CEO Club Briefing


Excerpt from remarks to the Boston College Chief Executives Club 

May 3, 2019

TAKEAWAY: Alternatives

So our job is to explain to consumers what the problem is and then offer alternatives. But governments have a role to play. And as with any innovation, obviously, regulators are very slow, very cautious. And in this particular industry, given the sensitivity, the controversy of cigarettes, all the emotions around them, it’s even more difficult for people to move fast.

But somehow, we have a lot of paralysis and polarization, and there is a lot of work to be done by governments on supply- and demand-side measures allowing a certain degree of communication. I was very pleased that the FDA set some very clear rules in their order on how you do the marketing of these products, how you make sure and report who uses the products to avoid unintended use, how you do all this post-market. Because going back to my principle—let’s assume for a second that these products reduce the individual risk of the people who switch by 80 percent. Public health has to make sure that not how many more people start with this product, many less people quit, and everybody that has quit relapses again and uses the product. So it’s all the deltas that you have to monitor to see that you have a positive impact in public health.

Now, obviously, doing the math, if you reduce the risk—and I’m not saying any of these products has been proven to reduce, but just to use a numeric example, not to confuse anybody—by 80 percent, you need big deltas in the rest in order to compensate. But all this has to be monitored, and we’re very, very sensitive to this. The good news for us is that now, as I said, we are in 47 markets. We have 10 million people that use IQOS. And as our monitoring shows, there are no red flag sensitive audiences, including teenagers.   

But you have to monitor these things and adapt. And the difficulty you appreciate is this kind of how can I speak to adults and I make sure that kids don’t have access and don’t see it and you don’t entice them? The answer is, obviously, age limits, and there is debate in the US for increasing the age limit. But most importantly, it’s access control at retail and strict contracts with the retailers and potentially penalties—and governments can help here and education at schools.