By 2025, Philip Morris will reach its target of 50% sales from smoke-free products through organic revenue growth rather than mergers and acquisitions, its CEO told Reuters.
The Marlboro cigarettes maker has spent more than $8 billion on reduced risk products since it began developing them a decade ago, Chief Executive Jacek Olczak said in an interview at the Reuters Next conference.
Olczak said that about 30% of the revenue at Philip Morris comes from smoke-free products such as nicotine pouches and iQOS tobacco heating devices.
Philip Morris has set a goal of generating $1 billion in sales from non-nicotine products by the year 2025 as part of its evolution into a broader healthcare and wellness company.
According to Olczak, "Our $1 billion goal of sales from non-nicotine products can also be achieved organically by continuing this organic growth and we can get to the current 30% organically," he said. The deal that Olczak bought last month came nearly two months after Philip Morris bought British inhaler-maker Vectura, a deal that faced opposition from health experts who questioned whether a tobacco group should own a company that cures the respiratory illnesses that cigarettes cause.
Olczak said he was surprised by the backlash and that he expected negative emotions to fade as Vectura launches products that address unmet patient and consumer needs over the next few years.
Since it was announced in July, shareholders and government have been under pressure to block the deal.
In August, a group of more than 35 health charities, experts and doctors wrote to shareholders about the harmful effect tobacco has on the United Nations Sustainable Development Goals, following a letter to the British government to look at conflict of interest issues in September.
Olczak said that nothing we are doing should come as a surprise, because we are putting in action the visions we shared seven or so years ago about leaving cigarettes behind.
This is a way that the company is moving in a different direction.