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Philip Morris Near Decision on Lower-Risk Cigarette Plant

Philip Morris International Inc. (PM), the world’s largest publicly traded tobacco company, will soon announce where it will make new cigarettes that it says pose a lower health risk, said Chief Financial Officer Jacek Olczak.

“We are very close to making a decision on where to place our manufacturing facility,” he told analysts at a conference in London today, without elaborating further. “We should be ready with the commercialization in 2016-2017.”

The company is developing three products that would be sold under existing brands such as Marlboro, and the most advanced is a product that heats tobacco rather than burning it. Still, it may be beaten to the market by British American Tobacco Plc (BATS), which on Feb. 28 said it may sell an alternative nicotine product in the U.K. as early as next year.

Tobacco companies have spent decades trying to develop a safer alternative to smoking, including a 1988 test of Premier, a heated-tobacco smokeless cigarette that its maker, now called Reynolds American Inc. (RAI), dropped in about a year. Philip Morris and BAT are accelerating the development of such products amid stricter government constraints on smoking.

Olczak said Philip Morris will increase invest 500 million euros ($647 million) to 600 million euros in capital expenditure over three years for the new products.

To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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