REUTERS NEXT-Philip Morris CEO does not need M&A to hit smoke free goals

The maker of Marlboro cigarettes 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 during the Reuters Next conference. About 30% of revenue at Philip Morris now comes from "smoke-free" products such as iQOS tobacco heating devices, Olczak added on Thursday.

Philip Morris will reach its target of 50% sales from smoke-free products by 2025 through organic revenue growth rather than mergers and acquisitions, its CEO told Reuters. The maker of Marlboro cigarettes 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 during the Reuters Next conference.

About 30% of revenue at Philip Morris now comes from "smoke-free" products such as iQOS tobacco heating devices, Olczak added on Thursday. Philip Morris has also set a target of generating $1 billion in sales from non-nicotine products by 2025 as part of its evolution https://www.pmi.com/our-transformation into a broader "healthcare and wellness" company.

"The way we look at these targets, we achieved the current 30% organically and I believe we can get to 50% by continuing this organic growth," Olczak said, adding: "Our $1 billion targets of achieving sales from non-nicotine products we can also to a very large extent achieve organically." Olczak's comments come nearly two months after Philip Morris bought British inhaler-maker Vectura, a deal which faced opposition from public health experts who questioned whether a tobacco group should own a company that cures the respiratory illnesses which cigarettes cause.

Asked if he was surprised by the backlash, Olczak said there were "a few voices of criticism" and that he expected "negative emotions" to fade as Vectura launches products over the next few years that will address unmet patient and consumer needs. Since it was announced in July, critics have put concerted pressure on shareholders and the government to block the deal.

In August, a group of more than 35 health charities, experts, and doctors across the world wrote https://www.instapaper.com/read/1464774163 to shareholders over the damaging effect tobacco has on United Nations sustainable development goals, following up with a letter to the British government to look at the conflict of interest issues in September. "Nothing we are doing should come as a surprise, we are putting in action the visions that we shared openly seven or so years ago about leaving cigarettes behind," Olczak said. "This is completely moving the company in another direction."

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