Philip Morris' Smoking Option - Analyst Blog
May 31 2011 - 1:01PM
Zacks
Philip Morris (PM) bought the patent and global
rights to an aerosol nicotine-delivery system developed by Jed
Rose, director of Duke’s Center for Nicotine and Smoking Cessation
Research. The new technology delivers nicotine to users' lungs but
doesn't involve smoking.
Management reported that the Center for Nicotine and Smoking
Cessation Research at Duke University in Durham, N.C. where Jed
Rose is working, does not have a role in Rose's agreement with the
company and won't receive any money. Terms were not disclosed.
This technology will help the smokers to get the nicotine
straight from the cigarette without generating the accompanied
smoke and the toxic substances. This endeavor resonates the
company’s effort to reduce death and disease associated with
smoking.
Switzerland based Philip Morris will next develop a commercial
product using the technology. The system differs from current
medicinal nicotine inhalers available on the market as aids to stop
smoking because it delivers nicotine more rapidly to hit the
smokers just like a cigarette.
However, management has reported that it may take three to five
years for the company to develop the commercial product.
Tobacco companies have been taking steps to venture into
smokeless tobacco and other nicotine products as tax increases,
health concerns, smoking bans and stigma cut into demand for
cigarettes.
Last month, British American Tobacco Plc created a subsidiary
called Nicoventures focused on nicotine alternatives. In 2009,
Reynolds American Inc. (RAI) purchased Swedish
company Niconovum whose nicotine gum, pouches and spray help people
give up smoking.
We are encouraged as Philip Morris is strengthening its brand
portfolio through innovation based on enhanced consumer
understanding. Marlboro’s brand equity is being supported by the
introduction of innovative packaging, new blends, and other line
extensions, along with fresh execution of its iconic image.
Similarly, the L&M brand is being revitalized with the
introduction of products having a smoother taste and more
attractive pack designs.
We currently have a Zacks #2 Rank on Philip Morris shares, which
translates into a short-term Buy rating.
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