During the past few years, Philip Morris International (NYSE: PM) has taken steps to transition to smoke-free products. They’ve worked diligently to push their electronic tobacco device, IQOS, into the spotlight. On June the 19th, the company announced plans to ramp up production of the device with the construction of a new facility in Germany. The company intends to invest around 320 million dollars into the new high-tech facility, which will be located in Dresden, Germany. The facility’s main obligation will be to produce HEETS, which are tobacco units used with the company’s IQOS tobacco heating device.
The company expects construction of the 80,000 m2 facility to begin sometime later this year. The facility is scheduled to become fully operational in early 2019. Then, it will employ around 500 individuals. HEETS and IQOS were made available to German smokers in June of 2016. They were initially piloted in the cities of Frankfurt, Munich, and Berlin. At this point in time, the IQOS device is available in certain cities in more than twenty-five markets around the globe.
The completion of the facility will make Germany yet another country that manufactures tobacco units for PMI’s IQOS. Italy and Switzerland already have their own production facilities. Simultaneously, PMI just recently confirmed that their affiliate cigarette manufacturing facility in Greece would be converted to accommodate smokeless products. Philip Morris International hopes to have an annual installed capacity of heated tobacco units of around 100 billion units by the end of 2018.
While the company’s IQOS is their current lead product, it is one of four smoke-free products under development by PMI. The transition to smoke-free, healthier alternatives started in 2008, when PMI hired more than four hundred scientists to begin researching such products. The company also admits they’ve invested more than 3 million dollars into the project. PMI has remained transparent with their research efforts often sharing its finding with independent 3rd parties for review and verification.
The company insists the research has confirmed that the IQOS is likely capable of reducing the risks of smoking and is considered a better choice when compared to traditional cigarettes.