Investment in harm reduction seen to benefit public health
OF SAN FERNANDO--Industry investments in non-combustible alternatives to cigarettes provide upside to new and existing players as well as public health, according to a fund manager that focuses on long-term, highquality investments in the fast-moving consumer goods industry.
“I think there's a lot of upside from industry investment in harm reduction, if we can move the discourse beyond that ‘Big Tobacco’mental model and refocus the conversation on a more open-minded conversation and look at what consumers want,” U.K.-based Ash Park founder Jonathan Fell sai d .
Technology has led to the development of smoke-free nicotine alternatives such as e-cigarettes, heated tobacco products (HTPs) and Swedish snus. These devices are considered part of tobacco harm reduction, a strategy that aims to mitigate the impact of smoking on public health.
An example of HTP is Philip Morris International’s IQOS. The heated tobacco device uses a patented HeatControl™ Technology that precisely heats, without burning, tobacco-filled sticks wrapped in paper called HEETS™ to release a water-based aerosol. Unlike cigarettes, IQOS does not burn tobacco and therefore produces no smoke and no ash.
The device and heat sticks were made available last year for adults 21 years old and above in the pilot area of Metro Manila. The online store IQOS.com now also covers delivery of the device and heat sticks to key areas in Luzon including Baguio City and La Trinidad; Calumpit, Bulacan; Cabanatuan City, Santa Rosa, Aliaga, Jaen, Peñaranda, Palayan, Zaragoza in Nueva Ecija; and San Fernando City, Bacolor,
Santa Rita, Guagua, Apalit, Mexico, Santo Tomas, Santa Ana, Arayat, Floridablanca, Minalin and Clark Freeport Zone in Pampanga.
Prof. David Sweanor, advisory committee chair of the University of Ottawa Centre for Health Law and Policy in Canada, said technology has shaped the tobacco industry, as more consumers are switching to innovative nicotine products that are considered less harmful than combustible cigarettes.
“We see a tremendous number of consumers are very willing to move to these products, if the products are available, they have decent information. And the global market for cigarettes is approaching a trillion US dollars a year with over a billion users,” said Prof. Sweanor.
Prof. Sweanor has been actively involved in tobacco and health policy issues since the beginning of the 1980s and has worked globally, and with numerous groups, including the International Union
Against Cancer, World Health Organization, World Bank and the Pan American Health Organization and played a key role in achieving many global precedents in tobacco policy. He now focuses much of his tobacco and nicotine related efforts on risk reduction strategies.
He cited the need to study the tobacco industry as it undergoes a process of transformation. “I think we need to be
studying the industry, we need to be looking at the new players, we need to understand this is a very dynamic situation. And we need to try to shape that through intelligent regulation, through having an intelligent discourse to look at how we transform other industries like what's going on with the automotive industry now, moving with the internal combustion engines?“he said.
“You can see that the market is putting a much higher valuation on companies that are making that transition away from combustible products. And of course, the companies and their executives notice that too and it's reflected in the incentive plans of a couple of them,” said Fell.
Prof. Sweanor posed questions that should be looked into to understand the transformation, “What happened to move from unsanitary to sanitary food, from snake oil to science-based pharmaceutical products? How did we transform all these other industries? What are the lessons in that for us? And what can we do by understanding how this industry operates, but also understanding who's the industry? What's the difference between companies that are selling tobacco products and companies that are selling alternative products? What's the difference between cigarettes and non-combustible tobacco products?“he said.
He said, however, there remains a lot of misconception about alternative products. “Much of mainstream tobacco control thought that vaping was a plot by Big Tobacco, these new evil geniuses, and it had to be attacked. And the best thing we could do, would be to attack these alternative products. You're not recognizing what they were doing was really protecting the cigarette market, which is where these companies made massively higher profit margins on a sustainable basis. So, it was a failure to grasp the reality of what's going on,” he said.
According to Prof. Sweanor, the easiest way to incentivize the companies to transform and do more, is to stop banning the alternatives. “There's tremendous potential in all of these markets, you know, and anybody who thinks that new technology cannot be acceptable in low and middle income countries needs to understand what happened with smartphones. I mean, just take away the bans, give an incentive for people to move in this direction,” he said.
“So, innovation is going to happen. It's a question of do we try to turn that to the advantage of public health? Do we have sensible regulatory regimes that help us reduce cigarette smoking more rapidly?“Prof. Sweanor said.
Ash Park manages the Ash Park Global Consumer Franchise funds. Prior to 2013, Fell was team head of the consumer equity research group at Deutsche Bank in London, where he covered the tobacco and beverages sectors, following earlier spells at Morgan Stanley and Merrill Lynch.