The next three weeks are among the rockiest, on a historical basis, of the entire calendar.Trading Nationread more
Removing Neumann is a difficult decision for Son, who has long believed in WeWork and Neumann's vision to quickly expand the company.Technologyread more
Microsoft is looking for a new way to grab business from retailers as they fend off Amazon.Technologyread more
The UK's Civil Aviation Authority said Thomas Cook had now ceased trading and the regulator would work with the government to bring the more than 150,000 British customers...Europe Marketsread more
Banks have historically used armies of mortgage brokers to gather income and asset documents from prospective borrowers.Financeread more
Guggenheim reiterates its buy rating on Boston Beer's stock and raises its price target to $462 from $449 per share.Investingread more
On-demand delivery company Postmates is partnering with Phantom Auto, an autonomous vehicle teleoperator, to coordinate driverless deliveries.Autosread more
Bruce Broussard, CEO of health insurance company Humana, sits down with CNBC's Bertha Coombs to discuss the state of the industry, integrating digital health technology,...Squawk Boxread more
Gluskin Sheff's David Rosenberg reinforces his recession forecast following the Federal Reserve's September meeting.Futures Nowread more
In his new memoir, "The Ride of a Lifetime," Iger explains why he decided against the deal to buy Twitter.Technologyread more
Ad-tech company The Trade Desk is launching a campaign to show how it differs from tech giants like Google and Facebook.Technologyread more
Philip Morris International, which sells Marlboro outside the U.S., says its future is beyond cigarettes. It's now trying to prove it.
The tobacco company has invested more than $4.5 billion since 2008 developing smoke-free products, including IQOS . The device heats tobacco until it's warm enough to emit an aerosol but not quite hot enough to cause combustion, the chemical process responsible for producing toxins in cigarettes.
It's part of a budding group of tobacco products called heat-not-burn. Euromonitor expects the category to reach $15.36 billion by 2021, up from $2.12 billion in 2016. That would account for 45 percent of the broader $33.93 billion alternative market.
Cigarette sales, meanwhile, are expected to continue declining. Euromonitor anticipates the market will fall to $676.40 billion in 2021, down from $683.78 billion in 2016.
Philip Morris lowered its full-year adjusted earnings forecast Wednesday to between $5.15 and $5.30 per share, down from the previous estimate of between $5.25 to $5.40 per share, due to less favorable currency.
IQOS is critical to Philip Morris' future. It's the beginning of Philip Morris' promised pivot, and it could show investors whether it can truly transform itself.
Other tobacco companies have also invested in tobacco alternatives, including heat-not-burn products and e-cigarettes. These innovations could bolster the industry — if they're successful.
"Look, I think it's probably one of the most interesting moments in (Philip Morris') history," CEO Andre Calantzopoulos said in an interview with CNBC. "...I think we're all very happy that after 12 years of developing products and investing both in the product development, but most importantly in the scientific substantiation, we have the products on the market."
Since first launching IQOS in Nagoya, Japan, and Milan, in 2014, Philip Morris has introduced it in more than 30 markets around the world. Adoption has been mixed, said Cowen analyst Vivien Azer.
In some places, growth has surged. Japan has been so successful that to a certain extent it's become a proxy for IQOS' potential. Last month, news of a slowdown there spooked Wall Street and sparked the biggest sell-off since PMI spun off from Altria a decade ago.
Shares have now slid 26 percent over the past year.
Chief Financial Officer Martin King told analysts PMI was anticipating market share growth would plateau sometime this year, it just happened earlier than expected. Calantzopoulos told CNBC this week that PMI is still "an enormous distance away" from a plateau and that no new product grows perfectly straight and steady.
Azer said expectations for IQOS are "very high" among the investment community, and the selloff reflected a negative surprise.
"I think it's an overreaction, and I explained to investors there is a lot of variability in this category," Calantzopoulos said. "It's not as predictable as combustible products. And the issue here is that there was I think a misunderstanding that somehow Japan is flat and is going to stay flat forever. And this is absolutely not true."
Heated tobacco represented about 5 percent of PMI's shipments last year. By 2025, PMI wants 30 percent of its volume to come from reduced-risk products.
Reduced-risk products generated $3.73 billion of sales for PMI last year when stripping out excise taxes, currency and acquisitions, a nearly 400 percent increase from 2016. They represented 13 percent of PMI's total $29.19 billion in revenue. The company wants to boost that to between 38 percent and 42 percent by 2025.
PMI has submitted two applications to the U.S. Food and Drug Administration: one that would allow it to simply sell IQOS in the U.S., and another that would allow it to market it as being less risky than a conventional cigarette. Altria will commercialize IQOS in the U.S. if it receives regulatory clearance.
The latter, known as a modified-risk tobacco product application, requires an abundance of scientific evidence. The FDA has never authorized one of these requests.
Knowing the bar was high, PMI decided to build its capabilities to gather and measure clinical data. The bulk of the company's investments into IQOS and other reduced-risk products have gone into this, Calantzopoulos said.
"I think from a consumer perspective, (the modified-risk regulation) is very important," he said. "And I think also for regulators, it's important as well because they need to have a process, test it and control what manufacturers say. And it's also a level playing field for all the players because we invested billions of dollars."
Under Commissioner Scott Gottlieb, the FDA has adopted the idea that tobacco products exist on a continuum of risk, where conventional cigarettes are the most dangerous and others are possibly less harmful. Regulators and industry leaders agree most people don't understand that nicotine, while addictive, isn't deadly on its own.
Regulation on how IQOS can communicate the product with consumers affects how people switch to the product, Calantzopoulos said. PMI decided to apply IQOS for modified-risk tobacco product authorization so it could tell consumers the company's research has shown the product is a safer alternative to cigarettes, he said.
An FDA advisory committee disagreed, saying evidence doesn't back Philip Morris' claims. Its conclusion is non-binding and serves only as a recommendation to the FDA, which will make the ultimate decision.
"The FDA is largely viewed as the gold standard for scientific evaluation, so if they could get the MRTP application authorized, it would put them in a position to go to other foreign governments and use that as support on differentiated advertising and favorable tax rates," Azer said.
Other tobacco companies are also trying to pivot and are investing in novel technologies like e-cigarettes and others.
British American Tobacco has developed its own heat-not-burn tobacco device called Glo. The company plans to apply to sell Glo in the U.S. this year then pursue the modified-risk application in 2020.
Japan Tobacco sells Ploom Tech, a hybrid of an e-cigarette and a heat-not-burn product, overseas. A subsidiary called Logic has started selling it in a few U.S. states under the brand Vapeleaf. Japan Tobacco plans to launch a heat-not-burn product that's similar to IQOS in Japan as soon as the end of the year.
PMI has other offerings in its pipeline. TEEPS warms tobacco in a way similar to IQOS . It looks like a conventional cigarette except a carbon heat source at the tip warms tobacco when it's lit.
The company started a small-scale city test in the Dominican Republic in December and has yet to announce any plans to commercialize it in the U.S. It also plans to launch a new version of IQOS in Japan by the end of the year.
Over time, IQOS will be a key growth driver for PMI, Azer said. For now, she said it's still predominantly a cigarette-focused business. Though PMI wants to change that.