Philip Morris International Inc. (PM), the largest publicly traded tobacco company, will spend as much as 500 million euros ($680 million) on a new factory in Italy as part of a drive to make products with lower health risks.
The plant, near Bologna, will start producing tobacco products that are heated with a special device rather than burned at the end of 2015 or early 2016, the New York-based company said in a statement today. The factory will have capacity to produce as many as 30 billion units a year, equivalent to about 6 percent of the European Union’s cigarette sales, the company said.
“This first factory investment is a milestone in our road map toward making these products available to adult smokers,” Chief Executive Officer Andre Calantzopoulos said in the statement.
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In November, Philip Morris brought the launch date of the tobacco-heating product forward to 2015 from a previous forecast of 2016 or 2017. It will test it in a few cities in the second half of this year.
Unlike e-cigarettes, the company’s new product will contain tobacco to appease smokers’ cravings for the taste of a conventional cigarette.
The device looks like a hollowed-out fountain pen. The custom-built cigarette is inserted and the tobacco is heated to generate a smoking aerosol. The temperature is “significantly below” what’s generated by a traditional cigarette, PMI has said.
PMI has spent more than a decade trying to develop lower-risk products and started eight clinical trials on them last year, the company said.
Philip Morris already has a filter factory and a pilot plant in Bologna. The new facility will employ about 600 people. The company will also enter the e-cigarette market in the second half of this year.
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