For the most part, a new product or service rolled out by a big company is met with interest or excitement, not revulsion and resistance. This does not apply to the tobacco industry, however; anti-smoking sentiment remains strong, and many people feel that the last thing consumers need is another product in this category.
So it was entirely expected that there would be some institutional-level pushback against Philip Morris International's (NYSE: PM) plans to roll out its IQOS heated tobacco system in the United States. Some of that opposition is fairly stiff and determined; perhaps it's even strong enough to threaten the company's viability.
Heated rhetoric
For a next-generation tobacco product, IQOS actually has a long-ish history behind it. Following a long period of development stretching back to the 1990s, Philip Morris began selling IQOS in select foreign markets in 2014.
Altria had held the exclusive rights to sell IQOS in the U.S. following its spinoff from of Philip Morris in 2008. However, as a result of a patent infringement case brought by peer British American Tobacco (BAT), the import and sale of IQOS was banned by the U.S. International Trade Commission in 2021.
The following year, Altria sold those rights to Philip Morris for a cool $2.7 billion. The change in ownership kicked in this past May 1.
Another path was cleared earlier this year when Philip Morris and BAT settled their patent dispute. So now, Philip Morris only requires U.S. Food and Drug Administration (FDA) approval to roll out IQOS on our shores, and it has filed numerous pieces of official paperwork in that effort. Meanwhile, a host of health and advocacy organizations are proving to be just as determined to halt the introduction.
Collectively, six of them -- including the American Heart and Lung Associations, the American Academy of Pediatrics, and the American Cancer Society -- this past June drafted a letter to the FDA's point man regarding IQOS.
In the letter, addressed to the director of the FDA's center for tobacco products, Brian King, they wrote that "Recent research on the impact of IQOS in other countries fails to demonstrate a public health benefit from the introduction of IQOS." This is a refutation of the company's argument that IQOS is a "reduced risk" tobacco product compared to traditional cigarettes.
The protesting parties also claim that Philip Morris "has repeatedly made misleading and deceptive statements wrongly suggesting that the FDA has found that IQOS reduces the risk of disease."
IQOS introduction is inevitable
Generally speaking, in this country there is little love lost between the public and Big Tobacco. So no matter how hard the spin Philip Morris puts on IQOS' supposed benefits (or its "reduced risk" profile), it's probably not going to convince many consumers or regulators that it's a needed product.
Yet it doesn't really have to. Cigarettes are, as ever, widely available throughout the country, and there's no logical way the FDA can maintain approval for these products while nixing that for heated tobacco platforms. And although those six organizations have some size and power, the cigarette giant has gobs of capital it's able to devote to lobbying. Philip Morris can keep funding its fight for years, even decades, until the regulators relent.
So I don't feel Philip Morris' business is on the line in this dispute (also, such fights are par for the course for basically any tobacco product now). Whether this year, in 2025, or even 2030, IQOS is almost certain to hit the market before long. The American Cancer Society and its allies won't like it, but Philip Morris investors will be pleased. After all, an extensive nationwide IQOS rollout will only mprove its business in this country.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends British American Tobacco P.l.c. and Philip Morris International and recommends the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 puts on British American Tobacco. The Motley Fool has a disclosure policy.
