![\"\"](\"http:\/\/wpmedia.business.financialpost.com\/2018\/05\/vaporiser.png\")
<\/a><\/p>\nA vaporiser at the British American Tobacco research centre in Southampton, England.<\/p>\n<\/div>\n
Over the past several years, tobacco companies have pumped billions of dollars into \u201cpotentially reduced risk\u201d products, both tobacco-heating devices such as IQOS and e-cigarettes, and vapes, which use nicotine-infused juices mixed with propylene glycol and glycerine to create the sensation of smoking.<\/p>\n
These devices are still a small part of Big Tobacco\u2019s globe-spanning business, but majors like PMI and British American Tobacco PLC are making noises about a future where they make more money from \u201cnext generation\u201d products than from cigarettes.<\/p>\n
Both companies \u2014 or rather their subsidiaries, Rothmans Benson & Hedges Inc. (PMI) and Imperial Tobacco Canada Ltd. (BAT) \u2014 have begun dipping their toes into the Canadian market with the respective releases of IQOS and Glo in a limited number of test markets.<\/p>\n
A lack of federal regulations and a hodgepodge of provincial rules, however, have largely kept the big players away from the market, leaving the \u201csmoking cessation\u201d field to independent vape producers and retailers willing to navigate the regulatory fog.<\/p>\n
That\u2019s set to change in the coming months once the federal government passes Bill S-5, an update to the Tobacco Act that will provide a framework for Health Canada to regulate vaping and heat-not-burn tobacco products.<\/p>\n
\u201cAssuming that vaping becomes legal in Canada, we will be in there,\u201d said David O\u2019Reilly, BAT\u2019s group scientific and R&D director. “And we’ll be bringing the scale that BAT and Imperial bring.”<\/p>\n
<\/a><\/p>\nDr David O’Reilly, Group Scientific Director, with testing equipment at the British American Tobacco research centre in Southampton, England.<\/p>\n<\/div>\n
The smooth-talking, silver-haired executive is in his office at BAT\u2019s massive research facility in Southampton, England, where he oversees hundreds of engineers and scientists, the majority of whom are working on \u201creduced risk\u201d products. On his desk are several vapes; he said he quit smoking by using snus, an oral tobacco product similar to dipping tobacco, and continues using BAT\u2019s various gadgets.<\/p>\n
“By 2020, we estimate there will be 100 million next-generation-product consumers on the planet,\u201d O\u2019Reilly said. “We’re not doing this for PR, we’re doing this for good business sense.”<\/p>\n
On a global scale, BAT\u2019s investment is beginning to show returns. In 2017, the company made nearly \u00a3300 million in revenue from vaporizer products and more than \u00a3200 million from Glo, mostly in Japan, the largest heat-not-burn market. It expects to introduce Glo to another 14 countries this year, and is forecasting over \u00a31 billion in revenue from next-generation products in 2018 and \u00a35 billion by 2022.<\/p>\n
\u201cBy 2030, it will be 30 per cent of our business,\u201d O\u2019Reilly said. “By 2050, 50 per cent of our business.”<\/p>\n
Key to this sales growth is cultivating the idea that these products are better for your health than cigarettes; that consumers and regulators should trust products developed and tested by large tobacco companies rather than independent vape manufacturers; and that governments should apply liberal tax and advertising regimes so that consumers are encouraged to switch from cigarettes.<\/p>\n Touring the Southampton facility, that assiduously crafted message is on display.<\/p>\n In one of the building’s many labs, a tangle of wires runs from the battery of a vaporizer, being developed for the Polish market, to a heat monitor. A machine puffs on the vape every 33 seconds, at a force supposed to emulate an intake of breath, to see if the battery will overheat over time.<\/p>\n In the next lab over, human-like lung tissue grown in a petri dish is exposed to vapour sucked through a mechanical lung apparatus.<\/p>\n “We don’t want to overinterpret the data, but everything we see from all the tests we do (on heated tobacco products) is showing reduced risk,” said a lab-coat-wearing biologist overseeing pre-clinical tests that look for various \u201cbio-markers\u201d in the lung tissue.<\/p>\n Answering the question of relative harm is crucial for tobacco companies\u2019 ability to commercialize e-cigarettes and tobacco heating products, and they\u2019re spending extraordinary amounts of money trying to build a case for regulators. So far, the reception has been mixed.<\/p>\n In the United States, PMI\u2019s request to the Food and Drug Administration to market IQOS as a \u201creduced risk\u201d product was condemned in January by the scientific panel advising the agency, which said the company had not conclusively proved IQOS use would result in less disease.<\/p>\n Overseas, Public Health England, a government body that\u2019s surprisingly supportive of e-cigarettes, remains reticent about tobacco heating research.<\/p>\n \u201cThe available evidence suggests that heated tobacco products may be considerably less harmful than tobacco cigarettes and more harmful than e-cigarettes,\u201d the agency noted in a recent assessment. Out of 20 studies that it looked at, however, \u201c12 were funded by manufacturing companies so there is a lack of independent research.\u201d<\/p>\n The IQOS was poorly received by a panel of health officials in the U.S. in terms of a “reduced-risk” alternative to cigarettes. It uses sticks of tobacco rather than liquid to create a smoke-like vapour.<\/p>\n<\/div>\n The level of skepticism around any goodwill or scientific efforts by tobacco companies remains very high, not least, as Britain\u2019s Royal College of Physicians puts it, because \u201cthere is no firewall between a \u2018good\u2019 tobacco industry that is marketing harm-reduction products in the U.K. and a \u2018bad\u2019 one that promotes smoking, or undermines tobacco control activities, in low- and middle-income countries.\u201d<\/p>\n E-cigarettes are having an easier time with public health advocates, in large part because there are more independent studies. Based on an analysis of published research, Public Health England concluded, \u201cthe cancer potencies of e-cigarettes were largely under 0.5 per cent of the risk of smoking.\u201d The agency actively promotes e-cigarette use in mass advertising campaigns.<\/p>\n What to make of these new products and their various health claims has been the subject of heavy debate in Canada.<\/p>\n The federal government is treating IQOS and Glo as tobacco products, but appears to be taking a relatively liberal approach to e-cigarettes, banning lifestyle advertising but leaving the door open for certain government-approved statements about relative harm.<\/p>\n But the majority of provinces have put e-cigarettes in the same category as tobacco products, with all the limits on advertising and communication that entails. The approach has both critics and defenders.<\/p>\n “You don’t need advertising because consumers are doing it (switching to vaping) on their own,” said Rob Cunningham, senior policy analyst at the Canadian Cancer Society. He dismisses attempts by tobacco companies to market \u201creduced risk\u201d products as a \u201cpublic relations effort.\u201d<\/p>\n Tim Stockwell, director of the Canadian Institute for Substance Use Research and a professor at the University of Victoria, takes an opposing view, arguing that alternative nicotine products should be widely marketed.<\/p>\n “Hardly any non-smokers are going to take up vaping and do it to any great extent. And even if every Canadian became addicted to using a vapour \u2026 there’d be fewer people dying,\u201d Stockwell said.<\/p>\n \u201cRegulators need to tighten things up to incentivize tobacco companies to price their products (differently). They need to be taxed out of existence, the old cigarettes, then give financial advantages and support for developing the alternative.\u201d<\/p>\n<\/a><\/p>\n<\/a><\/p>\n