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Altria and JTI announce heated tobacco joint venture in US

October 28, 2022

Ploom X_Device

Tobacco giants Altria Group and JT Group have on Thursday announced a strategic partnership.

Altria, which last week announced an agreement with Philip Morris International (PMI) to end the companies’ commercial relationship covering IQOS in the US, will launch a joint venture (JV) with Japan Tobacco International (JTI), a subsidiary of JT, for the US marketing and commercialisation of heated tobacco stick products and its expanded pipeline of wholly owned products.

“We are excited to begin a new partnership with JT Group, a leading international tobacco company,” said Billy Gifford, Altria’s chief executive. “We believe this relationship can accelerate harm reduction for adult smokers across the globe.”

“We believe Moving Beyond Smoking in the US requires multiple FDA-authorised products within each smoke-free category to appeal to a diverse range of adult smokers. We believe that our joint venture and pipeline of heated tobacco products position us well to increase adoption of smoke-free products.”

Philip Morris USA, an Altria subsidiary, has entered into a JV with JTI, which sells the heated tobacco product Ploom in four countries, including the UK. JT Group has launched its most recent heated tobacco device, Ploom X, in Japan last year and since its introduction, the group has doubled its share of the Japanese heated tobacco segment.

The JV establishes Horizon Innovations LLC, which would be responsible for the US commercialisation of current and future heated tobacco stick products owned by either party.

PM USA holds a 75 per cent economic interest in Horizon, with JTI having the rest. PM USA will make an initial $150 million (£130m) in capital contributions to Horizon. Capital contributions made to Horizon after the initial $150m will be split according to economic ownership.

Both firms expect to combine their scientific and regulatory expertise to jointly prepare US Food and Drug Administration (FDA) filings for the latest version of Ploom products, which are not currently commercialised. They currently expect to submit pre-market tobacco product applications (PMTA) for these products in the first half of 2025.

Upon PMTA authorisations, Horizon will become the exclusive entity through which the companies market and commercialise the products in the US, making use of Altria’s sales and distribution network, which services over 200,000 US retail stores.

“Given that we agreed to assign our US commercialisation rights to the IQOS Tobacco Heating System to Philip Morris International in April 2024, we do not expect to have US commercialisation rights to the IQOS products when Horizon’s exclusivity requirements go into effect,” Altria added.

JTI will supply the Ploom devices and PM USA will manufacture the Marlboro heated tobacco sticks consumables for US commercialisation.

Altria has also announced an expanded US heated tobacco portfolio that includes a pipeline of differentiated product platforms, including both sticks and capsule formats.

“We believe heated tobacco capsule (HTC) products can appeal to US adult smokers who are open to novel smoke-free products but have not yet found a satisfying alternative to cigarettes. This audience includes the millions of US adult smokers who tried, but ultimately rejected, e-vapor products,” Altria said.

The firm expects to finalise the design of its HTC platform 1 technology (HTC1) by the end of this year and then begin regulatory preparations for a PMTA submission to the FDA by the end of 2024.

They also expect to partner with JT to launch the HTC1 technology in an international test market in late 2024 or early 2025 using JT’s sales and distribution network.