Philip Morris (PM) Seeks FDA Approval for IQOS Products

Tobacco giant Philip Morris International Inc. PM has filed an application with the US Food and Drug Administration (FDA) for its IQOS products (heatsticks that heat tobacco instead of burning it).

Once the Modified Risk Tobacco Product (MRTP) claim is approved by FDA, the company will be able to enjoy a significant marketing advantage over other reduced risk tobacco products that are being sold currently. The regulatory authority is expected to take a minimum of 60 days for completing an administrative review of the application.

The heatsticks are already available in several test markets. Philip Morris launched these products in fiscal 2015 in Japan and Italy where it became very popular. Further, there is a steady increase in the number of iQOS purchasers who have predominantly or fully converted to these reduced risk products.

Once these products get a go ahead from the FDA, Altria Group Inc. MO will also be able to sell these products in the U.S.

Altria and Philip Morris have been working on reduced risk tobacco products for quite some time. In 2015, the two companies had entered into a strategic agreement under which Philip Morris markets Altria’s MarkTen e-cigarettes internationally. Altria in turn distributes two of Philip Morris’ heated tobacco products in the U.S.

Further, the companies have decided to partner on a regulatory engagement related to the products. The joint venture has made excellent progress on branding and go-to-market strategies for non-conventional cigarettes in the U.S. market. Additionally, the two companies were working together on the above mentioned modified-risk tobacco product claim.

PHILIP MORRIS Price

PHILIP MORRIS Price | PHILIP MORRIS Quote

Philip Morris, like several other tobacco companies has been witnessing declining demand for cigarettes due to the ongoing anti-tobacco campaigns and price rise to offset the rising taxes. In fact, so far this year, the shares of this tobacco maker have gained just 0.31%, underperforming the Zacks categorized Tobacco industry, which has showcased a gain of 6.74%.

Zacks Rank & Key Picks

Philip Morris currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader consumer staple sector include Sanderson Farms Inc. SAFM, Hormel Foods Corp. HRL.

Sanderson Farms carries a Zacks Rank #2 (Buy) and has an expected earnings growth rate of 5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hormel Foods Corp. also carries a Zacks Rank #2 and has an expected earnings growth rate of 10.4%.

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