PMI invests an additional $130 million in the Otopeni factory

Philip Morris International (PMI) announced yesterday a new wave of investments in its Otopeni factory, where an additional $130 million will be spent to increase production capacity and transform the facility from a cigarette factory into a production line for smoke-free alternatives. According to company officials, this will increase PMI's contribution to our country's export volume, and Romania remains a central pillar in the company's transition to a smoke-free future.

The additional investments include new production lines and an ongoing effort to make the production process more environmentally friendly. Romania is an important component of PMI's commitment to building a smoke-free future, stated Jacek Olczak, CEO of Philip Morris International, adding, "Our mission remains unchanged: we want to turn cigarettes into museum pieces and smoking into a habit of the past. The approximately four million adult Romanian smokers deserve access to accurate information about smoke-free products and need a new generation of public policies to encourage those who would otherwise continue to smoke to switch to alternative products for their own benefit and that of those around them. We are confident that the additional investment of over $130 million will accelerate the transition to a smoke-free Romania."

The company official reiterated that to date, $500 million has been invested in the Otopeni factory, where the latest technology in the field is employed: "We have invested in state-of-the-art technologies to manufacture products that address health issues. People need to open their minds and recognize that long-standing problems can now be resolved."

Among other things, Jacek Olczak emphasized that Romania provides a positive business environment: "I count on Romania and Romania's delegates at various international forums to promote the fact that not all tobacco products are harmful, that some benefit the country's economy and smokers."

Prime Minister Marcel Ciolacu praised the company's contribution to the state budget during yesterday's event, marking 30 years of PMI's activity in Romania: "I have seen the numbers that make this place a major contributor to the country's budget and provide jobs for thousands of Romanians. As prime minister, I can only be pleased. I am also pleased to hear that over 90% of the production here is exported, balancing Romania's trade deficit. Additionally, what has been achieved here in these 30 years - technology, product design, the community created with the employees of this business, the high level of working conditions, the average age (35-36 years), all of these are impressive.

At the same time, we have a responsibility to make young people and adults aware of how harmful smoking is. I strongly believe that nicotine and tobacco consumption do not bring any benefit to individual or collective health. Therefore, I recently approved a resolution requiring heated tobacco products to carry health warnings. We are creating opportunities, spreading information to the people, and the people decide. The population needs to be well-informed.

Another aspect I would like to emphasize is that this industry has zero evasion - in Romania, where we have one of the highest levels of evasion in the EU. I believe it is our duty to invest as much as possible in zero-evasion industries. Only by doing so, by strengthening the relationship between authorities and investors, can a state achieve sustainable consolidation."

After Poland, we are the second-largest exporter of alternative smoking products, alongside Germany, which means "we are already talking about excellence," the prime minister concluded.

Mircea Scăunaşu, Managing Director of Philip Morris Romania, emphasized that the additional investment of over $130 million will increase the number of new production lines, allowing us to supply the national market with innovative products "made in Romania" and increase exports to more countries: "We are proud to have been investing in Romania for 30 years, and we are confident that the Otopeni factory will play a crucial role in accelerating smoking cessation and building a smoke-free future as soon as possible. Furthermore, we want the new investment to be seen as a commitment that we will continue to contribute to the sustainable development of the local economy. This factory has changed profoundly from what it was in 2004. Today, it is a modern unit that no longer focuses on cigarettes. It is the biggest challenge in our history. Globally, we have eight factories, three of which are in Europe - in Italy, Greece, and Romania. In terms of volume, Romania ranks second after Italy, with over 90% of the exported production going to 54 countries on five continents. For 30 years, we have been investing in Romania, with the conviction that we can create better alternatives to smoking. In addition, we pay 2.6 billion lei to the budget every year, and in recent years, the export of heated tobacco products has greatly contributed to reducing the trade deficit."

Started in 2017, the $600 million investment in PMI's Otopeni factory has transformed it into a high-class production unit for tobacco-heating products, according to company data. They show that $500 million has been invested in developing production capacities, employee training, and implementing sustainability solutions. Another $100 million was invested in 2022-2023, leading to the development of production capacities for IQOS consumables, for both domestic and international markets.

As a result of the investments made so far, the Otopeni factory has been transformed from a cigarette producer into one that manufactures consumables for the IQOS system, and over time, the company has created over 1,500 new jobs. Today, the factory has more than 1,200 employees.

The Otopeni production unit is at the center of the strategy that underlies Philip Morris International's vision of building a smoke-free future, alongside seven other factories worldwide that produce consumables for IQOS.

In the opinion of Mihai Bundoi, Head of Scientific & Medical Affairs, PMI is undergoing a major change in approach, with the specialist appreciating that the future without smoke is driven by technological advancement. Andrei Ghizdăvescu, Manager Scientific, also emphasized that the "harm reduction" phenomenon represents a humanistic approach that focuses heavily on the individual, not just the problems. PMI's products represent a harm reduction alternative.

The company's current product portfolio consists mainly of cigarettes and smoke-free products. Since 2008, PMI has invested over $10.5 billion in developing, scientifically substantiating, and commercializing innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending cigarette sales. This has involved building world-class scientific assessment capabilities, particularly in the areas of preclinical system toxicology, clinical and behavioral research, as well as post-market studies. As of June 30, 2023, PMI's smoke-free products were available for sale in 80 markets, and PMI estimates that approximately 19.4 million adults worldwide have already switched to IQOS and quit smoking. Smoke-free products have accounted for approximately 35.4% of PMI's total net revenues in the second quarter of this year.

In February 2021, PMI announced its intention to expand into the wellness and healthcare sectors, and through its subsidiary Vectura Fertin Pharma, aims to enhance the quality of life by providing integrated health experiences.