Tobacco majors spent billions on R&D of reduced-risk alternatives to smoking since 2008, says exec

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Updated 03 August 2022

Tobacco majors spent billions on R&D of reduced-risk alternatives to smoking since 2008, says exec

Tobacco majors spent billions on R&D of reduced-risk alternatives to smoking since 2008, says exec
  • Experts share views on how it is essential to rely on evidence when making decisions

DUBAI: British American Tobacco and Philip Morris International invested billions in the research and development of reduced-risk alternatives to smoking

Since 2018, BAT invested over $1.4 billion in R&D to develop innovative new category products, according to Hugo Tan, the company’s regional head of scientific engagement in the Asia-Pacific region and the Middle East.

What matters is not just to believe what people say, but to be guided by the evidence. Not just consumers but also public health experts and regulators often equate nicotine with cigarettes.

Hugo Tan, BAT’s regional head of scientific engagement in the Asia-Pacific and the Middle East.

Tan explained to Arab News that tobacco harm reduction is a strategy that recognizes the harmful effects of combustible cigarettes and encourages smokers to switch entirely to alternatives such as vaping and tobacco-heated products.

“It has been widely accepted and adopted by many countries, including the US, UK, Germany, France and others,” Tan said.

He added that the move is supported by its R&D center in Southampton and 1,500 specialists, who have contributed to publishing more than 130 peer-reviewed scientific studies on its new category products.

Since 2008, PMI has invested more than $9 billion in the R&D of smoke-free products.

Also, among PMI’s professionals are over 930 scientists, engineers and technicians committed to building scientific assessment capabilities, such as preclinical systems toxicology, clinical and behavioral research, and post-market assessment, according to the company’s website.

“In order to evaluate the reduced risk potential of our smoke-free products, we have developed a comprehensive scientific assessment program that is inspired by standard practices in the pharmaceutical industry and in line with the guidance provided by the US Food and Drug Administration for evaluation of modified risk tobacco products,” said Ignacio Gonzalez Suarez, head of scientific engagement Middle East and Africa, PMI.

He added: “Our program follows the international quality standards, such as Good Laboratory Practices and Good Clinical Practices and, since 2008, has resulted in over 400 peer-review scientific publications and book chapters showcasing our data and methods.”
 

Myths about nicotine

Tan clarified many myths about nicotine and explained how it is essential to rely on evidence when making decisions.

“What matters is not just to believe what people say, but to be guided by the evidence,” he continued.

Not just consumers but also public health experts like him and regulators often equate nicotine with cigarettes, Tan added.

Evidence has shown, however, that it is primarily the smoke from tobacco combustion and not nicotine that causes most of the health risks associated with cigarettes. Nicotine, he said, is only one of many chemicals found in cigarettes.

BAT has also completed a study, which is yet to be published, on a clinical trial on one of the new category products, Vuse. This study looks at both scenarios, the Vuse user and the cigarette user.

“It will provide a snapshot of the differences in biomarkers of potential harm between Vuse consumers compared to cigarette smokers, and from there, we can see if one indicator differs from the other in terms of biomarkers,” he said.

Tan said that in the UK, there are major health regulators and medical associations that have contributed to tobacco harm reduction strategies.

He cited the Public Health England report on e-cigarettes that said vaping was 95 percent safer than smoking combustible cigarettes.

Based on their clinical findings on the website, PMI also has found that using their tobacco heating system, such as IQOS, positively impacts smokers’ health.

“In the case of our tobacco heating system, we have conducted 12 preclinical studies and 10 clinical studies,” said Suarez. “The results show that there is no combustion and also the levels of toxicants are reduced, on average, by more than 90 percent compared with the smoke of a reference cigarette.”

He added: “Moreover, our clinical studies show that when adult smokers switch to the product, they reduce their exposure to toxicants compared to those that continue smoking and the level of reduction is similar – though not the same – as the reduction observed when quitting smoking.”

Despite the clinical findings of PMI and BAT’s research, Karem Harb, general practitioner and medical director at Dubai-based Hortman Clinics, said there are not enough studies on electronic cigarettes or coil-heated tobacco products.

Smokers do admit they feel better on e-cigarettes. That is because they contain less or zero amounts of tar. On the other hand, many e-cigarette smokers have reported an increase in palpitations and anxiety.

Karem Harb, Medical director and general practitioner at Dubai-basedHortman Clinics.

In his opinion, the new trend in e-cigarettes or similar products is that they have a higher concentration of nicotine when compared to regular cigarettes.

“Smokers do admit they feel better on e-cigarettes and breathe better, as well as sleep better, etc. and that is because they contain less or zero amounts of tar,” Harb said.

“On the other hand, many e-cigarette smokers have reported an increase in palpitations and anxiety, which could be directly related to the higher levels of nicotine compared to regular cigarettes,” Harb added.

Ways to accelerate alternatives

Furthermore, BAT proposes five ways to accelerate THR, Tan said.

The company encourages data collection to better understand the potential impact of electronic nicotine delivery products in the region.

He said this approach would improve consumer choice, quality and trust in the products.

Developing an appropriate regulatory system would be the second step in which science-based relative risks are differentiated and used to guide policies such as taxation, Tan added.

He explained that another way to ensure products can adapt to changing consumer preferences is to allow them to innovate.

Communication is essential for regulators and consumers to make informed decisions and support transparent industry-academic research collaboration to eliminate biased research.

Responsible marketing freedom, he concluded, enables consumers to move from combustible to non-combustible products faster. He said that BAT is committed to helping and working with local regulators to implement THR strategies.

According to PMI’s website, the FDA has approved marketing modified risk versions of IQOS Platform 1 devices and consumables as modified risk tobacco products.

PMI’s smoke-free products were available in 71 countries as of March 31, 2022.

It is stated on the website that the FDA found it appropriate to modify exposure orders for these products to promote public health.

As Harb concluded, although many claim to have quit cigarettes and taken up what would seem to be a healthier substitute, there is still a lot to learn about the new industry trends and the new age-group populations adopting the habit. “No smoking is always the better alternative,” he said.


Global investors increasingly attracted by Saudi Arabia’s incredible economic progress, say top officials at Franklin Templeton

Global investors increasingly attracted by Saudi Arabia’s incredible economic progress, say top officials at Franklin Templeton
Updated 26 March 2023

Global investors increasingly attracted by Saudi Arabia’s incredible economic progress, say top officials at Franklin Templeton

Global investors increasingly attracted by Saudi Arabia’s incredible economic progress, say top officials at Franklin Templeton

RIYADH: Driven by giga-projects and economic reforms under the Vision 2030 program, Saudi Arabia has emerged as an attractive destination for investors, said top officials at global asset management firm Franklin Templeton.

Speaking to Arab News in an exclusive interview, Salah Shamma, head of MENA equities for Franklin Templeton’s Emerging Markets Equity group, struck an upbeat tone when discussing the opportunities available in the Kingdom.

“Large-scale projects that are long term in nature and are looking to be driven mainly by the public sector but with large or significant private sector participation have given a boost to the equity market in Saudi Arabia,” he said.

Shamma also pointed to the young demographic of Saudi society, adding: “You’ve got one of the fastest growing populations which is a critical factor when you’re looking at emerging markets in general. What’s more, the Kingdom has one of the highest per capita incomes in the world and a very supportive environment for companies to operate within the consumer space.”

Salah Shamma, head of MENA equities for Franklin Templeton’s Emerging Markets Equity group. (Supplied)
 

His enthusiasm was echoed by Mohieddine Kronfol, chief investment officer, global sukuk and Middle East and North Africa fixed income, at Franklin Templeton.

Kronfol explained that now is a great time to invest in fixed income markets for two reasons.

“One is obviously that yields are today much higher than they were a year ago and so there’s much more income for investors to be able to take advantage of,” he said, adding: “There’s also more protection that fixed income markets can offer. So when you talk about the Saudi fixed income markets, we’re talking about a very high quality, mainly government-sponsored markets, which is a safe place to put your money to work.”

HIGHLIGHT

Large-scale projects that are long term in nature and are looking to be driven mainly by the public sector but with large or significant private sector participation have given a boost to the equity market in Saudi Arabia.

Kronfol went on to say that Franklin Templeton’s outlook for debt in Saudi Arabia and the region in general is “very constructive, very positive.”

“We think that investors would be looking to take advantage of the yields on offer and the security and safety that these government bonds and government issues provide,” he said.

Reflecting on Saudi Arabia’s position in the bond market, Kronfol claimed the Kingdom has made “incredible progress” over the past five years.

“The Kingdom went from really hitting well below its economic weight in terms of its share of the regional bond markets into now being not just a leader in our conventional bonds but also in global Shariah-compliant bonds or sukuk markets,” he said.

Other than Saudi Arabia, Shamma and Krofnol are also positive about opportunities in the UAE which has witnessed significant improvements in its investment and ownership laws. 

“The amount of businesses that are setting up in the UAE and the activity that we’re seeing is all quite positive for corporates that are operating within the country,” Shamma said. 

Mohieddine Kronfol, chief investment officer at Franklin Templeton - MENA. (Supplied)

But that’s not all. He pointed out that, among the other positive developments in Gulf Cooperation Council countries, governments have been expediting their divestment program and selling quality assets and blue-chip assets at attractive valuations. 

“They’ve managed to de-risk a lot of these assets and offer them to the public. So you’re getting these quality, large scale infrastructure-related companies that have a very secure and visible cash flow over a long period of time and coming at an attractive valuation,” Shamma explained.

Strong rebound

Kronfol said that the region has witnessed a strong rebound in economic activities after the COVID-induced slowdowns. 

“As far as our region is concerned, we had a very sound response to the pandemic not only from a public health point of view but also from a reopening point of view,” he pointed out.

“The policies were so good that we actually engineered the same recovery spending one third of what emerging markets were spending, and one sixth of what the developed world spent.”

Kronfol believes it was because of this post-pandemic reopening that the region was able to absorb some of the higher input costs, thanks to relatively well-anchored inflation, positive growth and strong balance sheets. 

“Whatever costs that came through to companies or governments, as far as higher input costs were concerned, they were able to pass that on without too much difficulty,” he continued. “And that’s one of the main reasons why you find that the region has outperformed other emerging markets in many developed markets over the past few years.”

Kronfol added: “Now, going forward, much will depend on the path of interest rates, the dollar and the one area of focus for us which is oil…I know policy makers here are doing what they can to keep oil prices up but there’s some uncertainty attached to that. However, if we continue to have oil above $70 and we have the policy flexibility because of our financial resources, I think the region is well placed.”

Challenges investors face

Asked about the challenges faced by investors, Shamma replied: “What’s happening right now in the world is that, with higher interest rates, the cost of capital in general is increasing. As such, when the cost of capital is increasing, you’ve got different assets that are competing for that capital. 

“So, at this point in time, I think the key challenge that investors need to address is mainly on the asset allocation issue as they need to decide whether it’s time to benefit from higher interest rates which are quite attractive now or to invest in equity markets.”

Shamma added: “Since we are in a higher interest rate environment with tightening monetary policies after years of loose monetary policy as well as lower interest rates, there is a fair amount of volatility that is affecting all asset classes in general.

“Also, our markets are not going to be immune to that volatility, especially now that the participation of foreign investors has increased in our markets.” 

Shamma believes since regional markets have done quite well over the past couple of years and valuations have risen significantly, another key challenge is for corporations to stick to their expansion plans.

“If the corporates are not able to deliver on their growth promises then obviously we will see a fair level of adjustment. That being said, we believe that investors in this type of environment need to be significantly more selective in not just trying to choose the best companies but also the best managers and the best asset classes to invest in given the volatility and level of uncertainty that we have in the global backdrop,” he concluded.


China to implement zero tariffs on coal imports to the end 2023

China to implement zero tariffs on coal imports to the end 2023
Updated 24 March 2023

China to implement zero tariffs on coal imports to the end 2023

China to implement zero tariffs on coal imports to the end 2023

BEIJING: China will extend some preferential tax policies and continue to implement zero tariffs on coal imports until the end of this year, state media CCTV reported on Friday, citing a cabinet meeting chaired by Premier Li Qiang on the same day, according to Reuters.

China cut tariffs on coal to zero in April last year in the face of concerns over domestic energy security and supply disruptions.

The country’s coal imports in the first two months of this year surged 71 percent from the same period last year, as utilities stepped up purchases of cheap thermal coal from Indonesia while arrivals from Mongolia also picked up after the easing of COVID-19 restrictions.

China will also cut some taxes for small companies and individual businesses and extend such favorable policy until the end of 2024, state media reported.

Other preferential tax policies include a reduction in tax related to research and development and a halving of logistics companies’ tax on warehouse land for bulk commodity storage in urban areas.

The cuts are expected to reduce the total burden by more than 480 billion yuan ($69.80 billion) a year, CCTV said.

Last year, when private businesses were hit hard by stringent COVID-19 lockdowns and curbs, China’s tax and fee cuts, tax refunds and deferred payments totalled 4.2 trillion yuan, the finance ministry said. That included 2.4 trillion yuan in VAT tax rebates, the largest in recent years.

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World shares fall on banking turmoil, recession worries

World shares fall on banking turmoil, recession worries
Updated 24 March 2023

World shares fall on banking turmoil, recession worries

World shares fall on banking turmoil, recession worries

BANGKOK: Shares fell Friday in Europe and Asia as worries flared over turmoil in the banking sector and potentially worsening risks of recession, according to the Associated Press.

European benchmarks sank as shares in Deutsche Bank plunged more than 10 percent. Reports said its shares fell because the company was facing higher costs for insuring itself against default. US futures turned lower and oil prices fell more than $2.

Investors are worried that more banks might suffer a debilitating exodus of customers following the second and third-largest US bank failures in history. That turmoil is clouding the outlook for what the Federal Reserve will do with interest rates after hiking them to market-rattling heights over the last year.

The fear is that all the turmoil in the banking industry could cause a sharp pullback in lending to small and midsized businesses around the country. That could put more pressure on the economy, raising the risk for a recession that many economists already saw as likely.

Germany’s DAX lost 2.5 percent to 14,834.24 and the CAC 40 in Paris tumbled 2.5 percent to 6,965.01. Britain’s FTSE 100 declined 2.1 percent to 7,245.65. The future for the S&P 500 was 0.9 percent lower while that for the Dow industrials lost 1.1 percent.

Deutsche Bank’s shares plunged 14 percent after an overnight surge in credit default swaps — a hedge against defaults for bond investors. Other European banks also lost ground. Commerzbank dropped 8.7 percent,

Societe General skidded 7.7 percent and Credit Suisse, itself subject to a government-arranged buyout by UBS, dropped 8.6 percent. UBS gave up 8 percent.

Regional banks’ shares in Asia were modestly lower Friday, with HSBC Holdings plc losing 2.9 percent in Hong Kong while mid-sized Japanese bank Resona Holdings declined 2.6 percent.

Shares in Japanese energy and electronics company Toshiba Corp. gained 4.2 percent after it announced late Thursday that it had accepted a $15 billion tender offer from a buyout fund made up of the nation’s major banks and companies. If regulators approve it, the proposed buyout by private equity firm Japan Industrial Partners would be a major step in troubled Toshiba’s yearslong turnaround effort, allowing it to go private.

Japan reported that its inflation rate fell to 3.3 percent in February from 4.3 percent the month before, though core inflation excluding fresh food and energy costs rose to 3.5 percent from 3.2 percent. The data suggest persisting pressure on the Bank of Japan to adjust its below zero interest rate policy, though economists said they expect price pressures to abate in coming months.

“Given the recent market turmoil surrounding the banking sector,” ING economists said, “the BOJ’s move will likely be well communicated with the market before it substantially changes its policy.”

Tokyo’s Nikkei 225 index lost 0.1 percent to 27,385.25 and the Kospi in Seoul gave up 0.4 percent to 2,414.96. Hong Kong’s Hang Seng slipped 0.7 percent to 19,915.68 and the Shanghai Composite index sank 0.6 percent to 3,265.65.

Australia’s S&P/ASX 200 shed 0.2 percent to 6,955.20. Shares fell in Mumbai but rose in Bangkok and Taiwan.

On Thursday, the S&P 500 added 0.3 percent for its third gain in four days while the Dow Jones Industrial Average gained 0.2 percent. The Nasdaq composite held up better thanks to strength in technology shares, gaining 1 percent.

Stocks fell sharply the day before after the Federal Reserve indicated that while the end may be near for its hikes to interest rates, it still doesn’t expect to cut rates this year. Fed Chair Jerome Powell also insisted the Fed could keep raising rates if inflation stays high.

Stocks in the financial industry ended up being the heaviest weight on the S&P 500 despite rising in the morning. First Republic Bank fell 6 percent after giving up a gain of nearly 10 percent.

In other trading Friday, US benchmark crude oil dropped $3.09 to $66.87 per barrel in electronic trading on the New York Mercantile Exchange. It gave up 94 cents to $69.96 per barrel.

Brent crude, the pricing basis for international oil, lost $3.08 to $72.42 per barrel.

The US dollar fell to 130.09 yen from 130.83 yen. The euro slipped to $1.0743 from $1.0833.


Apico secures $29m funding for new plastics factory in Riyadh

Apico secures $29m funding for new plastics factory in Riyadh
Updated 24 March 2023

Apico secures $29m funding for new plastics factory in Riyadh

Apico secures $29m funding for new plastics factory in Riyadh

RIYADH: A new plastics factory in Riyadh is a step closer after the Arabian Plastic Industrial Co. secured SR105.5 million ($29 million) of funding from the Saudi Investment Bank.

According to a filing to the Kingdom’s stock market, Apico will use the funds – which come in the form of working capital and a medium term loan – to build the facility as part of a plan to expand production.

The Jeddah-based company had signed a land lease contract with the Saudi Authority for Industrial Cities and Technology Zones – known as Modon – in 2022 with regards to the factory.

Of the SR105.5 million, SR55.5 million will be spent on the expansion with the remainder earmarked for existing facilities.

Apico made its debut on the Kingdom’s stock market in October 2022, when its shares climbed 18.52 percent above its listing price on the first day of trading.

The company offered 1 million shares, or 20 percent, of its SR50 million market capitalization.

The offering coverage was 15.43 times oversubscribed, with the offer price set at SR27 per share.

Established in 1996, Apico serves customers across different sectors, including to Almarai Co., flynas, TotalEnergies, and Nahdi Medical Co..


Moody’s boosts ratings for six key Saudi companies, including PIF and Aramco

Moody’s boosts ratings for six key Saudi companies, including PIF and Aramco
Updated 24 March 2023

Moody’s boosts ratings for six key Saudi companies, including PIF and Aramco

Moody’s boosts ratings for six key Saudi companies, including PIF and Aramco

RIYADH: Saudi Arabia’s Public Investment Fund and energy giant Aramco are among six firms in the Kingdom to have their ratings boosted from stable to positive by Moody's Investors Service.

The credit rating agency said the upgrade in outlook is linked to the strength of Saudi Arabia’s economy, which was also changed to positive from stable earlier this month.

Saudi Basic Industries Corporation, also known as SABIC, Saudi Telecom Co., known as stc, and the Saudi Power Procurement Co. were among the other companies to see their grading increase.

The Saudi Electricity Co. also received a boost.

In a report explaining its rationale for the shift, the ratings agency said: “(These) rating actions are a direct consequence of the sovereign rating action and reflect the credit linkages between the Government of Saudi Arabia and each of the six entities. 

“While these corporates benefit to varying degrees from international assets and cash flows, they all have significant credit linkages to the Saudi Arabia sovereign and are exposed to the domestic environment including political, economic, regulatory and social factors.”

Reflecting on Aramco, the report said the company’s A1 rating “reflects its very large operational scale, significant downstream integration and strong financial flexibility given its low cost structure and low leverage relative to cash flows.”

It added: “These characteristics provide resilience through oil price cycles and also help mitigate carbon transition risk, which is a material credit consideration for oil and gas companies.”

Moody’s said that SABIC had been able to maintain its strong global position in the petrochemical and fertilizer market thanks to “competitively priced domestic feedstock under long-term contracts with Saudi Aramco.”

The report added: “These advantages help mitigate to an extent the volatility of its predominantly commodity-based petrochemical, fertilizer and steel activities and SABIC's asset concentration in Saudi Arabia.”

In a section on the PIF, Moody’s said the organization had a “high-quality investment portfolio”, a “very strong financial profile with very low leverage and very high interest coverage”, and an “excellent liquidity profile”.