Philip Morris International has agreed to pay $2.7 billion for exclusive rights to sell IQOS heated tobacco products in the United States, current rights holder Altria Group has confirmed.
Altria will receive approximately $2.7 billion from PMI in exchange for exclusive US commercialization rights of the IQOS system. The agreement is effective April 30th, 2024.
IQOS, a smokeless tobacco heating device, was invented by Philip Morris. It was sold in the United States by Altria before the US Trade Regulator banned importation and sale last year due to patent claims by rival R.J. Reynolds.
Philip Morris is seeking to overturn the ban.
Both companies have strong ties, with their subsidiaries entering into several agreements to address issues such as intellectual property licensing, regulatory engagement, contract manufacturing, and contract manufacturing.
The two leaders in tobacco expanded the pact to include a joint agreement for research, development, and technology-sharing in July 2015.
Philip Morris aims to resume supply in the United States of IQOS products by the first half 2023.
Altria holds the rights for IQOS sales in the United States up to May 2024. After that, it will transition to Philip Morris.
“We are ready to invest behind IQOS to bring it to market at scale across the U.S.,” Philip Morris CEO Jacek Olczak said.
Altria stated that it had already received $1Billion from Philip Morris, and that it will receive the rest by July 2023.