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Tobacco Harm Reduction

G4-DMA
Management Approach

Indicator
RDRN participation by year

G4-DMA
Indicator

Product Innovation

RAI and its operating companies are committed to reducing the harm caused by smoking. To that end, RAI’s operating companies have focused on the development of products that present or may present less risk than cigarettes.

INNOVATING FOR HARM REDUCTION

In early 2016, RJR Vapor Company and Niconovum USA were moved into RAI Innovations Company, a new RAI subsidiary, to centralize efforts on product development, innovation and commercialization of next-generation vapor and nicotine products. RAI’s operating companies have long been recognized as the innovation leaders in the tobacco industry. Emerging product categories that offer the potential to reduce tobacco harm allow us to be growth leaders in growing segments of our industry that also offer potential for higher margins.

RAI and its operating companies are transforming the tobacco industry from one dominated by traditional cigarettes to one offering a range of products that meet the changing expectations of adult tobacco consumers. We believe this approach is in the best interest of adult tobacco consumers, stakeholders and society as a whole, while providing our businesses the best opportunity for success.


Research & Development Spending

 20112012201320142015*2016
Expenditures on R&D
($ in millions)
$69$62$72$88$107$101
R&D as a percent
of net sales
0.81%0.75%0.87%1.04%1.00%0.81%
*In 2015, net sales increased substantially due to the acquisition of Lorillard, lowering R&D as a percent of net sales.

 

Our companies are not interested in innovation for its own sake. Rather, they are working to address industry trends and emerging adult tobacco consumer preferences. For the past decade, we have been focusing research and development efforts, as well as acquisitions, to create a broad portfolio of products placed throughout the risk continuum that are aligned with changing adult tobacco consumer preferences.

"Our companies employ over 200 individuals with scientist in their title in research and development, and scientific and regulatory affairs functions.”
James Figlar, Ph.D., senior vice president — scientific & regulatory affairs, RAI Services Company

PRODUCT & PROCESS INTEGRITY

Product stewardship begins with the principle that nothing is to be done or added to products that increases their inherent risks. Whenever any of RAI’s operating companies considers a change in the ingredients, materials or design of an existing product, the company evaluates the potential effect of that change by using an analytical framework based on the best scientific information available.

This evaluation uses a multi-tiered testing process that has guided our product-stewardship efforts for many years. The process includes scientific literature reviews, analytical chemistry, in vitro and in vivo toxicological tests and human studies, as appropriate.

Our companies have devoted substantial resources to developing product technologies and designs with the potential to reduce tobacco risks, while continuing to meet the changing expectations of adult tobacco consumers. Consumer acceptability is crucial, as products with the potential to lower risk will not reduce harm if they are not acceptable to, and thus never adopted by, adult tobacco consumers.