PMI Reduced Risk Products - Lausanne - 26th June 2014

1. Investor Day – Reduced-Risk Products
Lausanne, June 26, 2014
Bertrand Bonvin
Senior Vice President, Research & Development
Manuel Peitsch
Vice President, Biological Systems Research
Frederic de Wilde
Senior Vice President, Marketing & Sales
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

2. Reduced-Risk Products is a Consumer Category of its Own
2
Fast-Moving Consumer
Goods for Adult Smokers
Scientific
Substantiation
Electronics
Consumer
Electronics
Reduced-Risk Products ("RRPs")
Platform 1 Platform 2 Platform 3 Platform 4
Heated Tobacco Products Nicotine Containing Products
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm. The RRPs depicted are subject to ongoing
development and therefore the descriptions are illustrative and do not necessarily represent the latest stages of product development

3. Leadership in Reduced-Risk Products
3
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm. The RRPs depicted are subject to ongoing
development and therefore the descriptions are illustrative and do not necessarily represent the latest stages of product development
Reduced-Risk Products ("RRPs")
Platform 1 Platform 2 Platform 3 Platform 4
Heated Tobacco Products Nicotine Containing Products
RRPs
Regulation
R&D and
Scientific Substantiation
Marketing and
Commercialization

4. Agenda
● R&D capabilities and assets
● RRPs portfolio
● Scientific substantiation
4Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

5. Best-In-Class R&D Capability in the Industry
● PMI’s long experience in RRP
● Since the spin, PMI has significantly enhanced its R&D capabilities
● Invested approximately $2 billion
● Hired over 300 scientists with deep expertise in key fields
5Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

6. PMI R&D Centers and Global Partnerships Network
6
Technology and Scientific Network (2014)
2 R&D Centers
Major partners and service providers

7. RRPs Development and Scale-up
● Heat-not-burn consumables:
- Internally developed and manufactured
- New factory (30 billion units by the end of 2016)
● Devices:
- PMI’s technology developed with external partners
- Scale up and manufacturing by third-party
- Manufacturing for pilot launches commenced
Bologna, Italy
7Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm. Visual execution is for illustrative purposes only

8. Long-Term RRPs Pipeline
● Portfolio of over 500 granted patents worldwide
● Pipeline of around 1,000 pending patent applications
● Basis for long-term RRPs pipeline to address range of adult smoker
preferences
8Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

9. Developing Robust Evidence to Support a Claim of Reduced Risk
● Leading RRPs science
● State-of-the-art product assessment
● Sharing and collaborating with the scientific community and regulators
● 80 peer-reviewed scientific publications
● Clinical studies registered on ClinicalTrials.gov
9Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

10. Agenda
● R&D capabilities and assets
● RRPs portfolio
● Scientific substantiation
10Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

11. RRPs: Our Product Platforms
11
Platform 2Platform 1
Heated Tobacco Products Nicotine Containing Products
Platform 3 Platform 4
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm. The RRPs depicted are subject to ongoing
development and therefore the descriptions are illustrative and do not necessarily represent the latest stages of product development

12. Platform 1: Precisely Controlled Electrically-Heated
Tobacco System
● Heater maintains tobacco temperature below combustion
● Custom designed HeatStick tobacco stick
● Aerosol delivers volume, flavor and satisfaction
12Source: Baker R. R., 1975, High Temp. Sci., 7, 236-247 and PMI Research & Development

13. Platform 2: Heat-Not-Burn with Combustible Cigarette Ritual
● Pressed carbon heat source
● Tobacco temperature control by design:
- Physically separated to prevent tobacco combustion
● Proprietary blend & flavor system
● Plan to start clinical studies in 2014
● Manufacturing synergies with Platform 1
● City launch in 2016
13
Platform 2

14. E-Vapor Products
● Current e-vapor product challenges:
- Satisfaction
- Consistency
- Manual manufacturing
● PMI’s approach:
- Enter e-vapor product category in 2014
- Develop innovative NCP delivery technology addressing current challenges
14

15. Platform 4: Innovative Technology
● Novel aerosolization technology:
- Proprietary cartridge-battery combination
- Improved e-liquid
- Automated manufacturing
● Consistency of aerosol delivery
● Nicotine delivery profile superior to existing products
● Pilot city test in H2, 2016
15

16. Platform 3: Effective Delivery of Nicotine Salt Aerosol
● Product development on-going
● Organic acid and nicotine contained in separate sections
● Nicotine salt is formed in a visible aerosol
● Provide nicotine delivery and satisfaction similar to combustible cigarettes
● Initial pre-clinical testing ongoing
16
Platform 3

17. Agenda
● R&D capabilities and assets
● RRPs portfolio
● Scientific substantiation
17

18. ● Developing robust evidence packages based on state-of-the-art science and
best in class data
Post-Market Studies
& Surveillance
Consumer Perception and
Behavior Assessment
Substantiating Reduced Risk
18
Reduced Risk in Laboratory Models
Reduced Exposure & Risk
Reduced Population Harm
Reduced Toxicity in Laboratory Models
Reduced Formation of HPHCs
Clinical Trials
Systems Toxicology
Assessment
Standard Toxicology
Assessment
Aerosol Chemistry and
Physics
Product Design and
Control Principles
Note: HPHCs stands for Harmful or Potentially Harmful Constituents

19. Substantiating Reduced Risk
19
Aerosol Chemistry and
Physics
Standard Toxicology
Assessment
Clinical Trials
Systems Toxicology
Assessment
Consumer Perception and
Behavior Assessment
Post-Market Studies
& Surveillance
Reduced Risk in Laboratory Models
Reduced Exposure & Risk
Reduced Population Harm
Reduced Toxicity in Laboratory Models
Reduced Formation of HPHCs
Product Design and
Control Principles

20. Substantiating Reduced Risk
20
Product Design and
Control Principles
Aerosol Chemistry and
Physics
Standard Toxicology
Assessment
Clinical Trials
Systems Toxicology
Assessment
Consumer Perception and
Behavior Assessment
Post-Market Studies
& Surveillance
Reduced Risk in Laboratory Models
Reduced Exposure & Risk
Reduced Population Harm
Reduced Toxicity in Laboratory Models
Reduced Formation of HPHCs

21. Substantiating Reduced Risk
21
Product Design and
Control Principles
Aerosol Chemistry and
Physics
Standard Toxicology
Assessment
Clinical Trials
Systems Toxicology
Assessment
Consumer Perception and
Behavior Assessment
Post-Market Studies
& Surveillance
Reduced Risk in Laboratory Models
Reduced Exposure & Risk
Reduced Population Harm
Reduced Toxicity in Laboratory Models
Reduced Formation of HPHCs

22. Substantiating Reduced Risk
22
Product Design and
Control Principles
Aerosol Chemistry and
Physics
Standard Toxicology
Assessment
Clinical Trials
Systems Toxicology
Assessment
Consumer Perception and
Behavior Assessment
Post-Market Studies
& Surveillance
Reduced Risk in Laboratory Models
Reduced Exposure & Risk
Reduced Population Harm
Reduced Toxicity in Laboratory Models
Reduced Formation of HPHCs

23. Substantiating Reduced Risk
23
Product Design and
Control Principles
Aerosol Chemistry and
Physics
Standard Toxicology
Assessment
Clinical Trials
Systems Toxicology
Assessment
Consumer Perception and
Behavior Assessment
Post-Market Studies
& Surveillance
Reduced Risk in Laboratory Models
Reduced Exposure & Risk
Reduced Population Harm
Reduced Toxicity in Laboratory Models
Reduced Formation of HPHCs

24. Substantiating Reduced Risk
24
Product Design and
Control Principles
Aerosol Chemistry and
Physics
Standard Toxicology
Assessment
Clinical Trials
Systems Toxicology
Assessment
Consumer Perception and
Behavior Assessment
Post-Market Studies
& Surveillance
Reduced Risk in Laboratory Models
Reduced Exposure & Risk
Reduced Population Harm
Reduced Toxicity in Laboratory Models
Reduced Formation of HPHCs

25. Cessation: The "Gold Standard"
● We apply the US Institute of Medicine’s "gold standard" for assessing risk
reduction: comparability to cessation
25
Time
DiseaseRisk Point of
Intervention
From
Epidemiology
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm. The descriptions in the chart are for illustrative
purposes only
Source: IOM (Institute of Medicine), 2012, Scientific Standards for Studies on Modified Risk Tobacco Products. Washington, DC: The National Academies Press

26. Investor Day – Reduced-Risk Products
Lausanne, June 26, 2014
Manuel Peitsch
Vice President, Biological Systems Research
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

27. Evidence Package
Product Design and
Control Principles
Aerosol Chemistry and
Physics
Standard Toxicology
Assessment
Clinical Trials
Systems Toxicology
Assessment
Consumer Perception and
Behavior Assessment
Post-Market Studies
& Surveillance
Reduced Risk in Laboratory Models
Reduced Exposure & Risk
Reduced Population Harm
Reduced Toxicity in Laboratory Models
Reduced Formation of HPHCs
27

28. 28
0
10
20
30
40
50
60
70
80
90
100
Aerosol Composition(a): Relative Amounts Reported on a Nicotine Basis Compared to a
3R4F Reference Cigarette (%) Laboratory Filter Pad
Combustible Cigarette
Laboratory Filter Pad
Platform 1
Platform 1 Platform 2
Combustible Reference Cigarette
(a) Aerosol collection with Intense Health Canada’s Smoking Regime (55 mL puff volume, 2 second puff duration, 30 second interval puff)
(b) < LOQ in Platform 1
(c) < LOQ in Platform 1 and Platform 2
(d) < LOQ in Platform
Note: These data alone do not represent a claim of reduced exposure or reduced risk. LOQ refers to the Limit of Quantification
Source: PMI Research and Development
Reduction of HPHCs in Platform 1 and Platform 2 Aerosols

29. Evidence Package
29
Product Design and
Control Principles
Aerosol Chemistry and
Physics
Standard Toxicology
Assessment
Clinical Trials
Systems Toxicology
Assessment
Consumer Perception and
Behavior Assessment
Post-Market Studies
& Surveillance
Reduced Risk in Laboratory Models
Reduced Exposure & Risk
Reduced Population Harm
Reduced Toxicity in Laboratory Models
Reduced Formation of HPHCs

30. 7.4 9.612.8 11.6
0%
50%
100%
3R4F Regular Menthol
Reduction of Toxicity in Heat-Not-Burn Platforms
● Compared to combustible cigarette smoke:
- reduces biological activity (in vitro / in vivo)
30
Cytotoxicity Relative to 3R4F
Mean ± SE
TPM
GVP
Platform 1
Genotoxicity Relative to 3R4F
Mean ± SE
0
200
400
600
1,000 2,000 3,0000
TPM (µg/plate)
Number of
Revertants
3R4F
Platform 1 Regular
Platform 1 Menthol
Note: These data alone do not represent a claim of reduced exposure or reduced risk. 3R4F reference cigarette. TPM refers to Total Particulate Matter. GVP refers to Gas Vapor Phase
Source: PMI Research and Development

31. Source: PMI Research and Development
Systems Toxicology-Based Risk Assessment
● Integrated large scale molecular measurements with advanced computational
models of disease mechanisms
● Ability to quantify the perturbation of the core mechanisms leading to disease
31
Cigarette Smoke
Inflammation
Cell
Proliferation
Cell Stress ApoptosisDNA Damage Necroptosis SenescenseAutophagy
Biological Networks
Month 1 2 3 5 Month 7Start

32. Note: CC is a 3R4F reference combustible cigarette
Source: PMI Research and Development
Compare Heat-not-Burn Platforms with Continued Smoking and
Cessation in Mouse Model: Impact on Disease Mechanisms
32
Platform 2 Prototype
CC
Platform 2 PrototypeCC
AirCC
Air
Combustible Cigarette
Cessation
Switching
Platform 2 Prototype
Reference: Air
Month 2 Month 7Start
Group Exposure

33. Compare Heat-not-Burn Platforms with Continued Smoking and
Cessation in Mouse Model: Impact on Disease Mechanisms
33
Platform 2 Use
1
Time (months)
2 3 5 7
Note: These data alone do not represent a claim of reduced exposure or reduced risk. Prototype of Platform 2
Source: PMI Research and Development
Combustible Cigarette 
Cessation
Combustible Cigarette Use

34. Compare Heat-not-Burn Platforms with Continued Smoking and
Cessation in Mouse Model: Impact on Disease Mechanisms
34
Platform 2 Use
1
Time (months)
2 3 5 7
Note: These data alone do not represent a claim of reduced exposure or reduced risk. Prototype of Platform 2
Source: PMI Research and Development
Combustible Cigarette 
Cessation
Combustible Cigarette Use
Combustible Cigarette 
Platform 2 Prototype (Switching)

35. Note: These data alone do not represent a claim of reduced
exposure or reduced risk. Prototype of Platform 2
Source: PMI Research and Development
Compare Heat-not-Burn Platforms with Continued Smoking and
Cessation in Mouse Model: Impact on Disease Mechanisms
35
Combustible Cigarette 
Cessation
Combustible Cigarette Use
Combustible Cigarette 
Platform 2 Prototype (Switching)
Platform 2 Prototype Use
1
Time (months)
2 3 5 7

36. Compare Heat-not-Burn Platforms with Continued Smoking and
Cessation in Mouse Model: Impact on Disease Mechanisms
36
0
10
20
30
CC Cess. Switch. Air P2
Cell Changes:
Inflammation
Total Cells
(x105)
0
1
2
3
4
CC Cess. Switch. Air P2
Emphysema
Index
CC Cess. Switch. Air P2
Physiological Changes/Disease:
Lung Function
Relative Loss of
Lung Function
Tissue Changes:
Lung Emphysema
After 7 months After 7 months After 7 months
Note: These data alone do not represent a claim of reduced exposure or reduced risk. Cess. is Cessation, Switch. is Switching and P2 is Platform 2 (Prototype)
Source: PMI Research and Development

37. Evidence Package
37
Product Design and
Control Principles
Aerosol Chemistry and
Physics
Standard Toxicology
Assessment
Clinical Trials
Systems Toxicology
Assessment
Consumer Perception and
Behavior Assessment
Post-Market Studies
& Surveillance
Reduced Risk in Laboratory Models
Reduced Exposure & Risk
Reduced Population Harm
Reduced Toxicity in Laboratory Models
Reduced Formation of HPHCs

38. PMI’s Approach to Clinical Assessment
38
Clinical Assessment
Reduced Exposure
Pharmacokinetics /
Pharmacodynamics
Exposure Response
Measures:
Nicotine Uptake
Subjective Effects
Measures:
Biomarkers of Exposure
Clinical Risk Endpoints
Measures:
Clinical Risk Endpoints
Product Use
1 2 3
1 week in a clinic
1 week in a clinic
3 months at home
6-12 months at home

39. Platform 1 Clinical Assessment: Pharmacokinetic
Preliminary Results
39
Platform 1
Combustible
Cigarette
0
2
4
6
8
10
12
14
16
18
0 10 20 30 40 50 60 70 80 90 100 110 120
Nicotine(ng/mL)
Time (min)
Nicotine Pharmacokinetic Profile
Note: These data alone do not represent a claim of reduced exposure or reduced risk
Source: PMI Research & Development

40. Platform 1 Clinical Assessment: Reduced Exposure
Preliminary Results
40
3-HPMA levels
Geometric Mean 3-HPMA (ng/mg creat, [95%CI)
MHBMA levels
Geometric Mean MHBMA (pg/mg creat, [95%CI)
Acrolein 1,3-Butadiene
COHb levels
Geometric Mean (%; [95%CI])
Carbon Monoxide
S-PMA levels
Geometric Mean S-PMA (pg/mg creat, [95%CI)
Benzene
Monohydroxybutenylmercapturic
acid(pg/mgcreat)
0
500
1000
1500
2000
2500
3000
3500
4000
Baseline Day 1 Day 2 Day 3 Day 4 Day 5
0
1
2
3
4
5
6
Baseline Day 1 Day 2 Day 3 Day 4 Day 5
0
200
400
600
800
1000
1200
Baseline Day 1 Day 2 Day 3 Day 4 Day 5
0
500
1000
1500
2000
2500
3000
3500
Baseline Day 1 Day 2 Day 3 Day 4 Day 5
Carboxyhemoglobin(%)
S-phenylmercapturicacid
(pg/mgcreat)
3-hydroxypropylmercapturicacid
(ng/mgcreat)
Switched to
Platform 1
Continued smoking
Quit during study
Note: These data alone do not represent a claim of reduced exposure or reduced risk
Source: PMI Research & Development

41. ● 160 adult smokers
● Confined & Ambulatory
● Exposure to harmful and potentially harmful
constituents, product use
● Multiple countries and ethnicities
Platform 1 Clinical Assessment: Reduced Exposure: Ambulatory
and Exposure Response Study
41
● Primary endpoints: 5 biomarkers of exposure
● Secondary endpoints: additional biomarkers
of exposure and clinical risk endpoints
Reduced Exposure Studies
(3-month Ambulatory)
● Primary endpoints: 8 clinical risk endpoints
● Secondary endpoints: additional biomarkers
of exposure and clinical risk endpoints
● 950 adult smokers
● Ambulatory
● Changes in clinical risk endpoints, functional
health markers and blood chemistry, product
use
● Multiple ethnicities
Exposure Response Study
Source: PMI Research & Development

42. Evidence Package
42
Product Design and
Control Principles
Aerosol Chemistry and
Physics
Standard Toxicology
Assessment
Clinical Trials
Systems Toxicology
Assessment
Consumer Perception and
Behavior Assessment
Post-Market Studies
& Surveillance
Reduced Risk in Laboratory Models
Reduced Exposure & Risk
Reduced Population Harm
Reduced Toxicity in Laboratory Models
Reduced Formation of HPHCs

43. Consumer Perception and Behavior Assessment
● Based on FDA guidance
● Designed to assess consumer perception and understanding of RRPs
● Assess label, labeling and marketing material
● Assess intent to use among adult consumer groups
● Progressing according to plan
43Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

44. PMI’s Post-Market Assessment
● Surveys and surveillance to:
- Understand how product is used
- Monitor spontaneous health events (safety surveillance)
● Under development; to be initiated as of pilot market launch
44

45. Evidence Package
45
Product Design and
Control Principles
Aerosol Chemistry and
Physics
Standard Toxicology
Assessment
Clinical Trials
Systems Toxicology
Assessment
Consumer Perception and
Behavior Assessment
Post-Market Studies
& Surveillance
Reduced Risk in Laboratory Models
Reduced Exposure & Risk
Reduced Population Harm
Reduced Toxicity in Laboratory Models
Reduced Formation of HPHCs

46. Reduced-Risk Products: R&D
46
R&D and Scientific Substantiation
• Ready for RRPs era
• Strong product portfolio and innovation pipeline
• Industry-leading risk assessment capabilities
RRPs
Regulation
Marketing and
Commercialization
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

47. Reduced-Risk Products: Regulation
47
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm. The RRPs depicted are subject to ongoing
development and therefore the descriptions are illustrative and do not necessarily represent the latest stages of product development
RRPs
Regulation
R&D and
Scientific Substantiation
Marketing and
Commercialization
Reduced-Risk Products ("RRPs")
Platform 1 Platform 2 Platform 3 Platform 4
Heated Tobacco Products Nicotine Containing Products

48. Reduced-Risk Products: Regulation
● Advocating rigorous regulatory standards, which can provide:
- Assurance to regulators and the public
- Confidence for consumers
- Clarity for the marketplace
● Momentum for evidence based RRPs regulation
48

49. Reduced-Risk Products: Regulation
● US FDA:
- Statute and MRTP Draft Guidance
- "Deeming Regulations"
● EU Tobacco Products Directive:
- E-cigarettes regulated as tobacco-related products
- "Novel Tobacco Products"
49

50. Reduced-Risk Products: R&D
50
RRPs Regulation
• Uncharted territory
• Can provide assurance to
regulators, public and
consumers
• Clarity for marketplace
• PMI well-positioned
R&D and Scientific
Substantiation
Marketing and
Commercialization
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

51. Investor Day – Reduced-Risk Products
Lausanne, June 26, 2014
Frederic de Wilde
Senior Vice President, Marketing & Sales
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

52. Reduced-Risk Products: Commercialization
52
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm. The RRPs depicted are subject to ongoing
development and therefore the descriptions are illustrative and do not necessarily represent the latest stages of product development
RRPs
Regulation
R&D and
Scientific Substantiation
Marketing and
Commercialization
Reduced-Risk Products ("RRPs")
Platform 1 Platform 2 Platform 3 Platform 4
Heated Tobacco Products Nicotine Containing Products

53. Commercialization of RRPs
● Evolution of E-Vapor Product market
● PMI’s RRPs portfolio
● PMI’s Platform 1 commercialization
● PMI’s Platform 4 commercialization
53Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

54. Evolution of E-Vapor Products Market
● Changing the dynamics of the industry
● Classified as medicinal or prohibited product in more than half of OECD
markets
● Growth driven by adult smokers’ desire for Reduced-Risk Products, but also
by:
- Lower price particularly for e-liquid products
- Convenience, less smell, no ash
54Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

55. Evolution of E-Vapor Products Market
● Some markets dominated by e-liquid products – rechargeable "tanks" with
nicotine containing liquids – whilst in others "cartomizer" products are leading
● Wide range of penetration levels in various markets
● High interest but potential of the category currently limited by:
- Lack of taste and sensory satisfaction
55
"Cartomizer" Products "Tank" Systems / E-liquids

56. Maturity Levels of E-Vapor Markets
● Mature markets:
- UK (7.8% adult smokers used an e-vapor in the past 7 days), Poland (4.9%), Italy (3.5%)
● Developing markets:
- France (11.9%), Spain (2.0%), Denmark (7.6%), Netherlands (3.8%)
● Low penetration markets:
- Germany (0.4%), Austria (1.2%)
56
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm
Source: PMI RRP Market Research (% of adult smokers using e-vapor products in the past 7 days)

57. 5
15
3
0
16
79
96
70
100
13
39
10
40 Trial
(past 12 months)
Awareness of
e-vapor products
Italy: Adoption of E-Vapor Products
57
(% of adult smokers)
Purchase
(past 12 months)
Usage
(past 7 days)
Oct Nov Dec Jan Feb Mar Apr May Jun Sept Oct Nov Dec
20132012
Note: n ~ 2,300 for each wave
Source: PMI RRP Market Research (3 months moving, no fieldwork in July and August)

58. ● E-vapor is a product category which is here to stay
● The category will continue to grow at different rates depending on the market
specificities and product improvements
● Excise taxation will probably be implemented
● E-vapor products do not fully respond to evolving preferences of adult smokers
● Innovation will be a key driver for the evolution of the e-vapor products
category
A portfolio approach with different product options is required to
address emerging preferences of adult smokers
58
E-Vapor Market: Conclusions

59. RRPs Commercialization
● Evolution of E-Vapor Product market
● PMI’s RRPs portfolio
● PMI’s Platform 1 commercialization
● PMI’s Platform 4 commercialization
59Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

60. Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm. The RRPs depicted are subject to ongoing
development and therefore the descriptions are illustrative and do not necessarily represent the latest stages of product development
Source: PMI RRP Market Research 60
Importance of satisfaction
PMI’s RRPs Portfolio Addresses Adult Smokers Preferences and
Market Opportunities
P4 like
Openness to departure from cigarette flavor and ritual

61. 61
Importance of satisfaction
PMI’s RRPs Portfolio Addresses Adult Smokers Preferences and
Market Opportunities
Importance of satisfaction
P1 like
P4 like
Openness to departure from cigarette flavor and ritual
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm. The RRPs depicted are subject to ongoing
development and therefore the descriptions are illustrative and do not necessarily represent the latest stages of product development
Source: PMI RRP Market Research

62. P2like
62
Importance of satisfaction
PMI’s RRPs Portfolio Addresses Adult Smokers Preferences and
Market Opportunities
P1 like
P4 like
Openness to departure from cigarette flavor and ritual
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm. The RRPs depicted are subject to ongoing
development and therefore the descriptions are illustrative and do not necessarily represent the latest stages of product development
Source: PMI RRP Market Research

63. P3 like
P2like
P1 like
63
Importance of satisfaction
P4 like
PMI’s RRPs Portfolio Addresses Adult Smokers Preferences and
Market Opportunities
Openness to departure from cigarette flavor and ritual
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm. The RRPs depicted are subject to ongoing
development and therefore the descriptions are illustrative and do not necessarily represent the latest stages of product development
Source: PMI RRP Market Research

64. 100% 95%
36%
17%
3%
9.1
8.7
3.3
1.5
0.4(a)
Adult
Smokers
Awareness of
E-vapor Products
Trial
(past 12 months)
Purchase
(past 12 months)
Usage
(past 7 days)
Italy: Adoption of E-Vapor Products
64
(million adult smokers)
(a) Includes all users of tobacco products in the past 7 days
Note: Number of adult smokers: Italy n ~ 2,300
Source: PMI RRP Market Research (3 months-moving average, February 2014 – April 2014)

65. Italy: Size of the Opportunity
65
e-vapor product users
Platform 4
NoTobacco
0.4
# of Adult
Smokers
(millions)
• Current generation taste
satisfaction
• Electronics
• Convenience, less smell, no ash
• Price advantageNote: The RRPs depicted are subject to ongoing development and therefore the descriptions are
illustrative and do not necessarily represent the latest stages of product development. Number of adult smokers: Italy n ~ 2300
Source: PMI RRP Market Research (3 months-moving average, February 2014 – April 2014)

66. Italy: Size of the Opportunity
66
Tried and rejected
e-vapor products
e-vapor product users
Platform 1
Platform 4
NoTobaccoTobacco
3.0
0.4
# of Adult
Smokers
(millions)
• Taste satisfaction
• Convenience, less smell, no ash
• Electronics
• Current generation taste
satisfaction
• Electronics
• Convenience, less smell, no ash
• Price advantageNote: The RRPs depicted are subject to ongoing development and therefore the descriptions are
illustrative and do not necessarily represent the latest stages of product development. Number of adult smokers: Italy n ~ 2300
Source: PMI RRP Market Research (3 months-moving average, February 2014 – April 2014)

67. Aware of but did not
try e-vapor products
Italy: Size of the Opportunity
67
Tried and rejected
e-vapor products
e-vapor product users
55.0%
Platform 1
Platform 4
NoTobaccoTobacco
5.4
3.0
0.4
# of Adult
Smokers
(millions)
• Taste satisfaction
• Convenience, less smell, no ash
• Electronics
• Current generation taste
satisfaction
• Electronics
• Convenience, less smell, no ash
• Price advantageNote: The RRPs depicted are subject to ongoing development and therefore the descriptions are
illustrative and do not necessarily represent the latest stages of product development. Number of adult smokers: Italy n ~ 2300
Source: PMI RRP Market Research (3 months-moving average, February 2014 – April 2014)

68. Aware of but did not
try e-vapor products
• Taste satisfaction
• Convenience, less smell, no ash
• Cigarette-like ritual
Platform 2
Italy: Size of the Opportunity
68
Tried and rejected
e-vapor products
• Taste satisfaction
• Convenience, less smell, no ash
• Electronics
Platform 1
e-vapor product users
• Current generation taste
satisfaction
• Electronics
• Convenience, less smell, no ash
• Price advantage
Platform 4
55.0%
NoTobaccoTobacco
5.4
3.0
0.4
# of Adult
Smokers
(millions)
Note: The RRPs depicted are subject to ongoing development and therefore the descriptions are
illustrative and do not necessarily represent the latest stages of product development. Number of adult smokers: Italy n ~ 2300
Source: PMI RRP Market Research (3 months-moving average, February 2014 – April 2014)

69. Aware of but did not
try e-vapor products
5.4
• Taste satisfaction
• Convenience, less smell, no ash
• Cigarette-like ritual
Italy: Size of the Opportunity
69
Tried and rejected
e-vapor products
3.0
• Taste satisfaction
• Convenience, less smell, no ash
• Electronics
e-vapor product users 0.4
# of Adult
Smokers
(millions)
55.0%
Platform 2
Platform 1
Platform 4
Platform 3
Next Gen. Platform 4
• Improved taste satisfaction
• Electronics
• Convenience, less smell, no ash
TobaccoNoTobacco
• Current generation taste
satisfaction
• Electronics
• Convenience, less smell, no ash
• Price advantageNote: The RRPs depicted are subject to ongoing development and therefore the descriptions are
illustrative and do not necessarily represent the latest stages of product development. Number of adult smokers: Italy n ~ 2300
Source: PMI RRP Market Research (3 months-moving average, February 2014 – April 2014)

70. RRPs Commercialization
● Evolution of E-Vapor Product market
● PMI’s RRPs portfolio
● PMI’s Platform 1 commercialization
● PMI’s Platform 4 commercialization
70Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

71. (Approximately 45-second video)
Investor Day – Reduced-Risk Products
Lausanne, June 26, 2014
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm
Video

72. Introducing The System
Note: Reference images only 72

73. Kit Packaging
73Note: Reference images only

74. Note: Reference images only
Kit Packaging
74

75. Note: Reference images only
Kit Packaging Components
75

76. 76
Components Line-Up
Note: Reference images only

77. Device Color Customization
77Note: Reference images only

78. Marlboro HeatStick: Tobacco Sticks Specially Designed for
78Note: Reference images only

79. 79
Marlboro HeatStick: Tobacco Sticks Specially Designed for
Note: Reference images only

80. Communication and Commercialization
● campaign
● Leverage current infrastructure
● New capabilities and channels
80

81. Visual Not Shown

82. Visual Not Shown

83. Visual Not Shown

84. Visual Not Shown

85. Visual Not Shown

86. Communication and Commercialization
● campaign
● Leverage current infrastructure
● New capabilities and channels
86

87. Leverage Current Infrastructure
● Ensure product availability in C-stores and general trade
● Traditional media to boost awareness
● Leverage existing touch points
● Develop engagement activities to enable longer interaction
87

88. Visual Not Shown

89. Visual Not Shown

90. Visual Not Shown

91. New Capabilities and Channels
● Digital Platform:
- 24/7 online platform providing end-to-end service
• Integrated e-commerce platform for adult consumers
• Video tutorials, hotline, troubleshooting, FAQ
• Testimonials
● Customer Care:
● Personalized, multi-channel customer support center
● Electronics:
● Logistic and distribution infrastructure
91
E-Commerce
Mobile App
Note: Reference images only

92. : Launch Plan
● shows high potential to address the emerging preferences of adult
smokers
● The system and Marlboro HeatSticks tobacco sticks manufacturing
has started
● will be introduced in two test cities in Q4 2014, one in Japan and one
in Italy
● National expansion starting in 2015 and launch in other markets planned
● Commercialization toolbox developed for all relevant channels
92

93. 93
Platform 4

94. Platform 4: Commercialization Plan
● Agreement with Altria to commercialize their products
● Invest in the development of second generation products for global expansion
● Enter the category starting in the second half of 2014
● Explore acquisition opportunities that could accelerate the achievement of
significant presence in certain markets
94

95. 95Source: Company websites, PMI estimates and Nielsen
Nicocigs: Company Information
● Founded in 2008, based in Birmingham
● Strong market position in the UK & Ireland
● Excellent supply chain capability
● Skilled and well trained marketing & sales teams
● Nicolites: company’s main brand:
- 26% YTD April Retail SoM
- Present in more than 20,000 POS

96. Reduced-Risk Products: Marketing and Commercialization
96
Regulation
Marketing and Commercialization
• A strong RRPs portfolio to address all adult smoker
preferences
• New city launches in Q4, 2014
• Entered e-vapor in 2014 / Nicocigs acquisition
R&D and
Scientific
Substantiation
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

97. Reduced-Risk Products: Conclusions
97
RRPs
Regulation
R&D and
Scientific Substantiation
Marketing and
Commercialization
Reduced-Risk Products ("RRPs")
Platform 1 Platform 2 Platform 3 Platform 4
Heated Tobacco Products Nicotine Containing Products
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm. The RRPs depicted are subject to ongoing
development and therefore the descriptions are illustrative and do not necessarily represent the latest stages of product development

98. Investor Day – Reduced-Risk Products
Lausanne, June 26, 2014
Questions & Answers
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm

99. Reconciliation of non-GAAP measures included in this presentation
to the most comparable GAAP measures are provided on our
website at: www.pmi.com/2014InvestorDay/RecSlides
Glossary of Terms: www.pmi.com/2014InvestorDay/Glossary