Phillip Morris struggling in Japan’s sluggish vaper market
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Philip Morris International (NYSE:PM) is in trouble.

The New York City-based tobacco giant is experiencing growing pains for its heat-not-burn iQOS e-cigarettes line of business.

Philip Morris recently released an uninspiring earnings report, lowlighted by a 30 percent decline in shares over the past 12 months. It also experienced a disappointing showing in Japan, one of the company’s top sales markets, according to The Motley Fool.

Once considered a top player in the fledgling vaping industry, Philip Morris developed an iQOS device known for heating tobacco only to the level of creating vapor, without burning. Released in Japan in 2014, the iQOS brand was initially popular for not delivering smoke containing toxic chemicals, like combustible cigarettes.

Phillip Morris also benefited from a favorable ruling, regulating competitors’ e-liquids as a pharmaceutical ingredient, which effectively left them banned in Japan. The current market is sluggish. With competitors British American Tobacco (NYSE:BTI) and Japan Tobacco (JAT.BE) adding pressure, Philip Morris continues to adjust to a market that may not develop the way company brass anticipated four years ago.

The U.S. market also concerns Philip Morris, which eagerly awaits word from the U.S. Food and Drug Administration (FDA) on an application to market its products. A reduced-risk label is being negotiated. The FDA’s advisory board recommended Philip Morris should not be permitted to market its devices with a reduced-risk tag but the company, with more parameters, likely will receive approval for domestic sale, The Motley Fool reported.

Once believing the U.S. market to be similar to its early days in Japan, Philip Morris has not earned the market share it expected. But recent data suggests older smokers in the U.S. could be an easier sell than those in Japan. The Centers for Disease Control announced in 2016 3.2 percent of U.S. adults fired up an e-cigarette.

As a tobacco industry leader, Phillip Morris has endured a rocky road attempting to establish an international vaping presence.

It will be interesting to see what moves it executes over the next one to three years.