Tobacco companies collect cigarette taxes for governments worldwide. Now, the industry has become a silent partner in state medical programs. Tobacco companies seem to face the same fate as asbestos companies, which were pushed into bankruptcy years ago by damage payments. Yet Geoffrey Bible, Philip Morris' chief executive officer, displayed no fears last month in an address to institutional investors in Washington. Executives of competitor R.J. Reynolds see Philip Morris' calls for regulation as a ploy to lock in the leadership position of the company and its Marlboro brands.
Regulation typically raises barriers to entry and restricts competition within an industry.
There's another reason, analysts say. Some form of FDA regulation, which would measure carcinogens, could allow Philip Morris to gain a competitive edge. The company, in short, is emphasizing relative safety in a dangerous product, as cigarette companies four decades ago moved to filter tips. No coincidence that filter tips sparked the rise of Philip Morris' Marlboro brand, now the world's largest seller. Bible even contemplated a decline of smoking.