Lesearch Conference, Sydney, lot 5 On September 1986
A. L. Board
Structure of Conference
Last 7,*ar*s Research Conference concluded that a preferred
format for future conferences would have two parts - a technical
review of key activities presented by research
sasagers/spoci&1ists, to be followed by a policy/strategy meeting
involving only the Research Policy Croup (Rosearcb Co-ordivator
plus R&D Directors). During tbo XPC meeting, the research
sanaXers/speclalists would be asked to consider Issues to report
to the closing sessiou of the 13PG.
This format was adopted. These notes are consequently in
three parts.
1. Technical Review of activities set against three of the
important business objectives previously identified as
common to the Group -
(i) Snake Quality Improvement
(Li) Response to Regulatory Authorities
(ill) Cost reduction
2. Tt-e proceedings of the RPC seating.
3. The report on three Issues presented for consideration by
the Research Managers:
(L) Priorities
(ii) DupIleatiou
(ill) Competitive Intelligence
and the ensuing discussion.
Lima of the Conference
I. To examine R&D activities and resources in relation to
Group R&D seeds.
2. Critical review Of projects responding to 3 key business
objectives.
3. 17C - to review orSanleation and strategy for R&D and
related Issues.
.4. Research Managers - to consider selected management
issues relating to R&D and recommend to XGP proposals for
action.
3. To agree future course of coordination of Croup R&D.
job
BAT Co LTD MINNELOTA TOBACCO LITIGATION

2
Technical Review : I a - 3rd September
Business Objective 1 : laprovement of Subject Smoke Quality
1. Subjective Testing
A pre-requisite to improving smoke quality is sensitive,
reliable and appropriate sensory and consumer test systems.
Traditional consumer testing has been aimed at Marketing
Issues and has not always provided necessary guidance to
product development and innovation. Recent method
developments at 36W, ZATUKE and BATCF have improved this
subscancially. Examples Include Dupont testing co guide
development of statistical process control limits (B4W), a
system to test novel products (DATUKE) and a postal market
survey system (BATCF). However, the degree of co-ordination
of R&D and Market Research functions any still need attention
in some companies.
2. Process Factors
B4W are putting a major effort behind smoke quality and
inproveueuts based on recent leaf, reconstituted tobacco,
casings, flavourings and primary process investigations. The
emphasis on ammonia chemistry of reconstituted tobacco remains
high. Additionally a Quality Maintenance prosramue has
improved the chemical and physical consistency of the product.
Souza Cruz are now incorporating reaction flavours from
ammonium hydroxide - sugar reactions as a caning material for
quality improvement in some blends.
Souza Cruz' basic programme on curing, processinS and ageing
variables, begun in 1981, is now moving to an Applications
phase with particular emphasis on upgrading low quality
tobacco and exploring different CLD profiles. However, it is
important that basic research data will continue to be
gathered since empirical observations will have limited
general value.
SATUKE have completed two low quality leaf upgrading projects,
requested by Canada and Malaysia. The Canadian project used
findings from the above Souza Cruz programme, as well as a
1B AT patent, a good example of inter-Coupsn7 Information
pooling.
3. Chemoseasory Research
The thostosensory Research programme aims to d1scover the
chemical and physical properties of smoke Important to sensory
perception, with coordinated contributions from D&W, ZATUKE
and ZATCF - The co-ordination of this project was considered
exemplary involving short term staff exchanges, regular
workshops and good reporting. Practical work is as yet in its
infancy but La y1eldIng some Interesting leads. Important
anonS these is the role that C029 hitherto Iguared as a
smoke component, may play In taste perception. Another co
important implication for the future is the design of low _C@1.
tar/nicotine ratio products, the tar perhaps augmented by
och*r aerosol material to maintain sensory balance - Wbilst
the conference
BAT Co LTD - MINNE,6TA TOBACCO LITIGATION

3
could see merit in this approach to products for the future,
it was agreed that our first initiative should be to review
Group experience In producing low tartnicotine products from
the cigarette acceptability standpoint. BATUKE Vill elicit
views of the other CAC countries In producing this review. if
we decide to proceed in the light of this review, It was
augXested that all available options for pursuing this
particular line be examined looking both 'in-house' and
externally. Advanced Tobacco Products, manufacturers of
'FkVOR-, have made a proposal for working collaboratively with
RAT in this area and this will be evaluated against the other
options.
Flavour/Taete Modifiers
ZATCP describe a flavour-generating system, boxed on the
reaction of ammonia and sugar# and improved by the addition of
pectic and propylene glycol. The system was developed to
influence global taste Impressions such as -fullness-,
harshness' and 'blend character-. It con be used simply to
develop casing materials or could be developed for flavour use
by reaction with selected tobacco constituents. AltbouSh the
ystam cannot be patented, it is being used by IATCIP an
:elected commercial products. Future special applications
ight be an expanded tobacco, sheet, etc.
:ATCF a looking for a flavour manufacturer who can 'be relied
upon to retain formulation details in confidence.
Dr. SLqueira proposed that one possibility is to use Suvalan,
flavour company owned by Souza Cruz. This will be explored.
:ouza Cruz described the flavour research in Brazil:
tobacco-based flavour (terpene fraction) add it to
blend&
con-tobacco flavours (fruit extracts) to reduce butt
aroma and smoke Irritation
tobacco treatment effects an flavour
Souza Cruz have used fruit extracts to Improve poor Virginia
and Barley tobacco grades and have applied the work to co 902
of their sales volume. Samples of various flue-cared samples
11 re available and other Group laboratories could evaluate
then. Although the flavours have been sent round various
Group laboratories, no other Company has used tb*u In the
a a Future Flavour Workshops should really probe Group
opportunities for application of such concepts and for
distributing samples.
The Flavour Workshop is seen as an excellent forum for
exchanging inforascLon, on flmvours and presenting results on
flavour research, and the concept wL11 be continued.
co
4N6
_Mv.
_t:rA.
BAT Co LTD - MINNESOTATOBACCOLITIGATION

Filters
Filter research in relation to smoke quality was presented 'by
SATUKE R&D. IQ the lost four years this bas concentrated on
noke swirl and there is much evidence that this has &
;Ositive effect on smoke t&ste. The results from current
consumer tests in Germany and Switzerland will determine
whether various filter concepts will 'be developed further into
products and should determine the future interest In swirl.
The filter research area is at a crossroads In terse of what
direction to take in the future.
BATCr is currently the main Company doing filter development.
6. Biotechnology
BATCF described the German biotechnology programme and its
potential areas of application. The tobacco programme which
is not leaf related but exploits the ability of tobacco calls
to offer unique benefits (a binding character for special
additives, low nit rosauines , etc) is only just getting
underway, the major priority of the 2-3 people working on
biotechnology being an a Government supported pharmaceutical
project.
BATCY called on Group members to seek areas of application of
tobacco cell technology since if there are unique uses of this
technique we are La an unassailable position from competition.
Mr. Heard described the biotechnology opportunities in tobacco
leaf improvements in terms of three strategies:
the use of current techniques for the commercial
improvement of tobacco, including developing a gene
library
develop the technical capability to select plants by
genetic composition
engineer tobacco plants to achieve defined commercial end
points
The Group now has the technological facilities to pursue plant
breeding, tissue culture and, very shortly, molecular biology,
aad we are In danger of pursuing a fragmented and perhaps low
key approach.
As a recent development Imperial Tobacco (Montreal) will be
undertaking a 5 year biot*chnology contract to Increase total
tobacco alkaloids and develop disease-resistant strains of
tobacco, results of which they are willing to share with tb*
Group.
C30
_J@Nb
-CU.
A-I:b-
Un
BAT Co LTD MINNAOTATOBACCOLITIGATION

5
Mr. Heard expressed the view that if we are ever going to use
the benefits of biotechnology on tobacco we suet begin a
co-ordinaced and sore profound approach now - no one will do
it for us. In discussion, the use of synthetic smoking
aat*rials was suggested as au alternative route to tailored
starting material but suffered the disadvantage of not being a
natural tobacco product. klao, the use of genetic maps was
questioned - practical application might be a better use of
biotechnology rather that concentrating on fundamental
building blocks.
It was agreed that a technical group should be set up, chaired
by Mr. C. A. Read, to set out a positive strategy for the
agreement and co-ordination of the Croup biotechnology work in
the different centres, and this will report to the RPC.
Business Objective 2 : Response to Regulatory Authorities
Session 1 : Maiustreas Source
1. Regulatory Mechanisms
In the initial part of the session each country provided an
overview of their respective regulatory authorities in terns
of who they are, what they are likely to impose in the future
and the nature of the interaction.
Germany
Three groups interact with the industry:
L. Regional and Federal Government, in general Health
Ministries.
2. The Vs
3. Groups such as Deutsche* I Fur Norsung Z-V. (DIN),
ISO, Consumer Orgazisations, etc.
Regulations relating to tobacco products have Increased
dramatically since 19 70 - One example relates to
aubient/pasaive smoking and the introduction of work place air
concentrations (MAX standards). Aa far as SATCY is concerned
the key Is to anticipate regu2ations/legislatiou and be In a
position to respond to it.
Austr*lia
C=)
Interaction Is with both the Federal and State Goveruseut N-0
Health Departments. A voluntary code exists with regard to co
the CPH and nicotine deliveries. This code Is currently under -ftr-
re,viev and will involve a change In the maximum pack printed J:b.
deliveries and the printing of CO data. The warning label is _X@b
also under discussion. C-ri
BAT Co LTD - MINNESOTA TOBACCO LITIGATION

6
Canada
Discussion takes place between the CTMC and the Federal
Department of Health and Welfare. At present, the code Is
voluntary but Is currently being discussed. Some local
legislation exists regarding smoking in public buildings.
Brazil
No restriction at present but this could change both very
quickly and with unanticipated severe requirements. Souza
Cruz is developing an ongoing dialogue with members of the
government in order to ninimise the introduction of
legislation.
United States
The industry deals most frequently with Congress and tbo
Federal Trade Commission on issues related to mainstream
suoke. The FDA does not assert jurisdiction but would If any
drug-like properties were to be claimed in advertising. The
industry's relationship in unavoidably adversarial due to
debate over causation.
The VTC's involvement has primarily been In regulation of
advertising. They are currently contemplating termination of
cigarette testing due to budget pressures and a lack of
support for the significance of delivery numbers.
There are many regulatory issues now pressurlsing the
industry, witb additional taxation and fire safety standards
those most likely to be introduced.
United Kingdom
Principal interaction Is between TAC and the Independent
Scientific Committee. ISC. The ISC advises the Minister of
Realtb and vorks closely with the Department of Health and
Social Security. The ISC will be producing Its 4th Report
during 1987 which will deal with the following issues:
Tar quality, biological activity, epidemiological
analysis and nicotine
Relative risk of different products
Passive smoking
Trends in snaking habits
Action to combat smoking
Additiv*s
Research needs
-CIA.
BAT Co LTD MINNESOTA TOBACCO LITIGATION

7
Overall regulatory authorities were generally asking for
reductions in tar and, La the Middle East, for reduction in
nicotine. Carbon monoxide appeared to be of less interest.
Regulatory authorities and anti-smoking Organisation* had
spent such time examining the role of compounds such as
mitrosamines and polycyclic hydrocarbons, but had not been
able to come to any firm conclusions beyond advocating further
research.
2. In terns of future scenario*, the following topics could
become issues in the future according to Dr. R.E. Thornton::
1. Dis-dichloromethyl ether in cigarette smoke
2. Radioactive compounds
3. Free radicals
4. Self extinguishing cigarettes
5. Substitutes
6. Heavy metals.
3. Control of Smoke Components
The Group knowledge on controlling both major and important
minor smoke constituents was reviewed. Important means of
reducing components Lie in agricultural practice (or curing In
the case of ni.trosanines) or in filter ventilation or tobacco
weight reduction. Possibilities for selective filtration were
reviewed. Stem treatments including shredding can alter
delivery of specific components, eg HCN or CO.
There was discussion of what specific smoke consonants need to
be reduced or controlled In the future. There was, however,
some lack of agreement on this point and the matter will be
referred co the Scientific Research Group for an urgent
in-depth consideration of thin very complex questiou. It Is
imperative that SRG produces a pricritisation of those
components backed by a rationale for each. Resources can then
be allocated.
4. biological Testing
Probable trends La tb* biological testing of tobacco products
were reviewed. The Lace -in vitro' test only identifies
potential carcinogens (on the basis of mutagenicity) and that
additional tests are required to identify if tbi& potential
can be realised. Southampton In currently looking at the
possibilities in this area. It was also uoted that
legislation say require the application of multiple tests.
The In vitro Ames test is currently used in Hamburg, Montreal'
and Southampton.
co
_Cb..
Jl@h.
BAT Co LTD - MINNF@OTA TOBACCO LITIGATION

Product Development
SATCY described their project V4 which has the following
objectives:
I. To reduce the Ames specific activity of current products.
2. To develop prototype products with significantly reduced
Ames activity.
The approach Is based on the results of Project Rio but
further basic research is being undertaken. One new finding
of note is that high levels of ventilation significantly
reduce Ames specific activity. Previous results indicated the
reverse, and this apparent contradiction used* to be resolved.
Both ITL and BATUKE are working towards developing products of
low biological activity based on Ames testing for their
14 arkets. A small technical workshop an toxicology with
representation fro= the three countries concerned would be
arranged
C=20
1-0
CO
BAT Co LTD I TOBACCO LITIGATION

9
Session 2 : Sidestrean/Ambient Smoke
1. Possible Scenario
Epidemiological studies underway in nine countries on passive
smoking will probably be interpreted as giving adverse results
(risk ratios greater than 1) although most studies are to
crude that they cannot distinguish between any of the
possibilities (no effect, positive effect. negative effect).
Nevertheless, this will result in further pressures on the
industry.
In any event, false positive effects can be explained in terms
of biassing effects, notably the misclassification of smokers
as non-smokers. It is important that the shortcomings in such
studies are pointed out.
However, the IARC (1986 Monograph) says that where there is
2moke there is risk, and the ISC may ask the industry to
modify or reduce sidestreas smoke. Social issues,
particularly the pressures to clean up the environment
resulting from the 'Green Movement-, are likely to override
any scientific arguments and lead to further restrictions in
2. a
abieut Smoke Monitoring
BKTUXE R&D ambient roams provide controlled facilities unique
in the Group to Investigate concentrations and decay of smoke
components, and how these are affected by cigarette design
changes. Nitrosamine levels In ambient smoke are leas than I
mg/litre and only detectable at unrealistically high amok*
levels.
Ambient levels can generally be calculated from sIdestream
emission values although nicotine presents an anomaly in
having lower levels and faster decay rates than other
components.
Nicotine and CO levels measured by NATOLL RAD and in the
Verband in familiar environments are 1/10 or leas than TLV a
and lover than other published levels.
The TAC Ls conducting other real Life monitoring as is the US
Industry Group.
Th* SAT/Gallab*r study at Harwell with labelled iodohexad*cau*
shows vaporisation from particulates.
Tbo analytical studies by rh1l1p Morris an environmental rooms
(which Is in agreement with BATUKZ results), and on real life
environments will provide data for the study being orSanised
by the Verband. No epidemiological studies as such are
planned by the the V*rband and the question of dosisecry
studies is being examined.
Future priorities are to rationalism sidestreau/sabient
discrepancies and to investigate the activity of aged ambient
smoke versus fresh sidestreas.
--4
BAT Co LTD - MINNESOTA TOBACCO LITIGATION

10
3. Low Sidestreas Products
Suppliers' cigarette papers which reduce visible snake do not
decrease irritation and *dour and have other disadvantages.
Rovever, Canada will conduct a very small market research
exercise based on low visible sidestream with a Kimberly-Clark
paper. Smoking properties have been made acceptable with a
black tea extract.
NATUKE X&D has shown that nicotine accounts for part of the
sidestreas irritation. Stronger acid paper additives can
reduce nicotine In sidestreas and will be further
investigated.
Reduction of the total amount of tobacco burned, with its
accompanying reduction in total widestreau van agreed to be an
appropriate general approach. Reduced circumference woes& to
have fewer disadvantages than the ash problems from high
expanded tobacco levels or high inorganic containing
materials. Possibly a combination of the latter two nay
provide a more normal ash density. It was felt tba product
development activities on reduced circumference and reduced
tobacco weights provide an evolutionary approach to sidestreas
reduction and should continue.
Wo immediate marketing requirements nor legislation an
sidestrean yields are foreseen. Total industry approaches
must continue to address the social issues.
Project EMN
(L) Proposal
Development of a cigarette perceived as safe by our
critics would ensure the continuance and prosperity of
our business. ITL believe that whilst this long term
objective say come to *aught, it should be attempted.
As an approach ITL believe chat Ldentifization, by
reference to external sources, of components claimed to
be undesirable, is a first step to reduction to
acceptable threshold levels by product modifications.
Short and long term bioassays would be used to assess
progress.
Finally Titania-* and auti-oxidants could provide 'benefits
whilst research continues into the mechanism* of disease.
This approach should improve or at least scutralixe the
hostile public Environment &aA protect against any
competitive disadvantages.
CD
CC)
-ftft
co
BAT Co LTD MINNESOTA TOBACCO LITIGATION

Discussion
The Canadian proposal refocuses the Issues with which the
RAT Group and tb* industry have struggled since the aid
1950 ' Progress over the last thirty years has been
evolutionary and, in the consensus view, vould continue
to be so. Difficulties are seen in obtaining & reasoned
external view an what smoke components should be
modified. The view was repeatedly expressed In
discussion that goal posts will change and that this
applies even to accepted views on threshold*.
The SRG will develop a consolidated view of priority
components for smoke reduction but will necessarily be
limited in time perspective and we can expect the targets
to be reviewed and updated on a 'rolling basis'.
Assuming that product modifications can be made to
achieve some of these component changes, there remains
the question of biological testing. Whether the chemical
changes would affect test results is uncertain. The
types of test would be those likely to be suggested by
regulatory authorities, yet these may be of dubious
validity.
Despite these difficulties the Group programme should
address these issues. At present, our policy La to
support external research on biological testing systems
and on mechanisms of disease but ITL would like to see
'in house' effort increased.
Two alternative strategies which night (a) be required of
us by Regulatory bodies or (b) be the basis of a product
viewed by our critics as safer were discussed. The
first, which is also evolutionary is to continue the
reduction of car/aLcotine, ratios. The technology exists
to provide significant changes but the problem of
providing acceptable smoking quality has yet to be
solved. The second, which is revolutionary, emphasises
development of alternative nicotine delivery systems.
both assume endorsement of nicotine but, assuming that
this is achieved, the latter in the more likely to be
perceived as safe. However, the former offers best
prospects for a practical approach.
ta summary, the Canadian proposal received limited
endorsoa*vt from the Couf*reuce. whilst the ultimate
goal is desirable there exists no recognised route to
product modification to achieve it. Certain aspects of
it are already, and will continue to receive attention
particularly La the area of reduction of specif ic smoke
components. Allocation of Group resources must, however,
consider both the changes we nay be asked to Implement in
a two to five year tine-frame, and Implementation plans
for the alternative strategies.
cc
.X@hb
BAT Co LTD MINNESOTA TOBACCO LITIGATION

i2 -
Business Objective 3 : reduction of Product Costs
I.' Review of Options for Cost leductiou
BATUKE presented a list of options and then presented details
of several of these. One example in the nigh Velocity Dryer,
originally developed for expanded tobacco, which can be
applied to lamina and ate= drying. The advantages of this
dryer are in the use of high temperatures and abort residence
time. Another cost saving project (Project Lift) increases
the expanded tobacco of a full flavour NATUKE blend from 8 to
12Z. By using a cigarette paper developed by R&D it was
possible to make this change without significant change In
2. sensory properties.
ow Density Cigarettes
Ville outlined their progress in the production of low density
cigarettes. Various filling power improvement processes were
highlighted that had been instrumental in achieving these
density reductions while maintaining cigarette firmness. With
the exception of G.13 most of these processes had been
developed by Wills or the RAT Group.
Tb* ensuing discussion highlighted Wills' concern for density
reduction because of the Australian excise system. This
concern for density reduction was not shared by other
companies such as B&V an' BATCF who put a higher emphasis on
cigarette quality. Souza Crux Is becoming more concerned with
cost aspects.
3. Particle Size Studies
Thin subject Is being pursued by both Wills and BATUKE. The
Wills project investigate* the effect of particle size on
physical properties, such an filling power and loose ends.
Ways of maintaining or increasing particle size were
considered; these varied from changes in GLT through primary
to modification of the making process. One of the concepts
outlined was that of producing a controlled/restrlcted strand
length tobacco. This concept went 'hand-to-hand with
la edification of the maker to optimise tb* benefits of this
concept.
BALTUXE are also studying some of the effects observed with
different particle size tobacco strands on. physical properties
of the tobacco and cigarettes. The outline was given of a
large project being carried out based on altering threshing
node; tobacco Is being threshed under soft, normal and bard
thrashing conditions. This work is being carried out with the
asistance of GLT In the IDS. Brazil and Zimbabwe.
:n order to ensure maximum co-ordination of this work,
Dr. 9. Book from 3ATUKZ will visit Wills for two weeks during @_c
October. CC
AN,
_Qh
_D16
ON
BAT Co LTD MINNESOTA TOBACCO LITIGATION

- 13 -
4. Conearison of various Etta procossoo
The Impact of various at*% processes on final product
characteristics has been studied in considerable depth by
ITL - This project was jointly run with BATCF and 34W.
Canadian lamina and aces was treated in different processes in
the different countries. The processes Included the STS
process, shredded &tea, and the two modifications of high
humidity drying. The filling power improvements of the
different processes were listed along with the investments
Costs. By optimum choice of process for *ten and lamina a 23Z
cigarette weight reduction could be obtained. Potential
yearly savings were presented. ITL presented their logic for
adopting the STS process developed by BATCF.
In discussion it was explained that no evidence of harshness
was observed on repeated trials of the STS product.
All this work gave a note of caution that the filling power
improvement of some processes do not translate into the
expected cigarette welght savings.
A German view on a comprehensive approach to the most
important working areas in the field of Research 4 Development
was given, aiming especially at the topics:
improvement of sucking quality
improvement of acceptance of BATCF products by the
con-user
Resulting from this an overview of different process
techniques aiming in this direction was given:
development and production of RTS/RTT and the effects on
cigarettes
development of the STS process
Jet process for Improving filling power
The activities for reducing density during the last ten years
was shown.
An overview on the technology and know-how transfer from BATCF
to other NAT companies (Switzerland, USA, Argentina.
Australia. Canada, Brazil, Den2ark, Malaysia and the UK)
including the above process techniques was given.
5. Waste Utilleatiou
BATUXI presented details of their extrusion/expauslon waste
tobacco utilisation project, Project Dear. An incentive for
this work was the need for a reconstituted tobacco process
uitable for smaller companies. It is an extrusion process
:sing tobacco waste, starch, binding and &Sent and cc
bustectants. This mixture is extruded through a standard _C@ft
_Cb.
-C:D.
BAT Co LTD - I LITIGATION

14 -
cossercial extruder wbicb allows for expansion on extrusion.
This product is nov uud*rSoing biological. physical and
sensory testing. The forecasts of cost of the product of
Project Deer seems to compare favourably with other uetbods of
reconstituting waste tobacco. The Additives Guidance Panel
has seen no problem with this product to date.
The meeting considered that there should be a comparison of
the various options available to the Group for reconstituting
waste tobacco and S&W offered to do a desk study to include
technical opportunities for product improvement (notably smoke
quality) an vell as cost savings.
6. Expansion
Wills detailed the history of G. 13 use in Australia and
summarised the advantages and disadvantages of G. 13 use.
S&W gave a paper on their experience with DIET discussing the
various formulations that they, have investigated and the
results to date.
BATUKE presented details on APEX. The need for a Group
process for expansion was agreed at the R&D Conference La
1982. BATUIZ, having tried a large range of chemicals as
expanding agents, have found two with synergistic effects
which give greater filling power than either G-13 or DIET.
This product has beter physical and chemical properties than
DIET and has less effect on the taste. ZALTUKE plan to produce
a small factory plant next year.
The session concluded that no important approaches to cost
reduction were being overlooked.
Oc
M-1
BAT Co LTD MINNE@OTATOBACCOLJTIGATION