R&D Talk to CAC - May 1987 A. L. Heard This paper considers the Group's current allocation of resources across broad areas of tobacco R&D. Following the major changes in R&D organisacton Initiated two years ago. we have six R&D contras all of which now classify project activity in a standardEsed way. Thin enables us to estimate quito reliably the relative effort allocated to various sub-groups of R&D. W* also have details of external contract research umdertaken for the six ce R&D activity across the six centres costs C30 m and the external supported research costs an additional E1.5 m. Their total is allocated as follows: OVERHEAD SLIDE I : DISTRIBUTION OF GROUP R611 EFFORT Classiftcation Short-medium Long torn term focussed .uncharted' R&D Research I II R&D aimed at Quality 65% 16Z Improvement, Cost Reduction end Innovative Products III IV R&D in respon8a to S&R 12Z 7z related (Regulatory) Issues General consensus suggests that cigarette development will be ovolutionar- rather than revolutionary and that we can reasonably plan 5 year; ahead. Consequently, short-medium term research spans this ;eriod, but of course, is effectively updated annually (a 'rolling' 5 year programme) In the light of Group management perception of what either the customer or the Regulatory Authorities will require. This presentation will focus on the type of work falling into categories t-tV and the rationale for the work. CD CD BATCO CONFIDENTIAL - CATEGORY [:,MINNESOTA TOBACCO LITIGATION- BATCO document for Province of British Columbia 21 April 1999 Category I The Group has a major effort In this sector. It La highly arket-orlented and projects are selected either to Increase market share or to Improve margins. Across the Group we have a particularly concerted effort on smoke quality improvement with technical improvements rapidly being transferred to brands, for instance in USA. Production of satisfactory low density cigarettes in terms of both physical and subjective properties Is key co many markets. Development of our own novel expansion process for tobacco and a completely new reconstitution process for use of tobacco waste will generate very significant tost savings for the Group. In terms of product Innovation we have been successful with Barclay and, so far, Capri (the ultra-slim) and we are constantly searching for new products. CategorT 11 The need for new 'building bricks' for extending our capability to !:et quality demands etc. La clearly recognised. In this e*d-corn- area we have work directed towards understanding and aodifying the snake aerosol properties, a fundamental route to ts to character. The effective release and transfer of nicotine tast tobacco to the smoker is a subject of our longer term research. This important compound contributes not only to the pharmacological sensations but also to taste and flavour. The search for new and more effective flavour materials remains key to our long term needs. Items I and It have been dealt with briefly. The next two items need more careful consideration since they are a potential source of confusion. Category III The evolutionary development of the cigarette in response to S&13 issues will be guided by such Regulatory Authorities as the ISC or the US Surgeon General's Report. We believe our role Is to be able to have meaningful interaction with such bodies, and, In practical tocus, to be ready to provide appropriate products. Thus we must stay closely in touch with such bodies and to son* extent anticipate their requirements. Our work In this category is almost entirely conducted internally since &part from a competence In biological testing. it largely calls for research an the cigarette itself - selection and processing of blend, construction of cigarette including paper, and additives, combustion, filtration and ventilation, and we believe that SAT Group has the appropriate expertise 'In-house'. If we are deficient in this area we have a serious problem. C:) BATCO CONFIDENTIAL - CATEGORY 1:.NIINNESOTA TOBACCO LITIGATION. BATCo document for Province of British Columbia 21 April 1999 - 3 - Some examples of the in-house projects are: Reduction of scecif ic 'notes' Of the A,000 or more chemicals Identified in tobacco smoke, there are hundreds that, It taken in isolation and in sufficiently high dose, can produce toxic reaction In humans. Which, if any, have serious consequences in smoke with Its complex physical structure and its various generally low concentrations, is a trul? open question. The two key Regulatory Authorities - the Roval College of Physicians and the US Surgeon General each have commented on relative importance of groups of chemicals, but in most cases, they call for further research. Our approach has been two-f old - Firstly, we have over 20 years explored means of controlling the formation or selective removal of those chemicals generally classed as important by Authorities, viz mitrossaines, aromatic hydrocarbons, phenols , aldeh7des etc. OVERHEAD SLIDE : OTHER NOXAE The complex list of possible toxic components in smoke appears to present as much confusion to the Authorities as to the Industry when trying to prioritise. We are aware that at a recent US Conference of Governmental Industrial Hygienists a scheme was outlined for classifying nozaa an the basis of their Threshold Limit Values (defined as the concentration for a normal 8 - working day/40 hour working week to which nearly all workers any be repeatedly exposed, day after day, without adverse effect). This may form a sensible basis for prioritizing compounds. A quite different approach to reducing those components that concern the Authorities is to go for blanket reduction through major smoke modifications rather than aim at at selective reduction. The first approach of lowering all deliveries (tar, nic, etc.) by filtration/ventilatLon appears to have run Into controversy due to arguments about compensation. Current pointers suggest that the Regulatory Authorities will encourage a move to cigarettes with lower tar but normal nicotine deliveries. OVERHEAD SLIDE 3: POSS11SLE TRENDS IN CIGARETTE DELIVERY MODIFICATION We have research projects exploring the feasibility of making low tar/hLgh nicotine products. one way depends on breading tobacco with unusually high nicotine levels. One opportunity for establtshiat quite radically different leaf is through plant biotechnology for which we are well placed In SAT Industries. C.-4 BATCO CONFIDENTIAL - CATEGORY I:'.%IIN14ES0TA TOBACCO LITIGATION. BATCo document for Province of British Columbia 21 April 1999 - 4 - Finally, on the subject of smoke toxicity based on likely ReSulotory standards, it should be mentioned that In our search for factors affecting the biological activity of smoke one of the most important findings is that activity is markedly dependent on cigarette diameter. Capri, the ultra-slim cigarette, recently launched In US by, z4g, with a circumference of 17 an in contrast with the normal 24-25 me, has a much reduced activity based on the Amos test for autagenicity. Whilst we must remember that the meaning of this test in relation to human toxicology is highly questionable, based as it is on the fate of bacteria in a laboratory test condition, the result is important in the event that biological indices become mandatory. (Interestingly a similar result was found many years ago in mouse-skin painting tests, a predictor of cumorigenicity). OVERHEAD SLIDE 4: AMES RESULTS V. CIRC13MYERENCE Passive-Smoking Another issue calling for short term action in response to clear targets is passive smoking. Dr. Thornton has covered the main BAT thrust of challenging poor epidemiology. We also have Important lines of in-house research on this topic. The first is largely of an inforsation-Sathering nature and facusses on reliable measurement of ambient smoke concentration both for particulate matter and for specific chemical components. At Southampton we have two environmental rooms that are fully controlled in terms of air temperature and humidity and which can have complete atmosphere changes at pre-set frequency (representing different levels of room ventilation. There are also sampling ports for monitoring chemicals or for subjective rating of small, eye irritation and so on. Quite separately, we have looked at *make concentrations in some typical environments, using some ingenious surreptitious atmospheric monitoring devices. Results are: OVERHEAD SLIDES:$ CONVENTRATIONS IN FAMILIAR ENVIRONMENTS The only satisfactory known means of reducing overall sidestress yield is to reduce the total weight of tobacco burned. Once again Capri offers an interesting opportunity since a simple calculation suggests a 35-40Z reduction in sidestress relative to conventional 84 mu cigarettes. For general purposes, where slim cigarettes cannot yet be seen as the answer, Increased expanded tobacco inclusion offers the next best direction providing puff number can be maintained. C) J-4 -rnD.Arrr% r "Tr -rynv BATCo document for Province of British Columbia 21 April 1999 5 Category IV Thus far we have considered product evolution In response to S&H issues. Such activities have reasonably clear targets , are practical and have some reasonable probability of success - Judged in terms of keeping abreast of Regulatory requirements. The key question is whether there exists any more fundamental approaches to our major S&H issues? What technical avenues exist for products will not be embroiled in the S&R controversies, of which causality between cigarette smoking and specific diseases is key? Scientific Information currently available suggests few research directions to follow In terms of cigarette modification. Until we know that we have a problem and what Lc is, how can we react in a rational manner? If, for instance, changes to minor components of smoke were firmly believed by scientific and medical opinion to be the route to an acceptable cigarette, they would apply strong pressure on the Industry and we would willingly respond. This Is not the case. In our view. the most appropriate fundamental research on S&H issues approach is to monitor all publications on Smoking & Health and where information is incomplete, to support further research at external cencres of excellence. Much of it is focussed on unravelling mechanisms of disease and the role of various chemicals in these processes. External Research Molecular biology provides the modern medical research worker with far more precise tools than the crude techniqu*s, mainly limited to animal studies, of the past. The present-day medical researcher is beginning to study changes taking place at the fundamental cell levol and to track the changes including the incidence of abnormalities that are taking place within the cell. Not only can we expect medical research to throw light on the interaction of human cell material with specific chemicals but also to show at the molecular level the reason for so-called genetic predisposition of Individuals to various diseases. OVERHEAD SLIDE 6 : HUMAN CENETICS, R. L. WHITE It is essential that we are throuShly appraised of such research. Let's look at same examples of where we sponsor research or have consulting arrangements with key workers in these areas. OVERHEAD SLIDE 7+6: MECHANISMS OF DISEASE CD co BATCO CONFIDENTIAL - CATEGORY 1: MINNESOTA TOBACCO LITIGATION. BATCo document for Province of British Columbia 21 April 1999 6 Such work may have a variety of outcomes. It may t. exonerate smoking from key disease processes Z. point to various components of snake which are undesirable 3. indicate individuals genetically disposed to disease 4. provide a cure or prevention of such diseases. Additionally such work should lead to bloassays that have true relevance to human disease mechanisms- The final lag of the Group-supported long term research towards increasing the acceptability of smoking concerns the so-called 'benefits of smoking'. In this area there is little point in doing 'in-house' research since credibility will be low. In any event the techniques appropriate to studies of this kind will be located in universities or Institutes since they will be either medical or psychological. The 'benefit' most widely publicised is in relation to Parkinson's disease where smoking is associated with a reduction in incidence. We are nov pursuing interesting developments in relation to ulcerative cholitis and Alzheimer's disease, both of which also indicate signs of -benefits'. Summary In summary, we have 802 of our L31.5 a expenditure on R&D aimed at market-oriented goals. This is generating some visible achievements for the Group and I believe, at this level of effort, we are competitive. On the S&R Issues. I distinguish between activities which are essential in response to those currently held scientific views that determine Regulatory requirements and influence consumer habi to .Specific chemical components and single biological test standards fall into this category. This accounts for 12% of our expenditure. Purposeful long term and truly fundamental research on S&R, in my view, can only be done in collaboration with medical scientists/molecular biologists. The majority of our 7% expenditure La this area is directed at the mechanisms of diseases. In my view this Ls appropriate currently but say need to be escalated If any interesting leads are identified. I hope this talk has given the Impression of a business-like approach to 140. closely managed and cost-effective. Of course, our scientists have 'brainstorming' discussions and will occasionally advance revolutionary Ideas for radical product modification. One such example Ls based on a aicotina-carrying. synthetic aerosol. So far there Ls little belief that this avenue really represents a realistic direction to pursue. A . Ha a 10th April 3 7 BATCO CONFIDENTIAL - CATEGORY 1:'.%IINN--ESOTA TOBACCO LITIGATION. BATCo document for Province of British Columbia 21 April 1999 Tobacco I Following the presentations on Legal Issues, on Smoking Issues, and an Research and Development, delegates will be invited to discuss the following q4astions:- 1. Are there any new initiatives which the B.A.T Industries Croup should be taking on:- (a) Product Liability Issues. (b) Smoking Issues. 2. The majority of SAT's tobacco R&D resources are being placed behind short term, market driven and cost reduction, objectives, e.g. Actron, Ultra Slim, Apex. smoke quality improvement, low cost "pension processes, etc., and in ensuring an appropriate response to sucking Issues. Only a very minor part of total R&D resources are spent on the basic, long term research necessary for more radical product development. Is the total level of resources J30 million per annum) adequate, and are the proportions currenclv event an these objectives correct? CD C) (J-4 BATCo document for Province of British Columbia 21 April 1999