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VISIT TO PHILIP HORR!S R&D CENTRE RICHMOND. VIRGINIA 80 Dr L c F Blsckman Mr A L Hea.~d Dr T S Osdsne Vice President R&D Director cf Research of E~tramurel Studies Yollowing an initial approach by Dr D G Felton, arrangements to spend a morning at the Research Centre were finelised when we met Dr Osdene at the 34th Tobacco Chemists Conference st Rlc~ond. Following s brief walk through the R&D tower block, we had a The following is a summary of the main information obtained: Oraanisat~qn According to Dr Osdene. it took some 6 years to br£n~ about the present vary close integration ~tween R&D and the Marketing, Production and ~eaf operations: it clearly helps having central R&D located at the very centre of the ~siness. ~ere is also v~ close llas~ bet~en the Ric~ond R&D (550 s~aff) and the slm~lar la~rato~les i~ Swltzerland Canada. ~ough the latter la~rator~es have a high d~ree of cen~e. ~en describing ~hls, Dr Ol~ene clearly could resist making the count that, "we 81ways lau~h~ a~ the way Dr Osdene's Research an~ ~ral Studies (the lat~er an euph~i~ fo~ mokinq a~d ~alth) reD~esents the ~in lon~- te~ research thrust an~ acco~,~ly. ~as a high ratio of The strength of the total research capability BATCO LTD - WASHINGTON AG TOBACCO LITIGATION

- 2 - We saw from s distance the impressive new building that will house the recently fo:~e~ Tobacoo Technology Group. Dr Osdene sa~d when ~t ~s r~ady e~tly n~t ~, ~velo~ent will ~ tr~sferr~ ~o i~ from out of ReD. se~s ~ha~ the main ~ion o~ ~he Tobac~ Tec~ol~ Group Accor~n~l~, ~t w~ll have a br~dly ~sed or~sation as ~b~ishe~ earlier this year (attached in Ap~nd~ I~}. (Paddy Support 5e~ices.) Dr Osdene suggested that there is SO~ ¢on~e~ a~ut the high. depreciation costs of ~he new building. We ~nderst~d that further 40 staff are currently ~eing recruite~. Dr Osdene explained that the new Group is pax of a plan to intensify their world-wide control fr~n Richmond: "The remaining Fief~oms will disappear". Of£1cially this a~tivtty d~s not extat~ b~t in practice there the underztanding that we do not divulge it further. (I know also that Dr Felton last year was given a ~uite detailed We were told that there are 20 PhD's and 8 assistants concerned melnly w~th checking the biological et-~ivlty of all new materials and produc~s that are being considere~ for ~em~rcial use. A/though the ~in aim would appear to be defensive, there seem~ little the lowest pcsslble blol~ical activity. ~i ~kln~ ~nd ~alth work with annals is ~t out to contract. ~ Osdene sa~d he t~ether with our ability ~o work dlrec~ly with ani~!s. psychologists are now at work. C~pensatioo is clearly one area of ~nterest, but I suspe~ like us, they are atte~pting to It'was clear from a general talk on flavours that Philip Morris regard this 88 one of the ma~or technical challenges t~lay, k key develo~nt would appear to ~e synthetic pol~mers with side change that "~p-off" on moc~est heat. Dr'Osdene Sa~d that • he7 had concluded that there Is no pros~ct fo~ encapsulat~ flavour materials, or for ~he use of "I~em-t~e"pa~rs.. BATCO LTD - WASHINGTON AG TOBACCO LITIGATION

- 3 - rbon n xld bring carbon monoxide down to acceptable levels, withou¢ saying $o directly, it would seem that they are working scrongl~ on benefits of research in a basically consumer product Osdene made 2 interesting HZRIT yes e~tiTely the product of R&D - witb a suggestion that the secret lies in the flavour Philip Horris are searching for • second MERIT which, if they find it, "Will pay for ell for the res~ of time". ho~ ~LgO~O was doing in England1 He then went on to say that the Philip Horris Boar~ had the toughes~ discussion ever on whether they should launch the UK MARLBORO as a modified Vlr~inia b~end -I sense because Of future problems of malnteinin~ satisfactory taste when, inevitably, the deliveries have to be 1owe~ed. He Intlma~ed that Philip Horrla were not happy with the io~ rate of growth. said that Philip ~orris have • "fanatical" concern with ," maintaining qua.llty of their pr~uct$ throughout the world. lh:bllcat~ons ~n~ ~omr.unicationF Dr Osdene confirmed what is already wall kno~. namely, that Philip Morris have an aggreslve p~llcy regarding presenting tO the outside world an image of high science - by publishing as much as possible that is not directly linked to commercial products (after full patenting), b~ holding regular international scientific symposiums to which eminent world scientists are invited, and by high attendance at appropriate conferences. Dr Oadene said that there had never been any difficulty in funding R&D. Overseas companies contribute on a levy basis: . they are in no position to argue on the ~mountl L ~ ? BLAC~MAN 3 November ]980 BATCO LTD - WASHINGTON AG TOBACCO LITIGATION

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RI1LIP "1~'-'~t~'~ ~o~m:.~ti~n of its n~ ~obacco ~n~n A. ~yu~ is ~p~te~ Presid~n~. F~k E. Resnik re¢.ains P.~ Vi~e-Prosi~nt, Dr. Helot R.R. ¢:okeham h'tll se~'e as Vice-President, R.g ~.~ I':allace G. Lloyd has been nard gic¢-Prcsidcnt, ~ufactur~g T~olo~. Joscph A. C~u~d: D~rec~or, Facilities P~in~. ddm v~ Ha~: Director, Leaf at T~bacco Tcchnologv. Sus~ H. ~:iencr: )tanager, Eeoc P~d~t ~nfo~tion. J~s A: Remington: ~nior Vic~-Prcsi~=nt, 5hnuf.,cl,ring .~rtht~r R. P2sq~i~=: ~*icc' lhcsidcnL, Cr, ar]cs G. E;les: Tobacco Prod~cts A.g.C. L~x~r: ~i~¢c~or, ~.t~tffactt,rin= BATCO LTD - WASH[NGTON AG TOBACCO LITIGATION