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PLAN OUTLINEfCONTENT P age VI. Resource Allocations and Implementation 75 A. Strategic Goal 1 75 B . Strategic Goa12 77 G. Strategic Goa13 79 D. Strategic Goa14 80 E. Strategic Goal 5 81 F. Resource Allocation Summary 83 VII. Implementation Appendices Appendix A Export Product Development Accomplishments Appendix B Technology Review Appendix C PME R&D Accomplishments iv

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Executive Summary The 1993-1997 PM U.S.A. R&D Strategic Plan contains seven major sections. The first section is the PM U.S.A. Mission Statement and Goals. This is followed by an Internal Analysis section. The 1993 R&D Major Programs are described and reasons for changes between the 1992 and 1993 plans are presented. Resources allocated to the Major Programs are shown. Major PM U.S.A. R&D accomplishments are summarized, including an outline of patents and publications. The status of technology at PM U:S.A. R&D is discussed. Next accomplishments and major objectives of PM Europe R&D are described. This section closes with a summary of PM U.S.A. R&D strengths indicated by the Internal Analysis. Section Three is an External Analysis. A summary of the domestic market and a detailed analysis of our four major competitors -- R.J. Reynolds, Brown &Williarnson (and BAT), and Japan Tobacco - are discussed. Next, non-traditional competitors (nicotine patches) are described. Competitive technology from a variety of sources is then summarized. The status of suppliers of importance to R&D issues such as flavors, filter tow, packaging materials, paper, and adhesives is discussed. A summary of relevant political and social issues is followed by a discussion of the strategy of a number of anti- smoking groups. The next section is entitled R&D Issues and describes strategic issues arranged by strategic goal. These issues raise many questions. The search for answers to these questions is the basis for the PM U.S.A. R&D Programs, 1993 Commitments and 1993- 1997 Operational Plan. A description of resource allocations in the next section and implementation in the final section concludes the Plan. Resource allocations are presented for R&D Major Programs. Resource allocations for all 1993 R&D activities by PM U.S.A. R&D cost center are given in the appendix. To provide a concise plan, much of the supporting documentation and information have not been included. This information is available for review in the PM U.S.A. R&D Library. Several changes were made to the PM U.S.A. R&D planning process during this planning period. A decision was made to move the time line for developing the Strategic Plan forward in the year to present the Plan in July. This goal was established to provide planning information prior to, or at least simultaneously with, the budgeting process. In general, the target dates were met. The new goal is to have R&D Strategic Planning accomplished on a July to July calendar year, and R&D Operational Plans prepared by September. In this way, Operational Plans may be reviewed prior to finalizing the budget. Finally, as mentioned in the 1992-1996 R&D Strategic Plan, both the Strategic and Operational plans for R&D should be living documents, not dust collectors. To this end, a significant effort was made to provide tools to facilitate the modif cation of the R&D Operational plan as needed, and to encourage a quarterly revision in conjunction with the R&D Quarterly Progress Report and Quarterly Planning Meeting.