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US sketches strict regime of e-cigarettes with first approval

This week’s first e-cigarette approval by U.S. regulators was described by industry experts as a historic moment in the $ 5 billion sector operating under the cloud since the crackdown on teen vaping. rice field “Epidemic” In 2018.

However, some of the U.S. Food and Drug Administration’s first selection of products to use the green light, an unpopular device in the shape of a real cigarette manufactured by a subsidiary of British American Tobacco. Confused the observer.

Juul, the market leader with a 43% share, has also applied for approval, and it is not yet known if the product will also be approved.

Still, by rubber stamping Vuse Solo’s e-cigarettes and related devices, the agency gave a clear signal that it did not intend to ban complete vaporization. Rather, it began sketching new regulatory regimes that allow products designed to help people quit smoking.

Cliff Douglas, director of the University of Michigan Tobacco Research Network, said:

Equally important was the agency’s decision to reject five flavored tobacco products manufactured by Reynolds American, a BAT subsidiary that sells Vuse Solo. In doing so, the FDA has expressed aversion to the type of vaping product that caused the explosion of use among teens.

Also, so far, it has refused to dominate BAT’s much more popular device, Vuse Alto, and has imposed strict marketing restrictions on Solo products.

“The FDA is under great political pressure, facing litigation, threats and political difficulties, trying to pierce its needles in a way that satisfies its scientific and public health missions,” Douglas said. Stated.

He said the FDA’s rejection of flavors underscores a conservative approach to products that are popular with school children and adolescents.

Last year, US regulators temporarily banned the production, distribution, and sale of cartridge-based fruit and mint-flavored e-cigarettes, working on what is known as a teenage vapor-breathing “trend.” The FDA has required all US e-cigarette manufacturers to submit their products for review or bring them to market.

Even before the FDA formalized the crackdown, heightened regulatory uncertainty caused management turmoil in Juul in 2019, prompting Philip Morris International to: Abort Let’s talk about the $ 200 billion merger with Altria, which owns a 35% stake in Juul.

After that, Juul cut marketing costs and stopped selling flavor pods for vaporizer devices.

The strategic reset lost the company’s market share, dropping from 64% in May 2018 to 43% last month. According to Goldman Sachs’ analysis of Nielsen’s data, retail sales of Juul products fell 10% to $ 1.99 billion in the 52 weeks to September 25.

However, Juul is confident that by reestablishing its position as a responsible industry leader focused on adult smokers, we can mitigate regulatory risk and build long-term sustainable businesses.

The company released a new Juul2 device in the UK last month. It includes new technology to prevent the use of counterfeit pods and make it difficult for children to access the device.

“In the last few years, millions of adult smokers have switched from tobacco to our products and have reset the company, but only if they continue to fight the use of minors will they replace adult smokers. We are confident that we will provide it, “said Joe Murillo of Juul. Chief Regulatory Officer.

Reynolds has benefited from Juul’s strategic pivot and has been actively marketing for the past year. We also reduced the price of our main e-cigarette device to 99 cents. This is one tenth the normal price of a Juul device. According to Goldman’s analysis, the company’s e-cigarette product retail sales surged 60% to $ 1.2 billion in the year to September 25.

Analysts said the FDA’s approval of Vuse Solo products is a small part of e-cigarette sales, about 1.5%, and is unlikely to give Reynolds a competitive advantage.

Bar chart of market share (%) showing the entire US nicotine market

Christopher Glow, an analyst at investment bank Stiffel, said:

He said the FDA’s decision was probably more noteworthy about the FDA’s disapproval. Reynolds’ flagship e-cigarette product, Vuse Alto, is a very smooth e-cigarette that holds the majority of the company’s market share.

Reynolds said he was confident in the quality of Alto’s application to the FDA, which was submitted almost a year after his solo application.

However, industry and health experts say the FDA’s decision to reject flavor company applications and severely limit Solo’s marketing sent a strong message to the industry about future approvals.

Desmond Jenson, a tobacco lawyer at Mitchell Hamline School, said: “Now they have … That part is very good news for public health.”

However, the FDA is still making a big decision on whether to approve one of the most popular categories, menthol e-cigarette products and Juul’s applications, Jenson said.

The American Vaping Association said it welcomed the approval of Vuse Solo products, but told the Financial Times that it would encourage Reynolds to sue the FDA for refusing flavored products.

By banning popular flavors, AVA President Gregory Conley said people would either go to gray market products or return to smoking.

Even when regulations are catching up with the e-cigarette industry, new competitors have emerged that have succeeded in evading FDA oversight. Puff Bar, run by entrepreneurs Patrick Bertrand and Nick Minas, sells products using synthetic nicotine, a substance that is not currently regulated by the FDA.

Critics claim that the company sells many flavors such as bananas, watermelons, and mint that are popular with children. According to Goldman Sachs analysis, it recorded sales of $ 155 million in the 12 months to September 25, making it the largest seller of disposable e-cigarettes.

The puff bar did not immediately respond to the request for comment.

According to Stifel’s Growe, puff bars are now the number one brand for young people, and the FDA was once again flatfoot because it couldn’t regulate the most popular products among young people.

“We continue to be disappointed with the FDA’s regulatory measures, which continue to punish companies in accordance with the rules, while turning our attention to companies that violate the rules,” said Groe.

Additional report by Andrew Edgecliffe-Johnson in New York

US sketches strict regime of e-cigarettes with first approval

Source link US sketches strict regime of e-cigarettes with first approval

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