Tobacco stocks fell sharply following the FDA's announcement last Friday that it would begin regulating nicotine levels in cigarettes.
Last Friday, the FDA announced a new, more comprehensive regulatory plan for both tobacco and nicotine, which includes postponing the PMTA until 2022. Additionally, the tobacco plan also includes a plan to remove nicotine from traditional cigarettes, which will be implemented by 2021.
“We must recognize the potential for innovation to create less harmful products under FDA oversight. While there is still much research to be done on these products and the harms they may cause, they do have certain benefits that we should consider. Investing in FDA’s regulatory science can certainly answer those questions about benefits and harms,” newly appointed FDA Commissioner Scott Gottlieb said at a press conference.
This effort to reduce nicotine levels is considered one of the strongest efforts to reduce smoking, along with the requirement to print health warnings on cigarette packs in 1965, and is expected to have a major impact on the $130 billion tobacco industry.
“Commissioner Gottlieb’s announcement today that the PMTA deadline has been extended to 2022 is emboldening. It is the right decision and a much-needed reprieve. However, the overall regulatory landscape remains unchanged and fails to adequately consider the potential of e-cigarettes . The deadline remains unchanged and we are still unable to introduce new products or improve existing ones to keep up with technological developments. While we are grateful, we must be more proactive in re-evaluating and changing the regulatory framework. This extension gives us the opportunity to secure the future of our industry in the form of fairer regulation or even change. Nicopure Labs will remain on the front lines to ensure that consumers and smokers have an alternative to cigarettes that can improve their quality of life and give them the opportunity to quit.” Nicopure Labs, the most active company in the battle to change the FDA's burdensome regulatory rules, said.
A heavy blow to the tobacco industry
Not surprisingly, immediately after the FDA announcement, tobacco stock prices plummeted, with many predicting this would be the trigger for a lobbying campaign in the US.
“This is a pretty big surprise and will force tobacco companies to develop more innovative and safer products,” said Jack Russo, an analyst at Edward Jones & Co.
In fact, immediately after the FDA announcement, Altria's stock fell 19%, its biggest drop since 1999. BAT's stock fell 14% and Imperial Brands Plc's fell 9.5%.
“It is too early to understand the practical implications until there is a more concrete proposal,” said Simon Evans, a spokesman for Imperial Brands Plc.
All eyes on nicotine
At the press conference, Mr. Gottlieb said nicotine is both the problem and the solution, because it is not the most toxic ingredient in cigarettes.
Nicotine has received a lot of attention in recent days. Public health expert Dr. Kostantinos Farsalinos agrees that the way nicotine is delivered is important for smokers who want to quit.
A win for public health and a big shift for Big Tobacco
This is good news for public health experts, although the tight regulation of nicotine levels will have a negative impact on the tobacco business, Big Tobacco has prepared for this by starting to develop safe products so it is not a fatal blow. Most of the major tobacco companies have launched their own e-cigarette products , such as Philip Morris, which has invested $3 billion in developing safe products and is trying to meet the demand for iQOS devices in Asia.
Source: Diane Caruana - Vapingpost
Translator: The Vape Club
