Author: Taco Tuinstra

Damage Done

Soldiers of the South African National Defense Force guard confiscated cigarettes. (Photo: SANF)
Eighteen months after lifting its cigarette ban, South Africa still struggles with inflated illicit sales.
By Stefanie Rossel
Sometimes the best intentions yield the worst possible outcome. In an effort to protect its citizens from the impact of Covid-19, the South African government banned the sale of alcohol, cigarettes and vape products from March to August in 2020.
For the legal cigarette market, the move backfired: Illicit trade, which according to market leader BAT South Africa (BATSA) already accounted for approximately 33 percent of all cigarettes sold in South Africa before the ban, soared to unprecedented new levels. “With very weak enforcement by government during the ban, the legal industry adhered 100 percent to the ban, but it gave the illegal players a golden opportunity to take over 100 percent of the market during that time,” explains Francois van der Merwe, advisor to the South Africa Tobacco Transformation Alliance.
One and a half years after the ban was lifted, illicit tobacco still claims an estimated 60 percent of the total market, one of the highest shares in the world and only comparable to Malaysia. Out of a total market of more than 32 billion sticks, only 12 billion to 13 billion cigarettes were tax-paid in 2021, according to van der Merwe.

Francois van der Merwe
An online survey by the University of Cape Town’s Research Unit on the Economics of Excisable Products (REEP) showed that 90 percent of smokers continued to purchase cigarettes during the lockdown. Unable to buy their pre-lockdown brand, 46 percent of smokers switched from a multinational company brand to a brand produced by a local producer. Most of these licensed companies are members of the Free-Trade Independent Tobacco Association. Critics contend they conducted illegal business by selling vast quantities of their products at a fraction of the minimum collectible tax of ZAR21.60 ($1.41) per pack of 20—sometimes for as little as ZAR6 per pack.
According to BATSA, these companies manufacture and earn profit on vast volumes of cigarettes while paying the South African Revenue Services (SARS) only a small portion of the tax owed. BATSA estimates that this under-declaration costs the country’s treasury at least ZAR8 billion annually. For the 2021–2022 government fiscal year, this figure is expected to rise to ZAR21 billion. BATSA reckons that more than 90 percent of all illegal cigarettes in South Africa are manufactured locally.
During the lockdown, illicit whites were freely available, although at hugely inflated prices. The temporary sales prohibition dramatically changed the purchasing environment, the REEP survey found. Before the lockdown, 56 percent of smokers had bought their cigarettes from formal retailers, but only 3 percent did so after the ban had been lifted. The percentage of smokers who purchased from small informal spaza shops in townships increased significantly. Street vendors, friends and family or “essential workers” became new sources of cigarette supply. The profitability of dealing with illicit cigarettes attracted a range of new players, including crime syndicates, but also civilians seeking to make a living amid a worsening economic crisis.
The financial damage of the ban was immense: It cost the government ZAR5.8 billion in tobacco tax revenue from BAT alone. In addition, the government lost a court case filed by the tobacco industry regarding the constitutionality of the ban. BATSA said it lost more than ZAR2 billion due to the sales ban.

Johnny Moloto
Smuggling Prevails
While alcohol sales largely recovered after restrictions were relaxed, legal cigarette sales continued to languish. “Consumers have become used to buying illicit products, and this will make it increasingly difficult to eradicate the illicit trade,” says Johnny Moloto, general manager at BATSA. “The fiscus is projected to lose ZAR19 billion in cigarette excise tax in the 2021–2022 fiscal year alone as a result, which the country cannot afford.”
In November last year, Ipsos found that illegal cigarettes were available in almost half of stores (43 percent) nationwide. Cigarettes are selling for the equivalent of ZAR8 per pack, close to a third of the ZAR21.60 in tax that should have been paid. “It is clear that taxes on these products could not have been paid by the manufacturer,” says Moloto.
While reliably measuring illicit trade is inherently difficult everywhere, it is even more complex in South Africa, where cigarette packs don’t carry security features, such as stamps, indicated tax payments and illicit manufacturers comply with health warning requirements. The Ipsos study therefore used the “mystery shopper” model, under which researchers bought the cheapest cigarettes in almost 5,000 stores nationwide. Its findings echo those of the REEP survey. The ban, it said, would feed an illicit market that “will be increasingly difficult to eradicate when the lockdown and Covid-19 crisis is over.”
Ahmad Ismail, general manager for southern Africa at Japan Tobacco International, believes South Africa has now reached that point. “The legal industry declined by over 40 percent alone during the Covid-19 tobacco ban,” he says. “Illicit tobacco flourished with very little enforcement during the lockdown. We have also witnessed an increase in cross-border smuggling in and out of South Africa, which was a problem that we had not experienced in several years. It will take more than three years for the legal industry to recover—not fully—if government acts immediately.”
“The failure of government to enforce its own regulations during the sales ban was a golden opportunity for illicit operators to establish their brands firmly in the market in the absence of the legal brands,” says van der Merwe. “By dropping their prices post the lifting of the ban, they simply retained their market share, and the legal tax-paying brands are struggling to regain lost market share. With the lower volumes of legal brands, this resulted in many thousands of job losses across the value chain, including the most vulnerable jobs on farms in rural areas, but also in factories processing leaf and manufacturing products.”
At an annual tax conference in 2021, the SARS commissioner noted that the lockdown brought about a proliferation of illicit cigarettes that has now embedded itself as an alternative to the regular brands. He said the SARS was fighting a losing battle in this regard.

Ahmad Ismael
Concerted Efforts Needed
Although the major legal cigarette manufacturers in South Africa have called on the SARS and law enforcement agencies to increase their efforts to prevent criminal networks from selling illicit cigarettes, little has been done so far. In May 2020, the SARS canceled a tender for a track-and-trace system. “One of the main challenges was the lack of consultation with the industry, as local manufacturers and wholesalers would have been required to implement the system and bear the cost of implementation,” says Ismail. “Another challenge was that South Africa did not ratify the Framework Convention on Tobacco Control (FCTC) Protocol on Illicit Trade (ITP) and that the tender was not in line with the FCTC approach. This would have enabled them to align the system with global guidelines and systems being implemented and allocate a budget dedicated to fully comply with the protocol guidelines following a recommended and tested process implemented in Europe.”
In 2020, the SARS instructed all cigarette manufacturers to install production counters that report directly to the authorities how many cigarettes are coming off the production line in real time. Moloto, whose company believes not enough is being done to combat illicit trade at this point, argues that this measure had not been enforced. Ismail claims that while being a step in the right direction, the system still relies on the transparency of manufacturers to report on their production levels.
Moloto says the South African government must act to stop the flow of illicit cigarettes before the problem becomes even more entrenched. Both BATSA and JTI have asked the government to ratify the ITP immediately. “South Africa has been a founding member of the FCTC where the former minister of health, Honorable Dr. Aaron Motsoaledi, signed the ITP in Geneva in January 2013,” says Ismail. “Putting in place a track-and-trace system would allow tobacco products to be traced from the manufacturer to the wholesaler and to retail and contribute to the reduction of massive illegal cigarette trade.”
JTI believes that a full digital volume verification system, in combination with a track-and-trace system, would be the most effective and affordable migration. This would give the government real-time insight into what is manufactured and thus help it curb under-declaration and tax evasion.
“Track-and-trace aimed at tracking cigarettes from manufacturing plants to point of sale on its own will not prevent illicit trade,” Ismail admits. “However, it will support law enforcement agencies and legitimate businesses working in collaboration to reduce the problem. Consistent audits by the SARS need to continue, seizures of illegal tobacco products must intensify, and law enforcement agencies need to work in a coordinated manner to increase prosecution or closures of operators that decide to conduct illegal practices.”
In addition to the other measures, BATSA has called for a minimum legal retail price of ZAR28 per pack. “This is a simple way to allow the police to seize illegal cigarettes more effectively without having to prove that the manufacturer has not paid the taxes due,” says Moloto. “It could be implemented quickly through the declaration by the government of a minimum price for cigarettes. It would also help consumers to differentiate between legal and illegal products.”
South Africa’s experience proves that prohibition does not work, according to Ismail. “Illegal trade cheats everyone: governments, society, consumers and legitimate businesses,” he says. “It robs governments of tax revenues, harms hardworking retailers and invites organized crime into communities.”
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

March 1, 2022
Fired Up

Nina Ritter-Reischl, in front of Glatz LIP paper machine
(Photo: Julius Glatz)
Having prevailed in an intellectual property dispute, Julius Glatz prepares to reenter the market for lower ignition propensity cigarette papers.
By George Gay
Julius Glatz is to reenter the market for lower ignition propensity (LIP) cigarette papers.
This follows a four-year hiatus during which it was forced out of that market as a result of a patents dispute it eventually won in September last year, after a legal battle that, in total, lasted six years.
Nina Ritter-Reischl, a managing partner at Glatz, told Tobacco Reporter during an exchange in January that, having overcome the difficulties of those four years, the company, which produces a large range of papers, mainly for the tobacco industry but also for other industries, was keen to return to the LIP market and, indeed, had already started work on doing so.
And this won’t be a case of starting from scratch, of course. “As we were able to retain at least some of our core personnel, we can build upon their know-how and knowledge to produce LIP papers with the high standard our customers know us for,” said Ritter-Reischl. “Our customers will still find their former contacts in our technical, R&D and sales teams.”
Meanwhile, the machine that Glatz used in the past to produce its LIP papers has been geared up at the production site where those papers were manufactured previously, in Neustadt, Germany, about 10 km from the company’s base in Neidenfels. “Our LIP machine has been maintained during the down period, some parts have been renewed, and our control technology has been upgraded within the last months,” said Ritter-Reischl. “Those investments were made to ensure production of all kinds of LIP papers.
“As our application system is very flexible,” she added, “our production range and products are as well. We can therefore produce LIP papers to the specifications our customers were used to, or we can develop papers with new specifications according to our customers’ needs.”
Of course, during the period when it wasn’t possible for Glatz to manufacture LIP papers, the company didn’t just sit on its hands; it used the time to concentrate on another type of demanding tobacco industry paper. “We were able during those four years to focus on another part of our core competences—our tipping base paper production,” Ritter-Reischl said. “Those papers also are very complex and demanding papers in the industry, and our quality and service for those is a benchmark.”
That’s not to say, however, that the renewed opportunities that LIP paper production now offer isn’t massively important. In corresponding with Ritter-Reischl, I got the impression that Glatz was not only taking a huge amount of pleasure in being able to restart its LIP papers operation but also relishing the fact that this meant it could once again offer a complete range of tobacco industry papers. “Entering back into the LIP market, we at Glatz can offer our customers not only additional papers, [but] we can again provide them with the full-service range of all papers for the industry, from plug-wrap papers and tipping base papers to cigarette papers, including LIP papers,” she said. “We are able to offer all these papers manufactured to the highest qualities and within the most demanding specifications. And we can offer a flexible service delivered through short lines of communication by a dedicated team of traditional paper makers.”
Currently, Glatz’s LIP papers production unit is making trial runs to produce papers of various specifications for a number of interested customers, but it expects to have to ramp up its production level to full manufacturing mode during the next few months.

Ritter-Reischl, who is a lawyer, seemed frustrated that discussions and legal disputes over one LIP patent had taken so long but pleased that that period was now behind the company. “As the patent was held to be invalid, this pulled the rug from under all the accusations made against Glatz,” she said. “But, needless to say, this dispute and the interim consequences were a burden for us over the past four years, and only a company like ours with a very resilient financial, social and competitive structure would have been able to endure such a phase.”
Julius Glatz is a family-owned medium-sized company with more than 135 years of experience in producing paper in Neidenfels, Germany. “We are a traditional and sustainable asset in the region, being ourselves aware of the responsibility we have toward our employees, our environment, our suppliers and, most important[ly], our customers,” said Ritter-Reischl.
The company was started in 1885 by Wilhelm Adolph Glatz, Franz Julius Glatz and Hans Haehnle when, between them, they founded the Glatz papermill at Neidenfels in the Palatinate Forest. Almost 100 years later, in 1990, Glatz became the first fine paper manufacturer to offer thin printing papers and cigarette papers of TCF (totally chlorine-free) quality. And, in 1994, Glatz became part of the first Sino-German joint venture in the field of tobacco industry papers with the founding in Yunnan province of Yunnan Hongta Blue Eagle, which quickly went on to produce premium cigarette paper of international quality standards.
Now, as it navigates 2022, Glatz can look forward to the boost that being able once again to participate in the LIP papers market will bring. But the question arises as to what the future holds for Glatz beyond LIP papers, and Ritter-Reischl started answering this question by admitting that, overall, the outlook for the traditional tobacco industry was not exactly rosy. Everyone knew, she said, that the tobacco market in general was difficult, as regulations and tobacco product taxes were increasing while the number of smokers was decreasing. Nevertheless, she indicated, Glatz was optimistic about the future, and part of that optimism seems to be coming from what is perhaps an unexpected source. “Due to the coronavirus pandemic, customers have come to realize how important local sourcing, flexible service and short communication tracks are,” said Ritter-Reischl. “And those are all services and assets that we can offer firsthand.”
Another reason for optimism at Glatz was that the idea of sustainability was becoming more and more important and into focus, said Ritter-Reischl. “As a family-owned business with a history of 135 years in paper making, [we] are sustainable by our very nature,” she said. “We value our employees and suppliers, we take care of our environment, and our customers are always in focus as we conduct every aspect of our business.”
Of course, individual businesses can expand even when the markets they serve are not expanding by, in one way or another, increasing their market shares or by diversifying. And in this regard, Glatz sees opportunities arising in the future as paper products come to replace other materials, such as plastic. “Our thin papers with their special haptic properties can be used in other industries to substitute for foil or other wrappers,” she said. “Therefore, alongside our tobacco papers specialization, we have the opportunity of diversifying into other aspects of fine papers. And this will be one of the options we will focus on in the future and that will help keep us optimistic in the face of the challenges to come.”
George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.

March 1, 2022
A Balancing Act

Photos: Taco Tuinstra
Embracing tobacco harm reduction might help Indonesia ease the tension between dependence on tobacco revenues and rising healthcare costs.
By Stefanie Rossel
Tobacco or health—for Indonesia, the choice embodied in that slogan presents a real dilemma. On the one hand, the world’s second-largest cigarette market and fifth-largest producer of leaf tobacco is highly dependent on the revenue from the sector. Statista expects revenue from the cigarette segment to reach $24.86 billion in 2022, up 5.8 percent from 2021. On the other hand, the country is facing increasing healthcare costs for the treatment of tobacco-related illness. An October 2021 study by the Indonesian Development Foundation found that tobacco-induced morbidity, disability and premature deaths were responsible for economic losses of IDR375 trillion ($26.04 billion) in 2019—a fifth of the total state budget.
Indonesia is unlikely to find a way out of this quandary soon. Smoking and tobacco cultivation have been deeply rooted in the nation’s culture since the 19th century. The market is unique in that it is largely dominated by kreteks or clove cigarettes, which represent around 95 percent of all cigarette sales. While tobacco consumption has been declining, Indonesians still smoked a whopping 300.2 billion cigarettes in 2019. With roughly 75 percent, the vast majority of cigarettes consumed are machine-made kreteks. Hand-rolled kreteks account for around 20 percent of the market.
Indonesia has one of the highest smoking rates in the world. According to a national survey from 2018, the country is home to almost 100 million smokers. More than one-third (33.6 percent) of adults use tobacco. Smoking is a male habit; 62.9 percent of men are smokers compared to only 4.8 percent of women. Worryingly, smoking is also common—and increasing—among minors. Ministry of Health data show that 33.8 percent of youths under the age of 15 smoked in 2018, up from 32.8 percent in 2016. Other data suggest that an estimated 20 percent of children under the age of 10 have tried a cigarette.
The Covid-19 pandemic, in combination with cigarette excise tax increases, has depressed incomes and pushed smokers toward lower priced products, a trend the industry has met with smaller packages. This, in turn, has driven up demand for higher tar kreteks.
In 2020, five major corporations controlled almost 90 percent of the Indonesian cigarette market, according to the Southeast Asia Tobacco Control Alliance. Sampoerna led the market with a share of 32.5 percent followed by Gudang Garam (27.5 percent), Djarum (18.7 percent), Bentoel (8 percent) and Nojorono Tobacco Indonesia (3 percent). The remaining 10.3 percent are made up by an estimated 500 small-sized to medium-sized manufacturers.
Tobacco is a major employer, providing work to 5.98 million people, of which 4.28 million work in the cigarette manufacturing and distribution sectors and 1.7 million in tobacco cultivation, according to the Indonesian Development Foundation. In 2019, this corresponded to 0.34 percent of total employment in the manufacturing sector. As in many tobacco-cultivating countries, leaf is grown mainly by small-scale farmers who rely solely on tobacco. The tobacco farming sector also struggles with child labor. In 2002, Indonesia committed to eliminating it in all forms by 2022. In 2019, the U.S. Department of Labor noted that Indonesia had made “moderate advancement” toward this goal (see “Homework Due,” Tobacco Reporter, February 2021).

The tobacco industry remains a major employer in Indonesia.
Incoherent Policies
With tobacco playing such a large role in the country’s economy, Indonesia’s tobacco control efforts have been halfhearted. It is one of only nine countries that have yet to ratify the World Health Organization Framework Convention on Tobacco Control. Decentralized decision-making has led to fragmented policies. Responsibility for tobacco policy is spread among the president’s office, six national ministries and an independent agency.
Nonetheless, some progress has been made. Since 2014, cigarette makers must print pictorial health warnings covering 40 percent of each pack. Smoking bans have been implemented for public transport, healthcare facilities, educational facilities, places of worship and playgrounds. Tobacco advertising on TV and radio remains permitted with certain restrictions. There is no minimum age limit to buy cigarettes, and selling cigarettes by the stick is common practice.
Despite regular excise tax hikes, cigarette prices in Indonesia remain among the lowest in the Asia-Pacific region. The tobacco excise tax remains far below the 75 percent of retail price recommended by the WHO. Indonesia’s tobacco taxation system is also dauntingly complex. Until recently, cigarette tax rates were divided into 10 tiers based on product type, volume and price. The tiers are meant to protect smaller manufacturers and local jobs from competition. Under the government’s 2017 “tobacco roadmap,” the number of tax tiers were supposed to be cut to five by 2021 to reduce the incentive for smokers to switch to cheaper products. The plan, however, was withdrawn in 2019. In November 2018, the coordinating ministry of economic affairs launched a new tobacco roadmap emphasizing the importance of the industry and arguing for its protection until 2025.
Effective Jan. 1, 2022, Indonesia increased its tobacco excise across cigarette types by an average of 12 percent. In addition, the number of tax tiers was reduced from 10 to eight. According to the ministry of finance, the tax reform aims to counter the rising healthcare costs caused by increasing smoking prevalence and to reduce the smoking rate among adolescents aged 10 years to 18 years.

Harris Siagian
Promoting Tobacco Harm Reduction
To help the country escape move forward, the Indonesian Development Foundation has proposed a tobacco transformation program that seeks to address certain policy gaps. It has created a roadmap that, among other things, proposes to complement existing policies with harm reduction initiatives. By emphasizing reduced-risk products (RRPs), the foundation believes Indonesia can reach smokers who have been overlooked by the current policies.
“The draft roadmap targets to diminish substantial economic costs and productivity losses associated with cigarette smoking by introducing a cost-benefit analysis approach to estimate the strengths and weaknesses of alternative, reduced-risk products,” explains Harris Siagian, one of the authors of the report. “It will measure and compare the costs of cigarette smoking-attributable diseases and the economic costs of reduced-risk product use.”
The guideline also recommends increasing the affordability and accessibility of RRPs. According to its authors, the excise tax on RRPs should be lower than that for combustible products.
Indonesia classifies noncigarette tobacco products as “other tobacco processing products,” or Hasil Pengolahan Tembakau Lainnya (HPTL). These include molasses-based tobacco products, snuff, chewing tobacco and RRPs, such as e-cigarettes and heated-tobacco products (HTP). All HPTL products are subject to the maximum excise tax rate of 57 percent.
Among RRPs, e-cigarettes, which hit the market in 2010, are significantly more popular than HTPs, which were introduced to Indonesia in 2019, and the vape market is growing. According to the Indonesian Development Foundation Report, there were 2.2 million vapers in the country in 2020. Apart from provisions on import and excise tariffs, there is no specific and comprehensive regulation of HPTL products yet, and policies appear uncoordinated between regulators. While the Food and Drug Monitoring Agency would like to ban vape products altogether, claiming they could be a gateway to youth smoking, the health ministry wants to regulate e-cigarettes as conventional tobacco products. This, in turn, is opposed by the ministry of agriculture, which fears that such regulation would burden tobacco farmers.

Indonesia aims to simplify its complex tax ystem.
Complex Task
To address such conflicts, the Indonesian Development Foundation committee team advocates incorporating RRPs in the national smoking cessation programs. “The products will be available to users, on an incentive basis, through registered outlets and clinics,” says Siagian. To help fund the initiative, the committee suggests using money from the revenue-sharing fund of tobacco products excise, which collects 2 percent of the total tobacco excise funds at the national level and distributes it to regional governments.
The roadmap also takes farmers into consideration. Locally grown tobacco will be directed toward RRPs, and farmers will be encouraged to diversify into other crops. To help eliminate child labor, the program calls for strengthening local government initiatives to provide basic education access and other supportive measures for children involved in tobacco farming.
Affordability is a well-known challenge to the success of RRPs in low-income and middle-income countries. Nonetheless, Siagian is confident that RRPs will succeed in Indonesia: “Over the past 20 years, there has been a significant shift of the vulnerable lower middle-class population that has climbed out of poverty and into the aspiring educated middle class, and these demographic groups are shifting toward more health-conscious and hygiene products, including in their use of tobacco products,” he says.
“The educated middle class, which currently accounts for 52 million people out of a total population of 273 million Indonesians, are favoring e-cigarettes as part of their lifestyle, and these population groups are more open to healthy-yet-stylish products, which means a great opportunity for RRPs. The Indonesian middle class has been a major driver of economic growth as the group’s consumption has grown at 12 percent annually since 2002 and now represents close to half of all household consumption in Indonesia, which means that price is not a major concern for these groups when purchasing RRPs. A suitable brand ambassador, product choices, accessibility and affordability will play an important role in RRPs for the middle-class groups.”
Transforming Indonesia’s tobacco control policies will be a tough nut to crack. The Indonesian Development Foundation’s proposed roadmap, therefore, is a multi-step plan, with the first stage of implementation expected to be concluded within a two-year period—provided that the country’s development priority plan, which includes the elimination of child labor, remains under the control of the current government, says Siagian. “The overall program is expected to be accomplished in five years, with an additional three years of implementation under the next government as the continuation of the first-stage program,” he says.

Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

March 1, 2022
Pure Play

Photo: Essentra
Filter manufacturers consider their strategies in an increasingly challenging environment.
By Stefanie Rossel
In October last year, Essentra fueled speculation about the future of its filter business: The Singapore-based company, which manufactures plastic caps, work-holding clamps, fasteners and knobs, said it was studying strategic options for two of its three divisions, cigarette filters and packaging, in an attempt to become a “pure play” components business over time. The review is expected to conclude by the end of June 2022 at the earliest. Since the announcement, the company has appointed several new people to key positions, including Robert Pye as Essentra Filters’ managing director.
SK Low
“A strategic review normally covers the full range of strategic options for a business, i.e., the best structure for that business to reach its full potential and deliver value for shareholders,” explains Seng Keong Low (SK), global marketing manager at Essentra Filters. “These reviews can include a number of potential outcomes including sale, demerger and other outcomes. We don’t yet know what the outcome of the filters review will be, and no decisions have been made regarding any of the divisions. The filters business will still be in operation, just that it may or may not be under the banner of Essentra pending the outcome of the strategic review. The most recent appointments to the global filters leadership team are longtime filters leaders, which were decided before the announcement of the strategic review.”
According to the company’s 2021 pre-close trading update, the filter division performed well in the fourth quarter of 2021, with revenue up 22.3 percent during that period. “The division continues to benefit from higher volumes from outsourcing contracts and a strong performance in Europe,” the update said. “Further progress has been made in the delivery of its ‘game changers’ with the China joint venture continuing to gain momentum after successful commencement in June. Our range of proprietary eco and heated-tobacco products continue to attract increased interest. The number of projects underway continues to grow.”
At the end of 2019, Essentra announced the establishment of a joint venture in China, China Tobacco Essentra (Xiamen) Filters, which launched in June 2021. Shareholders in the joint venture are Essentra with 49 percent, China Tobacco Fujian Industrial Co. with 21 percent, and three Chinese investment management companies holding ten percent each. The JV manufactures specialist and next-generation filters locally at a new facility in Xiamen in Fujian province.
Tackling Logistics
While awaiting the outcome of Essentra’s strategy review, filter manufacturers must navigate the ongoing global logistics crisis, which has led to a shortage of shipping containers, significant in freight rate hikes and delays in the supply chain. “We have been working closely with all partners covering long-term plans that required more accuracy than before,” says Hyunyoung Park, sales and business development manager at Taeyoung Industry Corp. in South Korea. “Nevertheless, other activities, such as keeping a high level of stock or production capacity build-up, can help to mitigate the delivery issue. However, it is affecting factory operation severely.”
Essentra says it is experiencing extended lead times on deliveries from many suppliers. “To ensure supply continuity, we are working several BCP (business continuity planning) plans, e.g., holding more safety stocks, working on finding more local solutions, etc.,” says SK. “To minimize supply disruption and delay to our customers, we are doing additional pre-build where possible, making advance bookings for deliveries and driving more end-to-end synchronization of our materials planning with finished goods delivery.”
In addition to supply chain challenges, the price of raw materials, including wood, has risen significantly due to the Covid-19 pandemic. Wood, of course, is the basis of cellulose acetate tow used in cigarette filter production. “We have seen increases across our raw materials as well as other commodities, from packaging materials to spare parts,” says SK. “The increase in wood prices has affected our plug wrap suppliers, acetate tow suppliers, packaging and pallet suppliers. We are also seeing significant increases in power prices.” Because of these developments, Essentra Filters had to raise prices in 2021. “We have to find the right balance in accepting and passing on any price increases and constantly evaluate our positions with both suppliers and customers given any potential changes in the pandemic situation around the world,” says SK.
Park has also observed an impact on prices due to the logistic and raw material situation. “Raw material price is affecting not only our factory operation but [those of] other manufacturers as well. However, the cost of logistics is underlying geographical influences, which made it difficult for the export business and increased chances to find alternative suppliers for cost saving or minimizing cost impact, and these activities will concern all manufacturers involved in the cigarette business except major players.”
Growing Importance
Another theme affecting the filter sector is sustainability. In July 2021, more parts of the European Union’s Single-Use Plastics Directive entered into force. While cigarette butts have been exempted from the rules for the time being, a provisional agreement in the legislative process seeks to further encourage innovation in the development of sustainable alternatives to plastic-containing tobacco filters through the introduction of extended producer responsibility (EPR).
EU member states have until Dec. 5, 2023, to set up EPR schemes for tobacco filters, but to date, there is no implementation guidance for member states. Since July 3, 2021, all packs of filtered tobacco products in the EU have been required to display a pictogram against littering.
Legislators in other jurisdictions are considering similar measures. In February 2022, Californian lawmakers introduced a bill that would ban the sale of single-use cigarette filters and vapor products. Under the bill, sellers would risk fines of $500 per violation, defined as the sale of one to 20 items. Ninety percent of the approximately 12 billion cigarettes sold in California each year are filtered. The state spends millions of dollars annually on cleaning up cigarette litter, according to proponents of the ban.
“Sustainability has always been important to us at Essentra Filters, and we have long had nonplastic filters in our product portfolio,” says SK. At the end of last year, the company added two new varieties to its sustainable filter range: the ECO Active Filter, a plastic-free alternative to active carbon acetate filters that is 100 percent biodegradable, and the ECO Flute Filter, a nonplastic alternative to the company’s Combined Performance Superior Filters. The design of the Flute Filter is customizable for length, circumference, pressure drop and flute length and can be combined with other filter segments. “Our new ECO range is currently the largest step change in our sustainability efforts, and with an increasing number of customers asking us about sustainable, nonplastic filters, we are confident that investing our innovative efforts in sustainability is the correct strategy,” says SK.
Park, who in a previous interview mentioned that Taeyoung’s research and development department was working on filter development with nonacetate tow and carrying out studies on the replacement of conventional filter materials, said that the company had made progress with that initiative. “However,” he added, “market feedback is more important for actualization. I believe this kind of development is continuing under rapidly changed business circumstances including environment, social, governance criteria.”
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

March 1, 2022
Laser Liaison

Photos: Heinen Koehl
Heinen Koehl’s coding equipment combines serialization and aggregation in one unit.
By Stefanie Rossel
Last November, parties to the Protocol on Eliminating Illicit Trade in Tobacco Products gathered virtually to strengthen the treaty that had entered into force three years earlier. Among the decisions adopted was a roadmap to improve the global track-and-trace system. Currently, use of track-and-trace systems for tobacco products is probably most advanced in the European Union, where it is regulated under articles 15 and 16 of the Tobacco Products Directive. For cigarettes and roll-your-own products, the EU has mandated traceability and security features since May 20, 2019. By May 2024, it will be compulsory for all other tobacco products, including cigars, cigarillos and smokeless tobacco products, as well.
For tobacco product manufacturers, placing individual identifying codes on each pack and then on each bundle is a challenging additional step in the production process. Heinen Koehl, a Luxemburg-based supplier of processing and logistics equipment for the tobacco industry, has developed several machines to facilitate that process. The Label Application System (LAS) and the Laser Coding Extension (LCE) have been designed for “pack-to-bundle” aggregation.
“The LAS applies a bundle label onto the head side of each bundle and verifies this bundle with a camera. In contrast to the LAS, the LCE serializes each single pack within the bundle with a laser to provide it with a unique track-and-trace code,” says Stefan Hahn, managing director at Heinen Koehl. “This code is then verified with a camera system to carry out the aggregation. Contrary to traditional solutions available in the market, where various printing technologies such as CO2 or ink printers have to be implemented into existing bundle packers, we have developed a patented stand-alone solution. By using a special laser designed by expert company Koenig and Bauer Coding, we can apply the unique track-and-trace code to the pack through the overwrap without destroying the film. This is not only an advantage in production, but also for the security, availability and performance of the track-and-trace system.”

Standardized Solution
Easy integration is the greatest benefit of the LAS and LCE, which together can be built into the production line without changing the existing equipment. Since existing machinery doesn’t have to be adapted to additional hardware and functionality, the implementation time is significantly shorter than with other solutions. Similarly, the stand-alone combination can easily be moved to another production line or location without complex conversions of existing equipment, according to Hahn.
“With our solutions, serialization and aggregation of individual packs into bundles is carried out in one unit,” he says. “Other technologies require several production steps between serialization and aggregation, which means potential risks for the track-and-trace functionality.”
According to Heinen Koehl, the LAS/LCE combination is a standardized solution independent from packer type. This means that operators and maintenance staff don’t need special training. Maintenance is similar for both machines within a manageable expenditure of time.
The LAS/LCE combination can be adapted to all bundle types and sizes and allows for easy format changes. It has been designed for all speed ranges with up to 100 bundles per minute and up to 1,000 packs per minute, respectively.
While the LAS/LCE is presently being used for coding packs and bundles of cigarettes and cigars, Heinen Koehl has developed an additional machine especially for roll-your-own and pipe tobacco pouches based on the same technology. Known as LAS Pouch, this machine combines coding, verification, bundle label application and aggregation into one system that lasers the track-and-trace code on the pouch through the film.
Heinen Koehl also offers solutions for the manual aggregation of tobacco products that can be adapted to customer requirements and minimize disruption of the production process.
Suitable also for yet-to-be-regulated markets, Heinen Koehl is delivering its coding equipment to customers worldwide, including to clients in the U.S., Europe, Russia, the UAE, Saudi Arabia and Indonesia. As track-and-trace requirements spread around the world, Hahn says he sees great potential in other markets as well.
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

March 1, 2022
Holding the Line
Photo: Schmidt Pest Management Consulting
The war on tobacco insect pests continues.
By George Gay
On being asked recently whether the war against tobacco insect pests would ever be won, most of the experts and interested parties contacted, referring mainly to post-harvest tobacco in transit or storage, said no, qualified in one way or another. But Vernon Schmidt of Schmidt Pest Management Consulting wondered whether “winning” or “losing” was the best way to judge what was happening overall. The important point in the battle against the tobacco beetle and tobacco moth, he said, concerned whether industry players were working together, communicating well and implementing fundamental pest control strategies. In other words, was the industry stewarding its resources well to allow it to use the tools available to it wisely and thereby minimize tobacco and tobacco product losses?
“Communication lines need to remain open, and cooperative research needs to be supported by the players within the industry in order for us to stay ahead of the insect pests,” said Schmidt in an email response. “This is the brilliance of Coresta and the work of its Subgroup on Pest and Sanitation Management in Stored Tobacco [PSMST].”
Worryingly, however, he added a caveat that is unlikely to have come out of the blue. “Pulling out of cooperative endeavors and doing it on our own will not be a winning strategy,” said Schmidt, who was closely associated with Coresta and the PSMST in the past, and who is likely to be so again shortly after a break made necessary by his transition from an employee of Reynolds American to starting his own consultancy.
And Schmidt had other warnings. There would be no success without the industry’s putting in the hard work of implementing fundamental pest control practices, and there would still be challenges, he added, even where the fundamentals were in place. Phosphine resistance remained a challenge and would continue to worsen if the industry did not address the causes. Insisting on quality phosphine fumigations remained a must, and consideration had to be given to eliminating ineffective fumigations, such as container fumigations, or, at least, implementing measures to improve them greatly by, for instance, requiring barrier sheeting be placed on the floors of containers before loading to minimize gas leakage.
And in what seemed to me to be a minor bombshell, Schmidt admitted that the way in which phosphine worked as a fumigant still needed to be understood better and should continue to be investigated cooperatively. Such investigations, he added, would likely lead to a revision of the Coresta Fumigation Guide and require a new round of global training.
Exploring Alternatives
At the same time, the 30-year search for an alternative to phosphine should continue, again co-operatively, said Schmidt. There was promising work underway investigating a potential alternative to phosphine, sulfuryl fluoride, which offered a completely different mode of action from phosphine. This had the potential to break phosphine resistance where it existed and, additionally, preserve phosphine as an excellent tool for the industry.
And moving away from fumigation techniques, Schmidt said controlled atmosphere (CA) and freezing treatments should be implemented where feasible.
Rene Luyten, a director at b-Cat, which installs CA chambers, made the point that tobacco insects were difficult to control, partly because they were able to adapt to new circumstances. In other words, while it was possible to eliminate such insects in individual tobacco batches, there were often routes through which others could enter those batches. In part, this was down to the very nature of tobacco, which is a bulk product subject to transportation, division into smaller consignments and storage. Additionally, tobacco doesn’t exist in isolation but is sometimes stored alongside other products that also provide homes and breeding grounds for insects of concern.
Indeed, Luyten said it was possible to have in-house clean tobacco free of insects or to receive clean tobacco on one day and the next day to have a huge issue with insects. Of course, the severity of the problem would depend, in part, on the location of the warehouse, with those in warmer climes likely to experience more insect activity. But such issues could arise in many places, added Luyten, even when everybody in the tobacco chain did their best to avoid infestation. Fumigators might comply with best practices that conformed with the guidelines laid down by Coresta. And warehouses might employ best practices in respect of storage, including the use of good sanitation programs. But it wasn’t always possible to have control of all factors, such as when a neighboring warehouse storing raw food didn’t employ strict and proper sanitation protocols.

Controlled atmosphere technology offers a “green” solution for pest control.
(Photo: b-Cat)
Positives and Negatives
Schmidt, too, saw positives and negatives stretching along the supply chain. A positive would see farmers eliminating carry-over tobacco, but the fact that farmers were unable to treat their post-harvested tobacco was a negative, he said. The receipt by processors of infested tobacco was a negative while the lethal effects to insects of processing was a positive. Reinfestation during transport was a negative while monitoring programs for transported tobacco provided a positive. Good segregation practices during storage constituted a positive, but undetected phosphine resistance was a negative. Continually improved cleaning programs at manufacturing plants constituted a positive, but insect harborages that could not be eliminated without dismantling equipment comprised a negative.
There is at least one caveat you have to add to the idea that the war against tobacco insects cannot be won. It can be won in the sense that insects of all types and in all their life stages can be eliminated from tobacco just before it is manufactured. Luyten said an increasing number of tobacco manufacturing plants were installing CA technology, which he described as a “green and natural treatment method” offering a 100 percent mortality rate among insect pests in all their life stages. In fact, b-Cat’s main building program currently involves installing CA facilities, including remote control and monitoring systems, at manufacturing sites.
Away from the major manufacturing sites, things are rather different. For instance, Guy Harvey, the CEO of Transcom Sharaf in Africa, who is based out of Mozambique, said businesses in that part of the world used only chemical fumigation, though this was not for want of trying other methods. Harvey said his company had completed trials on the use of CA in Mozambique but that it seemed the industry was not ready for it yet, which I took to mean that companies further down the supply chain were not willing to help pick up additional costs arising from CA. Certainly, in Harvey’s view, the capital costs of CA were holding back its use in Mozambique.
This might be unfortunate, though it has to be remembered that fumigation can be effective. Nico Vroom, who runs the consultancy N.I.C.O, also believes the war against tobacco insects will never be won, but he believes, too, that infestations can be kept to a “manageable level” through the use of good fumigation practices and through the employment of recent technological advances, such as sensors for constantly monitoring tobacco.

While complete victory in the battle against tobacco insects is some ways off, infestations can be kept to a “manageable level” through the use of good fumigation practices and through the employment of recent technological advances, such as sensors for constantly monitoring tobacco.
(Photo: Transcom Sharaf)
Ongoing Monitoring
One respondent who didn’t give an unequivocal “no” in answer to the question about whether the industry was winning the war against insects was Steven Bailey, managing director of the Barrettine Group, which manufactures the Mobe Combo insect monitoring trap. Bailey said he thought it unlikely that the industry was winning the war, but that it might be holding its own. Traditional treatment methods using fumigants were limited to only a few. He was unaware of any new pesticides coming through beyond, perhaps, sulfuryl fluoride, he added, and due to high regulatory and approval costs, didn’t expect there to be any anytime soon. This, together with ongoing phosphine-resistance issues, was a concern, but CA treatments in conjunction with insect monitoring and traditional methods were helping the industry to stay on top of the problem. The importance of ongoing insect monitoring was therefore essential in pinpointing infestations so that control measures could be carried out as soon as identified, thus preventing any infestation from escalating.
One of the matters that gets little airing in respect of tobacco insects concerns responsibility. Who is or should be responsible for ensuring tobacco is taken in at its destination—at the manufacturer’s site—insect-free?
Well, according to Rainer Busch of NewCo, currently, the shipper is obliged to fumigate tobacco before loading, even though it is very difficult for the shipper to control what happens to that tobacco during transport and when it is opened at its destination. And if the tobacco was found to have insect infestation at its destination, to have been infested during transport, it was necessary to refumigate it or put it through another treatment. It would therefore be better economically and financially to avoid having to carry out two treatments by switching the fumigation or other treatment from the point of shipment to the destination.
It would seem that while the industry might not be winning the war against insects, it is not losing all the battles. Evripidis Christidis of Missirian told me that the application of integrated pest management techniques was helping the industry to win in the region in which his company operates—the region where classical oriental tobacco is produced. In general, the amount of leaf tobacco currently lost to insects was proportionally less than it had been during past decades. But, he added, this sort of success required close attention being paid in five areas:
Personnel training and awareness;
Facilities management, including cleaning and sanitation, operating with open structures and creating barriers to insects, such as air curtains and mesh nets, and segmenting the green and final products;
Selection of suitable means of transportation;
Pest monitoring, with pheromone traps, and the use of UV lamps and space/surface fogging when necessary during tobacco storage; and
Pest control methods.
Another factor that had helped the industry attain better results was the use of only specialized and licensed contractors to perform control and prevention activities, said Christidis. And yet another had been the introduction of Coresta standards for the fumigation in respect of resistant beetle populations, which basically involved higher phosphine concentrations and longer exposure times. A radical but expensive proposal would involve vacuum or nitrogen packing of the final leaf product.
Learning Lessons
The importance of Coresta was raised by most respondents, and so it is unfortunate that the Covid-19 pandemic has interfered with some of its work, including the PSMST’s Infestation Control Conferences that, until the pandemic struck, had been held annually around the globe. Of course, there have been other problems caused by the pandemic. Shipping delays have created tobacco transport congestion, and there have been interruptions caused by staff shortages, supply chain difficulties and other transport issues. But the pandemic has also caused a lot of rethinks, some of them positive. Luyten told me that while the start of the pandemic had caused concern, it turned out the past two years had been the best ever for b-Cat’s business. When travelling became almost impossible, it was discovered that internet communications using Teams or Zoom could easily stand in for some face-to-face meetings. “I do hope that everybody is having the same idea,” said Luyten, “that we have learned from this pandemic that travelling, which was a common thing, is not always needed. We all can save a lot of time and help the planet.”
Which brings us, perhaps, to the most important question. In fighting tobacco insects, are we winning or losing the environmental battle? And there seems to be some good news here. Schmidt told me that industry practices had little negative environmental impact. Beneficial insects were not threatened by current common practices, he said, and phosphine readily broke down in ultraviolet light. At the same time, however, continued training on best practices would help with reducing the improper use of insecticides and excessive fumigant use.
George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.
March 1, 2022
22nd Century to Launch VLN in South Korea

Photo: 22nd Century Group
South Korea will be the first international market to commence sales of 22nd Century’s VLN reduced nicotine content cigarettes, the company announced in a press release.
“South Korea is an ideal international launch market in many ways, with a high smoking rate among developed countries and a government strongly committed to smoking harm reduction. We expect the first sale of VLN reduced nicotine content cigarettes to our South Korean partner to occur by the end of March,” said 22nd Centur4y’s CEO, James A. Mish.
“Approximately one in three adult men in South Korea are smokers, and an estimated 6 percent of adult women smoke. The government has worked over the past two decades to promote smoking cessation through a variety of means, including heightened tobacco prices, and remains committed to advancing alternative products to help curb smoking activity in the country. We are excited to make VLN reduced nicotine content products available in South Korea to help break the nicotine addiction cycle and support this important effort.”
The company will continue its launch process in additional markets in Asia and Europe with limited regulatory barriers while also leveraging VLN’s modified-risk tobacco product (MRTP) authorization in the United States toward seeking approval in additional markets with higher regulatory barriers.
In addition to its first international launch of VLN reduced nicotine content cigarettes in the more than $800 billion global tobacco market, 22nd Century Group is actively moving forward to launch VLN in the $80 billion U.S. market.
The U.S. FDA authorized 22nd Century’s VLN reduced nicotine content cigarette products on Dec. 23, 2021. The company is currently executing its 90-day post-authorization plan to launch in its first U.S. pilot market.
February 28, 2022
Duterte Urged to Sign Vaping Bill

Photo: Gajus
The Coalition of Asia Pacific Tobacco Harm Reduction Advocates (CAPHRA) has written to Philippine President Rodrigo Duterte asking him to urgently sign the Vaporized Nicotine Products Regulation Act into law.
Both the Philippine Senate and House of Representatives have ratified the harmonized version of the act, which will regulate the use, manufacture, importation, sale, distribution and promotion of vaping and heated-tobacco products. It now awaits the president’s signature or veto.
“The weight of the scientific evidence shows that potentially thousands of Filipino lives can be saved by making this act the law of the land,” wrote CAPHRA, backed by its expert advisory group and member organizations throughout the Asia-Pacific region.
CAPHRA told Duterte that, when enacted, the legislation will provide 16 million Filipino smokers with the world’s most effective smoking cessation tool, saving the lives and enhancing the health of millions of Filipino smokers and their families, friends and co-workers.
“Hundreds of peer-reviewed international scientific studies have found innovative smoke-free products such as e-cigarettes and heated-tobacco products to be far less harmful than combustible tobacco and offer the best options to make smokers switch or quit,” wrote Nancy Loucas, executive coordinator of CAPHRA. “The act will ensure the regulation of these products so that they meet government standards to protect consumers and will contribute revenue via taxation.”
The letter said signing the act into law and giving Filipino smokers the option of choosing less harmful alternative nicotine products will create an enduring presidential legacy. It will prove to the world that Duterte is a leader who put the health and well-being of his people, based on science, above the special interests of foreigners.
February 28, 2022
Broughton Establishes U.S. Subsidiary

Tony Jones (Photo: Broughton)
Broughton is establishing a U.S. subsidiary to enhance its presence in the region. Leading the U.S. team will be Tony Jones, who joins Broughton as managing consultant. Jones has extensive experience in toxicology and risk assessment.
“I am delighted to be spearheading this exciting next stage of the development of Broughton in the U.S. market,” said Jones. “I’m looking forward to introducing the full lifecycle development services offered by the Broughton team to U.S. clients across pharmaceuticals, nicotine and cannabinoids to help the company support their clients to accelerate innovation to market and improve health outcomes.”
Along with the appointment of Jones, Broughton has strengthened its consultancy team with several new members.
Libby Clarke and Carol Beevers have joined the company’s toxicology team. Clarke is a European registered toxicologist and has substantial experience devising toxicology testing strategies and compiling submissions to regulatory bodies, such as the U.S. Food and Drug Administration and Health Canada. Beevers is a genetic toxicology specialist and has contributed to more than 20 papers in peer-reviewed journals. She is a member of the U.K. Committee on Mutagenicity and several international working groups on genotoxicity testing.
In recognition of the growing importance of behavioral science in regulatory submissions, Broughton has also strengthened its in-house team with the appointment of Oliver Knight-West. Knight-West has conducted multiple behavioral and clinical studies into next-generation nicotine products and pharmaceuticals for dossier submission to the FDA, the U.K. Medicines and Healthcare products Regulatory Agency, and the European Medicines Agency.
He has published many scientific papers in several highly cited publications.
To complement the appointment of Paul Hardman in 2021, Malcolm Saxton has joined the chemistry consultancy team. Saxton will help ensure that Broughton remains at the forefront of the industry in terms of novel method development aligned with evolving market and regulatory needs.
“Since 2006, our focus has always been to help our clients succeed,” said Broughton CEO Chris Allen. “With a passion for enhancing societal health and well-being, the establishment of a North American subsidiary is a natural next step to enable us to better partner with our customers in the region.”
February 28, 2022
Canada Approves Medicago’s Vaccine

Photo: M.Rode-Foto
Health Canada has approved Covifenz, a tobacco plant-based coronavirus vaccination developed by GlaxoSmithKline and Medicago, a biopharmaceutical company backed by Philip Morris International.
“The approval of our Covid-19 vaccine is a significant milestone for Canada in the fight against the pandemic. We appreciate Health Canada’s timely review,” said Takashi Nagao, president and CEO of Medicago, in a statement. “We’re also grateful for the government of Canada’s support in the development of this new vaccine, and we are manufacturing doses to start fulfilling its order.”
“This first approval is an important milestone in our approach of pairing GSK’s well-established pandemic adjuvant with promising antigens to develop protein-based, refrigerator-stable Covid-19 vaccines to help protect people against Covid-19 disease,” said Roger Connor, president of GSK Vaccines. “We look forward to working with Medicago to make the vaccine available in Canada and to progress further regulatory submissions.”
The government of Canada has a contract with Medicago to supply the Covid-19 vaccine.
“As one of our government’s top priorities has been to reverse the 40-year decline faced by Canada’s biomanufacturing sector, we are pleased to see Medicago’s vaccine approval. It is a great milestone for Canada’s biotechnology sector and for homegrown innovation. We will continue to support companies that want to produce vaccines in Canada and join the growing national biomanufacturing sector,” said François-Philippe Champagne, minister of innovation, science and industry.
Health Canada based its decision on scientific data shared by Medicago as part of its rolling submission that began in April 2021 under an Interim Order and concluded with the filing of a New Drug Submission-CV.
“Today is a great day for Medicago as Covifenz becomes its first approved vaccine,” said Yosuke Kimura, chief scientific officer at Medicago. “I’d like to thank the clinical investigators involved in our trials as well as Medicago’s passionate and curious team of over 500 scientific experts and employees. Today only reinforces our commitment to using our technology to provide rapid responses to emerging global health challenges and to advancing therapeutics against life-threatening diseases worldwide.”
Covifenz uses coronavirus-like particle technology with the vaccine composed of recombinant spike (S) glycoprotein expressed as virus-like particles co-administered with GSK’s pandemic adjuvant. The vaccination regimen calls for two doses given intramuscularly 21 days apart (3.75 micrograms of coronavirus-like particle antigen in combination with GSK pandemic adjuvant in the same injection). The vaccine is stored at 2 degrees Celsius to 8 degrees Celsius. The Covifenz antigen will be manufactured in Canada and in North Carolina, USA.
February 25, 2022