A hedge fund might force Philip Morris International to raise its bid for Swedish Match, according to an article in The Wall Street Journal.
On May 11, PMI offered SEK161.2 billion ($16.14 billion) to purchase Swedish Match. The acceptance period for the offer was initially set to expire on Sept. 30, 2022, but was later extended to Oct. 21, 2022, as the bid awaits approval from the European Commission.
The offer is conditional on PMI gaining more than 90 percent of Swedish Match’s Stockholm-listed shares.
Since the companies announced their deal, Elliott Management Corp. has acquired an undisclosed stake in Swedish Match. According to Massimo Stabilini, a hedge-fund manager at London-based Sinclair Capital, Elliott is trying to get a better price from PMI.
Elliott would need to buy close to $1.6 billion worth of Swedish Match stock to stop Philip Morris reaching 90 percent, suggesting it might need others to join its campaign. Under Swedish rules, it will also have to disclose its holding if its stake reaches 5 percent.
Elliott is not the only Swedish Match shareholder seeking better terms. Earlier this year, shareholder Bronte Capital also opposed the takeover, saying the offer price was “unacceptable,” according to Reuters.
Investors holding out for a better price are betting that PMI will cough up rather than walk away from the deal. The acquisition is key to the cigarette giant’s stated goal of generating more than 50 percent of its net revenue from smoke-free products by 2025, up from 29 percent last year.
Elliott has proven willing to play a longer game before, according to The Wall Street Journal. In 2016, it took a more than 10 percent stake in Arcam after General Electric Co. agreed to buy the Swedish 3-D printing company. GE later raised its bid and lowered its minimum approval threshold to 75 percent.
The U.S. Food and Drug Administration on Aug. 18 issued a warning letter to VPR Brands (doing business as Krave Nic) for marketing illegal flavored nicotine gummies—the first warning letter for this type of product.
According to the FDA, these types of gummies are of particular public concern because of their resemblance to kid-friendly food or candy products and the potential to cause severe nicotine toxicity or even death among young children.
VPR Brands markets gummies that have 1 mg of nicotine each and are available in three flavors – Blueraz, Cherry Bomb and Pineapple. The packaging claims that the products contain tobacco-free nicotine. This firm has not submitted a premarket tobacco product application to the FDA, and does not have a marketing authorization order to manufacture, sell or distribute these products in the U.S.
“Nicotine gummies are a public health crisis just waiting to happen among our nation’s youth, particularly as we head into a new school year,” said FDA Commissioner Robert M. Califf in a statement. “We want parents to be aware of these products and the potential for health consequences for children of all ages—including toxicity to young children and appeal of these addictive products to our youth. The FDA will not stand by as illegal products infiltrate the marketplace.”
Respira Technologies as appointed former Altria Group executive and current Respira COO Brian Quigley as its new CEO. Respira’s founder, Mario Danek, will transition to the role of chief technology officer.
Quigley spent 16 years at Altria Group, with seven years as president and CEO at Altria’s smokeless and innovative products/vapor businesses. Quigley has been an active investor in both the cannabis and alcohol spaces and sits on the boards of Mustgrow Biologics and Belle Isle Craft Spirits.
With Respira in the midst of securing financing for clinical trials, Danek made a significant change to the structure of the company’s leadership team. Quigley’s background as a successful business leader and Fortune 150 CEO in the space will help drive Respira to its next phase as it advances to an investigational new drug submission to begin human clinical trials. This transition will enable Danek to focus on the technology behind Respira, concentrating on inventing and refining its innovative inhalation device across multiple potential indication areas and target markets.
Respira is a California venture-backed health tech company focused on commercializing proprietary inhalation device technologies to improve patient outcomes. The company is currently engaged with U.S. Food and Drug Administration Center for Drug Evaluation and Research to pursue a combination product authorization as the first inhalable prescription smoking cessation therapy.
A new study carried out by the Center of Excellence for the Acceleration of Harm Reduction in Sicily confirms that vaping presents a lower risk to heart health than does smoking.
The researchers replicated a 2017 BAT study, which demonstrated that the endothelial cell migration inhibition caused by cigarette smoke is not caused by e-cigarette aerosol exposure. (The endothelium is a membrane lining the heart and blood vessels).
Using the Vype ePen3 and the heated-tobacco products Glo Pro and IQOS 3 Duo, the Replica study corroborated the findings of the BAT study.
Riccardo Polosa
“The interesting fact is that switching to combustion-free products reduces vascular damages and prevents the possibility of the onset of smoking-related diseases, such as arteriosclerosis and hypertension,” said Massimo Caruso, an author of the study. “Once again, our research has challenged the notion that e-cigarettes or heated tobacco cause similar damage to that of combustible cigarettes.”
The study is part of the Replica Project, whose mission is to replicate studies conducted by tobacco companies—whose research is routinely dismissed as conflicted—in order to independently assess their scientific validity.
“By replicating the findings generated by tobacco industry studies on e-cigarettes and heated tobacco products, we are proving that these results are robust and trustworthy,” CoEHAR founder Riccardo Polosa told Filter.
Some 900 million people, or 96 percent of the population, of the 35 countries of the Americas are currently protected by at least one of the six tobacco control measures recommended by the World Health Organization, up 50 percent from 2007, according to a new report by the Pan American Health Organization (PAHO).
While 26 countries in the region have achieved the highest level of application of at least one measure, other measures, such as increased tobacco taxes, have made slow progress, and nine countries have not yet taken any action.
The report shows that, in 2021, of 35 countries in the Americas:
24 are implementing measures to protect against exposure to secondhand smoke;
22 require large graphic warnings on tobacco packages;
10 have surveillance systems with data on tobacco use;
six offer a comprehensive system to help people quit smoking;
nine ban tobacco advertising, promotion and sponsorship;
three apply indirect taxes to cigarettes that account for at least 75 percent of the retail price; and
seven ban the sale of electronic nicotine-delivery systems.
According to the PAHO, progress in the application of the World Health Organization’s MPOWER principles has helped reduce the prevalence of tobacco use from 28 percent of the region’s population in 2000 to 16.3 percent in 2020, the second lowest in the world. In 2020, South America became the first smoke-free subregion of the Americas, where smoking is absolutely prohibited in enclosed public places, in workplaces and on public transport.
The PAHO report warns that new and emerging nicotine and tobacco products, such as e-cigarettes, are becoming increasingly available and accessible. The group urges governments to enact regulations that prevent nonsmokers from starting to use these products and prevent tobacco use from becoming socially acceptable again.
E-cigarettes may help people decrease their dependence on combustible cigarettes without increasing their overall nicotine dependence, according to a recent Penn State College of Medicine study.
The researchers enrolled 520 participants interested in reducing their cigarette intake but with no plans or interest to quit smoking and instructed them to reduce their cigarette consumption over the six-month study period. Participants randomly received an e-cigarette that delivered 36, 8 or 0 mg/mL of nicotine, or a cigarette substitute that contained no tobacco, as an aid in their efforts to reduce their cigarette consumption.
At six months, all participants in the e-cigarette groups reported significant, decreased cigarette consumption, with those in the 36 mg/mL group smoking the least number of cigarettes per day. Those in the e-cigarette groups reported significantly lower dependence on the Penn State Cigarette Dependence Index than those in the cigarette substitute group.
“Our results suggest that using e-cigarettes or a cigarette substitute to reduce cigarette consumption can result in a reduction of self-reported cigarette use and dependence,” said Jessica Yingst, who directs the College of Medicine’s Doctor of Public Health Program. “Importantly, use of the high-concentration e-cigarette did not increase overall nicotine dependence and was associated with a greater reduction in cigarette smoking compared to the cigarette substitute.”
The U.S. Food and Drug Administration’s focus on preventing sales of flavored vaping products by well-known mass-market brands and open-system products has created a parallel gray market of little-known disposable brands, according to industry expert Jim McDonald.
Writing for Vaping360, McDonald cites figures from the Chicago market research firm IRI showing that the disposable vape sales in the United States have grown from less than 2 percent of the convenience store e-cigarette market to 33 percent in three years.
The growth of the disposable market is a direct result of FDA actions. In January 2020, the agency banned most flavored e-cigarettes. The policy, however, permitted all flavors to be sold in devices that cannot be refilled and are designed to be disposed of after the flavored nicotine has run dry.
In 2018, then market leader Juul Labs was pressured into removing most of its flavored pods from the market in response to concerns about youth vaping.
The crackdown on flavored products sold in the regulated market coincided with the growth of the disposable gray market, which was largely unknown to regulators and the national news media.
None of the disposable vapes that are currently popular have received authorization from the FDA, although some disposable manufacturers have submitted premarket tobacco product applications, and some have challenged FDA marketing denial orders (MDOs) in court or through FDA administrative appeals.
McDonald says the developments bode ill for the vaping policies in the U.S. and elsewhere. “It will be the suckers that submitted applications and made good-faith efforts to comply with the agency’s regulations that get MDOs and warning letters while the gray market sellers will change their product names and laugh at the clumsy regulator,” he writes.
Seventy percent of respondents to an international survey conducted earlier this year said they are either “bothered” or “really bothered” when tobacco companies make money from an inhaler, medication or other devices that treat their lung conditions.
A total of 1,196 people who reported inhaler use completed the survey in early 2022.
After Philip Morris International acquired pharmaceutical company Vectura in 2021, patient advocacy groups wanted to understand patients’ attitudes toward tobacco organizations’ stake in the companies that make their respiratory inhaler devices. Vectura develops several widely used medical delivery devices and/or formulations for inhaled therapies used in people with chronic lung diseases, including chronic obstructive pulmonary disease (COPD) and asthma.
The COPD Foundation partnered with Global Allergy and Airways Patient Platform and Lung Foundation Australia to conduct the survey among people with chronic lung diseases in English, Spanish and German between January and March of 2022.
In addition to expressing concern about tobacco ownership of lung treatments, a significant share (48 percent) of patients surveyed also said they would strongly consider switching inhalers if they knew that a tobacco company made or sold their brand of an inhaler.
“This was an unexpected finding, as many patients in my own practice indicated a preference to stick to medications that work for them,” said Byron Thomashow, chief medical officer at the COPD Foundation, and co-author of the Thorax brief in a statement. “However, socioeconomic, and systemic factors such as insurance coverage, health care system limitations, and convenience strongly influence the patient’s ability to make treatment choices.”
Smoore’s flagship atomization platform, Feelm, has received an e-cigarette production license from China’s State Tobacco Monopoly.
In early 2022, China introduced new national standards for electronic cigarettes, which required companies manufacturing these devices to obtain a production license. Three Smoore factories, two of which are licensed under the Feelm brand, have been granted these licenses, with Feelm also receiving official approval to produce e-cigarettes as its own entity.
In a press note, Smoore said it welcomed the new policy framework, as it ensures that all e-cigarette manufacturers now operate in full compliance with the law. The company says it aims to use science and technology as the driving force behind its business model.
With its products available in more than 50 countries, Feelm now has a total annual production capacity of 2 billion devices and boasts a fully automated production line that can produce more than 7,200 atomizers per hour.
Earlier, the STMA issued an e-cigarette production license to Smoore’s Vaporesso brand. As of Aug. 4, more than 130 enterprises, including RLX Technology and BYD Electronics, had obtained licenses, according to Panda Daily.
The crisis in Ukraine offers an opportunity to transform tobacco use across eastern and central Europe.
By Derek Yach
Vladimir Vorotnikov, writing in Tobacco Reporter’s August 2022 issue, outlined how Russia’s invasion of Ukraine has upended well-established supply chain and business relationships that have been in effect for decades. In fact, a careful read of Balkan Smoke by Mary C. Neuberger traces the roots of these relationships way back to Bulgaria in the 1920s. Vorotnikov discussed the impact of sanctions on Russian tobacco production, the emergence of illicit trade in the region, and more recently, the reestablishment of cigarette production in Ukraine.
He does not discuss the massive growth over the past few years in new reduced-risk nicotine products—led by IQOS—across eastern and central Europe. The editor makes the point that Russia is (was) one the largest markets for IQOS. My own observations during a visit to Kyiv in late October 2021 were that a range of vape products and heated-tobacco products were readily available across the city despite posters funded by Bloomberg Philanthropies near the Parliament proclaiming that they were dangerous.
An anti-vaping poster in Kyiv (Photo courtesy of Derek Yach)
This is a time of profound transition for the region. Amid the horrors of war and the human tragedies it continues to bring to the people of Ukraine are opportunities to reduce future deaths from the single largest cause of premature death in the region—and especially among men—combustible tobacco products. As rebuilding begins—as it inevitably will—government, business and health professionals need to grasp the chance to avoid rebuilding the tobacco industry in the image of the past and rather take the high ground of health and make reduced-risk products the easily available option while phasing out combustible sales.
For governments, this means adopting risk-proportionate regulations that build on the approaches proposed by the recent Javed Khan report for the United Kingdom, and on the authorizations of a range of reduced-risk products by the U.S. Food and Drug Administration. Ukraine and the neighboring countries relied on FDA guidance in relation to Covid vaccine advice—now is the time to draw upon their guidance to accelerate access to reduced-risk products, citing the FDA’s comments that they are deemed “appropriate for the protection of public health.”
Tax and other regulatory approaches could be applied to accelerate the transition. Further, governments of the region need to step up investments in customs and excise oversight to stop large-scale illicit trade taking hold—as it has in the occupied territories of Georgia following Russian invasion in 2008.
The Russian government also has an obligation to protect the health of its people and take regulatory steps to ensure that the progress made by Philip Morris International, Japan Tobacco International and BAT is increasing their revenue from heated-tobacco products at the cost of combustibles. Slippage with regard to these gains will translate into a return to the very high smoking rates, and associated death rates, of the past.
Government actions will be limited, though, unless the three leading tobacco companies (PMI, JTI and BAT) active in the region commit to take concerted efforts to accelerate their transition out of combustibles and publicly clarify what “withdrawing from Russia” means. Are they continuing to profit from Russian cigarette sales albeit through local companies? Are those companies obliged to push ahead with reduced-risk products, or will they revert to cigarettes?
Outside of Russia, leading tobacco companies could communicate the benefits of switching, take measures to clamp down on illicit trade and tighten youth access to all nicotine products, through joint action. Such bold actions would give them a chance to show their seriousness to transformation—something investors should reward.
United Nations agencies have a role to play at this time. Evidence emerging from inside Ukraine suggests that smoking rates have increased among those in the military and possibly among displaced peoples. This is understandable given the unprecedented stress to which people are exposed. The current U.N. response has been to ignore this reality and simply continue to support policies that ban cigarette sales during conflicts—something that is probably ignored. A far better way forward is to support people who smoke or seek nicotine to have ready access to nicotine-replacement products and approved reduced-risk nicotine products. This would mean that a generation of people may well emerge from the war with lower overall risks to their health.
War and tobacco use are intimately linked and currently interacting in dangerous ways to the health of populations. We should not wait for the transition to peace and health to begin before taking steps to accelerate the transition of smokers away from combustibles.
A global health expert and anti-smoking advocate for more than 30 years, Derek Yach is the owner of Global Health Strategies. Previously, Yach was the director of the Foundation for a Smoke-Free World and a World Health Organization cabinet director and executive director for noncommunicable diseases and mental health. He was deeply involved with the development of the Framework Convention on Tobacco Control.
