Category: News This Week

Creditor protection granted
Philip Morris International’s Canadian subsidiary, Rothmans, Benson & Hedges (RBH) has obtained an initial order from the Ontario Superior Court of Justice granting it protection under the Companies’ Creditors Arrangement Act (CCAA).
In a note posted on its website, PMI said that RBH had said that obtaining creditor protection became necessary following recent developments in two class action proceedings in Québec against RBH, Imperial Tobacco Canada, and JTI-Macdonald.
PMI listed the key elements and impact of RBH’s decision to file for protection:
- ‘The initial order includes a comprehensive stay of all tobacco-related litigation pending in Canada against RBH and PMI, thus providing an efficient forum for RBH to seek resolution of all such litigation.
- ‘The CCAA process allows RBH to carry on its business in the ordinary course with minimal disruption to its customers, suppliers and employees.
- ‘As a result of the filing, and under US GAAP, PMI will deconsolidate RBH from its financial statements, resulting in an estimated one-time non-cash charge of approximately $0.10 per share, as described below.
- ‘While it remains under creditor protection, RBH does not anticipate paying dividends. As RBH has not paid dividends since the trial court’s judgment in May 2015, the deconsolidation will not have an impact on PMI’s current annualized dividend rate.’
PMI said that, as a result of the deconsolidation of RBH, PMI was revising its full-year 2019 reported diluted earnings per share forecast to be at least $4.90 at prevailing exchange rates. This full-year guidance, it said, reflected:
- ‘The current estimated one-time net impact of the deconsolidation of RBH under US GAAP of approximately $0.10 per share, to be recorded in the first quarter of 2019, which is a non-cash item, plus the tobacco litigation-related charge of approximately $0.09 per share announced on March 4, 2019; and
- ‘The exclusion of RBH’s previously anticipated earnings from PMI’s consolidated financial statements from the date of deconsolidation to December 31, 2019, of approximately $0.28 per share.’
March 25, 2019
FDA final guidance
US vape shops that modify a product so that it is deemed by the US Food and Drug Administration to be a ‘new tobacco product’ are required to comply with the agency’s premarket authorization requirements, according to a final FDA guidance.
In a note issued through its Center for Tobacco Products, the FDA said it had posted a notice in the Federal Register announcing the publication of the final guidance, Interpretation of and Compliance Policy for Certain Label Requirement; Applicability of Certain Federal Food, Drug, and Cosmetic Act Requirements to Vape Shops. This guidance was said to finalize the draft guidance of the same title, which was available for public comment on January 17, 2017.
‘Under section 903(a)(2)(C) of the Food, Drug, and Cosmetic Act [FD&C], a tobacco product in package form is misbranded if its label does not include an accurate statement of the percentage of tobacco used in the product that is foreign-grown and domestic-grown,’ the note said. ‘This guidance clarifies FDA’s interpretation of this as applying only to tobacco products that are made or derived from tobacco. Tobacco products (such as components, parts, and accessories) that are not made or derived from tobacco would not be required to bear the statement.
‘Additionally, at this time, FDA does not intend to enforce this requirement for certain products, including tobacco-derived liquid nicotine, e-liquid made or derived from tobacco, cigars, smokeless tobacco, and waterpipe tobacco. FDA is providing this compliance policy as the agency recognizes the current scientific and technical difficulties of quantifying the percentage of foreign and domestic tobacco used in these products.
‘The guidance also clarifies [that] vape shops that are tobacco product manufacturers are subject to the requirements in section 904(a) and (c) of the FD&C Act, including the requirements to provide ingredient listings, report harmful and potentially harmful constituents, and submit health documents. Those vape shops that modify a product so that it is a new tobacco product are required to comply with the premarket authorization requirements. Vape shops that are engaged in the manufacture, preparation, compounding, or processing of tobacco products are required to comply with the establishment registration and product listing requirements in section 905 of the FD&C Act.
‘The final guidance explains certain activities which modify a product, and which would subject the vape shop to the requirements of the Act that apply to manufacturers and includes a compliance policy for limited circumstances for which FDA does not intend to enforce these requirements…’
March 25, 2019
Pregnant finding
Researchers at the Department of Drug Design and Pharmacology of the University of Copenhagen, Denmark, say that tobacco smokers who become pregnant cannot protect their fetuses sufficiently by undertaking a quit-tobacco-smoking course, according to a story by Stephen Gadd for The Copenhagen Post.
“When a pregnant woman uses nicotine chewing-gum or any other form of nicotine substitute in connection with stopping smoking, she risks damaging her fetus as much as if she’d continued to smoke,” associate professor and brain researcher Jesper Tobias Andreasen, was said to have told BT tabloid.
The negative effects were said to be caused by nicotine’s reducing the flow of blood through the placenta leading to the fetus not receiving enough oxygen to the brain. This could cause conditions such as ADHD, anxiety, depression and addictive tendencies later in life.
Andreasen points out that a ‘stop smoking’ course is all very well but the only safe way to do it is to go ‘cold turkey’ – without any form of nicotine substitutes.
Vaping was said also to present a risk to the fetus because the levels of nicotine in the liquids used contained ‘very variable amounts and often more than normal cigarettes’.
Up to now, the Copenhagen research has been carried out on mice. But Andreasen said that it was known “from extensive studies that people who have been exposed to nicotine in the womb show a higher propensity to ADHD, anxiety, depression and drug abuse”.
The researchers say they intend to publish their findings in a scientific journal within the next couple of months.

March 25, 2019
Broughton launches Nicotine Services
The Broughton Group has launched Broughton Nicotine Services. A spin-off from Broughton Laboratories, the new company will specialize in accelerating safer nicotine-delivery products to market.
The launch coincides with the development of a 15,000 square foot CRO facility in Lancashire, U.K., designed specifically to address the needs of the electronic nicotine delivery systems (ENDS) market. Having operated in this rapidly expanding and changing market for almost 10 years, the company believes it is now perfectly placed to guide ENDS companies through a period of growth and regulatory change.
Broughton Nicotine Services raised more than £5 million ($6.58 million) in 2018 to invest in the new facility, which includes several specialist laboratories equipped with the latest aerosol collection instruments, high-spec analytical equipment and fully validated software data management systems.
A standalone stability facility covering all ICH storage requirements has been included in this initial phase of developments. Led by a growing team of experienced scientists and analytical chemists, the operation is aligned with capacity for further expansion during 2019 to meet the expectations of its global client base.
‘’We have seen rapid change over recent years within the reduced-risk nicotine products market,” says Broughton Nicotine Services CEO Paul Moran. “At Broughton Nicotine Services, we are committed to supporting this evolving industry towards creating a smoke-free future through innovations, scientific advancement and regulatory compliance. Operating as an independent company within the Broughton Group, specializing in next generation nicotine delivery, will enable us to continue to accelerate the transformation of this exciting industry for our clients.”
March 22, 2019
Problem cannot be patched
Taxpayers in the state of South Australia will pay for nicotine substitutes for prisoners as the state moves to make its jails smoke-free, according to a story by Rebecca Puddy at abc.net.au.
The Department for Correctional Services has estimated that 80 percent of South Australia’s 2,800 prisoner-population comprises smokers, with 75 percent smoking daily.
Under the current smoking rules, prisoners can buy their own cigarettes and tobacco from canteens.
A $2 million bill for nicotine patches and lozenges will form part of the $6.2 million cost to taxpayers of keeping cigarettes out of the state’s prisons in the years to 2022, with additional funding set aside for health and security measures, staff costs and quit support.
The smoking ban has received bipartisan support and strong backing from Cancer Council SA and the Public Service Association, the union representing the state’s prison guards.
Under the current structure, SA Health pays for NRT in prisons that have not enacted a smoking ban but will hand over this cost to the Department for Correctional Services when the ban is introduced at the end of the year.
Under the rules to be introduced as prisons become smoke-free, taxpayers will foot the bill for the first six weeks of a nicotine replacement program, with prisoners required to pay one quarter of the cost for the next three weeks, and 50 percent of the cost for the final three weeks.
Cancer Council SA spokeswoman Alana Sparrow said the Government had worked with stakeholders to develop a “good evidence-based approach”, learning from the experiences of other states.
“We have looked at evaluations in different states and territories – in some it has worked extremely well but we are also learning from the experiences in other states like Victoria,” she said.
A 2018 study of former prisoners in Queensland found 94 percent relapsed to smoking within two months of their release, with 72 percent doing so on the day of their release
March 22, 2019
Hybrid device well received
KT&G sold more than 200,000 of its lil Hybrid devices within 80 days of their launch in South Korea, according to a story by Baek Byung-yeul for The Korea Times.
The new device is a hybrid in that it uses both electronic-cigarette and heat-not-burn (HNB) technologies, which means that the consumer uses both e-liquid cartridges and tobacco sticks at the same time.
The company’s lil Hybrid device, its MIIX tobacco sticks and e-liquid cartridges were launched in December.
KT&G said yesterday that sales of the hybrid device were growing faster than those of the original lil HNB device, which took about 100 days to pass the 200,000 mark.
Sales of its lil HNB device hit one million in October 2018 and 1.5 million this month.
South Korea’s e-cigarette market has seen growing competition in recent years and industry insiders believe the race to take the lead will peak this year because JUUL Labs is expected to roll out its e-cigarette.
Lim Wang-seop, the chief of KT&G’s innovative product department, was quoted as saying that his company had been developing new products that could compete with Juul.
The e-cigarette market accounted for only 3.13 percent of the entire tobacco market in South Korea, he said, but KT&G expected this share to grow to about 14 percent to 15 percent after the introduction of Juul.
Nevertheless, Cho Sang-hoon, an analyst at Samsung Securities, was quoted as saying that KT&G wouldn’t be negatively affected by the market changes.
KT&G’s share in the regular cigarette market would grow by about one percent to 62.9 percent this year, while its share in the e-cigarette market would increase to about 30 percent this year, from about 17 percent in 2018.
March 22, 2019
Taxing balancing act
Indonesia is to follow a policy of foreshadowing cigarette excise increases in such a way as to limit smoking while lessening the impact of any cigarette-sales reduction on tobacco-industry jobs, according to a story at en.tempo.co.
Finance Minister Sri Mulyani Indrawati said the Government had to address two concerns before issuing a regulation on cigarette excise: its impacts on health and the industry.
Sri Mulyani said that the use of tobacco by smokers, especially children, would badly affect their health in the future; so the Government imposed excise on tobacco products in a bid to lessen its consumption.
However, on the other side of the coin, the tobacco industry employed a large number of workers, including tobacco and clove farmers.
Speaking before millennials at a Youth Engagement event at Balai Sarbini, Jakarta, Sri Mulyani implied that, given these circumstances, it was difficult for the Government to decide whether to prioritize individual physical health or economic health.
Therefore, she said, the Government planned to gradually increase taxes based on the roadmap of tobacco excise, which would provide “a signal to the tobacco industry and regional administrations”.
At the same time, Sri Mulyani said, the Finance Ministry, through the Customs and Excise Directorate General, would strive to reduce the illegal trade in cigarettes.
In 2017, the illegal trade was said to have accounted for 10.9 percent of the cigarette market, a figure that fell in 2018 to 7.03 percent.
March 22, 2019
Malawi crop confirmed
The torrential rain associated with Cyclone Idai has not affected tobacco production in Malawi, according to a story in The Maravi Post quoting the Tobacco Control Commission (TCC).
The rain has caused devastating floods in some parts of the country, but, reportedly, not in the areas where tobacco is grown.
Addressing the Media Network on Tobacco (MNT) on Wednesday in the capital, Lilongwe, TCC CEO, Kayisi Sadala said a second crop estimate had put tobacco production at 205.5 million kg, fractionally more than that of the previous season, 202 million kg.
Meanwhile, the MNT acting vice chairperson, Arnold Mnelemba, reminded the TCC of child labor issues, saying they were critical and needed to be addressed.
He said, too, that there was a need for a program of afforestation to make the growing of the crop sustainable.
March 22, 2019
E-cig epidemic explodes
The US Food and Drug Administration Commissioner Scott Gottlieb, MD, has said that his agency might need to pull pod-based nicotine products off the market to fight teen vaping, according to a story by Anna Edney published by the LA Times.
Speaking at the Brookings Institution on Tuesday, Gottlieb said he had had a contentious meeting last week with executives of Altria and Juul Labs.
“The e-cigarette industry has been overly dismissive” of the risk that young people could become addicted to nicotine through e-cigarette use, Gottlieb said. “We’re capturing an exploding epidemic right now.”
Gottlieb said the FDA was working on defining what constituted a pod-based product in case it needed to ban them temporarily.
Sales of vaping pods could resume if manufacturers showed that their devices were geared toward adult cigarette smokers trying to quit, and not toward young people.
“It was a difficult meeting,” the commissioner said, noting that there was a “disconnect” between the companies’ priorities and those of health officials.
He added that it appeared Altria’s decision to purchase a stake in Juul was purely a business decision and not driven by public health concerns.
Edney said that Altria and Juul hadn’t responded to Gottlieb’s characterization of the meeting.
But she added that both companies said they remained committed to combating underage use of e-cigarettes.
March 21, 2019
E-cig ban proposed
Two San Francisco officials on Tuesday introduced bills that would ban the sale of electronic cigarettes in the city until the US Food and Drug Administration had evaluated their effect on public health, according to a story at cbsnews.com.
Supporters say that if the ban is approved, it will be the first in the country.
City Attorney Dennis Herrera and Supervisor Shamann Walton also proposed a bill at a Board of Supervisors meeting that would prohibit companies that make, sell and distribute tobacco products, including e-cigarettes, from occupying city-owned property.
The San Francisco Chronicle was quoted as saying that tobacco companies were already barred from doing business on city property, but that the proposed legislation would embrace e-cigarettes.
It wouldn’t apply retroactively, so Juul Labs would be allowed to stay in space it rents for its headquarters at Port of San Francisco property on Pier 70. But, says the Chronicle, e-cigarette companies wouldn’t be able to lease city property in the future.
Juul said in a statement to CBS News that the proposed legislation would limit adult smokers’ access to e-cigarettes that could help them kick regular smoking habits.
‘We encourage the City of San Francisco to severely restrict youth access but do so in a way that preserves the opportunity to eliminate combustible cigarettes,’ Juul said.
“This proposed legislation begs the question – why would the City be comfortable with combustible cigarettes being on shelves when we know they kill more than 480,000 Americans per year?”
Herrera said San Francisco, Chicago and New York had sent a joint letter demanding that the FDA begin its review. He said the review should have been done before e-cigarettes ever hit the market.
March 21, 2019