Thomas3.20.2010

Follow the Money Part II

Blog Post created by Thomas3.20.2010 on Mar 28, 2014

At present, e-cigs are for the most part unregulated, allowing companies to aggressively market them and claim that e-cigs are relatively safe. This approach can't be used with conventional cigarettes. However, opposition to e-cigs is building, and an unlikely backer is funding the move against these products.

Indeed, one of the biggest forces working against the introduction of e-cigs is Big Pharma. Big Pharma is highly active in the NRT market. GlaxoSmithKline  is the leading marketer of these products within the United States. Obviously, if smokers who are in the process of quitting turn to e-cigs rather than quit with NRT, GlaxoSmithKline will lose revenue.

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Furthermore, it would also seem as if GlaxoSmithKline has support from the U.S. Food and Drug Administration; in particular, Mitch Zeller, a former anti-tobacco lobbyist who was appointed head of the FDA's center for tobacco products earlier this year. Zeller disclosed that he:

...provides consulting support to GlaxoSmithKline consumer health through Pinney Associates on an exclusive basis on issues related to tobacco dependence treatment.

This pharmaceutical consultancy has regulatory authority over competing products, including e-cigs.

 Altria recently purchased Green Smoke, an international e-cig company with a distribution network and sales in the US and Israel. Meanwhile, Lorillard has acquired a British e-cig developer, although this does mean the company must compete with tobacco industry behemoth British American Tobacco, which has launched its first e-cig product in its home market.

In addition, Altria and Reynolds have made inroads in the NRT market within the US, both offering types of tobacco gum. Reynolds also has several smokeless snuff offerings, which are still registering strong demand. This is nothing new; it just helps set the company apart from its peers.

As a result, all will not be lost for these companies if the FDA moves against them. Smaller e-cig companies, however, could potentially be snuffed out overnight, as regulations benefit the industry's larger players.

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