Big Tobacco Is About to Dominate the E-Cig Industry

Date:

The clock is ticking down for e-cig makers to submit premarket applications to the FDA for approval.

The electronic cigarette industry is poised to irreversibly change next week. Manufacturers face a Sept. 9 deadline to submit premarket tobacco product applications (PMTA) to the Food & Drug Administration or face having their e-cigs and e-liquids pulled from store shelves.

Because the cost of complying with the regulations is staggeringly high, many manufacturers will not be able to make it over the hurdle, and the e-cig market will be left largely to the tobacco giants.

Crunch time

Some 650 PMTAs have been submitted to the FDA as of June, the most recent data available, but each application covers a separate product. Philip Morris International (NYSE:PM), the first company to file an application, had four separate PMTAs approved: one for its IQOS heated tobacco device and three for flavors of its disposable Heatsticks.

Although the FDA estimates a single PMTA costs anywhere from $117,000 to $466,000, those figures are considered low by the industry. The Rocky Mountain Smoke-Free Association estimates a single PMTA costs between $8.6 million and $11.1 million per stock keeping unit (SKU). It forecasts 14,000 small vape businesses employing 166,000 workers will be destroyed, representing $24 billion in economic activity.

The problem is it’s not just e-cig manufacturers that need to comply with the regulations, but also manufacturers of the e-liquids the devices use, as well as the vape shops that sell them.

Read full article here.

Rich Duprey – Motley Fool – September 3, 2020.

 

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