Most of the e-cigarettes on the US market are OEM from Chinese e-cigarette factories.
On June 23, Eastern Time, the U.S. Food and Drug Administration (FDA) announced on its official website that it issued a marketing refusal order to the e-cigarette company Juul Labs Inc. (hereinafter referred to as “Juul”) that day, and the company must stop selling all products. , otherwise you will face the risk of administrative penalties.
Juul is one of the top giants in the e-cigarette market in the United States and is affiliated to the American Altria Group, which is also the owner of the cigarette brand “Marlboro”. In 2019, Juul’s e-cigarette market share in the United States once exceeded 70%.
“Except Juul, most of the top 5 e-cigarette brands in the U.S. market are manufactured by Smol, which is definitely good for Smol.” Zheng Zhi, founder of Ziyuan Technology and a PMTA certification expert, said in an interview with Times Finance that these brands are missing. a competitor.
In the early morning of June 23rd, Beijing time, there were rumors that Juul was kicked out of the U.S. market by the FDA. The Hong Kong stock e-cigarette index rose 4.88% that day, and Smol rose 5.61%.
Toxicology studies have conflicting results
“Juul had the opportunity to provide evidence that its products met the standards, but it didn’t,” said Michele Mital, acting director of the FDA’s Center for Tobacco Products. The FDA issues a marketing refusal order without data identifying the associated health risks.
The announcement of the FDA expulsion of Juul Source: FDA official website
According to the FDA announcement, after reviewing Juul’s premarket tobacco product application, the PMTA (Premarket Tobacco Application), it found that the company’s product toxicology research data was insufficient and conflicting results, including genotoxicity and e-liquid released data on harmful chemicals , Juul also prevented the FDA from doing a full toxicological risk assessment of its products.
Since there is no evidence to assess the toxicological risk of Juul products, the announcement also encourages Juul consumers to report health concerns and product concerns to the FDA.
The reporter learned that the FDA requires e-cigarette companies to apply for PMTA certification and submit materials for their products, and only after approval can they be sold in the US market. During the process, the FDA will evaluate the product’s formulation, manufacturing process, health risks, safety to individuals and groups, especially adolescents.
Juul applied for PMTA certification for two tobacco-flavored and menthol-flavored products, both with 5% and 3% nicotine concentrations. The company also applied for certification for tobacco rods, but both were rejected by the FDA. Previously, the FDA has banned the sale of e-cigarettes containing fruit flavors and sweeteners.
As far as Zheng Zhi knows, the FDA issued a listing refusal order to delist e-cigarette products. If the company refuses to delist, the FDA will issue a warning letter, and then law enforcement agencies will come to the door to force the product off the shelves, and may issue a huge fine. .
However, he also mentioned that Juul received a listing refusal order and could sue the FDA, and the product could continue to be sold during the litigation process, and that the FDA lost the PMTA case “not once or twice.”
No domestic company has obtained PMTA certification yet
my country’s electronic cigarette industry is export-oriented, manufacturing 90% of the world’s electronic cigarettes, and many companies do OEM for electronic cigarette giants in the US market. Small clearly mentioned in the financial report that Logic, the top e-cigarette brand in the US market, is its customer.
In the early morning of June 23, Beijing time, the Wall Street Journal quoted people familiar with the matter as saying that Juul would be expelled from the U.S. market by the FDA. On the same day, the stock prices of Hong Kong stock e-cigarette concept stocks China Tobacco Hong Kong, China Bolton, and Huabao International rose together, and Yiwei Lithium Energy, which indirectly participated in Smol, rose by 6.06%.
The fact that Juul e-cigarettes will be expelled from the U.S. market has attracted widespread attention from people in the e-cigarette industry in my country. Because the US market is very important to my country’s electronic cigarette industry, and many companies in my country are also applying for PMTA certification.
Currently, Juul and British American Tobacco’s Vuse are evenly matched. According to Nielsen data, Juul had a market share of 35.7% in the U.S. e-cigarette market in the four weeks ended March 26, surpassing Vuse, which had a market share of 33.9%.
Juul plays a pivotal role in the U.S. market, which is the world’s largest consumer of e-cigarettes and the largest exporter of e-cigarettes in my country. According to the report of the Electronic Cigarette Professional Committee of the China Electronic Chamber of Commerce, in the first quarter of 2021, 58% of China’s electronic cigarette export value came from the United States.
Taking Smol as an example, the financial report shows that in 2021, its revenue is 13.755 billion yuan. According to the place where customers are registered, the revenue from the United States and Hong Kong, China will be 12.2% and 27.5% respectively. Among the products sold to Hong Kong customers, 90.6% % shipped to the United States.
It is for this reason that many companies in my country apply for PMTA certification. According to the FDA’s official website, as of now, 23 types of electronic cigarettes and their main components have been certified by PMTA, including e-liquids, cartridges, and disposable electronic cigarettes, under the three brands of Vuse, Logic and NJOY.
Among them, Vuse belongs to British American Tobacco, the world’s second largest tobacco manufacturer, Logic belongs to Japan Tobacco, which is the third largest multinational tobacco company in the world, and NJOY is an American brand with a small company scale. These are not Chinese e-cigarette brands.
Zheng Zhi observed that the FDA reviews and approves in chronological order. Juul submitted the PMTA application as early as July 2020, and Chinese companies basically started to submit in August 2020. It is expected that the FDA will announce the results before the end of this year.
The FDA also mentioned in the previous announcement that it will continue to work hard to complete the review of the remaining pending PMTA certification. At present, the “boots” of PMTA have not yet been fully implemented, and the FDA has not yet expelled products for which PMTA applications have not been completed.
