Tang Wei

　　According to US media reports on the 23rd, the US FDA officially rejected the PMTA application for Juul e-cigarette tobacco flavors and menthol flavors, requiring Juul to stop selling and distributing its products in the United States.

　　Juul then issued an official statement, saying that it respected but disagreed with the findings and decision, and would explore options to appeal.

　　The FDA decision shocked the global e-cigarette industry.

A person in charge of a domestic e-cigarette company said: This is a day worth remembering.

Spur and reflect on our understanding of the industry.

The FDA has shown its attitude to practitioners in this industry with practical actions that quality and safety need to be focused on.

　　Affected by this news, the tobacco giant Altria Group, which owns a 35% stake in Juul (which owns brands such as Marlboro), fell sharply on Wednesday, giving back all gains during the year, and rebounded slightly on Thursday. As of the latest, its market value was $76.9 billion (about 514.9 billion). RMB).

Altria, which spent $12.8 billion for the aforementioned stake in 2018, had written down the investment to $1.6 billion earlier this year.

Morgan Stanley re-evaluated the impact of the Juul e-cigarette ban on it and maintained its "underweight" rating on Altria.

　　Today, Smol International (06969) rose by more than 6% in early trading. As of press time, it rose 5.77% to HK$22.9, with the latest market value of US$137.4 billion.

Some analysts believe that on April 27, NJOYAce became the first ceramic core product approved by the FDA. As a core supplier of NJOY products, Smol International may benefit from the accelerated concentration of the market structure brought about by the PMTA application.

If Juul exits the U.S. market, other brands that pass the PMTA will benefit from filling the gap.

　　From September 9, 2020, the U.S. Food and Drug Administration requires all e-cigarette products sold in the United States to apply for PMTA, and products that have not passed PMTA certification are not allowed to be marketed in the United States.

Both Smol International and Onewin Technology passed the FDA audit at the end of March this year.

FDA bans Juul products from U.S. market

　　Juul's market share in the US e-cigarette market once reached 70%.

2018 was its highlight moment. In July of that year, Juul completed a $650 million financing at a valuation of $15 billion. Investors included the well-known Tiger Global Fund and Fidelity.

Just five months later, the American tobacco giant Altria (Altria) spent $12.8 billion to acquire a 35% stake in Juul, valuing Juul at $38 billion, one head higher than SpaceX, which completed financing in the same period. .

After the Altria deal was completed, Juul management decided to give out $2 billion in year-end bonuses, which averaged about $1.3 million to each of its 1,500 employees.

　　Juul also entered the U.S. FDA's radar that year, when the company's fruit-flavored e-cigarettes and trendy marketing were accused of "fueling an underage drug boom."

In April 2018, the FDA asked Juul to provide internal documents about its social marketing and advertising strategy; in September, the FDA asked Juul to develop a specific plan on how to address teenage abuse of their products; in October, the FDA raided Juul’s headquarters, took away Thousands of pages of internal sales and marketing documents.

Juul suspended all print, radio and digital advertising in 2019.

In October 2019, before the FDA had determined that the ban on the sale of flavored e-cigarettes was about to be issued, Juul announced that it would stop selling flavored e-cigarette products in the United States. Juul only sold mint and original flavored e-cigarette products in the United States with nicotine.

　　Juul's sales have declined in recent years.

As of June this year, Juul's market share has slipped to second, the first is Reynolds' Vuse electronic cigarette.

Media reports said Juul recorded a loss of $259 million last year and revenue fell 11% to $1.3 billion.

　　Juul's PMTA application was submitted in July 2020.

Including a cigarette stick, two colors are gray and silver, and two flavors of pods, Virginia tobacco flavor and menthol flavor, each flavor has two nicotine concentrations, respectively 5.0% and 3.0 %, according to Juul, they submitted as many as 125,000 pages of application materials, including scientific research and market information.

　　On June 23, the FDA announced on its official website that it rejected the PMTA application for Juul products, requiring the company to stop selling and distributing these products.

In addition, the entire line of Juul products currently on the U.S. market must be removed, including Juul e-cigarettes and four types of Juul pods: Virginia tobacco-flavored pods with 5.0% and 3.0% nicotine, and 5.0% and 3.0% menthol flavored pods.

　　The FDA said in the ban statement that after evaluating Juul's product application, it determined that Juul's laboratory submitted research results on the genotoxicity and harmful chemicals of the company's patented e-cigarette cartridges with insufficient data and conflicting data. Questions are not fully answered.

　　The FDA therefore determined that the continued sale of Juul products would not protect public safety.

Therefore, Juul products must stop selling and distributing in the United States, and existing products on the market must be removed from the shelves, otherwise they will face legal risks.

Retailers should contact Juul to handle inventory.

However, there are no penalties for personal possession and use of Juul products.

　　"Today's action is a further step forward in the FDA's commitment to ensure that all e-cigarette and nicotine delivery system products currently sold to consumers meet our public health standards," said U.S. Food and Drug Administration Commissioner Robert M. "We invest in Substantial resources are available to review products from companies that make up the majority of the U.S. market. We recognize that these products play an important role, many of which have played a large role in the youth vaping popularity.”

　　FDA recommends against modifying or adding substances to tobacco products.

Juul users are encouraged to report any unexpected health concerns or product issues to the FDA through the Safety Reporting Portal and seek medical attention if necessary.

　　"The FDA's mission is to ensure that tobacco products sold in this country meet the standards set by the law, but the responsibility for demonstrating that products meet those standards ultimately rests with the companies." Michelle Mittal, acting director of the FDA's Center for Tobacco Products Say.

“Like all manufacturers, Juul has the opportunity to provide evidence that its products are marketed in compliance with these standards. However, the company did not provide that evidence and left us with important questions. In the absence of what is needed to determine the associated health risks data, the FDA is issuing these marketing denial orders.”

　　In addition to ensuring that Juul complies with the order in the same way as unauthorized products in general, the FDA intends to ensure that distributors and retailers comply with the order.

Specifically, the FDA noted that all new tobacco products on the market without statutory premarket authorization are illegally marketed and subject to enforcement.

　　It is understood that the FDA has authorized PMTA applications for 23 e-cigarette products so far, and NJOY, VUSE, and LOGIC have all received PMTA approvals.

Juul response: respect but disagree, will appeal

　　In response to the U.S. FDA’s official rejection of the PMTA application for Juul e-cigarette tobacco flavors and menthol flavors, Juul subsequently issued an official statement, saying that it respected but disagreed with the findings and decisions, and would explore options to appeal.

　　The following is the full text of the statement:

　　We respect but disagree with the FDA's findings and decisions and continue to believe that we have provided sufficient information and data based on high-quality research to address all of the concerns raised by the agency.

　　In our application filed more than two years ago, we believe that we have appropriately characterized the toxicological profile of Juul's products, including comparisons to combustible cigarettes and other vapor products, and believe that these data, along with all evidence, are in compliance with statutory regulations appropriate to protect public health. standard.

　　We intend to seek a stay and are exploring all our options under FDA regulations and laws, including appealing the decision and engaging with our regulatory agency.

We remain committed to doing our best to continue serving the millions of American adult smokers who have successfully used our products to transition from combustible cigarettes to still available on market shelves nationwide.

—Joe Murillo, Chief Regulatory Officer, Juul Labs

　　In this regard, a senior person in the industry told reporters that according to regulations, Juul products do not need to be removed from the shelves during the appeal period, and the appeal process may last for more than a year.

This also means that, whether or not the appeal is successful, Juul can at least stay in the U.S. market for a while.

　　Before that, more than 30 e-cigarette companies that had received marketing denial orders had sued the FDA.