US bans sale of Juul Labs e-cigarettes

US bans sale of Juul Labs e-cigarettes

The US health agency (FDA) on Thursday banned the sale in the United States of all Juul Laabs brand electronic cigarettes in an attempt to curb vaping among young people, a blow to the company as it plans to call .

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The FDA found that the startup, which enjoyed phenomenal success in the late 2010s with its USB vaporizers and fruit-flavored nicotine refills, had failed to demonstrate that the marketing of its products was “appropriate for the protection of public health”. .

As a consequence of this decision, “the company must stop selling and distributing” the products for which it currently has authorization and those that are already in stores “must be withdrawn” from sale.

The agency had already prohibited in 2020 the commercialization of rechargeable vapers, of the Juul type, with flavored flavors, authorizing only tobacco and menthol flavors.

It has also been tasked with reviewing vaping products to ensure that the benefit to adults, including helping them quit smoking traditional cigarettes, outweighs the risks they pose to younger people.

As part of this review, it challenged vapers from various companies, but also green-lighted certain products introduced by companies RJ Reynolds (a subsidiary of British American Tobacco), Logic or Njoy.

The ban announced Thursday demonstrates the FDA’s commitment “to ensuring that all e-cigarettes and other products that deliver nicotine through an electronic device currently on the market meet public health standards,” the agency’s chief said. , Robert Califf, in the press. release.

To combat the effects of smoking, the FDA also announced Tuesday that it wanted to significantly reduce the level of nicotine in cigarettes sold in the United States.

The agency does not believe that Juul’s products present an “immediate risk” but judges that the company has not provided enough data to be able to evaluate “the possible toxicological risks”.

The San Francisco-based startup says it “provided enough information and data” to resolve all the issues raised by the agency.

She plans to seek a stay of the decision and explore all options available to her, including an appeal.

The startup has been accused of being heavily involved in the skyrocketing rise of teen vaping with ads and marketing aimed especially at high school students.

Faced with pressure from the authorities, Juul Labs had already suspended sales of flavored refills, popular with young people, in 2019 and had promised to review its marketing strategy.

The company currently holds 36% of the US e-cigarette market share, valued at about $5.3 billion a year, according to Nielsen figures cited in a Goldman Sachs note. It’s less than 70% of 2019, but still number one.

In addition to requesting a stay of the FDA decision or filing an appeal, he could also file an amended dossier, according to analysts at Goldman Sachs.

If the ban remains in force, Juul Laabs “still has a promising presence in other markets”, in Asia or Europe for example, they add.

US tobacco company Altria, which owns 35% of Juul Labs shares, had fallen more than 9% on Wednesday after early media reports of an impending FDA decision. However, the stock was up 1% by midday Thursday.

The company made a big bet on Juul Labs in 2018, investing more than $12 billion in a deal valued at $38 billion. Then he wanted to diversify his business, sales of classic cigarettes were long declining in the United States.

But in the face of new restrictions from health authorities and costly legal wrangling, Juul Labs’ value has since melted. Altria, which already records more than $11 billion in charges for this ill-fated investment, estimates the startup was worth less than $5 billion at the end of March.

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