US bans sale of Juul Labs e-cigarettes

The US Health Agency (FDA) on Thursday banned the sale of all Juul Laabs-branded e-cigarettes in the United States in a bid to curb vaping for young adults, a blow to the company as it plans to resume.

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The Food and Drug Administration found that the startup, which achieved huge success in the late 2010s with USB vaporizers and fruit-flavored nicotine refills, had failed to demonstrate that marketing its products was “appropriate to protect public health.”

As a result of this decision, the company “must stop selling and distributing” products that it currently has a license and those already in stores “must be removed” from sale.

The agency had already banned in 2020 the marketing of refillable, flavored Juul vapers, allowing only tobacco and menthol flavors.

It was also commissioned to review vaping products to ensure that the benefits to adults, including helping them quit smoking traditional cigarettes, outweigh the risks for young adults.

As part of this review, it challenged the papers of several companies, but also gave the green light to some products made by RJ Reynolds (a subsidiary of British American Tobacco), Logic or Njoy.

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

To combat the effects of smoking, the US Food and Drug Administration (FDA) also announced Tuesday that it wants 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 considers that the company has not provided enough data to be able to assess the “potential toxicity risk.”

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

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

The startup has been accused of largely participating in the skyrocketing teen vaping through ads and marketing specifically targeting high school students.

Facing pressure from the authorities, Juul Labs already halted sales of the flavor packets, which are popular with young people, in 2019 and pledged to review its marketing strategy.

The company currently has a 36% market share of e-cigarettes in the United States, which is estimated to be worth about $5.3 billion annually, according to Nielsen figures cited in a note from Goldman Sachs. It’s below 70% for 2019, but it remains the first.

In addition to asking for an FDA decision to be suspended or to file an appeal, an amended file can also be filed, according to analysts at Goldman Sachs.

They add that if the ban remains in effect, Goal Labs “continues to have a promising presence in other markets”, in Asia or Europe for example.

US tobacco company Altria, which owns 35% of Juul Labs shares, fell more than 9% Wednesday after initial press reports of an imminent decision by the Food and Drug Administration. However, the stock was up about 1% midday Thursday.

The company made a big bet on Juul Labs in 2018 by investing more than $12 billion in a $38 billion deal. Then she wanted to diversify her business, since sales of classic cigarettes for a long time fell in the United States.

But in the face of new restrictions from health authorities and costly legal disputes, the value of the Joule coefficient has since melted. Altria, which already has more than 11 billion counts of that unfortunate investment in its accounts, estimates the startup was under $5 billion at the end of March.

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