The U.S. International Trade Commission (ITC) has opened a probe into vapor products imported by cigarette giant Philip Morris USA (PM) after R.J. Reynolds complained that PM’s tobacco-heating system infringes Reynolds’ patents, according to a report by Law360.
The investigation will determine whether the IQOS tobacco vaporizers marketed by Philip Morris and parent company Altria use tobacco-heating systems and sticks that violate patents for R.J. Reynolds’ Vuse vaping system. R.J. Reynolds seeks cease-and-desist orders barring imports of the allegedly infringing products.
The patents describe a device that heats tobacco held in a removable cartridge to 350 degrees when vapors containing nicotine are released without producing smoke, according to R.J. Reynolds’ April 9 complaint to the ITC.
R.J. Reynolds, which is owned by British American Tobacco, said Philip Morris has sold the alleged copycat IQOS system in the U.S. since October 2019 and has imported the product from manufacturers in Italy, Switzerland and Malaysia for years to use in clinical testing.
“We believe the allegations are without merit, and we are fully prepared to defend ourselves,” Philip Morris spokesman Corey Henry told Law360 in a statement Wednesday, noting the company has spent $7 billion developing its smoke-free tobacco products over the past two decades.
R.J. Reynolds filed a suit accusing Altria and Phillip Morris of six counts of trademark infringement in Virginia federal court the same day R.J. Reynolds filed its ITC petition. In that case, the company seeks treble damages and court declarations that Altria and Philip Morris have infringed its intellectual property.
The U.S. International Trade Commission (ITC) will investigate Altria and Philip Morris after a complaint was filed by R.J. Reynolds. The ITC will look into certain tobacco heating elements and components.
The ITC has not made a decision on the case but has said it will make its “final determination … at the earliest practicable time.”
Tobacco and vapor companies have an extra four months to file their premarket tobacco applications (PMTAs) for newly deemed tobacco products with the Food and Drug Administration (FDA) following a U.S. court ruling.
On July 12, 2019, the United States District Court for the District of Maryland ordered the FDA to require manufacturers of e-cigarettes, cigars and other deemed new tobacco products that were on the market as of Aug. 8, 2016 to submit applications for premarket review by May 12, 2020.
However, the coronavirus pandemic has drastically impaired the FDA’s ability to adhere to this timeline. As a result of the pandemic and these exceptional and unforeseen circumstances, the agency requested on March 30 a 120-day extension of the May 12 deadline. This request has now been granted.
The court order means applications for premarket review for many e-cigarettes, cigars and other new tobacco products are now required to be filed by Sept. 9, 2020. Consistent with the original court order, for companies that submit timely applications, the agency may continue to exercise enforcement discretion, meaning their products would generally continue to be marketed without being subject to FDA enforcement actions, for up to one year from the deadline (up to Sept. 9, 2021), unless a negative action is taken by the FDA on an application during that time.
Following the Covid-19 outbreak, the agency received numerous inquiries from the tobacco industry expressing concern they would be unable to complete premarket applications by the original May 12 deadline due to disruptions at all stages of preparation, including preventions or disruptions to in-person laboratory work and clinical studies or necessary foreign travel, or from the shuttering of manufacturing facilities abroad.
In a statement, the FDA said it believes the public health is better protected by not having these firms compromise their employees’ health or take actions that would risk spreading Covid-19 to others by trying to meet the previous May 12 deadline. In the more than a dozen requests for an extension that the FDA received, this public health concern was mentioned repeatedly.
Another consideration, according to the agency, was that a number of the FDA’s Center for Tobacco Products (CTP) personnel have been deployed to work on Covid-19 pandemic issues for the U.S. Public Health Service (PHS), leaving fewer staff to process applications. Many of those deployed are among the staff that had been playing a critical role as CTP prepared for this deadline.
“Ultimately, a Sept. 9 deadline will better serve the public health by allowing manufacturers to prepare for, and the agency to conduct, the thorough scientific review of these products that is required under law and vital to our mission of protecting Americans while reducing or eliminating physical contact during this critical period,” the FDA wrote in its statement.
“Importantly, this new deadline does not detract from our efforts to prioritize enforcement of certain e-cigarette products currently on the market. Although the FDA’s in-person compliance checks and vape shop inspections are currently on hold due to the pandemic, review of previous inspections continues, and we continue to monitor the online marketplace and will take action as appropriate.
“Accordingly, the January 2020 enforcement priorities guidance, which independently prioritizes earlier enforcement against certain e-cigarette products that are widely used by youth, remains in effect regardless of whether an application is submitted, although we intend to update it for products for which the Sept. 9 date now applies.”
Juul Labs said today it would end operations in South Korea, a year after it entered the market. The company states the cause was its inability to gain market share amid government health warnings.
In a statement, Juul Labs stated that since the beginning of the year it was working through a restructuring process aimed a re-establishing a viable business in South Korea by significantly reducing costs and making changes to its products.
“However, these innovations will not be available as anticipated,” the statement said. “As a result, we intend to cease our operations in South Korea.”
In October last year, South Korea’s health ministry advised people to stop vaping because of growing health concerns, especially after a case of pneumonia was reported in a 30-year-old e-cigarette user that month, according to Reuters news article.
The announcement prompted convenience store chains and duty free shops to suspend the sale of flavored liquid e-cigarettes, including those made by Juul Labs.
In December, South Korean health authorities said they had found vitamin E acetate, which may be linked to lung illnesses, in some liquid e-cigarette products made by Juul Labs, but the company denied using the material, according to Reuters.
Juul Labs launched a product portfolio that was specifically developed for the Korean market in May 2019, but “our performance has not met expectations in terms of meeting the needs of our Korean adult smokers to successfully transition from combustible cigarettes,” according to the statement. “We have learned through this process and are focused on innovating our product portfolio.”
Juul Labs is also reportedly ready to withdraw from a handful of EU markets as well, claiming the regulatory environment has become overly hostile to the device.
According to BuzzFeed News, Juul will soon remove its products from shelves in Austria, Belgium, Portugal, France, and Spain.
The news outlet reports the European Union’s strict requirement that e-cigs contain no more than 20 milligrams of nicotine makes it difficult for Juul to do business there.
Austria, Belgium, and Portugal are very small markets for Juul, but the leading e-cig manufacturer generates significant sales from France and Spain. It will exit France by the end of the year, but withdraw from the other countries in July, paring its presence in global markets to a narrow selection that includes Germany, Italy, Russia, and the U.K.
Covid-19 has disrupted the vapor product supply chain.
By Michael MacGrady
The global economy is reeling as industries in virtually every field are suffering the challenges brought on by the unprecedented outbreak of the novel coronavirus and the spread of Covid-19. According to a report published by ECigIntelligence.com in February 2020, manufacturers of vapor products and components are relying on reduced workforces and coping with product shortages, which in turn is affecting product accessibility around the world.
Shenzhen, China, is the manufacturing capital for the international e-cigarette industry. At press time, Covid-19 cases worldwide nearly topped 719,000, according to the World Health Organization (WHO). Alarmingly, the number of deaths has exceeded 33,000, with the outbreak epicenters moving westward to Europe, Latin America and North America.
Also, at the time of writing, data from China revealed a slowing of deaths and new cases as the metropolises of Wuhan, Guangzhou, Hong Kong, Shanghai and Shenzhen slowly resumed manufacturing in what seems to be an entirely new world for international commerce. However, even then, these cities were shadows of their previous selves as bustling centers of industry and commerce.
Photo: Timothy S. Donahue
“Workers are slowly returning, but the situation remains literally unchanged,” said Dimitris Agrafiotis, executive director of the Tennessee Smoke Free Association and the chief executive of Global eVapor Consulting. According to Agrafiotis, the international vapor industry is now in a bind that cannot be dealt with in the same way as a regulatory challenge or a change in the international market.
“There is not enough staff to get production lines up to speed, and the limited workforce is trying to catch up to back orders, especially for consumables like coils and pods,” Agrafiotis said, adding that the industry will remain in dire straits, facing considerable challenges such as the looming compliance deadlines in the United States.
“Currently, most factories are operating well below 10 percent of their usual capacity,” said Agrafiotis. According to him, China’s central government has done what it can to control the spread of the new virus in a heavily concentrated industry city like Shenzhen.
One of the biggest challenges will be to restaff the factories that feed the international demand for e-cigarettes and their components. Workers at these plants, Agrafiotis added, migrate from remote villages to work in Shenzhen and make a living in high-tech manufacturing. That is one of the most efficient ways to transmit the coronavirus, according to Agrafiotis. The lockdown of Chinese citizens, along with restrictions on nonessential employees, has indefinitely upended the migratory flow of workers to manufacturing hubs such as Shenzhen.
Pandemics are inherently disruptive. Analyzing a model global influenza pandemic, researchers from the London School of Hygiene and Tropical Medicine, the University of Antwerp and Oxford Brookes University predicted that an international pandemic could result in extensive unemployment, thus impacting production and consumption.
Photo: Timothy S. Donahue
Covid-19 is no different, once you consider the events of forced business closures and modified operations. Virtually all countries have implemented policies to prevent a spread of the virus. U.S. state governments are issuing shelter-in-place orders for citizens in highly populated areas while also placing restrictions on the number of employees allowed in an office at a time. Needless to say, such policies stunt labor activity.
The restrictions in China go even further. “My sources in China have told [me] they do not anticipate things to return to normal until mid to late June, causing a huge disruption in the chain of products and release of new technology,” said Agrafiotis.
The outbreak comes at a time of already tense relations between the world’s largest manufacturer of vapor products, China, and the largest consumer of e-cigarettes, the U.S. Rather than cooperating in the coronavirus crisis, the two superpowers have unhelpfully been blaming each other for the outbreak.
Doug Barry, a spokesperson for the U.S.-China Business Council, believes that this is a critical period for the bilateral trade relationship. “The most optimistic report is that the epidemic will knock about 1 percent off of GDP for 2020,” he said. “U.S. companies with operations in China are likely to see lower revenue for the year.” Encouragingly, however, Barry said the council had seen no evidence of a rush for the exits by U.S. and other foreign companies.
“Our members are in China for the long term and see it as a strong market going forward,” said Barry. “That said, some companies are prudent to look at some diversification in their supply chains, but China’s role as a key player is unlikely to change because of the emergence of this new virus.”
After a brief shutdown of all operations, vapor hardware manufacturers in China are now operating at more than 80 percent of pre pandemic production.
By Timothy S. Donahue
It’s not the same as it was this time last year. However, vapor hardware manufacturers in China that produce products for the world market are back in service after a brief hiatus due to the Covid-19 pandemic. Mostly based in Shenzhen, the e-cigarette capital of the world, companies say that they are working hard at implementing new standards and processes in order to keep employees and customers safe.
They are also playing catch-up in collecting data for premarket tobacco product authorizations (PMTA) in the U.S. market. “The coronavirus is indeed having an impact on the PMTA process,” says Welford Ou, CEO of Smoktech, a major manufacturer. “For example, the behavioral investigations have been stopped, and it is also taking more time for us to prepare all the products for the PMTA.” As of this writing, PMTA applications are due to the U.S. Food and Drug Administration (FDA) on May 12.
Smoore Technologies, the parent to Vaporesso and Feelm, says it “took strong and comprehensive measures” in advance of the virus’ outbreak. “We set up disease prevention and control teams in each of our facilities before the Chinese Spring Festival holiday. Dating back to the 20th of January, Feelm teams started to collect information, investigate employees’ conditions, prepare epidemic prevention supplies and disinfect public areas,” said Sofia Luo, marketing director for Feelm. “Before getting back on track, Feelm handed out a Covid-19 prevention and control booklet to each employee, providing scientific support to enhance health security.”
All Smoore facilities are now back up to at least 85 percent of pre-pandemic production, according to Luo. She says Feelm is already shipping goods to the U.S. and has been since the middle of February. “Smoore and its subsidiaries have enough key materials inventory, and all of our supply chain has recovered and is back in production,” she said. When asked whether there was a supply shortage, Luo replied, “In general, the impact of supply shortage is under control.”
Smoktech is getting back to its normal operations and more workers are expected to be hired as the virus outbreak is brought under control, according to Ou, who added that the company is awaiting the return of some workers from Wuhan (located in the Hubei province and the epicenter of the pandemic) where the quarantine was officially lifted on April 8.
“The sales are doing well even with the Spring Festival and a long time staying at home for virus control,” says Ou. “Our challenge is to get more skilled workers in [a] short amount of time to meet the growing demand. My concern for the world market is [that] hopefully they will embrace vaping and see it is better and safer than smoking cigarettes.”
Smoore took early action in order to prevent a massive global disruption in the vapor and e-cigarette market, according to Luo. She said that the company started to communicate frequently with its clients at the early stages of the pandemic. “We reminded customers to pay great attention to the epidemic. With the development of Covid-19 worldwide, most of our customers have been prepared (in terms of staff safety and inventory),” Luo stated. “The [virus] was a black swan event of great magnitude.” A “black swan” event refers to an unforeseen occurrence that typically has extreme consequences; in contrast, a “gray rhino” event is an obvious yet ignored threat.
Luo says that, although Covid-19 is spreading all over the world, the demand for e-cigarettes hasn’t changed. “Vapor stores in many countries remain open. And we know some brands are increasing the online sales and e commerce service,” she said. “We forecast [that] the 2020 industry will be the same size or a slight increase compared with 2019. And after PMTA, [the industry] will get a big increase.”
When it comes to issues like the limitation of freight and whether the virus could be on packaging, Feelm says the information from official sources are that there’s no limitation of freight, and the World Health Organization (WHO) confirms coronaviruses do not survive for extended periods on objects such as letters or packages and that it’s safe for people to receive packages from China.
Luo says Feelm will continue to stay updated on related information and adds that the company will spare no efforts to guarantee each product is clean and safe in all aspects from purchasing raw materials to exporting goods. Feelm products have been approved by several international quality and safety systems, according to Luo. “As a leading company in the automatization area, Feelm has the strength to embrace health and security first,” she says. “Disease prevention and control is our responsibility. Feelm is well prepared to protect employees’ safety to recover production and to win the battle.”
At its factories, Smoore and its other entities’ staff are well-equipped with protection products such as masks, gloves and other safety equipment, according to Luo. “Disinfection in public areas is proceeded twice a day. Exclusive dust bins for used face masks are placed throughout the facilities,” explains Luo. “All these measures lay a solid foundation to protect Feelm and all Smoore employees’ safety. This allows for the greatest possibility for full production recovery.”
THE NEW NORMAL
United we stand, together we win. Since the outbreak of Covid-19 at the end of last year, the Chinese government has implemented a series of powerful measures that have effectively controlled the spread of the virus, according to Sofia Luo, marketing director for Feelm, a major atomizer company based in Shenzhen, China.
“At present, production recovery has become the top priority. Allied with government regulations and a corporate plan, Feelm employees started to work online at the beginning of February. Now, all facilities serving Feelm clients are getting back on track,” explains Luo. “Thanks to Feelm’s advantages with having a strong supply chain and the ability to deal with emergencies, Covid-19 has had little impact on production. Once getting back to work, the production capacity will recover soon.”
In order to ensure the prevention of a recurrence of the virus within the company, Feelm has implemented an eight-step policy to enhance protocols and address health and security concerns for its employees. According to Luo, the first step requires all employees to register their current health status and any other conditions they may have.
“They must also inform us of the dates they are returning/returned to Shenzhen, the people they have met, etc.,” she says. “They must archive related documents setting up an exceptional first line of defense. Step two: any employees returning to Shenzhen from other places must isolate themselves at home for 14 days. They must work from home or online if applicable, according to Luo. Only if without any suspected symptoms like fever and coughing, are they permitted to return to the office. All employees must wear a face mask at [the] factory.”
Step three is all factories must have epidemic prevention supplies ready, according to Luo. Employees must wear a face mask while going out and have their temperature taken before stepping into the factory. They must also wash their hands after touching anything and always have disinfectants at hand.
Step four involves having strict Allied Social Sciences Association (ASSA) access control systems in place. Employees must wear identification badges and have their temperature taken twice a day. “Anyone whose body temperature is over 37.3 degrees Celsius should stay at home for medical observation,” says Luo. “Protecting yourself is protecting others.”
Luo explains that step five is one of the most vital steps. She says the company actively disinfects all public areas in factories twice a day. “Office areas are disinfected once a day after work. Public space and dormitories are also once a day,” she says. “Production area disinfection is arranged by departments.”
Step six involves maintaining the cleanliness in production workshops. “Enter the air shower room after disinfection, no more than six persons at one time. [The] distance between two workstations should be wider than one meter,” says Luo. “Reduce the number of employees at one production line. Add extra production lines if necessary. Spare no efforts to guarantee production safety.”
The final two steps are more lifestyle changes, according to Luo. Step seven centers on employees keeping a one-meter distance from each other while dining. “Dining out is temporarily prohibited. Keep [a] one-meter distance while queueing (getting in line) and dining. Wash hands before and after dinners,” Luo explains. “[A] disposable tableware policy has also been adopted. We also disinfect tables and chairs after using three times a day. Eat at ease, work at ease.”
Step eight asks for Feelm employees to avoid crowds while commuting. “Walk, ride or drive to work. Try to avoid public transport, if possible,” she says. “If you must, avoid touching anything. Clean phones and keys with wet tissue or medical alcohol often.”
The global e-cigarettes market was worth $11.73 billion in 2019. It is expected to grow at a compound annual growth rate (CAGR) of 17 percent and reach $21.4 billion by 2023, according to the “E-Cigarettes Global Market Report 2020” report from ResearchAndMarkets.com.
The e-cigarettes market covered in this report is segmented by product type into disposable, rechargable, modular. It is also segmented by composition into tobacco, flavors, nicotine-free and by distribution channel into specialist e-cig shops, online, supermarkets, tobacconist, others.
Rising awareness of health issues caused by smoking conventional tobacco cigarettes among smoking population is driving the growth of the e-cigarettes market. For instance, in December 2018, British American Tobacco (BAT) company released the Vype iSwitch and Vype iSwitch Maxx based on Puretech blade technology, involves using an ultra-slim stainless-steel blade to heat e-liquid and create vapor.
The vapor products do not burn tobacco, the vapor contains significantly lower levels of toxicants in the smoke created when burning tobacco, according to the report. Therefore, e-cigarettes have reduced risk properties compared to traditional cigarettes, according to the report. .
Increased government regulations on the ban on e-cigarettes is restraining the growth of the e-cigarettes market. Many countries have banned the sale and manufacture of e-cigarettes to protect the young people and children from the harmful effects and addiction of e-cigarettes, according to the report.
In December 2019, Indian government has passed prohibition of electronic cigarettes (production, manufacture, sale, distribution, import, export, transport, storage and advertisement) bill 2019 that imposed the ban of e-cigarettes, according to the report. The government banned the e-cigarettes as the manufacturing companies were promoting them as a way to get people out of smoking habits but research studies have shown that most of the people are addicted to it.
Increasing number of mergers and acquisitions between traditional cigarette and e-cigarette manufacturers is trending in the e-cigarettes market. Traditional cigarette manufacturing companies and e-cigarette manufacturers are collaborating for product development or to improve their presence in the global market.
In July 2017, BAT acquired Reynolds American Inc. for $49 billion. The acquisition favored the BAT to have a stable presence in high growth emerging markets and high profitability developed markets.
In June 2018, Philip Morris International Inc. (PMI), a Swiss-domiciled multinational cigarette and tobacco manufacturing company, entered strategic collaboration with Parallax Development Corp. (Parallax). The agreement focused on development and commercialization of an effective alternative nicotine-delivery platforms that uses the maximum advantage of the most advanced technologies in pulmonary medicine. Parallax Development Corp., is a life sciences development company focused on developing an innovative, multi-patented platform for delivering nicotine to smokers in the safest ways possible.
Philter Labs, a San Diego-based technology company that produces micro-sized air filters to help reduce the impacts of secondhand smoke, announced it has received $1 million in new investments.
The capital will be used for research and development, building out an extensive product roadmap, and launching what the company says will be first-of-its-kind personal filtration products, according to an article on Benzinga.com.
This new round of funding brings Philter’s total to $3 million. Bravos Capital and Explorer Equity both participated in the effort.
Philter Lab’s patented zero-5 technology utilizes a five step filtration process that manipulates smoke and vapor at the molecular level to dissipate up to 97 percent of emissions and dissolve harmful particulates and pollutants. Also unique to Philter is it’s pocket-sized design, allowing for ease of use and portability.
For over 20 years, the team behind Philter has been working to solve major medical problems, and identify consumer-centric solutions for common issues. Philter also aims to help re-frame popular associations behind controversial human behaviors, according to the article.
Philter’s technology encourages consumers to practice responsible vaping and empowers them to protect those they love, and the environment, by drastically reducing harmful emissions and airborne contaminants. The company’s overarching mission is to change the way people perceive vaping tobacco and cannabis.
CEO Christos Nicolaidis told Benzinga the goal at Philter Labs is to eliminate the impacts of secondhand smoke and harmful emissions while empowering consumers to vape responsibly, according to the article.
“This new series of funding builds on our momentum and will allow us to expand on our scientific research and launch new innovative, cutting-edge filtration products,” Nicolaidis said. “We want to lead the charge on a cultural shift for cleaner air and a better environment — and hopefully change the way people vape for the better.”
Turning Point Brands (TPB) repurposed select manufacturing infrastructure to produce free hand sanitizer for communities in California, Kentucky and Tennessee.
TBD division Nu-X distributed the first few thousand hand sanitizer bottles and bulk gallons this Tuesday in an emergency production run to the UCLA Ronald Reagan Medical Center. “We saw an opportunity to contribute and help. We hope other companies with the capacity to do so will do the same,” said Lorenzo De Plano, senior director of Nu-X.
TPB will have two vans delivering Nu-X products around the Los Angeles area every day until all available inventory is depleted. The company is also looking for opportunities to provide needed materials to other organizations out of its Louisville, Kentucky, facility. Hospitals and elderly homes will have priority of hand sanitizer products. All hand sanitizer bottles produced will be under the brand Nu-X and will not be for resell purposes.
“Our company takes very seriously our role in providing support to the communities where we operate. We hope that through this action we can both help those impacted by the Covid-19 situation and inspire others to act,” said Larry Wexler, president and CEO of TPB.
Vapor hardware manufacturers in China that produce products
for the world market are back in service after a brief hiatus due to the Covid-19
pandemic. Mostly based Shenzhen, the e-cigarette capital of the world,
companies say that they are implementing
new standards and processes in order to keep employees and customers safe.
Several companies are also intensifying their
data-collection efforts for premarket tobacco product authorizations (PMTAs) in
the U.S., the world’s largest market for vapor products. “The coronavirus is
indeed having an impact on the PMTA process,” says Welford Ou, CEO for
SmokTech, a major manufacturer. “For example, the behavioral investigations
have been stopped, and it [is] also taking more time for us to prepare all the
products for the PMTA.” As of this writing, PMTA applications are due to the
U.S. Food and Drug Administration (FDA) on May 12.
Smoore Technologies, the parent to Vaporesso and Feelm, says
it “took strong and comprehensive measures” in advance of the virus’ outbreak.
“We set up disease prevention and control teams in each of our facilities
before the Chinese Spring Festival holiday. Dating back to the 20 of January,
Feelm teams started to collect information, investigate employee’s conditions,
prepare epidemic prevention supplies and disinfect public areas,” said Sofia
Luo, marketing director for Feelm. “Before getting back on track, Feelm handed
out a Covid-19 prevention and control booklet to each employee, providing
scientific support to enhance health security.”
All Smoore facilities are now back up to at least 85 percent
of pre-pandemic production, according to Luo. She says Feelm is already
shipping goods to the U.S. and has been since the middle of February. “Smoore
and its subsidiaries have enough key materials inventory, and all of our supply
chain has recovered and is back in production,” she said. When asked whether
there was a supply shortage, Luo replied, “In general, the impact of supply
shortage is under control.”
SmokTech is getting back to its normal operations, and more
workers are expected to be hired as the virus outbreak is brought under
control, according to Ou, who added that the company is awaiting the return of
some workers from Wuhan (located in the Hubei province and the epicenter of the
pandemic) where residents were quarantined until March 25.
“The sales are doing well even with the Spring Festival and a long time staying at home for virus control,” says Ou. “Our challenge is to get more skilled workers in [a] short amount of time to meet the growing demand. My concern for the world market is [that] hopefully they will embrace vaping and see it is better and safer than smoking cigarettes.”
