Connecticut attorney general, William Tong, took a turn in the spotlight this week, representing 33 states and Puerto Rico in announcing that vaping original, Juul, had agreed to pay penalties of $438.5 million to settle lawsuits against the company.
Juul in essence acknowledged that the company’s marketers had targeted young students, used social media to attract underage teens, and had given them free samples. With 45% of the company’s Twitter followers between ages 13 and 17, and an age verification methodology authorities label as “porous”, they were happy to get the nation’s attorney generals out of their hair.
Over the past four years, Juul has lost over 95% of its value. When Altria bought a 35% stake in the company in December, 2018, they paid $12.8 billion. That translates to just $450 million today. What were they thinking? At the time, Juul was fighting to preserve their “flavor pods” – with mango and creme brûlée a favorite among teens.
But the F.D.A. took a hard line, attempting to shut them down completely, attacking vaporized natural and synthetic nicotine. Lobbyists for Altria and Juul argued that they had helped 2 million Americans quit traditional cigarettes. That was enough to gain a “temporary reprieve”, sending the F.D.A. back to the drawing board for “additional review.”
By the way, local and state campaigns to curb teen vaping seem to have had an effect. E-cigarette use in a survey in March, 2022, found 8% or some 2 million teens had used an e-cigarette in the past 30 days. As for traditional smokers, 31 million are still addicted to cigarettes and 16 million currently have a smoking related chronic disease.
In the meantime, tobacco giant, Philip Morris International, took a different tact. Last week they inked the purchase of Danish oral drug delivery company, Fermin Pharma, for $813 Million. They then “doubled-down” this week, announcing their intention to purchase “inhalation specialist” Vectura for $1.2 billion.
What are they up to? Their official site says this is all part of their “Beyond Nicotine” strategy, and will now be pursuing “respiratory drug delivery” and “selfceare wellness.” How much is that worth in future revenue. The company projects $1 billion in net revenues from these ventures by 2025. This is in part because Vectura has significant expertise with 13 inhalable products already on the market and $245 million in 2020 sales.
The concise market message reads:
“Philip Morris International (PMI) is leading a transformation in the tobacco industry to create a smoke-free future and ultimately replace cigarettes with smoke-free products to the benefit of adults who would otherwise continue to smoke, society, the company, its shareholders and its other stakeholders.”
And PMI says the future is bright: “The market for inhaled therapeutics is large and growing rapidly, with significant potential for expansion into new application areas. PMI has the commitment to science and the financial resources to empower Vecturas skilled team to execute on an ambitious long-term vision. Together, PMI and Vectura can lead this global category, bringing benefits to patients, to consumers, to public health, and to society-at-large.”
What could possibly go wrong with that?
Mike Magee M.D. is a Medical Historian and author of “CODE BLUE: Inside the Medical Industrial Complex (Grove/2020).
