Industry Insiders Welcome FDA's New Tobacco Plan

Credit Joel Saget Getty Images

European and Asian tobacco companies extended declines Monday amid investors concern that a move by the U.S. Food & Drug Administration to cut the level of nicotine to "non-addictive" levels could slash sales in the $26 billion cigarette market.

So the plan is to reduce nicotine levels in cigarettes, while leaving it in other products, like aids to quit smoking and e-cigarettes.

"Because nicotine lives at the core of both the problem and the solution to the question of addiction, addressing the addictive levels of nicotine in combustible cigarettes must be part of the FDA's strategy for addressing the devastating, addiction crisis that is threatening American families", Gottlieb said in a statement.

"A key piece of the FDA's approach is demonstrating a greater awareness that nicotine - while highly addictive - is delivered through products that represent a continuum of risk and is most harmful when delivered through smoke particles in combustible cigarettes", the agency wrote in its announcement. For this very reason, the federal government of the US has proposed bringing down the proportion of nicotine in cigarettes so that they become less addictive.

The Food and Drug Administration is the federal agency that regulates cigarettes, and it has been working to limit how companies can advertise cigarettes to children and require labels that state upfront how unsafe the products can be. Camel, a brand that is owned by Reynolds American, Inc, which has recently been acquired by British American Tobacco, will allow you to enjoy their "genuine taste" with their light cigarette. The whole plan is a result of regulatory powers given to the agency in 2009. One of the biggest: the addictive component of cigarettes will have to go away. FDA has stated that e-cigarettes and vapes are majorly unauthorized product and they don't have much information about how they can affect human health.

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Gottlieb said other issues may arise, such as a black market in high-nicotine cigarettes.

For more on smoking's harms, visit the U.S. Department of Health and Human Services.

"Importantly, we expect the FDA will encourage continued RRP innovation with the goal of increasing adoption of these products - a huge positive for MO [Altria Group] and PM [Phillip Morris International]", said Bonnie Herzog, managing director of Wells Fargo Securities.

Regions outside the USA present additional potential for 22nd Century to partner or licensed the company's low nicotine cigarette platform.

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