FDA issues ban on Juul products in the US

On June 24th, the Food and Drug Administration (FDA) formally issued a ban on all products from the American e-cigarette giant, Juul, mandating their removal from sale in the United States. The ban was imposed due to the lack of data and evidence to assess the potential health risks associated with these products. As a result, the ban is expected to impact approximately 95% of Juul's revenue streams.

The company operates more than 90% of its business in the United States, with the remaining majority in Canada and the United Kingdom, and a small portion in France, Italy, and the Philippines. However, most of its revenue still comes from the US market, and the local ban on sales could potentially cause Juul to face financial strain and risk bankruptcy.

On June 25th, Juul filed for an emergency motion to temporarily halt the sales ban while appealing the FDA's "unlawful action." The U.S. Circuit Court of Appeals in Washington, D.C. approved Juul's request, requiring the FDA's mandate to be suspended until at least July 12th, while the court reviews the case.

However, this is a catastrophic event for the US e-cigarette industry.

Once had unlimited glory.

Juul is the largest electronic cigarette company in the United States, holding nearly 40% market share in the American e-cigarette industry. The company generated $1.3 billion in sales last year, a decline from its peak of $2 billion in 2019.

However, a few years ago, Juul could be described as having unlimited success.

In 2015, two Stanford University graduates, James Monsees and Adam Bowen, followed the "post-modernist strategy" of large tobacco companies and packaged a highly addictive nicotine liquid in a chrome casing (initially without disclosing the nicotine content), marketed to a new generation of young people who were increasingly turning away from traditional cigarettes.

At the end of 2018, American tobacco giant Altria invested $12.8 billion to acquire a 35% stake in JUUL. At the time, JUUL was valued at $38 billion, surpassing even SpaceX. Its market share in the United States also exceeded 72%, selling an estimated $2 billion annually.

Juul's rapid revenue growth can be attributed to its marketing strategy centered around "fashion, youth, and trendiness." As the Juul brand developed, it heavily relied on the promotion of Hollywood celebrities and social media influencers to quickly capture the attention of young people.

While JUUL has been successful in attracting adult smokers, their early flavors such as milk pudding, cucumber, and mango electronic cigarettes have also been widely embraced by American adolescents.

Peak decline leads to sharp decrease in revenue.

Suddenly, just as teenage smoking rates hit an all-time low, American teenagers started getting hooked on vaporized nicotine. This has infuriated parents, public health officials and the FDA alike, as it can be equally addictive and disrupts the development of teenage brains.

In the face of successive regulatory crackdowns and competition from rivals, JUUL's revenue has plummeted from its peak. By 2020, due to regulatory influence, Juul is only allowed to sell products with mint and tobacco flavors.

In 2019, Juul suffered losses of up to $1 billion, leading to the announcement of a 33% reduction in workforce the following year. In 2020, Juul's revenue plummeted by 29%, and it continued to decline by 11% in 2021, dropping to $1.3 billion, a one-third decrease from 2018.

Juul, which used to hold a dominating position in the American e-cigarette market, has now given up its top spot. According to analysis from Goldman Sachs, Reynolds' Vuse brand surpassed Juul in market share during the second quarter of this year. Juul's market share has shrunk to 36%.

Electronic cigarettes in the United States are experiencing a catastrophic disaster.

The FDA has issued a ban on Juul after a two-year scientific review, with anti-vaping advocates and lawmakers welcoming the decision and stating that the company should have been punished sooner.

According to reports, Democratic Representative Raja Krishnamoorthi of Illinois has commended the FDA for following science in removing Juul products from the market, which have been responsible for potentially addicting countless American youth to nicotine for life. Democratic Senator Dick Durbin of Illinois stated in a speech to the Senate, "If you don't know about the story behind e-cigarettes and the industry, ask American high school students.

In 2019, nearly 30% of high school students reported using e-cigarettes, with the majority being Juul products. Former head of the Food and Drug Administration, Scott Gottlieb, warned that e-cigarettes had become a "nearly ubiquitous and dangerous trend among teenagers." Since then, the percentage of high school students using e-cigarettes has decreased to 11%, with the most popular product being the new brand Puff Bar instead of Juul.

According to the 2021 U.S. Youth Tobacco Survey report released by the FDA, among students currently using e-cigarettes, 26.8% are using Puff Bar, 10.5% are using Vuse, 8.6% are using SMOK, and 6.8% are using JUUL.

According to public information, Puff Bar circumvented regulations by selling non-tobacco nicotine products; Vuse has several electronic cigarette products approved by the FDA; and although SMOK is still awaiting FDA approval, they are also expanding their market in the United States.

However, the FDA's decision to remove Juul from the market is clearly not solely based on its appeal to young people. A 2016 regulation gave the FDA the power to approve or reject the marketing orders of electronic cigarettes and other alternative tobacco products based on whether they meet the "appropriate for the protection of public health" standard. The agency found that Juul did not meet this standard because the company failed to provide sufficient evidence to "assess the potential toxicological risks of using Juul products," despite spending over $150 million and hiring a group of scientists to prove otherwise.

Despite the FDA's assertion that Juul does not pose a "direct hazard" to human health, it is difficult to determine any hidden dangers given that their so-called marketing refusal order is not available to the public. The statement notes that "some of the company's research results have raised concerns" regarding issues such as genotoxicity due to a lack of conclusive data. Essentially, this indicates that the FDA is not satisfied that the scientific evidence provided by Juul is sufficient to rule out the possibility that their product could cause cell damage.

Juul has responded to the ban, arguing that it has "appropriately characterized the toxicological properties of its product." The company claims to have provided the necessary data and information and added that it will explore various options, including legal appeals against the ban.

In a statement, Joe Murillo, Chief Regulatory Officer of Juul, said, "We respect the findings and decisions of the FDA, and we continue to believe that we have provided ample information and data based on high-quality research to address all of the concerns raised by the agency." He also stated that "we remain committed to doing everything we can to continue to serve millions of American adult smokers.

The FDA will make a decision on September 9th regarding whether Juul will be allowed to continue selling their products in the United States and under what conditions they will be permitted to continue. The FDA has also stated that they are reviewing millions of other products produced by hundreds of cigar, pipe, and e-cigarette companies.