Reynolds tobacco closer to buying smoking cessation products company

Source: Beasley Allen Law Firm
Author: Kurt Niland

Reynolds American, the second largest American producer of cigarettes and other tobacco products, is in the advanced stages of negotiating a purchase of Niconovum, a Swedish company that manufacturessmoking cessation. If the deal works, as it appears it will, it shows the determination of the tobacco giants to cash in on the “whole cycle of a smoker from the first puff to the last piece of gum,” said Chip Brian, a business analyst for SmarTrend.

Based in Helsingborg, Sweden, Niconovum produces nicotine-replacement therapies (NRTS), smoking cessation products designed to provide users with a smokeless form of nicotine relief. Niconovum’s products are Zonnicpouches (small bags containing a nicotine powder that users put beneath their lips), Zonnic “pepparmint” [sic] mouth spray, and Zonnic gum.

SmarTrend’s analyst points out that both Reynolds and the Altria Group, owner of Philip Morris USA and other tobacco product companies, ownpharmaceutical companies, but Reynolds’ purchase of Niconovum would be the first time a tobacco giant marketed and sold a smoking cessationproduct.

According to the Wall Street Journal, “the potential deal would mark the latest and most dramatic move by Reynolds into nicotine products that represent alternatives to cigarettes.”

“Sales of cigarettes in the U.S. have been declining for years, prompting Reynolds to move into products that studies have shown present much smaller health risks than cigarettes,” the WSJ explains.

Reynolds’ acquisition of Niconovum might seem contradictory and even hypocritical, but it makes good sense for the tobacco company. Somesmoking cessation experts allege that many people who use nicotine replacement products wind up addicted to expensive gums, lozenges, patches, sprays, pouches, and other products. The smoking cessationmarket, already a multi-billion-dollar industry, is expected to continue its dramatic growth in the next ten years.

“Help people quit smoking, but keep them addicted to nicotine” seems to be the business model Reynolds America follows in its purchase of Niconovum.