Following the U.S. Food and Drug Administration’s approval of the marketing of 20 of the tobacco company’s Zyn nicotine pouches, shares of Philip Morris International Inc. continued their current upward trend on Thursday.
However, the FDA clarified that the marketing approval simply indicates that the products are safer than certain alternatives, not that the agency thinks they are safe.
“While today’s actions permit these specific tobacco products to be legally marketed in the U.S. to adults 21 and older, it does not mean these tobacco products are safe, nor are they ‘FDA approved,'” said the FDA. “There is no safe tobacco product.”
The shares of Philip Morris (PM) closed Thursday at $119.80, up 1.1%. During a four-day winning streak that began when the stock closed at a five-month low, it has risen 2.3%.
The stock closed the day 10% lower than its record close of $133.06 on November 29.
According to the FDA, its decision on Thursday was supported by research that indicates Zyn pouches have “substantially lower amounts” of dangerous components than cigarettes and the majority of smokeless tobacco products, lowering the risk of cancer and other severe illnesses.
Additionally, data from Philip Morris demonstrated that a significant percentage of adults who previously used cigarettes or smokeless tobacco products switched to the new, less harmful pouches, indicating that they are beneficial to health.
To make sure that young people aren’t being targeted, the FDA informed Philip Morris that it will be monitoring the pouches’ marketing.
“The FDA’s Center for Tobacco Products director, Brian King, stated that “it’s vital that the manufacturer sell these products responsibly to prevent underage use.”
According to study, 1.8% of American middle and high school kids currently report using nicotine pouches, according to the FDA. Despite a recent increase in overall pouch sales, usage is still modest.
According to the company’s third-quarter report, Philip Morris shipped 164.6 million nicotine pouch cans, including 149.1 million Zyn pouches, which is a 43.6% increase over the same period last year. Each container in the United States contains 15 nicotine sachets.
The company also reported a 2.6% increase in shipments of cigarettes and heated tobacco units, and a 24.7% increase in shipments of all oral smoke-free products.
The business is being sued for allegedly promoting the items to children and causing Zyn pouch addiction as a result of deceptive promotion.
According to the corporation, it is currently unable to estimate the range of possible losses or the possibility of loss resulting from the actions.
Philip Morris stated a year ago that Zyn products are exclusively promoted to individuals who are 21 years of age or older and who would otherwise be using other nicotine products in response to political and public criticism of the company’s marketing strategy.
The following is a list of Zyn products that the FDA has approved for sale in dosages of three and six milligrams:
- Zyn Chill
- Zyn Cinnamon
- Citrus Zyn
- Zyn Coffee
- Cool Mint Zyn
- Zyn Menthol
- Zyn Peppermint
- Zyn Smooth
- Zyn Spearmint
- Wintergreen, Zyn
According to the FDA, the business cannot state in its advertising that the products are less dangerous.
Over the last 12 months, Philip Morris’s stock has increased 26.8%, the S&P 500 index SPX has increased 24.6%, and the Consumer Staples Select Sector SPDR exchange-traded fund XLP has increased 6.1%.
With a market valuation of $186.3 billion, the company now distributes a $5.40 annual dividend per share, meaning that at current stock prices, the dividend yield is 4.51%. The estimated yield on the S&P 500 is 1.27%, while the yield on the consumer staples ETF is 2.83%.
