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Juul e-cigarettes are ordered from American shelves – WSJ

A woman holds a Juul e-cigarette while walking in New York, USA, September 27, 2018. REUTERS / Brendan McDermid

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June 22 (Reuters) – The US Food and Drug Administration is preparing to order Juul Labs Inc to withdraw its e-cigarettes from the US market, the Wall Street Journal reported on Wednesday, quoting people familiar with the matter.

The shares of the tobacco giant Altria Group (MO.N), which owns a 35% stake in the manufacturer of vaping products, fell 8.5% according to the report. The decision can come as early as Wednesday, the report states.

Juul has faced increased scrutiny from regulators, lawmakers and state attorneys over the appeal of nicotine products to teens. Under pressure in late 2019, the company had stopped US sales of several flavors.

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The FDA declined to comment on the report, while Altria and Juul did not respond to requests for comment from Reuters.

“This clearly comes as a surprise to the market … we expect Juul to appeal the decision, and remain in the market through the process, which is likely to take a year or more,” said Cowen analyst Vivien Azer.

The threatening verdict comes almost two years after Juul had applied to continue selling e-cigarettes in the country.

The FDA’s review of the applications was based on whether the e-cigarettes are effective in getting smokers to quit, and if so, whether the benefits for smokers outweigh the health damage to new users, including teenagers.

In October, the FDA allowed Juul competitor British American Tobacco Plc (BATS.L) to market its Vuse Solo e-cigarettes and pods with tobacco flavor, the first steam product ever to receive approval from the Norwegian Board of Health. read more

The estimated fair value of Altria’s investment in Juul was $ 1.6 billion at the end of March, a fraction of the $ 12.8 billion it paid in 2018, as a breakdown of vaping has upgraded the once fast-growing industry.

“The investment in Juul was always a mistake, the company paid top dollar for a business that was already clearly (on) the wrong side of the regulators,” said Rae Maile, analyst at Panmure Gordon.

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Reporting of Praveen Paramasivam and Deborah Sophia in Bengaluru; Editing Devika Syamnath and Sriraj Kalluvila

Our standards: Thomson Reuters Trust Principles.

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