Can E-Cigarettes Measure Up to Traditional Smoking Cessation Products?

E-cigarettes from Lorillard, Reynolds American, and Altria are taking on traditional smoking cessation products from GlaxoSmithKline and Pfizer. How well do these new devices stack up against nicotine gum, lozenges, patches, and anti-smoking drugs?

Mar 15, 2014 at 9:00AM

Americans who are trying to quit smoking are probably familiar with common smoking cessation products such as nicotine gum, lozenges, and patches. Yet over the past few years, newer smoking cessation products -- such as drugs to block nicotine cravings and e-cigarettes -- have also risen in popularity.

How do these products -- which are made by companies like GlaxoSmithKline (NYSE:GSK), Johnson & Johnson (NYSE:JNJ) Pfizer (NYSE:PFE), and Lorillard (NYSE:LO) -- stack up against each other in terms of profitability, safety, and efficacy?

Image

Common smoking cessation products: GSK/J&J's Nicorette, Pfizer's Chantix and Lorillard's blu eCigs. (Source: Company websites)

The projected market growth of smoking cessation products
The smoking cessation market in the U.S. is expected to grow as national smoking rates, which have already fallen from 42% in 1965 to 18% in 2012, continue declining.

A recent report by BCC Research projects that the global market for smoking cessation products will rise from $2.1 billion in 2012 to $2.5 billion by 2018, growing at a compound annual growth rate (CAGR) of 3.4% between 2013 and 2018. Another study from Nature Discovery Review is even more bullish, forecasting that the global market will hit $3.8 billion by 2016.

According to Nature Discovery Review's market share projections, Pfizer's anti-smoking drug Chantix/Champix is expected to dominate the global market until 2016, remaining ahead of over-the-counter nicotine replacement products such as Novartis' Nicotinell, Johnson & Johnson's NicoDerm, and GSK/J&J's Nicorette.

However, this model doesn't account for the rising popularity of e-cigarettes as a smoking cessation device. The e-cigarette market has already grown from $10 million in 2007 to $1.5 billion in 2013, and is projected to soar to $10 billion by 2017, according to Wells Fargo analyst Bonnie Herzog. At that rate, e-cigarettes would become the most important smoking cessation product on the market, leading to explosive growth for Lorillard, which dominates half of the market with its blu eCigs brand.

Novartis, J&J, and GSK don't report individual sales of their nicotine gum, lozenges, or patches, since they are all classified under consumer health care products. J&J sells the Nicorette brand overseas, while GSK markets the brand in the United States. 

Pfizer reported that U.S. sales of Chantix sales rose 10% year-over-year to $343 million in 2013, while Lorillard reported that e-cigarette sales surged 277% to $230 million -- a clear indication that many U.S. smokers consider e-cigarettes a viable new option.

Efficacy and nicotine content
Each of these three subsets of smoking cessation products -- nicotine gum/lozenges/patches, pharmaceutical products, and e-cigarettes -- have distinct advantages.

Nicotine gum, lozenges, and patches don't contain any tobacco, and gums and lozenges can satisfy the oral fixation and cravings constantly associated with smoking. Patches can be a more passive, longer-lasting solution. Drugs like Chantix contain neither tobacco nor nicotine, and work by blocking the brain from deriving pleasure from nicotine to reduce the daily need for cigarettes. E-cigarettes deliver vaporized nicotine to the lungs and emulate the physical sensation of smoking -- a key strength that GSK, J&J, and other companies have tried to copy with new nicotine inhalers.

Generally speaking, Nicorette products and e-cigarettes deliver roughly the same nicotine content to smokers over the course of a day without the cancer-causing tobacco smoke. However, nicotine can also cause cardiovascular issues such as an elevated heart rate. That's why Pfizer believes that delivering a nicotine- and tobacco-free smoking cessation drug could be a preferable solution.

Safety issues
Although all three of these products seem to be better solutions than traditional cigarettes, there are other risks beyond their nicotine content.

Nicorette and other nicotine patches can agitate existing cardiovascular problems and interact with common medicines like acetaminophen. Nicotine gum and lozenges can interact with a rare mutation which increases the risk of mouth cancer, according to a study conducted at Queen Mary University of London and other research centers in the UK and Malaysia.

Those problems, however, pale in comparison to Chantix's risks. Chantix has reportedly been linked to significant psychological issues, including suicide, since its U.S. launch in 2006. This eventually led to the FDA issuing new warnings for Chantix and another smoking cessation drug, GSK's Zyban, for "changes in behavior, depressed mood, hostility, and suicidal thoughts."

E-cigarettes, on the other hand, are still unregulated by the FDA or WHO, which have both recommended against their use as smoking cessation devices until more clinical data can be reviewed. The WHO has expressed concerns regarding the wide range of nicotine content found in cartridges, which can range from 6 mg to 100 mg of nicotine. Independent studies have also found that inhaling vaporized nicotine can irritate the lungs.

The Foolish takeaway
All of these smoking cessation products have clear benefits and drawbacks. However, the growth of e-cigarettes in contrast to traditional smoking cessation products like Nicorette and Chantix can't be ignored.

As the e-cigarette market continues growing, big tobacco companies like Lorillard, Reynolds American, and Altria could ironically be better bets on declining rates of smoking than traditional choices GSK, Johnson & Johnson, or Pfizer.

Invest In The Next Wave of Health Care Innovation
The Economist compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion dollar industry." And the technology  behind is poised to set off one of the most remarkable healthcare revolutions in decades. The Motley Fool's exclusive research presentation dives into this technology’s true potential, and it's ability to make life-changing medical solutions never thought possible.  To learn how you can invest in this unbelievable new technology, click here now to see our free report.

 

Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers