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?


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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information