The Future of Vaping: The Role of Big Pharma and Big Tobacco
Aside from the government – who stand to lose a lot of money in tobacco tax revenue from the rise in vaping – the two other main stakeholders are Big Tobacco and Big Pharma, the manufacturers of the deadly product we’re all trying to avoid and the ineffective medications people use to avoid it, respectively.
Tobacco companies have almost all gotten in on the action, putting out their own “cigalike” products, but pharmaceutical companies have thus far said that they’re “not going to play.” However, things could change in the future, especially if regulators decide to do both of these groups of companies a favor by crippling the competition.
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Part 3: The role of Big Pharma and Big Tobacco? (you are here)
Big Tobacco: Why Cigalikes?
Tobacco companies are already invested in the e-cigarette industry – although not by much – but the most striking element of their involvement so far is how they’ve stuck to the cigarette-like aesthetic by putting out “cigalike” devices that almost no regular vapers use but that capture a substantial portion of first-timers. The question is: why have they stuck so steadfastly to these ineffective devices? Will they ever move to “open-system” devices?
Nick (Grimm Green):
Of course not. Tobacco is their bread and butter. They don’t make money from e-cigs. I believe that the big tobacco e-cigs are simply a “hey us too” situation so when they look back they can say ‘well we tried, but people would rather smoke our cigarettes, we can’t help that.’
The real question is whether they would be selling cigalikes at all after the competition has been removed, considering that tobacco companies really like their positions with the combustible tobacco products they sell. Not all of these big tobacco companies are the same. Some like the higher profit margins they get from cigalikes compared to those from cigarettes, but others appear to use their vapor products as sacrificial pawns on the business chessboard.
I think they’ve stuck with the closed system cigalike approach for many reasons:
1) They have a lot of money invested in it already and, if they’re not very serious about the vapor products market, why invest more?
2) Some got into it only after vapor products started to threaten their profits, and as a means to get a seat at the many legislative tables out there.
3) Cigalikes resonate a little better with smokers because of the form factor and thus may be an easier sell to current smokers than some of the more advanced vapor products (which to most smokers look strange and silly).
As much as I love a good conspiracy, there’s a pretty basic explanation here. Big Tobacco are old-line companies. Those types of companies are beyond conservative and are slow to embrace innovation. There are focus groups and meetings, and meetings about focus groups, and so on. By the time they got a product out the door, they were a couple years behind. Vaping in particular moves very fast and they just can’t keep up.
Some may move to open systems, but without competition I doubt we’d see the startling innovation we have so far. Any big company is going to put in the least effort they can to produce the most profit. Unless the survivors start competing between each other, don’t expect much here.
Cigalikes are what is most familiar to the tobacco company and smokers. It’s easy to substitute a cigarette for a cigalike. Try telling a smoker of Marlboro to try a DNA40 box mod and a Kanger Subtank. Ain’t going to happen on a large scale.
I think they push cigalikes for a variety of reasons. The first one being the knowledge that many cigalikes are ineffective. Most vapers upgrade to better kits that deliver vapor and nicotine more effectively, but tobacco companies know if vapers don’t move to a better kit, they will ultimately end up back on cigarettes. Tobacco companies are also the main lobbyists behind strict restrictions on open vapor products and pushing for taxes on e-cigs.
Big Pharma: Will They Ever Get Involved?
For pharmaceutical companies, the issue becomes whether they’ll ever put out their own e-cigarette. With their own selection of nicotine-based products on offer and the veneer of reliability that comes from medical approval, do they really have any motivation to get involved at all? Even when the competition is decimated, will we ever see a Big Pharma e-cigarette?
They’d be silly no to get into it, especially if they are about health and not profit. There is plenty of evidence to show e-cigs are doing what NRT never could. Then again, a medical e-cig will probably be just like a cigalike, and the cycle will be repeated endlessly. Smoke, get an NRT ecig, find out it doesn’t work, go back to smoking. Tobacco gets its profits, orgs get their funding, Big Pharma makes a profit. Everyone is happy except the smoker.
Nick (Grimm Green):
I truly and honestly doubt it. I’m sure their e-cig would be just horrible. Possibly more horrible than the cig-alike devices we have on the market now.
In a way they already have with some of the nicotine inhalers like Nicotrol, but those are quite different from the vapor producing products we know. I have a feeling they are not interested in going that route, and that’s solely based on their fierce opposition to vapor products in general.
I have no idea. If I had to guess I’d say no, they won’t enter the market with their own vape products, unless they release a ‘step-down’ cig-a-like program like they did with nicotine patches. Maybe then, but it depends on the technology and the future mindset of the public.
I want to say there’s already an approved device in the UK, but it was developed in partnership with BAT. I would expect Pharma to get in on it. Expect something like a cigalike but more boring. Pharma products have to deliver the same dose with each use, so chances are it would be overly complex and expensive.
Conclusion: “Any big company is going to put in the least effort they can to produce the most profit.”
Big Tobacco may have their “toe dipped in the water,” so to speak, but whether we’ll see any innovation from them is very doubtful indeed, and pharmaceutical companies really seem quite happy to live with the diminishing profits from their smoking cessation products and make the bulk of their money elsewhere. As Steve K. argues, they’re more interested in making a quick and easy profit than getting seriously involved with vaping as we know it.