Analysts say ALTRIA Group, Inc. “S” Philip Morris defends its dominant market share, has the legal and risk management more predictable, possibly paving the way for new tobacco products with less risk to health.
On the other hand, smaller competitors, such as Camel and Kool Cigarettes Maker Reynolds American Inc., struggling not to remain in the bill some call “Marlboro Monopoly Act.”
“They do not want to stop the clock and was stuck at 10 percent market share with Camel,” said tobacco analyst Gregg Warren of market research firm Morningstar Inc.
The bill was introduced by Massachusetts Democrat Edward Kennedy and Texas Republican John Cornyn in the Senate, a California Democrat Henry Vaksman and Virginia Republican Tom Davis in the house.
It has 29 co-sponsors in the Senate and 96 in the House. Republican House leaders, who have blocked consideration of two years ago from the government.
The Senate Health Committee Chairman Kennedy has scheduled a hearing on the bill in the testimony of witnesses of Health on Tuesday.
“The Congress discussed the issue of FDA authority over tobacco for nearly a decade. It is time to end debate and decide,” said Matthew Myers, president of Campaign for Tobacco-Free Kids.
The bill currently pending would allow the FDA to regulate tobacco products, to restrict tobacco advertising, to prevent the sale of cigarettes to minors, require stronger warning labels, bar misrepresentation of the dangers of tobacco, as well as the removal of harmful ingredients from cigarettes.
In addition, he will set standards for “reduced risk” tobacco products, which can not be on the market as safer than regular cigarettes without FDA inspection.
“We believe FDA regulation … can be described as a good thing for the industry. However, we continue to believe that there will be fierce opposition,” said Christopher Growe, a tobacco analyst of brokerage AG Edwards & Sons Inc.
“Any benefits of FDA regulation would accrue mostly” Philip Morris “, Growe added.
As the dominant U.S. cigarette with a group of controls half the market, Philip Morris could absorb the added costs of FDA regulation more easily than smaller competitors, said an analyst.
Philip MorrisЎЇmarket share will also be protected from the applicants, if the FDA turns off rivalsЎЇadvertising, they said.
Finally, regulation could pave the way for products that pose less risk. Here, Philip Morris may have an advantage.
“We believe (Philip Morris USA) is miles ahead of their peers to develop a reduced risk product”, Growe said.
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