Reynolds American to buy smoking-cessation firm

Reynolds American announced to buy Sweden's Niconovum AB for about USD 44 million, gaining a foothold in the market for smoking-cessation products, reports the Wall Street Journal.

The deal marks the latest move by Reynolds to diversify as the volume of cigarettes sold in the U.S. continues to decline. Reynolds, based in Winston-Salem, N.C., said it plans to retain the management team at Niconovum, which makes nicotine gum, mouth spray and pouches under the Zonnic brand. Niconovum's products currently are sold only in Sweden and Denmark, and Reynolds would need the Food and Drug Administration's approval to sell them in the U.S.
Reynolds Chief Executive Susan Ivey said the company intends to provide capital to help Niconovum focus on product development and the testing necessary to enter new markets.
No major U.S. tobacco company currently markets or sells an approved smoking-cessation product. Such nicotine-replacement therapies typically have been made and marketed by pharmaceutical companies, including GlaxoSmithKline PLC and Johnson & Johnson.
"Niconovum's products have great potential in meeting consumer demand and public health objectives," Ms. Ivey said in a statement.
Reynolds spokeswoman Maura Payne said it may take "at least a couple of years" before Niconovum products would receive FDA approval and appear on store shelves in the U.S.
Reynolds, the No. 2 U.S. cigarette maker by sales after Altria Group Inc., has diversified its product mix in recent years by acquiring smokeless-tobacco maker Conwood and by introducing such products as Camel Snus, a type of spit-free tobacco. Scientific research has shown that smokeless-tobacco products carry significantly lower health risks for consumers than do cigarettes.
Reynolds, the maker of Camel and Pall Mall cigarettes, said the Niconovum deal is expected to be completed by year-end. Niconovum will be a separate operating company of Reynolds and will keep its headquarters in Helsingborg.
Niconovum was founded in 2001 by Karl Olov Fagerstrom, an expert on nicotine dependence. (pi)

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