$165 billion Profit Industry of US Tobacco Companies’ Could Hit by FDA Revised “Maximum Nicotine” Policy; Morgan Stanley

The tobacco companies of US would be suffering if the FDA enacts a “maximum nicotine” policy, the approximately $165 billion profit industry of US, according to analysts at Morgan Stanley.

 The rating agency Morgan Stanley downgraded the shares of British American Tobacco PLC (NYSE:BTI) to underweight, while retaining an underweight rating on Altria and Imperial Brands.

The major U.S. tobacco companies’ profits could be trimmed in half, if the FDA (Food and Drug Administration) adopts a maximum nicotine rule within next 15 years, according to the analysts at Morgan Stanley (MS).

If the proposed policy for nicotine goes in effect by 2035, although, Morgan Stanley predicts that the tobacco stocks will take a big hit, while this move will benefit the e-cigarette giant Juul, as consumers will shift from smoking to vaping.

If the newly proposed regulation adopted by 2035, it would also cost the US tobacco industry roughly $165 billion in terms of losing the profits, wrote by the analysts at Morgan Stanley in a research report Sunday.

Analysts at Morgan Stanley wrote, “Reducing nicotine in cigarettes to non-addictive or minimally addictive levels, in our view, would be a potential game changer for the U.S. industry,”

Food and Drug Administration (FDA) is set to publish in October about its proposed rule regarding the regulating amount of the nicotine, that would be allowed in cigarettes and the other tobacco products, so that the effects are minimally addictive on customers, according to the FDA agency. If that rule adopted it would have significant benefits on public health and also having potentially large economic benefits, as said by the FDA.

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