Jincheng Pharmaceutical approved to export nicotine for e-cigarettes, production license extended to
After obtaining the "Tobacco Monopoly Production Enterprise License" in June 2022, Jincheng Pharmaceutical announced on the evening of July 16 that its wholly-owned subsidiary, Shandong Jincheng Pharmaceutical Chemical Co., Ltd. (referred to as "Jincheng Chemical"), recently received the "Tobacco Monopoly Production Enterprise License" (for nicotine for e-cigarettes) issued by the National Tobacco Monopoly Administration. The company stated that this will have a positive impact on its performance.
In June 2022, Jincheng Pharmaceutical announced that Jincheng Chemical received the approval decision for the tobacco monopoly license from the National Tobacco Monopoly Administration, making it one of the first companies in China to obtain a production license for nicotine used in e-cigarettes, thus officially entering the production and sales business of nicotine for e-cigarettes. At that time, the nicotine produced was only for domestic sales, with a production scale not exceeding 20 tons/year.
The announcement indicated that, after a year, the newly obtained "Tobacco Monopoly Production Enterprise License" has changed the production scale, permitted scope, and validity period defined in the original certificate. In addition to domestic sales, the permitted scope now includes export business, and the validity period has been extended to June 30, 2025.
Regarding production scale, the company stated that it will not exceed the data approved by the National Tobacco Monopoly Administration, and specific details will be disclosed in a timely manner after updates on the trading management platform.
This means that after receiving the new license, Jincheng Pharmaceutical can expand production according to the newly approved production scale by the National Tobacco Monopoly Administration. On the other hand, the company can also legally engage in the export business of nicotine for e-cigarettes, expanding into foreign markets.
Since entering the nicotine business, there has been considerable interest in the development of this business by Jincheng Pharmaceutical. In June of this year, during discussions with investors, Jincheng Pharmaceutical revealed that the nicotine project has already been put into production and is generating revenue. The company has resolved the raw material issue for extracting nicotine and is intensifying its marketing and sales efforts for nicotine products.
It is understood that the scope of operation for the e-cigarette production license is divided into three categories: e-cigarette products (factories and brands), atomized substances (e-liquid), and nicotine for e-cigarettes. Factories and brands apply for the e-cigarette products production license, e-liquid companies apply for the atomized substances production license, and nicotine companies apply for the nicotine for e-cigarettes production license.
On June 9, 2023, the National Tobacco Monopoly Administration issued a notice regarding the renewal of tobacco monopoly production enterprise licenses for e-cigarette-related production enterprises, stating that starting from June 30, the licenses of certified e-cigarette-related production enterprises will gradually expire, and from that date, the renewal, modification, and reapplication for certified e-cigarette-related production enterprise licenses will be conducted in accordance with the law.
In recent years, the global e-cigarette market has shown significant potential, and Jincheng Pharmaceutical's approval for overseas sales of nicotine for e-cigarettes will help broaden its market space. According to a report by Tianfeng Securities, in 2022, the global e-cigarette market experienced accelerated growth, with sales reaching $23.65 billion, a year-on-year increase of 20.0%. The United States, the United Kingdom, and Canada ranked as the top three markets for e-cigarette sales, with $9.0 billion, $5.03 billion, and $1.98 billion, respectively.
Regarding the largest market, the United States, data from the Centers for Disease Control and Prevention (CDC) shows that e-cigarette sales in the U.S. increased from 15.5 million units in January 2020 to 22.7 million units in December 2022, a nearly 50% increase over three years. (This article is compiled from announcements by Jincheng Pharmaceutical, Securities Times, and Xinhua Finance)
