Reynolds American Adds Nicotine-Replacement to Portfolio

WINSTON-SALEM, N.C. -- Reynolds American Inc. opted to buy -- rather than research and develop -- its way into the smoking cessation market with the $44 million purchase of Niconovum AB, a nicotine-replacement product manufacturer, the Winston-Salem Journal reported.

Niconovum specializes in products that help people quit smoking. The companies expect the deal to close by the end of 2009, according to the report.

Susan Ivey, chairwoman, president and chief executive of Reynolds, said in the report that Niconovum would operate as a separate company under Reynolds American.

"Niconovum's products have great potential in meeting consumer demand and public-health objectives," Ivey said. "This acquisition extends the harm-reduction strategies Reynolds American and its operating companies have been developing over the past several years."

The products are sold only in Sweden and Denmark to date, and no plans have been made to being them to the U.S. or other markets, Maura Payne, a spokeswoman for Reynolds, told the paper.

"If they choose to pursue approval to sell their products in the United States, they would have to follow the Food and Drug Administration's well-defined methodology for evaluation of their products," Payne said. "They would have to comply with the marketing and sales requirements the FDA has in place for nicotine-replacement therapies at that time."

Niconovum was formed in 2000 by Karl Olov Fagerstrom. It is managed by many of the people who were involved in the development of Nicorette, a nicotine-replacement gum, according to the report. It employs 20 people, and outsources its laboratory and manufacturing, Payne said in the report.

Reynolds said in the report it plans to retain Niconovum's management team and keep its headquarters in Helsingborg.

Stephen Pope, chief global-market strategist with Cantor Fitzgerald Europe, said the deal makes sense as tobacco manufacturers increasingly rely on smokeless tobacco products as cigarette demand drops, the report stated.

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