By Dhirendra Tripathi
Investing.com – Stocks of Altria (NYSE:MO) and Philip Morris (NYSE:PM) fell around 5% and 3.5%, respectively, Thursday after an adverse ruling in the import and sale of the Iqos tobacco device by the companies.
The U.S. International Trade Commission held Wednesday that the cigarette alternative infringed on two of R.J. Reynolds’ patents.
The Iqsos device heats tobacco without burning it, a process supposed to give users the same rush of nicotine that a cigarette does, but without the toxins.
Philip Morris sells the device in several international markets and has granted Altria a license to sell it in the U.S. While Iqos’s U.S. sales aren’t significant, the order is upsetting for the companies given their efforts at shifting towards products seen as better alternatives to tobacco-based items which have seen falling demand amid negative public sentiment.
Altria spun off Philip Morris to focus on the U.S. market while the latter took care of the overseas sales. The two companies discussed reuniting in 2019 but called off the merger talks later.
The ban needs President Joe Biden’s stamp, and he has two months to review it. Philip Morris told CNBC it plans to appeal the trade agency’s decision. Altria told the channel the two companies are working together on contingency plans.