TobaccoAsia/ InterTabac Podcast #54

00:00:04: This is Tobacco

00:00:05: and Vape

00:00:06: News & Views, brought to you by Tobacco Asia in partnership with Business Insights.

00:00:11: The new digital platform of inter-Tobacco and Inter Supply.

00:00:16: You host this TobaccoAsia's Thomas Schmidt.

00:00:18: Welcome back for a new episode.

00:00:29: I have on the mic today Mark McQuillan And he works at a company called Niko Brand.

00:00:36: He's actually managing director And Nicobrand is a sister company of C&T, Contra of Nicotex Tobacco.

00:00:45: A German outfit.

00:00:47: that's one the largest suppliers of nicotine in the world.

00:00:52: and with that let say hello to Mark!

00:00:54: Hello mark am I coming through?

00:00:56: You are Thomas could hear you

00:00:58: fantastic.

00:01:00: i just mentioned uh your connection with cnt.

00:01:03: can you tell me a little bit about?

00:01:08: Of course, yeah.

00:01:09: Thanks, Thomas.

00:01:10: Nickelbrown and CNT started their journeys independently back in the Argyeti Saudis.

00:01:15: two companies one based in Northern Larnan, Nickelbrow on CNT at Corder & Jelly where there are two businesses involved.

00:01:22: And then let's say the race for the realization of a pharmaceutical nicotine for use was the NRT business back when the nicotine replaced with therapy soap.

00:01:31: These two companies were starting to purify nicotine back in the late eighties for use and these products.

00:01:38: Both companies were successful independently since the nineteen nineties, so we've been supplying pharmaceutical-grade nicotine active ingredients to the pharmaceutical industry there was a high degree of mutual respect for each other terms of compliance and business integrity and so forth.

00:01:53: um And for some twenty years Nicol Brown himself was part of a multinational pharmaceutical business.

00:01:58: until two thousand nineteen.

00:02:00: uh We were spun off in two thousand ninety and we became acquired in whole by CNT.

00:02:06: CNT itself has Anderson Tobacco as well, it's been a very significant producer of pharmaceutical nicotine.

00:02:13: these days the two companies operate symbiotic together In terms of their business.

00:02:17: We both retain our brand opportunities in terms of Nicobrand & C&T And Together we have a massive capacity for the extraction of nicotine from sustainable tobacco leaf.

00:02:26: an India-wide room facility there As Well is a massive Capacity the production of nicotine active pharmaceutical ingredients, primarily nicotine itself and nicotine polychrolix resin.

00:02:37: And nicotine biotartic dihydrate as well.

00:02:40: CNT used a European contract manufacturer in Switzerland for its downstream processing at production on the nicotine PPI's itself.

00:02:47: Nippebrand also has a certain capacity to manufacture these APIs to EDGESELP as well, at it's facility in the north coast of Northern Ireland.

00:02:58: Perhaps deaf for a little bit is the fact that Nickelbrown will be of high level flexibility to manufacture additional value-added nicotine formulations, particularly in the NGP industry.

00:03:09: So here we are manufacturing quite significant tonnages all ready-to-pouch modern oil blends which design and manufacture bespoke nicotine formulation.

00:03:19: so they're ready for pouching for a variety customers or large customers independent customers with all red customers all over the world.

00:03:27: In addition to the pitered element, we also have a considerable capacity to manufacture any kind of nicotine solution.

00:03:34: Again for use in pieches or e-vapor or heated products and so forth as well.

00:03:39: All this is supported by R&D headquarters in Germany Aswell as R& D function here at Nicobromb.

00:03:45: So you still market into these

00:03:47: distinguished

00:03:48: brands right?

00:03:49: You're marketing your nicotine under NECO brand And you are marketing on nicotine Under CNT.

00:03:55: Yeah, the marketing I guess is an interesting question and when we talk to our customers.

00:03:59: We are essentially one company.

00:04:02: What we want to emphasize Is that fact?

00:04:04: We have a certain level of business continuity in The fact that we have a negative production facility In Switzerland where we're producing quite sizable quantities.

00:04:11: but in parallel with that we Have also Our dedicated nicotine production facility And cool rain in Northern Ireland as well Where you have up also additional capacity to manufacture nicotine agis on the end when it comes to costs, which these two products are the same.

00:04:26: It's just a case of what we chose since in terms over customer requirements?

00:04:30: Right now.

00:04:31: The topic today actually is pharma grade nicotine.

00:04:34: so Just to kick it off after this little introduction How would you define pharma-suitical great nicotine?

00:04:43: In simple terms What Is Pharma-Suitical Great Nicotine

00:04:48: I guess and its most basic terms A pharmaceutical-grade nicotine means it should meet the recognized pharmaceutical monographs.

00:04:55: And these are a monograph which we have sponsored back decades ago when the pharmaceutical business was in its heyday.

00:05:00: let's say, and they're coming from USP or the

00:05:04: U.S.,

00:05:04: that come out of the farm here in Europe.

00:05:07: That is not providing many to full picture.

00:05:09: In order to be licensed as a pharmaceutical drug product I'd be categorized as a Pharmaceutical Grade Nicotine.

00:05:15: The scrutiny grows much steeper than this one part as they assess of the product facilities, for example involved in that production.

00:05:23: And we ourselves, folks from Nicobarland C&T's facilities have been audited for decades by agencies such as USFDA UK Emitter A Swiss Medic and so forth who go on poorly at facilities for days then do this on a regular basis.

00:05:38: These audits are some of most stringent inspections I would say any manufacturing entity could be challenged with.

00:05:44: They're essentially for your right to have your nicotine AGI using any drug toilet and in that respect of jurisdiction.

00:05:51: In addition to that, we also hold what are known as drug master files or DMS for the US And also certificates of suitability or CEPs from the European Union For these nicotine active grace as well.

00:06:02: Many others also hold these filings aswell.

00:06:07: However having a file may be listed on an agency's website.

00:06:10: Not exactly same thing is happening at Fully Reference again on that finished drug pilot Because when pharmaceutical assessors pick up any drug pilot application They will look at the associated reference drug master fire, or CEP.

00:06:23: And from that they may well further request for a translation on our RFIs which go much deeper into the manufacturers.

00:06:29: chemistry manufacturing and controls The CMC information about the nicotine API and that goes well beyond anything to contain in a basic certificate of analysis.

00:06:38: It'll touch on topics such as heavy metal residues, residual solvents, TSNAs, nitrosamines... ...and so forth.

00:06:46: That's really your license to operate if you like as a true pharmaceutical nicotine approved in the drug product.

00:06:51: And that's really important, Thomas.

00:06:53: and one thing I'd like to emphasise here is that once meeting them on a graph might be at their basic entry level.

00:06:58: from our perspective we have taken care of these other attributes which are still necessary here in COV.

00:07:05: And it spurred nicotine as in C&T and Nicobarra which has been used supporting those global pharmaceutical markets for almost thirty five years which in itself has an exemplary safety record.

00:07:16: And that's the important point because it is something we can reflect on as you go into this harm reduction kind of journey and, um... It's important to undermine the confidence.

00:07:25: there isn't safe nicotine cause.

00:07:26: that safe nicotin comes from our facilities which have a good report.

00:07:30: You just mentioned the impurities like nitrosamines for example or heavy metals.

00:07:35: Where do they come from?

00:07:36: Do they come form the soil?

00:07:38: are they introduced?

00:07:40: maybe by fertilizers or whatever the plant is exposed to.

00:07:45: Yeah, and there's a number of impurities which can be present.

00:07:47: First off these monographs point to more certain tobacco specific impurities such as other nicotine alkaloids let's say And they are codified in the monographes and C-Vase.

00:07:57: They need to be controlled from the tobacco plant.

00:07:59: That's all that I'm coming for with the oxidation products As well.

00:08:02: The other aspects are as you see Such as pesticide residues Can't have a bearing on them.

00:08:08: We go just great extent to control the permissible pesticides which can be used in or sustainable nicotine programs, ensure that no pesticides are used and that these are tightly monitored during the entire supply chain as well.

00:08:19: Heavy metals, rotisserie salts come from processing some of the vessels for leaching if container is used too.

00:08:29: so again this needs to be tightly controlled and routinely monitored in terms of the end product on throughout the supply chain.

00:08:37: Nitrosamines and TSNAs, of course are typically harmful to tissue to human health.

00:08:42: We've had to do certain risk assessments to make sure that nitrosamine generally aren't pivoted in our products And also tobacco-specific nitrosamine are controlled on undetectable levels In our product.

00:08:53: When we're talking endproducts containing nicotine Let's say for example the always present nicotine pouches But also gums, lozenges inhalers patches E-liquids also have nicotine, some of them at least and heated tobacco products.

00:09:11: Is it advisable to in their manufacturing only use pharma grade nicotine instead of conventional nicotine that's not purified?

00:09:22: I think this is where the confusion arises.

00:09:24: what we see in terms of global regulation around these next generation products there is a much more show different approaches that product compliance standards in terms of the ingredients used.

00:09:36: For example, TBD-II and European Huclid Yield Barriers generate some markets.

00:09:41: there's not really any classification in terms with the nicotine we should use generally.

00:09:46: I think from an overarching perspective i think the important message is that we're trying to evidence to the general public law makers and regulators at these are farm ridges products that are being used on which you do our utmost to ensure our supply chain, or customers and deep regulators, and ultimately consumers that were doing their utmost to ensure that we're not doing anything which could be deleterious to human health.

00:10:09: And in doing that then the safest bet is say you should use a pharmaceutical-negating which has certain pedigree of history and pharmaceutical drug products because those drugs are talking about gums and so forth... ...which themselves have been around for thirty four years might be in the box to take report six weeks or twelve weeks.

00:10:27: what actually happens when reality tells us people continued to use these products for months and four years throughout their life.

00:10:33: And there's an exemplary safety record through those products, so that is something we can reflect on.

00:10:38: when it comes to these other products and the ingredients used in them.

00:10:43: Yes they would be incumbent I'd say to use pharmaceutical nicotine and the nicotine has been subject to a category of history from health care issues around the world.

00:10:52: What does it do with you or the end consumer?

00:10:55: Yeah!

00:10:55: Of course Steve... There are lots kind of nicotine illiteracy out there.

00:10:59: You know, people associate a nicotine equals to microwebals hard-to-health and nicotine itself is not essentially the problem.

00:11:06: it isn't an addictive product but in its own right.

00:11:08: it's managed in the dosage forums we talk about can be managed quite well as you've seen that.

00:11:13: so It's an education We need to do To the general public to the consumer itself to say okay if we control these things These products are arm or just products indeed.

00:11:22: And then they can draw many parallels between for example nicotine which has switched and away are not too dissimilar to nicotine gums.

00:11:29: They're really quite similar in terms of their product makeup formulation, so as I say you can leverage that block history we have with the pharmaceutical gums to these other

00:11:38: products.".

00:11:39: Yeah...I recently talked a neurobiologist from United States.

00:11:43: he assured me even now around eighty percent U.S physicians still think it's nicotine actually which causes cancer which is quite shocking.

00:11:54: if that's true, right?

00:11:56: Yeah.

00:11:57: And this isn't difficult and it's not just transitions as lawmakers or regulators.

00:12:02: well of course the general public.

00:12:04: so there was an educational program required here to try help people understand what the harm we knew from conventional tobacco was not associated with the methodings.

00:12:14: you know We performed extensive testing The safety proof I love, Necotine itself.

00:12:19: So there's a message we're trying to get across.

00:12:21: but of course people still associate Necotein with tobacco and with arm gels generally.

00:12:27: Yeah You also told me that the regulatory landscape globally speaking can be quite fractured right?

00:12:35: Now i believe in the United States And EU it is much more streamlined than elsewhere But there surely must other markets where The rules are not hundred percent clear when it comes to nicotine.

00:12:48: Yeah, that's true.

00:12:49: I think the global regulatory landscape is very different.

00:12:52: you have parts of the world such as UK which has quite open-to-the harm reduction message and It sees a potential benefit in terms of these farm reduced products whereas You've got the extreme all MIDI Australia and so forth where there's certain outright bonds on some of these products.

00:13:08: And then there isn't balance between addressing providing products for better health outcomes on mass adoption of lease products by youth, for example.

00:13:16: And I think we've seen a lot of let's say poach to the wire marketing of certain products maybe in eBay or in Soapworth with kind of different flavors and colors.

00:13:24: you know it's hard to discern whether these products were tip-de-market that are mature conventional tobacco users.

00:13:30: so i think everyone has a bit to do here too To convince the general public and so forth That these are super alternative products For conventional tobacco user and not products just for other markets.

00:13:41: Let's see

00:13:42: Well, what are some of the typical products where pharmaceutical-grade nicotine would be used?

00:13:48: I can imagine it's not just tobacco products.

00:13:51: It is not just lozenges and gums... ...and heated tobaccos and nicotine pouches.

00:13:57: There must be other product segments as well.

00:13:59: Well!

00:14:00: And the story here probably in Nicaragua actually can trace its roots back to US over a century ago.

00:14:05: Actually was found there as a company to extract nicotine for use as a pesticide.

00:14:09: so they already The use of nicotine was actually an agrochemical usage agency.

00:14:15: I've not obviously dated to some extent over the last century when DDT and other artificial pesticides came along, so by the time that business made its way to Coal Radio, that really was on its way out.

00:14:26: these days...the use of Nicotine for those purposes is it's not really permitted generally word-wide.

00:14:33: So these days the primary commercial focus were nicotine is for considerable applications and it's sort of the patches probably because nicotine has really absorbed across the skin, uh...and also the gums, the losangers, the sprays then healers.

00:14:44: And so forth.

00:14:44: those are licensed medicinal products um but we do see if course in the next product which started with beaver.

00:14:51: Then we have nicotine pouches.

00:14:53: these days there're also heated products.

00:14:55: So those were the headline products to its site.

00:14:58: Um I guess that was a certain fascination with nicotine on.

00:15:01: There Are Different projects and work streams at various research institutions worldwide for other potential benefits of nicotine as well.

00:15:09: so there's one research roadway to go in terms of seeing what we can realize from nicotine indeed not just from nicotin but some of the real altos that come with the nicotine.

00:15:20: All

00:15:22: right, let's look at your typical annual trade volume.

00:15:28: How many percent would you reckon would be delegated for the manufacturing of tobacco products in the broadest sense, keeping in mind here that even Los Angeles patches and pouches in some markets are nowadays classified as tobacco products just because they do contain nicotine?

00:15:49: Okay.

00:15:49: Yes but essentially we're probably manufacturing an area over about five hundred metric tons all pure nicotine firm, so the API building.

00:15:59: Obviously some of that we sell direct to certain customers, to large consumers and some of it we use for room consumption at more value on our products as well.

00:16:08: And these days The majority thought was going into what would call next generation or tobacco production.

00:16:14: We look collectively out.

00:16:16: in global nicotine market There's essentially three areas where nicotine is produced.

00:16:21: They're just actually European area I'd say Error.

00:16:24: knowledge is probably about thirty five to forty percent of the kind of the global share on the marketing market.

00:16:30: And it may be another fifty percent coming from India, typically for more recent producers were seeing a plethora in the interest over last five or ten years of startups and India producing marketing from various sources which again this going into primarily some these tobacco industries that are Asian near hand markets on some lower cost products at the other.

00:16:54: thirty percent are still coming from China.

00:16:56: China does have a legacy in tobacco manufacturing and also nicotine manufacturing, albeit these days is both tobacco-derived nicotine as well some synthetic nicotine and that's now controlled by Chinese authorities generally but it has permitted in China.

00:17:10: there is production in China And that typically finds its way not back into China for export.

00:17:16: so those I would say the three buckets where nicotine comes out of us.

00:17:21: One thing people think is the global nicotine market, it's like tens of thousands tons a year.

00:17:26: It definitely not as much smaller than that to generally be between a thousand and fifteen hundred metric tonnes per annum.

00:17:31: Right but do you see potential there in global sales?

00:17:35: Is the markets saturated or Do You Think There'S A trend Going Upward?

00:17:40: Uh...There Still Some Water Growth In The Vapor Products Throughout The World Because Of The Mishmash Of Regulation I Think When Comes To Nicotine Pouches Particularly These.

00:17:50: Typically, we utilize more nicotine producers for perhaps than some of the other products.

00:17:54: So these are really driving the need and demand from pure nicotine.

00:17:59: in a way These have strong CITR rate on maybe thirty-thirty five percent forecast.

00:18:03: so We do see considerable growth in this product.

00:18:06: There are no controls with the P&TA process.

00:18:09: The market is still very much being developed and growing there And that's just one market.

00:18:13: Of course Northern Europe also quite strong as well As other parts of Europe.

00:18:16: I think That it has long ways to go what it comes to pouches.

00:18:20: And of course, there may be certain head ones here in terms of TPT-III and other national regulations as well which we need to contend with.

00:18:28: but generally the trend is still very much upward than I would say for heat approachs as well.

00:18:32: that would also have a strong CAGR particularly inserted geographies so generating still very large in the growth phase.

00:18:38: That's good to know!

00:18:40: What we are seeing actually is shift away from combustibles towards nicotine pouches And that seems to be quite a sustained trend at the moment.

00:18:50: Even vaping is losing a bit of steam, but I see a lot of potential still in nicotine pouches.

00:18:57: Yeah i think vaping suffered from being first candidate under the internet and next generation products.

00:19:02: What happened was you know on those early days there were a lot more entrepreneurs.

00:19:04: they brought products to market.

00:19:06: um so larger multinationalists were caught In the back food.

00:19:10: they acquired certain companies.

00:19:11: it took a long time to get a structure around the regulation of these products and address maybe concerns that public perception had.

00:19:18: Whereas if we look at nicotine pouches, these have a better start.

00:19:23: I think they're generally easier understood by the consumer.

00:19:26: They are an oral product but not going into your lungs.

00:19:29: There's seen almost as akin any other kind of oral product or so The concept can be understood better by the consumers.

00:19:37: We've seen larger players And the marketplace and those conventions in tobacco industry have established strong ground equity.

00:19:46: I've recently read an opinion piece on the internet somewhere that India is one of best ways to become a new hub for pharmaceutical great nicotine manufacturing hub.

00:19:59: What's your take?

00:20:00: Yeah, it's really good point.

00:20:02: So in terms of Tobacco India has very good place because there are abundance of tobacco growing.

00:20:10: costs are also relatively good.

00:20:13: If I look at it from work perspective, we've been operating for thirty five forty years in the last fifteen-twenty years and invest heavily on the upstream part of our supply chain In India ensuring that we have a high level of compliance not just form quality perspectives but from an environmental social and governance perspective.

00:20:30: so since two thousand fifteen we have implemented what would call as sustainable nicotine program starting at our extractive facility in India, whereby we contract with the farmers themselves.

00:20:43: on these days over eleven thousand farmers onboard.

00:20:46: We produce sustainable nicotine means growing tobacco solely for the purpose of extracting nicotine from the tobacco leaf and doing that program governs all aspects of child labour minimum wage and all of this typical governance topics which are really important these days But massive commitments in terms of ESG.

00:21:09: So I think we have made the great efforts to support that, and last twelve years on it comes at a certain cost And if you look into our production or nicotine compared maybe some of these newer entries The difference for sure.

00:21:21: there are cheaper variations out here but i think that's contradictory to the expectations around compliance That customers definitely expect.

00:21:28: It is important that we have transparency.

00:21:30: through your supply chain We build with good effort.

00:21:34: you're at just the market and I think in a globalized world where people want to understand what their products come from, it's imperative that we are able to demonstrate that data is entirely transparent.

00:21:46: We have our customers going into doing a variety of social audits through your supply chain right to the farmers' and we can't even stop.

00:21:51: It makes whatever decoration require... The trip was actually in the product as important.

00:21:56: if anyone who's serious about this then wants to ensure they have full integrity on their supply chain goals and vestigating entirely other supplies right to the leaf.

00:22:06: Very good points, very good points!

00:22:09: Let's talk about China.

00:22:10: to wrap it up... How significant is China as a competitor in the global pharmaceutical trade?

00:22:18: Nicotine market especially as far your company concerned.

00:22:22: I think that China was strong a few years ago when there were certain controls put on by government there In terms of supply within China.

00:22:35: I mean, they do export nicotine as well.

00:22:37: Not only in the end products but also to export farmers who do great nicotine?

00:22:42: Yes we do and there are certain companies that manufacture pharmaceutical grade nicotine.

00:22:47: on nicotine meeting at least the CLA be it from tobacco or be it synthetic.

00:22:53: The majority of the nicotine produced is typically going through Shenzhen and international markets.

00:22:58: that way companies should have the ability to produce that nicotine and export directly.

00:23:03: And not something which is a natural progression of industry, again be it synthetic or be it tobacco derived imperative there for any customer thought as to ensure they have full visibility.

00:23:15: The Coley compliance process to manufacture the control of solvents heavy metals TSNAs nitrosamines.

00:23:21: these are typically not probably dedicated nicotine facilities their proving multi-purpose.

00:23:25: so there's A certain level of work to evidence the compliance and not move from a protocol-y compliance, but also form a social compliance as well.

00:23:33: Well, your honor I have no more questions!

00:23:37: Is there anything else?

00:23:38: Any other point that you would like to raise before we wrap this episode?

00:23:43: Thank you for your time this morning Thomas.

00:23:45: it's been a pleasure for me and I'll be quite useful.

00:23:48: thank you so much for your Time.

00:23:50: i let you go back to your double espresso And...I will talk too soon.

00:23:54: Bye for now.

00:23:56: Okay, take care.

00:23:57: All

00:24:03: the

00:24:19: best!