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    New Lorillard Products Stalled Over FDA Approval

    The maker of the Newport brand hopes new products will maintain 2011's strong growth.

    GREENSBORO, N.C. -- Lorillard Inc.'s drive to bring new products to market this year is hitting regulatory obstacles.

    During the company's second quarter results conference call, CEO Murray Kessler explained that the tobacco company had hoped to launch new tobacco products this year to help maintain 2011's strong growth, according to a report by NASDAQ.com. However, product expansion efforts have "temporarily slowed down," he said, as substantially equivalent products -- like the ones Lorillard is hoping to launch -- now require Food and Drug Administration (FDA) approval.

    Lorillard, which disappointed Wall Street analysts with its second quarter results on Wednesday, said the FDA has yet to approve one substantially equivalent application since premarket approval was required beginning in March 2011, the report added.

    In recent years, tobacco companies have turned to other tobacco products as adult smokers have increasingly searched for alternatives to traditional cigarettes.

    Lorillard, the maker of the leading menthol cigarette brand Newport, has also stepped outside of the menthol mold as the FDA continues to explore banning menthol. To that end, the tobacco company launched non-menthol Newport Red in late 2010, as CSNews Online as previously reported.

    According to Kessler, major competitors were able to launch new variations of existing brands as they had those products in test market prior to the FDA's deadline. Lorillard only began to ramp up new product development after Kessler joined the company in September 2010, NASDAQ.com reported.

    He said Altria Group Inc. in particular has been able to launch new products over the past year and a half, while the FDA hurdle has delayed Lorillard's ability to tap segments it doesn't yet compete in. Altria introduced more 50 smokeless products last year, the news outlet added.

    Lorillard reported total wholesale shipments volume in 2011 jumped 6.9 percent from the prior year, helped by gains for Newport and Maverick and outperforming the industry's 3.5-percent decline. But earnings results for the first two quarters of 2012 have fallen short of Wall Street's expectations as volume declined, NASDAQ.com reported.

    "Our plans for the rest of 2012 do not rely on new products, but we are ready with fully tested products, so approval by the FDA could quickly follow with a launch that we would view as upside to our plans," Kessler said.

    He added that although Lorillard has had meetings with the FDA during the quarter, it isn't quite sure where it stands in the regulatory approval process. He said while Lorillard had a conversation about the submission process with the FDA as early as last week, the agency won't disclose the timeline of the approval process, the report stated.

    "This is a big deal to this company," Kessler said. "We have tried to use every avenue possible."


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