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The Nicotine Fix For E-Cigarettes

Companies in nascent business seek high-quality supplies of their key ingredient

by Michael McCoy
April 7, 2014 | A version of this story appeared in Volume 92, Issue 14

Credit: Douglas R. Clifford/ZUMA Press/Newscom
E-cigarette samplers, on view at a store in Clearwater, Fla., hold a mixture of nicotine, flavor, and propylene glycol.
Dozens of preloaded e-cigarette tanks await customers for sampling at Magic Dragon Vapes in Clearwater. The shop, at 29348 US Highway 19, in Clearwater, is laid out like a lounge where people can try out different devices and flavors of juices, the flavored liquid that contains the nicotine and is atomized by the e-cigarette.
Credit: Douglas R. Clifford/ZUMA Press/Newscom
E-cigarette samplers, on view at a store in Clearwater, Fla., hold a mixture of nicotine, flavor, and propylene glycol.

Electronic cigarettes are shaking up the tobacco industry in the U.S. and around the world. Consumption of e-cigarettes is soaring as traditional smoking declines. On the defensive, big tobacco firms such as Philip Morris and Reynolds American are entering the e-cig business.

Cigarettes are tobacco leaves wrapped in paper. E-cigarettes are essentially chemicals wrapped in plastic. But the products have two things in common: They are both vehicles for delivering nicotine, and they both get it from tobacco.

For e-cigarette makers, the source of that nicotine and the purity in which it arrives are matters of increasing importance as their business matures from the unregulated free-for-all it is today. Consequently, a growing number of companies—including the first producer in the U.S.—are jostling to become the emerging industry’s nicotine supplier of choice.

Traditional cigarettes deliver nicotine to the lungs when tobacco, which is up to 3% nicotine, is burned and the smoke is inhaled. Along with the nicotine, however, comes a cocktail of nitrosamines, polycyclic aromatic hydrocarbons, and other compounds that have been proven to cause cancer.

E-cigarettes, in contrast, are tobacco-free devices that look like a traditional cigarette or a plumper relative. Inside is a heating mechanism for vaporizing a mixture of propylene glycol, flavoring compounds, and up to 2.5% nicotine. In some products the mixture, known as e-liquid or e-juice, is contained in a disposable cartridge. In others the smoker—or vaper, as practitioners are known—adds it to a refillable chamber with an eyedropperlike dispenser.

Either way, the nicotine is obtained by extraction from tobacco, generally in India or China, followed by purification, in Asia or Europe. Chemical synthesis is possible but not economically practical, because nicotine is a chiral molecule that would need to be separated, a step that can be both tricky and expensive.

E-cigarettes are still small potatoes compared with traditional cigarettes, but the lines charting consumption are moving in opposite directions and may one day cross. Bonnie Herzog, a tobacco stock analyst at Wells Fargo Securities, estimated last year that 2013 e-cigarette sales would exceed $1 billion in the U.S. and that they could surpass sales of traditional cigarettes in the next decade.

The companies involved are also small but growing. Wisconsin-based Johnson Creek Enterprises, which calls itself the first U.S. firm to produce nicotine-containing liquid for e-cigarettes, was formed in 2008. Johnson Creek says it’s one of the fastest-growing private companies in America and the largest U.S. supplier of e-liquid.

NicVape, another leading e-liquid supplier, is less than four years old. Larry Pritchett, the firm’s chief marketing officer, explains that founder Richard Henning started NicVape to purchase nicotine—which presents a skin absorption hazard at full strength—and dilute it with propylene glycol or glycerin for sale to e-liquid companies.

Over time, NicVape began adding flavors and selling its own finished e-liquids to consumers via its website and to other firms in bulk through contract manufacturing agreements. Today, Pritchett says, about half of NicVape’s business is e-liquids and half is diluted nicotine.

Along the way, Henning and Pritchett learned that not all nicotine is the same. Fine chemicals companies had long supplied pharmaceutical-grade nicotine for smoking-cessation products such as gums, lozenges, and patches. But the product was expensive and often in another form—a ditartrate salt for gums, for example, or bound to an ion-exchange resin for patches.

Chinese suppliers abounded, Pritchett says, but their product quality was uneven, and their documentation was scant. Plus, the companies often had to falsely label their nicotine as ink-jet toner or other products to get past Chinese customs authorities. “I want to know how pure it is, what’s in it, and can you give me documentation that supports that,” Pritchett says. The Chinese companies, he and Henning found, could not meet those standards.

Credit: Alchem
Equipment at the plant in India where Alchem extracts nicotine.
Equipment at Alchem’s extraction facility in Haryanna, India, near New Delhi.
Credit: Alchem
Equipment at the plant in India where Alchem extracts nicotine.

Two years ago NicVape came across Alchem International, an 80-year-old Indian manufacturer of botanical extracts that was wading into the e-cigarette waters. Alchem has been NicVape’s primary nicotine supplier ever since, Pritchett says. As NicVape has grown, so have its purchases from Alchem: from 5 L per month in 2012 to 900 L today.

For Alchem, the agreement with NicVape followed years of supplying pharmaceutical-grade nicotine and derivatives to the smoking-cessation market from its U.S. Food & Drug Administration-inspected plant in Haryana, India, near New Delhi, according to Laurent Leduc, head of Alchem’s U.S. operations. “That’s what brought us to e-cigarettes,” he says.

Like the nicotine it sells for smoking-cessation products, Alchem’s NicSelect brand for e-cigarettes is triple-distilled to U.S. Pharmacopeia standards in a facility that complies with current Good Manufacturing Practices, Leduc says. In addition, Alchem produces it with an e-cig-specific flavor and color profile in mind.

For the time being, more nicotine is consumed in smoking-cessation products than in e-cigarettes, according to Torsten Siemann, managing director of Contraf-Nicotex-Tobacco (CNT), a family-owned German firm that has supplied nicotine for more than 30 years.

CNT produces a 40% nicotine solution in India and then refines it to pharmaceutical standards in Switzerland via a contract manufacturing agreement with Siegfried, a venerable fine chemicals manufacturer. Siemann claims that his firm supplies the vast majority of the nicotine used in the world’s smoking-cessation gums and patches.

CNT’s first inquiry about nicotine for e-cigarettes came a little more than four years ago, Siemann recalls. At first, he says, CNT was reluctant to supply some of the new companies that knocked on its door. “When we asked some of them if they could handle nicotine they would say, ‘Yes, no problem, I do it in my own kitchen,’ ” he relates.

But as bigger players entered the market and CNT was able to inspect their facilities, Siemann and his colleagues became more comfortable about doing business with them. Today, he figures, CNT supplies roughly half the nicotine consumed by the global e-cigarette market. The size of that market is hard to pin down, but CNT estimates it at 10 to 20 metric tons per year.

It’s also a market that is doubling every year, Siemann says. Today e-cigarettes consume 20–30% of pharmaceutical-grade nicotine. If current growth rates continue, he expects e-cigs to surpass smoking-cessation uses within the next three to four years.

Thanks to ample refining equipment at Siegfried’s site in Zofingen, Switzerland, CNT can easily supply 10 times the current world market for nicotine used in e-cigarettes, Siemann says. Leduc makes a similar claim for Alchem’s plant.

But anticipating a desire for U.S.-made ingredients, a new company has begun producing trial amounts of nicotine in North Carolina. Called AmeriNic, the firm is a joint venture between Universal Corp., the world’s biggest supplier of leaf tobacco, and Avoca, a botanical extracts company that is owned by Pharmachem Laboratories, a maker of ingredients for foods and nutritional products.

The nicotine is extracted in Merry Hill, N.C., where Avoca already extracts the fragrance ingredient sclareol from the clary sage plant. The partners are being tight-lipped with details about the venture, but they tell C&EN that AmeriNic has begun production runs and continues R&D to optimize the extraction and distillation processes. Capacity, they say, can meet current U.S. market demand.

AmeriNic promises that its nicotine will be based on “fully traceable and compliant tobaccos,” language that is a nod to what everyone involved with e-cigarettes is anticipating: FDA regulation of the industry. The agency first stated its intention to regulate e-cigarettes in 2011 but has since blown past several self-imposed deadlines to do so. Now industry participants expect action later this year.

“We are really looking forward to regulation,” NicVape’s Pritchett says. He figures his company will benefit from industry consolidation as smaller firms find they can’t afford to comply with new rules.

Until then, Pritchett intends to remain vigilant regarding the nicotine and other raw materials NicVape buys. Although Pritchett insists he’s committed to his relationship with Alchem, he is also eager to see new suppliers like AmeriNic help tame the industry. “It’s so brand new,” he says. “It is still kind of a Wild West out there.” 


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