By Aditya Kalra and Chris Kirkham
NEW DELHI/LOS ANGELES (Reuters) - U.S.-based electronic cigarette company Juul Labs Inc is hoping to launch its products in India by late 2019, a person familiar with the strategy told Reuters, marking one of its boldest bets to expand away from its home turf.
After recruiting Uber India executive Rachit Ranjan as a senior public policy strategist, Juul this month hired India-based Mastercard (NYSE:MA) executive Rohan Mishra as head of government relations.
It plans to hire at least three more executives, including an India general manager, LinkedIn (NYSE:LNKD) job postings showed. It also plans "a new India subsidiary", according to one posting.
"It (the plan) is currently at an exploratory stage, but the company needs people on the ground in India," the source said.
Juul's sleek vaping devices, which resemble a USB flash drive and offer flavors such as mango and creme, are a sensation in the United States but have drawn tighter regulatory scrutiny due to surging use among teenagers.
Juul devices, like most electronic cigarettes, vaporize a liquid containing nicotine, the addictive stimulant that gives smokers a rush.
Advocates for the devices say that they are far less of a health threat because users don't inhale the dangerous matter taken into the lungs through cigarette smoking.
Opponents argue the devices still involve addictive chemicals and can be a gateway to cigarette smoking, especially for the young.
The push to launch in India is part of the company's broader Asia strategy. India has 106 million adult smokers, second only to China in the world, making it a lucrative market for firms such as Juul and Philip Morris International Inc (NYSE:PM).
However, India's regulatory environment for tobacco and electronic cigarettes is highly restrictive. The health ministry last year advised states to stop the sale or import of e-cigarettes, saying they pose a "great health risk". Eight of India's 29 states currently ban e-cigarettes.
Juul is studying federal and state regulations that could block its plans, the source said, adding that it would engage with the medical community to build acceptance for the devices.
Juul said in a statement India was among the Asian markets under evaluation, but there were no "definitive plans".
"As we explore potential markets, we are engaging with health regulators, policymakers and other key stakeholders," the company said.
MEDICAL JOURNAL
As part of its evaluation, Juul said it would consult with the Indian Journal of Clinical Practice (IJCP), a healthcare communications company.
One of the journal's editors is a former president of the Indian Medical Association, K.K. Aggarwal, who has publicly voiced his support for e-cigarettes.
The IJCP will advise Juul on the regulatory landscape and offer advice on how it should approach the market, a second person familiar with the plans said.
Juul would face competition from leading players in India's $10 billion cigarette market - ITC and Godfrey Phillips - which sell such electronic devices as well.
India's vapour-products market was valued at only $15.6 million in 2017, according to Euromonitor International, but it is expected to grow by nearly 60 percent a year up to 2022.
Juul could be "potentially very attractive" to the growing number of young and wealthy smokers in India, said Shane MacGuill, Head of Tobacco Research at Euromonitor International.
Altria Group (NYSE:MO) Inc last month paid $12.8 billion to take a 35 percent stake in Juul, a move expected to boost the company's international growth prospects.
Philip Morris is also considering a launch of its heat-not-burn tobacco device iQOS in India, which it says is less harmful than conventional cigarettes, Reuters reported last year.
Many tobacco-control activists are opposed to e-cigarettes, saying they could lead to nicotine addiction and push people to consume tobacco. More than 900,000 people die each year in India due to tobacco-related illnesses.
"If they (Juul) try to launch in India, they need to be nipped in the bud before they become a major health hazard," said Sanjay Seth, head of tobacco-control at Indian non-profit Sambandh Health Foundation.