Follow up on tobaccos

The BAT share price had been oversold, then rallied to around 2900p. Then came the news that FDA Commissioner Scott Gottlieb was resigning to spend more time with family, and the share price started to extend the rally. Of course we have no idea who the next Commissioner will be, but the betting will be on someone who will carry on with the faster approval programme for generic products because government policy is to make drugs cheaper. With regard to tobacco, my best guess is that this will be put on the back burner – because there are a lot of American farmers and farm workers out there in the hinterlands growing and processing tobacco – so tobacco is a jobs issue. Generic Pharma companies create new jobs, and I think it is possible for the FDA to favour companies with manufacturing facilities in the United States or Canada, as these locations are easier to inspect, and the agency can cite budgetary reasons for not wanting to be inspect any more overseas locations.

I sold my tobacco shares close to all time highs, then bought back in far too early. So it would be nice to see the sector come right again and in the meantime dividend payments have been generous.

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