Imperial Brands has warned over a hit to annual sales, following United States President Donald Trump's move to crack down on flavoured e-cigarettes and tighten regulation on vaping products.
Shares of the maker of blu slumped more than 10pc as it said it had seen a "marked" slowdown in the US vaping market in recent weeks, with rising numbers of wholesalers and retailers not ordering or allowing the promotion of vaping products.
It comes amid a Trump administration plan to pull fruit flavoured e-cigarettes from the market, unless approved by the Food and Drug Administration, in an attempt to make them less attractive to young consumers.
US regulators are also examining hundreds of cases of people who are sick from what appears to be a vaping-related lung disease.
Davidoff and Rizla maker Imperial said it now expects group-wide revenue growth of its cigarette alternatives, or so-called next generation products, at a lower-than-expected 50pc this year.
This, together with tougher trading conditions across Africa, Asia and Australasia, means it now sees group revenues growing by a slower-than-forecast 2pc, and earnings per share to be "broadly flat".
It had previously guided for annual revenue growth of up to 4pc.
FTSE 100-listed Imperial said: "Whilst this is disappointing for the current year, we believe that NGP (next generation products) provides a significant opportunity to deliver additive growth to complement our tobacco business.
"We continue to refine our investment behind building a strong and profitable NGP business in a rapidly evolving market."
There are mounting health concerns globally over vaping products, with India banning the sale of e-cigarettes last week as it warned over an "epidemic" among young people.
It has come as a big blow to the tobacco giants, who have been pumping investment into vaping and tobacco heating products.
These products have accounted for some of the most rapid growth at tobacco firms in recent years.
But Imperial said that Europe, the Americas and Japan are still performing well, and it expects sales across the UK and Europe in the second half to be similar to the first.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "Vaping's only a small contributor to revenues and profits at the moment, which is why full year earnings per share look set to come in flat year-on-year, but hopes had been high that the vaping segment would drive growth as traditional tobacco declines.
"Increased regulatory scrutiny and retailers reluctant to stock vaping products is seriously undermining that hope."