- Thousands of Zantac Lawsuits Dismissed Tuesday
- The decision bodes well for pending lawsuits: analysts
- GSK and Sanofi rally adds more than $20 billion to combined mkt cap
LONDON, Dec 7 (Reuters) – GSK shares (GSK.L) and Sanofi (SASY.PA) rose on Wednesday, adding more than $20 billion in combined value in initial trade following the dismissal of thousands of US lawsuits that claimed the heartburn drug Zantac caused cancer.
Tuesday’s ruling by US District Judge Robin Rosenberg in West Palm Beach, Florida, struck out about 50,000 claims in federal court on the grounds that they were not supported by solid science.
Drug manufacturers, citing scientific consensus, have repeatedly claimed that Zantac does not cause cancer.
The Florida result represents a “nice early Christmas present for the defendants. Was this all just a storm in a teacup after all?” Bernstein analysts wrote in a note.
The ruling can still be appealed, and the decision does not directly affect tens of thousands of similar cases pending in state courts across the country. In a statement on Wednesday, GSK said it would continue to vigorously defend itself, including against all claims filed at the state level.
Although investors are unlikely to assume that the Zantac risk has completely dissipated, Wall Street analysts suggested that the likelihood and scale of future damage from Zantac through other legal avenues appears significantly less.
Originally marketed by a precursor to GSK, the drug has been sold by various companies at different times, including Pfizer. (PFE.N)Boehringer Ingelheim and Sanofi, as well as a host of generic drug manufacturers.
On Wednesday, GSK shares were up as much as 14% in early trading and 8.5% by 1100 GMT, while Sanofi shares were up nearly 6% by mid-morning.
Uncertainty surrounding the litigation had wiped nearly $40 billion off the market value of GSK, Sanofi, Pfizer and Haleon for about a week in August, with shareholders fearing multibillion-dollar payouts, similar to cases involving Merck & Co. (MRK.N) pain reliever Vioxx and Bayer (BAYGn.DE) Roundup, a glyphosate-based herbicide.
At their height, Wednesday’s gains meant GSK and Sanofi had nearly recouped all their losses since the brutal August selloff, adding as much as $21.1 billion in combined market value.
In the early hours of trading on Wednesday, more London-listed GSK shares changed hands than the average for a full day over the past five years, according to Refinitiv data.
Haleon Stock (HLN.L)which comprises consumer health assets once owned by GSK and Pfizer and spun off as a standalone company in July, also rose around 4%.
Haleon has repeatedly said that it was not responsible for any potential liability from Zantac. Barclays analysts said they viewed Zantac as substantially less risky, “leaving Haleon investable again for those with no appetite for pharmaceutical litigation risk.”
Zantac, first approved in 1983, became the world’s best-selling drug in 1988 and one of the first drugs to exceed $1 billion in annual sales.
Concerns began to arise in 2018 that Zantac contained potential cancer-causing impurities. By 2019, some manufacturers and pharmacies stopped sales of the drug due to concerns that its active ingredient, ranitidine, would break down over time to form a chemical called NDMA.
Although NDMA is found at low levels in food and water, it is known to cause cancer in higher amounts. In 2020, the US health regulator withdrew all remaining versions of Zantac from the market, citing research showing that the amount of NDMA in products increases the longer the drug is stored and could potentially become unsafe.
Lawsuits began piling up shortly after recalls began from people who said they developed cancer after taking Zantac. The plaintiffs said the companies knew, or should have known, that ranitidine posed a cancer risk and failed to warn them.
Natalie Grover in London and Danilo Masoni in Milan; Additional reporting by Tassilo Hummel in Paris and Amanda Cooper in London; edited by Louise Heavens and Elaine Hardcastle
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