SHARES of British drugmaker GSK rose as much as 6.5 per cent on Thursday (Oct 10), after it agreed to pay up to US$2.2 billion to settle lawsuits in the United States that claimed its discontinued heartburn drug Zantac caused cancer.
The agreement, announced on Wednesday, was lower than some analyst estimates, including JP Morgan Chase’s projection of US$3.5 billion. The settlement resolves 80,000, or 93 per cent, of the pending cases against the company in the US.
Analysts at Jefferies said the settlement of the cases should remove “the majority of Zantac overhang on the stock”.
Concerns about lawsuits and potential compensation wiped almost US$40 billion off the combined market value of GSK, Sanofi, Pfizer and Haleon, over about a week in August 2022. All of them sold the drug.
On Thursday, GSK shares were on track to becoming the top gainer on the FTSE benchmark index, and for the best one-day percentage gain since December 2022.
The company will also pay US$70 million to settle a related whistle-blower lawsuit filed by a Connecticut laboratory.
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The British drugmaker has admitted no wrongdoing or liability in the settlements. It added that the settlements were in the best long-term interest of the company to avoid the risk of continuing litigation.
The Brentford-based pharmaceutical company expects to record a £1.8 billion (S$3.1 billion) charge in its third-quarter results due to the settlements, with no impact on its investment plans.
It will announce third-quarter results on Oct 30.
Zantac was first approved by US regulators in 1983, and became the world’s best-selling medicine in 1988. The drug was one of the first to surpass US$1 billion in annual sales. It has been sold at different times by drugmakers GSK, Pfizer, Sanofi and Boehringer Ingelheim.
Ranitidine, which was sold under the Zantac brand name, was pulled off the market in 2020 on concerns it could degrade into NDMA – a carcinogen – over time or when exposed to heat. The recall triggered a spate of lawsuits. REUTERS
