Zantac heartburn drug cancer ruling is a shot in the arm for GSK

Zantac ruling hits GSK’s eye: US judge rules heartburn cancer claims based on flawed science

Shares of GlaxoSmithKline (GSK) rose to their highest level in five months after a US judge dismissed thousands of lawsuits related to its heartburn drug Zantac.

The FTSE 100 pharma giant, alongside several rivals including Pfizer and Sanofi, has been at the center of a legal storm over the drug, which was pulled from shelves in 2019 over concerns that one of its ingredients caused cancer.

But the company’s shares rose 7.5 percent, or 104.6 pence, to 1492.4 pence after a Florida judge ruled that about 2,500 lawsuits were based on flawed science and that the drug’s only reliable test had shown no demonstrable cancer risk.

GlaxoSmithKline rose 7.5% after a Florida judge dismissed about 2,500 lawsuits related to its heartburn drug Zantac

Meanwhile, GSK’s old consumer healthcare arm, Haleon, which spun off in July and whose share price also suffered amid concerns it could be entangled in the legal battle, rose 3.6 percent, or 10.5 pence, to 305.7 pence.

The decision effectively strikes out about 50,000 claims in federal courts, though tens of thousands of other cases remain unaffected and pending in states across the US.

GSK said the decision had “stopped unreliable and process-driven science from entering the federal courtroom,” and that it would “continue to vigorously defend itself” against all claims.

The ruling is a big win for CEO Emma Walmsley after a major blow to stocks over the summer when the lawsuits garnered a lot of attention.

Shares of Sanofi, another pharmaceutical giant involved in the case, rose about 6.1 percent on the Paris stock exchange.

A spokesman for the company said the court ruling “significantly reduces the scope of the lawsuit, potentially by more than 50 percent,” while Boehringer Ingelheim, a private German drugmaker, said it looks forward to continuing its “vigorous defense in the remaining cases.

AJ Bell’s investment director Russ Mold said the ruling provided “timely pain relief” for GSK and that the outcome was “probably the best” she could have hoped for.

“While there is some risk of appeal and other cases are open, GSK will be a lot more comfortable than before this verdict was reached,” he added.

Meanwhile, analysts at broker Jefferies said the ruling bodes “good omen” for the company as it shifted its focus to the state courts, adding that the ruling was likely to erode motivation for lawyers to pursue more cases.

Of particular interest will be the outcome in the US state of Delaware, where more than 90 percent of lawsuits involving about 40,000 plaintiffs have been filed.

Zantac was originally approved in 1983 and became one of GSK’s best-selling drugs, with sales exceeding $1 billion annually.

It was later sold to successive pharmaceutical companies, including Pfizer, Sanofi and Boehringer, while generic versions of the drug were also manufactured.

But in 2019, sales of Zantac were halted due to concerns about the active ingredient, ranitidine, which broke down over time into NDMA, a chemical found in low levels in food and water but can cause cancer in higher amounts. cause.

The following year, the U.S. Food and Drug Administration pulled all Zantac brands and generic versions from the market after citing research showing that the amount of NDMA in the products increased the longer the drug was stored and that it could potentially become unsafe.

After that, the lawsuits began to pile up, with plaintiffs saying the companies knew or should have known that ranitidine posed a cancer risk and failed to warn consumers.

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