GSK, Sanofi and Haleon shares slump on Zantac litigation concerns

August 12, 2022 Off By administrator

  • First Zantac trial to begin later this month
  • Drug contains probable carcinogen – regulators
  • Deutsche Bank says liability could be “$bn” magnitude

LONDON, Aug 11 (Reuters) – Shares in GSK (GSK.L), Sanofi (SASY.PA) and Haleon (HLN.L) fell sharply on Thursday, following declines earlier this week, amid growing investor concerns about U.S. litigation focused on a heartburn drug that contained a probable carcinogen.

GSK shares fell more than 10%, Sanofi’s stock sagged about 3.3% and Haleon’s shares slipped nearly 5% at the close of trading on Thursday.

GSK, the U.S. Food & Drug Administration (FDA) and the European Medicines Agency (EMA) have all concluded after experiments that there is no evidence of a causal association between therapy with the heartburn drug ranitidine and the development of cancer in patients, GSK said in a statement in response to the litigation.

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GSK added that plaintiff litigation is inconsistent with the scientific consensus.

GSK and Sanofi at various points sold the drug – originally branded as Zantac – which U.S. regulators ordered off the market in 2020. Haleon, spun out as an independent listed company last month, comprises consumer health assets once partly owned by GSK.

The prospect of impending litigation is not new. Among other disclosures, recently listed Haleon had highlighted the risk of such lawsuits in its prospectus.

The topic has arrived in investor consciousness in recent days it seems, but has been rumbling on in the background for a few years, Deutsche Bank analysts wrote in a note.

The litigation has just started to be talked about more by investors and written about in the media, Barclays analyst Emily Field said in an email. “I think the panic … really comes down to market psychology as opposed to having learned anything new.”

Zantac became the world’s best selling medicine in 1988 and one of the first-ever drugs to top $1 billion in annual sales.

However, concerns around the compound – known chemically as ranitidine – containing potential cancer-causing impurities started to emerge in 2018, well after generic versions of the medicine had been launched by a variety of manufacturers.

More than 2,000 legal cases related to Zantac have now been filed in the United States, analysts say, with the first trial beginning later this month.

“It is very possible we may see a liability of some $bn (billion) magnitude,” the Deutsche Bank analysts wrote.

Uncertainty over the issue has sparked fears of a worse-case scenario where costs run into the billions of dollars, as happened in cases involving Merck & Co’s (MRK.N) painkiller Vioxx and Bayer’s (BAYGn.DE) glyphosate-based weedkiller.

NOT PRIMARILY LIABLE

A decline of as much as 12% in Haleon shares on Thursday meant some $5 billion had been knocked off its value this week. It recovered some of those losses after a spokesperson told Reuters the company was not primarily liable for any claim.

“We…

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