GSK, Haleon and Sanofi get share price boost following Zantac news
By Jenny McCall
11:37, 6 September 2022
Pharma giants, GlaxoSmithKline (GSK), Haleon (HLN) and Sanofi (SAN) all got a share price boost last week, after analysts at Citi bank announced that the recent ruling in the US could force many plaintiffs to abandon their claims against the companies, concerning a legal wrangle over the heartburn drug Zantac.
All three companies had previously lost a combined $31bn (£23bn) in market capitalisation in August, as investors worried about litigation. The companies are among the defendants in several lawsuits claiming that Zantac contains a cancer-causing substance called NDMA.
With that said, this downward trend was slightly reversed last week, when the trio’s share prices rose between 1-3%.
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GlaxoSmithKline (GSK) share price chart
Catastrophic product
“Many people consider healthcare companies to be saviours of the world, with their products helping to ease the pain of countless individuals,” Danni Hewson, financial analyst at AJ Bell, wrote in a note. “What’s often forgotten is when something goes wrong with one of their products, the fallout can be catastrophic.
“Fears of a multi-billion-dollar lawsuit for the companies involved with recalled heartburn drug Zantac have wiped billions off the value of GSK, Haleon (HLN) and Sanofi (SAN). Investors fear they will have to shell out big bucks if found guilty of failing to properly warn users about health risks, with allegations that Zantac causes cancer.”
Zantac was the world’s best-selling medicine in 1988 but worries grew about the safety of the drug. Concerns were raised in 2018, around the fact NDMA was detected in Zantac, one of the trade names of ranitidine. As a result, in September 2019, the US Food and Drug Administration (FDA) and the European Medicine Agency (EMA) ordered GSK to remove Zantac from the market.
More than 2,000 legal cases relating to Zantac have now been raised in the US.
Litigation, which commenced last month, has sparked a series of cases across several countries, with GSK facing lawsuits in the US, Canada, and Israel.
However, as GSK has now offloaded its consumer healthcare division into a new company called Haleon (HLN), will it be party to litigation over Zantac?
A spokesperson for Haleon (HLN) said that the company is not party to the US litigation over Zantac.
However, analysts believe the reputational damage is just as bad.
“It’s given GSK spin-off Haleon a terrible start to life as a standalone business, with its share price having plummeted in recent days. Haleon says it isn’t party to any of the Zantac claims, yet GSK has served it with notice of potential claims in relation to liabilities connected to over-the-counter Zantac products,” Hewson said.
Zantac was originally marketed by GSK but has been sold by several other companies since the late 1990s, including Pfizer (PFE), Boehringer Ingelheim and Sanofi (SAN).
Sanofi (SAN) share price chart
A Pfizer (PFE) spokesperson said in an email to Reuters: “Pfizer, which has not sold a Zantac product in more than 15 years and did so only for a limited period of time, will continue to defend itself vigorously.”
Boehringer also responded and a spokesperson said: “The company would defend itself against any allegations."
Sanofi (SAN) issued a statement saying: “We remain confident in our legal defences and there have not been any material developments regarding the US Zantac litigation.”
The case continues.
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