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Picture: BLOOMBERG
Picture: BLOOMBERG

London — Shares of GSK dropped more than 9% on Monday, after a Delaware judge allowed more than 70,000 lawsuits alleging its discontinued heartburn drug Zantac caused cancer, to go forward, in a blow for the British drugmaker.

GSK said it disagreed with the ruling and would immediately appeal. Its shares were down 9.4% at £16 by 11am GMT, on course for their worst day since August 2022, with the drop wiping out nearly £7bn of the company’s market value.

After the ruling, analysts at JPMorgan said the potential liability that GSK could face from the litigation is likely higher than the $2bn-$3bn figure assumed by the market.

The judge ruled late on Friday that the expert witnesses could testify in court that the drug might cause cancer. But, former Zantac makers GSK, Pfizer, Sanofi and Boehringer Ingelheim had argued that the expert witnesses’ opinions lacked scientific support.

The lawsuits have been an overhang for the company, with concerns about protracted legal wrangling and compensation wiping almost $40bn off the combined market value of GSK, Sanofi, Pfizer and Haleon over a week in August 2022.

Citi analysts assume $3bn of settlement costs related to Zantac. Redburn, on the other hand, expect the litigation to settle for about $1bn-$1.5bn.

Over the past 12 months, GSK has settled a series of lawsuits related to Zantac, including several in California.

Meanwhile, last month a jury in Chicago rejected an Illinois woman’s claim that Zantac caused her colon cancer, handing the drugmaker a victory in the first case to go to trial.

“Far more important than this ruling is the defence win in Illinois,” Redburn Atlantic analyst Simon Baker said in a note in reference to the Delaware judge’s decision.

“As before, the incentive to settle is front and centre and we note that the intended outcome of mass tort litigation is settlement rather than advancement to multiple trials,” Baker said.

Reuters

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