GSK Plunges 9% as U.S. Court Allows Testimony in Zantac Cases

GSK Plunges 9% as U.S. Court Allows Testimony in Zantac Cases

Introduction

Shares of British pharmaceuticals giant GSK plunged 9% after a U.S. court ruled that scientific evidence could be presented in the ongoing lawsuits concerning the discontinued heartburn drug Zantac.

The Delaware State Court decided that plaintiffs’ expert witnesses could testify in approximately 75,000 cases alleging that ranitidine, the active ingredient in Zantac, may cause cancer.

“This case has always been about getting the science in front of a jury,” said a lawyer representing many of the plaintiffs. The dispute, which has been ongoing for years, involves several pharmaceutical companies. GSK initially sold Zantac as a prescription drug in the 1980s before it transitioned to an over-the-counter medicine. After its patent expired in the 1990s, other companies, including France’s Sanofi, U.S. firm Pfizer, and Germany’s Boehringer Ingelheim, also sold it.

Zantac was withdrawn from European and U.S. markets in 2019 and 2020 after regulators conducted a safety review, raising concerns that it contained a probable carcinogen called NDMA. The companies involved deny there is a scientific consensus linking the drug to cancer.

In a statement, GSK expressed disagreement with the Delaware ruling and announced plans to appeal, arguing that the decision contradicted a federal court’s multi-district litigation ruling in December 2022, which dismissed all cases alleging five types of cancer. GSK emphasized that the court's decision only pertained to the reliability of the plaintiffs’ experts' methodology to be presented as evidence at trial.

“Following 16 epidemiological studies looking at human data regarding the use of ranitidine, the scientific consensus is that there is no consistent or reliable evidence that ranitidine increases the risk of any cancer,” GSK stated. While most cases are in Delaware, smaller numbers are being heard in California, Illinois, and Pennsylvania.

In late May, analysts at Jefferies noted a potential positive outcome for GSK after an Illinois jury found GSK and Boehringer Ingelheim not liable for colorectal cancer in the first Zantac case to reach trial. Despite this, GSK, being the most exposed company to these cases, could face settlement costs ranging from $1 billion to over $3 billion, according to various analysts.

Sanofi, named in approximately 25,000 of the 75,000 cases, expressed disappointment with the decision and plans to appeal, noting that it was disappointed with the decision not to exclude the plaintiffs’ experts. As a result, Sanofi shares dropped by 1%.

Pfizer, implicated in a fraction of the Delaware cases, reported having resolved a substantial number of cases where it was named as a defendant. Pfizer reiterated that there is no reliable scientific evidence linking Zantac to cancer. “While we have great sympathy for plaintiffs in these cases, there is no reliable scientific evidence that Zantac, which was reviewed and approved by FDA, causes cancer,” Pfizer stated. The company also highlighted that it has not sold a Zantac product in over 15 years and only did so for a limited period, without ever manufacturing the product itself.

Last month, it was reported that Pfizer agreed to pay between $200 million and $250 million to settle more than 10,000 Zantac lawsuits. This reflects the ongoing legal challenges faced by pharmaceutical companies in light of the allegations surrounding Zantac and its potential health risks.