Stress causes “ulcers and heartburn”, said Lex in the FT. “Now the treatment of these afflictions is causing anxiety for investors.”
Shares of GlaxoSmithKline, Sanofi and the new GSK spin-off, Haleon, all fell sharply last week – shedding tens of billions of dollars – as investors took fright over the reported carcinogenic risk posed by the over-the-counter drug Zantac. Damages, if awarded, could be as high as $45bn, according to Morgan Stanley. And since rights of the over-the-counter version of Zantac have been transferred repeatedly, “it is unclear where any liabilities might sit”.
The issue of whether Zantac (the brand name for a drug called ranitidine) generates a probable carcinogen called NDMA has been building in the background for years, said Julianna Tatelbaum on CNBC: the drug was formally pulled from shelves in 2020, but legal proceedings have focused minds. The first of more than 2,000 cases begins in the US this month.
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The pharmas believe their legal position is strong, said Fierce Pharma. “The overwhelming weight of the scientific evidence supports the conclusion that there is no increased cancer risk,” stated GSK. Even if that risk is demonstrated, it will be “tough” to prove that the companies “knew of the danger and failed to warn customers” before withdrawing Zantac.
The litigation creates an awkward situation for GSK and the recently floated Haleon, said Alistair Osborne in The Times. If liability becomes an issue, it could mean “an unseemly legal dust-up between two companies that were in the same group four weeks ago”.
Precedent suggests investors should certainly remain wary, said Lex. The Bayer/Roundup weedkiller saga – which ultimately cost the German pharma at least $16bn – “shows it is easy to draw a line under claims prematurely”.
