GSK strikes £1.7bn deal over Zantac cancer claims
GSK will pay up to £1.7 billion to settle claims that its heartburn drug Zantac caused cancer. (Photo: GSK boss Emma Walmsley)
GSK shares rose more than 5 percent after trading on Thursday The pharmaceutical giant said it will pay up to £1.7 billion to settle thousands of lawsuits claiming heartburn drug Zantac caused cancer.
The British company ended a saga that has plagued the company for half a decade and struck a deal with ten law firms representing 93 percent of its pending cases in the US.
The legal wrangling has depressed the company’s shares amid fears it may have to pay more than £20 billion in damages.
All eyes will be on the London stock market when trading resumes today after GSK shares rose in New York last night following the historic update.
GSK and rivals including Pfizer and Sanofi found themselves at the center of a legal storm after Zantac was pulled from shelves in 2019 over concerns about an ingredient, ranitidine, causing cancer.
A 2022 research note from Morgan Stanley analysts said the move could cost the industry as much as £35 billion, with GSK facing debts of between £2.3 billion and £20.7 billion. More recent analysis from Bank of America estimates a hit of £6 billion.
The company also agreed yesterday to pay £53.6 million to resolve a separate complaint filed by laboratory company Valisure, which is subject to final approval from the US Department of Justice.
GSK has not accepted liability in either settlement. It expects to report a hit of £1.8 billion (£1.37 billion) in its third-quarter results.
“While the scientific consensus remains that there is no consistent or reliable evidence that ranitidine increases the risk of cancer, GSK strongly believes that these settlements are in the best long-term interests of the company and its shareholders as they remove significant financial uncertainty.” risks and distractions associated with lengthy litigation,” the report said.
‘The costs are financed from existing resources. There are no changes to GSK’s growth agenda or R&D investment plans as a result of these settlements.”
Approved and developed by GSK in 1983, Zantac became the world’s fastest-selling drug in 1988 and one of the first to exceed $1 billion in annual sales.
GSK and other companies recalled it in 2019 after research found ranitidine caused toxic levels of a substance called NDMA. NDMA is a chemical byproduct of many industrial processes, including rocket fuel production.
It also occurs in small amounts in many foods, such as salted or smoked meats, fish and beer, as well as in tobacco smoke.
NDMA is a “forever chemical,” meaning it does not break down or break down naturally in the environment or in bodies.
Over time it accumulates and human exposure increases. According to the World Health Organization, no cases of cancer have been officially linked to Zantac, although thousands of patients claim otherwise.
The U.S. Food and Drug Administration in 2019 ordered the removal of all products containing ranitidine from shelves and urged patients to stop taking medications containing the ingredient.
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