Pharma stocks crater as investors brace for litigation charges


Shares of GlaxoSmithKline, Sanofi and Haleon all sold off sharply this week, shedding tens of billions in market value, amid investor fear over potential U.S. litigation charges focused on popular heartburn drug Zantac.

This has been a known issue bumbling in the background for years but investor concern exploded this week in the lead-up to the first scheduled legal proceeding on Aug 22.

What is Zantac?

Zantac is the brand name for a drug called ranitidine, a medicine used to relieve heartburn. It was originally invented and sold by Glaxo as a prescription drug in the 1980s before transitioning to an over-the-counter medicine.

In 2019, regulators launched a safety review amid concern the drug contains a probable carcinogen called NDMA, prompting manufacturers to pull it from shelves. And by 2020, the U.S. F.D.A. and the European Medicines Agency requested all versions of the treatment be withdrawn from the market.

Since then, more than 2,000 cases have been filed in the U.S. with plaintiffs contending that consuming Zantac can generate NMDA.

The first trial begins on Aug. 22 with key bellwether trials to begin in early 2023.

Packages of Zantac, a popular medication which decreases stomach acid production and prevents heartburn, sit on a shelf at a drugstore in New York City.

Drew Angerer | Getty Images

The litigation is particularly complicated because so many pharma players have been involved with the drug.

The patent for the drug expired in 1997, so there are multiple manufacturers, retailers and distributors of the medicine named as defendants in the lawsuits.

There have been multiple owners of the OTC rights in the U.S. since 1998, including GSK, Sanofi, Pfizer and Boehringer Ingelheim.

Haleon, the consumer health business spun off from GlaxoSmithKline last month, is not primarily liable for the claims, according to the company, but may be tangentially linked.

Company responses

In response to the violent share price moves this week, GlaxoSmithKline, Sanofi and Haleon have all issued statements defending themselves.

The drugmakers’ stock prices stabilized on Friday morning.

A GlaxoSmithKline spokesperson said, “The overwhelming weight of the scientific evidence supports the conclusion that there is no increased cancer risk associated with the use [of] ranitidine … Suggestions to the contrary are therefore inconsistent with the science and GSK will vigorously defend itself against all meritless claims.”

A Sanofi spokesperson said, “There is no reliable evidence that Zantac causes any of the alleged injuries under real-world conditions, and Sanofi remains fully confident in its defenses. Given the strength of our case and the uncertainty of future proceedings no contingencies have been established.”

Zantac is the brand name for a drug called ranitidine, a medicine used to relieve heartburn.

The Washington Post | The Washington Post | Getty Images

Haleon’s involvement and potential liability appear less clear-cut.

Haleon asserts that it is not a party to any of the Zantac claims, saying it “never marketed Zantac in any form in the U.S.” and is “not primarily liable for any OTC or prescription claims.”

However, as flagged in the prospectus issued on June 1,…



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Pharma stocks crater as investors brace for litigation charges

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