Pharma shares hit over 2,000 lawsuits in US over Zantac heartburn tablets

Heartburn drug was pulled from the market in 2020 for containing a probable carcinogen

Shares in GSK, Sanofi and Haleon have been hit following US lawsuits over Zantac   

Shares in GSK, Sanofi, and Haleon fell sharply, building on declines earlier this week, amid growing concerns about US litigation over a heartburn drug that was pulled from the market in 2020 for containing a probable carcinogen.

GSK shares tumbled over 9%, Sanofi's shares fell by 8%, and shares in Haleon, which had recently been spun out of GSK's consumer health unit, fell 4% at one stage on Thursday. 

After alerting the public to the presence of a probable carcinogen in heartburn drug Zantac in 2019, the following year the US health regulator requested makers of all versions of the treatment to withdraw their products from the market. 

More than 2,000 legal cases related to the medicine have now been filed in the US, according to Credit Suisse analysts, and the first trial begins later this month.

"Investor feedback has been absolutely uniform that the stock selloff is in relation to concerns over the size of a potential settlement between the players," Barclays analyst Emily Field said. 

Shares in Haleon had fallen at one stage 12% on Thursday, meaning $5bn had been knocked off its value so far this week. 

It recovered some of those losses after a spokesperson told Reuters the company was not primarily liable for any claim.

"We have never marketed Zantac in any form in the US, as Haleon or as GSK consumer healthcare," the spokesperson said.

Zantac has been sold by several companies since 1995 and that "may make third parties liable ahead of any Haleon exposure", the spokesperson added.

The drug was marketed by GSK between 1995 and 1998, by Pfizer from 2000 to 2006, by Johnson & Johnson, or J&J, from 2006 to 2017, and by Sanofi between 2017 and 2019, according to analysts from broker Redburn. 

GSK declined to comment on stock moves and ongoing lawsuits around Zantac. J&J, Pfizer and Sanofi did not immediately respond to requests for comment.

GSK and Pfizer have each served Haleon with notice of potential claims of indemnification — but indemnification has not yet been determined between the parties, the Haleon spokesperson said.

Given Haleon was formed in 2019 and became an independently listed business only last month, the company "is not primarily liable for any claim", the spokesperson added. 

Sanofi, GSK, and Haleon have now lost a combined $40bn (€38.6bn) in market value since Tuesday’s close amid mounting concerns about litigation around the recalled heartburn drug Zantac. 

Shares in Pfizer, which owns more than a quarter of Haleon, also declined at one stage. Several Zantac-related lawsuits have been filed against Pfizer in various US federal and state courts, according to a recent company filing.

A Pfizer spokesperson said the company sold Zantac only for a limited period of time and that it has not sold it in more than 15 years.

Highlighting an upcoming Illinois case on August 22 and some key court trials in early 2023, Deutsche Bank analyst Emmanuel Papadakis warned that the issues are likely to act as a short-term headwind for both GSK and Sanofi shares. 

• Reuters and Bloomberg