GSK, its consumer health spin-off Haleon and Sanofi could be on the hook for billions of dollars in potential damages over Zantac, a gastrointestinal drug pulled from the market in 2020 after it was linked to cases of cancer.
That’s the conclusion of analysts at Morgan Stanley, Deutsche Bank and UBS, who have all issued research notes drawing attention to the issue, which has remained largely off the radar since sales of Zantac (ranitidine) were halted.
There are a couple of thousand legal complaints related to Zantac filed in the US, with a class action suit due to go to trial in Illinois later this month, with another scheduled to start in California in October.
Zantac was originated by GSK and launched by the company in the early 1908s, which sold it as a prescription and over-the-counter (OTC) product for indications like heartburn and acid indigestion over the years.
Sanofi had rights to the OTC version of the drug that was recalled in 2019 over possible contamination with the suspected carcinogen N-nitrosodimethylamine (NDMA), with the FDA banning sales the following year.
It was sold in generic form by several other producers, some of which have also been named in litigation, including Boehringer Ingelheim, Pfizer and Johnson & Johnson. All the companies have insisted they will defend themselves vigorously in the lawsuits.
Some voluntarily took their products off the market as soon as the NDMA finding was reported by the FDA. Low levels of NDMA are ingested in the diet as the substance is found in food and water, but not at levels expected to cause an increase in cancer risk.
Shares in GSK lost 8% of their value today in the wake of the analyst comments, while Sanofi fell 3% and Haleon was down 6%, collectively wiping tens of billions of dollars off their valuations.
“We do not have a view on the likelihood or magnitude of a potentially negative outcome for Sanofi at this stage, but we do think that even not knowing will be enough to deter some investors,” said UBS’ Laura Sutcliffe in her note.
Haleon said in a prospectus filed earlier this week that it could face “possible liabilities” connected with OTC Zantac, although it is in the midst of indemnity negotiations with GSK and Pfizer – formerly partners in the joint venture from which it sprang.