Shares of pharmaceutical giant, GlaxoSmithKline surged more than 6% after the company announced a settlement of up to $2.2 billion (€2.01 billion) to resolve tens of thousands of lawsuits in the US related to its discontinued heartburn medication, Zantac.
The drug has faced numerous allegations of causing cancer. The settlement addresses approximately 93% of the cases against GSK, involving around 80,000 claimants, according to Euronews.
Additionally, GSK will pay $70 million (€64 million) to settle a whistleblower allegation from US independent laboratory Valisure, which accused the company of defrauding the government by concealing the cancer risks associated with Zantac.
This agreement is classified as a “Qui Tam” settlement, allowing whistleblowers to file lawsuits on behalf of the US government under the Financial Conduct Authority guidelines.
Zantac, first introduced in the US in 1983, was once among the best-selling medications globally, generating over $1 billion (€0.91 billion) in annual sales.
The drug was marketed by various companies, including French firm Sanofi, Pfizer, and Germany-based Boehringer Ingelheim.
However, Zantac’s popularity has declined sharply in recent years due to growing concerns that its main active ingredient, ranitidine, could potentially convert into the carcinogen N-nitrosodimethylamine (NDMA) if stored improperly or left on shelves for extended periods.
In 2019, several UK manufacturers of ranitidine voluntarily recalled the medication, followed by similar actions in Australia and the European Union.
GSK has firmly rejected these allegations, maintaining that it is not responsible for any harm caused by Zantac.
The company also asserts that expert testimonies regarding the drug’s cancer risks are unreliable.
Regarding the settlement, GSK said, “While the scientific consensus remains that there is no consistent or reliable evidence that ranitidine increases the risk of any 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, risk and distraction associated with protracted litigation.
“GSK expects to recognise an incremental charge in its Q3 Results for 2024 of £1.8bn (€2.15bn) in relation to the State Courts Settlement, the Qui Tam Settlement, and the remaining 7% of pending state court product liability cases, partially offset by expected reduced future legal costs.
“The costs of these settlements will be funded through existing resources. There are no changes to GSK’s growth agenda or investment plans for R&D as a result of these settlements.”
