Sanofi and GSK Lead the $40 Billion Roadmap as Zantac Worries Mount
(Bloomberg) – Sanofi, GSK Plc and Haleon Plc have extended their declines and have lost a combined $40 billion in market value since Tuesday’s close amid growing fears of lawsuits. around the heartburn medicine Zantac is being recalled.
Sanofi fell about 13% on Thursday, bringing the two-day drop to 20%, the steepest drop ever in that timeframe. GSK is down 6.9% in London, while recent spin-off Haleon is down 12%, bringing the drop since Tuesday to 19%.
GSK declined to comment on stock moves and the ongoing lawsuits surrounding Zantac, while Haleon said it is not a party to the litigation and it has never marketed the drug in any way. in the US, whether it’s Haleon or GSK Consumer Healthcare. Sanofi did not immediately respond to requests for comment.
Zantac is a once popular antacid that has attracted a flurry of US personal injury lawsuits alleging it causes cancer. Sanofi, GSK and Boehringer Ingelheim GmbH – among many other generic drug makers – are accused in lawsuits for failing to properly warn consumers about the health risks of over-the-counter products.
Highlighting an impending Illinois case on August 22 and several key court cases in early 2023, Deutsche Bank analyst Emmanuel Papadakis warned Thursday that the problems are likely act as a short-term headwind for both GSK and Sanofi stocks.
According to analysts at Morgan Stanley, damages could be as high as $10.5 billion to $45 billion, based on similar past litigation settlements. “There is considerable uncertainty at this stage around the total potential financial impact of the Zantac case,” they wrote.
Zantac was withdrawn from the market in 2019 after the US Food and Drug Administration said it appeared to produce an unacceptably high amount of the cancer-causing chemical when exposed to heat as little as possible. five-day.
UBS Group AG analyst Laura Sutcliffe warned that some investors are avoiding Sanofi until there is more clarity. Lowering her rating to neutral versus buy, she said litigation in early 2023 could become an “overhang” for the stock.
Sanofi has previously downplayed the risk of litigation, with executives saying in an earnings call last month that there was no credible evidence that Zantac caused cancer and that the applicants will not be able to substantiate their claims.
Haleon said it has certain indemnification obligations to GSK and Pfizer, “which may include liabilities related to OTC Zantac,” in a prospectus ahead of the listing of its shares in London in October. before. That’s while Credit Suisse analysts marked Haleon’s involvement in the Zantac lawsuit as limited.
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