Shares in drug firms GlaxoSmithKline and Sanofi surged after a US judge dismissed thousands of lawsuits claiming that the heartburn drug Zantac caused cancer.
GSK’s shares jumped as much as 14% in early trading, while Sanofi’s stock jumped nearly 6% in mid-morning trading.
The US district judge Robin Rosenberg in West Palm Beach, Florida, dismissed about 50,000 claims in federal court on the basis that they were not backed by sound science.
The ruling can still be appealed against, and the decision does not directly affect tens of thousands of similar cases pending in state courts around the country.
GSK said it would continue to defend itself vigorously, including against all claims brought at the state level.
Although it is unlikely investors will assume the Zantac risk has completely dissipated, Wall Street analysts suggested the probability and scale of future Zantac damages via other legal routes do look significantly lower.
The company, run by Dame Emma Walmsley, split in two earlier this year, floating its Sensodyne to Panadol consumer arm on the stock market as Haleon. The Zantac litigation has weighed heavily on its share price.
Originally marketed by a forerunner of GSK, the medicine has been sold by several companies at different times, including Pfizer, Boehringer Ingelheim and Sanofi, as well as a plethora of generic drugmakers.
It was first approved in 1983 and became the world’s bestselling medicine in 1988, and one of the first drugs to top $1bn in annual sales.
Concerns around Zantac containing potential cancer-causing impurities started to emerge in 2018.
By 2019, some manufacturers and pharmacies halted sales of the drug over concerns that its active ingredient, ranitidine, degraded over time to form a chemical called NDMA.
While NDMA is found in low levels in food and water, it is known to cause cancer in larger amounts.
In 2020, the US health regulator pulled all remaining Zantac versions off the market.
Lawsuits began piling up soon after recalls began from people who said they developed cancer after taking Zantac.
The drugmakers, citing scientific consensus, have repeatedly asserted that Zantac does not cause cancer.
The AJ Bell investment director, Russ Mould,said: “This outcome is probably the best GSK could have hoped for given how comprehensively the judge in the case dismissed the plaintiffs’ arguments.
“While there is some risk of an appeal, and there are other cases outstanding, GSK will be sitting a lot more comfortably than it was before this judgment was handed down.”
