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GSK has reached an up to $2.2bn settlement to resolve the vast majority of cases linked to its heartburn medicine Zantac, in a move that will help assuage legal concerns hanging over the UK drugmaker.
The company said on Wednesday it had reached agreements with 10 plaintiff firms representing about 80,000 people who had brought product liability cases against it in US state courts. The settlement covers 93 per cent of all claimants.
GSK did not accept any liability.
The settlement is below the cost of up $8bn that Bank of America analysts estimated earlier this year as the cost of settling all the cases. It also avoids a number of further unpredictable jury trials over the cases, which could have led litigation costs to spiral.
GSK said it expected to report a charge in its upcoming results for the third quarter of 2024 of £1.8bn relating to the settlement, adding that there would be no impact to its investment plans as a result.
The settlement will help draw a line under legal threats that have hung over the drugmaker since 2019, when a laboratory in Connecticut — Valisure — alleged that it had found high levels of a carcinogen in ranitidine, the active ingredient of Zantac.
Other drugmakers that also marketed the drug, including Pfizer and Sanofi, have already reached settlements. GSK also said it had reached a separate $70mn settlement with Valisure on Wednesday.
Tens of billions of dollars have been wiped off the market value of companies linked to the drug, first approved in 1983, since a Morgan Stanley analyst note in 2022 estimated potential total liability at up to $45bn. The note put GSK’s potential exposure at up to $27bn.
GSK suffered a blow in June when a Delaware judge decided to allow at trial testimony of scientists for the plaintiffs alleging that the drug caused cancer. That decision led to a 10 per cent drop in GSK’s share price.
While an appeal process against that decision is still under way, GSK is now likely to avoid a trial. The company said it would attempt to reach a settlement with the remaining 7 per cent of plaintiffs.
Separately on Wednesday, the Washington Supreme Court ruled that it would review a case linked to toxic chemicals produced by Bayer subsidiary Monsanto, alleged to have caused brain damage in a case involving three schoolteachers.
Bayer has been ensnared in complex and costly legal battles over Monsanto’s weedkiller Roundup since 2018, fighting cases in multiple US states.
Wednesday’s decision led to an almost 7 per cent drop in Bayer’s share price, in a further sign of the damaging nature for pharmaceutical companies of unpredictable US class action cases.
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