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Pharmaceutical groups lose £30 billion in value due to anxiety over heartburn drug lawsuit

Around £30 billion has been wiped off the market capitalization of major pharmaceutical companies in the past two days as investors worry about lawsuits related to the heartburn drug Zantac.

Share in GSK has lost 14% of its value since the market close on Tuesday, with shares in its recent Haleon transfer down 15%. Sanofi fell 12% and Pfizer fell 3.4% after the analyst note flagged contingent liabilities.

The first of thousands of pending personal injury cases related to Zantac’s cancer is expected to go to trial in Illinois this month.

A note from UBS about Sanofi flagged a “potential overhang” from the Zantac lawsuit on Tuesday, adding that while the evidence of a link is controversial, some investors may avoid the stock until it clears up. clear.

However, David Risinger, an analyst at SVB Leerink, said the risk appears to have been “overstated”, as Sanofi only marketed the drug for about two years, compared with between three and 11 for other companies.

Sanofi began a voluntary recall of Zantac from the U.S. market in 2019 after the U.S. Food and Drug Administration began investigating amounts of N-nitrosodimethylamine, or NDMA, which is commonly consumed in small amounts but May cause cancer in humans when consumed in excess – in the product. In 2020, the FDA said the drug appeared to produce unacceptably high amounts of the cancer-causing chemical when exposed to heat and ordered the substance to be removed from the market.

There are more than 2,000 personal injury cases pending against several pharmaceutical companies that previously sold Zantac. Risinger said Sanofi marketed the drug in the US from 2017 to 2019. Before that, it was marketed by private drugmaker Boehringer Ingelheim from 2006 to 2017, Pfizer from 2000 to 2006 and GSK from 1995 to 1998.

In its prospectus for Haleon, the consumer health venture that spun off GSK last month, the company warned that it was not yet possible to accurately assess potential liability from any related lawsuits. to Zantac.

Haleon’s stock price recovered some of its losses after it said on Thursday: “Haleon is not a party to the Zantac litigation. We have never marketed Zantac in any way in the United States as Haleon or GSK Consumer Healthcare.”

Sanofi said it remained confident in its legal defense despite the “recent stream of highly speculative news”.

“Since 2019, the medical, scientific, and regulatory communities have comprehensively assessed the safety of Zantac’s active ingredient ranitidine, and the data show no evidence of harm to consumers. from using Zantac in the real world,” it said. “Science does not support the claimant’s claims in this litigation.”

It added that Sanofi’s Zantac sales accounted for only a very small percentage of total sales over 35 years.

GSK says the company, FDA and the European Medicines Agency have all independently concluded that there is no evidence of a causal link between the active ingredient in Zantac and the development of cancer in patients.

It said: “The overwhelming weight of scientific evidence supports the conclusion that there is no increased cancer risk associated with ranitidine use. “Proposals to the contrary are therefore not scientifically sound and GSK will vigorously defend itself against all otherwise alleged useless claims.”

Pfizer did not respond to a request for comment.

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