GSK shares float above recent lows amid looming legal woes
British pharmaceutical giant GlaxoSmithKline (GSK) has been wrapped up with legal woes this week over recalled heartburn drug Zantac and a former AstraZeneca dealmaker – which have wiped billions off its market value.
London-listed GSK’s shares have dipped into the red slightly today but remained above recent lows. However, the company has lost nearly eight per cent of its stock value over the past five days.
GSK, alongside French pharma firm Sanofi, are currently undergoing a series of trials in the US over Zantac, which was recalled in 2019 following claims by the US Food and Drug Administration that it produced unacceptable levels of cancer-causing chemicals when exposed to heat.
The first case was due to be heard in Illinois in the US on 22 August. However, the plaintiff agreed on Tuesday to drop the case.
Healthcare analyst at pharma data analysis firm Citeline, Ellie Davenport, told City PM last week that there remains “considerable uncertainty” around the financial impact of the Zantac litigation.
“The ongoing Zantac woes are likely to act as a near-term headwind for both GSK and Sanofi, as key trials scheduled for the second half of 2022 and beyond could see in damage liabilities reaching into the tens of billions,” she said.
There are expected to be cases heading to several other courts early next year.
A Sanofi spokesperson said: “Sanofi was voluntarily dismissed from the Bayer case several months ago. Sanofi did not begin marketing OTC Zantac until 2017, and it is our understanding that Mr. Bayer’s cancer diagnosis was made in 2010. Sanofi did not settle nor make any payment to Mr. Bayer as a part of our dismissal.”
The Zantac trials come amid another legal battle over former AstraZeneca dealmaker Chris Sheldon, who has been poached by the British rival.
AstraZeneca has sued a Sheldon in London to block him from sharing the sensitive information with his new employer, arguing that he was in danger of breaching a non-compete agreement – a clause he had been paid £644,000 in shares in 2021 to sign.
Sheldon has not yet filed a response to the lawsuit and has denied the allegations or any wrongdoing.
The legal action is expected to delay Sheldon’s arrival at GSK. AstraZeneca in 2017 sued former executive Luke Miels in 2017 after he announced he would be joining GSK as chief commercial officer, which delayed his entry.
GSK and AstraZeneca declined to comment.