NNPC

GSK Shares Surge After $2.2bn Settlement Deal


Shares of GSK (GSK.L) surged by as much as 6.5 per cent on Thursday following the announcement of a $2.2bn settlement related to U.S. lawsuits alleging that its discontinued heartburn medication, Zantac, caused cancer.

The settlement, disclosed on Wednesday, was significantly lower than anticipated, with JP Morgan previously estimating a potential cost of $3.5bn.

Analysts at Barclays described the outcome as the “best case scenario” in terms of the total settlement amount.

This agreement resolves 80,000, or 93 per cent, of the pending Zantac-related cases in the United States. Analysts from Jefferies and other firms noted that the settlement alleviates much of the uncertainty that has weighed on GSK’s stock for more than two years.

“The $2.2bn settlement is lower than market expectations of $3.5bn, and the timing was earlier than anticipated.

The Zantac issue is clearing up, and GSK is likely to resolve the few remaining cases quickly,” said Investment Director at wealth management firm JM Finn, Lucy Coutts which holds shares in GSK.

In addition to the larger settlement, GSK has agreed to pay $70m to resolve a related whistleblower lawsuit filed by a Connecticut laboratory.

GSK has admitted no wrongdoing or liability in these settlements, stating that the agreements are in the company’s long-term interest to avoid the risks associated with protracted litigation.

The company expects to record a 1.8bn pound ($2.4bn) charge in its third quarter results due to the settlements, with no impact seen on its investment plans. It will announce third quarter results on Oct. 30.

First approved by U.S. regulators in 1983, Zantac became the world’s best-selling medicine in 1988 and one of the first to top $1bn in annual sales. The drug was sold at different times by GSK, Pfizer, Sanofi and Boehringer Ingelheim.

Ranitidine, which was sold under the Zantac brand name, was pulled off the market in 2020 on concerns it could degrade into NDMA, a carcinogen, over time or when exposed to heat. The recall triggered a spate of lawsuits.

First Bank

About Daily Record

Check Also

Nation building: A collective responsibility, Sanwo-Olu charges directors

Lagos State Governor, Mr. Babajide Olusola Sanwo-Olu, has called on all stakeholders in national development …

Leave a Reply

Your email address will not be published. Required fields are marked *