GSK to pay $2.2bn to settle Zantac lawsuits

(Sharecast News) - GSK has agreed to pay $2.2bn to settle about 80,000 Zantac lawsuits in the US. In a statement released after the close of markets on Wednesday, the pharmaceuticals firm said it had reached an agreement with 10 firms who represent 93% of the Zantac (ranitidine) state court product liability cases pending against it in the US.

GSK also said it had agreed to pay $70m to resolve a whistleblower complaint by a laboratory called Valisure, which alleged that the pharmaceuticals company defrauded the US government by concealing the cancer risks of heartburn drug Zantac for decades.

GSK has not admitted any liability in either settlement.

"While the scientific consensus remains that there is no consistent or reliable evidence that ranitidine increases the risk of any cancer, GSK strongly believes that these settlements are in the best long-term interests of the company and its shareholders as they remove significant financial uncertainty, risk and distraction associated with protracted litigation," the company said.

GSK expects to recognise at £1.8bn charge relating to these settlements in the third quarter, and said this will be funded through existing resources.

Zantac was removed from the US market in 2020 amid fears over low levels of the contaminant N-nitrosodimethylamine (NDMA), which can increase with time and temperature and pose a risk of cancer.

Broker Shore Capital said: "Whilst this headline figure is still significant, we highlight it is only a fraction of the up to circa $30bn downside scenario we felt the market has been pricing into the share. We believe this should serve as a clearing event for GSK and be broadly well received.

"This now provides an excellent opportunity for the share to properly rerate and allow people to refocus their attention on the improving growth outlook GSK has been delivering since the demerger of Haleon."