The settlement, which is at the low end of Jefferies analysts’ $2 billion to $3.5 billion estimate, will resolve 93% of the product liability cases regarding allegations that GSK’s heartburn drug could cause cancer. Analysts say separate concerns remain about its vaccines business.
GSK on Wednesday announced that it has reached agreements to settle the vast majority of ongoing lawsuits related to its heartburn medication Zantac.
The settlement will cover 93%, or around 80,000, of GSK’s standing state court product liabilities in the U.S. Ten plaintiff firms are participating in the settlement and have said that they will unanimously recommend that their clients accept the terms of the agreement. The parties expect to fully implement the settlement by the first half of 2025.
The terms of the settlement are confidential but in agreeing to settle the lawsuits, GSK emphasized that it does not admit any liability in the matter.
“The scientific consensus remains that there is no consistent or reliable evidence that ranitidine increases the risk of any cancer,” GSK said in its announcement. The pharma “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.”
GSK will reflect these settlement payments in its third-quarter financials, which will show an incremental $2.3 billion charge. The costs will not affect GSK’s growth or R&D investment plans.
Zantac is a small molecule blocker of the histamine 2-receptor, which allows it to suppress the secretion of gastric acid, the main driver of heartburn. According to a 2019 analysis by Reuters, Zantac was originally developed by Glaxo Holdings—now a part of GSK—and won its first approval in 1983. Zantac became the world’s top-selling drug in 1988.
Through a series of deals, Zantac fell under the ownership of Sanofi while several other pharma companies developed generic versions of the drug.
However, in 2019, the FDA detected potential contamination of N-nitrosodimethylamine (NDMA) in several samples of ranitidine. NDMA is an environmental contaminant that the FDA classifies as a probable human carcinogen. In April 2020, the regulator found that the NDMA impurity could increase over time in some products. In line with its attending safety concerns, the FDA urged ranitidine manufacturers to withdraw their products from the market.
Subsequently, tens of thousands of lawsuits were filed against GSK and other ranitidine developers. In April 2024, Sanofi announced that it settled 4,000 Zantac-related lawsuits. Though the terms of agreements were confidential, the pharma at the time said that the settlement would resolve most of the related litigation in all U.S. states outside of Delaware, where the bulk of cases remain.
Jefferies analyst Peter Welford in a note to investors Wednesday said that GSK’s Zantac settlement “clears much indigestion” for the company as the focus now shifts to its vaccines business.
“Concerns linger over sales expectations for RSV vaccine Arexvy in both 2H24 & 2025 given recent slow US RSV vaccine uptake and data supporting every 3-year re-vaccination schedule,” Welford wrote. “In addition, investors continue to debate sustainability of the Shingrix franchise, given US sales declines and potential concerns around uptake in China.”
