British pharmaceutical company GSK said it would pay up to $2.2 billion (less than expected) as part of a settlement involving thousands of cases in US courts. The company was accused that the withdrawn version of its drug Zantac containing ranitidine may cause cancer, Reuters reported.
The company announced an agreement with 10 law firms representing approximately 80,000 people. claimants. Settlements cover 93 percent. all matters.
“The best scenario for the company”
GSK did not admit to committing a crime in any of the cases. A statement to investors said there is “no consistent or credible evidence” that ranitidine increases the risk of cancer, but the settlements “remove significant financial uncertainty.”
– Importantly, the company's core earnings have not changed, so investors can now focus on GSK's late-stage projects, Lucy Coutts, chief investment officer at wealth management company JM Finn, which holds GSK shares, told Reuters.
The amount resulting from the agreement announced on Wednesday is much lower than earlier forecasts by analysts, who estimated it at approximately USD 3.5 billion. Barclays analysts described it as a “best-case scenario in terms of total settlement.”
Zantac approved for sale in USA in 1983. Within a few years, it became the best-selling drug of its kind in the world, with annual sales exceeding $1 billion.
However, in 2020, Zantac was withdrawn from sale in the US because laboratory analysis results suggested that its active ingredient, ranitidine, which inhibits stomach acid secretion, could be converted to N-nitrosodimethylamine (NDMA), a carcinogen, when exposed to heat. This resulted in tens of thousands of lawsuits against the drug's manufacturers.
Medicines containing ranitidine, used to treat duodenal and/or stomach ulcers or heartburn, were also sold by, among others, Pfizer, Sanofi and Boehringer Ingelheim. Pfizer and Sanofi agreed to the settlement.
A modified version of the drug is still sold – Zantac 360, which does not contain ranitidine.
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