Shares in Sanofi, GSK, and Haleon have lost a combined $40 billion in market cap since Tuesday's close, amid a flurry of US personal-injury lawsuits claiming that Zantac - a once-popular antacid - causes cancer.
Sanofi marked a two-day decline of 20%, the steepest drop ever over that timeframe, according to while GSK dropped as much as 12% in London - at one point falling to its worst one-day retreat since February 1998, before trading slightly higher. Haleon, a recent GSK spinoff, slumped 13%.
" There is considerable uncertainty at this stage surrounding the potential total financial impact of the Zantac litigation," wrote Morgan Stanley, which estimates that damages could reach $10.5 billion to $45 billion based on similar litigation settlements in the past.
GSK declined to comment on stock moves and ongoing lawsuits around Zantac, while Haleon said it's not a party of the litigation proceedings and that it has never marketed the drug in any form in the US, either as Haleon or as GSK Consumer Healthcare. Sanofi didn't immediately respond to requests for comment. -Bloomberg
Sanofi, GSK and several generic drugmakers have been accused in several lawsuits for failing to adequately warn users that the over-the-counter drug had health risks.
On Thursday, Deutsche Bank analyst Emmanuel Papadakis warned that an upcoming Illinois case on August 22, and some key court trials in early 2023, will likely negatively affect shares in both GSK and Sanofi.
Zantac was yanked from store shelves in 2019 after the US FDA said that when the drug is exposed to heat for as little as five days, it appears to produce unacceptably high levels of a chemical that can cause cancer.
UBS's Laura Sutcliffe downgraded Sanofi from buy to neutral, warning that investors are avoiding Sanofi until there is further clarity, adding that litigation scheduled for early 2023 may become an "overhang" for shares.
Sanofi has previously downplayed the risks of the litigation, with executives saying on an earnings call last month that there's no reliable evidence that Zantac causes cancer and that plaintiffs won't be able to prove their claims. -Bloomberg
Haleon was dragged into the fray due to certain indemnification obligations to both Pfizer and GSK, "which may include liabilities related to OTC Zantac," leading Credit Suisse analysts to note that their involvement in the Zantac litigation would be limited.
