Shares of drugmakers Sanofi, GlaxoSmithKline (GSK), Haleon and Pfizer have taken a hit this week in response to investors' growing fears about litigation related to the recalled heartburn drug Zantac.
According to a Friday note to clients from Barclays analysts, the companies have lost a combined $39 billion from their market value over the past week in the absence of any other particular catalyst.
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As of the time of publication, Sanofi stock is down about 9% in the past five days, while GSK and Haleon have each fallen more than 11% during the same period.
Meanwhile, Pfizer, which owns an approximately 32% stake in Haleon, is up nearly 2% over the past five days but down more than 11% year to date. GlaxoSmithKline owns the other 68% of Haleon.
Zantac became the world's best-selling medicine in 1988 and one of the first-ever drugs to top $1 billion in annual sales. Originally marketed by a forerunner of GSK, Zantac has been sold by several companies since the late 1990s, including Pfizer Boehringer Ingelheim and Sanofi.
The drug was recalled in 2020 after an investigation by the Food and Drug Administration detected the presence of the chemical N-nitrosodimethylamine (NDMA), which has previously been classified by the Environmental Protection Agency as a "probable human carcinogen".
Individuals may be exposed to low levels of N-nitrosodimethylamine in occupational settings, through the ingestion of certain foods like cured meat products and smoked fish and from drinking contaminated water or breathing cigarette smoke.
More than 2,000 legal cases related to Zantac have now been filed in the U.S., analysts say, with the first trial beginning later this month. The companies are accused of failing to properly warn users about Zantac's health risks.
Analysts at Morgan Stanley predict that the companies could potentially face between $10.5 billion to $45 billion in legal damages based on previous similar litigation settlements.
Despite the concerns from Wall Street, the drugmakers have argued that there have been no material developments to the litigation beyond what's been previously disclosed and that the majority of available scientific evidence supports the conclusion that there is no increased cancer risk associated with the use of Zantac.
Sanofi said in a statement on Thursday that its sales of Zantac accounted for a "very small percentage" over the more than 35 years the product was available.
As of Aug. 1, the company was aware of approximately 2,850 personal injury plaintiffs across both state and federal jurisdictions with filed cases naming Sanofi in addition to other defendants. When factoring in additional Zantac cases that do not involve Sanofi, the company said it is aware of approximately 3,450 total personal injury plaintiffs across all jurisdictions.
Sanofi also says there is an unknown amount of potential personal injury claimants who have joined a registry of unfiled claims and that it is unclear whether it will be named as a defendant in those suits.
"Over time, the number of unfiled claims alleging either Rx and/or OTC use and implicating a variety of defendants in these actions has exceeded 150,000 – a significant number of these claims, however, do not implicate Sanofi," the company added.
Pfizer said it only sold Zantac between 1998 and 2006 and that the Zantac recalls did not involve any of its products. It noted that a "number of lawsuits" have been filed against it and other defendants.
GSK said that it has been named a defendant in approximately 3,000 filed personal injury cases in federal and state court and numerous unfiled claims registered in a census established by the Court presiding over the Zantac Multidistrict Litigation (MDL) proceeding. Class action lawsuits alleging economic injury and a third-party payer class action suit also have been filed in federal court.
Haleon, which spun out as an independent listed company last month, said it is "not a party to any of the Zantac claims", "never marketed Zantac in any form in the U.S." and is not "primarily liable for any OTC or prescription claims."
However, the company said it may be required to indemnify GSK and Pfizer if the companies are "unable to recover in respect of OTC Zantac from any third parties who are ahead of Haleon and who have given indemnities under previous transfers of rights to OTC Zantac."
Reuters contributed to this report