GSK shares were top of the FTSE 100 on Thursday after the pharma giant announced it had reached an agreement in the vast majority of litigation cases related to its Zantac heartburn drug.
Although the settlement will cost GSK $2.2bn, it draws a line under the litigation which alleged Zantac was a cause of cancer among users. GSK said they will recognise a £1.8bn charge in its Q3 results.
GSK shares were 5% higher on Thursday but they are still near the lows of the year.
“Pharma giant GSK has taken a giant leap towards drawing a line under the long-running legal battle concerning alleged cancer to heartburn remedy Zantac. It’s agreed to settle around 93% of cases pending in the US State Courts for a payment of up to $2.2bn as well as an additional $70mn in a separate but related action,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“In sterling terms, it’s expecting to recognise a £1.8bn charge for the settlements, which also covers the remaining 7% of outstanding claims, with some analysts seeing scope for the final quantum to come in a little lower. This is a significantly better outcome than initially expected, with some estimates standing at as much as $45bn just a couple of years ago. Since then, GSK and other drugmakers implicated in the case, Sanofi and Boehringer Ingelheim, have seen several key rulings go in their favour. GSK continues to accept no liability.”