The Zantac fog starts to lift for big pharma

The threat of Zantac litigation wiped a staggering $43bn from certain company valuations earlier this year, as investors fled big pharma names with potential exposure to costs that some feared could run into billions. But overnight developers won the first big battle in the war to clear their names. A Florida district judge threw out around 50,000 claims, in what Wolfe Research analysts described as “a smack-down of the evidence” asserting a link between the heartburn medicine and cancer. This is not the end of the road: these plaintiffs are likely to appeal, and many other cases are due to be heard in state courts next year. But share price reactions from the likes of GSK, Sanofi and Haleon show that investors consider the matter largely resolved. The Zantac cloud was shaping up to cast a major shadow over these over the pharma groups next year. For the boards of GSK and Sanofi, both of which are battling to build confidence in their pipelines and strategic direction, this outcome will come as a very welcome early Christmas gift. That said, the stocks are still down compared with their positions before the threat of litigation was raised.