Many people consider healthcare companies to be saviours of the world, with their products helping to ease the pain of countless individuals. What’s often forgotten is when something goes wrong with one of their products, the fallout can be catastrophic.
Fears of a multi-billion-dollar lawsuit for the companies involved with recalled heartburn drug Zantac have wiped billions off the value of GSK, Haleon and Sanofi this week. Investors fear they will have to shell out big bucks if found guilty of failing to properly warn users about health risks, with allegations that Zantac causes cancer.
Now comes the really hard part, with the drug companies having to convince investors, the public and the courts they are not guilty.
“It’s given GSK spin-off Haleon a terrible start to life as a standalone business, with its share price having plummeted in recent days. Haleon says it isn’t party to any of the Zantac claims, yet GSK has served it with notice of potential claims in relation to liabilities connected to over-the-counter Zantac products,” says Danni Hewson, financial analyst at AJ Bell.
“With the first personal injury case going to court later this month, the healthcare companies involved will have already prepared their defence and GSK implies that the accusations do not tally with scientific consensus to date.
“It is worth remembering this is not ‘new’ news. Regulators and experts have been looking into any links between Zantac and cancer for years, and indeed the risks were flagged in Haleon’s stock market prospectus. However, it goes to show most investors don’t bother to read the small print, so they’ve been caught off guard after the potential liabilities hit the news.”