GSK PLC (LSE:GSK, NYSE:GSK) has agreed to pay up to $2.2 billion to settle around 80,000 US lawsuits concerning its heartburn medication Zantac, generically known as ranitidine.
The plaintiffs alleged the drug caused cancer, although GSK maintains there is no evidence linking Zantac to an increased cancer risk and has not admitted liability.
The settlement resolves 93% of state court cases, and GSK expects it to be completed by mid-2025.
The company will also pay $70 million to settle a claim by Valisure, a laboratory that raised concerns about a carcinogen found in Zantac.
GSK will fund the settlements using existing resources and will not alter its investment in research and development.
The company said it expects a £1.8 billion charge in its third-quarter 2024 results, partially offset by reduced legal costs, removing significant financial uncertainty related to the ongoing litigation.
Responding to the news, Deutsche Bank said GSK had become 'investible again', adding: "The case for GSK beyond [a] very challenging valuation had become somewhat difficult of late.
"But as is often the case when things seem most tough we’ve had yet another surprising and this time positive twist in the Zantac litigation with a settlement that resolves more than 90% of the residual state strand for the princely sum of $2bn."
Deutsche rates the shares a 'buy' up to 1,850p a share. The stock closed on Wednesday at 1,458p.