GSK PLC (LSE:GSK, NYSE:GSK) and Haleon PLC (LSE:HLN, NYSE:HLN) were the biggest FTSE 100 fallers on Thursday amid investor concerns surrounding US lawsuits over heartburn drug Zantac, which was withdrawn from the market in 2019 on cancer fears.
Shares in pharma giant GSK, which specialises in infectious diseases, HIV, oncology and immunology, sunk 8.8% to 1,419p, while its recent consumer healthcare spinoff declined 7.7% to 258p on the news.
GSK and Pfizer are said to be facing multiple lawsuits in the US, Canada and Israel over the detection in ranitidine products of N-Nitroso-dimethylamine (NDMA), a substance that US drug regulator the FDA has said could cause cancer.
Ranitidine, an over-the-counter and prescription drug marketed as Zantac, was launched by what was Glaxo Holdings Ltd in the late 1980s and became the world’s biggest prescription drug for stomach ulcers. Glaxo later become GlaxoSmithKline and this year changed its name to GSK.
Haleon demerged from GSK on 18 July, focusing on over-the-counter products vitamins, pain relief, oral health and digestive health.
Haleon told the media it is not a party of the litigation proceedings and it has never marketed the drug in any form in America.
“GSK’s demerger hasn’t quite produced the success story it expected," said Danni Hewson, financial analyst at AJ Bell.
“This might be down to GSK investors ditching the Haleon shares they were given for free as they are only interested in pharmaceuticals, rather than the latter’s toothpaste and headache pills.
“Or it could be that investors are nervous at Haleon’s growth prospects in a world where cash-strapped consumers can easily shun big name, expensive brands in favour of cheaper, supermarket own-brand products.
“But perhaps the key reason for share price weakness in Haleon and GSK itself might be market worries over lawsuits concerning Zantac.”
Meanwhile, Sanofi SA fell 5.7% on the same litigation concerns and Pfizer Inc (NYSE:PFE) – which owns over a quarter of Haleon – eased 2.4% lower on the news.