Shares of pharmaceutical giants GSK PLC and Sanofi SA soared on Wednesday after what one analyst described as a “best-case scenario” Florida ruling that dismissed thousands of potential lawsuits over heartburn drug Zantac. On Tuesday, US District Judge Robin Rosenberg in West Palm Beach, Florida, dismissed the lawsuits that claimed Zantac, also known by its drug name ranitidine, can cause cancer.
Shares of GSK
GSK,
+7.85%
and Sanofi
SNY,
+8.06%
surged 12% and 8% in Europe, in reaction to the ruling. U.S.-listed shares of those companies climbed after the ruling on Tuesday afternoon. GSK offshoot Haleon
HLN,
+3.12%
shot up 13% in London trading. Glaxo and Sanofi shares were slightly lower in premarket U.S. trading on Wednesday. U.K.-based GSK said in a statement on Wednesday that Tuesday’s “ruling reflects the state of that science and ensured that unreliable and litigation-driven science did not enter the federal courtroom.” Pfizer
PFE,
-2.01%
and Boehringer Ingelheim are the other drugmakers involved in the case, which have been selling Zantac for decades. Jeffries analysts estimated liabilities of the drug makers could have reached $8 billion for Sanofi and $17 billion for GSK if the claimants were able to prove the cancer link. But Judge Rosenberg said the plaintiffs’ scientists “systemically utilized unreliable methodologies” to try and prove that ranitidine was a carcinogenic. Following the ruling, analysts seem bullish about reducing the majority of liabilities, with Jeffries equity analyst Peter Welford estimating the ruling should clear 80% of that “overhang”. The pharma companies could still face appeals and personal injury cases in state courts as Judge Rosenberg’s multidistrict (MDL) judgement does not apply to state litigation. The upcoming state cases are based in California, Illinois and Delaware, which is understood to be the largest suit with some 40,000 plaintiffs. “While there is some risk of an appeal, and there are other cases outstanding, GSK will be sitting a lot more comfortably than it was before this judgement was handed down,” said AJ Bell investment director Russ Mould. Citi analysts said the Florida MDL ruling represents the “best-case scenario” for GSK and the co-defendants. “While Judge Rosenberg’s ruling can be appealed and the state courts are not bound by yesterday’s ruling, we anticipate a meaningful reduction in liabilities discounted in the share pric …