Investors in GSK (NYSE:GSK) stock, Pfizer (NYSE:PFE) and Sanofi (NASDAQ:SNY) are all feeling the heat today. Reportedly, they’re concerned about legal possibilities surrounding Zantac, a heartburn drug removed from stores in 2019 due to safety concerns. Claims now say the three drugmakers — who were all involved in manufacturing Zantac due to a complex series of business deals– did not do enough to warn consumers about its safety-related issues. Now all three stocks are getting slammed in early trading.
GSK’s Zantac was first approved in 1983. However, the U.S. Food and Drug Administration (FDA) pulled the heartburn medication from sale in 2019 due to safety concerns.
This might seem like ancient history now and irrelevant to today’s traders. Yet, old news sometimes has a way of popping up again. On June 30, GSK consumer products spin-off business Haleon (NYSE:HLN) released a prospectus disclosing outstanding lawsuits in the U.S. related to Zantac. Reportedly, litigants “claim the drug causes cancer.”
What’s Happening With GSK Stock?
Apparently, there’s a case of delayed reaction going on today. Haleon’s prospectus identifies GSK and/or Pfizer as defendants in roughly 2,150 U.S. personal-injury lawsuits related to Zantac.
Of course, this prospectus has been available since late June. But it’s a lengthy and complicated document. It’s possible that the market needed time to mull over the facts and circumstances of the Zantac litigation.
In any case, traders on Wall Street are evidently choosing to dump Zantac-associated stocks today. As of this writing, GSK stock is down by 9%. Meanwhile, PFE stock and SNY stock are down by 2% and 4%, respectively.
GSK shareholders took the biggest hit this morning. Commentary from JPMorgan analysts is likely only adding to the anxiety:
“The limited visibility on the potential liabilities is likely to remain an overhang on [Haleon], especially give[n] the already high leverage […] with the pharma angle to the story also likely to be an issue for consumer investors.”
All told, it’s a nasty day for GSK stock investors — and there may be more share-price deterioration in store. Traders may need some time to sort out the implications and complications surrounding the Zantac news.
On the date of publication, David Moadel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.