(BFM Bourse) – The company announced an agreement in principle with the plaintiffs’ lawyers in this case which has weighted its stock price in 2022. But this agreement excludes the state of Delaware where thousands of complaints have been filed.
Even if it has taken a bit of a back seat in recent months, the Zantac file still constitutes a sword of Damocles for Sanofi on the stock market.
This medication was withdrawn from over-the-counter sales in the United States and Canada in 2019. Its active ingredient, ranitidine, caused this treatment to contain low levels of N-nitrosodimethylamine (“NDMA”), a molecule present in drinking water or soil but potentially carcinogenic in high doses. The American health authority, the FDA, noted that NDMA exceeded the authorized thresholds in certain samples tested, which led to the withdrawal of the drug.
Numerous class actions and lawsuits have been filed in U.S. courts seeking compensation from plaintiffs alleging that Zantac caused various cancers.
The laboratories, for their part, highlight the fact that the scientific community – including the FDA and the European Medicines Agency – has never found serious evidence demonstrating that Zantac could cause cancer, despite several evaluations.
Sanofi was late in marketing this drug, which was launched by GSK in 1983. The French group acquired the rights to Zantac without a prescription in 2017 following an exchange of assets with Boerhinger Ingelheim.
>> Access our exclusive graphic analyses, and gain insight into the Trading Portfolio
An agreement that does not concern Delaware
During the summer of 2022, investors became frightened, fearing that compensation in this case would be very heavy for the pharmaceutical groups concerned (Sanofi but also GSK and AstraZeneca). Bloomberg then cited an valuation from the Morgan Stanley bank of up to $45 billion for all the laboratories, while that of its own research division amounted to only $6 billion.
In December of the same year, a first verdict from a federal court judge in Florida ruled in favor of the pharmaceutical groups by rejecting the appeals of the plaintiffs who then decided to appeal.
Sanofi, however, decided to shorten the procedure for at least some of the complaints. The French pharmaceutical group sent a statement to several media including BFM Bourse in which it announced that it had reached an agreement in principle with “a number of plaintiffs’ lawyers to resolve personal injury cases linked to Zantac”.
These agreements concern cases pending in the courts of American states with the exception of Delaware, where, according to sources cited by Bloomberg, 20,000 complaints have been filed against Sanofi. “A judge has not yet decided whether these cases can proceed to trial,” the agency explains.
“This agreement would resolve up to approximately 4,000 complaints (the vast majority of outstanding cases in these states). The agreement requires the consent of individual complainants and will take some time to complete,” Sanofi said. .
“No significant financial impact”
The pharmaceutical group did not disclose the financial conditions of this agreement. But the group clarified that the “amount that would be paid reflects the limited period during which Sanofi marketed Zantac and the strong defenses available to Sanofi in these cases.” “The resolution of these cases will not have a significant financial impact,” also assured the CAC 40 group.
Sanofi also reiterated its position in this case, namely that the complaints filed against it and arguing that Zantac causes cancer “are unfounded”, as the Florida judge concluded.
“Sanofi settles these cases, not because we believe the complaints have merit, but rather to avoid the expense and ongoing distraction of litigation. No concession of liability has been made,” the company asserts.
On the Paris Stock Exchange, these announcements do not have a disproportionate impact on Sanofi shares. The stock rose 0.3% around 3:15 p.m., after peaking at +1% during the day.
Julien Marion – ©2024 BFM Bourse
Are you following this action?
Receive all the information on SANOFI in real time: