NEW YORK, June 3 — Shares of GSK dropped more than 9 per cent today, after a Delaware judge allowed more than 70,000 lawsuits alleging its discontinued heartburn drug Zantac caused cancer, to go forward, in a blow for the British drugmaker.

GSK said it disagreed with the ruling and would immediately appeal. Its shares were down 9.4 per cent at £16 by 1052 GMT, on course for their worst day since August 2022, with the drop wiping out nearly £7 billion (RM41 billion) of the company’s market value.

Following the ruling, analysts at JP Morgan said the potential liability that GSK could face from the litigation is likely higher than the US$2 billion to US$3 billion (RM9 billion to RM14 billion) figure assumed by the market.

The judge ruled late on Friday that the expert witnesses can testify in court that the drug may cause cancer.

However, former Zantac makers GSK, Pfizer, Sanofi and Boehringer Ingelheim had argued that the expert witnesses’ opinions lacked scientific support.

The lawsuits have been an overhang for the company, with concerns about protracted legal wrangling and compensation wiping almost US$40 billion off the combined market value of GSK, Sanofi, Pfizer and Haleon over roughly a week in August 2022.

Citi analysts assume US$3 billion of settlement costs related to Zantac. Redburn, on the other hand, expect the litigation to settle for about US$1 billion to US$1.5 billion.

Over the past 12 months, GSK has settled a series of lawsuits related to Zantac, including several in California.

Meanwhile, last month a jury in Chicago rejected an Illinois woman’s claim that Zantac caused her colon cancer, handing the drugmaker a victory in the first case to go to trial.

"Far more important than this ruling is the defence win in Illinois,” Redburn Atlantic analyst Simon Baker said in a note in reference to the Delaware judge’s decision.

"As before, the incentive to settle is front and centre and we note that the intended outcome of mass tort litigation is settlement rather than advancement to multiple trials,” Baker said. — Reuters