According to the Zhītōng Cáijīng App, a judge in Delaware made an important ruling, approving the continued trial of more than 70,000 lawsuits against GlaxoSmithKline (GSK.US) and its production of the gastroesophageal reflux disease (GERD) treatment drug Zantac, which alleges that the drug may cause cancer. This decision dealt a major blow to GlaxoSmithKline, with its stock price falling 10% in pre-market trading on Monday, the largest decline since mid-2022.

It was learned that Zantac (generic name: ranitidine), a drug commonly used to treat and prevent GERD and diseases related to excessive gastric acid secretion, was once a best-selling product of GlaxoSmithKline. However, in recent years, a major legal dispute involving the drug has attracted widespread attention. The cause of the event is that the active ingredient in Zantac, ranitidine, was found to degrade under certain conditions, generating a potential carcinogen called NDMA (N-nitrosodimethylamine).

This discovery has led to a worldwide recall of Zantac and a significant decrease in the market capitalizations of many pharmaceutical companies, including GlaxoSmithKline. Investors are worried that this lawsuit could cause significant financial burdens on related pharmaceutical companies.

In response, Judge Vivian Medinilla ruled that GlaxoSmithKline, Pfizer (PFE.US), Sanofi (SNY.US) and other drug makers must face lawsuits related to Zantac. The judge believes that the evidence that Zantac causes cancer is legitimate and the jury has the right to hear this evidence. This ruling is in sharp contrast to a federal judge in Florida in 2022 who dismissed related lawsuits on the grounds that the evidence of cancer was unreliable.

Citigroup pointed out in its report to clients that the market may be concerned about this ruling. Analyst Peter Verdult said that although this is a procedural decision, it puts GlaxoSmithKline at risk for more than 70,000 cases, and Citigroup estimates that the total settlement cost of Zantac could be as high as $3 billion.

GlaxoSmithKline said in a statement that it will appeal the ruling and emphasized that the ruling contradicts the federal court's evaluation. The company also pointed out, "The ruling does not mean the court agrees with the plaintiff expert's scientific conclusions or establishes liability." GlaxoSmithKline has always maintained that Zantac does not cause cancer.

It is worth noting that GlaxoSmithKline announced in February that it had reached a settlement in the United States regarding its popular GERD drug Zantac. The company has reached a confidential settlement with the plaintiff Boyd/Steenvoord to resolve the case scheduled to be heard in California on April 2.

Former Zantac users in the lawsuit claim that the active ingredient of the drug, ranitidine, degrades under certain conditions and generates a potential carcinogen called NDMA. GlaxoSmithKline and other defendant companies have denied these allegations.

GlaxoSmithKline stated that the settlement agreement "reflects the company's desire to avoid distracting attention from prolonged litigation." The company will continue to defend the safety of its products and seek legal ways to resolve these lawsuits.