GSK/Zantac: heartburn treatment avoids legal remedies
It rarely ends well when a company has an apparent open-ended liability. Finance directors and analysts have routinely and massively underestimated the costs. Instances range from BP’s Deepwater Horizon oil spill to Danske Bank’s embroilment in alleged money laundering and Philips’ agonies over a sleep apnoea device.
The corollary is the market’s willingness to reinstate value when a financial threat diminishes. Investors added €10bn to GSK and Sanofi’s combined market worth on Wednesday following a US legal ruling. A judge threw out claims related to Zantac, a heartburn medication allegedly linked to cancer.
Judge Robin Rosenberg ruled that scientific evidence provided by the claimants was flawed. If other courts share this view, the two pharma companies could get off lightly.
This story originally appeared on: Financial Times - Author:Faqs of Insurances
