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MARKET REPORT: Zantac deadline ruling a reprieve for drug giants

MARKET REPORT: Shares in GSK and Haleon get a boost after rare good news over legal dispute over former heartburn drug Zantac

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Shares in GlaxoSmithKline (GSK) and its spinout Haleon received a boost following rare good news about a legal dispute over the pharmaceutical giant’s former heartburn drug Zantac.

The once-popular drug in the US and UK, developed by GSK, was pulled from shelves in 2019 over fears it contained a cancer-causing chemical.

The incident has led to more than 2,000 cases being filed in the US, raising fears that pharmaceutical giants who sold it could be held liable for paying hefty damages.

Legal dispute: Zantac was pulled from shelves in 2019 over fears it contained a cancer-causing chemical

Legal dispute: Zantac was pulled from shelves in 2019 over fears it contained a cancer-causing chemical

Haleon, which spun off from GSK last month, could also hook up after the drugmaker said it could ask for payments to help settle any claims.

But GSK rose 0.3 percent, or 4.4p, to 1394.8p after analysts at investment bank Citi emphasized that a recent ruling by a US judge overseeing the lawsuits could mean 70,000 plaintiffs could be forced out. to give up their claims because of the statute of limitations, which sets a time limit within which a person may take legal action.

The rating also increased Haleon by 1 percent, or 2.7p to 266.3p. Citi said that if its predictions were correct, the number of plaintiffs in lawsuits would be “significantly lower” than initially feared.

If that happens, shares in GSK and French rival Sanofi, which also sold Zantac, could rise more than 40 percent. Citi’s estimates will come as a relief to both GSK and Haleon – whose shares have been battered in recent weeks.

The FTSE 100 fell 0.7 percent or 52.43 points to 7427.31 while the FTSE 250 fell 0.5 percent or 88.15 points to 19,169.72. Markets managed to maintain cautious optimism despite the sharp rise in Ofgem’s energy price cap, which will see millions of British households pay 80 percent more bills from October.

Things were less optimistic on the continent with German consumer confidence at an all-time low as fears of a recession mounted.

1661549425 836 MARKET REPORT Zantac deadline ruling a reprieve for drug giants

1661549425 836 MARKET REPORT Zantac deadline ruling a reprieve for drug giants

‘Germany is particularly concerned about rising energy costs and is mainly dependent on external producers, making the situation more dire. People are saving at the highest level in 11 years, showing that consumers are taking tangible precautions in the worst case scenario,” said Hargreaves Lansdown analyst Sophie Lund-Yates.

One beneficiary of the impending price cap hike turned out to be British Gas owner Centrica, up 0.6 percent, or 0.52p, to 81.96p.

Oil inventories came to the fore as Brent crude hovers around $100 a barrel amid forecasts that global supply will remain limited as possible production cuts by the OPEC+ cartel wipe out an expected surge in exports from Iran. Shell rose 0.6 percent or 13.5 pence to 2,334 pence, but BP fell 0.4 percent or 1.65 pence to 457.8 pence.

Holiday Inn owner Intercontinental Hotels fell 4.4 percent or 216p to 4750p after analysts at investment bank JP Morgan downgraded its stock rating from “overweight” to “neutral” and lowered its price target from 6100p to 5900p, saying they saw “limited upside” . ‘ for the shares now most hotels had reopened.

Premier Inn owner rival Whitbread was also trimmed by JP Morgan who lowered his target to 4100p from 4150p. Whitbread fell 1.8 percent, or 47p, to 2507p.

Mid-cap fund manager JTC revealed plans to acquire New York Private Trust Company, which provides services to wealthy people. JTC fell 0.3 percent, or 2p, to 759p.

Meanwhile, video game maker Tinybuild is to buy rival Konfa Games for up to £4.6 million in a cash and stock deal, and the intellectual property portfolio of Bossa Studios, maker of titles such as I Am Fish, for £2.5 million. Tinybuild rose 0.4 percent, or 0.5p, to 115.5p.

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