Jim Cramer on Super Micro Computer and Other Stocks

7. GSK plc (NYSE:GSK)

Number of Hedge Fund Holders: 36

Cramer talked about GSK plc (NYSE:GSK) when a caller mentioned the company’s settlement over its drug, Zantac. He said:

“Yeah, that was huge. I’ve been waiting for that. I was hoping for that. They got the settlements behind them. Now we’re moving on. GSK goes higher.”

The company is a big name in the pharmaceuticals sector and specializes in the research, development, and production of vaccines and both specialty and general medicines aimed at preventing and treating various diseases. One of its products, Zantac, gained widespread recognition after receiving US approval in 1983. Within a relatively short period, Zantac became the top-selling drug globally, achieving annual sales exceeding $1 billion.

However, Zantac’s legacy has taken a complicated turn. In 2020, US regulatory authorities made the decision to withdraw Zantac from the market due to concerns that its active ingredient, ranitidine, could convert into a potentially cancer-causing substance when subjected to heat. The regulatory action triggered a wave of legal challenges against the manufacturer of the drug, leading to tens of thousands of lawsuits.

In response to the growing number of claims, on October 9, GSK plc (NYSE:GSK) announced plans to allocate up to $2.2 billion (£1.68 billion) to settle a significant number of these lawsuits in the US, which include allegations that the discontinued formulation of Zantac was linked to cancer. The company disclosed that it has reached agreements with ten law firms representing approximately 80,000 claimants, covering 93% of the outstanding cases.

In addition to the settlements related to Zantac, GSK plc (NYSE:GSK) will pay $70 million to resolve a whistleblower complaint from a laboratory that accused the company of defrauding the US government by not fully disclosing the potential cancer risks associated with the drug. Despite the settlements and the legal battles, the company has maintained that it does not admit any wrongdoing in these matters.