Billions wiped off the value of GSK, Haleon & Sanofi, Flutter shares jump as customers keep betting and markets enjoy that Friday feeling

“Many people consider healthcare companies to be saviours of the world, with their products helping to ease the pain of countless individuals. What’s often forgotten is when something goes wrong with one of their products, the fallout can be catastrophic,” says Danni Hewson, Financial Analyst at AJ Bell.

“Fears of a multi-billion-dollar lawsuit for the companies involved with recalled heartburn drug Zantac have wiped billions off the value of GSK, Haleon and Sanofi this week. Investors fear they will have to shell out big bucks if found guilty of failing to properly warn users about health risks, with allegations that Zantac causes cancer.

“Now comes the really hard part, with the drug companies having to convince investors, the public and the courts they are not guilty.

“It’s given GSK spin-off Haleon a terrible start to life as a standalone business, with its share price having plummeted in recent days. Haleon says it isn’t party to any of the Zantac claims, yet GSK has served it with notice of potential claims in relation to liabilities connected to over-the-counter Zantac products.

“With the first personal injury case going to court later this month, the healthcare companies involved will have already prepared their defence and GSK implies that the accusations do not tally with scientific consensus to date.

“It is worth remembering this is not ‘new’ news. Regulators and experts have been looking into any links between Zantac and cancer for years, and indeed the risks were flagged in Haleon’s stock market prospectus. However, it goes to show most investors don’t bother to read the small print, so they’ve been caught off guard after the potential liabilities hit the news.”

Markets, Flutter Entertainment and Watches of Switzerland

“It’s always welcome to see green figures flashing on the screen rather than red ones, and that’s what we had on Friday with gains from the FTSE 100 in the UK, the DAX in Germany, the CAC 40 in France and the IBEX 35 in Spain.

“Flutter Entertainment took the top slot among the FTSE risers, with the shares jumping after the company said there were no signs of consumers betting less – something the market had been fearing given the cost-of-living crisis. This reinforces the idea that people will be happy to keep betting in the hope of winning big during more difficult economic times.

“Next week’s diary has plenty of things to keep investors on their toes, even though a lot of people will be sitting on the beach rather than staring at their share price charts.

“Tuesday brings the latest UK jobs figures, followed a day later by inflation numbers. Then on Friday we have the latest insights into UK consumer confidence. All of these figures on the state of the UK economy have the potential to influence share price movements.

“If Flutter says the cost-of-living crisis hasn’t dented gambling demand, investors will be hoping the same applies for luxury goods. Watches of Switzerland gives its latest numbers on Tuesday and this could be a make-or-break update. Its typical customer is affluent and may be less affected by the rising cost of living. However, there have been reports of weakness in the Chinese luxury goods market which has a negative read-across to the UK and US where Watches of Switzerland is focused.”

These articles are for information purposes only and are not a personal recommendation or advice.