For a company that spent the better part of three years with a £20 billion Zantac liability estimate hanging over it, GSK‘s rehabilitation has been more complete and faster than most institutional investors expected when the legal clouds first gathered in 2021 and 2022.
The shares are up 57% over the trailing twelve months — the strongest performance of any major FTSE 100 pharmaceutical — a movement that has compressed the company’s discount to European peers and prompted analysts who were cautious for years to revisit their price targets upward.
The Zantac settlement, announced in October 2024, resolved approximately 93% of US state court cases for up to $2.2 billion — a figure that came in far below the $3.5 billion projection from JPMorgan and the $27 billion worst-case scenario that had genuinely spooked long-term holders.
“The Zantac clouds are lifting, and GSK will likely resolve the few remaining cases quickly,” said Lucy Coutts, investment director at JM Finn, at the time of the settlement — a view that was borne out as the remaining 13 state court cases have progressed without the systemic liability they once threatened.
A federal appeal decision is expected in the first half of 2026, which still carries residual risk, but the quantum of that risk has been dramatically reduced by the settlement and the 2024 Delaware Supreme Court decision to review the lower court’s handling of plaintiffs’ expert evidence, which GSK welcomed as implying a reasonable chance the lower court could be overturned.
The investment case that has replaced the legal overhang is grounded in oncology, specifically the division’s 43% revenue growth in the most recent full year to £2 billion, powered by an 89% increase in sales of Jemperli, the endometrial cancer treatment that has become the most commercially significant pipeline product the company has delivered in a decade.
ViiV Healthcare, the HIV Business in which GSK holds a 78% stake, continues to generate strong and relatively predictable cash flows that underpin the group’s dividend sustainability and fund the clinical pipeline investment that management argues is now the company’s primary competitive advantage.
The headline that professional investors are watching most closely right now is bepirovirsen, a drug that achieved what scientists call a functional cure for chronic Hepatitis B in Phase III trials — an outcome that, if confirmed in regulatory submissions, would address a global patient population of 300 million people, a commercial opportunity that most analysts have not yet fully priced into the stock.
GSK carries £6.7 billion in contingent consideration liabilities, primarily related to its Shionogi partnership, and made £1.3 billion in cash payments against those liabilities in 2025, which consumed roughly 15% of operating cash flow and explains why core margins are expanding while reported net income remains constrained.
Net debt reached £14.5 billion by year-end 2025, up 10% on the prior year, which limits near-term acquisition flexibility and means that any large strategic move — of the kind that Novo Nordisk or AstraZeneca have used to transform their scale — would require either significant leverage or equity issuance.
The question the 57% share price rally has created is whether the re-rating from unloved-but-cheap to fairly-valued-with-visible-growth has now fully run its course, or whether the Hepatitis B pipeline, continued oncology momentum, and the Zantac tail risk finally disappearing can sustain the share price at or above current levels into 2027.