The Food and Drug Administration on Monday approved Merck‘s new vaccine designed to protect adults from a bacteria known as pneumococcus that can cause serious illnesses and a lung infection called pneumonia, the drugmaker said.

Merck’s shot, called Capvaxive, specifically protects against 21 strains of that bacteria to prevent a severe form of pneumococcal disease that can spread to other parts of the body and lead to pneumonia. It’s the first pneumococcal conjugate vaccine designed specifically for adults and aims to provide broader protection than the available shots on the market, according to the drugmaker.

Healthy adults can suffer from pneumococcal disease. But older patients and those with chronic or immunocompromising health conditions are at increased risk for the illness, especially the more serious or so-called “invasive” form. 

Invasive pneumococcal disease can lead to meningitis, an infection that causes inflammation in the area surrounding the brain and spinal cord, and an infection in the bloodstream called bacteremia. 

“If you have chronic lung disease, even asthma, you have a higher risk of getting sick with pneumococcal disease, and then being in the hospital, losing out on work,” Heather Platt, Merck’s product development team lead for the newly cleared vaccine, told CNBC in an interview. “Those are things that have a real impact on adults and children, their quality of life.”

Around 150,000 U.S. adults are hospitalized with pneumococcal pneumonia each year, Platt said. Death from the more serious form of the disease is highest among adults 50 and above, Merck said in a release in December.

Even after the FDA approval, the company’s single-dose vaccine won’t reach patients just yet. An advisory panel to the Centers for Disease Control and Prevention will meet on June 27 to discuss who should be eligible for the shot.

Platt said Merck will support the committee’s decision and is ready to supply the vaccine by late summer. 

Some analysts view Capvaxive as a key growth driver for Merck as it prepares to offset losses from its blockbuster cancer drug Keytruda, which will lose exclusivity in the U.S. in 2028. 

The market for pneumococcal conjugate vaccines is currently around $7 billion and could grow to be worth more than $10 billion over the next several years, according to a November note from Cantor Fitzgerald analysts. 

Merck’s newly approved shot could boost its competitive edge in that space, which includes drugmaker Pfizer. Merck currently markets two pneumococcal shots, but neither is specifically designed for adults. For example, the company’s existing shot Vaxneuvance is approved in the U.S. for patients 6 weeks of age and older.

Pfizer’s single-dose pneumococcal vaccine, Prevnar 20, is the current leader in the market for adults. But Merck expects its new shot to capture the majority of market share among adults, Platt said. 

“We do expect there to be rapid uptake of” Capvaxive, she said, adding that the company is confident that data on the shot will “really resonate” with clinicians and policymakers. 

Merck’s pneumococcal vaccine protects against eight strains of the bacteria that are not included in any other approved shot for the disease. Those eight strains account for roughly 30% of invasive pneumococcal disease cases in patients 65 and above, according to a release from Merck, citing CDC data from 2018 to 2021. 

The 21 strains included in Merck’s shot account for roughly 85% of invasive pneumococcal disease cases in adults 65 and above, Merck, citing the CDC data. Meanwhile, Pfizer’s Prevnar targets strains that only account for roughly 51% of cases in that age group, based on the same CDC data. 

The FDA’s approval is partly based on Merck’s late-stage trial called STRIDE-3 that pitted the vaccine against Pfizer’s Prevnar 20 in adults 18 and up who had not previously received a pneumococcal vaccine.

Correction: This story has been updated to reflect 150,000 U.S. adults are hospitalized with pneumococcal pneumonia each year.

Shares of GlaxoSmithKline, Sanofi and Haleon sold sharply this week, shedding tens of billions of market value, as investors feared potential US litigation fees focused on the popular heartburn drug Zantac.

This has been a known issue in the background for years, but investor anxiety exploded this week in the run-up to the first scheduled legal action on August 22.

Zantac is the brand name for a drug called ranitidine, which is a drug used to relieve heartburn. It was originally invented and sold by Glaxo as a prescription drug in the 1980s before moving on to over-the-counter medications.

In 2019, regulators launched a safety review amid concerns that the drug contained a possible carcinogen called NDMA, prompting manufacturers to pull it off shelves. By 2020, the US Food and Drug Administration and the European Medicines Agency have requested that all versions of the treatment be withdrawn from the market.

Since then, more than 2,000 cases have been filed in the United States with plaintiffs alleging that Zantac consumption can generate NDMA.

The first trial begins in August. 22 with major cases starting in early 2023.

Litigation is particularly complex because many pharmaceutical companies are involved in drugs.

The drug’s patent expired in 1997, so there are many manufacturers, retailers and distributors of the drug being defendants in the lawsuits.

There have been several OTC rights holders in the United States since 1998, including GSK, Sanofi, Pfizer and Boehringer Ingelheim.

Haleon, the consumer health company that spun off from GlaxoSmithKline last month, is not primarily responsible for the claims, according to the company, but they may be tangentially related.

In response to violent moves in stock prices this week, GlaxoSmithKline, Sanofi and Haleon have all issued statements in their own defense.

Pharmaceutical company shares stabilized on Friday morning.

A GlaxoSmithKline spokesperson said: “The enormous weight of scientific evidence supports the conclusion that there is no increased cancer risk associated with the use of [of] Ranitidine… Suggestions to the contrary are inconsistent with the science and GSK will vigorously defend itself against all baseless allegations.”

A Sanofi spokesperson said: “There is no credible evidence that Zantac caused any of the alleged injuries under real-world conditions, and Sanofi remains fully confident in its defences. Given the strength of our case and the uncertainty about future actions, no emergencies have been established.” “

Haleon’s involvement and possible responsibility are less clear.

Haleon stresses that it is not a party to any of Zantac’s claims, saying that it “never marketed Zantac in any way in the United States” and “is not primarily responsible for any OTC or prescription claims.”

However, according to GSK Mark in its June 1 prospectus, “To the extent that GSK and/or Pfizer assume liability with respect to OTC Zantac, Haleon may be required to indemnify GSK and/or Pfizer” under certain circumstances.

Pfizer was not immediately available for comment when contacted by CNBC on Friday.

“As with all legal outcomes, there is a significant amount of uncertainty,” Credit Suisse’s European pharmaceutical team said in a note. “This is particularly true in this case where four companies have shared ownership of the Zantac rights over time.”

As the brand’s builder, GSK could be on the hook for the bulk of the commitments, rather than OTC manufacturers, according to the team.

Redburn said in a research note that because there are several drug manufacturers in addition to the defendant’s retailers and distributors, this would likely reduce the absolute impact at the company level.

Deutsche Bank’s pharmaceutical research team on Thursday raised its recommendation for Sanofi from “Hold” to “Buy” on the grounds that “Zantac knee-jerk is starting to look somewhat exaggerated.”

The German bank doesn’t think it’s a clear buying opportunity but argues that “to maintain selling at these levels is terrible”.

The team adds, “Both GSK/SAN now appears to present a classic puzzle: they are trapped in worrying about an impending burden of responsibility that they cannot fully assess yet.”

Credit Suisse says this depends on the strength the court sees of any link between NDMA and cancer and any evidence of wrongdoing.

Previous drug settlements ranged from $30,000 to $270,000 per claimant based on evidence of wrongdoing.

There are currently over 2,000 known claimants, but this is expected to increase as trials progress.

For many investors and analysts, this ordeal brings back memories of the saga of the Bayer Roundup.

Soon after Bayer took charge of Monsanto in 2018, lawsuits related to the press report swelled rapidly, ultimately costing Bayer billions of dollars and years of legal and financial uncertainty.

As in the case of Bayer’s acquisition of Monsanto where the risk of litigation was reported to investors prior to the completion of the transaction, GSK indicated that Zantac’s lawsuit represented a major risk to Haleon in its prospectus issued to investors in June.

In the nearly 500-page document, GSK warned, “The group has indemnity obligations in favor of the GSK Group and the Pfizer Group, which may be significant and have a material adverse impact” on the group’s finances.

Contrary to the Bayer report, Zantac has been pulled by regulators around the world. Furthermore, there are currently more than 2,000 claims related to Zantac and other ranitidine products compared to Bayer, which has faced 130,000 cases related to glyphosate.

Deutsche Bank wrote: “We don’t believe the evidence points to this as another glyphosate, but it is very possible that we could see a billion-dollar liability.”