We Are Optimistic for the Business Overall, Says Bayer CEO
Bayer AG plans to cut 12,000 jobs and exit its animal health business in an effort to mollify Wall Street, which has punished the company over the tidal wave of lawsuits that came alongside the US$63 billion takeover of Monsanto Co.
The German company announced a rash of moves, including exiting the sun-care and foot-care segments, that it said would boost its core pharma and agricultural businesses. The cuts, including a significant number in Germany -- where layoffs can be politically sensitive -- are equal to about 10 per cent of the workforce.
The shares dropped 2.06 per cent as of 3:23 p.m. in Frankfurt trading, erasing initial gains after the announcement.
The company has lost some 30 billion euros (US$34.1 billion) in market value since August, when a California jury ruled against its signature weedkiller Roundup, saying it may have caused a school groundskeeper’s cancer. At least another 9,000 other lawsuits are pending.
After the stock fell about 40 per cent over the past year, Bayer has faced growing questions about whether it can remain a conglomerate. With no obvious synergies between divisions that sell weedkillers, cancer drugs and pest-repellent collars for cats, a change was widely expected ahead of an investor’s day meeting in London on Wednesday.
The company’s health segments also face challenges. The pharma unit will lose patent protection for its top two blockbuster drugs in the next half-decade, and there’s little in the way of new medicines to compensate. The consumer-health unit it beefed up four years ago with brands like Claritin has been limping along and is facing its third year of declining sales.
The company announced non-cash impairments and write-offs totaling 3.3 billion euros in the consumer health and pharmaceuticals division for the fourth quarter. It’s also looking to more than double -- to 2.6 billion euros a year by 2022 -- the expected synergies it has predicted from the takeover of Monsanto.