Monsanto Troubles

Bayer Group consists of three divisions, Pharmaceuticals, Consumer Health and Crop Science, the latter weighing heavily ever since the group acquired Monsanto, an American agrochemical and agricultural biotech, for USD 63 billion in 2018. Sales were up by five percent in Bayer’s pharma division in 2022, to EUR 19.25 billion.

What seemed like a good deal at the time as Monsanto was then bringing in USD 14 billion a year, turned sour when two months after the acquisition, an American jury awarded USD 289 million – later reduced – to a groundskeeper who claimed that one of the firm’s products, Roundup, had given him cancer and that the company had not been clear about tits dangers. It was just one of a string of continuing legal proceedings and settlements.

The object of the lawsuits, which escalated to 68,800 in number by February 2021, was glyphosate, the active ingredient in Roundup that was classified as a “probable carcinogen” by the World Health Organization in 2020.

In the fourth quarter of 2022, the Bayer group, including all of its divisions, recorded an overall revenue increase of 8 percent. However, profits for the period fell from EUR 1.16 billion to EUR 611 million due to the lawsuits settled in 2022 over Roundup. Meanwhile, share prices have also been plummeting.

Group CEO Werner Baumann who has been at the helm for seven years and led the Monsanto purchase has in part been held responsible by investors.

 

Commercial Rethink and CEO Change

Bill Anderson’s mission is clear: enable Bayer to realize its full potential and create sustainable value for our shareholders, farmers, patients, consumers, employees, and all stakeholders of the company

Norbert Winkeljohann, chairman of the Supervisory Board of Bayer AG

Amid pressure it was already under from investors, Bayer has also felt the combined strains of inflation and several countries’ cost containment measures. Stefan Oelrich, head of the group’s pharmaceuticals arm, announced that Bayer would be moving its commercial focus away from Europe to China and the US, saying that Europe had become “innovation unfriendly,” and its countries’ policies make it difficult to generate adequate returns on investments.

This announcement at the JP Morgan conference in January, along with a positive pharma pipeline forecast that included the rise of its peak sales projections for Kerendia, asundexian (both cardiovascular treatments), Nubeqa (prostate cancer) and elinzanetan, a hormonal treatment, with peak sales expected to reach USD 12.9 billion, boosted Bayer’s share price by 6.5 percent.

However, the group proceeded with a CEO replacement. After a selection process that began in mid-2022, Bill Anderson was chosen as the new CEO and will be coming to Bayer in June following a four-year tenure as Roche Pharma’s chief. Norbert Winkeljohann, chairman of the Supervisory Board of Bayer AG said that Anderson had an “outstanding track record of building strong product pipelines and turning biotech breakthroughs into products” and according to Bayer, he was involved in the development and launch of 25 new drugs, including 15 blockbusters.

Winkeljohann claimed that “Bill Anderson’s mission is clear: enable Bayer to realize its full potential and create sustainable value for our shareholders, farmers, patients, consumers, employees, and all stakeholders of the company,” but as of yet the details of his mission have not been revealed.

The onboarding of a new CEO with a strong pharma background combined with the troubles still riddling the group’s agricultural division have led to speculation about a possible split between the group’s three divisions although there has been no indication from the company that this could be the case.

 

New R&D Direction

As part of our strategy, we are refining our early innovation framework to concentrate on areas where we anticipate the best opportunities for delivering differentiated, high-value breakthrough medicines to patients

Anna Koch, Bayer spokesperson

Bayer has been vocal about a change in its R&D focus. Earlier this month, the company said it would be centring its efforts on four core therapeutic areas: oncology, cardiovascular, neurology and rare diseases/immunology, and moving away from women’s health. “As part of our strategy, we are refining our early innovation framework to concentrate on areas where we anticipate the best opportunities for delivering differentiated, high-value breakthrough medicines to patients,” said spokeswoman Anna Koch.

Bayer had acquired a large women’s health business under the 2006 takeover of Schering Pharma and is the maker of Yasmin brand birth-control pills and the Mirena intrauterine device. The firm said it would continue to pursue the development of its menopausal treatment, elinzanetant, one its most promising pharma products.

Stefan Oelrich claimed that a string of recent deals, like the acquisition of US biotech Asklepios BioPharmaceutical, were aimed at broadening the company’s cell and gene therapy base and have resulted in a more predominant role for neurology, rare diseases and immunology on its pipeline.