Bayer CEO pulls back from breakup of ‘badly broken’ group

Bayer chief executive Bill Anderson pulled no punches in his assessment of the company at its annual results update, saying it is “badly broken” by patent losses, litigation, debt levels, and bureaucracy.

The net result of that is that Bayer can’t meet the desires of an increasingly vocal group of investors who are seeking a break-up of the group into its constituent pharmaceutical, consumer health, and agrochemical parts.

“At first glance, there are really valid arguments to make a change,” said Anderson. “A pure-play structure has become the norm in our industries – it’s certainly the simplest approach. But you always have to consider where you’re coming from and, today, these four broken areas severely limit our access to structural options.”

He added: “Our answer is not now, and this shouldn’t be misunderstood as never. Of course, we’ll keep an open mind.”

The CEO, who took the helm of Bayer last June, said he hopes to be able to solve the four business challenges within the next two to three years, helped by a restructuring drive that aims to strip out layers of management, reduce annual costs by around €2 billion ($2.2 billion) by 2026, pay down debt, and build the pharma pipeline.

His comments came just after Bayer announced that it had licensed European rights to BridgeBio’s acoramidis for transthyretin amyloid cardiomyopathy (ATTR CM) in return for upfront and near-term payments of $310 million.

Anderson said that pharma is “progressing very well on an important rebuild,” but there is a lot more to do, and he warned investors not to expect a big spend on late-stage assets, saying: “I’ve seen companies try to get through patent cliffs by purchasing phase 3 assets. That’s a very expensive game with a lot of risk and, frankly, the industry track record on these sorts of deals is poor.”

The pharma division is facing some difficult years with anticoagulant Xarelto (rivaroxaban) and ophthalmic disease therapy Eylea (aflibercept) facing a loss of exclusivity, as well as the ongoing impact of its $63 billion acquisition of agrochem giant Monsanto, which exposed it to litigation claiming its glyphosate-based herbicide Roundup causes cancer.

In its fourth-quarter update, Bayer reported 2023 full-year sales fell 6.1% to €47.6 billion ($51.8 billion), and said it is anticipating another 9% fall this year on generic competition and pricing pressure in the agrochem division. Debt stood at €34.5 billion at the end of 2023, down around €4 billion from where it was in Bayer’s third-quarter update.