German union will resist any plan to split up Bayer

Michael Vassiladis, chairman of the IG BCE union

One of Germany’s main trade unions has pushed back against any future break-up of pharmaceutical and agrochemicals giant Bayer, claiming such a move would put thousands of domestic jobs at risk.

The IG BCE union – which represents more than 600,000 workers in areas like the chemicals, mining, energy, and waste sectors – says that disrupting Bayer’s current structure would wreak havoc with its ability to invest in innovation and lead to job losses and poorer working conditions, not only within the company, but also in the wider economy.

The comments, made at an IG BCE press conference by chairman Michael Vassiliadis (pictured above), come just a few weeks after Bayer’s new chief executive, Bill Anderson, launched a “re-design” of Bayer, currently labouring under high levels of debt and lacklustre cash generation, along with the overhang of litigation relating to claims that its Roundup herbicide can cause cancer.

Anderson took over as CEO of Bayer on 1st June last year, replacing Werner Baumann, who had held the role since 2016, but came under pressure after spearheading the $63 billion acquisition of agrochemical company Monsanto, which exposed the group to the multibillion-dollar Roundup litigation.

Bayer’s problems have been made more acute by some setbacks in the company’s flagship pharma division, notably the late-stage failure last year of new anticoagulant candidate asundexian in a trial involving patients with atrial fibrillation, a key indication for the drug. The unit, which generates almost half of group revenues, is also facing the loss of patent protection on two of its best-selling drugs – anticoagulant Xarelto (rivaroxaban) and ophthalmic drug Eytlea (aflibercept) – from 2026.

Anderson has said he plans to retain only what is essential for Bayer’s mission, and get rid of everything else, leading to speculation that separating the group’s three main constituent parts – pharma, consumer health, and agrochemicals – may be on the cards. He is due to decide on his plans for the group in the coming weeks.

Splitting up the group is seen by some industry observers as a good way to unlock value within Bayer, and would be very much in keeping with a prevailing trend among big pharma to spin out non-core assets. GSK and Johnson & Johnson have both parted company with their consumer health divisions, for example, and Sanofi has also said it is planning such a move.

According to the IG BCE, if Bayer goes down the same route, it could leave the resulting independent companies vulnerable to takeover and raise the risk that they will shift their attention away from Germany.

The trade union is also unconvinced by Anderson’s plan to strip out layers of middle management across the group and is seeking negotiations with Bayer to try to discuss its concerns.

16 January, 2024