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The Pulse of the Pharmaceutical Industry

Bayer CEO backs group’s diversified structure

Written by: | | Dated: Friday, November 2nd, 2018


* CEO says he sees no change that would justify a break up

* Analysts have called for sale, separation of divisions

* CEO says optimistic about recovery at consumer unit in H2


By Tina Bellon


ST. LOUIS, MO, Nov 2 (Reuters) – Bayer’s chief executive reaffirmed his support for a corporate structure made up of healthcare, crop science and animal health businesses, after analysts called for a breakup to shore up its flagging share price.

Shares in drugmaker Bayer, which bought Monsanto for $63 billion, have lost more than 25 percent since a U.S. jury in August found its glyphosate-based weedkillers responsible for a man’s terminal cancer, with more than 8,700 plaintiffs also seeking damages.

“We have announced our strategy in September 2014, which has not changed to date,” Chief Executive Werner Baumann told journalists in St. Louis at the former Monsanto headquarters where Bayer’s seed business is now based.

“As before, we have animal health, pharmaceuticals, plant (science) and consumer (health). In terms of profitability, the individual divisions can hold their own against stock-market listed companies,” he said.

If there were significant changes in the results or the attractiveness of the businesses, management would have to look into it, “but we are not seeing that here,” he added.

Baumann said he would unveil “measures to enhance group performance” at the group’s Dec. 5 capital markets day. He also plans to give investors a strategic update and issue 2022 targets.

Analysts at Bernstein Research and at brokerage Baader Helvea last month suggested in separate notes that Bayer should sell its Animal Health unit, which could be valued at up to 7 billion euros ($8 billion), and separate Crop Science from the remaining Healthcare businesses to shore up Bayer’s share price.

“You don’t have to believe everything that’s being written,” Baumann said, when asked about the notes.

Bloomberg last month cited sources as saying that Bayer, the inventor of aspirin and the maker of Yasmin birth control pills, was considering strategic options for the Animal Health unit.

Bayer in 2014 decided to separately list its plastics business, now known as Covestro, and to gradually sell the shares to focus on life sciences, with the genetics behind human, animal and plant biology as a common denominator.

Baumann also said that Bayer’s consumer care products business, with brands including Coppertone sun screen and Dr. Scholl’s foot care products, was improving.

“We are optimistic, as regards the recovery of the consumer business in the second half,” he said. The unit failed to stem falling sales in the second quarter as U.S. consumers switched from drugstores to online shops to seek cheaper products.

Bayer is the only major drugmaker with a farming supplies business, while healthcare rivals have pursued deals to focus rather than diversify their businesses.

Pharma majors Pfizer and Eli Lilly have successfully floated their veterinary medicine units on the stock market as independent entities.


($1 = 0.8794 euros)


(Writing by Ludwig Burger Editing by Alexandra Hudson)


Reuters source:

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