Bayer restructures business to consolidate in pharma market

Overhaul to leave thousands jobless as German group is set to close animal business and sell healthcare portfolio

© Bayer

German pharmaceutical group Bayer has announced plans to overhaul its portfolio in a move to focus resources on growing its business in the pharma and agro sectors.

The strategy includes exiting the animal health business and the sale of its Coppertone sunscreen and Dr. Scholl's foot-care product lines. The German group also plans to divest a 60% stake in the site services provider Currenta.

The announcement comes months from closing its US$63 billion takeover of agro-chemical giant Monsanto.

"Including the synergies expected from the acquisition of Monsanto, Bayer anticipates annual contributions of 2.6 billion euros from 2022 on as a result of its planned efficiency and structural measures," the company explained in a statement.

These measures, Bayer said, will include a reduction of around 12,000 of 118,200 jobs worldwide, a significant number of them in Germany. Details will be announced in the coming months.

Werner Baumann, chairman of Bayer's board of directors, said: “Through the end of 2022 alone, we aim to invest a total of around 35 billion euros in our company’s future, with research and development (R&D) accounting for over two thirds of this figure and capital expenditures for just under one third."

Pharma focus

In a move to advance its portfolio, Bayer intends to exit the animal health business and is assessing available options. "Although this unit offers growth options in an attractive market, Bayer intends to allocate the investment resources necessary to support Animal Health to Bayer’s core businesses of Pharmaceuticals, Consumer Health and Crop Science," read the statement.

Bayer said strengthening the focus on external innovation is an essential step in the plan for its Pharmaceuticals Division. This includes the successful continual development of the R&D pipeline.

The resources freed up through the reduction of internal capacities, Bayer said, are to be directed toward strengthening investment in collaborative research models and external innovations.

For example, within the hemophilia business, the introduction of a number of new products has led to a significant increase in competition. To remain competitive in this segment, Bayer has decided not to utilise the factor VIII facility it has built in Wuppertal, Germany, and to focus all recombinant factor VIII production at the Berkeley site, in the US.

Job cuts

Bayer said the planned reduction of around 12,000 jobs worldwide by the end of 2021 is accounted for by the various measures as follows:

  • Pharmaceuticals: approximately 900 jobs in R&D and around 350 positions in connection with the factor VIII facility in Wuppertal
  • Consumer Health: roughly 1,100 jobs associated with the reorganisation
  • Crop Science: around 4,100 positions as the result of integrating the acquired agriculture business
  • Corporate Functions: a further 5,500 to 6,000 jobs across Corporate Functions, supporting functions, Business Services and country platforms

“These changes are necessary and lay the foundation for Bayer to enhance its performance and agility. With these measures, we aim to take full advantage of the growth potential for our businesses,” said Baumann. “We are aware of the gravity of these decisions for our employees. As in the past, we will implement the planned measures in a fair and responsible way,” he concluded.

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