Bayer plans to stay the course despite pressure from investors to separate, CEO says
Amid a flurry of moves by big pharmaceutical companies to secede from their mainstream healthcare businesses, investors in companies resisting change are asking the question: why not us?
Bayer CEO Werner Baumann addressed the elephant in the room on Thursday, Bloomberg reports.
“We will continue on the path of developing our business according to the three pillars we have: pharmaceuticals, crop science and consumer health,” Baumann said at Bloomberg’s New Economy Forum in Singapore.
Company executives recently arrived at the decision, which was supported by the board of directors, Baumann said.
Last week, the world’s largest pharmaceutical and consumer healthcare company, Johnson & Johnson, said it was starting a new business to manage its consumer brands such as Neutrogena, Aveeno, Listerine, Band-Aid, Zyrtec and Johnson’s Baby Powder.
The move came after similar initiatives from other pharmaceutical giants such as Merck, which created Organon, Pfizer, which merged its Upjohn generics unit with Mylan, and GlaxoSmithKline, which is also in the process of going out of business.
The aim is to allow the remaining companies to focus on the highly profitable business of developing and marketing pharmaceuticals.
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Companies in other sectors, such as General Electric and Toshiba, have followed suit.
Founded in 1863, Bayer appears ripe for similar action given the lack of synergy between its broad segments of consumer health, agriculture and pharmacy. But the German conglomerate will hold on, at least for now.
âWhat’s good for one company is not necessarily the right thing for the other company,â Baumann said, quoted by Bloomberg. âThe area we are focusing on is life sciences. If you look at our portfolio today, we are active in three companies. These are pharmaceuticals, crop science and consumer health. All are informed by the life sciences as a platform.
This is not the first time that Bayer has addressed the issue. In August, President Norbert Winkeljohann said the company’s division “would not create value, but destroy it”.
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Investors are increasingly irritated by the way Bayer is running its affairs, and the ongoing Roundup litigation has not helped allay their concerns. In the pharmaceutical segment, the imminent loss of patent protection for its two main products, the blood clot drug Xarelto and the eye treatment Eylea, looms as another major challenge.