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Bayer AG plans to cut 12,000 jobs and withdraw from its animal health sector to appease Wall Street, which has punished the company for the flood of lawsuits following the takeover of Monsanto Co. by $ 63 billion
A German company announced a series of changes, including the exit of solar products and foot care segments, which would boost its pharma and agricultural business. The cuts, of which a significant number in Germany – where dismissals are politically sensitive – account for around 10% of the workforce. Shares fell 2.3% at 17 hours. in the Frankfurt trade, wiping out the initial gains after the announcement.
Bayer is under increasing pressure to prove that his new model makes sense. The agreement with Monsanto has made it the world's largest manufacturer of agricultural chemicals and seeds, with large pharmaceutical and consumer health units under one roof.
Investors are still not convinced. Shares have fallen after the announcement and the closing of the acquisition, and the market value of Bayer has dropped by some 30 billion euros ($ 34.1 billion) since August, when a California jury 'is against his signature, the Weedkiller Roundup, claiming that it could have caused a gardener's cancer.
"Today's decisions have not been made necessary by the recent acquisition, and certainly not by a glyphosate dispute in the United States," said Werner Baumann, chief executive a telephone conversation with reporters, evoking Roundup's chemicals. compound. "Absolutely nothing to do with that."
Some investors may be disappointed with the short-term cost of restructuring, the first strategic reorganization since the conclusion of the agreement with Monsanto. Bayer's earnings targets for fiscal year 2019 are lower than badysts' forecasts surveyed by Bloomberg. Nevertheless, "they delivered what everyone was hoping for," said Ulrich Huwald, an badyst based in Hamburg at Warburg Research GmbH. "It's a good package, at first glance."
Of the 12,000 job cuts, half will likely come from corporate and ancillary functions, another third will be devoted to crop science as as Monsanto integrates, Bayer said. An additional 1,250 jobs will probably come from pharmaceuticals, including 350 at a new factory in Wuppertal, Germany. Another 1,100 will be cut in the Bayer Consumer Health Division. Baumann has repeatedly refused to say how many reductions would be attributable overall to Germany.
"A lean organization will help us become more responsive to changing markets and increase our agility."
Bayer Animal Health Activities Probably According to Wimal Kapadia, a London badyst at Sanford C. Bernstein & Co., the group sells veterinary products for pets and livestock, and its product line the best-selling is Advantage small animal flea treatment.
After the stock's fall of about 40% in the past year, Bayer has been faced with growing questions about the competitiveness of its disparate units. Restructuring and cost reductions were widely expected before the Investor Day meeting in London on Wednesday. By leaving peripheral companies such as animal health, Bayer wants to devote its resources to central units such as pharmaceuticals, where it has to catch up with its competitors.
The pharmaceutical unit will lose the patent protection of its two best-selling drugs over the next five years, and there are few new drugs to compensate. The consumer health unit that she strengthened four years ago with brands such as Claritin is limping and is facing the third year of declining sales.
The company announced write-downs and write-offs of 3.3 billion euros from the consumer. health and pharmacy division for the fourth quarter. The expected synergies since the takeover of Monsanto are expected to increase more than twice, or € 2.6 billion per year by 2022.
Bayer will invest more in research partnerships with external groups, said Baumann. But the company will also look for partners with experimental drugs already close to the market, he said. The licensing agreement between Bayer and Loxo Oncology Inc. last year, which gave it its most promising new drug against cancer, shows how expensive late-stage drug partnerships can be.
million. Baumann said the company was particularly interested in its core areas of hemophilia and hematology, cardiology, women's health and cancer. "We certainly have the financial strength," he said.
Attached Media
Dieter Weinand, Head of Bayer AG Pharmaceutical Unit, Holds Press Conference While Cancer Funding Increased
Head of Bayer Pharmaceutical Unit AG, Dieter Weinand, Holds a Press Conference Increasing Funding for Cancer Control
Bayer: Animal Health Slowing Growth in the Last Quarter
Updates with CEO Commentary in Fourth Paragraph
To contact the journalists about this story: Tim Loh in Munich at [email protected]; Naomi Kresge in Berlin at the address [email protected] To contact the publisher in charge of this story: Eric Pfanner at [email protected] address
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