Bayer Eyes Break-Up, Management Cuts on Disappointing Q3 Results

Bayer NJ Headquarters/iStock, JHVEPhoto

Pictured: Bayer headquarters in New Jersey/iStock, JHVEPhoto

Bayer is looking to shake things up with some major company changes after reporting “not acceptable” cash flow for the third quarter on Wednesday. 

“We’re not happy with this year’s performance,” CEO Bill Anderson said in a statement accompanying third-quarter results that were down against the previous year, while emphasizing a need for redesigning the company to focus only on what’s essential for its mission of “health for all, hunger for none.” 

As part of a significant, unspecified reduction in its workforce, Bayer will remove “several layers” of management, according to Wednesday’s announcement. The goal is to shift the majority of decision-making from the managers to the people doing the work, Anderson said, adding that 12 layers of management between him and the company’s customers were “simply too much.” 

The company reported nearly 50 billion euros, or $53.3 billion, in revenue with what Anderson called “zero cash flow.” Third-quarter sales of Bayer’s pharmaceuticals were level compared to last year at $4.8 billion. Quarterly core earnings per share decreased by 66.4% year-over-year. The company noted near-double sales growth for its cancer drug Nubeqa, with greater than double percentage growth for its chronic kidney disease treatment Kerendia. 

Bayer confirmed its updated 2023 guidance and will rely on a strong fourth quarter to get the company there. However, a “soft growth outlook and continued challenges” are anticipated for 2024. 

As part of its redesign, Bayer is reviewing its structural options, considering a separation of either its consumer health or crop science businesses. At this point they’ve ruled out splitting the company into three businesses at once but may still split all three in a two-step process.  

“We are not wedded to one structure,” Anderson said. “We will pursue the best course to ensure maximum value creation.” 

Anderson came to Bayer from Roche in June 2023, after his predecessor faced heavy criticism for not dealing with a continued share price slump. The lawsuits over the company’s Roundup weed killer are a heavy weight on the stock, which is down around 13% year-to-date.  

Separating its consumer health arm would certainly follow an industry trend. Last month, Sanofi announced plans for a spin-off, abandoning its operating profit margin growth goal for 2025. Earlier this year, Johnson & Johnson launched Kenvue for its consumer health business.  

Further details on Bayer’s structural reorganization are to be announced in March 2024 at the company’s Capital Markets Day and annual report publication. 

Kate Goodwin is a freelance life science writer based in Des Moines, Iowa. She can be reached at kate.goodwin@biospace.com and on LinkedIn.   

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