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Bayer to strengthen core life science businesses

Group plans to exit Animal Health business and certain Consumer Health brands.

November 29, 2018

2 Min Read
Bayer to strengthen core life science businesses

The Bayer Group announced Nov. 29 that it will strengthen its core life science businesses through a series of portfolio, efficiency and structural measures designed to enhance productivity and innovation while significantly improving competitiveness.

In a Nov. 29 meeting, the supervisory board of Bayer AG discussed the plans laid out by the board of management and unanimously expressed its support. Through these measures, the company said it is "paving the way for sustainable business success" in long-term growth markets.

“We have made very good progress with Bayer’s strategic development in recent years. As we now proceed with these measures, we are laying the foundation to sustainably enhance Bayer’s performance and profitability,” said Werner Baumann, chairman of the Bayer AG board of management. “With these measures, we are positioning Bayer optimally for the future as a life science company.”

Bayer said it intends to advance the portfolio measures in 2019; it intends to exit the Animal Health business and is assessing available options. Although this unit offers growth options in an attractive market, Bayer said it intends to allocate the investment resources necessary to support Animal Health to the core businesses of Pharmaceuticals, Consumer Health and Crop Science.

At Consumer Health, the company has initiated measures to enable the division to catch up to market growth in the coming years and improve profitability. These measures include a planned exit from product categories that have more favorable development potential outside of Bayer. In addition to the previously announced divestment of prescription dermatology products, Bayer will review its strategic options in the coming months with a view to exiting the sun care (Coppertone) and foot care (Dr. Scholl’s) product lines.

Measures to enhance competitiveness, innovation

In addition to the planned portfolio measures, Bayer said it also intends to significantly improve its cost structure by further strengthening innovation and productivity, accelerating access to future technologies and further enhancing competitiveness and profitability. In this context, the company will seek to achieve greater efficiency across its supporting functions and services.

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.

These measures will include a reduction of around 12,000 of 118,200 jobs worldwide, a significant number of them in Germany, Bayer said, noting that details will be worked out in the months ahead.

“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 accounting for over two-thirds of this figure and capital expenditures for just under one-third,” Baumann said.

Bayer’s corporate strategy, financial targets and capital allocation priorities will be outlined Dec. 5 at the Capital Markets Day in London, U.K.

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