Bayer sets sights beyond aspirin
PHILADELPHIA — Bayer Aspirin has been a fixture on drugstore shelves for decades.
Today, the iconic aspirin has a renewed place in the German-based global giant's corporate strategy. Under chief executive officer Marijn Dekkers since 2010, Bayer AG has more than doubled its stock price since 2012, pared disparate divisions and plans to spin off its plastics unit, called Covestro, by Sept. 15.
As plastics exit the portfolio, the new focus will be on “people, pets, and plants,” through health care and crop sciences. In human health, Bayer will sell everything from suntan lotion to cancer medicine. And don't forget about weeds.
“If you look at species, all of them, from plant to dog to human being, we all share DNA, and that commonality is strikingly apparent when you can sequence the genome,” said Kemal Malik, a top executive for the company who grew up and earned a medical degree in Britain. He is responsible for innovation and the Americas as one of five people on Bayer's board of management, which includes Dekkers as chairman.
The common aspects involve basic survival functions at the cellular level, such as warding off fungal infections. “These are the things that tie Bayer together — the ability to come up with molecules that interfere with cellular processes across living species.”
The plant part of the equation could be in flux, however. Agricultural products giant Monsanto is trying to buy Syngenta AG, but if that $45 billion deal does not go through, Monsanto might be interested in Bayer's crop sciences division.
Bayer's streamlining includes human health care. On June 10, Bayer sold its diabetes testing device unit for $1.15 billion to Panasonic Healthcare Holdings Co., a consortium funded by electronics giant Panasonic and private equity firm Kohlberg Kravis Roberts & Co.
Bayer had $46.9 billion in revenue in 2014, the fifth straight year of increases, but the cash from the diabetes deal will go to pay debts incurred in the $14 billion purchase of the consumer products division of Merck & Co., in 2014. That deal brought Coppertone, Claritin, and Dr. Scholl's brands under the Bayer umbrella. Bayer's net income rose from $1.38 billion in 2010 to $2.76 billion in 2013, before dipping to $2.71 billion in 2014.
“Having huge, iconic brands, bundled together for shelf space, is a huge advantage,” Malik said. Bayer's competitors in over-the-counter drugs are the GlaxosmithKline-Novartis joint venture and Johnson & Johnson.
Like others, Bayer is looking for drug candidates beyond its labs in the tiny corners of biotech and halls of big research institutions. Bayer is pushing for bigger U.S. sales because that's where the money is, especially in high-priced cancer medicine.
