FRANKFURT (Reuters) - Bayer (BAYGn.DE) is considering job cuts and outsourcing as part of a wide-ranging review of drug research and development that will last until at least November, a person familiar with the company told Reuters.
The savings that Bayer - the inventor of aspirin and maker of Yasmin birth control pills - could make as part of the overhaul would give it financial wiggle room as it competes with larger rivals to buy the right to promising treatments from biotech firms.
Bayer, which is due to release second-quarter results on Wednesday, is under pressure from investors to make purchases or do licensing deals that they say are needed to ensure the long-term independence of the pharmaceutical division.
Here is a list of other challenges for the German drugs and pesticides maker:
Doubts over pharma unit’s growth prospects
Bayer’s pharma unit is seen as overly reliant on heart drug Xarelto, which Bayer hopes will generate more than 5 billion euros in revenues in its best year. The bestseller’s patent expires in 2024.Sales of eye drug Eylea, the second-most important product, could peak over the next three years as a promising drug by Novartis, brolucizumab, could take market share in treating the most common form of blindness in the elderly.
The Swiss drugmaker is also working on another experimental drug, RG7716, against the disease.
Bayer’s campaign to follow-up with new drug hopefuls has seen some setbacks. It dropped plans with its partner Regeneron (REGN.O) to combine Eylea with another drug after a mid-stage trial failed to show a benefit.
Anetumab ravtansine, a drug for asbestos-linked cancer type mesothelioma, failed a Phase II trial.
A trial designed to widen the use of prostate cancer drug Xofigo, which was tested in combination with certain hormonal treatments, had to be stopped early because of side effects late last year.
Roundup cancer verdict
Bayer shares plunged after newly acquired Monsanto was ordered to pay close to $300 million in damages in the first of possibly thousands of U.S. lawsuits over alleged links between the Roundup weedkiller and cancer.
Bayer vowed to challenge the verdict, saying it was at odds with scientific evidence and regulators’ conclusions.
The U.S. Food and Drug Administration in February sent Bayer a warning letter over sub-standard production procedures at its Leverkusen, Germany headquarters. Addressing the FDA’s issues will likely be a 300 million euro drag on operating profit this year.
Essure birth control device pull
Bayer in July started phasing out the sale in the United States of Essure, the birth control device at the centre of more than 16,000 U.S. lawsuits over alleged injuries. Bayer said that only commercial reasons were behind the market exit and that it stands behind the product’s safety.
It had previously started winding down the Essure business in other markets. Bayer in 2013 bought Essure maker Conceptus Inc for $1.1 billion to shore up its women’s healthcare business.
Declining consumer care business
Bayer’s consumer care division, bolstered by the 2014 acquisition of a Merck & Co Inc (MRK.N) division for $14 billion, has seen revenues slip as U.S. consumers switched from established drugstores to online shops to hunt for bargains.
Bayer brought in former Nestle manager Heiko Schipper this year to turn the business around but supply disruptions in the wake of the rebuke by U.S. regulators have made that job tougher.
Dicamba weedkiller litigation
U.S. farmers have filed class action lawsuits against Monsanto and other makers of dicamba-based weedkillers, claiming crops were damaged by neighbours’ use of dicamba, after millions of acres were affected.
The launch of dicamba and seeds that can resist it was Monsanto’s answer to the spread of aggressive weeds that have grown resistant to established glyphosate weedkillers such as Roundup.
Dicamba evaporates easily and travels to off-target plants but makers of newer versions, including DowDuPont (DWDP.N) and BASF (BASFn.DE), say the issue was resolved - provided farmers adhere to label instructions.
Reporting by Ludwig Burger; editing by Anna Willard