It took Bayer’s new CEO Bill Anderson about 20 seconds into his first quarterly conference call to go against the grain.
After the company’s investor relations chief requested that questions come via landline, Anderson wondered aloud if anyone still had that capability.
Joking aside, Anderson faces plenty of tough questions as he has taken over a company that has a massive litigation headache, growing debt and revenues in rapid decline. Investors are calling for a breakup of the company but Bayer’s deep bureaucracy could make change difficult.
Two weeks ago, the company made a preemptive strike, slashing projected revenue in 2023 by 2.5 billion euros ($2.7 billion) and removing much of the suspense from Anderson’s first quarterly presentation.
On Tuesday, most of the questions Anderson faced were about Bayer’s structural issues. With pharma companies such as Pfizer, Johnson & Johnson, Novartis and GSK separating from their other business units, why has Bayer remained intact with its crop science, pharmaceutical and consumer health units under one roof?
“The question is simple: Do we have the structure with our setup—with three divisions and headquarters—which allows us to be the best home for each of these businesses?” Anderson said. “How do we radically accelerate everything? Our benchmark isn’t other large companies. Our benchmark is a sole proprietor, a startup. We need to convince ourselves that the structure that we adopt is supporting that goal of speed, of innovation, of quality.”
In considering Bayer’s structure, Anderson said “nothing was off the table.” He added that there will be updates to his considerations before “communicating detailed plans and financial targets in early 2024.”
Two weeks after cutting its revenue projection for the year to a window of 48.5 to 49.5 billion euros ($53 to $54.1 billion), Bayer provided more clarity on the reduction. The company expects sales from its agricultural unit to fall by 5% this year, while pharma revenue will remain flat. Bayer had previously projected a 3% increase in crop division sales and a 1% increase from the pharma division.
The lackluster performance from pharma comes as blood thinner Xarelto, which is facing generic competition outside of the U.S., posted a sales decline of 7% in the quarter. Macular degeneration drug Eylea—now facing competition from Roche’s longer-acting Vabysmo—also is struggling as revenue increased just 1%.
The good news on the pharma side was the continued successful launch of prostate cancer drug Nubeqa, which delivered a 91% increase in sales year over year to 201 million euros ($220 million). Kidney disease drug Kerendia recorded sales of 67 million euros ($73 million), which is up from 52 million euros in the first quarter.
As for pharma investment and the need to develop more products, Anderson said with a chuckle that the company “doesn’t have a large, capital war chest” to make major, late-stage acquisitions.
As for revenue overall, Bayer generated 11.04 euros ($12.1 million) during the second quarter, which was a 14% decline from the same period last year. Crop science sales fell by 24%, while pharma division revenues fell by 5% and consumer health posted a 2% decline.