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| Bayer CEO Marijn Dekkers |
After Bayer hives off its plastics business, it's going to remake the rest. The German conglomerate will merge its HealthCare and CropScience divisions into one life-science-focused company, and if sales are any indication, the health side of things will dominate.
Bayer HealthCare's newer pharmaceuticals--including the clot-buster Xarelto and eye injection Eylea--have been turning in impressive growth stats, giving Bayer CEO Marijn Dekkers reason to hike his pharma sales estimates over and over again.
Then there's consumer health. Bayer last year paid $586 million for China's Dihon Pharmaceuticals, which specializes in OTC skin products and herbal meds, and then shelled out $14.2 billion for Merck's ($MRK) consumer business. Make no mistake about it, Dekkers says; he wants his company to dominate that field.
Bayer also has a solid animal health business, and Dekkers has said he's interested in building up there, too. The proceeds of a MaterialScience spinoff or IPO would add to Bayer's war chest for dealmaking.
As Reuters reports, Bayer management set up a team to blueprint a new structure for the company, melding its two remaining divisions. Each of Bayer's units now has its own independent management teams, so some executive choices are ahead. The idea is to put a new org chart in place by the beginning of 2016.
Unlike most pharma "restructurings," however, this one won't include job cuts, Bayer says. "We expect the number of jobs to be stable worldwide and in Germany over the next few years," a spokesman told the news service.
Bayer said last September that it would divest its MaterialScience business, perhaps via an IPO. The business is worth more than 10 billion euros, or almost $12 billion at today's exchange rates. The company plans to make the move by mid-2016 at the latest, Bloomberg reports.
Analysts have welcomed the news that Bayer would toss plastics to focus more tightly on life sciences. Kepler Cheuvreux analyst Fabian Wenner told Bloomberg Wednesday that the plan will make Bayer more efficient. And when the potential spinoff was announced, Wenner pointed out the benefit of having more cash to play with, now that Bayer knows it wants to grow in OTC meds and animal health. "They can basically now look to a target to buy with the proceeds," he said at the time. "They've always known they didn't need this business, but they haven't had a target to replace it with."
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Special Reports: Top 10 pharma companies by 2013 revenue - Bayer HealthCare | Pharma's top 10 M&A deals of H1 2014 - Bayer/Merck Consumer Health