Amid a flurry of moves by major pharmaceutical companies to separate themselves from their consumer health businesses, investors in companies that are resisting change are asking the question: Why not us?
On Thursday, Bayer CEO Werner Baumann addressed the elephant in the room, Bloomberg reports.
“We are going to continue the course, which is developing our company along the three pillars that we have—pharmaceuticals, crop science and consumer health,” Baumann said at Bloomberg’s New Economy Forum in Singapore.
The company’s managers recently arrived at the decision, which was supported by the board of directors, Baumann said.
Last week, the world’s largest pharmaceutical and consumer healthcare company, Johnson & Johnson, said it was creating a new company to handle its signature consumer brands such as Neutrogena, Aveeno, Listerine, Band-Aid, Zyrtec and Johnson’s Baby Powder.
The move came after similar initiatives by fellow pharma giants such as Merck, which created Organon, Pfizer, which merged its generics unit Upjohn with Mylan, and GlaxoSmithKline, which is also in the process of breaking up.
The goal is to allow the remaining companies to focus on the highly profitable business of developing and marketing pharmaceutical products.
Companies in other industries—such as General Electric and Toshiba—have done the same.
Established in 1863, Bayer seems ripe for a similar action considering the lack of synergy between its vast consumer health, agricultural and pharma segments. But the German conglomerate will stand pat—for now, at least.
“What’s right for one company is not necessarily the right thing for the other company,” Baumann said, as quoted by Bloomberg. “The area we are focused on is life sciences. If you look at our portfolio today, we are active in three businesses. It’s pharmaceuticals, it’s crop science and it’s consumer health. All of them are informed by life sciences as a platform.”
This is not the first time Bayer has addressed the question. In August, chairman Norbert Winkeljohann said dividing the company “would not create value, but destroy it.”
Investors have become increasingly irritated by Bayer’s handling of its business, and the ongoing Roundup litigation hasn't helped ease their concerns. In the pharma segment, the impending loss of patent protection for its top two products, blood-clot medicine Xarelto and eye treatment Eylea, looms as another major challenge.