Bayer CEO Bill Anderson says 'radical realignment' is underway

In three years as the pharma chief at Roche, Bill Anderson executed a massive overhaul of the division, lopping off layers of management and recharting its course.

Now in his fifth month as CEO at struggling conglomerate Bayer, Anderson is focused on an even larger renovation, saying the company is on its way to a “radical realignment” with massive reductions in its workforce.

As part of the realignment, Bayer also is evaluating separating its consumer health and crop science divisions.

“We are redesigning Bayer to focus only on what’s essential for our mission and then getting rid of everything else,” Anderson said during the company’s third-quarter earnings call.

As for the company’s performance in the quarter, Anderson called it “anemic” and “not acceptable.”

Anderson said that the 12 layers of management between himself and customers were “simply too much” and added that, by the end of 2024, the company will remove multiple layers of management and coordination.

In September, Reuters reported that Anderson was set to take his plan to slash the workforce to the company’s board of directors. His comments on Wednesday were a clear indication that the redesign is underway. Anderson added that leadership changes have already happened “over the last 90 days” in human resources, strategy and investor relations.

“This isn’t penny-pinching,” Anderson said. “This is a profound shift and we’re taking out a lot of work and that’s going to include a significant reduction in workforce.”

As part of his facelift at Roche, Anderson eliminated budgeting and forecasting. It appears he’ll use the same playbook at Bayer.

“An incalculable amount of time and energy of very smart people goes into our annual forecasts and budgets and targets,” Anderson said. “Despite all that, of course, we’ve downgraded our original targets for 2023. That’s a serious issue and we’re addressing it.”  

As for a potential break-up of Bayer, Anderson said that a simultaneous split of the company into three businesses was considered but now has been rejected because it’s “simply not feasible to do that all at once.”

By divesting its consumer health unit, Bayer would follow an industry trend, already undertaken recently by major pharma companies such as Pfizer, GSK and Johnson & Johnson.

Separating from the crop science division could help undo the damage caused by Anderson's predecessor, Werner Baumann, the company's former CEO, who acquired Monsanto just weeks into his seven-year tenure. Since then, Bayer has grappled with litigation related to the weedkiller Round-Up, which complicates any separation attempt.

“Interesting dynamics,” Anderson said, in reference to making a move on Bayer’s agricultural business.

He added that Bayer will provide more information on its strategic path during an investor event in March.

As for the performance of the pharma sector in the quarter, the company reported sales of 4.54 billion euros ($4.85 billion), which was down .3% year over year. Xarelto sales fell by 44% but coming to the rescue were new drugs Nubeqa and Kerendia.

Group sales for the quarter came to 10.34 billion euros ($11.07 billion), allowing Bayer to reiterate its 2023 revenue guidance.