Bayer is launching a sweeping business overhaul as the German conglomerate sees “no viable alternative.”
Bayer on Wednesday unveiled a restructuring of its organization that will “come at the expense of many managerial employees,” according to chairwoman of the executives committee on Bayer’s supervisory board, Barbara Gansewend.
The job cuts will begin in the coming months and will end in 2025, the company said without providing a specific number for the jobs impacted. But the reductions will be “significant” at the group in Germany, the company said.
Bayer declined to comment on the scale of the layoff or the functions involved. Reducing bureaucracy is the “central component” of the adjustments, a Bayer spokesperson told Fierce Pharma. The company’s new operating models are developed with customers at the center.
“For this reason, there are no top-down targets and we will only gradually know what scale is really realistic here,” the spokesperson said.
Details of the revamp remained thin, but it looks to be the deepest at Bayer since another large-scale restructuring launched in late 2018 had cost about 12,000 jobs and the group’s animal health franchise. And it comes as new CEO Bill Anderson tries to salvage Bayer’s floundering business that he previously called “not acceptable.”
Anderson has been critical of Bayer’s existing structure since joining from the top pharma job at Roche last year. The 12 layers of management at Bayer were “simply too much,” Anderson said during the company’s third-quarter earnings call in November, adding that he will remove those redundancies by the end of 2024.
The new operating model will “reduce hierarchies, eliminate bureaucracy, streamline structures and accelerate decision-making processes,” Bayer said in a statement. Introduction of the new org is a difficult decision, but “there is no viable alternative under the current circumstances,” Ganswewendt said.
The reorg plan has won support from Bayer’s works council, an employee representative body that acts as the middleman between the company and its staffers.
The new operating model is a “great opportunity to significantly improve our economic situation,” Heike Hausfeld, chairwoman of the central works council of Bayer said in the joint statement with Bayer.
“[I]n the company’s strained economic situation, the programs and measures already underway are not sufficient, which is why, with a heavy heart, we have agreed to further cuts,” she added.
But even as Anderson gets to eliminate bureaucracies, he’s facing internal resistance against another business split like his predecessor Warner Baumann did back in 2018.
Bayer landed in the current predicament in large part thanks to the ill-fated acquisition of the crop science company Monsanto in 2018. Investors have therefore repeatedly called for separating the company’s crop science unit from the pharma business. Since coming onto the job, Anderson has also indicated that he was evaluating that pathway.
But the Bayer works council is still “vigorously campaigning” for the group’s three-division business set-up, Hausfeld said. Francisco Grioli, a representative of the prominent German trade union IG BCE who sits on Bayer’s supervisory board, also insisted that his organization agreed to the reshuffling only under the existing one-Bayer structure.
Editor's Corner: The story has been updated with a statement from a Bayer spokesperson.