Bayer’s announcement of the early departure of its chairman, Werner Wenning, is not so surprising, given the ongoing legal issues surrounding Roundup, the herbicide the company was saddled with in its beleaguered 2018 acquisition of Monsanto. But Bayer’s choice for his replacement is unconventional, to be sure.
After Wenning steps down in April, two years ahead of schedule, he will be replaced by accountant Norbert Winkeljohann, a former chairman at PricewaterhouseCoopers Europe who joined Bayer’s board in 2018. That’s a major departure for Bayer, which in the past appointed experienced company veterans as chairmen. Wenning, who joined Bayer in 1966, served as its CEO from 2002 to 2010, then moved to the chairman role two years later.
Then again, maybe an outsider is just what Bayer needs right now.
Ever since mid-2018, when Bayer lost a lawsuit in the U.S. alleging Roundup causes cancer, the company has been trying to settle a mounting pile of additional suits. In June 2019, it hired an independent lawyer to handle the issue, leading investors to hike up shares of the company in anticipation of a settlement. That move came a few months after more than half of shareholders cast no-confidence votes at Bayer’s annual meeting.
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But there’s still no settlement, and Bayer has since lost two more Roundup lawsuits. The total number of plaintiffs skyrocketed from 18,400 last July to nearly 43,000, the company reported in October. An update on the legal situation is expected Thursday when Bayer releases its fourth-quarter earnings.
The $63 billion Bayer-Monsanto merger is now widely viewed as one of the worst M&A mistakes in biopharma history. Bayer lost 30% of its share value in the months following the closing of the deal, effectively wiping out the purported positives from the deal by bringing the company’s market cap down to the amount it paid for the agriculture giant. That made it difficult for CEO Werner Baumann to make good on his promise that Bayer would be able to continue to invest in the pharma side of the business.
Now, Bayer is facing some significant challenges in its pharma unit. In January, cost watchdogs in both England and Germany rejected its NTRK drug Vitrakvi, questioning whether clinical trial data supported its high price. And Bayer’s Nubeqa, the Orion-partnered prostate cancer drug approved by the FDA last July, was late to the market and is facing significant competitive pressure from Pfizer and Astellas' Xtandi and Johnson & Johnson’s Erleada.
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Wenning’s departure comes less than six months after Bayer took the ax to its C-level executive suite, bidding farewell to human resources head Hartmut Klusik and Asia-Pacific chief Kemal Malik. Baumann took over Klusik’s responsibilities and the company handed Malik’s job to consumer health head Heiko Schipper. At the time, Wenning painted the changes as vital to Bayer’s efforts to boost efficiency.
In a statement released Wednesday, Wenning, 73, said he was planning to step down last year in accordance with the company’s age limit but the board asked him to extend his tenure. He said now is the right time to hand his responsibilities to Winkeljohann, as the Monsanto integration “is going very well and good progress is being made with the announced efficiency, structural and portfolio measures."
“We have made and continue to make progress in handling the legal issues in the U.S.," he added.