Bayer faced a large number of doubters when it was working to close its $63 billion Monsanto buyout, but the drugmaker pressed ahead and eventually sealed the deal. However, that deal brought along some legal peril in the form of thousands of lawsuits alleging Monsanto's weed killer Roundup causes cancer.
Bayer's been doggedly fighting those lawsuits and recently persuaded a judge to cut a $289 million verdict against it—stemming from the first case to go to trial, filed by plaintiff Dewayne Johnson—to $78 million. But the same judge also slapped Monsanto for its behavior as Bayer defends against 8,700 remaining cases.
Still, Bayer has plenty of experience fighting product liability claims; just witness the Xarelto bleeding lawsuits it's now handling in court. And Bayer intends to maintain its tough stance against the Roundup litigation, too, according to The Wall Street Journal. Bayer executives this summer held a conference call on the issue, and CEO Werner Baumann told analysts the company is "committed to vigorously defending these lawsuits and the products."
Bayer maintains the product is safe. On its website, the pharma giant says, "for over 40 years, the overwhelming conclusion of experts worldwide has been that glyphosate can be used safely according to label instructions. There have been more than 800 scientific studies and reviews that prove glyphosate is safe for use."
As the litigation plays out, however, the company could face years of mixed headlines tied to the cases. In a note, Jefferies analyst Ian Hilliker wrote that the Johnson case will likely go to California Superior Court’s appellate division after Bayer pledged to appeal, and then the loser at that point could take arguments to the California Supreme Court or even the U.S. Supreme Court.
"This means that uncertainty around this case is likely to be an overhang on Bayer, and potentially the use of glyphosate for many months, possibly years, likely delivering a volatile share price for Bayer in the meantime,” Hilliker wrote. He added that the market needs to see results from several trials before estimating potential liability.
Bayer’s shares were down 11% Tuesday after the judge in California refused to completely overturn the verdict.
Like most pharma giants, Bayer has experience fighting product liability claims that number in the thousands or even tens of thousands. For instance, the company faces about 24,000 claims tied to its blood thinner Xarelto. The company has so far prevailed in the lawsuits, filed by plaintiffs who say the drug’s label doesn’t correctly disclose bleeding risks.
Bayer has been a pioneer in its tough approach to such issues, WSJ reports. Previously, the company faced a mounting caseload for statin Baycol. In response, the company decided to settle some cases it thought were legitimate and fought other lawsuits. When Bayer prevailed in the first Baycol case to go to trial, executives celebrated, and the company went on to settle 3,100 out of 14,000 lawsuits for $1.16 billion, according to the newspaper. Early estimates were that the issue could cost Bayer $10 billion.
Merck & Co. took a similar stance when it was fighting claims for Vioxx. That drugmaker faced tens of thousands of lawsuits alleging harm from the drug but pressed ahead in its defense, litigating trial by trial. Analysts had predicted a liability of $10 billion to $25 billion, with one estimate at a whopping $50 billion.
It ended up inking a series of settlements—worth $4.85 billion, $220 million and $830 million—with plaintiffs. The company also agreed to a $950 million deal with the Department of Justice to resolve allegations of mismarketing. At the time, now-CEO Kenneth Frazier served as Merck's general counsel.