2019 revenue: €23.71 billion ($26.59 billion)
2018 revenue: €25.32 billion ($28.39 billion)
Headquarters: Leverkusen, Germany
Heading into 2019, Bayer CEO Werner Baumann was under a lot of pressure—so much so, his management team lost a confidence vote at its annual shareholder meeting, the first for a German company in modern times.
The Bayer boss was under fire for a deal he spearheaded: the historic $63 billion acquisition of U.S. crop rival Monsanto. For our annual ranking, FiercePharma doesn’t count revenue from the conglomerate's crop science business, but there’s no denying its critical role in Bayer’s performance.
Bayer stock fluctuated in 2019, mainly around lawsuits that claim Monsanto’s Roundup herbicide caused cancer. It tumbled to a low of about €52 per share in mid-June at the news of jury rulings in favor of Roundup plaintiffs. The precipitous drop cut the German conglomerate’s market cap by about the same amount it had paid for Monsanto.
Then, an announcement of mediation talks, the formation of a special committee dedicated to the litigation and the increasing possibility of settlements helped vault up its stock price, which ended the year at about €73.
Along the way, the total number of plaintiffs has only snowballed, from approximately 11,200 as of January 2019 to 48,600 as of Feb. 6, 2020. While engaging in court-ordered mediation, Bayer is appealing rulings in the cases it lost at trial and has repeatedly vowed to defend itself.
To win over investors and show it had carefully examined the benefit-risk profile of Monsanto ahead of the buyout, Baumann’s exec team agreed to an investor request for an independent review of its rules on evaluating M&As. What’s more, it has promised to publish external reports that show it acted dutifully.
Meanwhile, company engineered a series of selloffs as outlined in a turnaround plan unveiled in late 2018. It sold the Coppertone brand of sun care products to Beiersdorf for $550 million and transferred the Dr. Scholl’s foot care line to Yellow Wood Partners. It divested its 60% stake in chemical park operator and site service provider Currenta for €3.5 billion.
Finally, Bayer inked a deal to merge its animal health business with Eli Lilly spinoff Elanco for up to $7.6 billion. The Elanco transaction recently hit a U.S. antitrust snag, but the two are preparing to win clearance with a number of selloffs.
As a result of those divestments, Bayer’s non-crop revenues dropped to €23.71 billion ($26.59 billion) in 2019 from €25.32 billion ($28.39 billion) in 2018. The remaining pharma and consumer health businesses were growing last year on a portfolio- and currency-adjusted basis.
Within the pharma business, revenues from anticoagulant Xarelto increased 12.6% at constant currencies to €4.13 billion, with direct sales and licensing revenues from U.S. partner Johnson & Johnson both moving upward. Wet age-related macular degeneration drug Eylea, to which Regeneron holds U.S. rights, also increased sales by 12.6% year over year at unchanged exchange rates and gave Bayer €2.49 billion.
On top of its old rival Lucentis, Eylea is now facing more competition from Novartis’ Beovu, which in February bagged its European approval. The next-generation anti-VEGF med beat Eylea on some secondary endpoints in a head-to-head study, but safety concerns recently raised by a U.S. physician group could ripple across the pond and hurt Beovu’s uptake in the E.U. as well.
In its oncology portfolio, Bayer saw Nexavar sales decline 2.5% to €706 million in 2019. As the standard of care in front-line liver cancer, Nexavar has basically made itself a target to beat, and newer drugs have been taking their shots. In addition to Eisai and Merck & Co.’s Lenvima challenge, Roche is coming after Nexavar's market share with its own phase 3 head-to-head win. The IMbrave 150 trial recently showed a combination of Tecentriq and Avastin cut the risk of death by 42% compared with Nexavar.
Second-line liver cancer drug Stivarga posted a sales gain of around 30% in 2019, mainly thanks to expansion in China. But it’s not insulated from competition, either. Bristol Myers Squibb’s immuno-oncology combo Opdivo and Yervoy snagged an FDA nod in the setting.
To beef up its oncology offerings beyond those meds, Bayer in early 2019 exercised its option and took full control of Loxo Oncology’s tumor-agnostic drug Vitrakvi, along with a follow-on therapy, TRK inhibitor LOXO-195, now dubbed BAY 2731954. But even Vitrakvi is under threat after the FDA greenlighted Roche’s Rozlytrek for ROS1-positive non-small cell lung cancer and any NTRK fusion-positive tumors. Roche has also priced the new med at nearly half of Viktravi's list price.
Bayer also has Orion-partnered Nubeqa, which was approved by the FDA in July 2019. The prostate cancer latecomer in January posted a key life-extension benefit among patients with non-metastatic castration-resistant disease. But there was no time for Bayer to gloat, as Pfizer and Astellas immediately said their market-leading Xtandi had also prolonged patients’ lives in the same setting.
In the pipeline, Bayer and Merck & Co.’s potentially first-in-class soluble guanylate cyclase stimulator vericiguat recently showed it could reduce the risk of cardiovascular death or hospitalization versus placebo when added to available treatment in patients with chronic heart failure with reduced ejection fraction (HFrEF).
Part of Bayer's ongoing overhaul is aimed at channeling resources to external R&D to address shareholder concerns about Bayer’s thin pharma pipeline. Toward that end, Bayer paid $240 million up front for the remaining 60% share it didn’t already own in cell therapy joint venture BlueRock Therapeutics, and it acquired 28% of the shares of Century Therapeutics, which is also working on induced pluripotent stem cells.
Bayer’s cost-cutting plan also involves layoffs of 12,000 people. In 2019, the company reduced its headcount by about 4,000, bringing its total workforce to about 103,800 at the end of the year.
The ax also fell on two top managers, leaving the company’s C-level seats to just its CEO, CFO and three division chiefs. It also recently bid farewell to its chairman, Werner Wenning, and elevated Norbert Winkeljohann, a board member since 2018, to the post.