Bayer Pauses Business Spin-offs, Moves Forward with Major Leadership Restructuring

During the economic downturn, while many pharmaceutical companies are busy restructuring their organizations and splitting their businesses to move forward with a lighter load, the path taken by Bayer is somewhat different.

On March 20, Bayer announced that its pharmaceutical business is about to enter the next phase of development. At the same time, the management will undergo another restructuring, with six senior executives from the leadership team of the pharmaceutical division set to leave. The leadership team consists of 14 members in total, meaning nearly half of the team will be cut.

Including Bayer's Global Marketing Head Anne-Grethe Mortensen, Radiology Head Gerd Kruger, and Consumer Health President Heiko Schipper will all leave the company in this round of adjustments.

Julio Triana, currently the head of Bayer's international commercial operations, will take over Heiko Schipper's role in leading the consumer health division.

Christian Rommel, Head of R&D in the pharmaceutical division, Holger Weintritt, Head of Product Supply, and Michael Devoy, Chief Medical Officer, will all remain in their positions, but Michael Devoy will no longer be a member of the leadership team. Additionally, Oliver Renner (Communications), Ursula Koeniger (Legal), and Christoph Bertram (Human Resources) will also continue to serve on the leadership team.

But regarding any changes to Oliver Bressier, the Chief Financial Officer, and Zhou Xiaolan, head of Commercial Operations for China, in this restructuring, a Bayer spokesperson did not confirm.

At the same time, Bayer will establish a new division within its pharmaceuticals business unit – the Global Commercialization Division. Oncology, global marketing operations, and medical affairs will all be integrated into this division, which will be led by Christine Roth, effective June 1st of this year. Roth, who currently serves as Bayer's head of oncology, took over as director of the oncology department in February 2022. In her new role, she will oversee key segments of the company’s former strategic business units, including oncology, global marketing, digital and commercial innovation, as well as parts of medical affairs and pharmacovigilance.

In addition, Bayer has appointed a new Chief Operating Officer, Sebastian Guth, who will officially take office on April 1st and be responsible for the commercial operations in all of the company's markets. In this role, Guth will collaborate with teams across different countries and regions to drive the implementation of commercial strategies to enhance customer value. Previously, Guth served as President of Bayer's Americas region, overseeing the pharmaceutical business in the Americas. In other words, all commercial operations across the company’s active markets will be consolidated under the Chief Operating Officer position.

This is precisely the new operating model of "Dynamic Shared Ownership" (DSO) proposed by Bayer CEO Bill Anderson in January this year. Dynamic Shared Ownership aims to enhance company efficiency through internal integration, abolish the traditional model of independent functional departments and hierarchical levels, and reduce bureaucracy. At the same time, it can also save on the company's operational costs.

Bayer had an especially tough year in 2023, facing internal challenges such as reversing losses and clinical setbacks, along with external pressures from hefty compensation lawsuits. Bill Anderson, who took the helm during this crisis, considered splitting and restructuring the three major business divisions—pharmaceuticals, consumer health, and crop science—and implementing significant workforce reductions.

But in the end, it chose to resolve internal conflicts first and shelve the spin-off plan. On March 5, while disclosing its 2023 annual report performance, Bayer AG's Bill Anderson revealed, "The company will temporarily shelve the spin-off plans for the consumer health or crop science divisions, and over the next two to three years, it will mainly focus on strengthening the pharmaceutical pipeline, resolving litigation, reducing debt, and improving performance."

In 2023, Bayer's revenue was 47.637 billion euros, a year-on-year decrease of 6.1%; the net loss for the year was 2.941 billion euros. In 2022, Bayer had a profit of 4.15 billion euros. Among them, the Crop Science Division's sales decreased by 3.7% to 23.27 billion euros; the Pharmaceuticals Division's sales remained flat year-on-year at 18.081 billion euros; the Consumer Health Division's sales increased by 6.3% to 6.027 billion euros.

The next phase of development for Bayer's pharmaceuticals business may already be clearly visible. Significant progress has been made in strengthening its R&D portfolio and expanding capabilities in breakthrough therapeutic areas such as gene therapy and cell therapy through collaborations and acquisitions. The next step for Bayer’s pharmaceuticals division will focus on updating its pipeline, increasing the value of its product portfolio, and leveraging a new operational model to become a key growth driver for Bayer.

Public data shows that in the past five years, Bayer's investment in CGT has exceeded 5 billion US dollars. Just the announcement of the acquisition of AskBio in October 2020 was a deal worth up to 4 billion US dollars. AskBio’s product portfolio covers multiple fields such as neuromuscular, central nervous system, cardiovascular and metabolic, and rare diseases. The industry estimates that investing in CGT may help increase Bayer's revenue by billions of euros.

Streamlining redundant management layers and shelving the spin-off plan to better focus on sustainable business… How is this not a form of moving forward with a lighter load?

Editor: Baiji

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