May 27, 2015
By Mark Terry, BioSpace.com Breaking News Staff
At its Annual Stockholders’ Meeting held in Cologne, Germany, Bayer AG (BAYZF) laid out its plans for corporate restructuring. Marjin Dekkers, chairman of the board, discussed four strategic priorities.
#1. Focus on driving organic growth of HealthCare and CropScience.
The company plans to invest more than 4 billion euros in research and development this year in these areas. “At the same time,” said Dekkers, “we are further increasing our spending for research and development in the Life Science businesses. This is the condition for future organic growth with new products.”
As reported on Feb. 12, 2015, Bayer was unloading its MaterialScience division to focus on life sciences. In October 2014 Bayer bought Merck’s over-the-counter drug business, including prescription rights for Claritin and Afrin, for about $14.2 billion. In February 2014 Bayer announced it would buy Dihon Pharmaceutical Group Co., a manufacturer of traditional herbal Chinese medicines.
#3. The demerger of MaterialScience.
The company plans a stock market flotation for the division by mid-2016 at the latest. “We are convinced that MaterialScience has outstanding prospects for long-term success as a separate company,” said Dekkers in a statement. This division already has a strong global presence, and Bayer believes that by having it be an independent company, will be more agile in the global marketplace.
#4. Drive forward the alignment toward the Life Science businesses.
In this regard, Bayer is still developing and evaluating plans for restructuring. “I must emphasize in this connection that it is not about cutting jobs,” said Dekkers in a statement. “We continue to anticipate that the number of employees at Bayer will remain stable in the coming years, both worldwide and in Germany.”
This is consistent with previous reporting that by getting out from the MaterialScience business, Bayer would focus on life science activities, both in commercialization and in research and development. The company has a strong pipeline, numerous brand identities and a diverse portfolio, as well as a strong presence in emerging markets.
“At the same time,” said Dekkers, “we will benefit from major similarities in our business model.” In other words, the company will be able to exploit biochemical processes that it develops into multiple products and markets.
In addition to the restructuring, the company announced changes to its Supervisory Board. Thomas de Win, vice chairman of the Supervisory Board, will be replaced as an elected replacement member by Heinz-Georg Webers, who is chair of the Works Council at the company’s Bergkamen location. Oliver Zühlke, currently chair of the Central Works Council, will replace de Win’s functions as vice chairman of the Supervisory Board.
Nine brokerage firms have given a consensus recommendation of “Hold” for Bayer AG as of Friday. Five analysts gave a “hold” recommendation, one a “sell” recommendation and three a “buy” recommendation. Company stock is currently selling at $135.35 per share.
Will PfizerKline Become the Next Pharma Player?
The speculation surrounding a possible bid from Pfizer Inc. (PFE) for struggling GlaxoSmithKline (GSK) is heating up, after one closely-watched biotech analyst said in a note last week that Pfizer buying the company would “unlock access to its balance sheet and improve its tax situation.”
Gregg Gilbert, a biotech analyst at Deutsche Bank, wrote in a note to investors “Introducing PfizerKline” that he thinks a deal would be “materially accretive” for both companies. Gilbert estimated that a bid priced at $29.86 a share, via half stock and half cash, which would push up Pfizer’s earnings per share by 10 percent to 16 percent beginning in 2016.
“We believe that the company has a sense of urgency to create value by leveraging the power of its balance sheet to do needle-moving deals,” Gilbert wrote. “Since media reports in the past have pointed to the potential for a Pfizer/GSK combination, we are revisiting that theme.”
We want to know, dear readers, if you agree? Should Glaxo continue going it alone, or might Pfizer buy it and create one of the world’s largest pharma players in history?