Bayer has to accept a loss of billions

Bayer has to accept a loss of billions

A weak business with seeds and sprays has resulted in a billion euro loss for the pharmaceutical and agrochemical group bayer.

Due in part to write-downs in the agricultural business, the dax-listed group reported a net loss of around 2.7 billion euros for the third quarter.

A year ago, bayer had achieved a surplus of one billion euros. Group sales – i.E. Including the other pharmaceutical and over-the-counter medicines businesses – fell by 13.5 percent to eur 8.5 billion in the summer quarter.

The poor performance was also due to the corona pandemic: with corn and soybean prices in the doldrums, farmers are buying fewer agricultural products from bayer.

Negative currency effects further worsened the figures. In addition, high impairment losses had to be recognized because the agrochemicals business unit is performing poorly and the outlook also remains gloomy. Part of the crop science division is the u.S. Rival monsanto, which was bought in 2016 and mainly produces seeds and the controversial spray roundup with the active ingredient glyphosate.

The weedkiller has brought the leverkusen company a lot of trouble. Many U.S. Citizens have filed lawsuits against bayer because of the risk of cancer, but bayer believes glyphosate is safe if used properly. In the summer, the company concluded a settlement costing around 10 billion euros. In the meantime, according to group ceo werner baumann, bayer has reached an agreement with the plaintiffs of 88,500 cases.

One aspect of the settlement, which is extremely important for the group, is still open – a provision according to which future lawsuits will also be covered by the settlement has been challenged by a u.S. Court. Now bayer and the plaintiffs are working on how to make this part legally binding. According to baumann, the company intends to file an agreement to this effect with the competent court in the next few weeks. The group ceo expressed confidence that the judge would agree to the wording this time.

In retrospect, was the monsanto purchase a mistake?? Confronted with this question, baumann was defiant, stressing that he was "very confident" about the agrochemicals business in the long term: "we always have been, that hasn’t changed, and nothing is changing because of the current crisis."

In addition to headwinds in the agricultural sector, the corona pandemic is also causing problems for bayer in the pharmaceutical sector. Doctors are postponing some treatments that are not urgently needed, and that is eating into sales of eylea, an eye drug that is actually in high demand. In the third quarter, revenues actually declined slightly here. In china, the national program for the bulk purchase of medicines left further traces. As a result, the prices for the diabetes drug glucobay and the antibiotic avalox had dropped significantly. Meanwhile, the group’s most important drug, the anticoagulant xarelto, achieved significant sales growth.

Business with over-the-counter medicines remained on course for recovery. Although sales fell slightly, this was only due to negative exchange rate effects. Operating profit – excluding special effects – also grew significantly thanks to cost reductions.

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