Bayer, the German multinational pharmaceutical and life sciences company, has revised its sales forecasts for its crop science and pharma divisions for this year. This adjustment takes into account the profit warning that was issued by the company last month. According to the new forecast, revenue for the crops unit is expected to decline by 5% due to a decrease in prices for the weed killer glyphosate. Similarly, the pharma unit’s sales are projected to remain flat instead of experiencing growth.
This announcement from Bayer provides further insight into the factors that led to the revision of the company’s 2023 financial targets. Since taking over as CEO in June, Bill Anderson has been working to rejuvenate the crisis-ridden company. Investors are closely analyzing his statements to determine whether he will support Bayer’s conglomerate structure, which combines crop science, pharma, and consumer health divisions, or if he will consider breaking up the company. With a global workforce of 100,000 employees, Bayer’s future direction carries significant implications.
Initially, Bayer had expected sales in the crops division to increase by 3%. However, prices for glyphosate-based products, including the controversial weedkiller Roundup, have remained persistently low. This has had a detrimental impact on the herbicides business, particularly in North and Latin America. Despite this setback, Bayer’s seed business experienced a positive performance with an 11% increase in sales during the second quarter. This growth helped offset the weak demand for soybean, cotton, and vegetable seeds.
Meanwhile, Bayer’s pharma unit is facing challenges in compensating for the declining sales of Xarelto, its blockbuster blood-thinner, due to generic competition. However, the increased demand for new cancer drug Nubeqa and new kidney medicine Kerendia partially mitigated the impact of Xarelto’s decline during the second quarter. On the other hand, Bayer’s consumer health division, although the smallest, continues to be the fastest-growing segment. The division is experiencing high demand for products such as Bepanthen skin creams, as well as allergy and cold products. As a result, Bayer remains confident in its target for the division’s revenue to grow by 5% this year.
These adjustments in sales forecasts reflect the challenges faced by Bayer in its crop science and pharma divisions. The decline in glyphosate prices and generic competition for Xarelto have posed significant obstacles to the company’s growth. However, the positive performance of Bayer’s seed business and the growth of its consumer health division offer some hope for the future. As Bill Anderson continues to navigate the company through its current crisis, the decisions he makes regarding the conglomerate structure will have far-reaching consequences for Bayer and its employees worldwide.
Source: Bloomberg
