Bayer plans to cut about 12,000 of its 118,000 employees and sell its animal health business as part of a restructuring designed to enhance productivity, innovation, and profits.
The company expects the move to generate an annual savings of $3 billion, including expected synergies of about $1.2 billion from its acquisition of Monsanto, by 2022. Costing an estimated $5 billion, the restructuring is set to begin next year.
In addition to the planned divestment of the animal health business, which generated sales last year of about $1.9 billion, Bayer aims to off-load its Coppertone sunscreen and Dr. Scholl’s foot-care brands and its 60% stake in the German industrial-site service provider Currenta. The divestments will remove an additional 7,000 employees from Bayer.
Among the 12,000 jobs being cut, about 900 will be in pharmaceutical R&D, 350 from the closure of a plant in Germany making the blood-clotting agent factor VIII, 1,100 from consumer health, 4,100 from crop science, and 5,500 to 6,000 from cross-divisional activities and business services.
Bayer says it will also push to make its business leaner so it can react faster to market needs. As part of this strategy, the firm plans to restructure internal pharmaceutical R&D and do more research with external partners, such as the pact that led to approval of the cancer drug Vitrakvi.
“We are freeing up resources inside R&D—our budget—to fund more external collaborations,” Bayer CEO Werner Baumann told reporters. “This is at the heart of measures we are taking in pharma. Where our innovation comes from will be less important than how.”
Bayer says the restructuring is not a response to its $60 billion-plus acquisition of Monsanto earlier this year. “And certainly it has nothing to do with glyphosate litigation in the US,” Baumann said, referring to the more than 4,000 US citizens who claim that exposure to Monsanto’s glyphosate pesticide caused them to develop cancer.