Bayer’s new chief executive Bill Anderson has launched a “re-design” of Bayer that will see layers of management stripped out by the end of next year, with “95% of the decision-making [shifting] from managers to the people doing the work.”
In a frank assessment of the group during its third-quarter results update, Anderson said Bayer is “not happy with this year’s performance,” adding that “nearly 50 billion euros in revenue but zero cash flow is simply not acceptable.
The comments came as Bayer reported revenues of just over €10.3 billion (around $11 billion), down 8% on the same period of 2022, but retained its full-year target of €48.5 billion to €49.5 billion even though the CEO conceded that will require a strong fourth quarter.
“We are redesigning Bayer to focus only on what’s essential for our mission – and getting rid of everything else,” said Anderson, who was previously head of pharma at Roche, pointing out there are currently 12 layers of management between the CEO role and customers. “This step will unleash our teams with the mission-focus necessary to turn things around.”
A significant reduction in the workforce is also expected, according to the update, although for now details on that are scant.
Anderson took over as CEO of Bayer on 1st June, replacing Werner Baumann who had held the role since 2016 but came under pressure after spearheading the acquisition of agrochemical company Monsanto for $63 billion, exposing the group to multibillion-dollar litigation over allegations of a cancer link to its Roundup herbicide range.
The new CEO said he is exploring additional options to restructure the company, but for the time being isn’t considering an immediate three-way split of the group, which has pharmaceutical, agrochemical and consumer healthcare divisions.
That is something that has been suggested by analysts as a possible way to unlock value at Bayer. While the CEO said that had been taken off the table, a separation of either consumer health or crop science remains “under evaluation.” A staggered split of all three businesses is also still on the table, as is keeping the group in its current conglomerate structure.
Analysts have suggested that separating consumer health into an independent company could be the least challenging option to start with, and would follow a trend in the sector with GSK and Johnson & Johnson among other big pharma groups that have taken that option in the last few years. Sanofi also said it may do likewise in its third-quarter update last month.
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