Bayer moves to refocus on its core pharma R&D, cutting 900 research jobs

Bayer aims to comprehensively restructure its pharmaceutical R&D and consumer health operations, a long-awaited move that the company says will refocus assets to its core life science businesses over the coming years.

Reports from the past year, including local German media that had suggested up to 1,000 jobs were on the chopping block, were not far off the mark: The final decision includes the loss of about 900 of its 8,000 R&D positions, out of a total reduction of 12,000 jobs across the company.

That’s in addition to 350 employees connected to Bayer’s factor VIII facility in Wuppertal, Germany, which it is closing due to increasing competition in the hemophilia treatment market. Instead, the company will move all its recombinant factor VIII production to a facility in Berkeley, California.

Meanwhile, Bayer will also exit the animal health business, and will look to drop its Coppertone sun care and Dr. Scholl’s consumer brands in the coming months. Those moves follow the company’s decision this July to sell off its prescription dermatology unit to Leo Pharma.

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“We have made very good progress with Bayer’s strategic development in recent years. As we now proceed with these measures, we are laying the foundation to sustainably enhance Bayer’s performance and profitability,” said Werner Baumann, chairman of Bayer’s management board.

The company said it plans to reallocate its investments in animal health toward its core businesses in pharmaceuticals, consumer health and crop science, following its massive $66 billion acquisition of agrochemical giant Monsanto this year.

“Through the end of 2022 alone, we aim to invest a total of around 35 billion euros in our company’s future, with research and development accounting for over two-thirds of this figure and capital expenditures for just under one-third,” Baumann said.

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“With these measures, we are positioning Bayer optimally for the future as a life science company,” he said. Bayer’s supervisory board unanimously expressed its support for the plan, which aims to make the portfolio changes in 2019. Additional details on the job cuts are expected in the months ahead, including during the company’s Capital Markets Day presentations in London on Dec. 5.

The news comes just weeks after Baumann told reporters the company was not discussing “any strategic considerations” for its animal health and consumer units, with a Bayer spokesperson describing reports as market rumors.

In September, Reuters reported that Bayer had begun a monthslong review of its R&D programs in January, exploring whether drug-testing services could be outsourced to cheaper contractors. The company’s pharmaceutical R&D units underwent a major reorganization last November, with all its therapeutic areas being consolidated under one division.

In its latest statement, Bayer said that focusing on external work would be “an essential step” in the restructuring of its internal R&D activities.

“Resources freed up through the reduction of internal capacities are to be directed toward strengthening investment in collaborative research models and external innovations,” the company said.

Out of the company’s 118,200 total employees, the restructuring includes the loss of about 1,100 jobs in consumer health; 4,100 in crop science; and 5,500 to 6,000 in corporate and support functions, as well as in its business services and country platforms.