After swallowing massive agrochemical company Monsanto, Bayer has offered a look at what the combined company’s financial firepower will look like—and if current numbers are any guide, it won’t depend much on consumer health.
On Wednesday, the German company reported second-quarter earnings that beat expectations, despite that unit’s 18% skid. All told, Bayer generated €9.48 billion in sales in the second quarter, with €4.22 billion of that from its pharma business, slightly ahead of consensus estimates of €4.16 billion, according to a note from Jefferies analyst Ian Hilliker.
Consumer healthcare lagged expectations, needless to say, with its sales of €1.41 billion falling short of €1.43 billion. The company’s crop sciences and animal health segments each beat estimates.
Within pharma, Bayer’s key anticoagulant Xarelto, eye drug Eylea, cancer med Nexavar and hemophilia med Kogenate beat expectations. Sales for Mirena, a birth control device, missed analyst estimates.
The results come just one day after Reuters reported that Bayer is considering job cuts as part of a wide-ranging business review following the Monsanto buy. The review is set to conclude by November. Last week, a German business publication reported that Bayer was eying up to 1,000 layoffs, though the company declined to confirm the layoffs and said it continually reviews operations.
Bayer’s move to buy Monsanto has frequently been questioned by pharma watchers. Following the results announcement Wednesday, Berenberg analyst Alistair Campbell wrote that the division between the company’s units “remains highly problematic,” as quoted by Reuters.
Any future reorganizations will follow the company’s move last year to combine its pharma R&D into one group led by Joerg Mueller. The unit houses teams in cardiology, gynecology, ophthalmology, hematology, oncology and more.
As Bayer works to integrate Monsanto and reviews its business, a legal issue poses a potential distraction for the company and investors alike. Last month, a California jury ordered the company to pay $289 million to a plaintiff who argued the Monsanto weed killer Roundup caused his cancer. Bayer pledged to appeal. Now, the company faces 8,700 lawsuits alleging a link between glyphosate products and cancer. Bayer maintains its products are safe and pledged to defend against the suits.
By Eric Sagonowsky
Source: Fierce Pharma
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