Bayer boss Bill Anderson this week drew parallels with a recent skateboarding accident to describe the state of the Aspirin-to-Roundup conglomerate. One Sunday in June 2021, he found himself “face down in the street on the edge of unconsciousness from the pain”, his femur broken in four places and haemorrhaging blood, he told investors.
“Having a broken leg didn’t make me a lesser person, but it did dictate my immediate actions and greatly limited my options in the moment,” the 57-year-old said on Tuesday. It took him complex surgery and months of physiotherapy to recover.
The 160-year-old German corporate juggernaut was also in dire straits, he said. Facing the loss of exclusivity of some of its best-selling drugs, boxed in by its own bureaucracy, stifled by a heavy debt burden and hounded by costly litigation after the takeover of US seed producer Monsanto, Bayer was “badly broken in four places”.
Eight years after the ill-fated $63bn Monsanto deal, which his predecessor Werner Baumann pushed through in spite of major shareholder opposition, Anderson is tasked with a near-impossible mission: resurrecting what was once one of the world’s largest chemical groups and the pride of corporate Germany, with 100,000 employees and a market value that peaked at €121bn.
Less than a year into the job, the Texas native who calls California’s bay area home has some convincing to do: after slashing dividends and ditching immediate break up plans this week, the stock plunged nearly 8 per cent to the lowest level in 19 years, giving the company a market value of €26bn.
“Bill Anderson is running out of time”, said Thomas Schweppe, a former Goldman Sachs banker and founder of Frankfurt-based advisory firm 7 Square. While the new CEO was not to blame for causing the problems, he seemed to lack “the sense of urgency” in addressing them, said Schweppe, adding that Anderson’s arguments against a break-up were “a decade old and just not convincing”.
Setbacks and challenges are in abundance. Bayer has been ensnared in a US legal battle over Monsanto’s weedkiller Roundup, whose active ingredient glyphosate has been blamed by tens of thousands of Americans for giving them cancer. In its pharmaceutical division, Bayer had to abandon a late-state trial for its most promising drug last year, meaning it has only a few potential blockbusters left in its pipeline: treatments for prostate cancer, chronic kidney disease and menopause symptoms.
Anderson says he is unfazed by investors’ criticism and is focusing instead on “doing the things that will realise value for customers and for shareholders in the future”. On Thursday, he could find comfort in at least one public show of support from top three shareholder Harris Associates, which said that he was “absolutely taking the right path to enhance value creation”.
Now based in Leverkusen — whose Bayer-owned football club could win the Bundesliga for the first time in its 120-year history — the executive is drawing on close to 30 years of experience in pharma and biotech.
Growing up in Lake Jackson, Texas, near a massive Dow Chemical factory where his father worked as a chemist, Anderson studied chemical engineering at the University of Texas at Austin and MIT. He joined US firm Biogen and then Genentech. After the latter was bought by Swiss pharmaceutical group Roche in 2009, he rose through the ranks, becoming Genentech’s CEO in 2017 and Roche’s head of pharma two years later.
“He has the most encyclopedic memory of deals, products and companies and can pull examples and learn from them,” said former colleague Alexander Hardy, chief executive of US biotech firm BioMarin.
Caught between bondholders rejecting the idea of a break-up and shareholders refusing the idea of capital raise, his main lever to reduce Bayer’s €34.5bn debt is a far-reaching internal reorganisation. Known as a “dynamic shared ownership” and based on an idea by consultant Gary Hamel, it consists of cutting out middle managers to empower the scientists and sales experts, and is expected to save €2bn per year by 2026.
“This is not simply a cost-savings program” but a “radical new operating model made up by small, nimble teams who work on 90-day cycles rather than one-year plans”, Anderson said.
Confidants acknowledge that the project can sound lofty. But Hardy, who worked on a similar plan with Anderson at Genentech, insists “it really does work”. Profit per employee shot up almost 70 per cent within five years, Hardy said.
Current and former colleagues describe Anderson as hands-on. “Bill is not a figurehead leader who manages through process or by looking through reports. He rolls up his sleeves,” said Karen Massey, chief commercial officer at biotech company Argenx, who worked with him at Roche.
While Anderson has warned the revamp will lead to “significant” job cuts, Bayer employees have been supportive. In an internal newspaper seen by the FT, workers’ representatives wrote that he “can fill people with enthusiasm and knows how to get them on board.”
Heike Hausfeld, the head of Bayer’s powerful workers council and the company’s deputy chair, described him as “very open and approachable”, adding that “he acts with a lot of transparency and listens carefully”.
There is still confusion about the reorganisation, however. “For many colleagues it is still not yet palpable what it will eventually mean for their day-to-day work. Even I don’t have the full picture yet”, she said — but insisted that failure was “not an option”.
Since his gruelling fall, Anderson has steered clear of skateboarding at the behest of his wife — but on Tuesday he sought to strike a hopeful note for the group he now runs.
“I stand before you,” he said, “with the ability to do everything I could before my accident.”
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