Bayer postpones listing as result of Baycol recall

20 August 2001 00:00  [Source: ICB]

Bayer has postponed its listing on the New York Stock Exchange (NYSE) while it reviews its pharmaceutical division which is currently under a shadow of pending litigation following the withdrawal of its anticholesterol drug Baycol/Lipobay.

The company had been scheduled to list on NYSE on 26 September 2001. However, several US law firms planning litigation against Bayer, on behalf of patients who suffered severe muscle weakening while taking Baycol, has spelt devastating consequences for the German group. Since the Baycol withdrawal, shares in Europe have plunged 28% and some 52 possibly related deaths have been reported to the authorities. Bayer withdrew Baycol in all countries except Japan on 8 August.

Manfred Schneider, Bayer's chairman, said: 'The climate for our listing has altered considerably over the past few days. We don't want to list our shares on what is, for us, the world's most important capital market, without being able to give convincing answers to questions.' Bayer plans to list in February 2002.

Bayer says it will fight the suits, which it claims are unfounded, as packaging labels warned against taking Baycol in combination with another lipid-lowering drug, gemfibrozil, or starting therapy at high dosages. Bayer has not withdrawn the drug in Japan as neither the high-dose prescription nor gemfibrozil are available there.

In a further blow, German health authority Bfarm has criticised Bayer for informing it too late of Baycol's side effects revealed in a study Bayer published on 15 June this year. Bfarm said it was not informed until two days after the drug's recall. A health ministry official said Bayer could face a fine of up to DM50 000 ($23 000) for its failure. But, he said this sum was 'not impressive' for a company of Bayer's size and authorities may consider sanctions.

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The recall has hit Bayer at the same time as cyclical downturns for chemicals and polymers (see box). The loss of Baycol, from which Bayer expected sales of E1bn ($895m) this year, will take another E650m bite out of earnings.

Speaking at a press conference last week Schneider said the crumbling of the drugs platform has weakened the fundamentals of Bayer's four-pillar business strategy. Consequently it may have to consider a minority joint venture for pharmaceuticals. He said two 'renowned' competitors have expressed an interest.

The postponed listing may cast doubt over this as some analysts believed Bayer would participate in a stock swap deal with another US-listed firm.

Commerzbank analyst Michael Vara said Bayer could appeal to several players. But he added that any unresolved lawsuits could scare off bidders.

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