Loss of cholesterol drug hits Bayer and sparks GSK takeover rumours
Following the withdrawal of one of its major drug products on possible harmful side-effects, Bayer's pharmaceutical arm could be subject to a US$15bn (€16.4bn) takeover by GlaxoSmithKline.
The cholesterol-lowering drug cerevastatin (Lipobay/Baycol) was removed from the market following concerns over reported side-effects.
Initial estimates indicate that it could cost the company as much as US$583m (€650m), giving a projected drop in earnings in the healthcare segment this year of up to 50%.
Bayer claims the problems of muscle weakness reported with cerevastatin are the result of interactions with another cholesterol drug, gemfibrozil (Lopid, from Pfizer), despite warnings about such concurrent use in the drug's packaging.
Cerevastatin was launched in 1997, and last year was responsible for 10% of sales — and 25% of profits — in the company's healthcare division. Sales for this year were expected to top the US$1bn mark.
There are also reports that GSK, which marketed Baycol in the US, could be subject to legal damages over the effects of the drug. Thus, although the company has close ties with Bayer, and the addition of its pharma division to GSK's range would bring in an attractive portfolio of prescription drugs, GSK will have to ensure it is not entering a legal minefield by acquiring Bayer's drug business.
Bayer issued its third profits warning of the year, saying that full-year earnings will fall substantially short of its previous estimates.
Sales from continuing operations rose by 8% in the first half of 2001, but earnings fell by 23% to US$1.3bn (€1.5bn).
Overall sales in the healthcare segment grew by just 2%, which the company blames on the delay in releasing the blood clotting agent Kogenate.
'The economic consequences [of the withdrawal] are severe,' said chairman Manfred Schneider. 'We will continue to pursue the cost saving and improvement programmes we have already embarked on. Our goal is to achieve savings of e1.5bn by 2005.'