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Bayer announces
strategic
realignment plan for further growth |
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Following its successful reorganization
initiated in 2001, Bayer is going to further concentrate on
the core businesses of health care, nutrition, and innovative
materials in the future under three operating subgroups: Bayer
HealthCare, Bayer CropScience, and Bayer MaterialScience. A
new company to be headed by Dr. Axel Claus Heitmann will be
formed from Chemicals (excluding H.C.Starck and Wolff Walsrode)
and parts of Polymers and listed on the stock market by early
2005. |
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Bayer announces
strategic realignment plan
Plans stock market flotation of chemicals activities
and strategic refocus on healthcare business |
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Establishment of new company
integrating chemicals business and part of polymers business
Following
its successful reorganization, the Bayer Group intends to maintain
its focus on its core businesses and in the future concentrate
on health care, nutrition and innovative materials. For this
reason, Bayer Chemicals (excluding H.C. Starck and Wolff Walsrode)
is to be combined with certain parts of the polymers business
in a new company with the provisional name "NewCo". The aim
is for this company to be listed on the stock market under a
new name by early 2005 at the latest. The Supervisory Board
approved these plans of the Group Management Board at its meeting
on November 7. CEO designate of the new company is Dr. Axel
Claus Heitmann (44), currently a member of the Executive Committee
of Bayer Polymers and head of that company's Asia region, headquartered
in Shanghai.
"Both Bayer and NewCo will benefit from the split, because a
stock market listing will be highly attractive for both shareholders
and employees," explained Bayer CEO Werner Wenning. "Following
the separation, Bayer-with sales of around EUR 22 billion -
will be able to focus more closely on the core businesses in
which we have excellent technologies, strong market positions
and above all growth areas that we intend to further strengthen
by pooling all our resources. In this way, we aim to safeguard
the success of our company in the long term and generate additional
value. Bayer's reorganization was a key requirement for this
significant step. Equally, we will be safeguarding the future
of our chemicals business because, as an independent company,
NewCo will be able to respond faster and more flexibly.
" Reorganization into three businesses: HealthCare, CropScience
and MaterialScience
In the future Bayer aims to concentrate all its financial and
management resources on developing and expanding its core activities
in health care, nutrition and innovative materials, which are
predominantly research-intensive areas. Wenning sees high growth
potential in these areas but also a corresponding need for investment.
"This means we do not have sufficient resources available to
maintain or enhance the market positions of our chemicals business
or all of our polymers activities," said Bayer's CEO. The separation
should trigger the necessary entrepreneurial impulses and create
the conditions for optimizing the strategies of each company
according to their different business needs.
Bayer's wealth of knowledge with respect to humans, animals,
plants and materials, coupled with the respective products,
will provide the foundation for sustainable growth in the long
term in the promising markets in which Bayer plans to specialize.
Following the reorganization, Bayer will have three operating
subgroups: Bayer HealthCare, Bayer CropScience and Bayer MaterialScience.
Growth will come primarily from products containing newly researched
active ingredients, from the consumer healthcare business and
from growth in Asia. However, contributions to value creation
should be achieved by the group-wide utilization of technology
platforms, nanotechnology and the expansion of biotechnology
and genetic engineering as key innovation drivers.
Biotechnology is used not only by CropScience to achieve sustainable
qualitative improvements in food crops and higher yields, but
also to open up a range of new applications in other areas such
as gene-based diagnostics.
Pharmaceuticals business to focus on infection, cardiovascular
diseases and urological diseases
Bayer's new realignment also includes repositioning the Pharmaceuticals
business. "We have examined all the options for this business
- especially the possibility of partnerships. We found that
none of these solutions would have adequately reflected the
value of our Pharmaceuticals business. In our view, they would
not have offered a value-creating alternative," explained Werner
Wenning. "We therefore intend to focus on our own strengths
and steer our Pharmaceuticals Division with significantly modified
structures towards a successful future." Bayer will concentrate
its research effort on the therapeutic areas where it already
plays a leading role and has developed successful products:
anti-infectives, cardiovascular (including diabetes and obesity)
and urology. Bayer also has a number of promising product developments
in the oncology (cancer) field.
"We intend to position our Pharmaceuticals Division as a mid-size
European pharmaceuticals business because we are convinced that
this will generate the greatest value for our shareholders,"
stated Wenning. In the future, the division's activities will
be focused more strongly on Europe, though without neglecting
the important markets in the United States and Asia. According
to Wenning, considerable progress has already been made in restructuring
Pharmaceuticals. Successful new product launches have given
grounds for optimism. For example, sales of Levitra®, Bayer's
treatment for erectile dysfunction, are very encouraging. Also,
major progress has been made in the area of cancer research.
A rafkinase inhibitor for the treatment of advanced renal cell
carcinoma, developed in collaboration with U.S. company Onyx,
has now entered phase III clinical trials.
Wenning also sees particular opportunities for growth in the
consumer healthcare business. Bayer's Consumer Care, Diagnostics
and Animal Health divisions hold strong or very strong positions
worldwide. The company intends to further expand these activities.
Material Science business to invest in Asian growth markets
The CropScience business units Herbicides, Insecticides, Fungicides
and Seed Treatment hold excellent positions, and the aim is
to grow faster than the market in these areas. Environmental
Science is the market leader in the supply of pest control products
for the home and garden. The Bio Science unit is a pool of impressive
expertise in the field of biotechnology for which experts predict
annual growth rates of 15 percent.
In MaterialScience, Bayer holds global leadership positions
in polyurethanes, polycarbonates and coating raw materials.
It has access to internationally acknowledged leading-edge technologies
and a wealth of expertise acquired over many years. It is intended
to continue expanding the growth areas of innovative plastics
and coatings materials - with a special investment focus on
the growth markets of Asia. In China alone, Bayer is currently
building or planning several new production facilities. The
MaterialScience subgroup will in future also include the subsidiaries
H.C. Starck and Wolff Walsrode.
In addition to these three operating subgroups, the three service
companies will also remain within the Bayer Group. These companies
will also perform services for NewCo.
New company positioned to become market leader
With sales of EUR 5.6 billion and a workforce of around
20,000, NewCo will rank among Europe's leading chemicals suppliers,
occupy leadership positions in more than two thirds of global
market segments and be a technology leader in manufacturing.
"Independence will trigger strong entrepreneurial impulses,
enabling NewCo to enhance the competitiveness of its production
technology, too, and generate above-average growth and value,"
said Wenning.
Independence from Bayer should put NewCo in a position to utilize
capital resources more efficiently for the enhancement of its
competitiveness and to seek partners or investors at its discretion.
The new structure will also make it easier to focus management
resources on the specific needs of the chemicals business, conform
structures and processes to the requirements of the chemical
industry and activate niche markets utilizing new business models.
The aim is to continue to grow through a stronger focus on innovation,
efficient use of resources and targeted expansion of attractive
specialty applications.
NewCo will have a broad-based portfolio of around 5,000 products
covering basic, specialty and fine chemicals as well as polymers.
These products include: intermediates for the manufacture of
active ingredients for pharmaceuticals and crop protection products;
material protection products; chemicals for the leather, textile
and paper industries; ion exchange resins for water treatment
applications; inorganic pigments for coloring concrete and plastics;
polymer additives such as flame-retarding agents and plasticizers;
solid rubber and rubber chemicals for the rubber and tire industries;
ABS (styrenics) and semi-crystalline thermoplastics which are
used primarily in automotive engineering, as well as for the
manufacture of covers and housings. NewCo will have a global
presence with production facilities and sales organizations
in 40 companies and 20 countries. |
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Message from Dr.Portoff
Dear Harmony readers, |
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The Bayer Group has recently announced
its latest program for realignment. Bayer will continue restructuring
itself and, in the future, concentrate on the three core businesses
of health care, nutrition, and innovative materials.
Bayer plans to separate the Chemicals subgroup into an independent
company with the provisional name, ''NewCo'' that will also
take over certain parts of the polymers business. This separation
is necessary to ensure a successful future for Bayer and the
new company, and it will benefit both firms. We expect the ''NewCo''
to be highly attractive to both its shareholders and employees.
As the Bayer Group shifts direction, I call upon all employees
of Bayer in Japan to join forces to strive for the future success
of both Bayer and the new company. Also, I would like to ask
for your continued support as we work toward our objectives.
Sincerely yours,
Dr. Michael Portoff
Senior Bayer Representative for Japan and Korea
President, Bayer Ltd.
Bayer HealthCare Representative for Japan |
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