More details have started to emerge on how exactly Bayer is executing its broader company restructuring.
The German conglomerate disclosed that 1,500 full-time employees had been laid off across pharmaceuticals, crop science and consumer health at the end of the first quarter. The company previously described plans for staff cuts in January but did not provide details on numbers.
CEO Bill Anderson told media on Tuesday morning that, while it does not have a breakdown of the worker cuts by division, it was likely proportional to each division’s representation across the company.
In January, the company had just over 22,000 staff in Germany and around 100,000 employees globally. It plans to complete the layoffs by the end of 2025.
Bayer’s “hierarchical bureaucracy” is one of four “badly broken” areas Anderson has set out to fix as he looks to steer the embattled company through a major turnaround. The other three include the loss of exclusivities for key pharma products, Monsanto litigation and high debt levels. His team has emphasized that the overhaul is not “simply a cost savings program,” but a reorganization of how the company is run. Nonetheless, execs have also acknowledged that reducing layers will often come at the expense of managerial employees.
Around two-thirds of the 1,500 terminations affected management jobs, Anderson said. In March, the German conglomerate slashed its pharma group’s executive leadership in half.
The terminations are part of the company’s plan to save €500 million by the end of the year and a total of €2 billion by 2026.
According to its most recent annual report, around 42.7% of Bayer’s total staffers are in production, followed by marketing and distribution (32.1%), R&D (16.8%) and general administration (8.4%). In each of the three divisions’ respective R&D segments, pharma had 7,800 staffers at the end of 2023, compared with 8,300 in crop science and 740 in consumer health.
On the commercial side, more than 180 customer and product teams were activated in pharmaceuticals as of last month, according to Bayer’s first-quarter presentation.
Customer and product teams — designed to function as micro businesses with cross-functional capacity — are set to replace “our traditional model with functional silos and many layers of hierarchy,” Stefan Oelrich, president of Bayer’s pharma division, said in a March release.
The restructuring comes as Bayer faces the loss of exclusivity for its two best-selling drugs, Xarelto and Eylea. Sales of the two drugs dipped slightly in reported currencies in the first quarter compared with the same period last year, with Xarelto sales down 1.8% to €926 million and Eylea sales down 0.9% to €782 million.
As for pipeline changes, the company dropped development of an atopic dermatitis drug, named zabedosertib. The selective IRAK4 inhibitor was in a placebo-controlled Phase 2 trial designed to enroll 77 patients.