German pharmaceuticals giant Bayer was in crisis condition today as it issued a profits warning, withdrew a cash-rich cholesterol drug because of side effects, and saw its shares slump 15%.
Immediately after announcing the third profit warning in three months, and the second in six weeks, the group said it would unveil restructuring measures tomorrow when it announces half-year results.
But Bayer insisted that its latest setback, caused by withdrawal of cholesterol treatment Baycol/Lipobay, except from Japan, and by continuing global economic weakness, would not affect negotiations for it to buy CropScience from Aventis.
Negotiations for acquisition of CropScience, the agro-chemical business of French-German Aventis, are expected to finish in several weeks. If Bayer buys the unit, it will become a world leader in the pesticide industry.
Bayer said it was withdrawing Lipo/Baycol, which is used by six million patients worldwide, from the markets because of mounting evidence that it caused muscular weakness. However, it provided no further details and did not explain why the drug was remaining on sale in Japan.
Bayer's management declined to say if the profit warning might signal possible job cuts, saying only that a restructuring plan would be announced tomorrow.
Werner said that the immediate withdrawal of Lipobay/Baycol would reduce profits in 2001 by 600 million to 650 million euros and would include 250 million to 300 million euros in exceptional costs.
The company also warned that 'initial profit expectations for the full-year of 2001 will be far from being met' and that it would not achieve its target of making an operating margin of 20% next year. The group had said in June that its operating profit for this year would fall to about 3 billion euros compared with 3.35 billion euros in 2000.
Nonetheless, the group remained confident that sales in 2001 would be higher than the 3.340 billion euros in sales that the company posted last year.
