Bayer’s Remorse

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What's going on?

German pharmaceuticals and life sciences giant, Bayer inventor of aspirin and commercializer of heroin (oops) reported second-quarter results on Wednesday that gave investors a headache. Its stock fell by 2%.

What does this mean?

Bayers been tangled up in its drawn-out $63 billion acquisition of agricultural biotechnology company, Monsanto (maker of alleged killer weed killer, Roundup) the ink on the deal finally dried in June. Bayer said that its profit for the year, excluding Monsantos contribution, would be higher than it had previously forecast but, including Monsanto, itd be lower. As Monsantos earnings were only included since June, Bayer missed out on Monsantos traditionally bigger first half of the year.



The addition of Monsanto to Bayers lineup will make the historical drugmaker as reliant on agricultural sales as it is on pharmaceutical sales. Profit at Bayers combined crops business nearly doubled compared to a year ago, partially offsetting falling profit in its consumer health business (where it sells things like antihistamine, Claritin, and stomach settler, Alka Seltzer).

Why should I care?

The bigger picture: Bayers inherited Monsantos problems.

Last month, a California court ordered Monsanto (i.e. Bayer) to pay $289 million in damages after health concerns over Roundup and another herbicide both of which are glyphosate-based products (more below). That settlement was for one case, and there are about 8,700 more outstanding. And this has all come to light after Bayer agreed to buy Monsanto. Bayers share price plummeted after the verdict.



For you, personally: Hero or villain?

Glyphosate is a hot topic. Some research says that it probably causes cancer. Other research says that it probably doesnt. Bayer thinks its fine, and plans to contest the court ruling. The history of pharmaceuticals is rife with similar uncertainty like morning sickness drug, thalidomide, which turned out to cause birth defects, and weight loss drug, fen-phen, which was found to cause heart disease. The jurys still out on glyphosate…

Originally posted as part of the Finimize daily email.

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