Over a year ago, Bayer CE Bill Anderson took a daring step to revitalize his battered company, saying the following: “Fire managers and let employees self-govern.” This move was made against a backdrop of huge debt, nearing expiration of a prime patent, and an endless legal battle over a disastrous acquisition.
After nearly 12 months, however, it seems that green shoots might be beginning to appear for the group erstwhile renaming itself after the German inventor of aspirin.
Earlier in the year, Bayer made the announcement as part of efforts to realize a €2 billion cost savings by 2026. This involved about 5,500 job cuts, most in managerial positions.
Instead of managers, Bayer scrapped the budgets and told workers to self-organize into 90-day “sprints” for self-directed teams. Anderson vowed that the majority of his personnel would be functioning under this model by the end of 2024.
Bayer will come out not as a lumbering corporation, but quite as agile and bold as a startup—albeit one operating in more than 100 countries. I am convinced that this dramatic change will cause acceleration and unlock value creation in each of our businesses,” Anderson wrote in a commentary piece for Fortune in March.
Bayer told Business Insider that the first batch of teams to roll out this structure in the summer of 2023 were “racing ahead and doing great,” while other groups were “still stuck in the starting blocks.” More importantly, he said, for the last year, voluntary attrition was in decline as they announced mass layoffs.
“You know the belly of the beast is bureaucracy, right,” Anderson told BI. “Everybody knows that. Everyone hates it.”
The drug maker would require more than an update in its management structure to rectify its affairs in 2025.
In March, Anderson had said that Bayer was “badly broken in four places,” where he compared the state of his leg after he skated over a fracture with injuries to his entire structure.
More than 44 percent of Bayer’s market capitalization has dwindled at present from last year.
For Bayer, acquiring the parent company of Roundup weed killer, Monsanto, for $63 billion in 2018 has brought disaster upon disaster, with the company facing lawsuit after lawsuit over allegations that the product caused cancer in consumers. The group has seen modest success in fighting some of these claims recently.
The exclusivity will expire in 2026 for Bayer’s blood-clot medicine Xarelto, its bestselling drug, paving the way for competitors to come to market and likely negate Bayer’s profits from the drug.
The financial structures are additionally juxtaposed with an overwhelming amount of debt-hitting nearly €34.5 billion, which can be equated to annual sales for the company. The ratings agency Fitch has yet to revise its assessment of the debt of Bayer since lowering the rating of the group to BBB in March.
Under the new structure, called “dynamic shared ownership,” Anderson would reallocate the budgets every 90 days to ratchet back bureaucracy and speed efficiency through.
Anderson cited Bayer’s pharmaceutical division outside Milan, which, by the end of Q3 2024, had cut release time by 50%.