Bayer Schering Pharma Outlines Reorganization Plan

Leverkusen, Germany (Nov. 9)-Bayer AG (www.bayer.com) outlined its strategy for integrating Schering AG (Berlin) into the newly formed company, Bayer Schering Pharma. These moves follow Bayer's acquisition of Schering AG earlier this year.

Bayer AG's board of management agreed on what it terms a “concept” for the future of some 70 Bayer Schering Pharma sites, including some in Germany. Last week, it provided details of its plans for the research and development (R&D) operations.

Bayer will consolidate its R&D operations into three major sites: in Berlin, in Wuppertal (the west German city in which Bayer was founded), and in Berkeley, California. The consolidation will shutter Bayer HealthCare's research sites in West Haven, Connecticut, and some facilities of Berlex, the Schering subsidiary based in Richmond, California. Bayer Pharma will relocate remaining departments and functions presently based in West Haven into headquarter locations in New Jersey.

Wayne and Montville, New Jersey will be headquarters for the company's US pharmaceutical commercial operations and global oncology and specialized therapeutics business units, and home to US-based global drug development groups and other business support functions. Employees transferring from other US sites will move in over the next 12–18 months.

Bayer said that its Berkeley site will continue to house a biologics manufacturing facility for “Kogenate,” and the company will continue to manufacture “Leukine” at its site in the Puget Sound region of Washington.

The company expects the consolidation of its research activities to be largely complete by the end of the first half of 2007. Bayer expects that these changes will eliminate roughly 600 US positions, primarily in research. And over time, the reorganization will trim an additional 200 US-based positions.

Bayer will take a one-time charge of $350 million and expects to reduce R&D costs by over $210 million by the end of 2008. Bayer expects synergies totaling EUR 700 million ($896 million) beginning in 2009.

Bayer also will restructure in Germany, but said in a statement “it is not yet possible to issue concrete statements on headcounts and schedules.”  The company also said that managerial positions in the future Bayer Schering Pharma have been appointed through the third hierarchical level.