Bayer AG CEO Bill Anderson on May 23 said the wave of lawsuits over its Roundup weedkiller is an “existential” threat to the company and farmers, threatening innovation, with the costs exceeding those for R&D.
“The glyphosate litigation topic is an existential topic for our company because it does threaten to remove our ability to continue to innovate for farmers and for food security,” Anderson said in a speech at the Executives’ Club of Chicago, referring to Roundup’s key ingredient.
The chemical conglomerate is spending more on lawsuits than the $2.6 billion a year spent on R&D, the CEO said. He said Bayer is the largest R&D investor in agriculture, and the legal issues put at risk the progress needed to feed an exploding world population by mid-century with less water and land.
“This is actually something very serious for American agriculture,” he stressed. “It’s been estimated that the cost of groceries for the average family of four in the US would go up by more than 40% if glyphosate were removed from the agriculture system.”
Crops genetically modified to withstand the application of glyphosate weedkiller account for almost all of the corn and soybean plantings in the US and Brazil. Anderson said that despite the US’s scientific and regulatory communities giving a green light to glyphosate, the company is still subject to billions of dollars every year in lawsuits.
Bayer inherited the Roundup lawsuits through its 2018 purchase of agriculture behemoth Monsanto for $63 billion. The German company’s shares have lost more than 70% of their value since the Monsanto purchase.
Anderson’s predecessor, Werner Baumann, generally stopped short of warning that the company’s existence was threatened, even as the legal woes mounted. Bayer has set aside $16 billion to resolve Roundup suits. About $10 billion of that reserve has been spent so far, a company spokesman said.
Investor concern has grown about Bayer’s liability, eventually leading to the departure of Baumann. In addition to the legal woes, the company has been grappling with other problems, including a weak drug pipeline and high debt.
Bayer has vigorously defended its claim that glyphosate and glyphosate-based formulations are safe, and the chemical remains in widespread use across much of the world.
Bayer is ratcheting up the stakes as it considers a controversial legal maneuver known as the Texas Two-Step bankruptcy, which would allow it to settle tens of thousands of US lawsuits claiming that Roundup causes cancer, people familiar with the company told Bloomberg in March (GM March 15, p. 1).
The Texas Two-Step gets its name from the use of a state law that lets companies split their assets and liabilities into separate units, then place the part loaded with liabilities into bankruptcy to drive a global settlement.
Such a move, if successful, could permit other parts of Bayer, a major pharmaceutical and consumer health company, to keep operating normally. But courts have rejected the tactic by 3M Co. over suits targeting faulty hearing protection devices for US soldiers and by Johnson & Johnson in litigation tied to its talc-based baby powder.
Bayer agreed to transition from the glyphosate-based version of Roundup to new active weed-killing ingredients in the US consumer market by the end of last year. The company still sells glyphosate-based herbicides for agricultural markets, however, and the European Union late last year authorized sales for another decade.
Bayer has also sought a legislative solution with at least a handful of states mulling bills in recent months that would shield the company from lawsuits alleging liability due to Roundup (GM April 26, p. 29).