Bayer has to pay $ 81 million in damages to a man who claims the Roundup weedkiller caused his cancer, a jury ruled Wednesday. In a similar way last year, the sum was $ 289 million, reduced to $ 78 million on appeal. Since that first verdict, Bayer's shares have lost 40% of their value — and there are still around 11,300 cases waiting in the wings.
All of which begs the question: was it foolhardy for Bayer to buy Roundup maker Monsanto? 19659002] Some, including activist Bayer shareholder Christian Strenger, say it was. Stronger has filed a motion of no confidence in Bayer's board ahead of the German giant's annual general meeting next month, and it includes a litany of complaints about the "almost complete failure to deliver the key objectives presented by [Bayer CEO Werner] Baumann in May 201
But before looking at Strenger's argument, let's consider the rationale behind that $ 66 billion whopper of a deal.
Why Bayer bought Monsanto
Bayer bought Monsanto as part of its reinvention as a life-science firm with a focus on health and agriculture. At the time the deal was proposed in 2016, the competitive landscape of the agricultural science space was shifting dramatically — Dow and DuPont were merging, and so were ChemChina and Syngenta. Bayer wanted to become a bigger player in seeds and genetically modified crops, and Monsanto offered just that.
Monsanto was also an early mover in the burgeoning "digital agriculture" arena, explains Sanjiv Rana, the editor-in-chief of Informa crop protection analysis outfit Agrow. "The acquisition gave Bayer an advantage in the field," he said.
But there were problems from the get-go.
First, the deal raised antitrust concerns in the US – it only went ahead after the companies agreed Bayer sells its Roundup compilation Liberty herbicide business, along with its cotton, canola, soybean and vegetable seed businesses, various research and development projects, and Bayer's own digital agriculture business. Chemicals company BASF was the lucky buyer, paying $ 9 billion.
And then there was the glyphosate issue. The International Agency for Research on Cancer (IARC) in the agency of the World Health Organization (WHO) issued a report in early 2015 that said the pesticide, which is Roundup's active ingredient, was probably carcinogenic to humans. The WHO and United Nations were clarified that glyphosate was unlikely to pose a carcinogenic risk to humans from exposure through the diet. However, eating roundup residues is one thing and spraying the stuff over many years — as both successful plaintiffs did — is another.
The IARC report, which was established at glyphosate was probably carcinogenic, was partly based on studies of farmers who had been exposed to the substance. So why have regulators not cracked down? “Many regulatory agencies rely primarily on industry data from toxicological studies that are not available in the public domain,” says the IARC in a Q&A on its study. "In contrast, IARC systematically assembles and evaluates all relevant evidence available in the public domain for independent scientific review." In essence, the IARC, not a regulatory authority itself, considered that different sets of data from those considered by regulators, avoiding industry studies
Strenger, who is a prominent German governance expert, customs Fortune the most important question as the cancer cases proceed is whether " too little in terms of warning signs. ”
“ Mr. Baumann from Bayer always refers to 800 opinions that glyphosate is a safe product, ”said Strenger. "But the big issue is how it was applied, and it was sold properly with sufficient warning signs." A jury awarded plaintiff Dewayne Johnson $ 289 million after claiming Monsanto's weedkiller caused his cancer. A judge later cut that award to $ 78 million. (Photo by JOSH EDELSON / AFP) “/>
A jury awarded plaintiff Dewayne Johnson $ 289 million after claiming Monsanto's weedkiller caused his cancer. A judge later cut that award to $ 78 million. (Photo by JOSH EDELSON / AFP)