Leadership Change Bayer's Crown Prince

The new head of Bayer's healthcare operations, Werner Baumann, is expected to lead the restructuring of Germany's largest drugs maker and is seen as a potential chief executive.
Werner Baumann is looking to climb the ranks.

 

Business is booming at Bayer these days. Demand for its pharmaceutical and agrochemical products is stronger than ever. Stock prices are hitting new highs on almost a weekly basis. And to the delight of investors, Chief Executive Marijn Dekkers decided in September to spin off the plastics division, Bayer Materials Science (BMS).

But if there’s one area where the Leverkusen-based company faces difficulties, it’s retaining top foreign executives at its critically important healthcare division, Bayer Healthcare.

With the departure of Frenchman Olivier Brandicourt, who will take over as the chief executive of French pharmaceutical giant Sanofi, Bayer faces the second executive reshuffle within the past few years. Werner Baumann, Bayer’s 52-year old chief strategy and portfolio officer, will replace Mr. Brandicourt at Bayer Healthcare on April 2, while continuing his duties as a member of the management board, the company said.

The nomination solidifies Mr. Baumann's position within Bayer and increases his shot at replacing Mr. Dekkers, who wants to retire at the end of 2016.

Liam Condon, current head of the agrochemical division, Bayer Crop Science, is another internal alternative to become CEO, insiders say.

Mr. Baumann, who studied economics and has worked as a finance specialist at Bayer, now has the opportunity to demonstrate his skills running a key production unit. It’s something of an acid test for the Bayer crown prince. Should he fail, insiders believe Liam Condon, current head of the agrochemical division, Bayer Crop Science, is another internal alternative. Mr. Condon, an Irishman, has been highly successful at driving growth in the crop science division.

It seems certain Mr. Baumann will lead Bayer Healthcare for a limited time and not only because of a changing of the guard when Mr. Dekkers leaves at the end of 2016. Bayer already plans a major corporate restructuring tied to the spinoff of its plastics subsidiary.

 

Video: Werner Baumann discusses finance.

 

Mr. Baumann’s new role indicates the company could be preparing to exit its present holding structure, which consists of an operative holding company with three independent subgroups and several service companies operating under its umbrella. The structure was introduced in 2002, when Bayer still rested on four pillars: crop protection, healthcare, polymers and chemicals.

By 2005, the company made large portions of its chemical business independent through the spinoff of its synthetic rubber maker, Lanxess. When the plastics operations, Materials Science, lists on the stock market as planned in the fourth quarter this year, Bayer will only consists of two major subgroups: healthcare and crop science.

This is why Mr. Dekkers will use the restructuring to make the organization more efficient. Two levels of management likely will be abolished and research in the two units is expected to become more closely integrated.

With his responsibility for strategy and portfolio management, Mr. Baumann will lead the reorganization. Mr. Brandicourt’s departure likely gives him additional leeway.

 

 

Meanwhile, with Mr. Brandicourt parting, Bayer loses yet another top executive to a major European rival. Less than two years ago, the former head of Bayer Healthcare, Jörg Reinhardt, said adieu to become chairman of the board of directors of Basel-based pharmaceutical giant Novartis.

All in all, Mr. Brandicourt’s departure is the fifth change of command at the division since Arthur Higgins left in 2010, when the then CEO-designate, Mr. Dekkers, provisionally took charge. After Mr. Reinhardt left, the former board member responsible for technology, innovation and sustainability, Wolfgang Plischke, took the post.

None of this should worry Mr. Baumann. Despite changes in the executive offices, nothing has slowed the success of the healthcare division.

With €20 billion, or $22.64 billion, in sales and an estimated €5.6 billion in EBITDA in 2014, it’s likely to generate almost half of the corporation’s sales and two-thirds of the operating profit.

 

Siegfried Hofmann is Handelsblatt's chemical and pharmaceutical industries correspondent. To contact the author: [email protected]