Bayer's profits hurt by drug withdrawal

Lipobay is mainly responsible for Bayer's troubles

German chemicals group Bayer has reported a big fall in third-quarter profits but said it expected to remain in the black despite the global economic slowdown.

The fall in profits is largely because of the company's withdrawal of anti-cholesterol drug Baycol/Lipobay.

Schneider is searching for "strategic partners"

Bayer's third-quarter operating profit before exceptional costs dropped 90.7% to 66m euros ($58.20m), while sales fell 5.9% to 6.868bn euros.

Bayer, Europe's second-largest chemicals group, put the cost of the Lipobay withdrawal and problems in producing the haemophilia treatment Kogenate at 1.4bn euros ($1.2bn).

This was more than previously announced.

"We are simply unable to absorb the withdrawal in August of Lipobay and the severe downturn through the third quarter," said chief executive Manfred Schneider.

Difficult year

It has been a difficult year so far for Bayer, after the Lipobay problem resulted in falling profits, takeover rumours, the filing of 160 lawsuits, a suspension of a listing on the New York Stock Exchange and the sacking of over 4000 workers.

In the fourth quarter, Bayer is expected to receive a short-term boost from sales of Ciprobay, which is used to treat anthrax.

The drug has been in hot demand in the US, following the anthrax attacks.

The company refused to comment on reports that it was close to signing a marketing deal in the US with GlaxoSmithKline (GSK) for its new erectile dysfunction drug Vardenafil.

Drug marketing deal

Lipobay was withdrawn in August over fears that it may have caused the deaths of more than 50 people.

Bayer also said it expects full-year operating profit to be cut by 350m euros because of the production problems of Kogenate, which it expects to resolve early next year.

The Health Care segment, which is responsible for the Lipobay and Kogenate problems, would remain a core business for Bayer, Mr Schneider said.

The company is continuing "to search for strategic partners for both the segment as a whole and for individual areas or special markets", he added.

New partner

Bayer needs a strong US partner to market and sell Vardenafil in competition with better-known rivals such as Viagra.

It hopes the new treatment will fill part of the gap left by the withdrawal of Lipobay.

British drug giant GSK has been tipped as the ideal partner since it has been looking to make use of its huge US sales operation after failing to bring several products in development to market.

GSK also refused to comment on a possible deal with Bayer, which was reported by the UK's Financial Times without citing sources.

The two companies have already worked together in marketing Lipobay.