Bayer to Invest Billions in Weedkillers in Wake of Roundup Controversy--Update
14 June 2019 - 8:32PM
Dow Jones News
By Ruth Bender and Jacob Bunge
Bayer AG plans to invest EUR5 billion ($5.64 billion) on
developing new ways to combat weeds over the next decade, as the
German chemicals and pharmaceuticals giant seeks to win back trust
in its business in the wake of thousands of lawsuits alleging its
Roundup herbicide causes cancer.
A big legal fight over the blockbuster weedkiller -- inherited
with its takeover of Monsanto Co. last year -- has plunged Bayer
into one of the worst crises in its 155-year history. The company
has lost the first three jury trials to plaintiffs claiming Roundup
gave them non-Hodgkin lymphoma, with the highest award topping $2
billion. In response, its shares have almost halved over the past
year.
While Bayer is appealing the jury verdicts and continues to
vigorously defend the safety of Roundup and the active ingredient
glyphosate, its announcement Friday shows how the company is being
forced to change tack under pressure from its legal woes. Bayer
said glyphosate would retain an important role in its portfolio but
that it was also "committed to offering more choice for
growers."
The company said the EUR5 billion earmarked for herbicide
development over the next 10 years would largely fit into the
annual spending of EUR2.4 billion that it had previously estimated
for agriculture R&D in coming years. Herbicide research will
represent about one-fifth of Bayer's overall agriculture research
investment, and the commitment announced Friday will include
chemical research and regulatory expenses as well as new
computer-driven farm-management services.
The company also said it would cut its "environmental impact" by
30% by 2030 through new technologies and making weedkiller use more
precise, and that it would also be more transparent about the
safety of its products. These measures, it said, would address
health and environmental concerns Bayer has faced since buying
Monsanto. Bayer also took out newspaper advertisements to promote
its message.
The company's leadership has faced intense criticism over its
decision to buy Monsanto. At a heated shareholder meeting in late
April, some 55% of shareholders refused to endorse management's
actions in the past year.
Bayer and other agricultural companies are already marketing new
herbicides, as glyphosate's widespread use on U.S. farms has
contributed to weeds like palmer amaranth and waterhemp developing
resistance to the world's most widely used weedkiller.
Bayer said Friday that with glyphosate's global success came
"widespread use, weed resistance, and in some instances unintended
misapplication."
Monsanto in recent years launched a new herbicide based on the
chemical dicamba, along with soybean and cotton seeds genetically
engineered to withstand the spray.
Some farmers have said the more-powerful weedkiller drifted onto
neighboring fields and damaged nonmodified crops. Agricultural
researchers estimate that millions of acres of crops have been
damaged by drifting dicamba. Bayer has attributed the crop damage
mainly to farmers misapplying the spray. In 2018 the U.S.
Environmental Protection Agency said farmers could continue to use
dicamba under tighter restrictions.
Rival Corteva Inc. is marketing a competing crop seed and
herbicide combination, based around the herbicide 2,4-D.
The legal battle over Roundup could take years to resolve as
Bayer has said it would appeal decisions and wait for the outcome
of a few more cases before considering a settlement.
Investors say Bayer's stock is likely to struggle until there is
more clarity over how much the litigation will end up costing the
company. Analysts' estimates range from EUR5 billion to EUR25
billion.
In 2015 the International Agency for Research on Cancer, a World
Health Organization unit, classified glyphosate as likely having
the potential to cause cancer in humans. That classification
triggered the wave of lawsuits. Bayer argues hundreds of studies
and regulatory decisions around the world show Roundup and
glyphosate are safe when used as directed.
In the U.S., where Roundup has become integral to farming,
Costco Wholesale Corp. recently pulled Roundup herbicides from its
stores. Certain cities in California, Florida, Minnesota and
elsewhere have also forbidden use of glyphosate weedkillers on
municipal property while other farm-state lawmakers have defended
the herbicides.
Several European countries, including France and Austria, are
considering phasing out glyphosate. Early this year, a French court
banned a Roundup product with the ingredient, even though it still
has a European Union seal of approval. A senior executive of German
public rail operator Deutsche Bahn AG told a German weekly Friday
that the company together with the German environment ministry
would research alternatives for combating weeds along its 33,000
kilometers of tracks.
The company said it would invite scientists, journalists and
representatives from nonprofits to participate in its efforts to
secure re-registration of glyphosate in the EU -- a review likely
to trigger debate about safety. The process is expected to kick off
later this year, with a vote in late 2022.
--Cristina Roca contributed to this article.
Write to Ruth Bender at Ruth.Bender@wsj.com and Jacob Bunge at
jacob.bunge@wsj.com
(END) Dow Jones Newswires
June 14, 2019 15:17 ET (19:17 GMT)
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