The failure of asundexian - a potential blockbuster - in phase three is a major blow for Bayer. Its pharmaceuticals division, once the jewel in the crown, has long since stopped innovating. The patent expiries of Xeralto and Eylea are fast approaching, and the little game of reformulations won't delay the deadline indefinitely.
The agricultural sciences division is facing shrinking markets and an ever-growing legal bill. Clearly, the acquisition of Monsanto is already one of the greatest disasters of contemporary capitalism.
Bayer has signed a cheque for EUR55 billion to acquire Monsanto, a sum that can be compared with its current market capitalization of EUR40 billion to gauge the scale of the destruction of value. Let's face it, the Germans were fooled by the Americans, who handed them the hot potato just before the storm broke.
For its part, the consumer healthcare division is barely surviving. Growth has stalled and margins have been under pressure for years. The other major pharmaceutical groups have already sold off their comparables to consumer goods groups such as P&G and Unilever. Bayer, on the other hand, is still dragging its feet.
New CEO Bill Anderson, who arrived last summer, has his work cut out for him and a limited window of opportunity if he is to shake off the Deutsche bürokratie coconut. Anderson was previously head of Genentech, Roche's R&D arm.
It's easy to see where the Bayer board's priority lies: in revitalizing the pharmaceuticals division rather than in a major restructuring, such as that advocated by the activists in the conglomerate's capital.
Would the latter make sense? In the past, Bayer has justified its desire to retain its agricultural sciences and consumer health divisions by their ability to finance the R&D of the pharmaceuticals division. The strategy does not appear illogical, especially with a high level of debt that leaves the group little room for maneuver.
Moreover, even if we were to assume that the entities would be separated, what would Bayer really get? Aligned with the valuation levels of FMC or Corteva, Monsanto could be worth EUR50 billion. At ten times earnings, the pharmaceutical division could be worth EUR30 billion, and the consumer healthcare division EUR10 billion.
Less the EUR45 billion in net debt - if we include EUR10 billion in provisions linked to the glyphosate litigation - we end up with a net asset value of EUR45 billion. Apply a slight holding discount to this amount and the current market capitalization looks rational.
Bill Anderson is right to see the Group's culture reformed from top to bottom. However, the task appears Herculean. Without a swift revitalization of the pharmaceuticals division and divine intervention to put an end to the glyphosate legal nightmare, Bayer will soon be in an untenable situation.