Bayer stumbles after Monsanto cancer decision reversed
Bayer stock fell on Tuesday after a US court rejected its Monsanto arm's appeal to overturn a jury verdict linking its Roundup weedkiller to cancer.
Bayer AG
€27.40
19:59 26/04/24
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23:59 25/04/24
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20:00 26/04/24
Overnight a US judge rejected an appeal by Bayer-owned Monsanto accusing it of “negligent failure” and said the company should have warned Dewayne Johnson who was diagnosed with cancer in 2014 about the risks the herbicide posed to his health.
Nevertheless, the judge slashed over $200m off the damages and said will now have to pay $78m to Johnson who won the lawsuit against the company in August.
In a statement, Bayer hailed the reduction in damages as "a step in the right direction”.
“But," the company added, "we continue to believe that the liability verdict and damage awards are not supported by the evidence at trial or the law and plan to file an appeal."
With around 8,000 similar cases outstanding in America, investors fear similar rulings could end up costing the company billions.
UBS observed that product liability litigations "tend to end up in settlements" and it was currently "impossible to estimate the average pay-out per potential case and the time-line to conclusion is also unclear".
"However large litigations in pharma have settled in the low to mid-single digit billion range even where the number of plaintiffs was in the thousands. We include a mid-single digit billion settlement in our downside scenario (approximately €5 per share)."
Jefferies analysts said that previous cases pointed to a liability of about $680bn.
"The key," said Kepler, "is that we now know that a US judge would be far more inclined than the jury to rule in favour of Monsanto on liability, even if she ultimately decided that the evidence did not reach the very high bar required to actually overturn the jury’s right to make a decision. While it seems Bayer is highly likely to win on appeal, this ruling is a clear negative development versus what was expected after 10 October."
Shares in the German chemicals giant lost 9% to €69.24 by the close on Tuesday.