Bayer Says More Americans Are Alleging Monsanto Weedkillers Cause Cancer

Bayer AG said the number of American plaintiffs alleging its recently acquired weedkillers cause cancer has risen sharply, adding to concerns about potentially lengthy and costly litigation stemming from its acquisition of Monsanto.

Source: WSJ - Ruth Bender | Published on September 5, 2018

West Palm Beach, USA - April 29, 2013: A container of Roundup Weed and Grass Killer on a grass lawn. Roundup is a popular gardening and landscaping product that is manufactured by the Scotts Company LLC.

The German chemicals company on Wednesday also lowered its full-year earnings outlook because of delays in closing its $63 billion purchase of Monsanto, which included a portfolio of herbicides that contain glyphosate, notably flagship product Roundup.

Bayer said it faced some 8,700 plaintiffs across the U.S. as of late August—mainly cancer patients who claim to have fallen ill after being exposed to the glyphosate-containing Monsanto herbicides. As of late July, the number of plaintiffs stood at about 8,000, up from 5,200 a few months earlier.

Last month, not long after Bayer closed the acquisition, Monsanto was ordered to pay a plaintiff $289.2 million by a California state jury. It found that Monsanto’s Roundup and Ranger Pro products presented a “substantial danger” to consumers, and that Monsanto knew or should have known of potential risks and failed to warn users.

Bayer rejected the verdict as “wrong,” and is seeking a review of the court decision. It said it would appeal if necessary, a process the company said could take up to a year. Such large jury awards are often ultimately reduced and in some cases overturned. Bayer hasn’t disclosed any provision for liabilities linked to the cases. The company argues some 800 studies have proven that the chemical is safe and doesn’t cause cancer.

Bayer’s shares opened 2.9% lower after the company reported its second-quarter results and reduced outlook, and the stock finished the day down 1.6%. The shares have lost over 15% since the August 10 weedkiller verdict.

“Despite overall reassuring results, the glyphosate litigation uncertainty will likely remain an overhang in the midterm,” Jefferies analysts wrote in a note to investors.

Bayer said it hasn’t seen a decline in demand for its glyphosate products because of the litigation and doesn’t expect any as regulators haven’t changed their stance that the chemical was safe. “Glyphosate has been used and trusted for over 40 years,” said Liam Condon, head of Bayer’s Crop Science business, which now includes Monsanto.

Roundup has come under increased scrutiny after a unit of the World Health Organization in 2015 said that glyphosate was probably carcinogenic. Yet further studies have produced mixed results about the potential danger. The U.S. Environmental Protection Agency in September 2017 wrapped up a decadeslong assessment of glyphosate risks and found the chemical not likely carcinogenic to humans.

Bayer on Wednesday didn’t say how much money it was setting aside to cover legal costs or potential payments for weedkiller lawsuits. “We continue to believe that we have meritorious defenses and intend to defend ourselves vigorously in all of these lawsuits,” the company said in a statement.

A case was set to go to trial in Missouri in late October but Bayer Chief Executive Werner Baumann on Wednesday said it likely won’t start until 2019. So far, the majority of cases were filed in Missouri, Delaware and California, Bayer said.

The Monsanto deal closed on June 7 following two years of regulatory review during which Bayer had to shed more assets than originally planned to get the green light. The Leverkusen-based company on Wednesday blamed its lowered earnings outlook on the longer-than-expected review.

“The acquired business generates the majority of its sales and, above all, earnings in the first half of the year,” Mr. Baumann said.

Bayer said it now expects full-year core earnings per share of between €5.7 ($6.6) and €5.9, lower than consensus expectations and below 2017’s €6.64 a share, a restated figure to account for the integration of Monsanto. Bayer had previously targeted a flat result.

Bayer does expect the acquisition to boost its full-year sales, which it now projects at more than €39 billion, compared with its previous forecast of €35 billion.

Bayer reported a fall in second-quarter net profit to €799 million from €1.22 billion a year earlier after Bayer further reduced its stake in plastics company Covestro AG . Sales rose 8.8% to €9.48 billion from a restated figure of €8.71 billion, boosted by the integration of Monsanto, which offset weakness in the company’s pharmaceuticals and consumer-health segments.