Bayer may halt U.S. Roundup sales without legal protections - report

Investing.com -- Bayer (OTC:BAYRY) has informed U.S. lawmakers that it may cease sales of its Roundup weedkiller unless stronger legal protections are put in place to shield the company from product liability lawsuits, Reuters reported on Friday citing a financial analyst and a person close to the matter.

Shares of the pharmaceutical and biotechnology company were down 7.2% at 07:28 ET (12:28 GMT).

The German company has already paid approximately $10 billion to settle claims alleging that glyphosate, the active ingredient in Roundup, causes cancer. 

However, around 67,000 additional cases remain unresolved, with Bayer setting aside $5.9 billion in legal provisions, the report said.

Bayer argues that plaintiffs should not be able to pursue litigation under U.S. state laws, given that the federal Environmental Protection Agency (EPA) has repeatedly deemed the product safe for use, a stance echoed by regulators in other regions.

Bayer, which acquired Roundup through its $63 billion purchase of Monsanto (NYSE:MON) in 2018, said it is considering all possible options to resolve the litigation and declined to provide further comments, the report said.

For the first time, Bayer disclosed glyphosate sales figures, revealing that the widely used herbicide generated €2.6 billion ($2.8 billion) in revenue last year in the U.S. agricultural sector.

A source familiar with the matter, speaking anonymously due to the sensitivity of the discussions, indicated that Bayer may ultimately be forced to discontinue sales of the product in the U.S., the report said.

In its fourth-quarter earnings release on Wednesday, Bayer announced its goal to "significantly contain" litigation by 2026. 

It has been collaborating with farmers’ associations to lobby federal and state lawmakers and is preparing to make another appeal to the U.S. Supreme Court for legal protections after a failed attempt in 2022.

While Bayer has previously removed glyphosate from consumer products sold in the U.S., this marks the first time it has suggested withdrawing the herbicide from the U.S. market entirely.

As one of the world’s largest agricultural input companies, Bayer competes with Corteva (NYSE:CTVA), BASF, and China’s Syngenta. 

Currently, it remains the only U.S.-based glyphosate producer, while American farmers also source cheaper, generic glyphosate from China to support the widespread use of glyphosate-resistant corn and soybeans, the report added.

The ongoing glyphosate litigation—originating from the Monsanto acquisition—has been a major drag on Bayer’s stock, alongside challenges such as a drug development setback in 2023 and weakness in the agricultural markets.

During its earnings announcement on Wednesday, Bayer revealed plans to separate the glyphosate business from the broader Crop Protection division internally.

When asked during an analyst call about the potential sale of the glyphosate business, Crop Science division head Rodrigo Santos said Bayer will continue assessing all possible options for the business, the report said.