Baycol linked to 52 deaths
August 13, 2001 Posted: 1011 GMT
LONDON (CNN) -- Germany's Bayer said on Monday 52 people are thought to have died after taking the anti-cholesterol product Baycol, its fastest-growing drug.
Bayer said it was reviewing the future of it drugs arm but would not ditch its strategy of producing both chemicals and pharmaceuticals, and denied it was "a company in need of rescue."
The company, one of Germany's big two chemicals and drug makers, said two big drugmakers had shown interest in buying its pharmaceuticals arm. A sale was a possibility, but not the company's preferred option, said Chief Executive Manfred Schneider.
The company pulled the drug, also sold as Lipobay, last Wednesday after it emerged it was linked to deaths of about 40 people. Bayer shares plunged 18 percent on the day.
The axeing of the drug came after increasing evidence that the drug caused deterioration in muscle tissue, a condition called rhabdomyolysis, which is known to cause severe pain and potential kidney failure. However, the company stressed "that there is currently no proof that" the drug is the cause of the deaths.
"Even this extraordinarily unfortunate series of problems -- whether home-made or caused by external factors -- poses no threat to Bayer's existence," Chief Executive Manfred Schneider said.
"Our sales this year will increase even though Baycol will now be absent," Schneider added. But he warned shareholders that the company would have to cut its dividend for this year.
"We now see the strength of our 'four-pillar' strategy, even if only two of those pillars -- namely agriculture and chemicals -- currently show a stable earnings trend overall."
The company has come under intense pressure to create separate businesses for its chemicals and healthcare operations, or take on a partner for its drug business, to enable it to compete with the world's giants, such as GlaxoSmithKline (GSK) of the UK and Pfizer (PFE: Research, Estimates) of the U.S.
As well as thses two arms, Bayer has separate units producing polymers and agricultural chemicals.
While Schneider said it was not yet clear if anti-cholesterol drug Baycol would be relaunched in future, the company's head of pharmaceuticals, David Ebsworth, described a relaunch as unlikely.
Schneider reiterated earlier downbeat earning assessments. The drug was expected to generate sales of 1 billion ($900 million) this year, up from 636 million last year. The company expects earnings to be reduced by between 600 million and 650 million this year due to the loss of Baycol.
"Since the economy is unlikely to improve before the end of the year, our operating income will be further impaired by the economic situation," Schneider said.
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