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CNN PINNACLE

Bayer's CEO Helge Wehmeier Faces Past and Fights for Future

Aired January 26, 2002 - 16:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)

WILLOW BAY, CNN CORRESPONDENT (voice-over): It was the moment of a lifetime for Bayer Corporation's CEO Helge Wehmeier, whose billion- dollar antibiotic Cipro became the nation's first line of defense against an anthrax attack.

HELGE WEHMEIER, CEO, BAYER CORPORATION: The mission is to help America, to stand by this emergency.

BAY: A moment in America's new war on terrorism, to repay debts from an old one.

WEHMEIER: I always had a fascination with America. I was two years old when the war was over, and I remember vividly how America fed me. When I was four years old, the Quakers donated food to the vanquished Germany, and that's why this crisis has a very deep meaning for me, because we can pay back the generosity America has shown us when we were smaller.

BAY: Facing the past, and fighting for the future, Helge Wehmeier, CEO of Bayer Corporation, on this edition of PINNACLE.

ANNOUNCER: This is PINNACLE, Willow Bay.

(COMMERCIAL BREAK)

BAY: In September, 2001, Helge Wehmeier, CEO of Bayer Corporation, was an executive facing an economic slowdown. Bayer AG, the parent company of his $10 billion health care and chemicals firm, was just about to report its first quarterly loss in its history. And their voluntary withdrawal of cholesterol fighter, Baycol, sent the stock tumbling.

But after the terrorist attacks of September 11, Wehmeier became a CEO on the front lines of America's new war.

WEHMEIER: In quickly ramping up production, I give here our team great credit that on the day of September 11, they started to ramp up production, even though at that time there was nothing on the horizon about anthrax.

BAY: Wehmeier assumed Bayer would once again be providing Cipro, the most effective defense against an unknown strain of anthrax to U.S. troops, as it did during Desert Storm. He also feared, as did many others, a bioterrorist attack on U.S. soil.

Beginning in September, anthrax-dusted letters arrived by mail at sites across the country. This was an unknown enemy, a biological threat this nation had never faced before.

But there was one known defense, Bayer's powerful antibiotic Cipro. In a terrifying instant, Cipro became a household name. Thousands of people who were potentially exposed to anthrax were given doses of the drug, and thousands more flocked to their local pharmacies and quickly exhausted the supply in the pipeline.

Stories of shortages spread and the country wondered if the attack got out of control, would there be enough Cipro on hand? Could one drug and one company defend the U.S. from a bioterrorist attack?

According to Wehmeier, Bayer was producing Cipro at an unprecedented rate.

WEHMEIER: We have a worldwide supply chain, which we activated, you know, right after September 11. We have production in Europe, which we have activated. We have ramped up our production on this side. We had to go beyond just supplying the fighting men and women of this country.

BAY: But in the days and weeks that followed, the company remained oddly silent about its efforts. Soon, there were press reports suggesting Bayer was asleep at the switch, slow to increase production, unable to meet demand.

Some members of Congress, critics of big pharmaceutical companies and soaring drug prices blasted Bayer for making a profit from a national crisis.

The Department of Health and Human Services announced it would increase its stockpile of Cipro, to add treatment for an additional 10 million people, and would certainly not agree to pay the average retail price of about $5 a tablet.

There were demands that Bayer give the drug away for free, and even angry calls to break Bayer's patent, which protects the company from generic competition.

SEN. CHARLES SCHUMER (D), NEW YORK: Today, I'm calling on the Department of HHS to sign contracts directly with manufacturers to purchase the generic version of Cipro in bulk quantities at significantly reduced prices.

BAY: On October 23, Wehmeier met with Health and Human Services Secretary Tommy Thompson, and Wehmeier says, despite reports of tension, the two hammered out a deal in 10 minutes.

BAY (on camera): Was this deal out of Washington in response to a medical crisis or a political crisis? Did Tommy Thompson need to come back with enough Cipro at a reduced price?

WEHMEIER: I think that would be a good question to ask Tommy Thompson. He came in with a price, which he had in mind, and we were one nickel apart, Willow, one nickel and of course that was soft. In an instant we just shook hands, and then it was just a matter of working out the contract.

BAY (voice-over): Bayer would supply 100 million tablets at 95 cents each, with an option for the government to buy another 100 million at 85 cents, and 100 million more at 75 cents. Is that a price that allows you to break even? Is it a price that allows you to make some profits?

WEHMEIER: Well, it depends on how you define the profit. It merely covers our variable costs. It clearly ought to cover some other costs. What it does not cover is, to a large degree, the enormous cost for research which we have. Per drug, it costs us $500 million to develop a drug.

BAY: Soon after the deal was announced, Wehmeier went on a carefully crafted PR offensive, an effort to restore Bayer's battered reputation, and to reassure an anxious public.

WEHMEIER: We don't want people to horde it. There is enough Cipro around, particularly since the government has built up an enormous safety stockpile for the nation.

BAY: Wehmeier invited CNN to Bayer's manufacturing facility, a highly secure and sterile environment. We were asked not to reveal its address, and required to wear protective jumpsuits, shoes and hats, when we toured the plant.

WEHMEIER: We produce more than two million tablets a day. We produce more than 15 million tablets a week. We'll produce in this quarter, Willow, 200 million tablets. And just to give you the magnitude, over the last year, we produced 240 million tablets here in this facility.

BAY: It was October 31st, almost four weeks after the first case of anthrax was confirmed, and Wehmeier was clear.

WEHMEIER: The nation can be assured, the citizens can be assured, everyone in America can be assured that there is and there always will be enough Cipro on hand, absolutely.

BAY (on camera): Were you caught off guard by the criticism this company received in the early going?

WEHMEIER: To a certain amount, yes, because you try to do the right thing and I think we did the right thing and why should we be criticized for doing the right thing?

BAY: Do you regret not having stepped up right away and said "look, here are so many million tablets for free. Take them and we'll get the rest to you later?"

WEHMEIER: Just take the premise of that we would have donated that. Then you all of a sudden talk about the option for another 200 million tablets. Then there are nations like Germany, France, Italy, all the civilized nations around the world, what do we do? All of a sudden, we become the free supplier of the entire free world, clearly not an option.

BAY (voice-over): Bayer may not have become the free supplier of the free world, but it did quickly replenish its pipeline, and by year's end, it had filled the government's order. But Wehmeier believes this was more than selling drugs to a nation in need. It was paying back a debt from a generation go.

WEHMEIER: I think it's the sense of gratitude, which is not untypical. I think many German managers of my generation will remember how generous America was to a nation that had not very long ago declared war to America feel a great sense of gratitude and a desire to return that generosity. And that is why we right away saw our obligation to come to the aid of America at this anthrax crisis.

BAY: Coming to America and coming to America's aid, when PINNACLE returns.

(COMMERCIAL BREAK)

BAY: Helge Wehmeier was born on January 20th, 1943 in Godingham, Germany. His father served as a soldier in the German army during World War II and was taken a prisoner when the war ended. He was released due to an illness, but never made it home, dying in a hospital in Berlin when Wehmeier was just two years old. Money was scarce and times were tough, but Wehmeier remembers a home filled with an abundance of love.

WEHMEIER: The recollection was of a loving cocoon of my mother, of my grandmother, of my aunt, of looking after my sister who is one year younger than I am, and of the adventures of life in a total, what we consider today, as a total unusual circumstance. Circumstance of what today we would describe as hardship, which in my recollection wasn't hardship because it was adventure.

For example, we had very little to eat, so I had to go out in the woods surrounding our little town we were living in and collect firewood, and I was entrusted with an ax so I could split that wood and bring them the split wood to my grandmother and to heat this one stove that heated this one room, where basically we spent the day in.

BAY: In this small German town ravaged by war, Wehmeier got his first taste of America.

WEHMEIER: The Quakers, after the war had come to a close, brought food to the starving children of Germany, and I remember, you know, being fed in the basement of a little school and fed this warm nourishing -- it was not very appetizing looking, but it was very, very nourishing and we were very hungry. This food was coming from America and we knew that it was coming from America, even though I had no clue at that time where America was and what it was standing for.

BAY: It sparked a fascination and an admiration that would last a lifetime. WEHMEIER: Once I became more politically aware, I became aware what a lasting gift, more than food, America was giving to Germany and that was democracy. So I read some books about America. It fascinated me and so it was like I had an image, like a dream of America, and always wanted to go there. So I went.

BAY: He graduated from college and at age 21, went to work for Bayer, one of Germany's largest chemical and drug companies where his mother was an executive assistant.

He began his career as a management trainee in the synthetic fiber department. After three years on the job, he requested a transfer to Bayer's American subsidiary.

WEHMEIER: I left the company in Germany because I wanted to go to America and they wouldn't send such a young, inexperience person to America.

BAY: So in 1967, with no job and nothing more than a small loan he'd taken out, Wehmeier made the trip across the ocean.

WEHMEIER: I had the most wonderful introduction to America. I arrived by freighter. I looked outside of a porthole and I saw in the distance the glittering lights of Manhattan, and then to the left, the lights of the Statue of Liberty. And it was September. The next morning, we steamed into the harbor and I will never forget this.

There was the blue sky. There was the whitecaps. There was still a lot of brick buildings in southern Manhattan, this wonderful Indian summer sun was illuminating these brick building, so there was the red, the blue and the white, the American colors. So, it was really a wonderful experience. What an introduction.

BAY: America did not let him down. He soon met and married his wife Erica, another German expatriate living in New York, and after a year working for an import-export company in lower Manhattan, Bayer asked him to rejoin his old firm.

WEHMEIER: Bayer rehired me here in the United States because all of a sudden they were in need of a young spark there, with American experience, which they didn't have due to the nature that they only shipped old people, like 30-year-old people to America.

BAY: Wehmeier was 26, back in the synthetic fiber business again, only this time he was charged with developing Bayer's American market. In 1989, he was named CEO of AGFA, Bayer's film and imaging unit in the U.S. By 1992, he had moved to Pittsburgh to become CEO of Bayer's American subsidiary, managing all of its U.S. operations. How does it feel for you all of a sudden to be front and center in the midst of this crisis?

WEHMEIER: Our people are greatly energized by this, because how often is it, Willow, that one can make a difference, and these people feel a responsibility to living up to this emergency which we have and they stand up to it and they support America in this crisis.

BAY: Aiding America in its new war and making amends for Germany's past, when PINNACLE returns.

(COMMERCIAL BREAK)

BAY: When Helge Wehmeier took over as CEO of Bayer Corporation, he took the reins of a company with deep ties to America. Bayer first did business in the U.S. in 1865, producing indigo blue dye. It launched Bayer Aspirin, one of the country's best known drugs in 1899.

WEHMEIER: Bayer is something so America. It's like as American as apple pie. Well, you can not be more American than that, because many generations here in America grew up with Bayer aspirin.

BAY: Bayer may be a trusted brand name to American consumers, but its parent Bayer AG, has deep ties to Germany and its dark history. In 1925, Bayer joined forces with two other German chemical giants to form the cartel IG Farben, an organization that became a key player in Hitler's military and industrial complex.

IG Farben operated fuel and rubber plants at concentration camps, which relied on the forced labor of thousands of inmates every day. After the war, the allies divided IG Farben back into its elements, but the history remained with each of them.

WEHMEIER: The Bayer past is deeply intertwined with the past of German industry, the German nation at the time of Nazism, and that is a very painful legacy. When you -- it is one thing to learn about it in school in Germany, and it's quite another thing to move to New York as a young person in the '60s and being confronted and speaking with many survivors of these tragedies, quite a different and very personal experience.

And so, I always felt a personal obligation to rise to that. I reach out to the Jewish communities and to the leadership in the Jewish communities in order to build bridges.

BAY: Wehmeier's most public moment in his effort to reach out to the Jewish community came in 1995. A Bayer sponsored group invited Eli Wizzel (ph) to a speaking engagement. Amid protests that Bayer had never apologized for its use of slave labor in World War II, Wizzel (ph) hesitated accepting the invitation.

WEHMEIER: I went to Eli Wizzel (ph) and we did not talk of whether I should apologize but how I should apologize, and it was an astounding evening. I said what I wanted to say, that I was sorry that even though it was not a matter of personal guilt, it was a matter of responsibility and how I profoundly regret what we did to the victims and to the survivors and their families.

And I said, but we should not give Hitler a lasting victory by letting him determine permanently the future relations between Jews and Germans.

After the event, about 100 people, all with Central European accents came to me and one woman said, "I never thought I would ever speak to a German," and she couldn't let go of my hand. So that was a very moving memorable day and I will never forget that. BAY: Today, in the wake of the anthrax scare and the pharmaceutical industry's increasingly visible role in protecting the American people, Wehmeier is busy building bridges again, now to the United States Government.

Bayer and the government have begun to ask questions suddenly relevant to America's new war. Which biological threats pose the greatest danger to the American public? Who will create drugs and vaccines that the country needs to defend itself? And who will pay for them?

WEHMEIER: What we have with Cipro is a very effective drug, which has everyday uses. We may need to develop drugs, which do not have everyday uses, which are specifically targeted only in the hopefully unlikely event that they will ever be needed in a new type of bioterrorism attack.

BAY (on camera): Has this crisis then changed the nature of the Bayer Company but also the pharmaceuticals industry's relationship with the government? Has it -- is it in the process of evolving from a regulator and regulated to partner, to customer?

WEHMEIER: I think partner is the right word, because clearly in our discussions with Secretary Thompson in developing mutual trust here, we clearly realized and have affirmed that we are in this together. We are in this together. And here the entire civilized world is in this together, and we need to rise to this occasion and go beyond some of the squabble, which is happening.

This is, we are challenged here as a civilized world. Our values are being challenged and we need to rise to that.

BAY (voice-over): Helge Wehmeier, CEO of Bayer Corporation, on this edition of PINNACLE.

(END VIDEOTAPE)

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