In edition 283 of BC Disease News (here), we reported that Bayer, the agrochemical powerhouse, was facing 18,400 product liability claims in the US over glyphosate-containing weedkiller.
This figure was accurate up to the end of July 2019.
It was therefore surprising to read, on 30 October 2019, that the number of cases brought against the business (as of 11 October) had more than doubled, over the course of ensuing months, to 42,700.[i]
However, Bayer’s Chief Executive, Werner Baumann, stated that the dramatic rise in Roundup claims was ‘expected’ and has ‘no bearing’ on the principal allegation that active ingredient, glyphosate, is carcinogenic – the share price increased by as much as 2.9% in Frankfurt trading on the day that claims numbers were publicised.
Figure: Bayer AG Share Price:
(Source: Hargreaves Lansdown)
Instead, Mr. Baumann has attributed the newest wave of litigation to a ‘substantial surge’ in claimant-driven, anti-Roundup television advertising, the cost of which ‘is estimated to have roughly doubled in the third quarter compared with the entire first half of the year’. [ii]
It is no fluke that this $50 million boost in marketing spend coincides with US District Judge Vince Chhabria’s appointment of Ken Feinberg as mediator.
To our knowledge, Bayer is ‘constructively engaging’ in mediation and would only accept an outcome that is ‘financially reasonable and is structured in a way that will bring the matter to a reasonable conclusion’. In other words, the company will only reach a settlement if it covers potential future claims, thereby assuring a cap on its liability.
If a settlement were to be reached, analysts at Baader Bank, Bloomberg Intelligence and Pareto Securities estimate that it could range from $6 billion to $20 billion, though upper-end estimates are ‘based on an even higher number of potential lawsuits’.
Irrespective of settlement talks, Bayer continues to promise that it will ‘vigorously’ defend upcoming claims and ongoing appeals, with the next trial scheduled to start on 15 January 2020, in California. Later that month, a trial is set to begin in Missouri.[iii]
What is more, Bayer has been boosted by the Environmental Protection Agency’s (EPA) latest announcement that the regulator will no longer approve product labels promoting ‘false claims’ that glyphosate is a known cause of cancer. EPA Administrator, Andrew Wheeler, stated:
‘It is irresponsible to require labels on products that are inaccurate when EPA knows the product does not pose a cancer risk. We will not allow California’s flawed program to dictate federal policy’.[iv]
Also expected to lift the spirits of Bayer’s investors is Q3 core profit before interest, tax, depreciation and amortisation (EBITDA), which has grown by 7.5% to €2.29 billion.
Assessors at Barclays surmised that the company’s financial performance represented a ‘solid operational result’, while Peter Verdult, of Citi, pessimistically described the corporation as ‘operationally fine, [but] legally stuck in the mud’.[v]
Aside from stealing headlines that cumulative use may lead to the development of non-Hodgkin lymphoma, in recent months, glyphosate has been linked with non-alcoholic fatty liver disease (NAFLD)[vi] and a mysterious epidemic of chronic kidney disease among agricultural workers.[vii]
[i] ‘Bayer reports surge in number of legal cases over Roundup’ (30 October 2019 Phys.org) <https://phys.org/news/2019-10-bayer-surge-legal-cases-roundup.html> accessed 15 November 2019.
[ii] ‘Roundup weedkiller: 42,000 plaintiffs sue Bayer over glyphosate’ (30 October 2019 DW) <https://www.dw.com/en/roundup-weedkiller-42000-plaintiffs-sue-bayer-over-glyphosate/a-51043520> accessed 15 November 2019.
[iii] Tim Loh and Jef Feeley, ‘Bayer’s Roundup Headache Grows as Plaintiffs Pile Into Court’ (30 October 2019 Bloomberg) <https://www.bloomberg.com/news/articles/2019-10-30/bayer-is-now-facing-42-700-plaintiffs-in-roundup-litigation> accessed 15 November 2019.
[iv] Adrian Croft, ‘As Roundup Lawsuits Pile Up by the Thousands, Bayer Remains Defiant’ (20 October 2019 Fortune) <https://fortune.com/2019/10/30/roundup-lawsuits-bayer-defiant/> accessed 15 November 2019.
[v] Tobias Buck, ‘Bayer risks mount as US pesticide lawsuits more than double‘ (30 October 2019 FT) <https://www.ft.com/content/d6649c2e-fae6-11e9-a354-36acbbb0d9b6> accessed 15 November 2019.
[vi] Mills PJ et al., Glyphosate Excretion is Associated With Steatohepatitis and Advanced Liver Fibrosis in Patients With Fatty Liver Disease. Clin Gastroenterol Hepatol. 2019 Apr 4. pii: S1542-3565(19)30361-1. <https://www.sciencedirect.com/sdfe/pdf/download/eid/1-s2.0-S1542356519303611/first-page-pdf> accessed 15 November 2019
[vii] Johnson RJ et al., Chronic Kidney Disease of Unknown Cause in Agricultural Communities. New England Journal of Medicine, 2019; 380 (19): 1843 <https://www.nejm.org/doi/10.1056/NEJMra1813869> accessed 15 November 2019.