The Signal Interview
“It’s hard to accept any new fact as clarity and certainty,” Bayer CEO Bill Anderson said, giving voice to the general feeling among business executives whipsawed by tariffs. He’s “hoping and praying for a negotiated solution that provides for continued open trade.”
It was two days out from US President Donald Trump’s “Liberation Day.” And Anderson’s comments took on new salience a few days later, when Trump pauses his most sweeping tariffs and starts the clock on trade negotiations.
Bayer presents a case study in how global commerce is now being scrambled. Its current globe- and industry-spanning form came out of Bayer’s 2016 takeover (disastrous, but more on that later) of US agriculture giant Monsanto. It operates in 80 countries. Its three major divisions — crop science, pharmaceuticals, and consumer health — put it in businesses as disparate as developing hybrid seeds, financing the farmers who buy them, researching breakthrough drugs, and mass-producing medicine-cabinet staples like Claritin and Alka-Seltzer. Anderson, who took the job in 2023, is the first American CEO in its 162-year history.
Take its signature product. Bayer makes all of its acetylsalicylic acid, the active ingredient in aspirin, at a plant in northern Spain. Its gelcaps are made in Italy, while film-coated tablets are made in Bitterfeld, Germany. Much of the packaging and distribution happens at a 500,000-square-foot factory in Myerstown, Penn., which underwent a major expansion in 2022.
“There’s a lot that goes into why things are made, where they’re made, and a lot of those things are not quickly undone,” said Anderson. “There’s a reason you make a lot of corn in Iowa. Not so much for bananas.”
Anderson has a Texas twang, but sported a T-shirt and half-zip that wouldn’t be out of place in Silicon Valley. He talks about both molecules and management styles with the fluency of someone who has graduate degrees in chemical engineering and business, which he does.
The new metric that matters
Anderson has a mental map of where Bayer makes its products and where it sells them. In the Before Times, too much overlap was seen as a drag, suggesting that companies were prioritizing convenience over lowest-cost considerations. Now, it’s an asset.
Bayer’s biggest product — agricultural seeds — is unusually immune from outsourcing. “The best seeds for Iowa, you’re going to tend to raise them in Iowa,” Anderson said.
That will be a big consideration for CEOs facing tariffs. How many of the cars that Tesla produces at its Shanghai megafactory, which it used to export to Europe and elsewhere, can it sell to Chinese buyers instead? Can Apple sell more Chinese-made iPhones in China, and reroute those made in its factories in India for export?
Fine-print fight on tariffs
The fight over what goods get carved out from tariffs — and what was originally spared but might now be swept in — is only just beginning. Pharmaceuticals were initially exempt, but after our interview, the White House announced an investigation of the national security implications of drug imports, a move seen as a precursor to tariffs. Pharmaceuticals contributed 38% of Bayer’s revenue last year, and the company has four major drug launches planned for 2025, including a menopause treatment that will go head-to-head with a pricey drug from Astellas, a Japanese rival.
“Tariffs on pharmaceuticals don’t make much sense,” Anderson said. Bayer spent 18% of its net drug sales on R&D last year, mostly in the US. That’s far more than it spends on manufacturing, much of which happens overseas. “You’d be putting a tariff on the small activity,” he said. “It’s a little counterintuitive. I hope reason will prevail on that.”
Taking stock of the turnaround
When Anderson became CEO, his goal was to “take a 160-year-old, command-and-control bureaucracy with an extra dish of German rules” and turn it into “the leanest, fastest, large life-sciences company on the planet.”
It was a play he ran at Genentech, which had grown from 5,000 employees to 15,000 and become the Big Pharma bureaucracy it loathed. “I had been a senior leader trying to prevent it, and totally failed,” he said. “Everyone I talked to said, ‘I love the mission, I love the science, I can’t get anything done.’”
Anderson studied companies including Nucor, which has just three management layers between its CEO and furnace workers, and Buurtzorg, a Dutch home-health care company that gives its nurses remarkable authority, and began thinning Genentech’s hierarchy.
In his first year at Bayer, he cut 12 layers of management into five or six. Managers went from overseeing, on average, about six employees to between 15 and 30, but some have as many as 90, he said. Teams can spin up for special projects, then melt away, and leaders are empowered to trade personnel and lab resources without approval from on high. “We’re putting the ownership with the people doing the work,” he said. “It’s remarkable how easy it is for people to sign up other people to do stupid stuff, but people will not volunteer themselves to do stupid stuff.”
When I pointed out that plenty of CEOs come in with a mandate to clear away the corporate shrubbery, he identified where they go wrong.
“The problem is, you take out people, but you actually haven’t taken out any work,” he said. “The people come back and three years later, guess what, [you’re] right back where you were.”
When asked if he had any advice for DOGE, Elon Musk’s government efficiency initiative, he said: “If you’re in the bureaucracy-busting business, and I would say that’s kind of a specialty of mine, you’ve got to have a vision to replace it with something better. For the guys trying to do this with the government, we need to hear more about that.”
The elephant in the stock
You know something has gone wrong when the CEO of a multinational company is talking about jury selection in a Philadelphia courtroom, but that’s where Anderson and I ended up. Hanging over Bayer is an existential legal fight over whether Roundup, the glyphosate-based weedkiller it acquired as part of the Monsanto merger, causes cancer. The company has faced more than 177,000 lawsuits and paid billions of dollars in settlements or fines, including a $2 billion judgment in a Pennsylvania case last year that sticks in Anderson’s craw.
Like other CEOs, Anderson has taken advantage of the Trump administration’s trade talk to reframe his company’s biggest problem as a national security advantage for the US. Studies have shown Roundup can boost yields by 15% to 30% for major food crops like wheat and barley, and Bayer produces about 40% of the world’s glyphosate out of phosphorus mines in a single town in Idaho.
“Imagine a foreign country having the ability to dial up or dial down the price of glyphosate in America, and the immediate effect that would have on food prices,” he said. “That seems like a bad idea.”
Bayer is betting on the Supreme Court, which it hopes will hear the company’s arguments that it stuck to federal Environmental Protection Agency guidance when warning consumers of Roundup’s health risks. It has also taken a divide-and-conquer approach, pushing legislation in states including Georgia that shield pesticide manufacturers from liability so long as they meet federally mandated disclosures.
“If we don’t see more progress in these areas, we’ll have to make a business decision on this, because glyphosate is not particularly profitable,” he said. No buyer would take on the legal risks, he thinks, so the company would likely shut down production instead.
Plenty of mergers fail to live up to lofty claims, but few destroy as much value as the 2016 tie-up of Bayer and Monsanto. The combined company is worth less than half of the $63 billion in cash Bayer paid to acquire Monsanto — and that doesn’t include the $16 billion the company has paid or provisioned for so far in cancer-related settlements and damages in individual cases.
Would Anderson spin off the agriculture business? “Not never, but not now,” he said.