Bayer HealthCare is realigning the structure of its global pharmaceutical R&D organization and the company has outlined its future U.S. pharma site plan. Also, NJ will become the U.S. headquarters for pharmaceuticals. The restructuring follows Bayer’s acquisition of Schering AG, Germany in June 2006 and serves as part of the company’s plan to integrate its operations with Schering AG and Berlex, Inc. (the U.S. subsidiary of Schering AG).

Through the realignment, research programs and activities in various sites will be consolidated into three major R&D sites: Berlin and Wuppertal, Germany and Berkeley, CA. The Berlin research group will take leadership for diagnostic imaging, oncology and gynecology/andrology research and Wuppertal will be core for the company’s cardiology research. Both locations have capabilities and activities in target discovery, lead generation and optimization, drug metabolism and pharmacokinetics, toxicology and clinical pharmacology.

As a result of this global consolidation, research operations at U.S. sites in West Haven, CT and Richmond, CA will close. The company will relocate remaining departments and functions currently based in West Haven into headquarters located in NJ.

Wayne and Montville, NJ will be headquarters for the company’s U.S. pharmaceutical commercial operations and global oncology and specialized therapeutics business units, and U.S.-based global drug development groups and other business support functions. Employee groups transferring from other U.S. sites will move during the next 12-18 months.

Bayer anticipates that approximately 600 U.S. positions will be eliminated by these changes, primarily in research, and anticipates an additional 200 U.S.-based positions will be eliminated by the overall reorganization. After one-time costs of approximately $350 million, the company expects to reduce overall R&D costs by more than $210 million per year by the end of 2008. Employees whose positions are eliminated will receive severance packages and the company will provide a comprehensive support package to displaced employees to ensure a smooth transition. The company will also work with state and local governments as well as economic development authorities in the communities where locations are closing, in an attempt to minimize the impact to those communities.

“The changes in R&D will leverage the combined assets of Schering and Bayer to maximize both the output and effectiveness of our global drug discovery and development programs. They also give us the flexibility to substantially lower our ongoing infrastructure costs,” said Arthur Higgins, chairman of Bayer HealthCare AG and chairman of Bayer Schering Pharma AG. The company anticipates the consolidation of research activities to be largely complete by the end of the first half of 2007.

Gunnar Riemann, member of the board of Bayer Schering Pharma AG in charge of the Latin and North American regions, said, “These changes will unlock opportunity for new drive and focus in the U.S. We can now bring together a critical mass of functions into a cohesive U.S. headquarters unit that blends the best of Bayer and Berlex talent and know-how. Ultimately, our goal is to create a high-performance U.S. organization that is lean, market-focused and capable of driving superior growth in one of the largest and most important pharmaceutical markets in the world.”