Bayer’s Exit from Pakistan Market – Asrar Qureshi’s Blog Post #823

Bayer’s Exit from Pakistan Market – Asrar Qureshi’s Blog Post #823

Dear Colleagues!  This is Asrar Qureshi’s Blog Post #823 for Pharma Veterans. Pharma Veterans welcome sharing of knowledge and wisdom by Veterans for the benefit of Community at large. Pharma Veterans Blog is published by Asrar Qureshi on  WordPress, the top blog site. Please email to asrar@asrarqureshi.com for publishing your contributions here.

OBS Team Taking Keys of Bayer Plant

Bayer Pharma

OBS Pakistan

Bayer, the German company doing business in Pharmaceutical, Chemical, and Agriculture market has sold its Pharma business to a local corporate and exited from Pakistan market. There is no word yet on the status of other businesses. Bayer is the latest in the list of MNCs leaving Pakistan. This scenario raises questions about the reasons and implications which I shall take up in another post. This post is dedicated to the way Bayer has left Pakistan market. I shall quote from several reports, references of which are given at the end.

June 23, 2023 – Propakistani.pk reported that ‘Global Drug maker Bayer had decided to shift its strategic focus but had no plans to halt operations in Pakistan. The company said it was analyzing which of its manufacturing activities might not be of strategic focus going forward. However, Bayer intended to stay put and continue operations in Pakistan despite the shift. 

June 23, 2023 – Daily Times Pakistan made the headline, ‘Bayer Pharmaceutical company announces closing business in Pakistan’. The news further read, ‘In the midst of the Pakistan’s economic crisis, the multinational pharmaceutical company Bayer announced its decision to halt its business here. The company’s assets were sold to a nearby business. This is the second foreign company to recently leave Pakistan. Eli Lilly, an American pharmaceutical company, also declared its exit from the nation in November 2022. Following the departure of another multinational corporation, employees are demanding guarantees of job security and separation packages in accordance with the company’s global policies because they are worried about possible job losses under the new management.

According to Bayer’s management, it sold its assets to a local business that promised existing workers job security for at least two years. As a result, the workers who will still be employed have not asked for severance packages.

Local staff members of the German multinational protested at the National Press Club, demanding payment equating to 60 to 100 months’ worth of salaries, in accordance with the customary severance procedures followed by other businesses around the world.

During the demonstration, the affected workers pleaded with the President, Prime Minister, and Chief Justice to address their complaints and make sure that the company is upholding their legal rights.

The staff has spoken with the decision-makers to request that they step in and enforce the company’s policies. They contend that while laws are strictly adhered to in Western nations when businesses fire employees, this is not the case in developing nations, where it is frequently illegal.’

Bayer’s own website mentions that the year 2023 marks the milestone of 60 years of Bayer in Pakistan. It does not mention anything about selling its assets in Pakistan, however, the Pharmaceutical and Consumer Health links are ‘Under Construction’ curiously.

June 24, 2023 – The News International Business page puts the headline ‘Bayer Pakistan rebuffs exit reports’. The news reads, ‘German pharma major Bayer on Friday rebuffed reports of the company exit from Pakistan, stating it was not planning any such move. In a statement, the company said, “Bayer is analyzing which of its manufacturing activities no longer be of strategic focus going forward…. The company stated it intended to transfer selected assets i.e., its pharmaceutical and consumer health manufacturing plant based in Lahore, Pakistan, as well as selected brands from pharmaceuticals and consumer health portfolios to an international diversified company with a strong presence on Pakistan”.

June 27, 2023 – Navlin Daily headline says, ‘Bayer to Continue Operation in Pakistan, Refutes Reports of Exit’. In addition to the above, the report says, “Bayer stated that employees affected by the acquisition would be transferred to the acquirer with a two-year job guarantee, equivalent remuneration, and special bonuses. As a result of this deal, there have been no layoffs. Employees who have been affected have already signed offer letters from the acquirer. There have been no layoffs as part of this transaction. Impacted employees have already signed offer letters issued by the acquirer.”

July 5, 2023 – Business Recorder reported ‘OBS Group nearing deal for Bayer Pharma assets in Pakistan for Rs. 7bn – OBS looking to purchase a manufacturing facility in Lahore and 12 pharmaceutical brands’. Meanwhile, the Bloomberg report said that Bayer representatives have declined to comment on the name of the buyer or size of the transaction. Representatives of OBS didn’t respond to requests for comment.

July 14, 2023 – Pictures of handing over of plant at Lahore to OBS team are shared on social media. The deal is done.

Few words about OBS, taken from OBS website.

The company was established in 2006 to take over plant and products of Organon Pakistan, a subsidiary of the Dutch chemical giant Akzo Nobel. In 2008, OBS took over Merck Sharp & Dohme Pakistan’s operations and manufacturing. In 2009, it acquired several brands of MSD in Sri Lanka. In 2010, OBS acquired Schering Plough business. In 2014, OBS acquired AGP private limited, an old Pakistani company based at Karachi. In 2015, OBS acquired Janssen, the pharmaceutical division of Johnson & Johnson Pakistan. There have been more strategic partnerships also. 

OBS-Pak is not a pharma company; it is an investment and trading company whose major shareholder is Aiken Stuart Pakistan Private Limited, and the ultimate parent company is West End 16 Pte Limited, Singapore. Acquisitions pose serious challenges because each of the acquired organization had a distinct culture and a strong team entrenched with it. No organization can assimilate people from diverse cultures under one umbrella. The same happened in mega mergers like GSK which comprised of four large companies – Glaxo, Wellcome, SK&F, Beecham, and probably several smaller ones. Two British and two American companies merger was unnatural and led to major disruption and loss of jobs. Though they compensated with ‘golden shake hand’ but careers were derailed all the same. OBS has no culture of its own, it is just a platform to acquire whatever companies may be available. So far, the performance of OBS acquired companies is average; the future will show which way it goes.

Concluded.

Disclaimer: Most pictures in these blogs are taken from Google Images and Pexels. Credit is given where known; some do not show copyright ownership. However, if a claim is lodged at any stage, we shall either mention the ownership clearly, or remove the picture with suitable regrets.

References: 

https://propakistani.pk/2023/06/23/bayer-does-not-plan-on-exiting-pakistan/

https://dailytimes.com.pk/1106703/bayer-pharmaceutical-company-announces-closing-business-in-pakistan/

https://www.bayer.com/en/pk/pakistan-home

https://www.thenews.com.pk/print/1083908-bayer-pakistan-rebuffs-exit-reports

https://www.brecorder.com/news/40251137/obs-group-nearing-deal-for-bayer-pharma-assets-in-pakistan-for-rs7bn-report

https://www.navlindaily.com/article/17624/bayer-to-continue-operation-in-pakistan-refutes-reports-of-exit

https://obscompany.pk/#download