CFO Studio Magazine with Bernd-Peter Bier, CFO, Bayer

4th QUARTER 2015 WWW.CFOSTUDIO.COM 11 B ayer spent EUR 3.6 billion globally on research and development in 2014. The company is expanding on its capabilities, says Berry Bier, CFO of the Pittsburgh, PA–based Bayer Corporation. In the CropSciences area, R&D laboratories are located in West Sacramento, CA; Lubbock, TX; and Raleigh, NC. R&D in health care has its global location in San Francisco. Partnerships are an important part of the business strategy, says Bier, particularly in pharmaceuticals, where development costs and the long product- development pipeline, requiring Phase I, II, and III testing, would substantially restrict Bayer’s solo R&D capabilities. Instead, the company is in some instances using the existing facilities of key suppliers, says Bier. University partnerships, like the one with the Broad Institute in Boston on cardiovascular diseases, are also part of the mix. Bier says that the life sciences industry in general is increasingly funding external R&D through partnerships. “As part of our R&D we’re looking into smaller companies that we can cooperate with. We could develop their product and get certain marketing rights.” Bayer took that route with an eye medicine, Eylea®, developed by Regeneron, of Tarrytown, NY, and now one of Bayer’s five highest-potential pharmaceutical products. cost $1 billion to $2 billion to bring a new drug to market, says Bier, and the drug’s patent subsequently expires in as few as 10 years. Creating Value by Being Partners Bier says the most challenging part of his position is not, as one might expect, working out a complex funding structure or working through tax issues. Rather, he contends, it’s the process of developing “a high-performing organization that is constantly able to respond to the challenges coming from the outside world onto the business, and that has the capability to create value by what it is doing.” He says, “The real challenge is having an organizational setup with creative spirit but that also has the capability of being great business partners.” In the past two years, he has worked to bring that type of mindset to his own organization through the recruitment of top business-school students from the likes of New York University, Duke University, and Carnegie Mellon University; through high-performance workshops; and through training in soft skills, such as delivering constructive feedback up- and downwards. Although innovation is the lifeblood of a company developing pharmaceuticals, Bier can’t budget for development of a specific cancer treatment. He says, it’s more like this: “You know you have so much product in the market generating so much sales, and a certain portion of that you’re willing to spend for your R&D.” Certainly there are benchmarks on R&D spending, but Bayer doesn’t attempt to create all its products from scratch. Instead, like most pharma companies, it spots opportunities to acquire small, entrepreneurial firms. (See “Funding the Future” at right, for more on Bier’s strategy regarding R&D.) Two Years In Bier brought his family — his wife, Gudrun, to whom he has been married for more than 20 years, and two sons, now 12 and 13 — to Pittsburgh two years ago, from Cologne, Germany. “It’s great to see how well the family adjusted to the new environment,” he says. He’s passionate about his family and credits them with centering him and giving him the mettle to perform in the C-suite of a top global corporation. There, Bier has not just a stake, but a big role in building the company. He was heavily involved during 2014 in designing the current strategy, together with the U.S. leadership team. That strategy relies on acquisitions, R&D partnerships, and the funding of promising new products. In pharma, you can’t think of your next breakthrough discovery as the product that will bring you growth in the 2020s, he says. You have to view that drug as just a way “to make up for the loss” when another wonder drug you’ve funded loses patent protection. In Grinnell, IA, Bier recalls that he was amazed at the stark difference in appearance between treated and untreated crops. In the Crop Protection area of Bayer’s business, says Bier, “increasing yields to ensure that growers can meet their targets” is perfectly aligned with the company’s mission, Science for a Better Life. “We can help to meet nutritional demands and feed the world today and in the future,” he says. The potential for significant ups and downs in the company’s chief areas of concentration — pharmaceuticals and food production — suggest that there will be little stability in the months to come. Bier, though, seems unconcerned. He says that the most exciting part of being a CFO is having the opportunity to focus on both the near-term and long-term planning for the company. It’s his job, Bier says, to create value. To do that, a CFO must “understand what the success factors of the business are, and then think about how you can contribute to that.” Sometimes that means walking around a cornfield and having all the pieces fall into place. C Coming in 2016, the CFO Breakfast Learning Series, with CPE credits. To learn more, go to www.CFOstudio.com Funding the Future +