In an attempt to get out from under the cloud of current Roundup-related litigation, Bayer announced Thursday it would stop using glyphosate in lawn and garden formulations in the U.S. starting in 2023.
The company also estimated the potential cost of future litigation alleging Roundup exposure has caused non-Hodgkin lymphoma would be $4.5 billion, unless Bayer can obtain a favorable ruling from the Supreme Court.
The $4.5 billion will be included as “an additional gross provision” before tax and discounting in the second quarter of fiscal 2021, Bayer CEO Werner Baumann said on an investor call Thursday morning.
“It is important for the company, our owners, and our customers that we move on and put the uncertainty and ambiguity related to the glyphosate litigation behind us,” Baumann said.
Bayer may not need most of the $4.5 billion if the U.S. Supreme Court rules in its favor on legal issues it continues to press. Baumann said Bayer is preparing a petition to the Supreme Court seeking review of a Ninth U.S. Circuit Court of Appeals decision that found the Federal Insecticide, Fungicide, and Rodenticide Act does not pre-empt state law tort claims.
Baumann said Bayer is confident in its legal arguments. “We actually do believe that the U.S. Supreme Court should give strong consideration to accepting our petition to review the Hardeman case and render a positive ruling,” he said.
A favorable ruling would likely have a significant impact on future Roundup cases, creating the potential for a “significant upside” for the company financially, Baumann said.
Bayer has settled or resolved about 96,000 cases but approximately 30,000 are waiting in the wings. The $4.5 billion provision would be on top of $11.6 billion the company already allocated to settle current and future Roundup litigation.
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The removal of glyphosate from lawn and garden formulations of Roundup in the U.S., which will begin in 2023, is purely a way to manage litigation risk, as 90% of the lawsuits against the company allege exposure through the use of those products, Baumann said.
He emphasized that the company is not pulling glyphosate from Roundup for agricultural uses. Liam Condon, president of Bayer Crop Science, said Bayer will seek registrations for new lawn and garden formulations of Roundup using “well-established active ingredients.”
Baumann said he did not think there would be “significant erosion” in sales of Roundup for residential uses, which in any case make up a “very small” part of the company’s Roundup sales.
The company laid out its “five-point plan” for bringing the Roundup litigation to a close in May, at which time it said it was examining whether to discontinue the use of glyphosate in residential Roundup products.
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