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Bayer faces Baycol probe
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September 4, 2001: 7:10 a.m. ET
Drugs and chemicals maker faces negligence investigation in Germany
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LONDON (CNN) - Bayer faces a probe by German prosecutors looking to establish if the firm's handling of a drug withdrawn on safety grounds was negligent.
Regional prosecutors in Cologne said they will look at Bayer's conduct surrounding the marketing and withdrawal of Baycol, a cholesterol-lowering drug pulled from the market last month after reports of patient deaths.
Bayer has insisted it acted to withdraw Baycol and inform doctors and pharmacists as early as possible, subject to its legal obligation to notify financial markets immediately of any news that could affect share prices.
Its stock price on Tuesday was undamaged by news of the latest investigation, edging up nearly 1 percent to  36.50. But that still leaves the company nursing a drop of about 20 percent in its market capitalisation since it announced the withdrawal of Baycol on August 8.
Germany's health minister last month appeared to attack the Leverkusen-based company for leaving doctors and patients in the dark about the drug, saying it should have acted sooner to release the information.
Minister Ulla Schmidt later toned down her criticism, saying she did not believe Bayer acted negligently. But she maintained the company should have kept German health authorities informed about any grounds it had for concern about the product's safety.
Legal onslaught in U.S.
Bayer is under pressure to defend its conduct in the face of a number of lawsuits filed in the United States, where lawyers are claiming compensation for side effects suffered by users of Baycol.
The drug, which was sold in some markets under the name Lipobay, was linked to a muscle-wasting disorder known as rhabdomyolysis. The worst side effects occurred when the drug was taken along with another cholesterol-lowering product called gemfibrozil.
Bayer does not concede that its product was the culprit in any of the cases of patient death reported to the U.S. Food and Drug Administration. It has maintained it gave clear warnings to physicians to avoid prescribing Baycol to patients who were also taking gemfibrozil.
The company has estimated the financial impact of withdrawing the drug at between 750 million and 800 million ($680 million to $730 million) in 2001, excluding any damages that might arise from lawsuits.
Bayer, which makes products ranging from Aspirin to chemicals for industry
and fragrances for perfumes, has said it expects the number of reported deaths among Baycol users to rise.
Chief Executive Manfred Schneider has ordered a review of the strategy and future prospects of the company's pharmaceuticals division. He is expected to report next week to the company's executive board on the review's initial findings.
Speculation over Bayer's future direction has centred on the possibility that it will sell the drug business to a larger rival. Schneider hasn't entirely ruled out a sale or joint venture, although he said soon after the withdrawal of Baycol that a sale wasn't his preferred option. 
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