'Bayer: Could the German chemical industry in China suffer the same fate as the automotive industry, Mr. Berninger?'

Germany's Chancellor-designate Friedrich Merz has spoken about the China risk. Do you feel this applies to you?

We naturally feel that something is changing in China. And that the way China is perceived is changing. We can no longer look at China the way the generation of business leaders did ten years ago. But that doesn't mean that the pendulum should swing in the other direction. China is too important for us as a company to turn our backs on the country. There is very high demand in the pharmaceutical sector. And in the agricultural sector, which is crucial for Xi Jinping, we play an enormous role. We are trying to avoid the pendulum swinging from one extreme – China is the solution to all the problems of the German economy – to the other extreme - China is the root of all the problems. The truth lies in between.

How much of your revenue is generated by your China business?

With revenue of around EUR 3.3 billion in 2024, China is Bayer's third-largest market after the United States and Brazil. In total, we generate around seven percent of our group revenue in China. The United States remains important, but that's no wonder, as we signed a check for EUR 57 billion in 2018, for example, and invested heavily in the US with the acquisition of Monsanto.

A decision that Bayer still impacts significantly. Ten years ago, you were Germany's most valuable company. Because of Monsanto's glyphosate-based pesticide, Bayer was hit with a wave of lawsuits in the USA. The stock market value has fallen to a quarter, Bayer has high debts.

In connection with glyphosate, we are active on many levels. In court – we want to achieve further successes in appeal proceedings. And with legislators – we seek greater regulatory clarity in the US states. We also hope to make progress with the US Supreme Court regarding product labeling. It cannot be that we are being sued in individual US states, despite the responsible federal agency repeatedly stating that glyphosate is safe and non-carcinogenic. Our goal is to reduce litigation by the end of 2026 significantly.

Considering the aging Chinese society, the Chinese market should soon become more important. The future demand for pharmaceutical products will be huge.

The success of Chinese health policy can be measured by the life expectancy. It has risen from 71 to 80 years in China this century, which is almost on par with the United States. This is not only because the Chinese healthcare system has improved. They have also made enormous improvements to air quality, which is considered to be the cause of many diseases. This is a good thing for the lives of the people there. But also for us as a pharmaceutical company.

The healthcare sector in particular is one of the few areas in China that is still open to international companies.

Yes and no. In the past, the approval of new drugs in China was often several years behind that of the USA or Europe; this has improved considerably, and we are getting to market faster. On the other hand, Chinese health policymakers have significantly lowered the prices of pharmaceutical products. Within five years, the 14th round of price cuts for certain groups of drugs is now underway.

What is the situation in biotechnology?

China has made considerable strides in biotechnology in recent years. The government has strongly subsidized its own companies to become less dependent on imports and know-how. Partnerships with foreign companies and research institutions are a key building block. However, biotechnology matters are often close to national security issues. The Biden administration has drawn clear boundaries for cooperation with China in certain areas. The strategy was: small yard, high fence. However, in the trade dispute with the new US administration, the Chinese side has also resorted to restricting US biotech companies as one of its first countermeasures.

What do we make of this?

This is alarming because the demand and potential for new technologies is so high. There is a completely new growth opportunity at the intersection of artificial intelligence, biology and chemistry. Some speak of a biorevolution. Nobody would benefit if we continued to divide the world into two spheres, as we already see in the technology sector. That would be very bad, especially when it comes to new medicines.

What would be the worst-case scenario?

Let's look at an example. We are currently using these technologies to develop a therapy that reverses the progression of Parkinson's disease. Stem cells are reprogrammed to replace the cells that degenerate in the brain and trigger Parkinson's disease. These reprogrammed cells are then transplanted into the brain. Such therapies, which enable a quantum leap in medicine, are made more difficult when we have two different research worlds. In areas where the problems are global, we need to join forces. Otherwise, there would be major delays, particularly in biotechnology, and people would suffer as a result.

How advanced is China in this research field?

Alongside the United States and Europe, China is the world's leading innovation hub in the pharmaceutical sector. We Europeans have no need to sell ourselves short; we are excellent in this area, much better than you might think. Take the Nobel Prize for Chemistry, which was awarded to people like the British researcher Demis Hassabis from Google/DeepMind. His discovery in the field of protein folding was an absolute breakthrough and has brought us mRNA vaccines, among other things. Chinese researchers are also very good. The United States is still at the forefront, but it is now in a new phase with changes at the top of the Ministry of Health. The question is whether it will be possible to cooperate beyond national borders. But when I look at the migration of researchers, I am worried.

What does it look like?

It is on the decline. Yet we actually need a lot more partnerships. The biorevolution is the biggest revolution in chemistry since organic chemistry. Bayer knows a thing or two about it. In 1863, we synthesized completely new substances from coal tar. We are now once again in a phase of profound change. We can exploit this all the better if we work more closely together globally and exchange knowledge.

What about the dual use of biotechnology?

If we end up with full fragmentation, monitoring will be more difficult than if we work together.

Could the German chemical industry in China face the same fate as the German car industry?

As far as the future of the chemical industry is concerned, it is quite clear that we are also under pressure. However, this is not only because of the overcapacities in other countries but also because we have been lulled into a sense of security for years with cheap Russian natural gas imports. The future of the chemical industry depends firstly on whether we can offer innovative products. Secondly, we need to determine whether we can pull off the energy transition. That is Europe's biggest economic policy issue in the next ten years.

How do you foresee your business in China?

Business in China is certainly not always easy, but the bottom line is that we are satisfied. We began selling paints in China 140 years ago during the Qing dynasty, and animal symbols were partly used to overcome the language barrier. We have had good times and bad times and are looking at current discussions calmly. China is and remains an important market for us.

Matthias Berninger heads Public Affairs, Science, Sustainability and Health, Environment Safety at Bayer AG.