Shares in German pills-to-weedkiller conglomerate Bayer jumped 11 per cent on Friday after the group scored a key win in a US appeals court over the labelling of its allegedly carcinogenic herbicide Roundup.
An appeals court in Philadelphia on Thursday ruled that Bayer did not violate US state law when it failed to add a cancer warning to its Roundup products, which uses glyphosate as its active ingredient.
Bayer has been ensnared in complex and costly legal battles over the weedkiller since 2018, fighting cases in multiple US states.
The Leverkusen-based firm, which became embroiled in the glyphosate litigation through its ill-fated $63bn takeover of US rival Monsanto in 2016, is facing damages claims from thousands of US citizens who blame Roundup for giving them cancer and accuse Bayer of failing to warn about the risk. The German conglomerate maintains that the product is safe and says scientific research supports that view.
The Third Circuit Court of Appeals in Philadelphia ruled unanimously on Thursday that federal regulations superseded a Pennsylvania state law, meaning Bayer did not need to place a warning on the pesticide.
The verdict opens the door for Bayer to have the legal issue reviewed by the US Supreme Court, as it is at odds with previous ones by other federal appellate courts.
The court said federal law required health warnings on pesticides to confirm to those required by the Federal Insecticide, Fungicide, and Rodenticide Act rather than state law.
The legal saga was caused by conflicting views of from different authorities on the potential carcinogenic effects of glyphosate. The US Environmental Protection Agency maintains its assessment that the chemical created “no risks of concern to human health when glyphosate is used in accordance with its current label.” But in 2015, the International Agency for Research on Cancer had labelled glyphosate as “probably carcinogenic to humans.”
In 2020, Bayer struck a $10.9bn settlement over a wave of Roundup lawsuits, and set aside another $4.5bn a year later. After losing several court cases, which dragged down the share price heavily, it embarked on a lobbying effort to persuade US states to pass legislation that would cut billions of dollars in liabilities and reduce the legal threat from the litigation saga.
Shares in Bayer were trading at €29.20 on Friday, having risen by 11 per cent in morning trading. The company’s stock is still down more than 40 per cent over the past 12 months, giving it a market valuation of €29bn.
Bayer said in a statement that it was “pleased” with the latest court ruling, adding that the decision created a “circuit split among the federal appellate courts and necessitates a review by the US Supreme Court to settle this important issue of law.”
If the Supreme Court were to share the view of the Philadelphia appeals court, Bayer would be off the hook over bulk of the glyphosate damage claims, according to a person familiar with the matter.
However, it may still decide not to review the case. Previous attempts by the company to get a supreme court ruling on the matter were unsuccessful.
Bayer on Friday said that it stands “fully behind its Roundup products”, arguing that “the weight of scientific evidence and the conclusions of expert regulators worldwide continue to support the safety of glyphosate-based herbicides and that they are not carcinogenic”.