As a result, when the industry began to consolidate, Bayer passed up on some opportunities to participate.

"Bayer's view was, 'We don't need this,'" says Higgins. "Of course, this was not unique to Bayer. And, of course, a decade later, if you're a company that took this attitude, you probably find yourself no longer competitive from a scale perspective. You probably haven't focused enough on your other businesses, and you get a pretty unbalanced portfolio, and then finally, you overlay that with some misfortune, which can happen to the best of companies. For us, it was Baycol. If Baycol had fulfilled its potential, it would have been a $4 billion to $5 billion asset. And we would have been proven right."

But that didn't happen. Instead, in August 2001, Bayer withdrew the cholesterol-lowering agent from the market, after reports of an elevated incidence of rhabdomyolysis, a breakdown in muscle tissue that can lead to kidney damage—including 31 fatalities in the United States. Over the next two years, Bayer's stock plunged to just over nine dollars.

Here are some highlights of Bayer's high-speed makeover.

Deeper into Consumer Health

Bayer has long been one of the best-recognized brands in pharma—to a great extent because of its presence in the nonprescription market, where Bayer has played a major role for more than 100 years, arguably dating to the synthesis of Aspirin (acetyl salicylic acid) in 1898.

Consumer health is traditionally a lower-margin business than brand-name prescription drugs. But the category has been growing rapidly in the past few years, and it offers some often overlooked advantages, says Higgins. "There are limits on the synergies you can realize on the commercial end of pharma. A pharma field force can at maximum promote two products. So, when you merge, you still need those selling organizations unless you dramatically reduce the number of products you're promoting—which defeats the whole purpose of the acquisition. A consumer business is almost like a catalog business. We can add product to existing sales and marketing organizations, and get the maximum level of synergies."

Driven by that logic, Bayer HealthCare acquired Roche Consumer Health in a $3 billion deal in August 2004. (Roche Consumer Health had sales of $1.4 billion in 2003.) The deal gave Bayer such products as pain relievers Aleve and Flanax (both based on naproxen); Bepanthen antiseptic cream; the multi-vitamins Berocca and Supradyn; Redoxon (artificially synthesized vitamin C); and Rennie (an antacid). They joined Bayer's lineup of consumer products, which includes such well-known brands as Aspirin, Alka-Seltzer, and One-a-Day. Bayer also acquired five overseas production sites and Roche's 50 percent share of the 1997 Bayer–Roche US joint venture, which makes Aleve.

The acquisition made Bayer the third-largest provider of nonprescription medicines. "At the time people felt we had significantly overpaid. If you see some recent acquisitions, we look like very smart people. We got in at the start of the OTC consolidation, and we got a bargain."

Out of the US Primary Care Business

One particularly hard decision Bayer made was to exit a market that has been one of the richest in healthcare for decades: primary care in the United States.