The Nufarm Limited (ASX: NUF) share price fell 4% in yesterday's trade after a California court ruled that global pharmaceuticals giant Bayer AG (ETR: BAYN) should pay a couple $2.9 billion in compensation in the latest Roundup cancer case.
Why was Bayer ordered to pay $2.9 billion?
Roundup is a glyphosate-based line of weed killers produced by Bayer-owned Monsanto, which is currently subject to more than 13,000 Roundup lawsuits following accusations that the product is carcinogenic and carries inadequate warnings.
Yesterday's result represents the third Roundup trial in a row that Bayer has lost in relation to its Roundup product, with the plaintiff's case being based on allegations that it was the cause of the couple's non-Hodgkin's lymphoma.
In August 2018, Bayer was also ordered to pay $289 million in damages (which has since been reduced to $78 million) in San Francisco over inadequate cancer warnings on its herbicide products. Monsanto is currently appealing that decision.
While Bayer will likely appeal the US$2 billion damages finding given its size and abnormality, this is unlikely to be the last significant payout that the company is ordered to pay as a result of its Roundup product line.
How does this affect Nufarm?
Nufarm is one of Australia's largest chemicals and agribusiness companies which also makes its own glyphosate-based products.
The company said regulators in Canada and Brazil had confirmed regulatory approval of the herbicide and that "glyphosate is safe to use and presents no risk to users when used in accordance with label instructions".
The Nufarm share price plummeted nearly 17% in August 2018 following the Johnson case ruling, with Macquarie Bank analysts estimating that Nufarm earns about a fifth of its revenue from products containing glyphosate.
The company's share price fell 4.13% yesterday on the US court ruling news and its current $4.41 valuation is well short of its 52-week high of $9.55 per share.
