Plaintiffs sought early successes against Bayer in the first trials of thousands of lawsuits over its cholesterol lowering drug by bringing the cases in east Texas and Mississippi, jurisdictions known for hostility towards big corporate defendants, particularly foreign ones.

But the legal strategy of the German pharmaceuticals and chemicals group appears to be working effectively after a second victory in two trials on April 3 in Jackson, Mississippi, prompted more plaintiffs to enter settlement talks.

"We tried two cases in the lions' dens," Philip Beck, lead attorney for Bayer's US litigation, told the Financial Times. "They very well may have thought if they got two victories, bang-bang, in these two jurisdictions, that would increase the pressure on us."

Instead, Bayer has shifted some pressure back on plaintiffs' attorneys, especially those who up to now told Bayer's attorneys that they would not talk settlement, holding out the threat of trial for a bigger pay-out.

More settlements instead of trials - and the possibility of large damage awards - can significantly reduce the potential liabilities Bayer faces from Baycol and the pressure on the group's share price.

There are up to 10,000 claims pending against the drug, known as Lipobay outside the US, which was pulled from the market in 2001. It has been linked to about 100 deaths and far more cases of serious side effects, including rare muscle wasting and kidney disorders.

Estimates had put Bayer's liability at up to Euros 10bn (Dollars 10.8bn), but its shares are recovering after plunging 30 per cent a month ago when it said its insurance might not cover the group if significant verdicts went against it.

Tobias Mock, credit analyst at HVB, says the victories make it increasingly likely that Bayer's litigation liability will fall to his best case of Euros 1.4bn - he predicted Euros 9bn in the worst case.

Bayer has attempted to settle all cases of the potentially fatal muscle-wasting disease, rhabdomyolysis, among former Baycol users, but to rigorously defend all other claims and attempts to tie settlements to thousands of claims.

The group's first victory came in a case for a large punitive damage award, Dollars 550m, brought by lawyers representing an elderly man with rhabdomyolysis. Attorneys brought the case to trial in Corpus Christi, Texas, to teach Bayer a lesson - it had refused to settle 1,400 other claims they had required be settled together with the one rhabdomyolysis case.

The second lawsuit, brought in Mississippi, sought only Dollars 50,000 and involved a woman whose own doctor eventually testified that Baycol had helped, not hurt her.

Attorneys in the case had juxtaposed portraits of Bayer's pharmaceutical executives with pictures of 103 tombstones of supposed victims; and had leaked documents on the eve of trial to raise questions over whether Bayer had been aware of the dangers while continuing to market the drug.

"Our focus has been to bring out the facts that, yes, there were side effects in rare instances, but that is an inevitable risk that one takes when taking prescription medications," Mr Beck said.

But Bayer executives caution it is far too early to claim victory. It faces a crucial federal case in June in the US District Court in Minneapolis and other trials could have different outcomes due to the diverse nature of patients' medical conditions and differing opinions over rhabdomyolysis.

"This is like the Tour de France (bicycle race)," says one senior Bayer executive. "We have won the first leg, but the Alpes D'Huez and the Tour Mallet (two large mountain climbs) are still ahead of us."

Hundreds of thousands took Baycol, so the potential for lengthy litigation remains, and a motion is pending in federal court to create a class-action suit against Bayer - which would be a victory for plaintiffs. And the company now also faces lawsuits against the chemicals side on behalf of victims of the apartheid regime in South Africa.

It is apparent that Baycol will continue to overshadow Bayer's fate for years to come. Its shares still sit 60 per cent below their price before the drug's withdrawal in August 2001. And, most important, it makes the search for a partner for Bayer's pharmaceuticals business much harder.