The collapse of joint venture talks with Aventis is just the latest headache for the sprawling German conglomerate.

With problems throughout its chemical and pharmaceutical empire, executives at Germany's Bayer AG are probably reaching for the company's flagship aspirin brand.

Bayer has no shortage of migraine-inducing difficulties: The company faces a passel of lawsuits over a recalled anticholesterol medicine that could cost it $1.6 billion in settlements; it continues to struggle with a mostly empty pipeline of new drugs; and, reflecting its uninspired product line, overall sales have stalled.

The latest bit of bad news came Friday, Jan. 31, when France's Aventis SA said it hadn't been able to come to terms on combining its proteins division with the biological products division of Bayer Healthcare. The inability to form the joint venture, announced a year ago, was yet another deal failure for Bayer, which canceled the sale of its rubber-and-plastics division to Advent International and has been seeking to sell a portion of its poor-performing pharmaceuticals division. "It would have been nice if they could have found a partner for the biologicals," said Alexander Kachler, an analyst with Merck Finck in Munich. "Bayer has real problems in pharmaceuticals right now."

Unsurprisingly, the concerns have weighed on Bayer's stock price, pushing the company close to 10-year lows. Perhaps even worse, the problems have left the sprawling industrial conglomerate unable to sell a stake in its struggling pharmaceutical unit, a goal it has set for itself. Already, potential buyers, including U.K. partner GlaxoSmithKline plc and Aventis, have dampened speculation they might be interested buyers.

Bayer, trying to recast itself as an over-the-counter-drugs, plastics and agricultural chemical company since buying Aventis CropSciences for $7.25 billion last summer, has already made it clear it is willing to negotiate with a potential partner to get a deal done. The company originally wanted to keep a majority stake in the unit, a position it has since softened.

"We don't insist on holding a majority stake," Annette Josten, a Bayer spokeswoman, said at the company's headquarters in Leverkusen, Germany. "We are still looking for a partner."

On the list of potential partners being eyed by analysts: Germany's Schering, Roche AG and Boehringer Ingelheim; Denmark's Lundbeck; Holland's Akzo Nobel; the U.S.'s Abbott Laboratories; and Japan's Takeda Chemical Industries.

"Everyone has looked at them," said Shaojing Tong, an analyst at research boutique Mehta Partners in New York, "and they still can't sell the unit."

Potential partners have plenty to consider when looking at the unit, which makes Cipro, an antibacterial agent that was thrust into the public's attention in the wake of anthrax outbreaks after Sept. 11.

The most serious problem facing Bayer's pharmaceutical unit, which is one of five subdivisions of the massive company's healthcare arm, is the spate of lawsuits its faces over problems with an anti-cholesterol drug called Baycol in the U.S. Pulled from the market in 2001 after being linked to scores of patient deaths, the drug has been associated with rhabdomyolysis, a disease that eats away at the victim's muscle tissue.

On Wednesday, Bayer stock was pummeled after analysts at British brokerage HSBC said Bayer could face as many as 15,000 Baycol lawsuits and estimated that settlements could total $1.6 billion, about 6% of Bayer's 2001 revenues. Bayer says it is aware of about 7,400 cases. The first U.S. Baycol trial is expected to go to court in March, according to Josten.

The report did little to improve investor sentiment toward the German icon, which invented aspirin in the 1890s. Bayer shares dropped to their lowest level in nearly 10 years, although later recovered.

"In a case like this, you never know how many lawsuits are out there," said one analyst who asked not to be identified.

Bayer insists the lawsuits are groundless though it has settled some cases without admitting responsibility. It has also said that insurance will cover any potential payments. Bayer has reportedly paid as much as $1.25 million in cases involving death and $300,000 in cases involving illness.

The company declined to comment.

Though clearly the most dramatic, the legal woes aren't the only obstacle Bayer faces in attracting a potential partner. The company has only a trickle of new products flowing in its pipeline.

Its most promising is Levitra, an anti-impotence pill being developed with partner GlaxoSmithKline plc. But Levitra will compete in a crowded market that includes Pfizer Inc.'s blockbuster Viagra and Cialis, a long-acting product from ICOS Corp.-Eli Lilly & Co.

Bayer also has a cancer-fighting drug, dubbed BAY 43-9006, it is developing with Onyx Pharmaceuticals Inc. That drug is expected to enter Phase 3 - the final stage of human testing before review by the U.S. Food and Drug Administration - this year.

Analysts say the withered lineup doesn't constitute a whole lot and explains in part the company's shrinking sales. Meanwhile, revenues have fallen at the pharmaceuticals division, making calculations of value difficult.

In the third quarter of 2002, the last reporting period for the company, the pharmaceuticals unit reported revenue fell 56 million ($60.6 million), or 6%, to 846 million because of dropping sales of Cipro and Adalat, an hypertension treatment. From that base, the unit's annualized sales are about $3.66 billion.

Analysts say that normally a unit like Bayer's pharmaceutical operations would command a valuation of two to three times sales. Trouble is, with its slipping sales, empty pipeline and unresolved legal issues, no one sees much potential in the business.

"It could be hard to justify a purchase at that valuation," said Mehta's Tong. "But everything has its price. Bayer will have to go lower."