Shareholders hammered the value of Bayer AG last week after management owned up to the consequences of the removal of its Baycol/Lipobay cholesterol drug from the market. But if the sell-off was stunning, its plunging valuation now starkly reveals just how undervalued the company is relative to its pharmaceutical peers.

The Baycol withdrawal sharply outlined the near-term weaknesses in the pharma company's pipeline. However, beyond the loss of more than $1 billion a year in revenues, the evaporation of E6 billion ($5.4 billion) of valuation meted out in response amplified shareholder unhappiness with the company's reluctance to separate its healthcare, agriculture, chemicals, and polymers business units.