I explored the lower city instead of rushing through the main quest - which seems to be something you should not do. Found the apothecary before I got the main quest that leads to him. Killed the bandits and the bandit boss.
Then many hours later I return to the main quest and get to the part where you need to talk to the apothecary. I get there, and the bandit boss has respawned. I kill him again, and now the apothecary is completely unresponsive. I can't even use him as a merchant. Tried everything - dying, resting, talking to the Watcher, talking to the guy at the Embassy. Nothing works. I'm just stuck.