Bayer sales and pre-tax profit in 2011 beat record


High hopes for four new drugs in late-stage development

Marijn Dekkers unveils the first full-year results since he became chief executive of the Bayer Group

Bayer is pinning its hopes on four new drugs that it believes have potential to become blockbusters as it faces generic competition and the impact of healthcare reforms in the US and Europe.

The German pharmaceuticals and chemicals giant says four medicines in late-stage development could each achieve peak annual sales of €1bn or more. This applies to the anticoagulant Xarelto, which Bayer believes could achieve sales of more than €2bn across all indications.

Cancer drugs Alpharadin, for the treatment of bone metastases in prostate cancer, and regorafenib to treat advanced colorectal cancer, plus VEGF Trap-Eye for treating various eye disorders are also viewed as potential blockbusters.

The firm has a total of 40 pharmaceutical projects in clinical development.

Bayer Group chief executive Marijn Dekkers, unveiling the firm’s first full-year results since he took charge, said Bayer has ambitions to become a top 10 pharmaceutical firm.

‘These four blockbusters will get us in that direction to a certain extent, perhaps augmented by certain acquisitions,’ he said. ‘We are interested in acquiring businesses that would strengthen our LifeScience and CropScience businesses.’

He said Xarelto had cost Bayer and Johnson & Johnson, its commercial partner for the drug in the US, about €2bn to research and develop, and it would ‘take a while to get this back as commercialisation costs in 2012 will be high’.

Dekkers said Bayer had a ‘very successful year in 2011 both strategically and operationally’ posting record levels of sales and EBIT.

Bayer Group sales rose by 4.1% to €36.5bn (2010: €35.1bn), exceeding the record set in 2010. Sales in emerging markets increased by 9%. Net income increased by 89.9% to €2.5bn.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) – before special items – rose by 7.2% to €7.6bn (2010: €7.1bn).

Bayer announced in November 2010 that it would cut 4,500 jobs worldwide, but also hire 2,500 people.

‘We are about halfway there,’ said Dekkers. ‘We have perhaps been quicker shedding than hiring, but have made good progress. We will complete the restructuring programme this year.’

Sales at the HealthCare subgroup, which includes pharmaceuticals, consumer healthcare, animal health and devices, increased by 1.5% in 2011 to €17.2bn (2010: €16.9bn).

EBITDA before special items of Bayer HealthCare improved by 6.7% to €4.7bn (2010: €4.4bn).

‘HealthCare did a nice job in improving its margins in 2011, which won’t kick in during 2012, but in 2013,’ said Dekkers. ‘In 2012 we will be burdened with the cost of developing new products, but without the sales benefit.’

Business in the pharmaceuticals segment grew by 0.6% (currency effects and portfolio adjusted) to €9.9bn, with sales gains particularly in emerging markets in Asia/Pacific and Latin America. Business in China also showed strong growth. This contrasted with falling sales in the established markets of North America and Western Europe owing to health system reforms and generic competition.

Sales of the erectile dysfunction treatment Levitra were markedly lower in the US, for example, due to the partial restructuring of distribution activities for general medicine products.

Business with Levitra shrank by 22.2% overall and sales of multiple sclerosis drug Betaferon/Betaseron also fell (by 5.4%) owing to generic competition and price reductions in connection with health system reforms, primarily in Europe.

Among the company’s best-selling products, the blood-clotting factor Kogenate performed especially well, with sales up by a currency-adjusted 8.3%.

Aspirin, which is 120 years old and 80 years off patent, is ‘still going strong’, said Bayer HealthCare chief executive Joerg Rheinhardt. ‘We continue to look at new formulations, such as a fast-acting version, but not new indications.’

Aspirin Cardio for the prevention of heart attacks, for example, achieved double-digit growth of 12.6% (currency effects adjusted).


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