Bayer doubles operating result for third quarter

Bayer increased its EBIT (Earnings Before Interest and Tax) for the third quarter by 101.5% in comparison to 2004, seeing it rise from €343m to €691m, and posted strong gains in sales and earnings in all subgroups (HealthCare, CropScience and MaterialScience). The company has consequently raised its expectations for full-year underlying EBIT to an increase of around 50% on 2004, after having predicted a 40% rise in August.

Group sales in the third quarter rose 19.1% to €6,531m, with the acquisition of Roche OTC activities cited as the main driver, as well as business with Lanxess and a seven percent in increase in selling prices. The same factors also helped HealthCare sales rise by 21% to €2,373m, with the pharmaceuticals sector 'registering considerable organic growth once again', despite the patent expiration of Cipro in the US. Sales of Levitra and Trasylol increased by 48.9% and 31.3% respectively, while Kogenate, a genetically engineered haemophilia drug, became the company's best-selling HealthCare product in the third quarter with an increase in sales of 31.7%. HealthCare EBIT before special items rose by 12.3% to €355m, 'due in part to the earnings contributions from the alliance with Schering-Plough in the US'.

CropScience increased sales by 4.2% to €1,171m, with underlying EBIT sitting at €17m; a particularly good result for the company following an EBIT loss of €108m for the same period in 2004. Sales for MaterialScience rise by 18.4% to €2,639m, while underlying EBIT climbed by 150.7% to €366m.

Looking to the future, Werner Wenning, ceo, said that there was 'encouraging progress' with the pharmaceutical pipeline, but would provide little more detail, saying only that it included 'two major products'. He expects Nevaxar, for the treatment of advanced kidney cancer, to be launched in the US in the first half of 2006, and confirmed that the company, along with Johnson & Johnson, is furthering the development of its oral antithrombosis drug, the Factor Xa inhibitor, for which it plans to launch Phase III clinical trials shortly. The pharmaceuticals division has 11 other projects in Phase I development and16 in preclinical development.

Wenning was keen to emphasise Bayer's position as 'an innovator company', talking up 'Triple-i', 'a group-wide innovation initiative which stands for "inspiration, ideas and innovation" and is designed to promote a culture of innovation', and announced an additional €50m investment in new research projects in 2006, part of which will be pumped into a project investigating the manufacture of pharmaceutical active ingredients from plants: 'I am convinced that this biotechnological approach has the potential to transform the industrial production of pharmaceuticals'.

He expects strong growth in the US and Asia, 'despite the high price of oil', and continued growth in Europe and Latin America, and nonchalantly dismissed Bayer's failed bid for Boots, saying 'if someone else can offer more then we wish them every success in this business'.