Bayer Has “Great Plans” for Life Sciences, CEO Says

12.03.2015 -

Bayer aims to achieve strong sales and earnings growth for its life science businesses in the coming years, CEO Marijn Dekkers said at the "Meet Management" investor conference in Berlin, Germany.

Dekkers said the German group, which will become a pure life science player after the carve-out of its MaterialScience business later this year, is optimistic for the medium term and has "great plans" for the life science businesses.

Bayer seeks to considerably increase sales and margins in its HealthCare sub-group up to 2017, driven mainly by the recently launched pharmaceutical products and by the Consumer Care business, which was "greatly strengthened" in 2014 through the acquisition of the Merck & Co business, the CEO added.

"The outlook for our health care business is particularly positive," Dekkers said, "thanks to the five pharmaceutical products we recently launched. They have played a crucial role in making us one of the fastest-growing large companies in the pharmaceutical industry."

The Bayer chief said combined sales of the anticoagulant Xarelto, the eye medicine Eylea, the cancer drugs Stivarga and Xofigo, and the pulmonary hypertension drug Adempas are projected to increase toward €4 billion in 2015, up from €2.9 billion in 2014. He pegged the peak annual sales potential of these products at "at least €7.5 billion."

At CropScience, Dekkers said Bayer aims to continue achieving above-market growth and to maintain an industry-leading margin, with the agricultural business benefiting particularly from new crop protection products. "We will continue to invest heavily so that we continue to be successful with innovative products."

Bayer aspires to grow HealthCare sales by an average of about 6% annually through 2017 to more than €25 billion (€20.0 billion in2014) and to increase the EBITDA margin before special items to a range between 29 and 31% (from 27.5%).

The estimates are based on exchange rates as of December 31, 2014, including a euro-dollar exchange rate of 1.21. The percentage changes in sales are based on pro forma figures that present acquired businesses as if the acquisitions had been completed on January 1, 2014.

Bayer aims to increase sales in its Pharmaceuticals division by around 7% annually through 2017 to more than €15 billion (€12.1 billion) and to achieve an EBITDA margin before special items of 32-34% (30.7%).

Dekkers said he expects the mid- and late-stage projects in the group's drugs pipeline to make "significant progress" over the next 12 to 18 months, saying, "we want to help improve treatment options for patients in our research areas of cardiology, hematology, oncology and gynecology."

In 2015 alone, Bayer plans to spend more than €4 billion (€3.6 billion) on research and development, with more than half the total (about €2.2 billion) earmarked for Pharmaceuticals.

In the Consumer Health segment, sales are projected to rise by an average of around 4% annually through 2017 to more than €10 billion (€7.9 billion) and the EBITDA margin before special items to 24-26% (22.5%), driven by the consumer care business acquired from Merck. Dekkers said the integration of this business is well on track, with Bayer now occupying the global number two position in over-the-counter products.

"In the agricultural business, too, we are mainly benefiting from our innovative products," the CEO said. In Crop Protection, new products launched since 2006 are predicted to achieve sales of about €2.8 billion in 2017 (€1.9 billion in 2014).

For CropScience as a whole, Bayer's aim is to achieve above-market growth and raise sales to more than €11 billion in 2017 (€9.5 billion), yielding average annual growth of around 5%. Bayer intends to maintain the EBITDA margin before special items at an industry-leading level of 23-25% (24.9%).