Bayer

Bayer HealthCare's combined pharmaceuticals business is characterised by a well-balanced portfolio comprised of business units such as oncology, cardiology/haematology and gynaecology. In addition, the combined biotech platform provides a sound basis for further growth, including such products as Schering's Betaseron (interferon beta-1b) and Leukine (sargramostim), together with Bayer’s genetically-engineered Factor VIII Kogenate. Current growth drivers include: Avalox/Avelox (moxifloxacin), Betaferon/Betaseron (interferon beta-1b), Kogenate (Factor VIII), Levitra (vardenafil), Mirena (levonorgestrel), Yasmin (ethinyloestradiol+drospirenone) and Aspirin Cardio. By combining and consolidating the research and development activities of the two companies Bayer has achieved a more focused and balanced pipeline.

Fiscal 2007 was a successful year for Bayer with total sales rising by 11.8 per cent to EUR 32 billion and operating income up by 14.2 per cent to EUR 3.2 billion. The acquisition of Schering AG, the largest corporate transaction in Bayer's history, contributed to this result, with the enhanced product portfolio and research and development pipeline providing a strong basis on which to build future success for Bayer HealthCare and thus the Bayer Group. Bayer is expecting HealthCare to account for nearly 50 per cent of Group sales in the future.

The integration of Schering is proceeding faster than expected and the acquisition has strengthened the Bayer Group's global market position in the pharmaceutical business as it copes with declining sales for many of its previously top-selling products, specifically Cipro.

Bayer's research ratio has traditionally been lower than the industry average, at between 7 and 9 per cent of sales. However, in a move that reflects thestrengthening of its pharmaceutical pipeline, Bayer now expects its R&D expenditure to rise to 15 per cent of sales in 2008, increasing to 15-17 per cent by 2009.

Bayer's overall strategy of focusing its portfolio has continued with the divestment of the diagnostics business to Siemens Medical Solutions, followed by the subsidiaries of HC Starck and Wolff Walsrode. Since Bayer has acquired a diagnostics imaging business with the acquisition of Schering, this would seem to be a possible candidate for divestiture in the future.

The withdrawal of Trasylol is a notable setback for the company, especially following the withdrawal of Baycol/Lipobay around six years earlier. Both products managed to reach the market despite safety issues which subsequently led to withdrawal. This has led to company wide review of Bayer Schering’s development and review processes. These two incidents occurring in such a short space of time could have some impact on Bayer’s profile in the pharmaceutical market.

This new strategic analysis report Bayer: Pipeline • Products • Performance • Potential, provides a complete and critical review of the company and includes unique and independent assessments and forecasts of key products. Buyers of the web edition receive online access for one year via an easy-to-use interface with fast navigation and a full text search facility. All formats are the same price.