Bayer's corporate strategy has proved effective in a difficult environment, claimed Bayer chairman Werner Wenning, at the Spring Financial News Conference in Leverkusen, yesterday. He reported a group sales increase of 1.6% to just under Euro 33bn and EBITDA up 2.3% to â"šÂ¬6.9bn for 2008.
Wenning said Bayer had benefited from its alignment toward the life-science businesses, HealthCare and CropScience, which are less dependent on global economic development. The company has particularly benefited from the, now completed, integration of Schering. However, the MaterialScience business took a direct hit in the fourth quarter with the sudden economic downturn. Sales in MaterialScience fell by 4.6%. This division's performance is expected to worsen in the next quarter.
HealthCare contributed to the good performance with growth of 6.9%. "2008 was a strong year for Bayer HealthCare," said Wenning. Sales of this subgroup climbed by 4.1% to â"šÂ¬15.4bn (â"šÂ¬14.8bn in 2007). Sales of the Pharmaceuticals segment expanded by 4.3 % (currency - and portfolio-adjusted: 7.1 %) to â"šÂ¬10.7bn.
The division was boosted by the performance of the YAZ family of oral contraceptives, sales of which rose by 22% on a currency-adjusted basis, despite the recent release of a generic version in the US.
The highest growth rates came from the cancer drug Nexavar with 75.7 % and the intra-uterine system Mirena with 35.5 %. The multiple sclerosis treatment Betaferon/Betaseron gained 15%, while the hemophilia medicine Kogenate saw 7.3 % growth.
Wenning said highlights of 2008 were the first marketing authorisations for the anticoagulant Xarelto, which can now be administered in tablet form for prophylaxis of venous thromboembolism following elective hip or knee-joint replacement surgery in adult patients. The drug is in the final phase of clinical development for the remaining indications - including some important long-term indications. Wenning said: "We believe this innovative drug has the potential to achieve peak annual sales of more than â"šÂ¬2bn".
The Consumer Health segment increased sales by 3.6 % to â"šÂ¬4.7bn. On a currency - and portfolio - adjusted basis, sales were up by 6.3%. In the non-prescription medicines business (Consumer Care), the Bepanthen/Bepanthol product line posted the strongest growth, with a 20.7% increase. The antifungal Canesten also performed well, with sales up 16.1%. In the Diabetes Care Division, the Contour blood glucose monitoring devices were once again the fastest-growing product line, with a gain of 18.4%.
Bayer expects further growth in earnings in HealthCare and CropScience next year.
The Group proposes to increase its dividend per share to â"šÂ¬1.40 and aims to reduce its net debt toward â"šÂ¬10 bn by 2010 and, as a result, said that no large acquisitions were planned.
Wenning said Bayer would invest â"šÂ¬420m in capital expenditure in Health Care this year, compared with â"šÂ¬395m last year, and will strengthen its research activities with a â"šÂ¬2.9bn research and development budget - its highest yet. It also plans to strengthen its marketing structure in markets such as China.
Commenting on the rising pressures on health systems around the world, Wenning noted that the specialty business was less susceptible and added that "not being in the GP business is our strength."