Bayer ups healthcare division earnings forecast for 2006
German drug and chemicals group Bayer continued on a successful course in the second quarter of 2005, predicting it will improve its year-on-year operating performance in the second half of the year.
German drug and chemicals group Bayer continued on a successful course in the second quarter of 2005, predicting it will improve its year-on-year operating performance in the second half of the year.
Second quarter (Q2) group sales rose 19.7% to Euro 7,053m (US$8,590), compared with €5,890m (US$7174) in the same period in 2004, while second-quarter earnings before interest and tax (EBIT) and before special items rose to €852m (US$1.05bn).
The marked improvement was driven mainly by higher margins in its plastics and healthcare divisions, along with cost savings and efficiency improvements. Q2 earnings were hit by €106m in charges, including €74m in litigation-related charges and €17m integration costs for the consumer health business acquired from Roche. The healthcare business saw faster than average growth; EBIT climbed 64% to €339m (compared with €217m in 2004) while sales rose 18.1% to €2,370m (€2,007m in 2004), thanks largely to the acquisition of the Roche consumer health business.
Above-market growth was recorded in the Diabetes Care, Diagnostics and Biological Products divisions, while sales of the Pharmaceuticals division remained steady. Good business with products such as Trasylol, Avelox and Levitra offset the lower sales in the US, resulting from the market exclusivity of Cipro expiring and Schering-Plough taking over the marketing of Bayer's primary care products.
The company saw group sales for first half of 2005 grow 17.8% to €13,757m and first-half net income increased by 87.3% to €1,058m (US$16,756).
Chairman of the management board Werner Wenning said that Bayer is increasingly optimistic about the outlook for its healthcare division and was confident it would exceed its target EBITDA margin of 17% in 2006.