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Bayer reports 14% y/y growth in pharmaceutical sales in 2015

Published: 26 February 2016

The pharmaceuticals division of German conglomerate Bayer AG has reported that sales in 2015 rose by 14% year on year to EUR12.052 billion.



IHS Life Sciences perspective

Implications

Oral anticoagulant Xarelto continued to be Bayer's leading product in terms of sales, while several newer products recorded impressive sales growth during 2015.

Outlook

Bayer has begun 2016 as an exclusively life-sciences-focused business, and it can be expected that research and development activities in the pharmaceuticals segment of the business will be intensified as the company seeks to consolidate its position and continue to bring new innovative products to market.

German pharmaceutical and healthcare group Bayer AG has reported its full-year results for 2015, showing a strong performance in terms of top- and bottom-line earnings. Net sales for the year increased by 12.1% year on year (y/y) on a reported basis to EUR46.324 billion (USD51.060 billion), although on a foreign-exchange (Fx) and portfolio-adjusted basis the increase was calculated at a more modest 2.7% y/y. Sales of Bayer HealthCare – which encompasses the Pharmaceuticals (prescription pharmaceuticals) and Consumer Health (over-the-counter products: OTC) divisions – increased by 19.9% y/y on a reported basis to EUR22.874 billion (up 8.1% y/y on an Fx and portfolio-adjusted basis). Sales of the pharmaceuticals division were up 14.0% y/y on a reported basis to EUR12.052 billion (up 9.9% y/y on an Fx and portfolio-adjusted basis). A substantial increase was also recorded in the Consumer Health division, which saw annual sales up by 30% y/y (5.1% y/y on an Fx and portfolio-adjusted basis), principally due to the acquisition of the OTC assets of Merck & Co (US).

Bayer Group 2015 financial results

 

2015 (EUR, bil.)

Y/Y, % change

Bayer AG's group net sales

46.324

12.1

Bayer HealthCare's net sales

22.874

19.9

-Pharmaceuticals

12.052

14.0

-Consumer Health

9.129

30.0

Cost of goods sold

21.158

6.3

Selling expenses

12.367

13.0

R&D expenses

4.281

21.0

General administration expenses

2.098

23.2

Operating income*

6.420

16.3

Operating margin**

13.9%

0.5pp higher

R&D as % of net sales

9.2

0.6pp higher

Net income

4.110

20.0

* IHS Life Sciences estimate: net sales minus cost of goods sold, selling, R&D, and general administration expenses.
** IHS Life Sciences estimate: operating income as % of net sales.
Source: Bayer AG

HealthCare and Pharmaceuticals post strong Q4 sales growth

Looking at Bayer's overall fourth-quarter financial results, the group as a whole recorded a 4.9% y/y increase in sales to EUR11.319 billion. Strong performances were shown by the HealthCare division – which saw an 8.6% y/y increase in sales on a reported basis, to EUR5.811 billion (up 8.5% y/y on an Fx and portfolio-adjusted basis) – while the Pharmaceuticals division saw a reported increase of 9.2% y/y in sales to EUR3.571 billion (up 9.6% y/y on an Fx and portfolio-adjusted basis). The main dampener on overall group sales in the final quarter of 2015 was the divestment of Bayer's plastics business, MaterialScience, now operating under the name Covestro.

Xarelto and Eylea lead in sales of individual products

In terms of sales in individual products of the Pharmaceuticals division, oral anticoagulant Xarelto (rivaroxaban) remained Bayer's best-selling drug, with sales in 2015 rising by 34.1% y/y on a reported basis to EUR2.252 billion. Bayer reports that the rise was mainly due to strong increases in sales volumes in Germany and Japan. Ophthalmology drug Eylea (aflibercept) improved its ranking to become the second-largest-selling product – with sales up by 61.8% y/y on a reported basis reaching EUR1.228 billion, based mainly on the new indications for which the drug was approved during 2015. Several newer products underwent dynamic increases in sales, including cancer medicines Stivarga (regorafenib) and Xofigo (radium Ra 223 dichloride).

Bayer Healthcare Pharmaceuticals, best-selling products 2015

 

Full-year 2015 sales (EUR, mil.)

Y/Y, % change (reported)

Y/Y, % change (FX and portfolio-adjusted)

Xarelto

2,252

34.1

34.2

Eylea

1,228

61.8

57.4

Kogenate

1,155

4.1

-1.1

Mirena product family

968

18.2

5.7

Nexavar

892

15.4

7.4

Betaferon/Betaseron

824

0.1

-8.1

YAZ/Yasmin/Yasminelle

706

-8.1

-4.7

Adalat

633

7.7

1.2

Aspirin Cardio

524

7.8

2.3

Glucobay

523

18.1

2.4

Avalox/Avelox

379

-0.5

-2.3

Stivarga

313

39.7

24.5

Xofigo

257

63.7

43.2

Levitra

226

-7.8

-8.0

Cipro/Ciprobay

182

-4.7

-3.2

Total

11,062

7.0

13.4

Proportion of pharmaceutical sales

80%

-

-

Source: Bayer AG

Outlook and implications

Bayer is undergoing a phase of significant changes, with the announcement towards the end of 2015 – coinciding with the divestment of MaterialScience – that the HealthCare division will cease to function as a separate entity from the beginning of 2016, leaving an overall structure with three divisions: Pharmaceuticals, Consumer Health, and Crop Science. 2015 was therefore the final year in which the HealthCare division will report separate results.

Bayer recently announced the departure of CEO Marijn Dekkers, with Werner Baumann – who has been a member of Bayer's management board since 2010, holding responsibility for strategy and portfolio management – replacing Dekkers. Baumann will be tasked with navigating Bayer through the challenges the company will face in establishing itself in its new form – that of a wholly life-science-focused conglomerate.

This will certainly depend on Bayer's continuing to increase its investment in research and development (R&D) – and considering the 21% y/y increase in R&D spending in 2015, this is likely to remain the prevailing trend. Bayer has reported a considerable number of candidate treatments at Phase III level – including copanlisib, intended for the treatment of various forms of non-Hodgkin lymphoma, and BAY1841788, which is undergoing trials in the treatment of prostate cancer – with additional, already-approved products also at the Phase III stage in other indications.

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