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Bayer sees modest advance for pharma business in 2011

Generic competition and government cuts on healthcare spending continue to bite

Bayer's pharmaceutical business posted marginal sales growth in 2011, up just 0.6 per cent to €9.95bn as generic competition and government cuts on healthcare spending continued to bite.

"The pharma segment was hampered by the efforts of many countries to reduce health system costs," said Bayer chief executive Marijn Dekkers, who joined his voice to many others in the industry by pointing out that "the money we earn from today's medicines pays for the development of tomorrow's medicines".

Pharmaceutical sales fell back in Western Europe and North America but were balanced by gains in Asia Pacific and Latin American markets, while stringent cost controls helped improve operating margins.

Overall, group sales grew 6 per cent to €36.5bn - ahead of Bayer's own targets for 2011 and despite a poor showing by its materials science unit caused by rising raw material prices.

Looking at individual pharma product lines, Dekkers noted that blood clotting factor Kogenate (antihemophilic factor) grew 8 per cent to €1.07bn, Aspirin Cardio rose nearly 13 per cent to €404m and intrauterine contraceptive Mirena (levonorgestrel) advanced 11 per cent to €581m.

On the downside, erectile dysfunction product Levitra (vardenafil) shrank more than 22 per cent to €332m, which Dekkers attributed to "the partial restructuring of distribution activities for general medicine products in the US".

Also depressed was Bayer's biggest selling pharmaceutical product - multiple sclerosis drug Betaferon/Betaseron (interferon beta-1b) - which fell 5 per cent to €1.12bn because of competition from other drugs and price reductions caused by health system reforms.

Bayer's overall healthcare business was buoyed by gains in the consumer health segment, which saw revenues rise 5 per cent to reach €7.2bn in 2011, thanks mainly to strong performances by the firm's over-the-counter analgesic brands.

Dekkers was keen to emphasise Bayer's late-stage pharma pipeline, which "was well ahead of the expectations we had at the start of the year and allowed us to selectively raise the peak sales estimates for some of these future products".

Bayer has been saying for some time it is sitting on four potential blockbusters, namely the eye medicine VEGF Trap-Eye, cancer drugs alpharadin and regorafenib and anticoagulant Xarelto (rivaroxaban).

The first three have peak sales potential of €1bn, with Xarelto looking to achieve €2bn or more, said Dekkers.

As Bayer's results were being presented, news emerged that the FDA had granted priority review for Xarelto for a third indication, treating patients with acute coronary syndrome, which is expected to be a major growth driver for the product.

29th February 2012

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