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Bayer raises FY07/ FY09 guidance on Schering acquisition

Bayer has raised its earnings guidance for 2007 and 2009, due to the improved earnings prospects from its HealthCare business, which was augmented by the acquisition of Schering

German pharmaceutical and health care company Bayer has raised its earnings guidance for 2007 and 2009, due to the improved earnings prospects from its HealthCare business, which was augmented by the acquisition of Schering in 2006.

At an investor conference held in Leverkusen in Germany, Bayer also presented its increased 2007 and 2009 adjusted EBITDA margin forecast for the HealthCare business. The EBITDA margin for the Bayer group as a whole is expected to exceed 20 per cent in 2007, compared with the company's previous forecast of a slight improvement over last year's margin of 19.3 per cent.

By 2009, Bayer's EBITDA margin is estimated to reach above 22 per cent. As per the earlier outlook, Bayer anticpates generating a margin of about 22 per cent, starting in 2009.

For the HealthCare business, the company currently projects EBITDA margin before special items of 25 per cent, up from 24 per cent expected earlier. By 2009, the business' underlying EBITDA margin is projected to reach around 28 per cent, in comparison with the group's previous forecast of 27 per cent.

Bayer's chairman of the board and CEO, Werner Wenning, said that the strengths of all four divisions made the HealthCare business a growth engine for the entire the company. The Schering acquisition and the strong performance of the consumer health business had also contributed to its increased profitability.

The company reported that it was confident of achieving more than EUR 800m from the Schering takeover, compared with the previously planned EUR 700m by 2009. According to Bayer's CEO, the company plans to further expand its HealthCare activities in order to strategically strengthen the entire enterprise.

Bayer recently completed a strategic realignment of its development portfolio in the specialty pharmaceuticals field. The strategic realignment was a key milestone in the integration process of Schering and consequently the company discontinued a total of 20 pipeline projects due to either strategic reasons or low prospects for success. The discontinued projects included the cancer drug PTK/ZK, Leukine against Crohn's disease and asoprisnil to combat benign uterine tumours.

Bayer's new pipeline currently comprises 14 projects in phase I, 17 projects in phase II and 19 projects in phase III. A further nine projects have already been submitted for marketing authorisation, Bayer revealed.

In addition, Bayer adjusted its pharmaceutical R&D budget for 2007 and 2008 to about 15 per cent of the division's sales. The company expects that the pharmaceutical R&D budget will be between 15 and 17 per cent in the following years.

Bayer said its drug discovery research will focus on four growth areas in the future, namely oncology, cardiology, women's healthcare and diagnostic imaging. The clinical development of new products and the further development of existing products are to continue for all areas of the subgroup.

Financial highlights:

  • Bayer's FY06 net income was EUR 1.7bn, an increase of 5.4 per cent from EUR 1.6bn a year earlier. On a per share basis, the company's earnings per share increased 1.4 per cent to EUR 2.22 from EUR 2.19 in FY05
  • EBITDA rose 13.4 per cent to EUR 4.7bn from EUR 4.1 bn in FY05, while underlying EBITDA grew 21.3 per cent to EUR 5.6bn from EUR 4.6bn in FY05, yielding an underlying EBITDA margin of 19.3 per cent
  • The company's FY06 net sales increased 17.2 per cent to EUR 29bn from EUR 24.7bn a year ago

20th June 2007

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