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Bayer to spin out material science division

German firm will focus solely on life sciences
Bayer symbol

Bayer is set to re-focus its business solely on life sciences through the planned separation of its MaterialScience division, which will leave the group and continue as a separate company to be floated on the stock market by 2016.

The move continues a trend for larger pharma companies to trim non-priority parts of their organisation in order to focus on the more profitable aspects.

“Our intention is to create two top global corporations: Bayer as a world-class innovation company in the Life Science businesses, and MaterialScience as a leading player in polymers," said Bayer's CEO Marijn Dekkers.

The businesses that will comprise the new Bayer Group are the company's HealthCare and CropScience divisions. The HealthCare unit will soon be strengthened with the addition of the over-the-counter (OTC) products business of Merck & Co, which Bayer acquired earlier this year.

According to Bayer, these companies had sales of €29bn in 2013 and a staff of nearly 99,000 people, including 29,500 in Germany. The company's headquarters will remain in Leverkusen.

Recent pharma divestments and spin outs
Baxter announces Baxalta as biopharma spin out from med tech businessSeptember 2014
Reckitt Benckiser spins out pharma business to focus on health and household goods
July 2014
Merck & Co sells consumer health business to Bayer
May 2014
Novartis buys GSK's oncology business, sells vaccine business to GSK and sells animal health division to Lilly
April 2014
Actavis sells EU generics businesses to AurobindoJanuary 2014
GSK sells Lucozade and Ribena to Suntory Beverage & FoodSeptember 2013
Pfizer announces plan to split  business into three parts: one for generics and two for branded medicines July 2013
Pfizer spins out animal health unit as ZoetisJune 2012

Bayer has ambitious plans for its new streamlined business, with intentions to raise R&D spending and strengthen early research at both Bayer Healthcare and Bayer CropScience.

New pharmaceutical products will lead the commercial drive at the new Bayer; the company expects he anticoagulant Xarelto, the eye medicine Eylea, the cancer drugs Stivarga and Xofigo, and the pulmonary hypertension drug Adempas to have combined peak annual sales of at least €7.5bn.

As for the Material Science business, Dekkers said the separate status of the company makes it able to “deploy its existing strength even more rapidly, effectively and flexibly in the global competitive arena”.

MaterialScience, which provides materials to the automotive, construction and electronics industries, has also seen investment with new facilities in China and Germany.

“MaterialScience is a very well positioned business that today operates very modern, competitive, large-scale facilities,” said Dekkers, who noted the independent firm will be Europe's' fourth-largest chemical company.

Other pharma companies to have spun out divisions as separate companies in recent years include Abbott, which launched AbbVie to focus on research-driven pharma activities, and Pfizer, which separated its animal health division as Zoetis.

19th September 2014

From: Research, Sales

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