Management Report

6. Business Development by Subgroup, Segment and Region

6.1 HealthCare

Key Data – HealthCare[Table 3.6]
  4th Quarter 2011 4th Quarter 2012
Change
Full Year
2011
Full Year
2012

Change
 
€ million

€ million

%
Fx (& p) adj. %
€ million

€ million

%
Fx (& p) adj. %
Sales 4,595 4,923 +7.1 +5.1 17,169 18,612 +8.4 +4.2
Change in sales                
Volume +1.6% +5.3%     +2.2% +3.7%    
Price +0.9% -0.2%     +0.2% +0.5%    
Currency +0.1% +2.4%     -1.2% +4.5%    
Portfolio +0.2% -0.4%     +0.3% -0.3%    
Sales by segment                
Pharmaceuticals 2,680 2,867 +7.0 +4.8 9,949 10,803 +8.6 +4.2
Consumer Health 1,915 2,056 +7.4 +5.4 7,220 7,809 +8.2 +4.2
Sales by region                
Europe 1,651 1,732 +4.9 +3.6 6,376 6,484 +1.7 +0.9
North America 1,161 1,281 +10.3 +6.1 4,360 4,961 +13.8 +5.5
Asia/Pacific 1,004 1,105 +10.1 +7.1 3,656 4,203 +15.0 +6.2
Latin America/Africa/Middle East 779 805 +3.3 +2.1 2,777 2,964 +6.7 +5.6
EBIT 770 541 -29.7   3,191 2,154 -32.5  
Special items (45) (460)     (176) (1,582)    
EBIT before special items* 815 1,001 +22.8   3,367 3,736 +11.0  
EBITDA* 1,110 878 -20.9   4,502 3,815 -15.3  
Special items (70) (464)     (200) (1,253)    
EBITDA before special items* 1,180 1,342 +13.7   4,702 5,068 +7.8  
EBITDA margin before special items* 25.7% 27.3%     27.4% 27.2%    
Gross cash flow** 926 584 -36.9   3,254 2,614 -19.7  
Net cash flow** 1,126 1,061 -5.8   3,357 3,543 +5.5  

Fx (& p) adj. = currency- (and portfolio-)adjusted (Fx & p adj.: Sales and Sales by segment; Fx adj.: Sales by region)

* For definition see Chapter 7.2 “Calculation of EBIT(DA) Before Special Items.”

** For definition see Chapter 7.5 “Liquidity and Capital Expenditures of the Bayer Group.”

Sales of the HealthCare subgroup rose by 4.2% (Fx & portfolio adj.) in 2012 to €18,612 million (reported: +8.4%), with both the Pharmaceuticals and the Consumer Health segments contributing to this growth. Business developed especially well in the emerging markets and in North America.

HealthCare Quarterly Sales

EBIT of the HealthCare subgroup fell in 2012 by 32.5% to €2,154 million. This drop earnings was mainly due to special items of minus €1,582 million (2011: minus €176 million). EBIT before special items rose by 11.0% to €3,736 million. EBITDA before special items increased by 7.8% to €5,068 million. This was mainly attributable to the positive business development in both segments – especially as a result of volume-related sales growth – and to currency effects.

HealthCare Quarterly EBIT and EBITDA Before Special Items

Pharmaceuticals

Key Data – Pharmaceuticals[Table 3.7]
  4th Quarter 2011 4th Quarter 2012
Change
Full Year
2011
Full Year
2012

Change
 
€ million

€ million

 %
Fx (& p) adj. %
€ million

€ million

%
Fx (& p) adj. %
Sales 2,680 2,867 +7.0 +4.8 9,949 10,803 +8.6 +4.2
Sales by region                
Europe 946 989 +4.5 +3.2 3,658 3,678 +0.5 -0.2
North America 532 601 +13.0 +8.8 2,048 2,370 +15.7 +7.7
Asia/Pacific 705 775 +9.9 +7.5 2,527 2,943 +16.5 +7.5
Latin America/Africa/Middle East 497 502 +1.0 -0.2 1,716 1,812 +5.6 +4.5
EBIT 471 157 -66.7   1,897 1,075 -43.3  
Special items (27) (437)     (145) (1,223)    
EBIT before special items* 498 594 +19.3   2,042 2,298 +12.5  
EBITDA* 698 384 -45.0   2,795 1,993 -28.7  
Special items (60) (443)     (177) (1,210)    
EBITDA before special items* 758 827 +9.1   2,972 3,203 +7.8  
EBITDA margin before special items* 28.3% 28.8%     29.9% 29.6%    
Gross cash flow** 580 224 -61.4   1,992 1,294 -35.0  
Net cash flow** 701 543 -22.5   2,077 2,260 +8.8  

Fx (& p) adj. = currency- (and portfolio-)adjusted (Fx & p adj.: Sales; Fx adj.: Sales by region)

* For definition see Chapter 7.2 “Calculation of EBIT(DA) Before Special Items.”

** For definition see Chapter 7.5 “Liquidity and Capital Expenditures of the Bayer Group.”

Sales of the Pharmaceuticals segment in 2012 came in at €10,803 million, up 4.2% (Fx & portfolio adj.) from the prior year. Growth was achieved mainly in North America and the emerging markets, particularly China. There was no overall sales gain in Europe due to the adverse economic conditions and a difficult health policy environment.

Best-Selling Pharmaceuticals Products[Table 3.8]
  4th Quarter 2011 4th Quarter 2012
Change
Full Year
2011
Full Year
2012

Change
 
€ million

€ million

 %
Fx adj.
 %

€ million

€ million

 %
Fx adj.
 %
Betaferon™/Betaseron™ 281 329 +17.1 +14.5 1,117 1,216 +8.9 +4.2
Kogenate™ 273 298 +9.2 +6.3 1,075 1,182 +10.0 +5.2
YAZ™/Yasmin™/
Yasminelle™
290 270 -6.9 -8.4 1,070 1,045 -2.3 -5.0
Nexavar™ 205 212 +3.4 +1.3 725 792 +9.2 +4.2
Mirena™ 157 135 -14.0 -17.1 581 677 +16.5 +9.4
Adalat™ 171 169 -1.2 -4.5 640 670 +4.7 -2.3
Avalox™/Avelox™ 131 123 -6.1 -9.3 486 486 0.0 -5.0
Aspirin™ Cardio 113 129 +14.2 +12.4 404 476 +17.8 +12.3
Glucobay™ 96 99 +3.1 -1.3 362 408 +12.7 +3.6
Xarelto™ 31 131 +322.6 +314.7 86 322 +274.4 +265.9
Levitra™ 93 87 -6.5 -8.0 332 307 -7.5 -9.1
Cipro™/Ciprobay™ 62 56 -9.7 -12.7 232 229 -1.3 -5.1
Zetia™ 55 57 +3.6 +5.1 179 207 +15.6 +7.5
Diane™ 49 49 0.0 -1.7 182 194 +6.6 +4.9
Fosrenol 43 50 +16.3 +16.5 147 187 +27.2 +18.0
Total 2,050 2,194 +7.0 +4.6 7,618 8,398 +10.2 +5.2
Proportion of Pharmaceuticals sales 76% 77%     77% 78%    
Fx adj. = currency-adjusted

Our anticoagulant Xarelto™ contributed significantly to sales growth in the Pharmaceuticals segment. Sales advanced strongly in all regions – particularly in Germany, the United States and Japan – following further product launches and indication expansions. Business with our hormone-releasing intrauterine device Mirena™ developed positively in all regions, especially in the United States due to higher volumes. Sales of the blood-clotting product Kogenate™ advanced due to higher volumes that mainly resulted from tender business in Australia. The growth in sales of our multiple sclerosis drug Betaferon™/ Betaseron™ was mainly attributable to price increases in the United States, while sales in other countries declined. Sales of the cancer drug Nexavar™ moved ahead, particularly in the United States and China and helped by tender business in Latin America.

Sales of Aspirin™ Cardio to prevent heart attacks and of our oral diabetes treatment Glucobay™ rose considerably, largely thanks to the steady expansion of our marketing activities in China. Sales of Adalat™ to treat high blood pressure and coronary heart disease also rose strongly in China. However, Adalat™ sales posted a slight overall decline on a currency-adjusted basis, mainly as a result of mandatory price reductions in Japan.

Sales of our erectile dysfunction treatment Levitra™ and the antibiotic Avalox™/ Avelox™ were down, particularly in the United States, for reasons that included the partial restructuring of distribution for general medicine products. The decline for Avalox™/ Avelox™ was partly offset by higher sales to a major customer in Western Europe and business growth in China. Sales of the YAZ™/ Yasmin™/ Yasminelle™ line of oral contraceptives receded, primarily as a result of generic competition in Western Europe, although business developed positively in the Asia/Pacific region.

Our Pharmaceuticals business was strengthened by initial sales of our cancer drug Stivarga™ (active ingredient: regorafenib) in the United States – 2012 sales: €32 million – and of Eylea™ (active ingredient: aflibercept) to treat wet age-related macular degeneration – 2012 sales: €14 million.

In the Pharmaceuticals segment, EBIT fell by 43.3% in 2012, to €1,075 million, reflecting special items of minus €1,223 million (2011: minus €145 million). These included €1,160 million in charges related to legal claims concerning the oral contraceptives Yasmin™/ YAZ™. EBIT before special items advanced by 12.5% to €2,298 million. EBITDA before special items increased by 7.8% to €3,203 million. Major contributors to this growth in earnings were the volume-driven sales increase and positive currency effects. However, earnings were diminished by higher expenditures for marketing new products, and for developing the business in the emerging markets, especially China.

Consumer Health

Key Data – Consumer Health[Table 3.9]
  4th Quarter 2011 4th Quarter 2012
Change
Full Year
2011
Full Year
2012

Change
 
€ million

€ million

%
Fx (& p) adj. %
€ million

€ million

%
Fx (& p) adj. %
Sales 1,915 2,056 +7.4 +5.4 7,220 7,809 +8.2 +4.2
Consumer Care 946 1,056 +11.6 +9.5 3,534 3,853 +9.0 +5.6
Medical Care 687 716 +4.2 +3.2 2,500 2,653 +6.1 +2.2
Animal Health 282 284 +0.7 -2.5 1,186 1,303 +9.9 +4.2
Sales by region                
Europe 705 743 +5.4 +4.1 2,718 2,806 +3.2 +2.3
North America 629 680 +8.1 +3.8 2,312 2,591 +12.1 +3.6
Asia/Pacific 299 330 +10.4 +6.0 1,129 1,260 +11.6 +3.1
Latin America/Africa/Middle East 282 303 +7.4 +6.0 1,061 1,152 +8.6 +7.4
EBIT 299 384 +28.4   1,294 1,079 -16.6  
Special items (18) (23)     (31) (359)    
EBIT before special items* 317 407 +28.4   1,325 1,438 +8.5  
EBITDA* 412 494 +19.9   1,707 1,822 +6.7  
Special items (10) (21)     (23) (43)    
EBITDA before special items* 422 515 +22.0   1,730 1,865 +7.8  
EBITDA margin before special items* 22.0% 25.0%     24.0% 23.9%    
Gross cash flow** 346 360 +4.0   1,262 1,320 +4.6  
Net cash flow** 425 518 +21.9   1,280 1,283 +0.2  

Fx (& p) adj. = currency- (and portfolio-)adjusted (Fx & p adj.: Sales; Fx adj.: Sales by region)

* For definition see Chapter 7.2 “Calculation of EBIT(DA) Before Special Items.”

** For definition see Chapter 7.5 “Liquidity and Capital Expenditures of the Bayer Group.”

Sales of the Consumer Health segment in 2012 advanced by 4.2% (Fx & portfolio adj.) to €7,809 million, with all regions and divisions contributing to sales growth. The Consumer Care business showed a particularly positive development in the emerging markets.

Best-Selling Consumer Health Products[Table 3.10]
  4th Quarter 2011 4th Quarter 2012
Change
Full Year
2011
Full Year
2012

Change
 
€ million

€ million

%
Fx adj.
 %

€ million

€ million

 %
Fx adj.
%
Contour™ (Medical Care) 170 193 +13.5 +10.7 640 722 +12.8 +8.5
Advantage™ product line (Animal Health) 84 92 +9.5 +5.8 420 495 +17.9 +10.6
Aspirin™ (Consumer Care) 123 138 +12.2 +9.9 471 494 +4.9 +1.3
Ultravist™ (Medical Care) 83 84 +1.2 -2.1 316 324 +2.5 -1.5
Aleve™/naproxen (Consumer Care) 76 87 +14.5 +10.6 285 323 +13.3 +5.4
Bepanthen™/Bepanthol™ (Consumer Care) 60 67 +11.7 +11.2 235 269 +14.5 +13.9
Canesten™ (Consumer Care) 56 65 +16.1 +11.8 224 250 +11.6 +7.8
Gadovist™/Gadavist™ (Medical Care) 44 60 +36.4 +33.0 160 209 +30.6 +27.2
One A Day™ (Consumer Care) 47 53 +12.8 +7.3 174 196 +12.6 +4.0
Iopamiron™ (Medical Care) 52 46 -11.5 -8.1 185 174 -5.9 -12.3
Total 795 885 +11.3 +8.6 3,110 3,456 +11.1 +6.2
Proportion of Consumer Health sales 42% 43%     43% 44%    

2011 figures restated

Fx adj.= currency-adjusted

Sales of Aspirin™ (including Aspirin™ Complex) – including Aspirin™ Cardio, which is reflected in sales of the Pharmaceuticals segment – increased by 10.9% (Fx adj. +6.4%) in 2012 to €970 million (2011: €875 million). Total sales of this product in the fourth quarter of 2012 rose by 13.1% to €267 million (Q4 2011: €236 million), and by 11.0% on a
currency-adjusted basis.

Our Consumer Care Division achieved above-market sales growth of 5.6% (Fx & portfolio adj.) to €3,853 million. The encouraging sales gains were mainly attributable to intensified marketing activities, which boosted sales of products such as our Bepanthen™/ Bepanthol™ skincare line, especially in Russia and Brazil, and the antifungal Canesten™, particularly in Germany. The growth in sales of our analgesic Aleve™/ naproxen resulted mainly from higher volumes in the United States. Sales of our pain-reliever Aspirin™ showed a small increase, largely as a result of new launches in the United States.

Sales of the Medical Care Division rose by 2.2% (Fx & portfolio adj.) to €2,653 million. The positive development of our Diabetes Care business – despite price and reimbursement pressure – contributed substantially to this increase. Sales growth was primarily attributable to the Contour™ line of blood glucose meters, which posted gains in all regions, mainly due to the launch of Contour™ Next. Sales of our contrast agent and medical equipment business matched the prior year. In the area of contrast agents for magnetic resonance imaging (MRI), we raised sales of Gadovist™/Gadavist™, particularly in the United States. This increase was partly due to the switch from Magnevist™, sales of which steadily receded.

The Animal Health Division lifted sales by 4.2% (Fx & portfolio adj.) to €1,303 million. Business with our Advantage™ line of flea, tick and worm control products developed particularly well in the United States and Europe.

EBIT of the Consumer Health segment fell by 16.6% to €1,079 million, due especially to special items of minus €359 million (2011: minus €31 million) that resulted chiefly from impairment losses on intangible assets, including the Medrad company name and brand. EBIT before special items amounted to €1,438 million (+8.5%). EBITDA before special items grew by 7.8% to €1,865 million, primarily as a result of the volume-related increase in sales and positive currency effects. However, earnings were held back by higher marketing expenses.

Last updated: February 28, 2013  Copyright © Bayer AG
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