Statements of Income
Performance by Subgroup and Segment
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Bayer HealthCare
Sales of the Bayer HealthCare subgroup rose in the first quarter by 63.9 percent, or €1,407 million, to €3,610 million. The acquired business of Schering, Berlin, Germany, contributed €1,410 million to this figure. Currency- and portfolio-adjusted sales improved by 7.9 percent, due particularly to the gratifying trend in our Consumer Health segment.
EBITDA before special items for this subgroup climbed by 103.9 percent to €948 million (Q1 2006: €465 million). Underlying EBIT advanced by €239 million to €624 million (Q1 2006: €385 million). The special items totaling minus €139 million in our HealthCare business resulted from charges connected with the integration of Schering, Berlin, Germany. EBIT of Bayer HealthCare moved ahead by €106 million, or 28.0 percent, to €485 million.
EBITDA before special items for this subgroup climbed by 103.9 percent to €948 million (Q1 2006: €465 million). Underlying EBIT advanced by €239 million to €624 million (Q1 2006: €385 million). The special items totaling minus €139 million in our HealthCare business resulted from charges connected with the integration of Schering, Berlin, Germany. EBIT of Bayer HealthCare moved ahead by €106 million, or 28.0 percent, to €485 million.
Pharmaceuticals
Sales of our Pharmaceuticals segment rose by €1,347 in the first quarter of 2007, to a total of €2,495 million (Q1 2006: €1,148 million), with the acquired business of Schering, Berlin, Germany, accounting for €1,410 million. Adjusted for currency and portfolio changes, sales expanded by 4.6 percent. Sharply higher sales of Nexavar® and Levitra® more than offset the expected decline for Cipro®/Ciprobay®.
The figures for the first quarter of 2006 do not contain the business of Schering, Berlin, Germany, acquired in June 2006. The commentaries given below on business developments related to the acquired products include comparisons with data for the first quarter of 2006 that were prepared by Schering AG, Berlin, Germany, and do not form part of the Bayer Group financial statements. We refer to those figures as “pro forma.” The acquired Schering business posted dynamic currency- and portfolio-adjusted sales growth of more than 5 percent.
Sales of the Primary Care business unit in the first three months of 2007 dipped by 1.8 percent to €773 million, but rose by 1.5 percent on a currency- and portfolio-adjusted basis. On a currency-adjusted basis, business with Levitra® developed particularly well, expanding by 14.7 percent, while sales of Avalox®/Avelox® also improved slightly in the first quarter, advancing by 3.8 percent. Increasing competition from generic products led to a marked decline for Cipro®/Ciprobay®, with sales dropping by 15.0 percent when adjusted for shifts in currency parities.
In our Women’s Healthcare business unit, we achieved sales of €627 million in the first quarter. The main growth drivers were the oral contraceptives of the Yasmin®/YAZ®/Yasminelle® product line, sales of which rose by 41.1 percent (pro forma) when adjusted for currency changes. This positive performance was due particularly to the launch of Yasminelle® in Europe and of YAZ® in the United States and Latin America. In January, the U.S. Food and Drug Administration (FDA) expanded the registration for YAZ®, which can now be used in the United States to treat moderately severe acne in women. Currency-adjusted sales of our intra-uterine system Mirena® also advanced by a pleasing 25.0 percent (pro forma) thanks mainly to strong growth in the United States.
The figures for the first quarter of 2006 do not contain the business of Schering, Berlin, Germany, acquired in June 2006. The commentaries given below on business developments related to the acquired products include comparisons with data for the first quarter of 2006 that were prepared by Schering AG, Berlin, Germany, and do not form part of the Bayer Group financial statements. We refer to those figures as “pro forma.” The acquired Schering business posted dynamic currency- and portfolio-adjusted sales growth of more than 5 percent.
Sales of the Primary Care business unit in the first three months of 2007 dipped by 1.8 percent to €773 million, but rose by 1.5 percent on a currency- and portfolio-adjusted basis. On a currency-adjusted basis, business with Levitra® developed particularly well, expanding by 14.7 percent, while sales of Avalox®/Avelox® also improved slightly in the first quarter, advancing by 3.8 percent. Increasing competition from generic products led to a marked decline for Cipro®/Ciprobay®, with sales dropping by 15.0 percent when adjusted for shifts in currency parities.
In our Women’s Healthcare business unit, we achieved sales of €627 million in the first quarter. The main growth drivers were the oral contraceptives of the Yasmin®/YAZ®/Yasminelle® product line, sales of which rose by 41.1 percent (pro forma) when adjusted for currency changes. This positive performance was due particularly to the launch of Yasminelle® in Europe and of YAZ® in the United States and Latin America. In January, the U.S. Food and Drug Administration (FDA) expanded the registration for YAZ®, which can now be used in the United States to treat moderately severe acne in women. Currency-adjusted sales of our intra-uterine system Mirena® also advanced by a pleasing 25.0 percent (pro forma) thanks mainly to strong growth in the United States.
| Bayer HealthCare | 1st Quarter 2006 | 1st Quarter 2007 | Change |
| € million | € million | % | |
| Net sales | 2,203 | 3,610 | +63.9 |
| EBITDA1 | 459 | 783 | +70.6 |
| Special items | (6) | (165) | |
| EBITDA before special items 2 | 465 | 948 | +103.9 |
| EBITDA margin before special items | 21.1% | 26.3% | |
| EBIT1 | 379 | 485 | +28.0 |
| Special items | (6) | (139) | |
| EBIT before special items 2 | 385 | 624 | +62.1 |
| Gross cash flow1 | 292 | 557 | +90.8 |
| Net cash flow1 | 43 | 383 | • |
2006 figures restated
1 for definition see Bayer Group Key Data
2 for definition see also Calculation of EBIT(DA) Before Special Items
1 for definition see Bayer Group Key Data
2 for definition see also Calculation of EBIT(DA) Before Special Items
| Pharmaceuticals | 1st Quarter 2006 | 1st Quarter 2007 | Change |
| € million | € million | % | |
| Sales | 1,148 | 2,495 | +117.3 |
| Primary Care1 | 787 | 773 | -1.8 |
| Women's Healthcare | • | 627 | • |
| Diagnostic Imaging (including Medrad) | • | 307 | • |
| Specialized Therapeutics | • | 303 | • |
| Hematology/Cardiology | 327 | 268 | -18.0 |
| Oncology2 | 34 | 159 | • |
| Dermatology (Intendis) | • | 58 | • |
| EBITDA3 | 241 | 546 | +126.6 |
| Special items | (5) | (165) | |
| EBITDA before special items 4 | 246 | 711 | +189.0 |
| EBITDA margin before special items | 21.4% | 28.5% | |
| EBIT3 | 202 | 281 | +39.1 |
| Special items | (5) | (139) | |
| EBIT before special items 4 | 207 | 420 | +102.9 |
| Gross cash flow3 | 162 | 390 | +140.7 |
| Net cash flow3 | (11) | 279 | • |
2006 figures restated
1 Schering andrology business not included in Q1 2006
2 Schering oncology business not included in Q1 2006
3 for definition see Bayer Group Key Data
4 for definition see also Calculation of EBIT(DA) Before Special Items
1 Schering andrology business not included in Q1 2006
2 Schering oncology business not included in Q1 2006
3 for definition see Bayer Group Key Data
4 for definition see also Calculation of EBIT(DA) Before Special Items
Sales of the Diagnostic Imaging business unit came to €307 million. Currency-adjusted sales of Magnevist® rose by 11.8 percent (pro forma), while those of Ultravist® fell by 20.8 percent (pro forma) from the prior-year quarter. Having voluntarily withdrawn the 370 mgI/ml formulation of Ultravist® in the summer of 2006, we resumed sales of this product in numerous countries in the first quarter of 2007. We expect to quickly proceed with distribution of this product in the remaining countries as well.
Sales of the Specialized Therapeutics business unit amounted to €303 million. Currency-adjusted sales of our top product Betaferon®/Betaseron® to treat multiple sclerosis (MS) expanded by 9.9 percent (pro forma) in the first quarter. To safeguard our Betaseron® business, we signed an agreement with Novartis in March 2007 to acquire the biologics manufacturing facility in Emeryville, California, currently used to produce Betaseron®. The acquisition is subject to the approval of the antitrust authorities. According to the terms of the agreement, Bayer will make a one-time payment to Novartis of approximately US$ 110 million for the production facility, including the Biologics License Application (BLA). Bayer Schering Pharma AG, Germany** will continue to pay Novartis royalties equivalent to those being paid currently on net sales of Betaseron® manufactured by Bayer at the Emeryville facilities until the original agreement with Novartis expires in October 2008. After this date, no more royalties will be due to Novartis on the sales of Betaseron®. Bayer Schering Pharma AG, Germany** will also acquire the existing inventories. In return, Novartis will receive a license to establish its own brand based on interferon beta-1b starting in 2009. When it is approved by the health authorities, Bayer Schering Pharma AG, Germany** will manufacture the product for Novartis from 2009 forward and receive in return a low double-digit percentage royalty from Novartis.
Sales of the Hematology/Cardiology business unit fell by 18.0 percent to €268 million, mainly due to termination of the plasma distribution agreements for Canada and Germany. Adjusted for currency and portfolio changes, business was up by 3.7 percent. Currency-adjusted sales of Kogenate® advanced by 3.2 percent in the first quarter. At the end of January 2007, the European Commission granted an additional registration authorizing the use of Kogenate® for continuous infusion in hemophilia a patients undergoing major surgery. Currency-adjusted sales of Trasylol® declined by 4.4 percent. Two separate observational studies reported on a possible correlation between the administration of Trasylol® (aprotinin), our product for use during open-heart surgery, and severe renal dysfunction and vasoconstriction (myocardial infarction and stroke). A follow-up study to one of them reported on a possible correlation between administration of this product and increased long-term mortality. Based on our study data and many years of experience with Trasylol®, Bayer believes that this product is a safe and effective medicine when used correctly. We are currently cooperating closely with the relevant regulatory authorities to resolve the questions that have arisen.
Sales of the Specialized Therapeutics business unit amounted to €303 million. Currency-adjusted sales of our top product Betaferon®/Betaseron® to treat multiple sclerosis (MS) expanded by 9.9 percent (pro forma) in the first quarter. To safeguard our Betaseron® business, we signed an agreement with Novartis in March 2007 to acquire the biologics manufacturing facility in Emeryville, California, currently used to produce Betaseron®. The acquisition is subject to the approval of the antitrust authorities. According to the terms of the agreement, Bayer will make a one-time payment to Novartis of approximately US$ 110 million for the production facility, including the Biologics License Application (BLA). Bayer Schering Pharma AG, Germany** will continue to pay Novartis royalties equivalent to those being paid currently on net sales of Betaseron® manufactured by Bayer at the Emeryville facilities until the original agreement with Novartis expires in October 2008. After this date, no more royalties will be due to Novartis on the sales of Betaseron®. Bayer Schering Pharma AG, Germany** will also acquire the existing inventories. In return, Novartis will receive a license to establish its own brand based on interferon beta-1b starting in 2009. When it is approved by the health authorities, Bayer Schering Pharma AG, Germany** will manufacture the product for Novartis from 2009 forward and receive in return a low double-digit percentage royalty from Novartis.
Sales of the Hematology/Cardiology business unit fell by 18.0 percent to €268 million, mainly due to termination of the plasma distribution agreements for Canada and Germany. Adjusted for currency and portfolio changes, business was up by 3.7 percent. Currency-adjusted sales of Kogenate® advanced by 3.2 percent in the first quarter. At the end of January 2007, the European Commission granted an additional registration authorizing the use of Kogenate® for continuous infusion in hemophilia a patients undergoing major surgery. Currency-adjusted sales of Trasylol® declined by 4.4 percent. Two separate observational studies reported on a possible correlation between the administration of Trasylol® (aprotinin), our product for use during open-heart surgery, and severe renal dysfunction and vasoconstriction (myocardial infarction and stroke). A follow-up study to one of them reported on a possible correlation between administration of this product and increased long-term mortality. Based on our study data and many years of experience with Trasylol®, Bayer believes that this product is a safe and effective medicine when used correctly. We are currently cooperating closely with the relevant regulatory authorities to resolve the questions that have arisen.
| Best-Selling Pharmaceutical Products | 1st Quarter 2006 | 1st Quarter 2007 | Change | Currency- adjusted change |
| € million | € million | % | % | |
| Betaferon®/Betaseron®* (Specialized Therapeutics) | • | 244 | • | • |
| Yasmin®/YAZ®/Yasminelle®* (Women’s Healthcare) | • | 240 | • | • |
| Kogenate® (Hematology/Cardiology) | 204 | 201 | -1.5 | +3.2 |
| Adalat® (Primary Care) | 157 | 145 | -7.6 | -0.9 |
| Avalox®/Avelox® (Primary Care) | 130 | 128 | -1.5 | +3.8 |
| Cipro®/Ciprobay® (Primary Care) | 132 | 108 | -18.2 | -15.0 |
| Levitra® (Primary Care) | 78 | 84 | +7.7 | +14.7 |
| Mirena®* (Women’s Healthcare) | • | 81 | • | • |
| Magnevist®* (Diagnostic Imaging) | • | 80 | • | • |
| Glucobay® (Primary Care) | 77 | 72 | -6.5 | -1.2 |
| Total | 778 | 1,383 | +77.8 | +87.1 |
| Proportion of Pharmaceuticals sales | 68% | 55% |
Products ranked by Q1 2007 sales
* acquired Schering AG product
* acquired Schering AG product
| Best-Selling Schering Products (pro forma) | 1st Quarter 2006 | 1st Quarter 2007 | Change | Currency- adjusted change |
| € million | € million | % | % | |
| Betaferon®/Betaseron® (Specialized Therapeutics) | 232 | 244 | +5.2 | +9.9 |
| Yasmin®/YAZ®/Yasminelle® (Women’s Healthcare) | 180 | 240 | +33.3 | +41.1 |
| Mirena® (Women’s Healthcare) | 68 | 81 | +19.1 | +25.0 |
| Magnevist® (Diagnostic Imaging) | 76 | 80 | +5.3 | +11.8 |
Our Oncology business unit lifted sales by €125 million to €159 million. Included in this figure is €98 million in sales of the acquired oncology business of Schering AG, Berlin, Germany, which mainly comprises the key products Fludara® and Campath®. Currency- and portfolio-adjusted sales rose by 83.6 percent. Our new cancer drug, Nexavar®, first launched in December 2005, performed very well in the market, with sales of €47 million (q1 2006: €20 million). Study results for Nexavar® in liver cancer are also very promising. The phase iii study involving patients with advanced hepatocellular carcinoma reached its primary endpoint. Overall survival was significantly extended in patients treated with Nexavar®. Furthermore, Bayer plans to expand the registration of Campath®, developed jointly by Bayer and Genzyme, to include first-line treatment of B-CELL chronic lymphocytic leukemia (B-CLL). Genzyme submitted the required supplemental license application to the FDA on March 19, 2007 and to the European Medicines Agency (EMEA) on April 4, 2007.
The Dermatology (Intendis) business unit had sales of €58 million. Currency-adjusted sales of the principal products Skinoren® and Advantan® rose by 16.5 percent and 1.8 percent (pro forma), respectively.
EBITDA of the Pharmaceuticals segment before special items advanced to €711 million in the first quarter of 2007, from €246 million in the same period of last year. This sharp increase is mainly due to the earnings contribution from the acquired business of Schering, Berlin, Germany, and to improved cost structures, including synergies already realized. EBIT before special items rose by €213 million, or 102.9 percent, to €420 million. The special charges of €139 million in the Pharmaceuticals segment resulted from expenses for the acquisition and integration of Schering. EBIT moved ahead by €79 million, or 39.1 percent, to €281 million.
The Dermatology (Intendis) business unit had sales of €58 million. Currency-adjusted sales of the principal products Skinoren® and Advantan® rose by 16.5 percent and 1.8 percent (pro forma), respectively.
EBITDA of the Pharmaceuticals segment before special items advanced to €711 million in the first quarter of 2007, from €246 million in the same period of last year. This sharp increase is mainly due to the earnings contribution from the acquired business of Schering, Berlin, Germany, and to improved cost structures, including synergies already realized. EBIT before special items rose by €213 million, or 102.9 percent, to €420 million. The special charges of €139 million in the Pharmaceuticals segment resulted from expenses for the acquisition and integration of Schering. EBIT moved ahead by €79 million, or 39.1 percent, to €281 million.
Consumer Health
All divisions contributed to the gratifying performance of our Consumer Health segment, where sales improved by 5.7 percent to €1,115 million (Q1 2006: €1,055 million). On a currency-adjusted basis, business expanded by a substantial 11.4 percent.
Sales in the Consumer Care Division rose by 2.6 percent to €659 million (Q1 2006: €642 million), or by 8.1 percent on a currency-adjusted basis. Among our top products, Aleve® performed particularly well, with sales up 40.9 percent when adjusted for changes in currency parities, thanks mainly to the launch of Aleve® Liquid Gels in the United States.
There was a significant increase in sales of the Diabetes Care Division, where business improved by 17.1 percent to €226 million (Q1 2006: €193 million), due primarily to a strong performance by our blood glucose monitoring systems Ascensia® Contour® and Ascensia® Breeze®, which replace the older Elite® systems in the Ascensia® product family. Currency-adjusted sales of the division improved by an even more gratifying 23.0 percent.
Sales of the Animal Health Division rose by 4.5 percent to €230 million (Q1 2006: €220 million), or by 11.2 percent when adjusted for currency changes. The increase was primarily due to the encouraging performance of our Advantage® product line, especially in North America, sales of which rose 35.5 percent on a currency-adjusted basis.
EBITDA of the Consumer Health segment before special items grew by €18 million, or 8.2 percent, in the first quarter of 2007, to €237 million. Higher earnings resulting from the growth in sales more than offset an increase in marketing expenses to support the new product launches planned for 2007. EBIT before special items advanced by 14.6 percent to €204 million (Q1 2006: €178 million). After special items, EBIT improved by 15.3 percent to €204 million (Q1 2006: €177 million).
Sales in the Consumer Care Division rose by 2.6 percent to €659 million (Q1 2006: €642 million), or by 8.1 percent on a currency-adjusted basis. Among our top products, Aleve® performed particularly well, with sales up 40.9 percent when adjusted for changes in currency parities, thanks mainly to the launch of Aleve® Liquid Gels in the United States.
There was a significant increase in sales of the Diabetes Care Division, where business improved by 17.1 percent to €226 million (Q1 2006: €193 million), due primarily to a strong performance by our blood glucose monitoring systems Ascensia® Contour® and Ascensia® Breeze®, which replace the older Elite® systems in the Ascensia® product family. Currency-adjusted sales of the division improved by an even more gratifying 23.0 percent.
Sales of the Animal Health Division rose by 4.5 percent to €230 million (Q1 2006: €220 million), or by 11.2 percent when adjusted for currency changes. The increase was primarily due to the encouraging performance of our Advantage® product line, especially in North America, sales of which rose 35.5 percent on a currency-adjusted basis.
EBITDA of the Consumer Health segment before special items grew by €18 million, or 8.2 percent, in the first quarter of 2007, to €237 million. Higher earnings resulting from the growth in sales more than offset an increase in marketing expenses to support the new product launches planned for 2007. EBIT before special items advanced by 14.6 percent to €204 million (Q1 2006: €178 million). After special items, EBIT improved by 15.3 percent to €204 million (Q1 2006: €177 million).
| Consumer Health | 1st Quarter 2006 | 1st Quarter 2007 | Change |
| € million | € million | % | |
| Net sales | 1,055 | 1,115 | +5.7 |
| Consumer Care | 642 | 659 | +2.6 |
| Diabetes Care | 193 | 226 | +17.1 |
| Animal Health | 220 | 230 | +4.5 |
| EBITDA* | 218 | 237 | +8.7 |
| Special items | (1) | 0 | |
| EBITDA before special items | 219 | 237 | +8.2 |
| EBITDA margin before special items | 20.8% | 21.3% | |
| EBIT* | 177 | 204 | +15.3 |
| Special items | (1) | 0 | |
| EBIT before special items | 178 | 204 | +14.6 |
| Gross cash flow* | 130 | 167 | +28.5 |
| Net cash flow* | 54 | 104 | +92.6 |
2006 figures restated
* for definition see Bayer Group Key Data
* for definition see Bayer Group Key Data
| Best-Selling Consumer Health Products | 1st Quarter 2006 | 1st Quarter 2007 | Change | Change currency- adjusted |
| € million | € million | % | % | |
| Ascensia® product line (Diabetes Care) | 190 | 223 | +17.4 | +23.8 |
| Aspirin®* (Consumer Care) | 116 | 113 | -2.6 | +2.3 |
| Advantage® product line (Animal Health) | 59 | 75 | +27.1 | +35.5 |
| Aleve®/naproxen (Consumer Care) | 53 | 69 | +30.2 | +40.9 |
| Canesten® (Consumer Care) | 41 | 43 | +4.9 | +7.3 |
| Baytril® (Animal Health) | 40 | 40 | 0.0 | +2.8 |
| Bepanthen®/Bepanthol® (Consumer Care) | 35 | 36 | +2.9 | +5.1 |
| Supradyn® (Consumer Care) | 35 | 33 | -5.7 | -3.2 |
| One-A-Day® (Consumer Care) | 30 | 31 | +3.3 | +12.1 |
| Rennie® (Consumer Care) | 26 | 27 | +3.8 | +5.4 |
| Total | 625 | 690 | +10.4 | +16.1 |
| Proportion of Consumer Health sales | 59% | 62% |
* Total Aspirin® sales = €167 million (Q1 2006: €164 million), including Aspirin® Cardio, which is reflected in sales of the Pharmaceuticals segment
**
The names "Bayer Schering Pharma" or "Schering" as used in this publication always refer to Bayer Schering Pharma AG, Berlin, Germany, or its predecessor, Schering AG, Berlin, Germany, respectively.
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