Meet Management 2012 Investor Handout
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  • 1. Investor PresentationMeet ManagementMarch 2012 I Leverkusen
  • 2. DisclaimerThis presentation may contain forward-looking statements based on currentassumptions and forecasts made by Bayer Group or subgroup management.Various known and unknown risks, uncertainties and other factors could lead tomaterial differences between the actual future results, financial situation,development or performance of the company and the estimates given here.These factors include those discussed in Bayer’s public reports which areavailable on the Bayer website at www.bayer.com. The company assumes noliability whatsoever to update these forward-looking statements or to conformthem to future events or developments.Page 2 • Bayer Investor Presentation • Meet Management • March 2012
  • 3. Bayer –Science For A Better Life Market leading positions in vast majority of portfolio New product pipeline strength in Pharma, CropProtection & BioScience Strong and profitable growth in emerging markets, especially China Unique opportunity at the interfaces of human, animal and plant health Group wide excellence initiatives to further boost earnings and free-up growth resources Incentive systems aligned to business specific challenges Mid-term targets show significant further value generation potentialPage 1 • Bayer Investor Presentation • Meet Management • March 2012
  • 4. Full Year 2011 –Record Sales and EBITSales EBIT EBITDA Core EPSin € million adjusted*% portfolio & currency adj. in € million in € million in € 35,088 36,528 7,613 4,149 7,101 4.83 4.19 2,730 FY´10 FY´11 FY´10 FY´11 FY´10 FY´11 FY´10 FY´11 +6% +52% +7% +15% *before special items Page 2 • Bayer Investor Presentation • Meet Management • March 2012
  • 5. 2007 – 2011A Period of Significant Progress Sales (€ billion) EBITDA before special items margin* (%) 22 36.5 35.1 21.1 32.4 32.9 31.2 21 20.9 20.8 20.8 20.2 20 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 EBITDA before special items* (€ billion) Core earnings per share* (€) 6 7.6 7.1 4.83 6.9 5 6.8 6.5 4.17 4.19 4 3.80 3.64 3 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 * 2007 - 2008 from continuing operationsPage 3 • Bayer Investor Presentation • Meet Management • March 2012
  • 6. 2007 – 2011Consistent Strong Cash Generation Gross Cash Flow* (€ billion) Trade working capital to sales ratio (%) 5.3 40 5.2 35 31.2 4.8 4.8 30.4 4.7 29.6 30 26.4 26.4 25 20 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Net Cash Flow* (€ billion) Net financial debt** (€ billion) 20 5.4 5.8 16 14.2 5.1 12.2 4.3 9.7 3.6 12 7.9 7.0 8 4 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 *2007 - 2008 from continuing operationsPage 4 • Bayer Investor Presentation • Meet Management • March 2012 ** year-end data
  • 7. 2012 – Financial OutlookPage 5 • Bayer Investor Presentation • Meet Management • March 2012
  • 8. Outlook 2012 –Planning AssumptionsGDP growth by regions in % vs previous yer  Global economic/political risks remain high5  Outlook for economic growth 5.14 4.8 marked by uncertainty3 3.3  Positive signals for North America, 2.6 in Europe we expect slower2 expansion in 2012 than 2011 1.71 0.7  Asian emerging markets continue to drive growth  $/€ 1.40, 1% depreciation of Euro increases sales by ~€70m and EBITDA by ~€20m  Crude oil: average $110/bbl (Brent)Page 6 • Bayer Investor Presentation • Meet Management • March 2012
  • 9. Outlook 2012 –Planning Assumptions2011 Group sales break-down in %, growth estimates in % Expected 2012 Global Market Development 10 % OTC-pharma Low- to mid-single digit growth 3 % Diabetes care low-single digit growth 27 % Rx-pharma Mid-single digit growth, driven by emerging markets 3 % Animal Health Moderate growth 20 % Agrochemicals/Seeds Positive development 15 % Others 5 % Furniture/wood 6 % Automotive Robust growth Ongoing recovery, small growth 6 % Construction 5 % Electro/electronic Ongoing recovery Robust growthPage 7 • Bayer Investor Presentation • Meet Management • March 2012
  • 10. Fiscal 2012 Outlook Projects Further GrowthAnd Higher EarningsSales ∆ Fx and portfolio adjusted, EBITDA before special items 2011 ∆ vs. 2010 2012E +~3% or Sales €36.5bn +6% ~€37bn* Adj. EBITDA €7.6bn +7% Slightly improve Core EPS €4.83 +15% Slightly improve *Assuming Fx rate of $1.40 per €Page 8 • Bayer Investor Presentation • Meet Management • March 2012 Outlook depends on specific planning assumptions as detailed in the Annual Report
  • 11. Fiscal 2012 –Guidance By Subgroup Expect sales to increase by low- to mid-single-digitHealthCare percentage. Plan to slightly improve adj. EBITDA . Expect sales to remain stable or move slightly higher, and adj. Pharma EBITDA to approx. match prior year level. Consumer Anticipate mid-single-digit percentage growth of sales and Health adj. EBITDA. Plan to grow above market and to increase sales and adj.CropScience EBITDA by mid-single-digit percentages. Expect sales and adj. EBITDA to remain level with prior year. Should market develop more favorably than anticipated, weMaterialScience expect sales and earnings to increase accordingly. Q1’12: Expect sales to be roughly level with Q4’11 and adj. EBITDA to be well above Q4’11 but below Q1’11. Sales ∆ Fx and portfolio adjusted, EBITDA before special itemsPage 9 • Bayer Investor Presentation • Meet Management • March 2012 Outlook depends on specific planning assumptions as detailed in the Annual Report
  • 12. Strategic PrioritiesPage 10 • Bayer Investor Presentation • Meet Management • March 2012
  • 13. Building A World-Class InnovationCompany Portfolio Growth Productivity  Enhance competitive  Invest in innovation  Decomplex position capabilities structures and processes  Strengthen  Maximize value of LifeSciences new product pipeline  Implement two-year strength group restructuring  Intensify cooperation plan & licensing activities  Leverage competitive advantage of new  Further adjust  Exploit synergy TDI gas phase business processes potential of human, technology at MaterialScience to animal and plant ongoing health  Realize emerging commoditization market opportunityPage 11 • Bayer Investor Presentation • Meet Management • March 2012
  • 14. Two Distinct Business Models LifeSciences MaterialScience Product innovation,  Process innovation, R&D-ratio ~11% of sales capital intensive COGS relatively low,  COGS high (~79%) 16% selling & distribution 31% marketing & selling relatively high relatively low (SAARE** High profitability, ~11%) adj. EBITDA-margins  Lower profitability, adj. 23-27%* 84% EBITDA margins ~11%* Increasing generic 69%  Few competitors, new competition & government entrants from Asia, Middle intervention East Structural risk: approvals,  Cyclical risk: demand and meta-analysis, product Sales Adj. EBITDA supply fluctuations liability 2011 2011 Breakdown excl. ReconciliationPage 12 • Bayer Investor Presentation • Meet Management • March 2012 *EBITDA before special items in % of sales, 2011 **Selling, administration and R&D
  • 15. Mid-term TargetsPage 13 • Bayer Investor Presentation • Meet Management • March 2012
  • 16. HealthCare –Building Growth Momentum Priority Target 2014  Accelerate growth  HealthCare sales of ~€20bn  Pharma: Successfully commercialize  Sales of ~€11.5bn late-stage pipeline and realize  High-single to low-double-digit % EM emerging markets (EM) opportunity growth  Consumer Health: Aspire to become  Sales of ~€8.5bn world-leading OTC company  HealthCare margin* of ≥28%  Improve profitability  Pharma margin* of >30%  Consumer Health margin* of ~25% *EBITDA before special items to sales in %Page 14 • Bayer Investor Presentation • Meet Management • March 2012
  • 17. CropScience –Propelling Future Growth Priority Target 2014 (normal market conditions)  Above market growth  >€8bn sales  New crop protection product sales  Translate R&D effectively into sales (=launched since 2006) of ~ €1.5bn  Aspiration to grow business in-line with  Extend BioScience footprint average of last 3 years, i.e. CAGR ~20% p.a.  Improve profitability  Generate adj. EBITDA* margin of ~24% *EBITDA before special items to sales in %Page 15 • Bayer Investor Presentation • Meet Management • March 2012
  • 18. MaterialScience –Earn A Premium Over Cost of Capital Priority Performance Targets  Grow business (volume) above global  Growth GDP  Defend #1 market positions in  Leadership polycarbonates and MDI  Leverage competitive advantage of  Increase market share of TDI business TDI gas-phase technology (2011: 23-24%*)  CapEx (PPE) budget of €1.5-2bn until  Closely monitor timing and necessity 2014 of capital investments  Expand Caojing, China site  Establish world-scale facilities in Germany  Earn a premium over cost of capital  CFRoI after reproduction > WACC *by volumePage 16 • Bayer Investor Presentation • Meet Management • March 2012
  • 19. New Incentive Scheme Reflects BusinessSpecific Challenges Individual Subgroup Group Performance + Performance + Performance HealthCare  Sales growth & adj. EBITDA* margin, innovation CropScience Individual  Sales growth & adj. Business EBITDA* margin; relative Core EPS Targets performance vs. peers, innovation MaterialScience  CFRoI vs. cost of capital, process innovation *before special itemsPage 17 • Bayer Investor Presentation • Meet Management • March 2012
  • 20. InnovationPage 18 • Bayer Investor Presentation • Meet Management • March 2012
  • 21. Pharma Pipeline –2011 - Significant Progress Achieved Project Indication Peak Sales Status & Targets Potential Xarelto Cardiology / > €2bn  SPAF: launched (US, EU, others) Anticoagulation  DVT treatment and sec. prevention: launched  VTE prev. ORS: launched in US  Sec. prev. ACS: filed VEGF Trap- Ophthalmology / ≥ €1bn  Filed for wet AMD in EU and Japan Eye Inhibition of blood  Phase III for DME and wet AMD (China) vessel growth initiated  Positive phase III data in CRVO Alpharadin Oncology / ≥ €1bn  CR prostate cancer: 44% improvement of OS Targeting of bone  Fast track designation by FDA metastases  Filing target: mid 2012 Regorafenib Oncology / ≥ €1bn  Metastatic colorectal cancer: 29% Oral multi-kinase improvement of OS inhibition  Fast track designation by FDA  Filing target: 1H 2012 SPAF: stroke prevention in atrial fibrillation; DVT: deep vein thrombosis; ORS: orthopedic surgery; ACS: acute coronary syndrome; VTE: venous thromboembolism AMD: age-related macular degeneration; DME: Diabetic macular edemaPage 19 • Bayer Investor Presentation • Meet Management • March 2012 CRVO: central retina vein occlusion; CR: castration refractory; OS: overall survival
  • 22. Crop Protection –Pipeline with €2bn Sales PotentialSales in €bn from launches 2011-2015e Launches 2011–2015e* ~ 2.0 Fungicide Seed Treatment Herbicide Fungicide Seed Treatment ~ 0.2 Sivanto Insecticide Peak sales 2011 potential Triafamone Herbicide * subject to regulatory approvalPage 20 • Bayer Investor Presentation • Meet Management • March 2012
  • 23. New LifeSciences’ Technologies Allow For AStronger Cross-Fertilization From a species-oriented research … … to a multi-species research approach Human Health Animal Health Plant Health Human Health Animal Health Plant Health New Technologies New PerspectivesParadigm: Paradigm: Mammals and crops differ substantially from each  There is more common ground between mammals and other crops than assumed before► Strong silo mentality in research ► Growing interest of researchers in different species („cross fertilization“)Page 21 • Bayer Investor Presentation • Meet Management • March 2012
  • 24. Opportunity Emerging MarketsPage 22 • Bayer Investor Presentation • Meet Management • March 2012
  • 25. Emerging Markets –Sales Growth Well Above Global AverageIn € million, ∆% yoy Fx adjusted FY2011 Group Sales by Region Emerging Economies +5% USA Emerging +3% Economies¹ ~5,100 +9% +12% 19% ~4,300 36% +12% +9% ~2,100 34% 11% ~1,800 Western Europe Others² +4% +4% Emerging Latin Eastern Africa & Group €36,528m; +6% Asia³ America Europe Middle East ¹ Emerging economies include: Latin America, Asia w/o Japan, Australia, New Zealand, Africa and Middle East incl. Turkey, Eastern Europe ² Others = Japan, Australia, New Zealand, CanadaPage 23 • Bayer Investor Presentation • Meet Management • March 2012 ³ Emerging Asia = Asia w/o Japan, Australia, New Zealand
  • 26. Emerging Markets –All Subgroups Have Strong FootholdFY 2011 Group sales breakdown; ∆% yoy Fx adjusted HealthCare CropScience MaterialScience 32% 43% 42% +10% +11% +7% = Developed Markets = Emerging Markets1 ¹ Emerging markets: Latin America; Asia/Pacific w/o Japan, Australia,Page 24 • Bayer Investor Presentation • Meet Management • March 2012 New Zealand; Africa and Middle East incl. Turkey; Eastern Europe
  • 27. All BRIC-Countries in Our MostImportant Country PortfolioFY 2011 sales in € billion; ∆% yoy Fx adjusted +3% +5%4.03.0 +4%2.0 +3% +13% +2% +1%1.0 +5% +5% +10% -2% +15% +11% +14% * * Greater China includes PR China, Hong Kong, Macau and TaiwanPage 25 • Bayer Investor Presentation • Meet Management • March 2012
  • 28. Bayer in Greater China – Key Facts Sales Bayer FY 2011 In € million 37% BHC 8% China: €2,957m €2,957m €36,528m 58% 5% BMS BCS Employees Sales Development Bayer Greater China (FTE) Bayer Greater China (in € billion) 10,924 10,001 8,350 2.9 3.0 1.9 2.1 1.8 1.5 2009 2010 2011 2006 2007 2008 2009 2010 2011 Greater China: PR China, Hongkong, Macao, TaiwanPage 26 • Bayer Investor Presentation • Meet Management • March 2012
  • 29. China - A Growth Engine for BayerSales Greater China in €bn Group Sales Target 2015 Expansion in All Subgroups ~6.0bn  Well positioned to capture opportunities in one of the world´s fastest-growing economies ~19% p.a.  Sales targets by subgroup: 3.0bn €bn 2011 2015e HealthCare 1.1 ~2.5 CropScience 0.1 ~0.3 MaterialScience 1.7 ~3.0 2011 2015ePage 27 • Bayer Investor Presentation • Meet Management • March 2012
  • 30. EfficiencyPage 28 • Bayer Investor Presentation • Meet Management • March 2012
  • 31. Restructuring Program Fully On Track Contribution by Subgroup  Target: €800m annual cost savings by 2013 Holding & HealthCare  Reinvestment of ~50% Admin. ~12%  One-time-charges of approx. €1bn of ~54% which €803m booked in 2010/11  Plans include staff reductions of 4,500 €800m €800m ~34%  2,500 new hires in growth and innovation, particularly in emerging markets CropScience Measures with €543m annualized savings already implemented by end of 2011Page 29 • Bayer Investor Presentation • Meet Management • March 2012
  • 32. Full Year 2012 –R&D And CapEx Budgets R&D 2012e: ~€3.0bn CapEx (PPE) 2012e: ~€1.5bn HealthCare MaterialScience HealthCare MaterialScience 2.0bn 0.2bn 0.5bn 0.5bn thereof Pharma 1.5bn 8% 8% 33% 34% CropScience 0.8bn 25% 24% 66% 67% 1% 13% 20% Reconciliation Reconciliation CropScience 0.05bn 0.2bn 0.3bnPage 30 • Bayer Investor Presentation • Meet Management • March 2012
  • 33. AppendixPage 31 • Bayer Investor Presentation • Meet Management • March 2012
  • 34. Financial Performance – Q4 2011Page 32 • Bayer Investor Presentation • Meet Management • March 2012
  • 35. 4th Quarter 2011 –Mixed Business Performance( ) = Fx & portfolio adjusted Q4‘10 Q4‘11 ∆% Highlights of Financial Results € million € million Sales 9,012 9,191 +2 (+2)  Top-line driven by ConsumerHealth and CropScience EBITDA - reported 1,510 1,415 -6  Emerging Markets sales up 5% - adjusted* 1,689 1,541 -9  Improvement of reported EBIT due to EBIT lower special charges - reported 51 629 • - adjusted* 1,005 844 -16  Adj. EBITDA* declined due to a sharp Net income -145 397 • drop at MaterialScience NCF 1,941 1,152 -41  Net cash flow impacted by payments in oFCF 1,417 427 -70 connection with LL Rice (€484m) EPS - reported -0.18 0.48 • - core 0.95 0.97 +2 *before special itemsPage 33 • Bayer Investor Presentation • Meet Management • March 2012
  • 36. 4th Quarter 2011 –HealthCareIn € million, ∆% yoy, () = Fx & portf. adjusted Q4’11 Sales Earnings Consumer Pharma Adj. Adj. Health 36% +1% (+1%) EBITDA* EBIT* +5% (+5%) 1,915 2,680 1,138 1,180 +4% 771 758 -2% 772 815 +6% 541 498 -8% 367 422 +15% HealthCare €4,595m; +3% (+2%) 231 317 +37% Price Volume Fx Portfolio 1% 2% 0% 0% Q4‘10 Q4‘11 Q4‘10 Q4‘11 *before special itemsPage 34 • Bayer Investor Presentation • Meet Management • March 2012
  • 37. 4th Quarter 2011 –CropScienceIn € million, ∆% yoy, () = Fx & portf. adjusted Q4’11 Sales Earnings Environmental Crop Protection / Adj. Adj. Science 36% BioScience EBITDA* EBIT* -5% (-6%) +2% (+4%) 148 1,528 270 273 +1% 144 145 +1% CropScience €1,676m; +1% (+3%) Price Volume Fx Portfolio -1% 3% 0% -1% Q4‘10 Q4‘11 Q4‘10 Q4‘11 *before special itemsPage 35 • Bayer Investor Presentation • Meet Management • March 2012
  • 38. 4th Quarter 2011 –MaterialScienceIn € million, ∆% yoy, () = Fx & portf. adjusted Q4’11 Sales Earnings Polycarbonates Polyurethanes Adj. Adj. -9% (-10%) 36% +5% (+5%) EBITDA* EBIT* 667 1,341 297 CAS** 420 156 0% (-1%) 168 106 -64% IO*** +13% (+11%) MaterialScience €2,596m; 0% (0%) -48 • Price Volume Fx Portfolio 4% -4% 0% 0% Q4‘10 Q4‘11 Q4‘10 Q4‘11 *before special itemsPage 36 • Bayer Investor Presentation • Meet Management • March 2012 **CAS: Coatings, Adhesives, Specialties *** IO: Industrial Operations
  • 39. 4th Quarter 2011 –Cash Flow And Net Debt DevelopmentCash Flow in € million, Net Debt in € billion, Q4’11 Cash Flow Net Debt Development GCF NCF Invest- oFCF +€25m cont. ments 7.0 7.0 1.004 1,152 725 427 ∆% y-o-y -29 -41 +38 -70 Q3´11 Q4´11Page 37 • Bayer Investor Presentation • Meet Management • March 2012
  • 40. Financial Performance – Fiscal 2011Page 38 • Bayer Investor Presentation • Meet Management • March 2012
  • 41. Fiscal 2011 –All Group Targets AchievedSales ∆ Fx and portfolio adjusted, EBITDA before special items 2011 Outlook 2011 2011 Comments original actual ∆ 4-6% to  Raised to 5-7% or €36-37bn Sales €36.5bn +6% €35-36bn in Q1 increase Adj. towards €7.6bn +7%  Raised to >€7.5bn in Q1 EBITDA €7.5bn Increase by Core EPS €4.83 +15%  Raised to ~15% in Q1 ~10% Net Debt reduce €7.0bn -€0.9bn  Record GCFPage 39 • Bayer Investor Presentation • Meet Management • March 2012
  • 42. Fiscal 2011 –Subgroup Performance vs. Targets 2011 Outlook 2011 in € million adj. ∆ Comments original actual HealthCare  Targets achieved or exceeded Sales low/mid single-digit 17,169 +2%  Top-line driven by Consumer increase Health Adj. EBITDA* small improvement 4,702 +7%  Pharma margin up 140 bpts. CropScience ≥ mid-single digit Sales 7,255 +9% increase  Achieved or exceeded all targets grow at higher rate Adj. EBITDA* 1,654 +28% than sales MaterialScience  Sales growth above, bottom-line mid single-digit clearly below expectations Sales 10,832 +8% increase  Pressure from higher raw grow at higher rate material prices and deteriorating Adj. EBITDA* 1,171 -14% business environment than sales *before special itemsPage 40 • Bayer Investor Presentation • Meet Management • March 2012
  • 43. Bayer HealthCareInvestor Handout – Meet ManagementMarch, 2012 – Leverkusen
  • 44. Leading Positions in Key HealthcareMarketsSales in € million Sales Split by Segment 2011 Pharma €9,949m  Leading positions in key therapeutic categories Consumer Care 25% €3,534m 20%  Global #2 in OTC-pharmaceuticals 58% Medical Care 14% €2,500m  #1 in fluid injection systems, #1 in contrast media, #4 in blood glucose meters 7% Animal Health €1,186m  Global #4 HealthCare €17,169mPage 2 • Bayer Investor Presentation • Meet Management • March 2012
  • 45. Fiscal 2011 –Key Financials HealthCare In € million FY 2010 FY 2011 ∆% Sales 16,913 17,169 +1.5 EBIT 1,861 3,191 +71.5 EBIT adjusted* 3,030 3,367 +11.1 EBITDA adjusted* 4,405 4,702 +6.7 Gross cash flow 2,948 3,254 +10.4 Net cash flow 3,320 3,357 +1.1 CapEx 605 611 +1.0 Free operating cash flow 2,747 2,749 +0.1 R&D expenses 2,066 1,948 -5.7 Capital invested (average) 23,022 22,757 -1.2 CFRoI 12.8 % 14.3 % ● * before special itemsPage 3 • Bayer Investor Presentation • Meet Management • March 2012
  • 46. Fiscal 2011 -Operating PerformanceSales in € million; ∆% y-o-y, () Fx & portfolio adj. Sales Earnings Consumer Pharma Adjusted Adjusted Health 0% (+1%) EBITDA* EBIT* +4% (+5%) 25% 4,702 +7% 4,405 42% 3,367 +11% 2,832 2,972 +5% 3,030 58% 1,900 2,042 +7% 1,573 1,730 +10% 1,130 1,325 +17% HealthCare €17,169m +1.5% (+2%) Price Volume Fx Portfolio +0.2% +2.2% -1.2% 0.3% 2010 2011 2010 2011Page 4 • Bayer Investor Presentation • Meet Management • March 2012 * before special items
  • 47. Fiscal 2011 -Regional Sales SplitSales in € million; ∆% y-o-y, Fx adj. Pharmaceuticals Consumer HealthNorth America LA / Africa / North America LA / Africa /-10.5% Middle East +6.0% Middle East +11.3% 15% +8.3% 21% 17% 32% 16% 25% 37% 38%Europe -3.5% Asia/Pacific Europe +4.8% Asia/Pacific +11.8% +4.4% € 9,949m € 7,220mPage 5 • Bayer Investor Presentation • Meet Management • March 2012
  • 48. Fiscal 2011 - Strong BusinessMomentum in Emerging MarketsSales in € million; ∆% y-o-y Fx adjusted 2011 HealthCare Sales Emerging Economies USA Emerging +11% -2% Economies¹ +13% 25% 32% +10% 23% ~1,900 +6% ~1,700 +9% 14% ~1,000 31% ~886 Western Others² Europe -1% +4% Emerging Latin Eastern Africa & HealthCare €17,169m Asia³ America Europe Middle East ¹ Emerging economies include: Latin America, Asia w/o Japan, Australia, ² Others = Japan, Australia, New Zealand, Canada New Zealand, Africa and Middle East incl. Turkey, Eastern Europe ³ Emerging Asia = Asia without Japan, Australia, New ZealandPage 6 • Bayer Investor Presentation • Meet Management • March 2012
  • 49. Bayer is One of The Leading InternationalHealthCare Companies in ChinaSales in € million; ∆% y-o-y Fx adjusted HealthCare 2011  Driven by Pharmaceuticals (+26% Fx-adj) ~€1bn +19% y-o-y (Fx-adj.)*  ~1,000 sales representatives added in 2011  Approx. 6,200 employees  €100m over 5 years to set-up a global R&D center in China  Beijing manufacturing site expansion (~€45m through 2015)Top products growth in 2011*  Partnership with Tsinghua University Aspirin +35% (joint drug discovery, student support)Adalat +24%Nexavar +24%Glucobay Avelox +22%AveloxNexavar +19% * People‘s Republic of ChinaPage 7 • Bayer Investor Presentation • Meet Management • March 2012
  • 50. Fiscal 2011 -Major Progress AchievedSales in € million; ∆% y-o-y Fx adjusted  First Xarelto-launches in chronic indications  Regulatory filings for Xarelto, VEGF-Trap-Eye, LCS Pipeline  Successful completion of major clinical studies (incl. programs for Xarelto, Alpharadin, Regorafenib, VEGF Trap-Eye)  Improved margins* at Pharma and Consumer Health (+140 Performance bp each)  Above market growth at Consumer Health  HealthCare EM-sales growth of +10% Emerging Markets  PR China: Above market growth at Pharma (+26%)  Expansion of marketing and sales organization LCS: Levonorgestrel contraceptive systemPage 8 • Bayer Investor Presentation • Meet Management • March 2012 *Adjusted EBITDA EM: Emerging markets
  • 51. HealthCare -Positioned for Future GrowthOpportunities  4 potential blockbusters to be launched near-termPharma  Limited patent expiration exposure  Strong presence in emerging markets  Strong brandsConsumer  Leading positions in all businessesHealth  Increasing share in mature and expand in Emerging MarketsPage 9 • Bayer Investor Presentation • Meet Management • March 2012
  • 52. Financial OutlookPage 10 • Bayer Investor Presentation • Meet Management • March 2012
  • 53. Market Outlook 2012 The Pharma market is expected to grow in the mid-single-digit percentage range driven by Emerging Markets For the OTC market we expect low-to-mid single-digit percentage growth The Diabetes Care market is expected to grow by a low-single-digit percentage Moderate growth expected in Animal Health marketPage 11 • Bayer Investor Presentation • Meet Management • March 2012
  • 54. Financial Outlook 2012 HealthCare Expect sales to increase by a low- to mid-single-digit percentage (Fx & portf.–adj.) Plan to slightly improve adjusted EBITDA* Pharmaceuticals Expect sales to remain stable or move slightly higher (Fx & portf.–adj.) Expect adjusted EBITDA* to approx. match prior-year level Consumer Health Anticipate mid-single digit percentage growth of sales (Fx & portf.–adj.) Anticipate mid-single digit percentage growth of adjusted EBITDA*Page 12 • Bayer Investor Presentation • Meet Management • March 2012 * before special items
  • 55. Building Growth Momentum – PharmaceuticalsPage 13 • Bayer Investor Presentation • Meet Management • March 2012
  • 56. Pharma – Top 10 Products2011 sales in € million (y-o-y changes Fx-adj.) Betaseron 670 (-9%) 447 (0%) 1,117 -5% Kogenate 785 (+11%) 290 (+2%) 1,075 +8% YAZ-Family 891 (+6%) 179 (-30%) 1,070 -3% Nexavar 551 (+3%) 174 (+5%) 725 +4% Adalat 637 (-5%) 3 (•) 640 -5% Mirena 268 (+6%) 313 (+15%) 581 +11% Avelox 398 (+8%) 88 (-31%) 486 -2% Aspirin C. 404 (+13%) 404 +13% Glucobay 362 (+4%) 362 +4% Levitra 227 (+7%) 105 (-51%) 332 -22% U.S. Rest of the worldPage 14 • Bayer Investor Presentation • Meet Management • March 2012
  • 57. The Leader in Women’s HealthCareSales ∆% y-o-y, () Fx adj. Yaz family Women’s Healthcare 2011 -4 (-3) Mirena +8 (+11) Diane +6 (+7) Microgynon -2 (-1) Valette -3 (-2) €2,992m Meliane -6 (-6) +2% (+3%) Angeliq +13 (+14) Qlaira +67 (+69) Other products +4 (+5)Page 15 • Bayer Investor Presentation • Meet Management • March 2012
  • 58. Mirena - The Leading Hormonal Long-ActingContraceptiveSales in € million; ∆% Fx adj. +11%  Leading long-acting (up to five years) reversible contraception device 581  2011 growth driven by higher volumes 539 in the US 490 268  Life-cycle opportunities: 254  Small, low-dose long-acting (up to three years) LCS filed in the US 218 and EU in 2011  Further phase III program for a 313 long-acting contraception LCS for 285 up to five years underway 272  2012e sales: high-single/low-double digit % increase 2009 2010 2011 U.S. Rest of the worldPage 16 • Bayer Investor Presentation • Meet Management • March 2012 LCS: Levonorgestrel-releasing system
  • 59. Hemophilia Franchise -Growth Trajectory IntactSales in € million; ∆% Fx adj. +8%  Global # 2 in hemophilia A treatment  Increased market share in 2011 1,075  Development program underway 1,004 888  Longer acting factor VIII: Start of a pivotal study targeted for 2012  Recombinant FVIIa: Target to 785 initiate a phase II/III study in 2012 705 638  Studies with plasma-free formulation on track  2012e sales: mid-single digit % 250 299 290 increase 2009 2010 2011 U.S. Rest of the worldPage 17 • Bayer Investor Presentation • Meet Management • March 2012
  • 60. Betaseron - Long-term Experience in MSTreatmentSales in € million; ∆% Fx adj. -5% 1,214 1,206 1,117 735 733  Wealth of clinical experience, demonstrating excellent efficacy and 670 tolerability of Betaseron  21-year long-term follow-up study demonstrated significant survival 479 473 advantage with Betaseron treatment 447  2012e sales: mid-to-high single-digit % decline 2009 2010 2011 U.S. Rest of the worldPage 18 • Bayer Investor Presentation • Meet Management • March 2012
  • 61. Nexavar - Our Cornerstone in OncologySales in € million; ∆% Fx adj.  Approved for kidney cancer (RCC) and +4% for liver cancer (HCC) 725  Only approved drug with overall survival benefit in HCC 705 604  Comprehensive development program underway, including phase III trials in  Lung cancer (NSCLC)  Thyroid cancer 531 551  Breast cancer 450  RCC (adjuvant)  HCC (adjuvant)  HCC (combination) 154 174 174  2012e sales: low-to-mid single-digit % increase 2009 2010 2011 U.S. Rest of the world RCC: Renal cell carcinoma, HCC: Hepatocellular carcinoma,Page 19 • Bayer Investor Presentation • Meet Management • March 2012 NSCLC: Non-small cell lung cancer
  • 62. Aspirin –More Than A Century of GrowthSales in € million; ∆% Fx adj.  One of the world’s most recognized +10% brands 844  Available as OTC and Rx Aspirin 776  Bayer’s #2 product in Emerging 404 Markets; over-proportional growth 715 358  Aspirin grew 35% Fx-adj. in 2011 315 in China  2012e sales: mid-to-high single-digit % increase (Rx-Aspirin Cardio) 440 418 400 2009 2010 2011 OTC-Aspirin Rx-AspirinPage 20 • Bayer Investor Presentation • Meet Management • March 2012
  • 63. Xarelto -Key Features and Differentiators Effectively reducing the risk of stroke and systemic embolism in AF-patients Novel single-drug approach for DVT-treatment and sec. prevention Superior efficacy with no increase in bleeding in VTE prevention after orthopedic surgery Convenient once-daily, fixed oral dose; no need for routine coagulation monitoring Proven efficacy in the broadest range of indications tested among novel anticoagulants Only novel anticoagulant to complete successful study in ACS also showing mortality benefit Unique phase III program for stroke prevention in AF-patients in Japan AF: atrial fibrillation, DVT: Deep vein thrombosis;Page 21 • Bayer Investor Presentation • Meet Management • March 2012 VTE: Venous thromboembolism; ACS: Acute coronary syndrome
  • 64. Xarelto –Above €2bn Commercial Opportunity1 Anticoagulants sales Anticoagulants estimated treatment days MAT 9/2011 in 2010 Other Post ACS/MI DTI 0.73 VTE 8% treatment ~350 0.76 8% ~200 UFH 0.63 Other 7% primary ~400 0.71 ~$9.2bn prevention ~3,100m VKA 8% 6.33 69% ~100 ~2,100 LMWH VTE prevention Stroke after orthopedic prevention surgery in AF LMWHs: low molecular weight heparins, UFH: unfractionated heparins, VKA: vitamin K antagonists, DTI: direct thrombin inhibitors AF: atrial fibrillation, ACS: acute coronary syndrome, MI: myocardial (incl. Pradaxa), Other antithrombotics (incl. Xarelto); MAT: Moving infarction, VTE: venous thromboembolism annual total 1 Subject to approvalPage 22 • Bayer Investor Presentation • Meet Management • March 2012 Source: IMS MIDAS, GERS, FARMINFORM for sales Bayer estimates for patient treatment days in main markets
  • 65. Xarelto – Targeting A Broad Range ofMajor Chronic Thromboembolic Diseases Venous Arterial Pulmonary embolism (PE) Stroke prevention in atrial fibrillation ● Caused by embolism of a clot ● Atrial fibrillation (AF) can cause the that migrates to the lungs development of clots, via stasis in the where it becomes trapped atria, which can travel to the brain ● Leading cause of in-hospital death ● AF increases stroke risk ~5-fold ● ~ 3.5 million AF-patients in the US, Deep venous thrombosis (DVT) > 6 million in EU and > 800,000 in J ● SOC: OAC ● Thrombi (clots) are formed in the deep veins of the leg Secondary prevention in ACS ● Risk factors include surgery, particularly orthopedic, and age ● Acute coronary syndromes (ACS) ● High risk of recurrent events, or comprise unstable angina and MI developing a pulmonary embolism ● The underlying cause is thrombosis ● After initial treatment, patients remain DVT + PE = VTE at high risk (venous thromboembolism) ● Annual cases of ACS in US, EU major ● Estimated ~ 900,000 cases/year in 5 and J estimated to be ~ 2 million major EU countries ● SOC: antiplatelets ● SOC: LMWH followed by VKA; Xarelto approved in Europe LMWH: Low molecular weight heparins; SOC: Standard of care; VKA: VitaminPage 23 • Bayer Investor Presentation • Meet Management • March 2012 K antagonists; OAC: Oral anticoagulants; MI: Myocardial infarction
  • 66. Xarelto –Rolled-out for Success Launched in >110 countries for VTE prevention following total knee/hip replacement surgery Launched in Europe and Canada in SPAF and DVT treatment Launched in SPAF in US Approved for SPAF in Japan Filed in ACS in Europe and US (priority review) SPAF: prevention of stroke and systemic embolism in patients with non-valvularPage 24 • Bayer Investor Presentation • Meet Management • March 2012 atrial fibrillation, DVT: deep vein thrombosis
  • 67. Xarelto in SPAF –Global Launch UnderwayStatus as of March 2012 J&J: generating positive launch momentum and steady growth; growing faster than competition in new Rx’s among novel OACs overall; favorable formulary access across majority of plans Strong market uptake Positive recommendation by SMC for SPAF, discussion with NICE ongoing Pricing and reimbursement discussions underway Approved, launch planned for Q2 First weeks of sales in SPAF in-line with expectations SPAF: prevention of stroke and systemic embolism in patients with non-valvularPage 25 • Bayer Investor Presentation • Meet Management • March 2012 atrial fibrillation, Rx: prescription; OAC: Oral anticoagulant; SMC: Scottish Medicines Consortium; NICE: National Institute for Health and Clinical excellence
  • 68. Xarelto – Strong Market Performance in Germany* Sales Market Share in % Cumulated daily therapies (DDD) - all (based on ex-manufacturer prices) dosage strengths and pack sizes at10,0 week 7 after launch Xarelto 1.800 Xarelto 1.600 7,5 7,2 6,8 6,8 1.400 6,2 Cumulated Daily Therpaies (000) 6,0 5,5 5,7 1.200 5,0 1.000 Pradaxa 800 600 2,5 1,8 400 1,4 200 0 calendar week 7 after launch 1/2/12 1/16/12 1/30/12 2/13/12 2/27/12 * As of March 2012 Source: IMS Health, Weekly Retail Sell-Out Data; BAYER Page 26 • Bayer Investor Presentation • Meet Management • March 2012 Sales market share estimates based on AC market
  • 69. Secondary Prevention of ACS –Key Findings from the ATLAS Phase III Study 16 percent relative risk reduction for cardiovascular (CV) death, stroke or myocardial infarction in patients taking rivaroxaban > 30 percent reduction of risk of CV death or all cause death if rivaroxaban (2.5 mg BID) is added to standard anti-platelet therapy > 30 percent reduction in stent thrombosis in patients taking rivaroxaban More TIMI major bleeding in the rivaroxaban groups (up to 2.4% in the 5mg BID group) compared to placebo (0.6%) No excess risk of fatal intracranial hemorrhage or fatal bleeding associated with rivaroxaban compared to placebo ACS: Acute coronary syndrome,Page 27 • Bayer Investor Presentation • Meet Management • March 2012 BID: twice daily
  • 70. EINSTEIN PE – Study Design The EINSTEIN PE study addresses the treatment of pulmonary embolism (PE) and the secondary prevention of venous thromboembolism (VTE) using oral rivaroxaban alone vs. standard therapy (LMWH followed by VKA) ● Randomized, open-label, event-driven, non-inferiority study Treatment period: 3, 6 or 12 months* Day 1 Day 21 30-day observation Rivaroxaban Rivaroxaban N=4,833 Objectively period 15 mg bid 20 mg od confirmed PE ± R DVT Enoxaparin 1.0 mg/kg bid for ≥5 days, followed by VKA, INR range 2–3*Decision to treat for 3, 6 or 12 months made by investigator at time of randomization; up to 48 hours pre-treatment with heparins/fondaparinux permitted before study entry LMWH: Low molecular weight heparin; VKA: Vitamin K antagonist; DVT: Page 28 • Bayer Investor Presentation • Meet Management • March 2012 Deep vein thrombosis; R: Randomization: PE: Pulmonary embolism; INR: International normalized ratio
  • 71. Xarelto –Major Expected Upcoming Newsflow  EINSTEIN PE Phase III data presentation at ACC, March 26, 2012  Secondary prevention of ACS – approval expected summer 2012 (US) and end 2012 (EU)Page 29 • Bayer Investor Presentation • Meet Management • March 2012
  • 72. Building Growth Momentum – Consumer HealthPage 30 • Bayer Investor Presentation • Meet Management • March 2012
  • 73. Consumer Health Businesses –A Highly Attractive Part of Our Portfolio Attractive Sustainable Consumer Financially underlying trends brands centered attractive  Aging population  Less patent  Evolution from  Predictable cash and increasing dependent “passive patient” flow life expectancy to “pro-active  Less R&D and  Attractive consumer”  Emerging capital intensive growth potential markets: OTC  Consumer  Strong  Consistent, growth due to expertise consumer attractive accessibility and becoming a brands have returns at lower cost required attractive long modest risk competency for lifetimes successPage 31 • Bayer Investor Presentation • Meet Management • March 2012
  • 74. Consumer Care –Gained Share in 2011Sales in € million; ∆% Fx & portfolio adj. +7% 3,534 3,371 3,020 3,080 2,6342,531 Performance  Global #2 in a growing market  Track record of performance  Some of the world’s most recognized brands  Acquired Roche OTC, Citracal, Sagmel and Topsun2006 2007 2008 2009 2010 2011Page 32 • Bayer Investor Presentation • Meet Management • March 2012
  • 75. Consumer Care –Strong Brands MatterSales in € million; ∆% Fx adj. Brand 2011 Sales y-o-y Growth 440* +9% 285 +9% 235 +11% 224 +7% 174 +2% 140 +4% * Only Aspirin CC sales, excluding Rx Aspirin CardioPage 33 • Bayer Investor Presentation • Meet Management • March 2012
  • 76. Radiology & Interventional – CombiningMedrad and Diagnostic ImagingSales in € million; ∆% Fx & portfolio adj. Highlights +2% Medrad: 1,474 1,4981,371* 1,363  Clear #1 1,298 1,323  Active in fluid injection systems for contrast media and endovascular devices  Business strengthened around strategic core through adjacent acquisitions of Possis (thrombectomy) and Pathway (mechanical atherectomy) Diagnostic Imaging:  Clear market leader in contrast media  Synergy creation through integration underway2006 2007 2008 2009 2010 2011 * pro forma salesPage 34 • Bayer Investor Presentation • Meet Management • March 2012
  • 77. Diabetes Care –Global Player in Blood Glucose MetersSales in € million; ∆% Fx & portfolio adj. +2% 1,000 993 1,002 934 956 810 Performance  Global #4 in blood glucose meters  Latest innovation products include CONTOUR™ USB meter with  Plug & play technology for instant access to patterns and trends  Patients can share data with their healthcare professional2006 2007 2008 2009 2010 2011Page 35 • Bayer Investor Presentation • Meet Management • March 2012
  • 78. Animal Health – A Top Player in an AttractiveMarketSales in € million; ∆% Fx & portfolio adj. +5% 1,186 1,120 956 963 977 Performance 905  Global #4 in a growing market  Ranked #3 in companion animal products (CAP)  #5 in food animal products (FAP)  Outpaced the market – in the majority of last years  Industry leading profitability2006 2007 2008 2009 2010 2011  Successful integration of BomacPage 36 • Bayer Investor Presentation • Meet Management • March 2012
  • 79. New Animal Health Products Veraflox  Dual targeting action with extended “Pradofloxacin, spectrum vs previous fluoroquinolones the new generation (greater Gram+ activity, anaerobes) fluoroquinolone with unique microbiology”  Greater potential to limit the selection for resistance  Convenient formulations for both dogs and cats Procox  Easy and convenient single oral dose “1st combined treatment endoparasiticide against  Can be used already from 2 weeks of age roundworm and coccidia in dogs”  Completes the endoparasiticides portfolio based on the active ingredient emodepsidePage 37 • Bayer Investor Presentation • Meet Management • March 2012
  • 80. Pharma Pipeline – VEGF Trap-EyePage 38 • Bayer Investor Presentation • Meet Management • March 2012
  • 81. VEGF Trap-Eye – Bayer’s Entry intoOphthalmology VEGF Trap-Eye: fully human fusion protein, specifically formulated for injection into the eye “traps” VEGF which induces abnormal vessel growth Collaboration with Regeneron; Bayer has marketing rights ex-US Filed for wet AMD in Europe and Japan Normal retina Abnormal vessel growth Filing for CRVO targeted for 2H Fovea 2012 Phase III in DME and mCNV ongoing Macula VEGF: Vascular endothelial growth factor; AMD: age-related macular degeneration,Page 39 • Bayer Investor Presentation • Meet Management • March 2012 CRVO: central retinal vein occlusion, DME: diabetic macular edema, CNV: choroidal neovascularization
  • 82. Retina Treatment is The Fastest GrowingArea Within Ophthalmology Global Ophthalmology Market in $bn CAGR 2008-2018 in % 23.8 1.3 1.3 6 4.3 4.3 10 6.2 6.2 13.9 10 Other 0.7 Dry eye 1.7 1.7 Retinal disorders 2.4 2.4 5.9 Anti-allergry/infec- 5.9 4 4.1 tive/ inflammatory 4.1 5.0 6.1 Glaucoma 6.1 1 5.0 20081 2018 Source: IMS HealthPage 40 • Bayer Investor Presentation • Meet Management • March 2012 1 2009 value is $14.7bn
  • 83. High Prevalence of Retinal Diseases  Wet AMD is the leading cause of acquired blindness in the elderly  approx. 1.2 million patients in the US  DME is the most prevalent cause of vision loss in patients with diabetes and a leading cause of acquired blindness in the adults aged < 50 years  Approx. 370,000 patients suffer from clin. significant DME in the US, with 95,000 new cases / year  CRVO may lead to vision loss and other serious complications  > 100,000 people in the US and > 66,000 people in key EU countries are estimated to suffer from CRVO  Severe myopia is common in Asia; in Japan, mCNV is the second most common cause of blindness  Prevalence in Japan is estimated to be approx. 200,000 AMD: Age-related macular degeneration; DME: Diabetic macular edema;Page 41 • Bayer Investor Presentation • Meet Management • March 2012 CRVO: Central Retinal Vein Occlusion; mCNV: Myopic choroidal neovascularization;
  • 84. Ex-US Territories Represent a SignificantOpportunity for VEGF Trap-Eye in wet AMD Total prevalence (2012e) Annual incidence (2012e) wAMD patients (thousands) Annual newly diagnosed wAMD patients (thousands) France 300 France 34 Germany 422 Germany 49 Italy 332 Italy 39 Spain 214 Spain 25 UK 276 UK 32 Japan 348 Japan 120 Canada 148 Canada 20 Brazil 332 Brazil 37 USA 1,229 USA 167 Source: Annual incidence: NICE; Worldwide incidence: AMD Alliance International.Page 42 • Bayer Investor Presentation • Meet Management • March 2012 Increasing Understanding of Wet Age-Related Macular Degeneration (AMD) as a Chronic Disease. April 2011
  • 85. VEGF Trap-Eye -Multiple Retinal Disease States wAMD US: launched 2011* EU: launch planned for Positive PIII Positive PIII China PIII (US) (Europe, J, etc) Study started end 2012# CRVO US: filed* Positive PIII Positive PIII Filing EU: 2H 2012e (US) (ROW) DME VIVID study: Completion1 2013/14e Positive PII PIII ongoing PIII ongoing VISTA* study: Completed (US, others) (Europe, J, others) Completion1 2013/14e mCNV MYRROR study: PIII Japan/Asia Pacific Completion1 2012/2013e Ongoing * RegeneronPage 43 • Bayer Investor Presentation • Meet Management • March 2012 # subject to regulatory approval 1: completion refers to primary completion estimated
  • 86. Phase III Studies in wet AMD – Every OtherMonth Dosing Possible with VEGF Trap-Eye VIEW 1,2 Phase III study results demonstrate comparable efficacy vs. Ranibizumab with every other month injection through first year# of injections Out of 13 possible injections1412 Out of 8 possible 12.3 12.3 12.2 injections10 Full analysis set: (5 in last 10 months) Rq4 n=595 8 2q4 n=613 7.5 0.5q4 n=597 6 2q8 n=607 4 2 2q4 0.5q4 2q8 0 Ranibizumab VEGF Trap-Eye Treatment arm in VIEW 2q4: VEGF Trap-Eye 2mg once every month; Rq4: Ranibizumab 0.5mg once everyPage 44 • Bayer Investor Presentation • Meet Management • March 2012 month; 2q8: VEGF Trap-Eye 2mg every other month; 0.5q4: VEGF Trap-Eye 0.5mg once every month
  • 87. VIEW 1 & 2 – Vision Maintained With VEGFTrap-Eye Dosed Every Other Month 14 VIEW 1 12 10.9* 2q4 (n=304) ETDRS Letters 10 8.1 Rq4 (n=304) 8 7.9†2q8 (n=301) 6 6.9†0.5q4 (n=301) 4 2 0 0 4 8 12 16 20 24 28 32 36 40 44 48 52 Rq4 2q4 0.5q4 2q8 14 VIEW 2 12 9.7†0.5q4 (n=296) ETDRS Letters 10 9.4Rq4 (n=291) 8 8.9† 2q8 (n=306) 6 7.6† 2q4 (n=309) 4 2 0 0 4 8 12 16 20 24 28 32 36 40 44 48 52 Week 2q4: VEGF Trap-Eye 2mg once every month; Rq4: Ranibizumab 0.5mg once everyPage 45 • Bayer Investor Presentation • Meet Management • March 2012 month; 2q8: VEGF Trap-Eye 2mg every other month;0.5q4: VEGF Trap-Eye 0.5mg once every month; *P = 0.0054; †P = NS vs. Rq4
  • 88. VEGF Trap-Eye –Positive Clinical Data in CRVO● Phase III program with two studies Percentage of patients with improvement of vision of at least 15 letters after 6 months (COPERNICUS, GALILEO) in central retinal vein occlusion 60.2% (CRVO) 56.1%● VEGF Trap-Eye vs. sham control injection● Both studies met primary endpoint: Visual acuity change vs. baseline 22.1% after 6 months of treatment 12.3%● Positive one-year results confirm primary endpoint results seen after Sham VEGF Trap-Eye 24 weeks injections 2 mg monthly GALILEO: p<0.0001 COPERNICUS: p<0.0001 Marked improvement in vision in CRVO-patients treated with VEGF Trap-Eye CRVO: Central Retinal Vein OcclusionPage 46 • Bayer Investor Presentation • Meet Management • March 2012
  • 89. VEGF Trap-Eye –Major Expected Upcoming Newsflow  Wet AMD – Launch in Europe planned for end 2012  CRVO – Filing targeted for 2H 2012 in EuropePage 47 • Bayer Investor Presentation • Meet Management • March 2012
  • 90. Pharma Pipeline – RegorafenibPage 48 • Bayer Investor Presentation • Meet Management • March 2012
  • 91. Regorafenib – Three Dimensional Mode ofAction Inhibition of proliferation Inhibition of tumor Inhibition of of certain tumor cells microenvironment signals neoangiogenesis Regorafenib is an oral tumor deactivation agent that potently blocks multiple protein kinases, including kinases involved in:  Tumor angiogenesis (VEGFR1, -2, -3, TIE2)  Oncogenesis (KIT, RET, RAF-1, BRAF, BRAFV600E)  Tumor microenvironment (PDGFR, FGFR) VEGFR: Vascular endothelial growth factor receptor; TIE2: Tyrosine kinase withPage 49 • Bayer Investor Presentation • Meet Management • March 2012 immunoglobulin-like and EGF-like domains ; PDGFR: Platelet derived growth factor receptor; FGFR: Fibroblast growth factor receptor;
  • 92. Regorafenib – Our Novel Multi-KinaseInhibitor CORRECT phase III trial in mCRC* stopped early on success (Oct ‘11)  Study met its primary endpoint of significantly improving overall survival in patients with mCRC who have progressed after failure of standard therapy  Submission for marketing authorization in mCRC planned for 1H 2012 Phase III program in GIST ongoing, data expected 1H 2012 FDA granted orphan drug (GIST) and Fast Track (GIST & mCRC) designation Phase II program ongoing in multiple tumor types mCRC: Metastatic colorectal cancer; * for patients whose disease has progressedPage 50 • Bayer Investor Presentation • Meet Management • March 2012 after approved standard therapies; GIST: Gastrointestinal stromal tumors;
  • 93. Regorafenib – Phase III Resultsin mCRC Show Promise The study met its primary endpoint of significantly improving overall survival by 29 % (p=0.0052, HR=0.77) at the preplanned interim analysis The trial also met key secondary efficacy endpoints including significant improvement of  Progression-free survival (HR=0.49, p<0.000001), and  Disease control rate (p<0.000001) No new or unexpected safety findings:  Main treatment-related adverse events observed in the regorafenib arm were fatigue, hand–foot skin reaction, diarrhea, anorexia, voice changes, hypertension, oral mucositis, and rash/desquamation mCRC: Metastatic colorectal cancerPage 51 • Bayer Investor Presentation • Meet Management • March 2012
  • 94. Colorectal Cancer – Common Cancer TypeWith High Unmet Medical Need ■ A common cancer: ● Incidence of 1.2million cases globally, third leading cause of cancer-related death Source: Decision Resources Jan 2011 CRC Report ■ Unmeet need: ● There are currently no approved treatments for mCRC after progression on standard therapies ● The current 5-year relative survival rate is on average 65% ● Oral therapy provides convenience to patients mCRC: Metastatic colorectal cancerPage 52 • Bayer Investor Presentation • Meet Management • March 2012
  • 95. Gastro-intestinal Stromal Cancer(GIST) GIST is a rare sarcoma affecting the digestive GISTs in the GI Tract tract and occurs in the stomach or small intestine The incidence of GIST in the U.S. is estimated to be 4,100 -6,000 / year Overall 5-year survival rates for primary resected disease are in the order of 50%– 55%1 Imatinib and sunitinib are established standards  No standard of care beyond imatinib and sunitinib Unmet need  A clear need for additional lines of treatment1 Din, Omar S, Woll, Panella J, Treatment of gastrointestinal stromal tumor: focus on imatinib mesylate. Academic Department of Clinical Oncology, University ofSheffield,Weston Park Hospital, Sheffield, UK ; *DeMatteo RP, Heinrich MC, El Rifai WM, et al. Clinical management of gastrointestinal stromal tumors: before andafter STI-571. HumPathol. 2002;33:466–477. ; W.-L. Wang et al Cancer Chemother Pharmacol (2011) 67 (Suppl 1):S15–S24; Photo: www.gistalliance.comPage 53 • Bayer Investor Presentation • Meet Management • March 2012
  • 96. Regorafenib Phase III in GIST (GRID) -Study Design Regorafenib 160 mg od Advanced 3 wks on /1 wk off GIST Primary after failure of 2:1 endpoint: at least imatinib randomisation PFS and sunitinib Placebo● Primary endpoint: progression-free survival (PFS) per blinded central radiology review; (significance level/power: 0.01 (one-sided) / 90%)● Secondary endpoints (selection): overall survival; time to progression tumor response rate; duration of response● Time frame (months): approx. 12● Total number of PFS events (plan): 144● Total number of patients enrolled: 199 GIST: Gastrointestinal stromal tumorPage 54 • Bayer Investor Presentation • Meet Management • March 2012
  • 97. Regorafenib –Clinical Program* Study Facts Phase I Phase II Phase III Milestones  Metastatic colorectal cancer after CORRECT failure of standard therapy; Filing target NCT01103323 3rd/4thline metastatic colorectal cancer (CRC) regorafenib + best supportive care 1H2012 (BSC) vs. placebo + BSC; N=760  Metastatic/unresectable GRID gastrointestinal stromal tumors Data 1H Gastrointestinal stromal tumors (GIST) ≥ 3rd line NCT01271712 (GIST) ≥ 3rd line 2012e  N=199  Regorafenib + FOLFIRI versus placebo+FOLFIRI as 2nd line Tx in NCT01298570** Metastatic CRC K-RAS/BRAF mutant metastatic CRC; N=240  Regorafenib + mFOLFOX6 as first line therapy in patients with NCT01289821 metastatic CRC Metastatic CRC  N=54  Regorafenib in patients with NCT01068769** metastatic and/or unresectable Metastatic / unresect. GIST GIST; N=34 Regorafenib in previously untreated  Data NCT00664326 patients with metastatic or Renal cell carcinoma unresectable RCC; N=49 reported Safety study of BAY73-4506 in patients NCT01003015  Data with hepatocellular carcinoma Hepatocellular carcinoma  N=36 reported *selection of studiesPage 55 • Bayer Investor Presentation • Meet Management • March 2012 ** investigator-sponsored study
  • 98. Regorafenib –Major Expected Upcoming Newsflow  Metastatic Colorectal Cancer – Filing targeted for 1H 2012  Phase III 3rd-line GIST (GRID) – data expected 1H 2012Page 56 • Bayer Investor Presentation • Meet Management • March 2012
  • 99. Pharma Pipeline – AlpharadinPage 57 • Bayer Investor Presentation • Meet Management • March 2012
  • 100. Alpharadin – New Potential Therapy toProlong Life in CRPC Patients  Alpha-pharmaceutical (Radium-223, delivering highly energetic, short ranging radiation) - in-licensed from Algeta  Radium as natural bone seeker targeting bone metastases  ALSYMPCA (phase III) trial in symptomatic castration-resistant prostate cancer (CRPC) patients with bone metastases stopped early - Alpharadin demonstrated 44% improvement in overall survival  Filing targeted mid 2012  Fast track status granted by FDA Tumor cells Newly formed bone Bone metastases Radium-223 deposition Radium-223: highly localized tumor cell killingPage 58 • Bayer Investor Presentation • Meet Management • March 2012
  • 101. Significant Unmet Need for Treatments forCRPC Patients with Bone Metastases Prostate cancer: Sixth leading cause of death from cancer in men; most commonly diagnosed cancer among men in the US and Europe  In 2008, 899,000 men were diagnosed and 258,000 died from prostate cancer worldwide1 Bone metastasis in prostate cancer CRPC is a form of advanced prostate cancer in which the tumor grows despite castrate levels of testosterone Majority of CRPC patients have radiological evidence of bone metastases Bone metastases are the main cause of disability and death in patients with CRPC 1 World Health Organization. GLOBOCAN 2008.; 2Mundy GR. Nat Rev Cancer. 2002;2(8):584-93 3Bubendorf L, et al. Hum Pathol. 2000;31(5):578-83 CRPC: Castration-resistant prostate cancerPage 59 • Bayer Investor Presentation • Meet Management • March 2012
  • 102. Alpharadin – Prolonged Life in CRPC*Patients in the ALSYMPCA Phase III Study ALSYMPCA* Overall Survival** In CRPC patients with bone metastases Radium-223:  Significantly prolonged OS  P value = 0.00185; HR = 0.695; 95% CI, 0.552-0.875  Significantly prolonged time to first SRE  P value = 0.00046; HR = 0.610; 95% CI, 0.461-0.807  Was very well tolerated* The ALSYMPCA trial was a Phase III, randomized (2:1), double- ** Parker C, Heinrich D, O’Sullivan JM et al. Overall survival benefit of Alpharadin in the blind, placebo-controlled international study of Alpharadin plus best treatment of patients with symptomatic bone metastases in castration-resistant prostate standard of care compared with placebo plus best standard of care cancer (CRPC): a Phase III randomized trial (ALSYMPCA). Presented at the 2011 in patients with symptomatic CRPC that has spread to the bone. European Multidisciplinary Cancer Congress. September 24, 2011Page 60 • Bayer Investor Presentation • Meet Management • March 2012 CRPC: Castration-resistant prostate cancer
  • 103. Alpharadin – Strong Improvement ofSkeletal-related Events in ALSYMPCA In addition to OS benefit, Alpharadin improved important skeletal-related event (SRE) components being associated with a 64% improvement in median time to first SRE of 13.5 months vs. 8.4 months for placebo (HR=0.610, p=0.00046)  SREs are associated with a poor prognosis in CRPC patients with bone metastases, leading to pain, a decrease in quality of life and hospitalization  Spinal cord compression can be devastating for patients as it can cause paralysis, as well as bladder and bowel dysfunction SRE Components: Number of Patients and Time to First Event No (%) of Patients Time to First Event (Alpharadin vs. Placebo) Alpharadin Placebo P-value* HR (95%CI) (n=541) (n=268) External beam 122 (23) 72 (27) 0.0038 0.65 radiotherapy (0.48-0.87) Spinal cord 17 (3) 16 (6) 0.016 0.44 compression (0.22-0.88) Pathologic bone 20 (4) 18 (7) 0.013 0.45 fracture (0.24-0.86) Surgical intervention 9 (2) 5 (2) 0.69 0.80 (0.27-2.4) CRPC: Castration-resistant prostate cancerPage 61 • Bayer Investor Presentation • Meet Management • March 2012 OS: Overall survival
  • 104. Alpharadin –Major Expected Upcoming Newsflow  Filing for treatment of bone metastases in castration-resistant prostate cancer (CRPC) targeted for mid 2012  Initiation of additional clinical studies targeted for 2H 2012Page 62 • Bayer Investor Presentation • Meet Management • March 2012
  • 105. Pharma Pipeline – RiociguatPage 63 • Bayer Investor Presentation • Meet Management • March 2012
  • 106. Pulmonary Hypertension (PH) –A Devastating Disease Definition of PH PH is continuous high blood pressure in the pulmonary artery, a critical blood vessel which channels blood from the heart to the lungs for re-oxygenation Criteria Mean pulmonary arterial pressure > 25 mm Hg at rest or > 30 mmHg with exercise (mean normal pressure ~15 mm Hg) Clin. Symptoms Breathlessness, fatigue, weakness, angina, syncope, abdominal distension Symptoms at rest in advanced stagesPatientsPatients ~ 700,000 patients diagnosed* with diseases related to / including PH, thereof ~ 300,000 might be eligible for PH treatment * Diagnoses estimated in 2009 in US, EU5, JPage 64 • Bayer Investor Presentation • Meet Management • March 2012
  • 107. Riociguat – A New Mode of Action Oral stimulator of soluble guanylate NO cyclase (sGC) Acts independently of nitric Riociguat sGC* cGMP oxide (NO) Enhances the sensitivity of sGC to low levels of bioavailable NO Increased cGMP levels lead to vasodilatation Maintains the crucial balance between oxygen supply and blood flow, avoiding a drop of oxygen in the Constricted Relaxed blood Pressure Pressure Reduction of pulmonary vascular Flow rate Flow rate resistance and alleviation of disease symptoms *native (intact)Page 65 • Bayer Investor Presentation • Meet Management • March 2012 cGMP: cyclic Guanylate Monophosphate
  • 108. Riociguat – Clinical Program Study Facts Phase I Phase II Phase III Milestones ~ 460 patients (treatment- naïve or pre-treated) Fully recruited vs.placebo (PATENT-1); Pulmonary Arterial Hypertension (PAH) Completion Efficacy study and long-term 2H 2012e extension ~ 270 patients vs.placebo Fully (CHEST-1); Efficacy study Chronic Thromboembolic Hypertension (CTEPH) recruited and long-term extension Completion 2H 2012e ~ 180 patients vs.placebo Completion with left ventricular systolic PH-LHD mid 2012e dysfunction Next steps and options in other forms of Pulmonary Hypertension being evaluatedPage 66 • Bayer Investor Presentation • Meet Management • March 2012 PH-LHD: PH owing to left heart disease
  • 109. Riociguat – PATENT-1/2: Phase III Efficacyand Long-term Extension Trial in PAH Primary outcome measure: change from baseline in 6 Minute Walking Distance (6 MWD) test after 12 weeks* Secondary outcome measures:  Change from baseline in Pulmonary Vascular Resistance (PVR), change from baseline in WHO functional class, change from baseline in NT-pro BNP, change from baseline in Borg dyspnea, change from baseline in EQ-5D and LPH, time to clinical worsening  Safety** PAH: Pulmonary arterial hypertension *Secondary outcome in extension, ** primary outcome in extension; p.o.: per os - oral;Page 67 • Bayer Investor Presentation • Meet Management • March 2012 TID: three times daily; NT-pro BNP: N-terminal pro brain natriuretic peptide; EQ-5D: quality-of-life measures; LPH: Living with Pulmonary Hypertension Questionnaire
  • 110. Riociguat – CHEST-1/2: Phase III Efficacyand Long-term Extension Trial in CTEPH Primary outcome measure: change from baseline in 6 Minute Walking Distance (6 MWD) test after 16 weeks* Secondary outcome measures:  Change from baseline in Pulmonary Vascular Resistance (PVR), change from baseline in WHO functional class, change from baseline in NT-pro BNP, change from baseline in Borg dyspnea, change from baseline in EQ-5D and LPH-Q, time to clinical worsening  Safety** CTEPH: Chronic thromboembolic pulmonary hypertension *Secondary outcome in extension, ** primary outcome in extension; p.o.: per os - oral;Page 68 • Bayer Investor Presentation • Meet Management • March 2012 TID: three times daily; NT-pro BNP: N-terminal pro brain natriuretic peptide; EQ-5D: quality-of-life measures; LPH: Living with Pulmonary Hypertension Questionnaire
  • 111. Riociguat –Major Expected Upcoming Newsflow  Completion Phase III in PAH (PATENT-1) expected 2H 2012  Completion Phase III in CTEPH (CHEST-1) expected 2H 2012  Completion Phase II in PH-LHD (LEPHT) expected 2H 2012 PAH: Pulmonal arterial hypertensionPage 69 • Bayer Investor Presentation • Meet Management • March 2012 CTEPH: Chronic Thromboembolic pulmonary hypertension PH-LHD: PH owing to left heart disease
  • 112. Pharma Pipeline – Other PipelinePage 70 • Bayer Investor Presentation • Meet Management • March 2012
  • 113. Development Pipeline Phase I (14) Phase II (8) Phase III (21) Cancer Heart Failure CHF Additional Indications PAH VTE Treatment BAY 80-6946 BAY 1067197 BAY 94-8862 Nexavar Riociguat (sGC Stimulator) Xarelto (PI3K Inhibitor) (Part. Aden. A1 Agonist) (MR Antagonist) Cancer Heart Failure Cancer Lung Infection CTEPH NSCLC BAY 1000394 BAY 86-8050 BAY 86-9766 Cipro inhale Riociguat (sGC Stimulator) Nexavar (CDK-Inhibitor) (Vasopr. Rec. Antag.) (MEK-Inhibitor) Cancer Heart Failure Gram-negative Pneumonia Submental fat removal Thyroid Cancer BAY 87-2243 BAY 1021189 Amikacin inhale ATX-101 Nexavar (HIF1 – Inhibitor) (sGC Stimulator) Cancer Endometriosis Pulmonary Hypertension Bone Mets CRPC Breast Cancer BAY 94-9343 BAY 1026153 Riociguat (sGC Stimulator) Alpharadin Nexavar (Mesothelin-ADC) Anemia MCI Cancer Skin and Lung Infections Adjuvant HCC BAY 85-3934 BAY 94-9172 Alpharadin Tedizolid Nexavar (HIF-PH) (Florbetaben) Sympt. Uterine Fibroids Cancer mCRC Adjuvant RCC BAY 1002670 Regorafenib Regorafenib Nexavar (S-PRAnt) Diagnostic Imaging GIST Contraception PET-Tracer Regorafenib FC Patch Low Hemophilia Alzheimer PET Imaging MRI LCM BAY 94-9027 BAY 94-9172 Gadovist (peg rFVIII) (Florbetaben) Hemophilia Myopic CNV VV Atrophy BAY 86-6150 VEGF Trap-Eye Vaginorm (rFVIIa) DME Contraception New molecular entities Life cycle management Status as of February 2012 VEGF Trap-Eye LCS 16 (NME) (LCM) CRVO VEGF Trap-EyePage 71 • Bayer Investor Presentation • Meet Management • March 2012 Selection of major Pharma Pipeline Projects in clinicial Phase I to III
  • 114. Heart Health and Hematology at BHC –Driving Our Expertise Phase I Phase II Phase III Anemia / HIF-PH CHF / MR Antagonist (BAY 94-8862) VTE Treatment / Rivaroxaban Hemophilia / peg. rFVIII (BAY 94-9027) PH / Riociguat (sGC Stimulator) PAH / Riociguat (sGC Stimulator) Hemophilia / rFVIIa (BAY 86-6150) CTEPH / Riociguat (sGC Stimulator) Heart Failure / part. Adenosine A1 Agonist Heart Failure / Vasopress. Rec. Antagonist Heart Failure / sGC Stimulator Riociguat – Phase III/Phase II  A soluble guanylate cyclase (sGC) stimulator; in development for the treatment of various forms of pulmonary hypertension Hematology:  Start of pivotal study with longer-acting pegylated rFVIII planned for 2012  Start of combined phase II/III with rFVIIa planned for 2012 Additional novel approaches – Phase I/preclinical  Focus on disease modification in additional cardiovascular diseasesPage 72 • Bayer Investor Presentation • Meet Management • March 2012
  • 115. Oncology – Building A SustainableFranchise In Fighting Cancer Phase I Phase II Phase III Cancer / PI3K Inhibitor Cancer / Regorafenib NSCLC / Sorafenib Cancer / CDK Inhibitor Cancer / MEK-Inhibitor Thyroid Cancer / Sorafenib Cancer / HIF1 Inhibitor Cancer / Alpharadin Breast Cancer / Sorafenib Cancer / Mesothelin-ADC Additional Indications / Sorafenib Adjuvant RCC and HCC / Sorafenib CRC / Regorafenib Sorafenib (Nexavar) GIST / Regorafenib Bone Mets CRPC / Alpharadin  Several Phase III studies ongoing MEK-Inhibitor  Small molecule mitogen-activated ERK kinase (MEK) inhibitors for the treatment of solid tumors  Under evaluation in advanced cancer patients of different tumor types as a single agent as well as in combination, for instance with Nexavar (Phase I/II) or in combination with PI3K-I (Phase I/II) Solid portfolio of promising early-stage projects CDK: Cyclin dependent kinase; CRC: Colorectal cancer; HCC: Hepatocellular carcinoma; CRPC: Castration-resistant prostate cancer; NSCLC: Non-small cell lung cancer ; PI3K:Phospharidylinositol-3 kinase; MEK:Inhibitor of MEK protein kinase ; GIST: Gastrointestinal stromal tumor; RCC: Renal cell carcinomaPage 73 • Bayer Investor Presentation • Meet Management • March 2012
  • 116. Women’s Health – Building On Our LeadingPosition Phase I Phase III Sympt. Uterine Fibroids / S-PRAnt Contraception / LCS-16 Endometriosis / BAY 1026153 Contraception / FC Patch Low VV Atrophy / Vaginorm Further expanding the world-leading position in Women‘s Healthcare LCS: New low dose levonorgestrel releasing intrauterine system (IUS); program for up to 5 years of contraception in phase III FC Patch Low: Once a week fertility control patch. Smallest, thinnest and only transparent patch for women who prefer non- daily contraception Vaginorm: Treatment of vulvo-vaginal atrophy, intra-vaginal application of dehydroepiandrosterone (DHEA)Page 74 • Bayer Investor Presentation • Meet Management • March 2012 LCS: Levonorgestrel contraceptive system
  • 117. Dermatology – Progressing in AestheticMedicine Phase III Submental fat removal / ATX-101 Long-standing position in Rx-Dermatology ATX-101 (First-in-class injectable adipolytic agent)  In-licensed from Kythera  Currently in development for the treatment of submental fat (double chin)  Phase III completion expected mid 2012Page 75 • Bayer Investor Presentation • Meet Management • March 2012
  • 118. Expected Major Pipeline Newsflow 2012 Pipeline Project Newsflow Timeframe Xarelto Data from Einstein PE Data at ACC, March 26, 2012 Chicago Approval for ACS Secondary prevention of ACS – approval expected summer 2012 (US); end 2012 (EU) VEGF Trap-Eye Launch EU (wet AMD) End 2012e Filing CRVO 2H 2012e Alpharadin Filing CRPC Mid 2012 Regorafenib Filing mCRC 1H 2012e Data from phase III GIST trial (GRID) 1H 2012e Riociguat Phase III PAH and CETPH Completion 2H 2012e Nexavar Phase III non-small cell lung cancer Completion mid 2012e (NSCLC) (MISSION) Phase III thyroid cancer (DECISION) Completion mid 2012e Phase III hepatocellular carcinoma (HCC) ± Completion 1H 2012e Tarceva (SEARCH) Phase III HCC adjuvant (STORM) Completion end 2012e / early 2013 Peg rFVIII (BAY 94-9027) Start pivotal study 2012e rFVIIa (BAY 86-6150) Start combined phase II/III 2012ePage 76 • Bayer Investor Presentation • Meet Management • March 2012 Note: completion refers to primary completion estimated
  • 119. Bayer CropScienceInvestor Handout – Meet ManagementMarch 2012 – Leverkusen
  • 120. Fiscal 2011 –A Year of Significant Progress  Developed and communicated new business strategy Strategy  Executing aggressively; accelerated licensing; selective M&A Performance &  2011: 9% organic growth and +28% adjusted EBITDA* Productivity  €265m savings on target by 2012  Refocused R&D investments Innovation  Strong track-record of innovations in 2011-2012  Market conditions expected to remain favorable in 2012 Outlook  Positive outlook for our business * before special itemsPage 2 • Bayer Investor Presentation • Meet Management • March 2012
  • 121. Executing Our Strategic RoadmapRejuvenate the core Reinvent customer- Rebalance and Extend BioScienceCrop Protection centricity along the refocus innovation footprintbusiness entire value chain Streamline portfolio and  Better understand and  Raise overall R&D  Strengthen our position focus on core crops, serve interconnected spend to more than in established crops brands and countries needs of customers, €850 million by 2015  Develop leading from seed to shelf Optimize our supply  Increase BioScience positions in 3 of 4 broad chain model and asset  Foster food chain R&D to be level with acre crops footprint partnerships AgChem spend Deliver savings of €265  Intensify interdisciplinary million through 2012 work at chemistry / biology interfacePage 3 • Bayer Investor Presentation • Meet Management • March 2012
  • 122. Fiscal 2011 –Key Financials CropScience In € million FY 2010 FY 2011 ∆% Sales 6,830 7,255 +6.2 EBIT 261 562 +115.3 EBIT adjusted* 787 1,168 +48.4 EBITDA adjusted* 1,293 1,654 +27.9 Gross cash flow 546 900 +64.8 Net cash flow 1,399 691 -50.6 CapEx 366 315 -13.9 Free operating cash flow 1,097 411 -62.5 R&D expenses 722 723 +0.1 Capital invested (average) 9,189 8,772 -4.5 CFRoI 5.9% 10.3% ● * before special itemsPage 4 • Bayer Investor Presentation • Meet Management • March 2012
  • 123. Fiscal 2011 – Sales Increase and StrongEarnings GrowthSales in € million; ∆% y-o-y, () Fx & portfolio adj. Sales Earnings Environmental Crop Protection / Adjusted Adjusted Science 36% BioScience EBITDA* EBIT* -4% (-2%) +7% (+10%) 626 1,654 +28% 6,629 1,293 1,168 +48% 787 CropScience €7,255m; +6% (+9%) Price Volume Fx Portfolio 2010 2011 2010 2011 -1% +10% -2% 0% * before special itemsPage 5 • Bayer Investor Presentation • Meet Management • March 2012
  • 124. Fiscal 2011 – Growth in all Regions,Mainly Driven by New Products North America Europe Sales: €1,703m (+14% Fx adj.) Sales: €2,505 (+6% Fx adj.) Main Drivers: Main Drivers: Fungicides gained from launch Strong growth in Eastern of Stratego YLD; new corn Europe; seed treatment and herbicides; seed treatment 23% herbicide gains; successful benefited from Poncho/Votivo; 35% launch of Xpro fungicide BioScience expansion 25% Asia/Pacific LatAm/Africa/Middle East 17% Sales: €1,803m (+11% Fx adj.) Sales: €1,244 (+3% Fx adj.) Main Drivers: Main Drivers: Insecticides rose from Belt and Fungicides moved ahead new products; growth for cotton strongly; insecticides impacted and corn herbicides; new Fox by portfolio streamlining; seed fungicide; BioScience gains treatment expansion; Japan flatPage 6 • Bayer Investor Presentation • Meet Management • March 2012
  • 125. Innovations Driving Growth in 2011Sales in € million; ∆% y-o-y Fx & portfolio adj. Herbicides 2,079 Strong growth in Europe and in the +9% Americas; new corn herbicides 1,709 Market share gains in the US; Fungicides +12% New Xpro above €100m sales Insecticides 1,290 Impacted by cessation of marketing of 0% WHO Class I products (about -€100m) Seed 731 Double-digit growth in all regions; Treatment +24% Launch of Poncho/Votivo in the US Environmental 626 Lower Specialty Actives sales partly Science -2% offset by increased US business 820 Double-digit growth in all BioScience +19% established crops FY 2010 Nominal growth/decline FY 2011Page 7 • Bayer Investor Presentation • Meet Management • March 2012
  • 126. Seed Treatment Back on Growth PathSales in € million; ∆% y-o-y Fx adj.  2011 strong performance of Seed 731 (+24%) Treatment portfolio in all regions 609  Successful introduction of Asia / Pacific Poncho/Votivo in corn in the US, launch in soybeans and cotton for LatAm/Africa/ Middle East the 2012 season Europe  Seed treatment application centers opened in Argentina, Brazil and China North America  New fungicidal seed treatment Emesto/EverGol ready for launch in Europe in 2012/2013  On track to develop remarkable seed 2010 2011 treatment segment in Asia/PacificPage 8 • Bayer Investor Presentation • Meet Management • March 2012
  • 127. 2011 - Significant Margin Increase Adjusted EBITDA* margin rose 380 bps to 22.8% in 2011 Earnings growth driven by significant volume increases and the resulting marked improvement in capacity utilization Efficient production and strict cost management enabled us to hold COGS down R&D expenses steady, selling expenses rose at a slower rate than sales €38m one-time gains from Crop Protection divestments (2010: €58 million) Efficiency program on trackCommitment to deliver on efficiency and restructuring program * before special itemsPage 9 • Bayer Investor Presentation • Meet Management • March 2012
  • 128. Optimizing our Supply Chain Model andAsset Footprint Efficient global production network and operating model create high flexibility and less capital employment Innovative chemistry and process technology drive cost leadership, as well as safety and sustainability excellence Fully integrated supply chain 2011: COGS/net sales ratio down by approx. 4 pp despite higher raw material pricesPage 10 • Bayer Investor Presentation • Meet Management • March 2012
  • 129. Strong Track-record of Innovation -Highlights 2011 - 2012 Numerous new vegetable Cereal fungicide varieties Seed treatment against New canola varieties with nematodes improved agronomic traits Fungicide for corn New soybean varieties and soybeans Herbicide for perennial Conventional oilseed rape seed crops for Europe Herbicide for IVM and New cotton varieties turf segment Fungicide for fruits & Proprietary glyphosate-tolerance vegetables Combined insect-resistance and Seed treatment fungicide herbicide-tolerance Market launch First registration or authorization received; launch planned for 2012/2013 IVM: Integrated vegetation managementPage 11 • Bayer Investor Presentation • Meet Management • March 2012
  • 130. Xpro - New Cereal Fungicidewith Yield-Boosting Effect Pyrazole fungicide from a new generation of SDHI* for foliar use in cereals Combined formulation of Bixafen and Prothioconazole leading to superior "all-in-one" cereal fungicide Excellent control of key cereal diseases including strobilurin-resistant Septoria Boosting yield through long-lasting disease control and positive impact on plant physiology Achieved above €100m sales in its first year of launch (2011) Global peak sales potential of more than €300m * SDHI: Succinate dehydrogenase inhibitorPage 12 • Bayer Investor Presentation • Meet Management • March 2012
  • 131. Luna - Outstanding Fungicide for ManagingProblematic Crop Diseases New SDHI* fungicide for use in foliar application and seed treatment on more than 70 horticultural and industrial crops Control for a broad range of problematic diseases including Alternaria blight, scab, powdery mildew and white mold Benefits for the food chain industry through better storability and longer shelf-life of harvested produce US registration received and available for the 2012 planting season; further registrations expected in Europe and in Canada in the coming months Global peak sales potential of more than €250m * SDHI: Succinate dehydrogenase inhibitorPage 13 • Bayer Investor Presentation • Meet Management • March 2012
  • 132. €2bn Peak Sales Potential withCrop Protection Pipeline 2011-2015 Sales in €bn from launches 2011-2015e Launches 2011–2015e* ~ 2.0 Fungicide Seed Treatment Herbicide Fungicide Seed Treatment ~ 0.2 Insecticide Peak sales 2011 potential Herbicide * subject to regulatory approvalPage 14 • Bayer Investor Presentation • Meet Management • March 2012
  • 133. We Are The Company to Offer a SustainableAlternative to Glyphosate Weed resistance increasingly impacting crop production; spreading from US to Canada LibertyLink is currently the only non-selective solution to glyphosate resistant weeds Herbicide innovation is urgently required In-line with our view on sustainable agriculture, we are committed to develop new and more sustainable weed management solutions  Innovation with new mode of action, HPPD herbicide tolerance, in soybeans and cotton  Developing of new herbicide tolerance traits in soybeans in collaboration with other companies  Return of older chemistry - 2,4D and Dicamba - not sufficient or sustainable options in future herbicide tolerance landscape Highly effective pre-emergent and selective herbicide portfolio recently launched Bayer CropScience sustains the "Respect the Rotation" initiative to overcome weed management challenges HPPD: Hydroxyphenyl-pyruvate dioxygenasePage 15 • Bayer Investor Presentation • Meet Management • March 2012
  • 134. BioScience – Double-digit Growth inall Established CropsSales in € million; ∆% y-o-y, () Fx & portfolio adj. Highlights 820 (+19%)  InVigor oilseeds outperformed the market 687 40  Important launches in cotton  Proprietary glyphosate herbicide 34 179 Other tolerance technology GlyTol in 152 Rice (+29%) the US  Double herbicide tolerant cotton 227 Cotton (+23%) 168 (LibertyLink&GlyTol) Oilseeds (+26%)  Market share gains in vegetable seeds Vegetables (+12%) business 273 299  About 70 new vegetable seed varieties launched across the whole portfolio 2010 2011Page 16 • Bayer Investor Presentation • Meet Management • March 2012
  • 135. Extend BioScience Footprint In the coming years we expect to grow organically at a similar rate as the last 2–3 years Grow our core brands & assets Leverage – and strengthen – our robust innovation pipeline, doubling annual R&D investment by 2015 (2010: €200 million) Fully exploit our pipeline by driving regional expansion, new market entries and game-changing technology launches Extend our footprint in new crops & markets, expand seed and trait research activities in wheat and soybean Deliver customer-focused innovations by Nunhems in strategic vegetable crops driven by molecular breeding excellence and unique, crop-based marketingPage 17 • Bayer Investor Presentation • Meet Management • March 2012
  • 136. Significant Investments in BioSciencein 2011 Targeted acquisitions to strengthen core crops  Hornbeck Seed - to invest in southern US soybean seed market  Raps GbR - to strengthen oilseed rape business seed platform in Europe Wheat breeding stations set-up in Europe and US 3 agreements with wheat players to broaden access to germplasm Several research collaborations with leading technology providers R&D investment increased by ~20% Bayer CropScience acquires access to wheat germplasm from leading Romanian agricultural research institution *** Bayer CropScience and DuPont announce canola trait licensing agreement *** Bayer CropScience subsidiary HILD opens new seed technology facility for vegetables and herbs *** Bayer CropScience to acquire US-based Hornbeck Seed Company *** Alternative mode of action for herbicide tolerance now in co- development by Bayer CropScience and Syngenta *** Bayer CropScience invests USD 20 million in new BioScience Bayer CropScience strengthens seed platform in greenhouse at North American headquarters *** Europe through acquisition of the Raps GbR oilseed rape business *** Bayer CropScience sets up European Wheat Breeding Center *** Bayer CropScience opens Seed Analytics Laboratory in Singapore ***Page 18 • Bayer Investor Presentation • Meet Management • March 2012
  • 137. Robust Broad Acre Seeds &TraitsDevelopment Pipeline 2012-2016* Pipeline Highlights Dual Herb. Tol. + Novel Insect Tol. Cotton Regional expansion ● Technology excellence ● Focus crop entry US Roundup Ready 2 Hybrid Canola AUS Bayer Improved Wheat Canola Oil Seed Profile EU NA LibertyLink + GlyTol + HPPD Insect + Roundup Tolerant Disease Res. Ready Hybrid Soybeans Hybrid Rice Canola NA US Asia Bayer Oilseed Roundup Canola Yield Submergence Disease Res. + Rape Seed Ready Hybrid Increase Tolerant Submergence Canola Hybrid Rice Tol. Hybrid Rice EU AUS NA Asia Asia Bayer TwinLink + Insect Salinity Disease Resis- Soybean GlyTol Cotton Resistant Tolerant tant + Salinity Seed Hybrid Rice Hybrid Rice Tol. Hybrid Rice Global US Asia Asia Asia 2012 2013 2014 2015 2016 *subject to regulatory approval / Pipeline includes both GM and Non-GM projectsPage 19 • Bayer Investor Presentation • Meet Management • March 2012
  • 138. Changing the Game in Cotton –TwinLink + GlyTol in 2013 Bayer launched first dual herbicide - dual insecticide product 2–3 years ahead of competition; TwinLink + GlyTol will provide another choice:  Two-genes for effective Lepidopteran control  Built-in tolerance to glufosinate-ammonium and glyphosate for broad-spectrum weed control Powerful new insect and weed technology in high-yielding FiberMax & Stoneville varieties New choices for efficient and effective crop management and increased productivity A critical tool in the fight against weed resistance Anticipated launch 2013 in United States; further launches planned* in Latin America and India * Pending regulatory approvalsPage 20 • Bayer Investor Presentation • Meet Management • March 2012
  • 139. Build up a Global WheatSeed Business Broad crop knowledge and customer insight based on leading position in crop protection with strong brands and a broad presence Invest significant resources into R&D of new wheat Global wheat germplasm / breeding infrastructure varieties and traits Initial focus on productivity, Canada: Spring Wheat stress tolerance, Northern US: Spring Wheat Germany: Winter Wheat nutrient uptake Ukraine: Winter and Spring Wheat Establish a broad France: Winter Wheat germplasm pool Nebraska: Winter Wheat Global breeding network Collaborations with leading institutions for seeds Australia: Spring Wheat and traits 1st phase : North America / Europe / Australia 2nd phase : Latin America / AsiaFirst new wheat varieties expected to be available by 2015 in EuropePage 21 • Bayer Investor Presentation • Meet Management • March 2012
  • 140. Building a ProprietarySoybean Seed Business 2009 launch of LibertyLink herbicide tolerance technology in soybeans, licensed by more than 100 US soybean seed players Acquisition of Hornbeck Seed Company  Supplying soybean varieties in the southern US-market  In-house soybean breeding program Broaden market access with launch of Bayer soybean seed in 2012 Assembling a broad soybean germplasm pool through breeding infrastructure in North and South America Industry-leading soybean trait pipeline  Multi-gene herbicide tolerance for sustainable, effective weed control and resistance management  Game-changing Soybean Cyst Nematode (SCN) control delivering higher yieldsPage 22 • Bayer Investor Presentation • Meet Management • March 2012
  • 141. Positive OutlookPage 23 • Bayer Investor Presentation • Meet Management • March 2012
  • 142. Positive Outlook We expect market conditions for our CropScience business to remain favorable in 2012 We predict above-market growth and anticipate that currency- and portfolio-adjusted sales and EBITDA before special items will advance by mid-single-digit percentagesPage 24 • Bayer Investor Presentation • Meet Management • March 2012
  • 143. Some more figures – AppendixPage 25 • Bayer Investor Presentation • Meet Management • March 2012
  • 144. Bayer CropScience –Balanced Portfolio PositionHerbicides €2,079m €1,290m InsecticidesMarket position: 2 Market position: 1-2 18% 29%Env. Science €626m €1,709m FungicidesMarket position: 1 Market position: 3 23% 9%BioScience €820m 11% €731m Seed Treatment 10%Market position: 6 Market position: 1-2 Sales 2011: €7,255m preliminary estimatesPage 26 • Bayer Investor Presentation • Meet Management • March 2012
  • 145. Q4 2011 –Key Financials CropScience In € million Q4 2010 Q4 2011 ∆% Sales 1,653 1,676 +1.4 EBIT 118 47 -60.2 EBIT adjusted* 144 145 +0.7 EBITDA adjusted* 270 273 +1.1 Gross cash flow 188 180 -4.3 Net cash flow 410 (327) • CapEx 158 126 -20.3 Free operating cash flow 289 (446) • R&D expenses 197 202 +2.5 * before special itemsPage 27 • Bayer Investor Presentation • Meet Management • March 2012
  • 146. 2011 - Business Momentum in EmergingMarkets Maintained CropScience Sales Emerging Economies Sales in € million, ∆% yoy Fx adjusted USA Emerging +13% +14% Economies¹ 25% +11% 16% 43% ~1,500 +5% +21% 28% 13% ~800 +6% Western Others² ~500 ~300 Europe +2% +7% Emerging Latin Eastern Africa & CropScience €7,255m; +6% (+9%) Asia³ America Europe Middle East ¹ Emerging economies include: Latin America, Asia w/o Japan, Australia, ² Others = Japan, Australia, New Zealand, Canada New Zealand, Africa and Middle East incl. Turkey, Eastern Europe ³ Emerging Asia = Asia without Japan, Australia, New ZealandPage 28 • Bayer Investor Presentation • Meet Management • March 2012
  • 147. Q4 2011 – Strong Growth ofSeed Treatment and BioScienceSales in € million; ∆% y-o-y Fx & portfolio adj. 444 Growth mainly driven by Europe Herbicides +3% Decline in Asia Pacific 397 Successful Fox launch in Brazil Fungicides +4% Western Europe business weaker Insecticides 350 Impacted by cessation of marketing of -7% WHO Class I products Seed 180 Business expansion in all regions Treatment +21% Strong performance of Poncho/Votivo Environmental 148 Lower specialty actives sales in Europe Science -6% Business increase in the US 157 Double-digit growth in North America, BioScience +24% Asia/Pacific and Latin America Q4 2010 Nominal growth/decline Q4 2011Page 29 • Bayer Investor Presentation • Meet Management • March 2012
  • 148. Cereals, Vegetables and FruitsA Major Part of Our Portfolio Sugar Crops Rice Cereals Other Oilseeds Vegetables/Potatoes Cotton Soy Fruits/Grapes Corn Bayer CropScience Sales 2011* * by major crop groups excluding industrial business and non-agricultural solutionsPage 30 • Bayer Investor Presentation • Meet Management • March 2012
  • 149. Global Ag Market Environment Expected toRemain Favorable in 2012 Crop commodity prices to remain relatively high, despite volatility Farmers’ overall economic prospects should therefore remain favorable, prompting further investment in seeds and crop protection products Latin America expected to post the strongest growth in 2012 due to benefit mainly from increase in soybean cultivation In Asia/Pacific, agricultural production anticipated to rise, though at slower rates than in Latin America. Expansion will be driven by specialty crops such as fruit and vegetables, as well as by rice and cereals Lower growth expected in industrialized regions of the northern hemispherePage 31 • Bayer Investor Presentation • Meet Management • March 2012
  • 150. Crop Commodity Prices Volatile,But Still at Attractive Levels Source: ReutersPage 32 • Bayer Investor Presentation • Meet Management • March 2012
  • 151. Bayer MaterialScienceInvestor Handout – Meet ManagementMarch, 2012 – Leverkusen
  • 152. MaterialScience –Leading Positions in All SegmentsSales in € million Polyurethanes Sales Split by Segment 2011 €5,435m  #1-2; approx. 22-24% market share* Polycarbonates €2,893m 27%  #1; approx. 27% market share 50% Coatings, Adhesives, Specialties 6% €1,845m  #1; >40% market share** 17% Industrial Operations €659m €10,832m *depending on segmentPage 2 • Bayer Investor Presentation • Meet Management • March 2012 ** arom. & aliph. isocyanates
  • 153. MaterialScience –Sales By Key Customer IndustriesBayer MaterialScience sales by industry in 2011Chemicals Automotive 8% 21%Others 20%(sports, leisure, footwear 28% Electro/packaging, medical, etc.) Electronics 16% 16%Furniture / Wood Construction 19%Page 3 • Bayer Investor Presentation • Meet Management • March 2012
  • 154. 2011 – Further Sales Growth, Lower EarningsPage 4 • Bayer Investor Presentation • Meet Management • March 2012
  • 155. Fiscal 2011 –Key Financials MaterialScience In € million FY 2010 FY 2011 ∆% Sales 10,154 10,832 +6.7 EBIT 780 633 -18.8 EBIT adjusted* 780 589 -24.5 EBITDA adjusted* 1,356 1,171 -13.6 Gross cash flow 1,058 939 -11.2 Net cash flow 763 775 +1.6 CapEx 505 574 +13.7 Free operating cash flow 265 210 -20.8 R&D expenses 231 237 +2.6 Capital invested (average) 9,589 10,157 +5.9 CFRoI 11.0% 9.2% ● * before special itemsPage 5 • Bayer Investor Presentation • Meet Management • March 2012
  • 156. Fiscal 2011 –Operating PerformanceSales in € million; ∆% y-o-y, () Fx & portfolio adj. Sales Earnings Polyurethanes Polycarbonates Adjusted Adjusted +8% (+10%) +4% (+6%) EBITDA* EBIT* 25% 1,356 50% 1,171 -14% 27% 780 589 -24% 6%Coatings, Industrial 17%Adhesives, OperationsSpecialties +3% (+4%) +20% (+22%) MaterialScience €10,832m; +7% (+8%) Price Volume Fx Portfolio +7.2% +1.0% -1.7% +0.2% 2010 2011 2010 2011 * before special itemsPage 6 • Bayer Investor Presentation • Meet Management • March 2012
  • 157. Fiscal 2011 –Regional Sales DevelopmentSales in € million; ∆% y-o-y Fx adjusted FY2011 MaterialScience Sales Emerging Economies +2% USA Emerging +10% Economies¹ 25% +7% 1% 18% 42% 42% ~2,530 +13% +18% 36% +12% 5% 35% 4% ~810 ~630 ~605 Western Others² Europe +11% -1% Emerging Latin Eastern Africa & MaterialScience €10,832m; +8% Asia³ America Europe Middle East ¹ Emerging economies include: Latin America, Asia w/o Japan, Australia, ² Others = Japan, Australia, New Zealand, Canada New Zealand, Africa and Middle East incl. Turkey, Eastern Europe ³ Emerging Asia = Asia without Japan, Australia, New ZealandPage 7 • Bayer Investor Presentation • Meet Management • March 2012
  • 158. Fiscal 2011 –Higher Input Prices Not Fully CompensatedAdjusted EBITDA* in € million 1,356 1,171 -14% y-o-y - Inventory reduction - Facility & asset management costs 13% - Start up costs for margin new TDI train 11% - Higher fixed costs margin Raw material/ Actual FY‘10 Volume Price energy prices Savings Others Actual FY‘11 * before special itemsPage 8 • Bayer Investor Presentation • Meet Management • March 2012
  • 159. Fiscal 2011 –Impact of Raw Materials Raw Material Cost Split 2011*  Petrochemical feedstock prices on a high level and very volatile in the past 12 months  Total raw material costs at €5.1bn in 2011, vs. €4.3bn in 2010  Energy costs in 2011 unchanged from 2010 at €600m  Raw material price increase negatively influenced EBITDA by €780m  not fully compensated by Exposure by value price increases Benzene (incl. phenol, aniline, styrene) Propylene Toluene Other petrochemical feedstock Others * Material Science raw material basket used as proxy, coversPage 9• Bayer Investor Presentation • Meet Management • March 2012 approx. 80% of total purchased raw materials
  • 160. Fiscal 2012 –Business OutlookQ1´2012 outlook Fx- and portfolio- adjusted sales roughly in line with Q4´2011 Adjusted EBITDA* expected well above the level of Q4´2011, but below the respective prior year levelFY´2012 outlook In light of the weaker development in 2011, we currently forecast Fx- and portfolio- adjusted sales and adjusted EBITDA* to remain level with the prior year Should the market environment develop more favorably than anticipated, we expect sales and earnings to increase accordingly * before special itemsPage 10 • Bayer Investor Presentation • Meet Management • March 2012
  • 161. Positive Long-term Trend To ContinueMajor products sales growth Business Development(polyurethanes and polycarbonates)Global GDP index (nominal)  Business sales growth:Index 1992 = 100 1992-2011 CAGR: +8%  Global GDP growth: 1992-2010 CAGR: +5%  Major products performing above GDP growth  Historically, long-term growth trend intact across the business cycles100 %  Growth trend expected to continue as global megatrends need sustainable solutions 1992 2011Page 11 • Bayer Investor Presentation • Meet Management • March 2012
  • 162. Capitalize On Global MegatrendsPage 12 • Bayer Investor Presentation • Meet Management • March 2012
  • 163. Capitalize on Global Megatrends and SpurFuture Growth Urbanization – Increasing Energy Consumption Buildings are responsible for more than 40% of global energy use* Globalization – Increase of Greenhouse-gas Emissions 14% of greenhouse gases worldwide origin from the transport of goods, making it the third largest emission source** Mobility – Increasing Noise Pollution About 30% of the EU population are exposed to road traffic noise in excess of 55 dB(A) during night time*** *Source: UNEP, Sustainable Buildings and Climate InitiativePage 13 • Bayer Investor Presentation • Meet Management • March 2012 **Source: World Resources Institute *** WHO recommends less than 30 dB(A); dB(A): A-weighted decibel quality
  • 164. Examples of Bayer’s Materials for Zero-emission BuildingsPage 14 • Bayer Investor Presentation • Meet Management • March 2012
  • 165. Polyurethane-based Insulationfor Residential & Commercial Buildings Growth drivers  Directive 2010/31/EU of the European Parliament: From 2020 on, new buildings have to bePUR Isoboards for Thermal Insulation constructed as “nearly zero-energy For buildings under construction buildings” Applicable insulation for walls, roofs and floors  IECC* in the US: From 2012 on new Advantages: highest thermal insulating capacity and renovated homes and relative to wall thickness, moisture resistant, easy to commercial buildings have to use apply, excellent long-term behavior 30% less energy than those build to current standardsPUR Metal Sandwich Panels  Metal – rigid PUR foam sandwich panels are  1 kg polyurethane saves 360 to 755 prefabricated and mainly applied for industrial and kg CO2 emissions** commercial buildings  PUR in construction industry in  Lightweight panels allow easy handling and fast site 2011: approx. €4.8bn, estimated assembly average growth rate of ~8% p.a.  High energy efficiency for cold and freezer storage *International Energy Conservation Code **Additional insulation. Savings over entirePage 15 • Bayer Investor Presentation • Meet Management • March 2012 product life-cycle of 50 years, including production and end-of-life stages PUR: polyurethane
  • 166. Polycarbonate Sheets for Heat Managementin Buildings Growth drivers  Growing demand for non-electrical indoor climate controlPolycarbonate Multi-Wall Sheets  Translucency levels of 65-85%, ensure the maximum amount of Combined light and heat management to daylight can flood into buildings while reduce energy requirements infrared radiation is absorbed Significant reduction of CO2 emissions with  Makrolon® meets international fire energy-saving multi-wall sheets protection requirements (not self- igniting, does not drip flaming Integration of solar energy panels for particles and does not allow fire to renewable energy solutions spread) Hail-impact resistance as well as good  Global market size 2011 approx. weather stability 45 kt, estimated average growth rate Several advantages versus glass: of ~10% p.a.  Design freedom, safety, weightPage 16 • Bayer Investor Presentation • Meet Management • March 2012
  • 167. Polyurethane-based InsulationAlong the Cold Chain Growth drivers  A 10 cm insulating layer can keep food cool for up to five daysRefrigerators without electricity – even at Replacing all old refrigerators with A++ external temperatures of over 40 appliances could cut annual CO2 emissions in degrees Celsius the EU by 22 million metric tons  Increasing demand for trans- Insulation made out of polyurethanes helped porting temperature sensitive reduce energy consumption of refrigerators by goods 65% from 1950-2005  Increasing standard of livingTransportation triggers continuously growing demand for appliances For e.g. refrigerated trucks, reefer container, portable coolers  PUR along the cold chain 2011: approx. €3bn, estimated average PUR combines high mechanical strength, high growth rate of ~6% p.a. insulating capacity and low weight PUR: polyurethanePage 17 • Bayer Investor Presentation • Meet Management • March 2012
  • 168. Examples of Bayer’s Materials for EnergyEfficient Cars MaterialScience‘s Solutions for Saving Weight Roof elements out of polycarbonate Development of material and polyurethanes Housings for charging share in %* Instrument panels out stations out of polycarbonate of polycarbonate and Seats out of polyurethanes polyurethanes 14 19 Polycarbonate tailgate 27 32 59 Polyurethanes, Load floor out of 49 coatings and polyurethanes adhesives for the body shell Polycarbonate for flame Colored resistant battery polycarbonate housings parts for the body Polymers Others Steel/Metal * Based on an average automotive weight of 1,300 kgPage 18 • Bayer Investor Presentation • Meet Management • March 2012
  • 169. Increased Energy Efficiency in Cars ThroughPolyurethanes Growth drivers  10% less weight reduces the fuel consumption of anPolyurethanes average car by around 5% Polyurethanes are used for interior and  Polyurethane offers versatile exterior applications like seating, instrument opportunities for lightweight panels and bumpers car design High noise-absorption qualities (lower acoustic  77m light vehicles* produced level inside the car) globally in 2011, estimated Bayflex® RIM Light Weight, a new material for average growth rate of 5-6% bodywork parts reduces the weight of the p.a. parts by 20 to 30%** while retaining the mechanical properties *includes cars and light commercial vehicles up to a weight of 6tPage 19 • Bayer Investor Presentation • Meet Management • March 2012 ** compared with conventional polyurethane solutions PUR: polyurethane
  • 170. Increased Energy Efficiency in Cars ThroughPolycarbonates Growth drivers  Broad global political initiatives are promoting e-Polycarbonates mobility Heat stability and optical quality enable new  Increasing need for electrical LED-based lamp lighting systems devices requires flame Battery housings made from flame-retardant retardancy of plastics polycarbonate blends will protect batteries  Polycarbonate glazing offers used in future cars with hybrid engines a weight advantage of 30- Colored car body parts like roofs, spoilers or 50% compared to real glass pillar covers from polycarbonate blends  77m light vehicles* produced reduce weight globally in 2011, estimated Automotive glazing from polycarbonate average growth rate of 5-6% combines high weight saving potential with p.a. outstanding thermal insulation *includes cars and light commercial vehicles up to a weight of 6tPage 20 • Bayer Investor Presentation • Meet Management • March 2012
  • 171. Noise Reduction in the TransportationSector Growth drivers  Noise absorption of up to 3dB(A)Polyurethane  Reduction of vibrations by Durflex® track system stabilizes ballast stones approx. 40% with polyurethane foam  1.37 million km rail network Creates a durable track system with long-term worldwide elasticity  Addresses especially highly Combining the strengths of ballast track frequented high-speed and (elasticity & dampening effect) with strengths heavy cargo lines of slab track (durability) Improving the economics of track operations  Reduced maintenance costs  Increasing availability of the tracksPage 21 • Bayer Investor Presentation • Meet Management • March 2012
  • 172. Noise Reduction in the TransportationSector Growth drivers  Governmental guidelines increasingly require noisePolycarbonates reduction Transparent sound walls more and more  Makrolon® Silent Sound preferred in urban environments reduces noise pollution up to Advantages of being transparent, light weight, 34dB(A) vandalism proof, flame retardant and ageing  Certified according to DIN EN stabile 1793-2 (Noise protection Light weight noise protection is inevitable on measures on streets - test bridges procedure for the determination of acoustic properties) Used on building sites without major machine expenditure  Wall-thickness of 18 mm with a weight of only ~22 kg/m² 100% recyclablePage 22 • Bayer Investor Presentation • Meet Management • March 2012
  • 173. Invest to Improve & GrowPage 23 • Bayer Investor Presentation • Meet Management • March 2012
  • 174. World Leading Positions in Markets withPositive Long-term Demand Growth PCS MDI TDI Bayer share in business 2011 (by volume)* ~27% ~22-23% ~23-24% Market position 2011 #1 #1 #1-2 Market capacities 2011 (name plate) 4,700 kt 5,700 kt 2,200 kt Expected average long-term demand growth p.a. (by volume)* 6-7% 6-7% 4-5% Expected market capacity growth 2012 ~2% ~3-4% ~9% *internal estimates MDI: methyl diphenylene diisocyanate,Page 24 • Bayer Investor Presentation • Meet Management • March 2012 TDI: toluene diisocyanate PCS: polycarbonate
  • 175. Cash Generation in Excess of OwnInvestment Need, A Real Success StoryIn € million ~€ 3.5bn FOCF in 10 years Free Operating Cash Flow CapEx (cash-relevant) 673 Net Cash Flow 649 592 345 206 277 265 210 1661,108 1,113 498 1,388 1,281 1,147 782 110 849 763 775 332 464 504 498 565 715 690* 870* 672 9022002 and 2003 as reported in 2004 excluding acquisitions or divestments 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Page 25 • Bayer Investor Presentation • Meet Management • March 2012
  • 176. Sustain Leading Positions in EstablishedRegions, Grow in Asia Planned Capital Expenditures (PPE* only)  CapEx timeline adjusted to invest in- ~€770m line with growing market demand ~€690m  Investments focused on two elements: €533m ~€520m  Further improve cost efficiency to sustain leading positions  Grow in developing markets  Major projects include:  Germany: Focus on improving cost efficiency to sustain leadership positions  China: Focus on expansion to capture further growth potential 2011 2012e 2013e 2014e * Property, plant & equipmentPage 26 • Bayer Investor Presentation • Meet Management • March 2012
  • 177. Build on European Market Leadership WithFurther Investments €700m in Capital Expenditures Planned in Germany  Investments focused on meeting growing local demand  New facilities use innovative process technologies for more efficient production  Construction of a new multipurpose plant for HDI and IPDI until 2013  Construction of a new 300kt/year TDI plant* until 2014  Expansion of MDI capacity by 220kt/year (timing t.b.d.)  Expansion of PCS capacity by 100kt/year(timing t.b.d.)  Chlorine production unit with new oxygen depolarized cathode technology * Construction of a new 300kt/year TDI facility replacing existing 205ktPage 27 • Bayer Investor Presentation • Meet Management • March 2012 IPDI: isophoron diisocynate, MDI: methyl diphenylene diisocyanate, TDI: toluene diisocyanate, HDI: hexamethylene diisocyanate, PCS: polycarbonate
  • 178. Grow in China by Expanding Bayer´sLargest, Fully Integrated Site in Shanghai Strengthening Leadership Through Further Local Production and Know-how  Second investment stage PUR PCS CAS  New investment of approx. €1bn in MDI PCS HDI Shanghai until 2016 to: 350 kt in 2011 200 kt in 2011 30 kt in 2011  Increase MDI capacity to +650 kt +300 kt +50 kt 1,000kt/year  Increase PCS capacity to TDI 500kt/year 250 kt in 2011  Increase HDI capacity, new 50kt line planned  New IPDI line planned  PCS headquarters transferred to Shanghai mid 2011  Expansion of local R&D activities MDI: methyl diphenylene diisocyanate, TDI: toluene diisocyanate, IPDI: isophoronePage 28 • Bayer Investor Presentation • Meet Management • March 2012 diisocyanate, HDI: hexamethylene diisocyanate, PCS: polycarbonate
  • 179. MaterialScience Sales Development inGreater China Bayer MaterialScience Sales in Greater China in % 2005 2011 Gr. China 8% +11% p.a. Gr. China 8% €0.9 bn €1.7 bn MaterialScience €9.4bn MaterialScience €10.8bn Greater China incl. PR China, Macau, Hong Kong & TaiwanPage 29 • Bayer Investor Presentation • Meet Management • March 2012
  • 180. China – Center of Gravity ofMaterialScience´s Customer Industries The largest construction market in the world World’s largest PCS market The largest automotive market in the world The largest railway market in the world To become the world’s largest PUR market The largest consumer electronics soon market in the world World’s second largest economy A close second behind with strong momentum the US for the world’s largest Coatings market World’s largest exporter PUR: polyurethane, PCS: polycarbonatePage 30 • Bayer Investor Presentation • Meet Management • March 2012
  • 181. Opportunities for MaterialScience fromChina‘s 12th 5-Year Plan  Increase non-fossil fuel use to 11-12%* by 2015 Promote clean energy  Reduce energy consumption per unit of GDP by 16% by 2015 Improve  Heat measuring and energy saving in existing buildings building energy efficiency  15% of energy consumption with renewable energy by 2020 New energy  Invest RMB100 billion until 2020 in electric vehicles vehicle development  Target production capacity of 1m new energy vehicles by 2015 Foster rail  Extend high speed network to 45,000 km** by 2015 freight  Connect every city with a population ≥500,000 habitants transportation *Up from currently ~8% ** Up from currently 10.000kmPage 31 • Bayer Investor Presentation • Meet Management • March 2012 Sources: SAI Strategic Analysis, KPMG
  • 182. Getting Closer to Our Customers –Polymer R&D Center Shanghai  Broad service range:  Technical service/help  Customer trainings  Specialized laboratories for product and process R&D Technical Sales Technical Service Application Development Product Development Research Phase I started 2001 Phase II started 2006 Phase III started 2011 Phase III expansion part of our €1 billion investment program Number of employees expected to double from currently 130 Providing a full range of R&D expertisePage 32 • Bayer Investor Presentation • Meet Management • March 2012
  • 183. Focus on Technology LeadershipPage 33 • Bayer Investor Presentation • Meet Management • March 2012
  • 184. Employing State-of-the-Art Technologies inWorld-Scale FormatPolycarbonates  World-scale standard: 100kt single trains  100kt line with melt process: conversion costs -30%MDI BPA and polycarbonate plant  New world-scale standard: 350kt (becoming 500kt)  Adiabatic nitration (aniline): conversion costs -25%  High efficiency phosgenation: conversion costs -45%  ODC* chlorine recycling: energy costs -30%TDI MDI storage tanks  New world-scale standard: 300kt  Gas phase phosgenation: energy costs -40%  Chlorine recycling: energy costs -50%HDI  Gas phase phosgenation: energy costs -65% HDI plant HDI plant All improvements compare to conventional process technology *ODC: Oxygen Depolarized CathodePage 34 • Bayer Investor Presentation • Meet Management • March 2012
  • 185. World Scale in Polycarbonates Production Reduces Costs Through Economies of Scale Bayer Has a Competitive Production Line Concept in All 3 World Regions Effect of capacity increase on conversion costs Bayer Bayer is the only PCS producer 100 50kt that runs highly efficient, single 100kt lines BayerConversion cost index 90 60kt Peer group 75kt 100kt lines are operated in: average  2002 Map Ta Phut, Thailand 80 (first 100kt line worldwide) Bayer  2003 Uerdingen, Germany 70 100kt world scale  2006 Caojing, China 60  2009 Caojing ll, China 50 60 70 80 90 100 Name plate capacity in kt p.a. per production line + Further expansion of Caojing PCS: polycarbonatePage 35 • Bayer Investor Presentation • Meet Management • March 2012
  • 186. TDI Gas Phase Process Sets NewStandards For Efficiency and Safety New Process Extends Bayer’s Cost and Technology Leadership in TDI ProductionProcess characteristics Reaction of phosgene and TDA in the gas phase Proprietary process new standard for efficiencyBenefits of gas phase process Reduced conversion costs due to lower energy demand and reduced solvent usage  Successful operation of a 60kt Reduced energy costs by approx. 40% pilot plant in Germany  World-scale 250kt production line in Caojing started in 2011 All improvements compare to conventional process technology TDI: toluene diisocyanatePage 36 • Bayer Investor Presentation • Meet Management • March 2012
  • 187. Sustainable Production –Making Carbon Dioxide a Feedstock Production of high quality polyurethane foam with the help of carbon dioxide (CO2) Substitute partially petroleum by CO2, reduce raw material costs Unique technology, good properties of final (foam) products Pilot plant started operating in Germany in 2011 Project partnered with RWE (supplies CO2) and RWTH Aachen Industrial production expected to start 2015 earliest The “Dream Production” project receives federal funding CO2 as FeedstockPage 37 • Bayer Investor Presentation • Meet Management • March 2012