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Meet Management 2013 Investor Handout

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Meet Management 2013 Investor Day on March 19, 2013 in Leverkusen …

Meet Management 2013 Investor Day on March 19, 2013 in Leverkusen
Investor Handout

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  • 1. Meet Management 2013Leverkusen, March 19, 2013Investor Handout
  • 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 2013
  • 3. Our Mission –Innovation and Customer Value Science For A Better Life Science / Innovation Better Life  Bayer is an innovation company  Bayer products improve the quality of people’s lives  With a strong “innovation portfolio”  Bayer has an excellent understanding  Addressing new growth areas of human, animal and plant health,  Capable of identifying and using as well as of high-quality materials breakthrough innovations  Respect for people and nature  Bayer is innovative in many ways: is an essential part of our values Products, technologies, processes, business models, strategiesPage 1 • Bayer Investor Presentation • Meet Management • March 2013
  • 4. Our Business Portfolio –Leading in Its Markets €18.6bn HealthCare Pharmaceuticals €10.8bn, leading positions in core indications 22% Consumer Health €7.8bn, OTC pharmaceuticals, blood glucose meters, contrast media and veterinary 48% medicines, global #2-5 30% €8.4bn CropScience Chemical crop protection & biologicals, global #2, seeds & traits €11.5bn MaterialScience Sales 2012: €39.8bn Polyurethanes and polycarbonates, global #1/2 Break-down excluding reconciliationPage 2 • Bayer Investor Presentation • Meet Management • March 2013
  • 5. We are Generating the Vast Majority of ourBusiness in the Life SciencesBreakdown excluding Reconciliation Sales 2012 Adj. EBITDA 2012*Material Human MaterialScience Health Science 45% Life Sciences 30% 85% 15% 3% 22% Animal Health Plant Health *EBITDA before special itemsPage 3 • Bayer Investor Presentation • Meet Management • March 2013
  • 6. Full Year 2012: SignificantStrategic and OperationalProgressPage 4 • Bayer Investor Presentation • Meet Management • March 2013
  • 7. Full Year 2012 –Very Good Year, Operational Targets AchievedSales EBIT EBITDA Core EPSin € million before special items% currency & portfolio adj. in € million in € million in € 39,760 8,284 36,528 7,613 5,35 4,83 4,149 3,960 FY’11 FY’12 FY’11 FY’12 FY’11 FY’12 FY’11 FY’12 +5% -5% +9% +11% Page 5 • Bayer Investor Presentation • Meet Management • March 2013
  • 8. Full Year 2012 –All Subgroups With Higher Sales and EarningsSales & adj. EBITDA (=before special items) in € million, sales ∆% y-o-y Fx and portfolio adjusted Sales Adj. EBITDA 18,612 5,068HealthCare +4% +8% 10,803 3,203Pharma +4% +8%Consumer 7,809 1,865Health +4% +8% 8,383 2,008CropScience +12% +21% 11,503 1,251MaterialScience +3% +7%Page 6 • Bayer Investor Presentation • Meet Management • March 2013
  • 9. Full Year 2012 –Continued Strong Emerging Markets GrowthIn € million, ∆% yoy Fx adjusted 2012 Group Sales Highlights Emerging EconomiesDeveloped Emerging  +12% driven mainly by ourEconomies Economies¹ BRIC LifeScience businesses +3% +7%  +13% with HealthCare +23% and CropScience +20% 63% 37%  +16% driven by CropScience, but also MaterialScience strong  +19% with both Consumer Health and MaterialScience +25%  +8% driven by CropScience Group €39,760m; +5% and MaterialScience ¹ Emerging economies include: Latin America, Asia w/o Japan, Australia,Page 7 • Bayer Investor Presentation • Meet Management • March 2013 New Zealand, Africa and Middle East incl. Turkey, Eastern Europe
  • 10. Workforce in the Emerging MarketsConsistently IncreasedBreakdown FTE figures in 1,000 as of Dec 31 31.2 35.1 36.5 39.8 111.0 111.4 111.8 110.5  Net reduction in total workforce by ~500 during last 4 years  Net increase of workforce in 65% 64% 63% 62% Emerging Countries (~3,200), especially in Emerging Asia  Concurrent workforce decline in Western Europe and North America 35% 36% 37% 38% Initiated shift of workforce in line with business to Emerging Markets 2009 2010 2011 2012 Emerging Economies Developed Economies Sales in €bnPage 8 • Bayer Investor Presentation • Meet Management • March 2013
  • 11. Full Year 2012 – Important Progress on KeyPharma Pipeline Assets 2012 sales of €322m above target following further launches and indication expansions Encouraging early feedback from first launches Positive feedback from commercial launch in the US, received US approval for GIST in Feb. 2013Radium-223 Submitted for treating bone metastases in patients withdichloride CRPC (Dec. 2012) Demonstrated efficacy in PAH and CTEPH in pivotal phase III trials, submitted (Feb. 2013) Combined peak sales potential of >€5.5bn CRPC: Castration resistant prostate cancer; PAH: Pulmonary arterial hypertension,Page 9 • Bayer Investor Presentation • Meet Management • March 2013 CTEPH: Chronic thromboembolic pulmonary hypertension; GIST: Gastrointestinal cancer
  • 12. Innovations at CropScienceFungicides Seeds Cereals Numerous new vegetable varieties Corn and soybeans Fruits & vegetables New canola varieties with improved agronomic traits Herbicides Perennial crops New soybean varieties IVM and turf segment Conventional oilseed rapeSeedGrowth for Europe Protects against nematodes New cotton varieties Proprietary glyphosate Protects against fungus tolerance Rhizoctonia IVM: Integrated vegetation managementPage 10 • Bayer Investor Presentation • Meet Management • March 2013
  • 13. Full Year 2012 –Dividend Proposal 2007-2012* Dividend Policy 6  Target is to pay out 30 to 40% of 5 core EPS  Successive history of dividend 4 payment for 60 years 3  Proposed dividend of €1.90 for 2012 up 15% vs. prev. year 1.90# 2 1.50 1.65  Proposal corresponds to a payout 1.35 1.40 1.40 of 2012 core EPS of 36% or 1 €1,571m 0 2007 2008 2009 2010 2011 2012 EPS (IFRS) Core EPS Dividend per share *in Euro per sharePage 11 • Bayer Investor Presentation • Meet Management • March 2013 #proposed dividend
  • 14. Priorities, Targets, AspirationsPage 12 • Bayer Investor Presentation • Meet Management • March 2013
  • 15. Full Year 2013 Outlook Projects FurtherGrowth And Higher EarningsSales ∆ Fx and portfolio adjusted, EBITDA before special items 2012 ∆ vs. 2011 2013E +4-5% to Sales €39.8bn +5% ~€41bn* mid-single-digit % adj. EBITDA €8.3bn +9% increase high-single-digit % Core EPS €5.35 +11% increase *Assuming Fx rate of $1.29 per €Page 13 • Bayer Investor Presentation • Meet Management • March 2013 Outlook depends on specific planning assumptions as detailed in the Annual Report
  • 16. Full Year 2013 –R&D And CapEx Budgets R&D 2013e: ~€3.2bn (+7%) CapEx (PPE) 2013e: ~€1.9bn (+24%) HealthCare MaterialScience HealthCare MaterialScience ~€2.1n ~€0.2bn ~€0.6bn ~€0.6bn thereof Pharma 7% ~€1.7bn CropScience 28% ~€0.8bn 32% 26% 65% 14% 2% Reconciliation 25% ~€0.1bn Reconciliation CropScience ~€0.3bn ~€0.5bnPage 14 • Bayer Investor Presentation • Meet Management • March 2013
  • 17. HealthCare –Building Growth Momentum, Improving MarginsSales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales Target Aspiration Priority 2012 2013* 2015 mid-single-digit CAGR ~6%  HealthCare: Accelerate sales growth €18.6bn % to ~€19bn towards €22bn  Pharma: Successfully commercialize new CAGR ~7% €10.8bn mid-single-digit products and realize emerging markets % to ~€11bn towards €13bn (EM) opportunity  New product sales¹ €368m ~€1bn >€2.5bn  EM growth 7.5% high-single high-single digit % digit %  Consumer Health: Aspire to become #1 mid-single-digit €7.8bn ~€9bn OTC company % to ~€8bn  HealthCare: Improve margins 27.2% slightly up towards 29%  Pharma 29.6% slightly up ≥31%  Consumer Health 23.9% at level ~25% ¹ Xarelto, Eylea, Stivarga, Radium-223 dichloride and Riociguat; subject to regulatory approvalPage 15 • Bayer Investor Presentation • Meet Management • March 2013 *Assuming Fx rate of $1.29 per € Outlook depends on specific planning assumptions as detailed in the Annual Report
  • 18. Pharma – New Products Drive Growth andRejuvenate PortfolioSales from new Pharma pipeline in €m >2,500  Global roll-out ongoing, targeting ~€600m sales in 2013 Xarelto 322 Eylea 14  Global roll-out in wAMD, first launches in CRVO Stivarga 32 expected during H2 2013  US launch ongoing, CHMP opinion expected ~1,000 1H 2013, Japan submitted July 2012 Radium-223 dichloride  Regulatory decision in the US expected for 368 2H 2013 (filed Dec. 2012) 86  Submitted for PAH and CTEPH (Feb. 2013) 2011 2012 2013e 2015e CTEPH: chronic thromboembolic pulmonary hypertension; CRVO: central retinalPage 16 • Bayer Investor Presentation • Meet Management • March 2013 vein occlusion; PAH: pulmonary arterial hypertension; wAMD: wet age-related macular degeneration
  • 19. CropScience – Above Market Growth atBenchmark ProfitabilitySales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales Target Aspiration Priority 2012 2013* 2015 high-single CAGR ~6% +12.4%  Above-market sales growth digit % towards to €8.4bn towards €9bn €10bn  Translate R&D effectively into new €1.1bn ~€1.4bn ~€1.9bn product sales (CP products launched since 2006) double-digit % double-digit %  Extend seeds footprint +14% growth growth p.a. slight  Maintain industry leading profitability level 24.0% ~24% improvement CP: Crop ProtectionPage 17 • Bayer Investor Presentation • Meet Management • March 2013 *Assuming Fx rate of $1.29 per € Outlook depends on specific planning assumptions as detailed in the Annual Report
  • 20. CropScience – Translate R&D Effectivelyinto New Product SalesSales from new Crop Protectionproducts launched since 2006 in €bn ~1.9 2012 Highlights∆% y-o-y, () Fx adj.  Xpro (+61%) - New cereal fungicide with yield-boosting effect ~1.4  Adengo herbicide family (+85%) - Excellent weed control in corn and cereals, 1.1 also in case of glyphosate resistance +60%  Belt (+54%) - Broad-spectrum insecticide 0.7 with fast and long-lasting action  Launch of Luna fungicide in the US 0.3  First launch of new SeedGrowth family EverGol/Emesto in Canada 0.02 2007 2009 2011 2012 2013e 2015ePage 18 • Bayer Investor Presentation • Meet Management • March 2013
  • 21. MaterialScience – Higher Asset Utilization &Efficiency Measures Are Driving PerformanceSales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales  Grow business (volume) above global GDP  Defend market leading positions in PCS and PUR  Sales to slightly increase  Realize 150 bp margin to ~€12bn contribution through new  Sales +3.0% to €11.5bn  Adj. EBITDA to further efficiency initiative (volumes +2%)  Optimize asset structure improve  Adj. EBITDA +7% to  Q1‘2013 vs Q4‘2012: in Germany €1,251m Sales to further increase  CFROI# > WACC  CFROI# 5.6% < WACC and adj. EBITDA at same 7.1% level 2012 Target 2013 Aspiration 2015 *Assuming Fx rate of $1.29 per €Page 19 • Bayer Investor Presentation • Meet Management • March 2013 #after reproduction Outlook depends on specific planning assumptions as detailed in the Annual Report
  • 22. AppendixPage 20 • Bayer Investor Presentation • Meet Management • March 2013
  • 23. Q4 2012 –Cash Flow and Net Debt DevelopmentCash Flow in € million, Net Debt in € billion Q4’12 Cash Flow Net Debt Development GCF NCF Invest- oFCF +€223m 7.0 cont. ments 6.8 755 903 743 160 ∆% y-o-y -25 -22 +2 -63 Q3´12 Q4´12 Net debt increase of €1bn due to pension funding, partly offset by positive cash generationPage 21 • Bayer Investor Presentation • Meet Management • March 2013
  • 24. Q4 2012 –HealthCareIn € million, ∆% yoy, () = Fx & portf. adjusted Q4’12 Sales Earnings Consumer Adj. Adj. 36% Pharma Health EBITDA* EBIT* +7% (+5%) +7% (+5%) 2,056 2,867 1,342 +14% 1,180 1,001 +23% 827 +9% 815 758 594 +19% 498 515 +22% HealthCare €4,923m; +7% (+5%) 422 407 +28% 317 Price Volume Fx Portfolio 0% +5% +2% 0% Q4‘11 Q4‘12 Q4‘11 Q4‘12 *before special itemsPage 22 • Bayer Investor Presentation • Meet Management • March 2013
  • 25. Q4 2012 –CropScienceIn € million, ∆% yoy, () = Fx & portf. adjusted Q4’12 Sales Earnings Environmental Crop Protection Adj. Adj. Science +12% (+11%) EBITDA* EBIT* +18% (+16%) 174 1,540 142 289 +6% 273 162 +12% 145 Seeds -10% (-11%) CropScience €1,856m; +11% (+9%) Price Volume Fx Portfolio 0% +9% +2% 0% Q4‘11 Q4‘12 Q4‘11 Q4‘12 *before special itemsPage 23 • Bayer Investor Presentation • Meet Management • March 2013
  • 26. Q4 2012 –MaterialScienceIn € million, ∆% yoy, () = Fx & portf. adjusted Q4’12 Sales Earnings Polycarbonates Polyurethanes Adj. Adj. 0% (-3%) +11% (+9%) EBITDA* EBIT* 1,473 255 +141% 669 CAS** +3% (+5%) 451 106 93 +294% IO*** 168 0% (-1%) MaterialScience €2,761m; +6% (+5%) Q4‘11 Price Volume Fx Portfolio Q4‘11 Q4‘12 Q4‘12 +2% +3% +2% -1% -48 *before special itemsPage 24 • Bayer Investor Presentation • Meet Management • March 2013 **CAS: Coatings, Adhesives, Specialties *** IO: Industrial Operations
  • 27. Q4 2012 –Regional PerformanceIn € million, ∆% yoy Fx adjusted Q4’12 Group Sales by Region Emerging Economies +14% Emerging +7% USA ~1,560 Economies¹ +5% ~1,420 +9% 20% 40% +12% 30% Western ~520 -1% 10% Others² Europe +2% ~460 +1% Group €9,862m; +5% Emerging Latin Eastern Africa & 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 EuropePage 25 • Bayer Investor Presentation • Meet Management • March 2013 ² Others = Japan, Australia, New Zealand, Canada ³ Emerging Asia = Asia w/o Japan, Australia, New Zealand
  • 28. Full Year 2012 –Cash Flow and Net Debt DevelopmentCash Flow in € million, Net Debt in € billion 2012 Cash Flow Net Debt Development GCF NCF Invest- oFCF 7.0 +€15m 7.0 cont. ments 4,599 4,532 1,929 2,603 ∆% y-o-y -11 -10 +19 -24 FY´11 FY´12 Net debt constant, despite €1bn pension funding in Q4’2012Page 26 • Bayer Investor Presentation • Meet Management • March 2013
  • 29. Full Year 2012 –HealthCareIn € million, ∆% yoy, () = Fx & portf. adjusted 2012 Sales Earnings Consumer Adj. Adj. 36% Pharma Health EBITDA* EBIT* +9% (+4%) +8% (+4%) 7,809 10,803 5,068 +8% 4,702 3,736 +11% 3,203 +8% 3,367 2,972 2,298 +13% 2,042 1,865 +8% HealthCare €18,612m; +8% (+4%) 1,730 1,438 +9% 1,325 Price Volume Fx Portfolio 0% +4% +4% 0% FY‘11 FY‘12 FY‘11 FY‘12 *before special itemsPage 27 • Bayer Investor Presentation • Meet Management • March 2013
  • 30. Full Year 2012 –CropScienceIn € million, ∆% yoy, () = Fx & portf. adjusted 2012 Sales Earnings Environmental Crop Protection Adj. Adj. Science +16% (+13%) EBITDA* EBIT* +9% (+5%) 680 6,741 962 2,008 +21% 1,654 1,526 +31% Seeds 1,168+17% (+14%) CropScience €8,383m; +16% (+12%) Price Volume Fx Portfolio +1% +12% +4% -1% FY‘11 FY‘12 FY‘11 FY‘12 *before special itemsPage 28 • Bayer Investor Presentation • Meet Management • March 2013
  • 31. Full Year 2012 –MaterialScienceIn € million, ∆% yoy, () = Fx & portf. adjusted 2012 Sales Earnings Polycarbonates Polyurethanes Adj. Adj. -2% (-7%) +12% (+8%) EBITDA* EBIT* 5,995 2,823 1,251 +7% 1,171 CAS** 629 +7% +3% (+4%) 1,972 589 IO*** 713 +8% (+6%) MaterialScience €11,503m; +6% (+3%) Price Volume Fx Portfolio FY‘11 FY‘12 FY‘11 FY‘12 +1% +2% +4% -1% *before special itemsPage 29 • Bayer Investor Presentation • Meet Management • March 2013 **CAS: Coatings, Adhesives, Specialties *** IO: Industrial Operations
  • 32. Full Year 2012 –Regional PerformanceIn € million, ∆% yoy Fx adjusted 2012 Group Sales by Region Emerging Economies +5% USA Emerging +9% Economies¹ ~5,700 +7% +12% 21% ~4,900 37% +10% ~2,400 0% 31% ~1,800 11% Western Europe Others² 0% +4% Emerging Latin Eastern Africa & Group €39,760m; +5% 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 EuropePage 30 • Bayer Investor Presentation • Meet Management • March 2013 ² Others = Japan, Australia, New Zealand, Canada ³ Emerging Asia = Asia w/o Japan, Australia, New Zealand
  • 33. Bayer HealthCareInvestor Handout – Meet ManagementMarch 2013 – Leverkusen
  • 34. Leading Positions in Key HealthcareMarkets Sales Split by Segment 2012 Pharma €10,803m  Leading positions in key therapeutic categories 25% Consumer Care 21% €3,853m  Global #2 in OTC-pharmaceuticals 58% Medical Care 14% €2,653m  #1 in fluid injection systems, #1 in contrast media, 7% #4 in blood glucose meters Animal Health €1,303m HealthCare €18,612m  Global #5, #2 in parasiticidesPage 32 • Bayer Investor Presentation • Meet Management • March 2013
  • 35. Full Year 2012 –Growth in All SegmentsIn € million, ∆% yoy, () = Fx & portf. adjusted 2012 Sales Earnings Consumer Adj. Adj. 36% Pharma Health EBITDA* EBIT* +9% (+4%) +8% (+4%) 7,809 10,803 5,068 +8% 4,702 3,736 +11% 3,203 +8% 3,367 2,972 2,298 +13% 2,042 1,865 +8% HealthCare €18,612m; +8% (+4%) 1,730 1,438 +9% 1,325 Price Volume Fx Portfolio 0% +4% +4% 0% 2011 2012 2011 2012 *before special itemsPage 33 • Bayer Investor Presentation • Meet Management • March 2013
  • 36. Full Year 2012 – Strong BusinessMomentum in Emerging MarketsSales in € million; ∆% y-o-y Fx adjusted 2012 HealthCare Sales Emerging Economies USA Emerging +6% +12% +8% Economies¹ 25% +8% 24% 33% ~2,100 ~2,100 +9% +1% 29% 14% ~1,100 ~900 Western Others² Europe -1% +1% Emerging Latin Eastern Africa & HealthCare €18,612m 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 34 • Bayer Investor Presentation • Meet Management • March 2013
  • 37. Bayer is One of The Leading InternationalHealthCare Companies in ChinaSales in € million; ∆% y-o-y Fx adjusted HealthCare 2012  Driven by Pharmaceuticals (+21% Fx-adj) ~€1.5bn +21% y-o-y (Fx-adj.)  ~1,500 sales representatives added since 2011  Improved presence in lower-tier cities in 2012: Bayer has presence in all tier 1-4 cities and in a substantial number of tier 5 cities  €100m over 5 years to set-up a globalTop products growth in 2012 R&D center in China Aspirin +39%Ultravist +29%  Beijing manufacturing site expansion +26% (~€45m through 2015) AdalatNexavar +17%  Partnership with Tsinghua UniversityAvelox Avelox +17% (joint drug discovery, student support)Glucobay +12%Page 35 • Bayer Investor Presentation • Meet Management • March 2013
  • 38. Full Year 2012 – Outstanding Clinical andRegulatory Progress Launch in SPAF  Positive phase III-data in PAH and CTEPH Positive phase III-data in EINSTEIN PE  Filed for PAH and CTEPH in Feb‘13 Approval/launch in PE/DVT-treatment (US) Approval/launch in PE-treatment (EU) Radium-223 dichloride  US and EU filings in mCRPC First launches in wAMD Women‘s Healthcare Filings for CRVO  Flexyess: successful conclusion of EU registration  Phase III-data for LNG-IUS12 and LNG-IUS16  Jaydess: successful conclusion of EU registration US-launch in mCRC (2012) and mGIST (Feb. 2013) Hemophilia Positive phase III-data in mCRC  Initiation of phase III for longer-acting rFVIII Positive phase III-data in GIST (BAY 94-9027) and phase II/III for rFVIIa Filings in GIST and mCRC (BAY86-6150) SPAF: stroke prevention in atrial fibrillation; PE: pulmonary embolism; DVT: deep vein thrombosis; wAMD: wet age related macula degeneration; CRVO: central retinal vein occlusion; mCRC: metastatic colorectal cancer: GIST:Page 36 • Bayer Investor Presentation • Meet Management • March 2013 gastrointestinal stromal rumors; PAH: pulmonary arterial hypertension; CTEPH: chronic thromboembolic pulmonary hypertension;mCRPC: metastatic castration resitant prostate cancer
  • 39. Top 10 Pharma Product Performancein 2012FY 2012 sales in € million (∆% yoy Fx-adj.) Betaseron Multiple Sclerosis 1,216 +4% Kogenate Hemophilia A 1,182 +5% YAZ-family Contraception 1,045 -5% 792 +4% Nexavar Cancer Mirena Contraception 677 +9% Adalat Hypertension -2% 670 Antiinfective 486 -5% Avelox Aspirin C. MI prevention 476 +12% Glucobay Diabetes 408 +4% Xarelto Anticoagulation 322 +266% MI: Myocardial infarctionPage 37 • Bayer Investor Presentation • Meet Management • March 2013
  • 40. Consumer Health –Best-Selling Products in 2012 FY 2012 sales in € million (∆% yoy Fx-adj.) 722 +9% 495 +11% 494* +1% 324 -1% 323 +5% 269 +14% 250 +8% 209 +27% 196 +4% 174 -12% * Only Aspirin CC sales, excluding Rx Aspirin CardioPage 38 • Bayer Investor Presentation • Meet Management • March 2013
  • 41. Building Growth Momentum –Improving MarginsPage 39 • Bayer Investor Presentation • Meet Management • March 2013
  • 42. HealthCare –Building Growth Momentum, Improving MarginsSales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales Target Aspiration Priority 2012 2013* 2015 mid-single-digit CAGR ~6%  HealthCare: Accelerate sales growth €18.6bn % to ~€19bn towards €22bn  Pharma: Successfully commercialize new CAGR ~7% €10.8bn mid-single-digit products and realize emerging markets % to ~€11bn towards €13bn (EM) opportunity  New product sales¹ €368m ~€1bn >€2.5bn  EM growth 7.5% high-single high-single digit % digit %  Consumer Health: Aspire to become #1 mid-single-digit €7.8bn ~€9bn OTC company % to ~€8bn  HealthCare: Improve margins* 27.2% slightly up towards 29%  Pharma 29.6% slightly up ≥31%  Consumer Health 23.9% at level ~25% ¹ Xarelto, Eylea, Stivarga, Radium-223-Dichloride and Riociguat; subject to regulatory approvalPage 40 • Bayer Investor Presentation • Meet Management • March 2013 *Assuming Fx rate of $1.29 per € Outlook depends on specific planning assumptions as detailed in the Annual Report
  • 43. The Leader in Women’s HealthCareSales ∆% y-o-y, () Fx adj. Yaz family Women’s Healthcare 2012 -2 (-5) Mirena +17 (+9) Diane +7 (+5) Microgynon 0 (-1) Valette -31 (-31) €3,154m Meliane -8 (-8) +5% (+2%) Angeliq +6 (+4) Qlaira +37 (+35) Other products +13 (+10)Page 41 • Bayer Investor Presentation • Meet Management • March 2013
  • 44. Mirena – The Leading Hormonal Long-Acting ContraceptiveSales in € million; ∆% Fx adj.  Intrauterine device, containing 677 levonorgestrel, for reversible long-term +9% contraception 581  Life-cycle opportunities: 539 490 292  Small low-dose long-acting (up to 3 years) device: 268 254  Jaydess: successful conclusion 218 of EU registration  Skyla: US-launch in Feb. 2013  Phase III for a long-acting (up to 5 385 years), low-dose, small contraception 285 313 272 device underway  2013 sales target: high-single to low- double-digit % increase 2009 2010 2011 2012 US Rest of the worldPage 42 • Bayer Investor Presentation • Meet Management • March 2013
  • 45. Hemophilia Franchise –Stable GrowthSales in € million; ∆% Fx adj.  Global # 2 in hemophilia A treatment +5% 1,182  Competitive development program in 1,075 hemophilia underway: 1,004  Phase III with long-acting Factor 888 VIII (BAY 94-9027) 850 785  Phase III with product from 705 plasma-free process (BAY 81- 638 8973)  Phase II/III with modified recombinant Factor VIIa (BAY 86- 332 6150) 250 299 290  2013 sales target: low-single-digit % increase 2009 2010 2011 2012 US Rest of the worldPage 43 • Bayer Investor Presentation • Meet Management • March 2013
  • 46. Betaseron – Long-term Experience inMultiple Sclerosis TreatmentSales in € million; ∆% Fx adj.  First interferon launched in multiple sclerosis, introduced in 1993 1,214 1,206 +4% 1,216  Wealth of clinical experience 1,117  Demonstrating excellent efficacy and tolerability 638 735 733 670  21-year long-term follow-up study demonstrated significant survival advantage with Betaseron treatment  2013 sales target: high-single-digit % 578 decline 479 473 447 2009 2010 2011 2012 US Rest of the worldPage 44 • Bayer Investor Presentation • Meet Management • March 2013
  • 47. Nexavar –Our Cornerstone in OncologySales in € million; ∆% Fx adj.  Approved for kidney cancer (RCC) +4% 792 and for liver cancer (HCC) 705 725  Only approved drug with overall survival benefit in HCC 604  Positive phase III data in radioactive iodine refractory differentiated thyroid 588 531 551 cancer (DECISION-trial) 450  Phase III trials in:  Breast cancer  RCC (adjuvant)  HCC (adjuvant) 154 174 174 204  2013 sales target: mid-single-digit % increase 2009 2010 2011 2012 US Rest of the worldPage 45 • Bayer Investor Presentation • Meet Management • March 2013
  • 48. Nexavar –Design of the DECISION Phase III Study Locally Advanced, Sorafenib 400 mg bid Metastatic Primary RAI-Refractory randomisation endpoint: Differentiated PFS Thyroid Cancer Placebo Primary endpoint: Progression-free survival (PFS) Secondary endpoints (selection): Overall survival, time to progression, response rate, disease control rate Total number of patients enrolled: 419● Study met primary endpoint ● Data to be presented at an upcoming scientific meeting ● Submission planned for 2013 RAI: radioactive iodinePage 46 • Bayer Investor Presentation • Meet Management • March 2013 bid: twice a day
  • 49. Aspirin –More Than A Century of GrowthSales in € million; ∆% Fx adj.  One of the world’s most recognized brands +6% 970  Available as OTC and Rx Aspirin 875 776  Bayer’s #1 product in Emerging 715 476 Markets 404  Aspirin grew 17% in 2012 in the 358 315 Emerging Markets  Aspirin grew 39% in 2012 in China 471 494 400 418 2009 2010 2011 2012 Rx-Aspirin OTC-AspirinPage 47 • Bayer Investor Presentation • Meet Management • March 2013
  • 50. New Products Drive Growthand Rejuvenate PortfolioPage 48 • Bayer Investor Presentation • Meet Management • March 2013
  • 51. New Product Pipeline Strength Combined* Peak Sales Potential >€5.5bn VEGF Trap- Radium-223 Rivaroxaban Regorafenib Riociguat Eye dichloride Radium-223 dichloride 2011 2012 2012 2013e 2014e First launches in first / main indication* *Combined peak sales potential for Xarelto, Stivarga, Eylea, Radium-223 dichloridePage 49 • Bayer Investor Presentation • Meet Management • March 2013 and Riociguat assuming approvals and launches planned
  • 52. Xarelto – Strong Launch ExecutionPage 50 • Bayer Investor Presentation • Meet Management • March 2013
  • 53. Xarelto –Effective Anticoagulation For More Patients1) Clinical  Breadth of indications: met or exceeded primary efficacy endpoint in 11/11 phase III studies  Phase III trial initiated for the secondary prevention of myocardial infarction and death in patients with coronary or peripheral artery disease2) Regulatory  Filed for secondary prevention of ACS in Europe and US (Complete Response Letter March 2013)3) Marketing  VTE prevention following total knee/hip replacement surgery  Stroke prevention in patients with atrial fibrillation (SPAF)  Treatment of DVT, PE and to reduce the risk of recurrent DVT and PE Peak sales potential > €2bn SPAF: prevention of stroke and systemic embolism in patients with non-Page 51 • Bayer Investor Presentation • Meet Management • March 2013 valvular atrial fibrillation; DVT: deep vein thrombosis; VTE: venous thromboembolism; ACS: acute coronary syndrome
  • 54. The Market for Anticoagulants is Attractive Anticoagulants sales Anticoagulants estimated treatment (MAT 9/2012) days in m (MAT 9/2012) Other Post ACS/MI DTI VTE 10% treatment ~360 15% ~200UFH 62% 6% LMWH Other primary ~420 ~$10.7bn prevention ~3,300mVKA 7% ~100 ~2,200 VTE prevention after orthopedic Stroke surgery prevention LMWHs: low molecular weight heparins in AF UFH: unfractionated heparins AF: atrial fibrillation VKA: vitamin K antagonists VTE: venous thromboembolism DTI: direct thrombin inhibitors (incl. dabigatran) ACS: acute coronary syndrome Other antithrombotics (incl. Xarelto®) MI: myocardial infarction Source: IMS MIDAS, GERS, FARMINFORM for sales Page 52 • Bayer Investor Presentation • Meet Management • March 2013 Bayer estimates for patient treatment days in main markets
  • 55. Xarelto –Strong Launch ExecutionSales in € million; ∆% Fx adj. 131  Exceeded 2012 sales target  Sales 2012: €322m  Sales advanced strongly in all regions following further product launches and 81 109 indication expansions 68  Most successfull launch ever in the 272 German cardiovascular market 42 67 57  Sales target 2013: ~€0.6bn 31 34 23 22 8 8 11 14Q411 Q112 Q212 Q312 Q412 US* Rest of the world *Bayer reporting, not reflecting in-market salesPage 53 • Bayer Investor Presentation • Meet Management • March 2013
  • 56. Xarelto –Development in Key MarketsStatus as of mid Feb 2013MarketMarket Performance Performance Market Share (IMS) Market Share (IMS) Germany: most successful launch ever in the Market share1 ~30% vs. dabigatran cardiovascular market ~10% Japan: 2 week prescription limitation to be lifted in April Market share2 ~9% 2013 Brazil: patient and prescriber base continously growing; Market share3 ~34% now leader in the anticoagulant market UK: generally low acceptance for novel oral Market share 2~4% vs. dabigatran anticoagulants ~4% France: now level with dabigatran Market share1 ~13%, dabigatran ~13% US4: steady uptake with consistent positive indicators ~30% new to brand prescription especially in cardiology, expanding access share5 Source: IMS; 1 sales market share anticoagulants (AC) ex manufacturer prices,Page 54 • Bayer Investor Presentation • Meet Management • March 2013 retail; 2 anticoagulants retail and hospitals, 3 sales market share AC , retail; 4:marketed by J&J; 5: oral anticoagulant market
  • 57. Eylea – Launch UnderwayPage 55 • Bayer Investor Presentation • Meet Management • March 2013
  • 58. Eylea –Major Progress Achieved 1) Clinical  Positive phase III data in wet AMD and CRVO reported  Phase III in DME and mCNV ongoing  First phase III data in mCNV expected 1H 2013  First phase III data in DME expected 2H 2013 2) Regulatory  Filed for CRVO in EU/J 3) Marketing  Bayer has marketing rights ex-US1, launched in first markets in wet AMD end 2012 (sales 2012: €14m)  Further roll out in wet AMD planned in Europe, Latin America & Asia in 2013  First launches in CRVO planned for 2H 2013 1: Regeneron has US marketing rights; AMD: age-related macular degeneration;Page 56 • Bayer Investor Presentation • Meet Management • March 2013 CRVO: central retinal vein occlusion; mCNV: myopic choroidal neovascularization
  • 59. Retina Treatment is The Fastest GrowingArea Within Ophthalmology Global Ophthalmology Market in $bn CAGR 2010-2022e in % 35.6 5 2.8 2.7 3 14.8 14 16.0 Other 1.7 1.5 Dry eye 2.0 3 Retinal disorders 2.4 3.0 6.3 Anti-allergy / infec- 4.3 tive/ inflammatory 4.1 9.0 5 Glaucoma 5.2 5.0 2010 2022e Source: Visiongain report, “Ophthalmic Drugs: World Market Prospects ”Page 57 • Bayer Investor Presentation • Meet Management • March 2013
  • 60. Eylea – Developed for the Treatment ofVarious Back of the Eye Diseases Wet age-related macular degeneration (wet AMD)  One of the leading cause of severe vision loss  Globally an estimated 12 million patients in the 50+ age group Diabetic macular edema (DME)  The most frequent cause of blindness in young and mid-aged adults  Globally. the treatable patient population for DME is estimated ~6.2 million Central retinal vein occlusion (CRVO)  90% occur in patients aged ~50, it can affect all ages  A common retinal vascular disorder affecting ~2.5 million people globally Myopic choroidal neovascularization (myopic CNV)  High prevalence in Asian population  In Japan and China treatable population of mCNV is approx. 2 million, with approx. 0.2 million new cases/year Peak sales potential ≥ €1bn Eylea has been in-licensed from Regeneron; Bayer has exclusive marketing rights ex-USPage 58 • Bayer Investor Presentation • Meet Management • March 2013 patient numbers are Bayer estimates
  • 61. Stivarga – Encouraging StartPage 59 • Bayer Investor Presentation • Meet Management • March 2013
  • 62. Stivarga (Regorafenib) – Three DimensionalMode of Action 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 60 • Bayer Investor Presentation • Meet Management • March 2013 immunoglobulin-like and EGF-like domains ; PDGFR: platelet derived growth factor receptor; FGFR: fibroblast growth factor receptor;
  • 63. Stivarga –Major Milestones Achieved 1) Clinical  Positive phase III data in mCRC and mGIST  Phase III in 2nd line HCC initiated (RESORCE)  Colorectal cancer (adjuvant therapy) expected to start 2H 2013 2) Regulatory  Filed for mCRC in EU & Japan (priority review)  Regulatory decision in Europe expected 1H 2013  Filed for mGIST in Japan (priority review)  Filing for mGIST in Europe H1 2013e 3) Marketing  Launched in mCRC (Sep 2012) / mGIST (Feb 2013) in the US  Sales of €32m in 2012, peak sales potential ≥ €1bn mCRC: metastatic colorectal cancer; mGIST: metastatic gastrointestinalPage 61 • Bayer Investor Presentation • Meet Management • March 2013 stromal tumors; HCC: hepatocellular carcinoma
  • 64. Regorafenib Phase III in 2nd Line HCC(RESORCE) – Study Design Regorafenib 160 mg od Advanced 3 wks on /1 wk off HCC Primary 2:1 endpoint: after failure of randomisation sorafenib OS Placebo Primary endpoint Overall survival (OS) Time to progression; progression-free Secondary endpoints (selection): survival; objective tumor response; disease control Time frame (months): ~33 Number of patients to be enrolled: 530 HCC: hepatocellular carcinoma (liver cancer)Page 62 • Bayer Investor Presentation • Meet Management • March 2013 od: once a day
  • 65. Radium-223 dichloride – First-in-Class Alpha- PharmaceuticalPage 63 • Bayer Investor Presentation • Meet Management • March 2013
  • 66. Radium-223 dichloride – AddressingSignificant Unmet Need First-in-class alpha-pharmaceutical (Radium-223 dichloride) Radium is a natural bone seeker, selectively targeting bone metastases with high-energy, short-range alpha-particles Bone metastases occur at high incidences in certain late-stage cancers, for example prostate cancer Inlicensed from Algeta Tumor cells Newly formed bone Bone metastases Radium-223 deposition highly localized tumor cell killing Peak sales potential ≥ €1bn CRPC: castration-resistant prostate cancerPage 64 • Bayer Investor Presentation • Meet Management • March 2013
  • 67. Radium-223 dichloride –Regulatory Progress Achieved 1) Clinical  Phase III (ALSYMPCA) in symptomatic castration-resistant prostate cancer (CRPC) patients with bone metastases stopped early – Radium-223 dichloride demonstrated 44% improvement in overall survival  Broader clinical development program planned: studies in earlier settings of prostate cancer, including combination studies and studies in other tumors (such as breast cancer and osteosarcoma) 2) Regulatory  Submitted for treating bone metastases in patients with CRPC in Europe and the US in Dec 2012 (priority review granted by the FDA) 3) Marketing  Launch preparations underwayPage 65 • Bayer Investor Presentation • Meet Management • March 2013
  • 68. Treatments for CRPC Patients with BoneMetastases Needed  ~900,000 men diagnosed and ~260,000 died from prostate cancer p. a. worldwide1  CRPC is a form of advanced prostate cancer in which the tumor grows despite castrate levels of testosterone  Up to 90% of CRPC patients have radiological evidence of bone metastases  Bone metastases are the main cause of disability and death in patients with CRPC  No survival benefit from current bone-targeted agents Bone metastasis occurs in almost all prostate cancer patients during the natural course of their disease and typically targets the lumbar spine, vertebrae and pelvis2 1 World Health Organization. GLOBOCAN 2008Page 66 • Bayer Investor Presentation • Meet Management • March 2013 2 Bubendorf L, et al. Hum Pathol. 2000;31(5):578-83 CRPC: castration-resistant prostate cancer
  • 69. Riociguat – Adressing Unmet Medical NeedPage 67 • Bayer Investor Presentation • Meet Management • March 2013
  • 70. Riociguat – A New Mode of Action Pulmonary hypertension (PH) is Riociguat associated with endothelial dysfunction, impaired synthesis of Nitric Oxide (NO) nitric oxide (NO) and insufficient stimulation of the NO-sGC-cGMP pathway sGC Riociguat targets sGC to increase production of cGMP  Stimulates native form of sGC directly (independently of NO)  Activity unaffected by depleted cGMP↑ NO levels  Makes sGC more sensitive to the body‘s own residual / existing NO Vasodilatation sGC: Soluble guanylate cyclase; cGMP: cyclicPage 68 • Bayer Investor Presentation • Meet Management • March 2013 guanosine monophosphate
  • 71. Forms and Epidemiology of PulmonaryHypertension Pulmonary hypertension (PH) encompasses multiple disease subtypes but approved treatments are only indicated for pulmonary arterial hypertension (PAH) ~700,000 patients diagnosed1 with diseases related to / including PH with ~300,000 patients thereof being potentially eligible for PH treatment ~30,000 PAH ~20,000 CTEPH ~410,0002 PH owing to lung disease ~240,000 PH-LVD 1Diagnosesestimated in 2009 in US, EU5, J; 2Thereof ~ <20% could be treated for PHPage 69 • Bayer Investor Presentation • Meet Management • March 2013 CTEPH: Chronic thromboembolic pulmonary hypertension LVD: left ventricular disease
  • 72. Riociguat – Demonstrated Efficacy in PAHand CTEPH Phase III trials in two forms of pulmonary hypertension, PAH & CTEPH, reported at CHEST in October 2012 Both trials met the primary efficacy endpoint (6MWDT)  PATENT-1: +36m from baseline after 12 weeks compared with placebo (p<0.0001) in patients with PAH  CHEST-1: +46m from baseline after 16 weeks compared with placebo (p<0.0001) in patients with CTEPH  Significant improvement observed in relevant secondary endpoints First interim analysis of CHEST-2 showed further increase in 6MWD to 63 meters in former Riociguat patients and 35 meters in former placebo patients compared with CHEST-1 baseline. Filed in PAH and CTEPH in US and EU (Feb 2013) Peak sales potential > €500m 6MWDT: 6 Minutes walking distance test , CTEPH: chronic thromboembolic pulmonary hypertension,Page 70 • Bayer Investor Presentation • Meet Management • March 2013 PAH: pulmonary arterial hypertension, sGC soluble guanylate cyclase
  • 73. Additional PromisingPipeline ProjectsPage 71 • Bayer Investor Presentation • Meet Management • March 2013
  • 74. Development Pipeline Phase I (11) Phase II (8) Phase III (14) Cancer Heart Failure CHF Submental fat removal Additional Indications Thyroid Cancer BAY 1000394 BAY 1067197 BAY 94-8862 Sodium Deoxycholate Sorafenib Sorafenib (CDK-Inhibitor) (Part. Aden. A1 Agonist) (MR Antagonist) (ATX-101) Cancer Heart Failure Cancer Gram-negative Pneumonia Skin and Lung Infections Breast Cancer BAY 94-9343 BAY 86-8050 Refametinib Amikacin inhale Tedizolid Sorafenib (Mesothelin-ADC) (Vasopr. Rec. Antag.) (MEK-Inhibitor) Anemia Heart Failure Cancer Hemophilia Pulmonary Hypertension Adjuvant HCC BAY 85-3934 BAY 1021189 BAY 80-6946 BAY 94-9027 Riociguat (sGC Stimulator) Sorafenib (HIF-PH) (sGC Stimulator) (PI3K Inhibitor) (peg rFVIII) Sympt. Uterine Fibroids Hemophilia Endometriosis Cancer Adjuvant RCC BAY 1002670 BAY 86-6150* BAY 1026153 Radium-223-Dichlorid Sorafenib (S-PRAnt) (rFVIIa) Bronchiectiasis Cancer VV Atrophy Cancer Myopic CNV BAY 85-8501 BAY 1082439 Prasterone Regorafenib Aflibercept Neutroph. Elastase Inhibit. PI3K Inhibitor (Vaginorm) Cancer DME Contraception BAY 2010112 Aflibercept LCS 16 PSMA BiTE Antibody MACE prevention Lung Infection Rivaroxaban Cipro inhale New molecular entities Life cycle management Status as of February 2013 (NME) (LCM) Selection of major Pharma Pipeline Projects in clinicial Phase I to IIIPage 72 • Bayer Investor Presentation • Meet Management • March 2013 * combined Phase II/III
  • 75. Expanding the Hemophilia Franchise With aLong-Acting Recombinant Factor VIII  B-domain–deleted recombinant factor VIII (BDD-rFVIII) with site- specific PEGylation (BAY 94- 9027)  Attachment of PEG extends half- life without reducing FVIII activity  Phase I data showed  prolonged half-life vs. Kogenate FS  BAY 94-9027 was well tolerated  A combined phase II/III study started in summer 2012Page 73 • Bayer Investor Presentation • Meet Management • March 2013
  • 76. rFVIIa (Bay 86-6150) is a Potential Moleculeto Expand Beyond Hemophilia A  Recombinant factor VIIa designed to increase circulating half-life and platelet affinity without modification of the active site  BAY 86-6150 is developed as a new treatment option for Hemophilia A and B patients with inhibitors  Phase I successfully completed  Combined Phase II/III study started 2012Page 74 • Bayer Investor Presentation • Meet Management • March 2013
  • 77. Refametinib (BAY 86-9766) – A MEK-Inhibitor in Phase II in Cancer ● Refametinib is currently in Phase II for pancreatic and liver cancer ● Ras-Raf-MEK-ERK pathway is one of the main pathways deregulated in cancer: ● Controls cellular proliferation, differentiation, apoptosis and migration ● Rationale to use in combination with other pathway inhibitors, e.g. sorafenib, PI3K-, AKT-, mTOR inhibitorsRas-Raf-MEK-ERK pathway: cascade of MAPK (Mitogen-activated protein kinases) - originally called ERK (extracellular signal-regulated kinases);AKT: is a protein kinase that plays a key role in multiple cellular processes, mTOR: mammalian target of rapamycin – a kinase; HCC: Hepatocellularcarcinoma; Puehler F. et al, Meeting of the EORTC-NCI-AACR, Poster 108. November 2010, Berlin, GermanyPage 75 • Bayer Investor Presentation • Meet Management • March 2013
  • 78. BAY 80-6946 – A PI3K-Inhibitor in Phase IIin Cancer ● BAY 80-6946 is a pan class I PI3K- inhibitor ● Currently in phase II for non-Hodkin’s lymphoma ● PI3 kinases signal downstream of most growth factor RTKs, where inhibitors do exist ● In most tumor cells, the PI3K-signaling cascade is activated and provides important tumor growth and survival signals ● Broad anti-tumor spectrum in preclinical tumors models ● Preclinical data support combination with MEK-inhibitorRTK: receptor tyrosine kinase; GPCR: G-protein coupled receptor;; PI3K:phospharidylinositol-3 kinase;Liu N et al, Annual Meeting of the American Association for Cancer Research. Poster 4476, April, 2010, Washington DCPage 76 • Bayer Investor Presentation • Meet Management • March 2013
  • 79. MR Antagonist (BAY 94-8862) – Progressingin the Clinical Program ● BAY 94-8862 is a novel non-steroidal, potent and selective next generation MR antagonist Sodium retention ● Two steroidal MR antagonists (Spironolactone and Eplerenone) are Potassium Hypertension approved for treating heart failure loss ● BAY 94-8862 efficacy and selectivity vs hormone receptors as well as its balance and injury between cardiac and renal efficacy is VascularMyocardial/  MR- inflammation expected to result in an improved benefit-risk Renal  Fibrosis Signaling and Injury profile BAY 94-8862 ● BAY 94-8862 is currently in Phase II for chronic heart failure and chronic kidney disease Cardiorenal Disease ● Phase IIa data planned for presentation at a scientific meeting in 2013 MR: mineralocorticoid receptorPage 77 • Bayer Investor Presentation • Meet Management • March 2013
  • 80. Expected Major Pipeline Newsflow 2013 Pipeline Newsflow Timeframe Project Xarelto Regulatory decision on secondary prevention of ACS (EU) 1H 2013e Eylea Phase III study in mCNV (MYRROR) Data expected 1H 2013 Phase III study in DME (VIVID-DME) Data expected 2H 2013 Radium-223 Initiation of additional clinical studies 2013e dichloride Regulatory decision mCRPC US 2H 2013e Regulatory decision mCRPC EU End 2013e / early 2014 Riociguat Update on potential next steps in the development program 1H 2013e Nexavar Phase III breast cancer (RESILIENCE) Data expected Q1 2014 Regorafenib Regulatory decision mCRC EU 1H 2013e Filing mGIST EU 1H 2013e Initiation of phase III in CRC (after resection of liver mets) 2H 2013e BAY 94-9027 Phase III study in hemophilia A Data expected early 2014Page 78 • Bayer Investor Presentation • Meet Management • March 2013
  • 81. Global Leader in ConsumerHealthPage 79 • Bayer Investor Presentation • Meet Management • March 2013
  • 82. Consumer Care –Gained Share in 2012Sales in € million; ∆% Fx & portfolio adj. +6% 3,853 3,534 3,3713,020 3,080 Highlights  Global #2 with a portfolio of some of the world’s most recognized brands  Track record of performance  Continued market share gains2008 2009 2010 2011 2012Page 80 • Bayer Investor Presentation • Meet Management • March 2013
  • 83. Consumer Care –Multiple Brands with ≥ €100m SalesFY 2012 sales in € million (∆% yoy Fx-adj.) 494* +1% 323 +5% 269 +14% 250 +8% 196 +4% 146 +3% 130 +8% 122 +5% Redoxon 101 +8% 100 +8% * Only Aspirin CC sales, excluding Rx Aspirin CardioPage 81 • Bayer Investor Presentation • Meet Management • March 2013
  • 84. Consumer Care – Aspire to Become #1 inOver-The-Counter Business Improve Capture Fully maximize Build a winning position in advantages the potential of future portfolio emerging of our multidiv- leading brands markets isional setup  Invest in  Establish  Leverage innovation functional opportunities excellence in for all divisions  Open for bolt- commercial across Bayer on acquisitions organization HealthCare and licensing platformsPage 82 • Bayer Investor Presentation • Meet Management • March 2013
  • 85. Major Brands Have Further PenetrationOpportunitiesRegional sales distribution FY 2012 Bepanthen Aleve ~ 75% ~75% Europe US Alka-Seltzer ~80% AmericasPage 83 • Bayer Investor Presentation • Meet Management • March 2013
  • 86. Animal Health –A Top Player in an Attractive MarketSales in € million; ∆% Fx & portfolio adj. +4% 1,303 1,186 1,120 963 977 Highlights  Global #5 in a growing market  #3 in companion animal products (CAP)  #6 in food animal products (FAP)  Leading parasiticide-portfolio  Broadened portfolio and marketing reach by acquisition of Bomac and TEVA Animal Health2008 2009 2010 2011 2012Page 84 • Bayer Investor Presentation • Meet Management • March 2013
  • 87. Animal Health – Rich Portfolio of Companionand Food Animal ProductsSales 2012 by segment ● Leading portfolio of endo- and ectoparasticides Companion Animal Products ● Rich portfolio further includes antibiotics, nutraceuticals, joint health products etc. ~60% ● Leading portfolio of endo- and ectoparasticides Food Animal Products ● Complemented by a range of products including pharmacologicals, antibiotics etc. ~40%Page 85 • Bayer Investor Presentation • Meet Management • March 2013
  • 88. Animal Health – New Products toStrengthen Business Seresto  The new benchmark for flea and tick protection  Outstanding efficacy based on combination of active ingredients  Up to 8 months protection thanks to innovative polymer matrix technology  Launch in EU 2012 / US January 2013, launch in further countries planned for 2013 Veraflox  Pradofloxacin, the new generation fluoroquinolone  Extended spectrum vs. previous fluoroquinolones  Greater potential to limit selection for resistance  Convenient formulations for both dogs and cats Procox  1st combined endoparasiticide against roundworm and coccidia in dogs  Easy and convenient single oral dose treatment  Can be used already from 2 weeks of age  Complements the endoparasiticides portfolio based on the active ingredient emodepsidePage 86 • Bayer Investor Presentation • Meet Management • March 2013
  • 89. Radiology & Interventional – CombiningMedrad and Diagnostic ImagingSales in € million; ∆% Fx & portfolio adj. Highlights Medrad: +1% 1,606 1,498  Clear #1 1,474 1,363  Active in fluid injection systems for1,323 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 – similar centers/physicians2008 2009 2010 2011 2012 * pro forma salesPage 87 • Bayer Investor Presentation • Meet Management • March 2013
  • 90. Diabetes Care –Global Player in Blood Glucose MetersSales in € million; ∆% Fx & portfolio adj. +4% 1,047 1,000 993 1,002 956 Highlights  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 professional2008 2009 2010 2011 2012Page 88 • Bayer Investor Presentation • Meet Management • March 2013
  • 91. Bayer CropScienceInvestor Handout – Meet ManagementMarch 2013 – Leverkusen
  • 92. Crop Protection Saves Harvestsand Boosts Yields Committed to food security with focus on innovative, integrated and sustainable crop solutions to secure harvests and to increase yields  SeedGrowth solutions to give crops the right start  Herbicides to manage weeds and overcome resistance issues  Insecticides to control biting and sucking pests and help farmers reduce harvest losses  Fungicides to prevent the infection of crops by fungal diseases  Biologics for integrated pest and disease managementPage 90 • Bayer Investor Presentation • Meet Management • March 2013
  • 93. Seeds Lay the Foundation for a SuccessfulPlanting Season High quality seeds and traits can deliver solutions to farmers that will help them to:  Protect harvests against weeds, insects, diseases and stresses like drought and heat  Enhance yields to boost productivity and sustainability  Improve the quality and characteristics of harvested crops to meet the needs from seed to shelf; e.g. cotton fibers with better fiber propertiesPage 91 • Bayer Investor Presentation • Meet Management • March 2013
  • 94. Environmental Science Offersa Better Quality of Life Our products and services help to control pests and weeds and to solve health and hygiene issues with:  Bayer Garden / Advanced for the do-it-yourself gardener and home owner  Our Green Industry business which provides solutions for the public and private park and forestry sector  Professional Pest Management to help safeguard and guarantee hygiene  Vector Control which contributes to protect human healthPage 92 • Bayer Investor Presentation • Meet Management • March 2013
  • 95. Leading the Way in Sustainable CropSolutions  Herbicides Chemical  Fungicides Crop  Insecticides Protection  Weed, pest &  SeedGrowth disease control Better harvest Biological  Microorganisms  Resistance with improved: Crop  Microbial management  Yield Protection extracts  Quality  Processability  Conventional  Canola, cotton,  Sustainability seeds Seeds rice, soy, wheat,  GMO seeds vegetables  Traits Sustainable Crop Solutions GMO: Genetically modified organismPage 93 • Bayer Investor Presentation • Meet Management • March 2013
  • 96. CropScience –A Leader in Chemical Crop ProtectionHerbicides €2,356m €1,514m InsecticidesMarket position: 4 Market position: 1 18% 28%Env. Science €680m €1,974m FungicidesMarket position: 1 Market position: 3 24% 8%Seeds €962m 11% €897m SeedGrowthMarket position: 7 11% Market position: 1 Sales 2012: €8,383m Market positions based on company reportings and Cropnosis estimatesPage 94 • Bayer Investor Presentation • Meet Management • March 2013
  • 97. Fruits, Vegetables and Cereals –A Major Part of Our Portfolio Sugar Crops Rice Other 5% Fruits & Vegetables 6% 26% Cotton 7% Oilseeds 9% Cereals 9% 22% Soy 13% Corn CropScience Sales 2012* * by major crop groups excluding industrial business and non-agricultural solutionsPage 95 • Bayer Investor Presentation • Meet Management • March 2013
  • 98. 2012 – Excellent Performancein Positive EnvironmentPage 96 • Bayer Investor Presentation • Meet Management • March 2013
  • 99. Full Year 2012 –Excellent PerformanceIn € million, ∆% yoy, () = Fx & portf. adjusted 2012 Sales Earnings Environmental Crop Protection Adj. Adj. Science +16% (+13%) EBITDA* EBIT* +9% (+5%) 680 2,008 6,741 +21% 962 1,654 1,526 +31% 1,168 Seeds+17% (+14%) CropScience €8,383m; +16% (+12%) Price Volume Fx Portfolio +1% +12% +4% -1% FY‘11 FY‘12 FY‘11 FY‘12 *before special itemsPage 97 • Bayer Investor Presentation • Meet Management • March 2013
  • 100. Full Year 2012 –All Segments Contributing to GrowthSales in € million; ∆% y-o-y Fx & portfolio adj. Herbicides 2,356 Growth in all regions, especially in the +10% US (new corn herbicides) and Brazil 1,974 Double-digit growth in several key Fungicides +13% markets (e.g with Fox in Brazil) Insecticides 1,514 Growth in all regions; phase-out of WHO +15% Class I products completed 897 Strong business expansion; high SeedGrowth +17% demand for innovative Poncho/Votivo 962 Double-digit growth in broad-acre crops; Seeds +14% slight decline with vegetable seeds 680 Products both for professional users Env.Science +5% and consumers posting gains FY 2011 Nominal growth FY 2012Page 98 • Bayer Investor Presentation • Meet Management • March 2013
  • 101. Seeds – Double-Digit Growth in All OurBroad Acre Crops in 2012Sales in € million; ∆% y-o-y, () Fx & portfolio adj. 2012 Highlights  High demand for InVigor in Canada; +14% 962 launch of conventional oilseed rape Other Soybean (+83%) in Europe 820 47 Rice (+23%)  Expansion of cotton seed business 40 199 Cotton (+10%) driven by US and Brazil  Growing rice seed business in Asia 179 (esp. India) 311 Oilseeds (+33%)  About 70 new vegetable seed varieties 227 launched  Successful launch of Bayer soybean seed in the US 299 304 Vegetables (-2%)  Build-up of global wheat seed business continued with new research cooperations 2011 2012Page 99 • Bayer Investor Presentation • Meet Management • March 2013
  • 102. Full Year 2012 – Growth in All Regions Sales in € million, ∆% yoy Fx adjusted CropScience Sales in FY 2012 Emerging Economies USA Emerging +15% +19% Economies¹ 25% +12% 18% 43% ~1,800 +7% +16% 25% 14% ~900 +7% Western Others² ~600 ~300 Europe +5% +13% Emerging Latin Eastern Africa & CropScience €8,383m; +16% (+12%) 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 100 • Bayer Investor Presentation • Meet Management • March 2013
  • 103. Executing ourStrategic RoadmapPage 101 • Bayer Investor Presentation • Meet Management • March 2013
  • 104. Executing Our Strategic Roadmap Enhance Strengthen Lead the Way Expand Crop Protection Customer Centricity in Innovation Seeds Business  Improving portfolio  Driving commercial  Striving for first- and  Further strengthening through focused excellence in best-in-class position in and integrated marketing and sales solutions vegetables, rice, crop solutions oilseed rape  Connecting partners  Exploiting expertise and cotton  Increasing in the value chain in seeds, breeding, flexibility and through integrated and chemical and  Extending portfolio efficiency Go-to-Market biological crop by building up practices protection business in soybean and wheatPage 102 • Bayer Investor Presentation • Meet Management • March 2013
  • 105. Translate R&D Effectively into New Product Sales Sales from new Crop Protection products launched since 2006 in € bn ~1.9 2012 Highlights ∆% y-o-y, () Fx adj.  Xpro (+61%) - New cereal fungicide with yield-boosting effect ~1.4  Adengo herbicide family (+85%) - Excellent weed control in corn and 1.1 cereals, also in case of glyphosate +60% resistance 0.7  Belt (+54%) - Broad-spectrum insecticide with fast and long-lasting action 0.3  Launch of Luna fungicide in the US 0.02  First launch of new SeedGrowth family EverGol/Emesto in Canada 2007 2009 2011 2012 2013e 2015ePage 103 • Bayer Investor Presentation • Meet Management • March 2013
  • 106. Xpro – New Cereal Fungicide with 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  Global peak sales potential of more than €300m * SDHI: Succinate dehydrogenase inhibitorPage 104 • Bayer Investor Presentation • Meet Management • March 2013
  • 107. Luna – Outstanding Fungicide for Managing Problematic 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  Available since 2012 planting season in several key markets  Global peak sales potential of more than €250m * SDHI: Succinate dehydrogenase inhibitorPage 105 • Bayer Investor Presentation • Meet Management • March 2013
  • 108. We Are The Company to Offer a Sustainable Alternative to Glyphosate to Fight Weed Resistance  Weed resistance to glyphosate increasingly impacting crop production  Our LibertyLink is currently the only non-selective herbicide solution to glyphosate resistant weeds  We are committed to develop new and more sustainable weed management solutions  Innovation with new mode of action, HPPD herbicide tolerance, in soy and cotton  MGI triple stack herbicide-tolerance soybean trait submitted for approval  Highly effective pre-emergent and selective herbicide portfolio launched Bayer CropScience sustains the "Respect the Rotation" initiative to overcome weed management challenges HPPD: Hydroxyphenyl-pyruvate dioxygenasePage 106 • Bayer Investor Presentation • Meet Management • March 2013 MGI: Mesotrione, Glufosinate-ammonium and Isoxaflutole
  • 109. Realising Further Growth Opportunities in Biologics  Biologics are bio-based products, either consisting of naturally-occurring living organisms or containing materials derived from plants, bacteria, fungi, yeasts or viruses  The market potential for Biologics is expected to triple from $1.2bn in 2010 to around $4bn in 2020  AgraQuest acquired in Q3 2012 for $425m (~€340m) plus milestone payments. Leading global provider of innovative biological pest management solutions based on natural microorganisms  German company Prophyta acquired in Q1 2013, provides customers well-established products primarily based on biological control agents, e.g. nematicide BioAct.  Acquisitions strengthen strategically important fruit and vegetables business  We aim to become the world leader in sustainable crop solutionsPage 107 • Bayer Investor Presentation • Meet Management • March 2013
  • 110. Customer Centricity Along the Entire Value Chain Providing Seed-to-Shelf Solutions seed companies Food processors Distributors / Food retailers Advisors Retailers Traders Bayer CropScience Our offers Growers Consumers  240 food chain partnerships covering most of the main fruit & vegetable crops  Premium seeds and effective crop protection products to maximize yield  Consistent and high harvest quality for efficient food processing  Meeting highest food safety standards  Better product quality for the consumerPage 108 • Bayer Investor Presentation • Meet Management • March 2013
  • 111. Best-Practice Examples of our New Go-To-Market Approach Approach Achievement  Market share in grapes in Brazil +5% Food chain partnerships in grapes in Brazil, Chile, Italy and India  ~ 60% market share in table grapes in Chile (largest exporter worldwide) "On demand" SeedGrowth system with a  2012 SeedGrowth sales* +17% global network of 10 Seed Treatment  Further roll-out of SeedGrowth franchise Application Centers in Asia Pacific (sales in China* +30%) Combine innovative technology of Movento  2012 Movento sales* +49% insecticide with additional service offerings BayDir service in Germany offers tailored  Further strengthened our position in the and immediate information for farmers German market through Internet and mobile phone apps * Sales ∆% y-o-y Fx adj.Page 109 • Bayer Investor Presentation • Meet Management • March 2013
  • 112. Unique combination of Seeds, Small Molecules and Biologics in R&D Operations Combining state-of Commercial Commercial Integrated approach the art techniques deployment deployment • Computational Next generation Traits life science • Agronomic traits product • Phenotyping, field trials • Germplasm • Biotech • Genome sequencing • Gene expression Seeds Breeding Chemicals • Genes of interest Small Biologics • Insecticides • Specific molecular targets Molecules • Fungicides • Herbicides • Marker assisted breeding Biologics • Trait selection chemistry • Bacteria • Naturals • Microbial strain collection Integrated plant health solution Collaboration with best-in-class organizations Regulatory excellencePage 110 • Bayer Investor Presentation • Meet Management • March 2013
  • 113. Pipeline Peak Sales Potential  €4bn from Products Launched 2011 - 2016* Herbicide Triafamone Crop Protection (excl. Biologics) Canola Soybean Biologics Fungi- / Bactericide Cotton Rice Biologics Seeds & Vegetables Insecticide Wheat Biologics Insecticide Biologics Insecticide Fungicide Fungi- / Bactericide New Bayer Brand Biologics Serenade AEW Fungicide SeedGrowth** Fungicide Insecticide LibertyLink Dual Herb. + R. Ready Tol. + Novel OPTIVA Sivanto Hybrid Ins. Res. Canola Cotton Herbicide Fungicide SeedGrowth** / Fung. TwinLink + Bayer Improved B. Subtilis GlyTol Wheat Canola Oil Cotton Seed Profile SeedGrowth** Bayer Bayer Canola GlyTol + Insect + Oilseed Oilseed Yield HPPD Disease Res. Rape Seed Mustard Increase Tolerant Hybrid Rice Hybrids Soybeans GlyTol Bayer Roundup Insect Disease Res. Disease Res. Cotton Soybean Ready Resistant + Submerge. + Salinity Tol. Seed Hybrid Hybrid Rice Tol. Hybrid Hybrid Rice Canola Rice Seed Varieties Seed Varieties Seed Varieties Seed Varieties Seed Varieties Seed Varieties ~80 launches in ~ 100 launches in ~110 launches in Numerous launches in Numerous launches in Numerous launches in vegetables & broad vegetables & broad vegetables & broad vegetables & broad vegetables & broad vegetables & broad acre crops acre crops acre crops acre crops acre crops acre crops 2011 2012 2013 2014 2015 2016 *Estimated and subject to regulatory approvalPage 111 • Bayer Investor Presentation • Meet Management • March 2013 **Formerly called Seed Treatment
  • 114. Sivanto – Innovative and User-friendly Broad-spectrum Insecticide  Active ingredient: flupyradifurone  Control of sucking pests such as aphids, cicadas and whiteflies  Intended primarily for fruit and vegetables, but also for broad acre crops  Improved environmental profile  Launch planned 2014 / 2015Page 112 • Bayer Investor Presentation • Meet Management • March 2013
  • 115. Increasing the R&D Share for Seeds In € million R&D Split Pipeline Value by Segment Crop Protection/Environmental Science Pipeline Peak Sales Potential  €4bn from Products Launched 2011 – 2016* Seeds . Seeds Fungicides Biologics 723 782 Insecticides SeedGrowth Herbicides 722 70% 65% 63% ~400 ~1,200 ~500 ~500 35% 37% 30% ~600 ~800 2010 2011 2012 2016e * Estimated and subject to regulatory approvalPage 113 • Bayer Investor Presentation • Meet Management • March 2013
  • 116. Aspiring Double-Digit Seeds Growth p.a. Sales in € million; ∆% y-o-y Fx & portfolio adj.  Market leading positions in chosen crops: Double-digit %  #1 in canola CAGR expected  #1 in cotton +14% 962  #1 in hybrid rice  #4-5 in vegetables 820  Strategy to develop soybean and wheat business in place  Increase R&D investment  Complement business expansion through bolt-on acquisitions 2011 2012 2015ePage 114 • Bayer Investor Presentation • Meet Management • March 2013
  • 117. Extending the Seed Footprint TwinLink + GlyTol Building a proprietary Build up a global wheat in cotton soybean seed business seed business  First dual herbicide – dual  LibertyLink herbicide  Significant investment into insecticide product tolerance technology R&D of new wheat varieties  Two genes for effective broadly outlicensed and traits insect control  Acquisition of Hornbeck  Focus on productivity, stress  Herbicide tolerance for Seed Company in the US tolerance, nutrient uptake glufosinate and glyphosate  Bayer soybean seed  Establishing a broad  Applied in high-yielding launched in 2012 germplasm pool Fibermax and Stoneville  Broad germplasm pool and  Global breading network cotton varieties promising trait pipeline  First new varieties expected  Anticipated launch in 2014 by 2015 in EuropePage 115 • Bayer Investor Presentation • Meet Management • March 2013
  • 118. Significant Investments in Seeds Since 2011  Targeted acquisitions to strengthen core crops  Hornbeck Seed - to invest in southern US soybean seed market  Raps GbR - to strengthen oilseed rape business in Europe  Abbott & Cobb – significant step forward in US watermelon market  Germplasm assets of ProSoy Genetics, US – well adapted to the broad Midwest growing region  Wheat breeding stations set-up in Europe, US, Australia  Several agreements with wheat players to broaden access to germplasm  Around 90 research collaborations with partners in the public and private sector  R&D investment increased by ~15% in 2012 to ~€300mPage 116 • Bayer Investor Presentation • Meet Management • March 2013
  • 119. Strategic Progress Achieved ● €1.1bn sales in 2012 with products launched since 2006 Enhance ● All WHO class I insecticides removed from our portfolio Crop Protection ● Expansion of Biologics Strengthen ● Increased grower orientation Customer ● Improved channel management practices Centricity ● Broadened food chain partnership business model ● Pipeline Peak Sales Potential*  €4bn Lead the Way ● Increased investment in Seeds R&D in Innovation ● Innovating at the interface between chemistry and biology ● Strengthened positions in cotton, canola and rice Expand Seeds ● Increased investments in soybean, wheat and vegetables Business ● Development of innovative traits * from products launched between 2011-2016Page 117 • Bayer Investor Presentation • Meet Management • March 2013
  • 120. Positive OutlookPage 118 • Bayer Investor Presentation • Meet Management • March 2013
  • 121. Crop Commodity Prices Volatile, But Still at Attractive Levels USD/ton USD/ton 1,000 5,000 900 4,500 800 4,000 700 3,500 600 3,000 500 2,500 400 2,000 300 1,500 200 1,000 100 500 0 0 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Soybean (LS) Corn (LS) Wheat (LS) Canola (LS) Rice (RS) Cotton (RS) Right scale (RS); Left scale (LS) Source: BloombergPage 119 • Bayer Investor Presentation • Meet Management • March 2013
  • 122. Seeds and Crop Protection Markets Expected to Grow  5% in 2013  Market environment expected to remain positive, though volatile  Attractive crop commodity price levels predicted at least for 1H 2013  Latin America: strongest market growth due to increasing soybean acreage  Asia / Pacific: cereals, rice and specialty crops fueling market growth  Eastern Europe: Above-average growth potential  Industrialized regions of the northern hemisphere: market expansion, but much more slowly than in 2012Page 120 • Bayer Investor Presentation • Meet Management • March 2013
  • 123. CropScience – Above Market Growth at Benchmark ProfitabilitySales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales Target Aspiration Priority 2012 2013* 2015 high-single CAGR ~6% +12.4%  Above-market sales growth digit % towards to €8.4bn towards €9bn €10bn  Translate R&D effectively into new €1.1bn ~€1.4bn ~€1.9bn product sales (CP products launched since 2006) double-digit % double-digit %  Extend seeds footprint +14% growth growth p.a. slight  Maintain industry leading profitability level 24.0% ~24% improvement CP: Crop ProtectionPage 121 • Bayer Investor Presentation • Meet Management • March 2013 *Assuming Fx rate of $1.29 per € Outlook depends on specific planning assumptions as detailed in the Annual Report
  • 124. We are Ensuring a World-Class Product Supply by Further Investing Capital Expenditures (PPE only, in €m)  Building up capacity for top Crop Protection brands including our herbicide Liberty/Basta and our 500 fungicide product families Nativo 450 and Prosaro 400 350  Expanding the infrastructure for our 300 Seeds business (breeding stations, 250 200 greenhouses and seed processing 150 facilities) 100  Expanding and modernizing R&D 50 0 facilities (RTP/USA, Davis/USA, 2012 2013e 2014e 2015e Monheim/Germany)Page 122 • Bayer Investor Presentation • Meet Management • March 2013
  • 125. Bayer MaterialScienceInvestor Handout – Meet ManagementMarch 2013 – Leverkusen
  • 126. MaterialScience – Operating in Attractive Markets Market Positioning Financial Performance Business Perspectives  Leading positions (#1/2)  2012 volume growth in  Global megatrends in all business segments line with global real GDP driving growth  Operating a state-of-the- development  Target to grow volumes art global production  Capital return below cost above GDP network of capital, burdened by  Closely monitor timing  Maintaining close high investments and necessity of customer relationships  History of cash capacity expansions  A leader in process generation in excess of  Earn a premium over technology / sustainability own investment needs Cost of CapitalPage 124 • Bayer Investor Presentation • Meet Management • March 2013
  • 127. Market PositioningPage 125 • Bayer Investor Presentation • Meet Management • March 2013
  • 128. MaterialScience – Leading Positions in All Segments Sales in € million Sales Split by Segment 2012 Polyurethanes €5,995m  #1-2; approx. 20-24% market share* Polycarbonates 25% €2,823m  #1; approx. 27% market share 52% 6% Coatings, Adhesives, Specialties €1,972m 17%  #1; >40% market share** Industrial Operations MaterialScience €11,503m €713m *depending on segmentPage 126 • Bayer Investor Presentation • Meet Management • March 2013 ** aliph. isocyanates
  • 129. MaterialScience – Sales By Key Customer Industries Bayer MaterialScience sales by industry in 2012 Chemicals Automotive 8% 20% Others 20% (sports, leisure, footwear 28% Electro/ packaging, medical, etc.) Electronics 16% 17% Furniture / Wood Construction 19%Page 127 • Bayer Investor Presentation • Meet Management • March 2013
  • 130. A Global Leader in its Markets Operating a Worldwide State-of-the-Art Plant Network Asia/Pacific Americas PUR PCS CAS PUR PCS CAS Position* # 2-3 # 1-2 #1 Position* #1 #2 #1 EMEA# PUR PCS CAS Position* #1 #1 #1 Headquarters Major Production Sites Downstream Businesses *Market share based on estimated sales following self-assessmentPage 128 • Bayer Investor Presentation • Meet Management • March 2013 # Europe, Middle East & Africa
  • 131. Bayer´s Largest, Fully Integrated Polymer Site, Constructed in Shanghai Leadership Strengthened Through Local Production and Know-how Integrated production site for Existing Capacities polycarbonate, polyurethanes and coating raw materials PUR – MDI PCS CAS – HDI 350 kt 200 kt 30 kt >€2bn invested in greenfield project All production lines in world-scale format PUR – TDI 250 kt Excellent infrastructure and customer proximity State-of-the-art technologies lead to:  Lower conversion costs  Energy savings Further Expansion Planned CAS: coatings, adhesives & specialties; HDI: hexamethylenePage 129 • Bayer Investor Presentation • Meet Management • March 2013 diisocyanate; MDI: methyl diphenylene diisocyanate; TDI: toluene diisocyanate; PCS: polycarbonate; PUR: polyurethanes
  • 132. A Leader in Process Technology & Sustainability TDI Gas Phase Adiabatic Aniline ODC Technology for Phosgenation Production Chlorine Production Process  Uses up to 60% less Benefits* energy  Uses 25% less energy  Uses 30% less energy  Requires 80% less solvent  20% less CO2 emissions  Reduces indirect CO2  CapEx reduced by 30% emissions  CapEx reduced by 20%  World-scale facility since 2011 in Shanghai,  Pilot plant in Antwerp,  Demo facility in Krefeld- Status China Belgium Uerdingen  Technology to be used in  Plant in Shanghai since  External marketing new TDI plant in Dormagen 2010 planned from 2013 *Compared with conventional technologyPage 130 • Bayer Investor Presentation • Meet Management • March 2013 ODC: Oxygen depolarized cathode
  • 133. Financial PerformancePage 131 • Bayer Investor Presentation • Meet Management • March 2013
  • 134. Full Year 2012 – Operating Performance Sales in € million; ∆% y-o-y, () Fx & portfolio adj. 2012 Sales Earnings Polyurethanes Polycarbonates Adjusted Adjusted +12% (+8%) -2% (-7%) EBITDA* EBIT* 25% 5,995 1,251 +7% 1,171 2,823 629 +7% 589 713 Coatings, 1,972 Industrial Adhesives, Operations Specialties +3% (+4%) +8% (+6%) MaterialScience €11,503m; +6% (+3%) Price Volume Fx Portfolio 1% +2% +4% -1% 2011 2012 2011 2012 * before special itemsPage 132 • Bayer Investor Presentation • Meet Management • March 2013
  • 135. Full Year 2012 – Regional Sales Development Sales in € million; ∆% y-o-y Fx adjusted 2012 MaterialScience Sales Emerging Economies +1% USA Emerging +7% Economies¹ +3% 20% 42% 43% ~2,760 +15% +7% 36% -5% 32% 5% 4% ~930 ~680 ~575 Western Others² Europe -1% +2% Emerging Latin Eastern Africa & MaterialScience €11,503m; +2% 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 133 • Bayer Investor Presentation • Meet Management • March 2013
  • 136. Full Year 2012 – Impact of Raw Materials Raw Material Cost Split 2012*  Petrochemical feedstock prices on a record level  Total raw material costs at ~€5.7bn in 2012, vs ~€5.1bn in 2011  Energy costs at ~€0.5bn in 2012, down ~€0.1bn vs 2011  Raw material price increases only partly compensated by higher selling prices Exposure by value Benzene (incl. phenol, aniline, styrene) Toluene Propylene Other petrochemical feedstock Others * MaterialScience raw material basket used as proxy, coversPage 134 • Bayer Investor Presentation • Meet Management • March 2013 approx. 80% of total purchased raw materials
  • 137. Cash Generation in Excess of Own Investment Need In € million Net Cash Flow CapEx (cash-relevant) Free Operating Cash Flow ~€3.6bn Free Operating Cash Flow in 11 years 1,388 673 1,281 592 1,147 277 1,108 206 1,113 649 902 870 849 345 782 110 763 265 775 210 715 739 119 690 672 620 565 464 498 166 504 498 332 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2002 and 2003 as reported in 2004 excluding acquisitions or divestmentsPage 135 • Bayer Investor Presentation • Meet Management • March 2013
  • 138. Business PerspectivesPage 136 • Bayer Investor Presentation • Meet Management • March 2013
  • 139. Higher Asset Utilization & Efficiency Measures Are Driving PerformanceSales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales  Grow business (volume) above global GDP  Defend market leading positions in PCS and PUR  Sales to slightly increase  Realize 150 bp margin to ~€12bn contribution through new  Sales +3.0% to €11.5bn  Adj. EBITDA to further efficiency initiative (volumes +2%)  Optimize asset structure improve  Adj. EBITDA +7% to  Q1‘2013 vs Q4‘2012: in Germany €1,251m Sales to further increase  CFROI# > WACC  CFROI# 5.6% < WACC and adj. EBITDA at same 7.1% level 2012 Target 2013 Aspiration 2015 *Assuming Fx rate of $1.29 per €Page 137 • Bayer Investor Presentation • Meet Management • March 2013 #after reproduction Outlook depends on specific planning assumptions as detailed in the Annual Report
  • 140. Outlook 2013 – Economy and Key Customer Industries Global Economic GDP Outlook Key Customer Industries Outlook GDP growth % prev. year Sales by industry 2012 and expected 2013 growth Others Automotive 5 5.1 (incl. (+2%) Chemicals) 28% 20% 4 3 2 2.5 16% 1.7 1 Electro / 17% 0.1 0.4 Furniture 19% Electronic (+5%) (+5%) Construction (+4%) *Assuming Fx rate of $1.29 per €Page 138 • Bayer Investor Presentation • Meet Management • March 2013 Outlook depends on specific planning assumptions as detailed in the Annual Report
  • 141. Demand / Supply Balance in the Industry Expected to ImproveSupply in kt p.a. PCS Supply TDI Supply MDI Supply ~5,300 ~7,000 4,800 500 5,900 1,100 2,400 ~2,500 100 2012 2015e 2012 2015e 2012 2015e Demand > Supply Demand > Supply Demand > Supply ~6% p.a ~3-4% p.a. ~4% p.a ~1-2% p.a. ~6-7% p.a ~5-6% p.a. Approaching industry capacity Approaching industry capacity Approaching industry capacity utilization rates around 90* utilization rates in the high 80’s utilization rates in the high 80’s = nameplate market capacities based on CMAI data, publicPage 139 • Bayer Investor Presentation • Meet Management • March 2013 competitor announcements and internal Bayer estimates * adjusted for non available capacities
  • 142. Profitability Improvement Through New Efficiency Initiative Until 2015  New efficiency initiative improves cost structure and increases adjusted EBITDA margin by 150bp  Initiative comprises more than 100 measures across the entire value chain Examples Business Units  Consolidation of system houses  Pricing excellence programs Organization  Optimization of regional structures (e.g. Canada & US) Production  Further initiatives to improve asset productivity (e.g. maintenance schedules, engineering setup) Supply Chain  Optimization of logistics services Selling &  Further reduce costs by leveraging established global ERP Administration platform and standardized processes ERP: enterprise resource planningPage 140 • Bayer Investor Presentation • Meet Management • March 2013
  • 143. Two Major Projects to Optimize Plant Structure in Germany TDI Dormagen  Replacement of existing 205 kt TDI capacities by new world-scale 300 kt plant using innovative gas-phase phosgenation process by 2014 MDI Brunsbüttel  After finishing the TDI project, conversion of existing TDI facility in Brunsbüttel into MDI plant, incorporating adiabatic aniline process innovation  New site will become a world-scale plant MDI: methyl diphenylene diisocyanate, TDI: toluene diisocyanatePage 141 • Bayer Investor Presentation • Meet Management • March 2013
  • 144. MaterialScience as an Integrated Solution Provider Ongoing New and Need for Higher urbanization improved better living transportation energy standards systems efficiency Proportion of city Lightweight cars EcoConstruction with Over 40m people dwellers expected to New energy vehicle high thermal insulation enter the middle class increase from 50% development standards every year in 2010 to 70% in Cold-chain efficiency Improved housing High-speed rail trans- 2050* standards portation networks Megatrends offer business opportunities worldwide, with the emerging economies at the forefront Source: Steria, The Future Report 2012Page 142 • Bayer Investor Presentation • Meet Management • March 2013
  • 145. Our High-tech Materials Meet Key Customer Industry Needs Construction Automotive Electro / Electronics  Low weight for better energy efficiency in transportation  High mechanical strength enables product durability Poly-  Transparency for optical applications and architectural glazing carbonates  High heat resistance and reliable electrical insulation properties  Excellent design flexibility that goes beyond that of glass  Outstanding thermal insulation properties Poly-  Versatility allowing full spectrum of flexible to rigid foam applications urethanes  Excellent abrasion resistance and rebound resilience & CAS  Durability for reliable protective coatings CAS: Coatings, Adhesives, SpecialtiesPage 143 • Bayer Investor Presentation • Meet Management • March 2013
  • 146. Polyurethane-based Insulation for Residential & Commercial Buildings Growth drivers  EU: From 2020 on, new buildings have to be constructed as “nearly zero- PUR Isoboards for Thermal Insulation energy buildings”  External Thermal Insulation Composite Systems (ETICS) save >25% energy  US: New standard requires compared with other insulation materials 30% less energy use for renovated homes and  Joint solution development with key industry commercial buildings players to fulfill high industry requirements  1 kg polyurethane saves 360 to PUR Metal Sandwich Panels 755 kg CO2 emissions*  Prefabricated and mainly applied for industrial  PUR in construction industry in and commercial buildings as well as cold 2012: approx. €5.7bn, storage estimated average growth rate of ~8% p.a.  Easy handling and fast site assembly *Additional insulation, savings over entire product life-cycle of 50 years, includingPage 144 • Bayer Investor Presentation • Meet Management • March 2013 production and end-of-life stages; PUR: polyurethane
  • 147. Polycarbonate Sheets for Heat Management in Buildings Growth drivers  Growing demand for non- electrical indoor climate control Polycarbonate Multi-Wall Sheets  Translucency levels of 65-85%,  Combined light and heat management to ensure the maximum amount of reduce energy requirements daylight inside buildings  Significant reduction of CO2 emissions  Makrolon® meets international fire protection requirements (not  Integration of solar energy panels self-igniting)  Global market size 2012: approx.  Good weather stability 320 kt* (complete roofing market), estimated average  Advantages over glass: Design freedom, growth rate of ~4% p.a. safety, weight * Internal estimatePage 145 • Bayer Investor Presentation • Meet Management • March 2013
  • 148. Polyurethane-based Insulation in Cold Chain Growth drivers  Globally more stringent energy saving regulations Refrigerators  Increasing demand for trans-  Refrigeration accounts on average for 20% of porting temperature sensitive a household’s electricity consumption goods  Replacing all old refrigerators with A++  Increasing standard of living in appliances could cut annual CO2 emissions in emerging markets triggers the EU by 22 million metric tons continuously growing demand for appliances  PUR insulation increased energy efficiency of refrigerators by 65% from 1950-2005  PUR in refrigerator industry 2012: approx. €2.6bn, estimated  BMS’s innovative Baytherm® Microcell foam: average growth rate of ~6% p.a.  Reduces pore size of foam up to 40%  Reduces thermal conductivity up to 10% PUR: polyurethanePage 146 • Bayer Investor Presentation • Meet Management • March 2013
  • 149. Examples of Bayer´s Materials for Energy Efficient Cars MaterialScience´s Solutions for Saving Weight Roof elements out of polycarbonate and polyurethanes Housings for charging Instrument panels out of polycarbonate and Seats out of stations out of polycarbonate 10% less weight polyurethanes polyurethanes Polycarbonate tailgate = Polyurethanes, Load floor out of coatings and polyurethanes adhesives for the body shell 5% less fuel* Polycarbonate for flame Colored resistant battery polycarbonate housings parts for the body * Based on an average automotive weight of 1,300 kgPage 147 • Bayer Investor Presentation • Meet Management • March 2013
  • 150. Increased Energy Efficiency in Cars Through Polycarbonates Growth drivers  Broad global political initiatives promoting e-mobility Polycarbonates  Heat stability and optical quality enable new  Increasing use of electrical LED-based lighting systems devices requires flame retardancy of plastics  Flame-retardant polycarbonate blends protect batteries used in future cars with hybrid  Polycarbonate glazing offers a engines weight advantage of 30-50% compared to real glass  Car body parts made from polycarbonate blends reduce weight  81m light vehicles* produced globally in 2012, estimated  Automotive glazing out of 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 148 • Bayer Investor Presentation • Meet Management • March 2013