Meet management 2014-06-05_ny_investor_handout_web_slideshare

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Bayer Investor Handout from Meet Management Conference in New York on June 5, 2014

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Meet management 2014-06-05_ny_investor_handout_web_slideshare

  1. 1. Meet Management Conference New York, June 5, 2014 Marijn Dekkers, CEO Bayer
  2. 2. Disclaimer This presentation may contain forward-looking statements based on current assumptions and forecasts made by Bayer Group or subgroup management. Various known and unknown risks, uncertainties and other factors could lead to material 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 are available on the Bayer website at www.bayer.com. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments. • Bayer Investor Presentation • Meet Management • June 2014Page 2
  3. 3. Page 1 Our Mission – Innovation and Customer Value  Bayer is an innovation company  With a strong “innovation portfolio”  Addressing new growth areas  Capable of identifying and using breakthrough innovations  Bayer is innovative in many ways: Products, technologies, processes, business models, strategies  Bayer products improve the quality of people’s lives  Bayer has an excellent understanding of human, animal and plant health, as well as of high-quality materials  Respect for people and nature is an essential part of our values Science / Innovation Better Life Science For A Better Life • Bayer Investor Presentation • Meet Management • June 2014
  4. 4. Page 2 Our Business Portfolio – Leading in Its Markets Break-down excluding reconciliation Sales 2013: €40.2bn CropScience Chemical crop protection & biologicals global #2, seeds & traits €8.8bn MaterialScience Polyurethanes and polycarbonates, global #1/2 €11.2bn HealthCare Pharmaceuticals €11.2bn, leading positions in core indications Consumer Health €7.7bn, OTC #2, blood glucose meters #3, Animal Health #5, contrast media #1 €18.9bn 23% 29% 48% • Bayer Investor Presentation • Meet Management • June 2014
  5. 5. We Generate Almost 90 Percent of our Earnings in the Life Sciences Businesses Page 3 *EBITDA before special items 23% 29% 45% 88% 12% Sales 2013 Adj. EBITDA 2013* Human Health 3% Breakdown excluding Reconciliation Material Science Plant Health Animal Health Life Sciences Material Science • Bayer Investor Presentation • Meet Management • June 2014
  6. 6. • Bayer Investor Presentation • Meet Management • June 2014Page 4 2010-2013 – A Period of Significant Success  Delivered growth and performance  Unprecedented R&D productivity  Pharma launch product sales ahead of expectations  Executing successfully our OTC growth strategy  CropScience customer-centric strategy bearing fruit  Capital discipline at MaterialScience
  7. 7. 2010-2013 – A Period of Significant Progress Page 5 2010 2011 2012 2013 35.1 36.5 39.7 40.2 7.1 7.6 8.3 8.4 Sales 5% Core EPS 10% Adj. EBITDA 6% 4.19 4.83 5.30 5.61 Sales and adjusted EBITDA in € billion, core EPS in € CAGR 2010-2013 • Bayer Investor Presentation • Meet Management • June 2014
  8. 8. Page 6 EBIT in € million +18% 2,096 1,771 Sales in € million % currency & portfolio adj. +8% 10,55510,266 EBITDA adjusted* in € million +12% 2,738 2,453 Core EPS in € +15% 1.95 1.70 *before special items Q1’14Q1’13 Q1’14Q1’13 Q1’14Q1’13 Q1’14Q1’13 Strong Momentum Continued in Q1 2014 Despite Significant Currency Headwind • Bayer Investor Presentation • Meet Management • June 2014
  9. 9. FY 2014 Group Guidance Maintained – Targeting Further Sales and Earnings Growth Page 7 2013 2014E* Sales €40.2bn ~5% to ~€41-42bn (neg. FX effect approx. -2%) adj. EBITDA €8.4bn low- to mid-single- digit % increase (neg. FX effect approx. -5%) core EPS €5.61 mid-single-digit % increase (neg. FX effect approx. -6%) Sales ∆ Fx and portfolio adjusted, EBITDA before special items *Assuming average Fx rates of Q4’13 (USD 1.36) Outlook depends on specific planning assumptions as detailed in the Annual Report• Bayer Investor Presentation • Meet Management • June 2014
  10. 10. Page 8 2013 Sales CAGR 2016e Pharma: Maximize Value of Launch Products • Bayer Investor Presentation • Meet Management • June 2014
  11. 11. 24 Successful Phase III Clinical Trials at Pharma since 2010 Page 9  Various indications incl. treatment of deep vein thrombosis/pulmonary embolism, stroke prevention in atrial fibrillation and secondary prevention of acute coronary syndrome  Wet age-related macular degeneration, diabetic macular edema, myopic choroidal neovascularization and central retinal vein occlusion  Metastatic colorectal cancer and metastatic gastrointestinal stromal tumors  Metastatic castration-resistant prostate cancer with symptomatic bone metastases  Pulmonary arterial hypertension and chronic thromboembolic pulmonary hypertension  Radioactive iodine refractory differentiated thyroid cancer  Prophylaxis in hemophilia A: Site-specific PEGylated Factor VIII with 5- or 7-days dosing intervals • Bayer Investor Presentation • Meet Management • June 2014 BAY 94-9027 Major examples
  12. 12. Launch Products Drive Growth at Pharma • Bayer Investor Presentation • Meet Management • June 2014Page 10 Sales in € billion; ∆% Fx & portf. adjusted Pharma Sales / Launch Products Launch Products 2013 2010 2011 2012 2013 10.0 1.5 25% 949 197 333 3 41 Sales in € million 9.9 10.8 11.2 +1% +4% +9%
  13. 13. Launch Products Expected to Contribute ~€2.8bn to Pharma Sales in 2014 • Bayer Investor Presentation • Meet Management • June 2014  Executing >100 launch events* in 2014  Continuous R&D investments in life-cycle management  Increased marketing and sales investments in emerging markets  Incremental marketing and R&D investments of €0.5bn in 2014e * new indications and new countries Page 11
  14. 14. Page 12 Pharma – Peak Sales Potential of Launch Products was Raised in February to ≥€7.5bn  Continued successful launch exe- cution and life cycle management  Unchanged  Unchanged  Unchanged ~€3.5bn ≥€1.5bn ≥€1bn ≥€1bn ≥€0.5bn >€2bn ≥€1bn Old Current • Bayer Investor Presentation • Meet Management • June 2014  Continued successful launch exe- cution and life cycle management
  15. 15. Two Recent Steps Forward for Bayer’s Pharma Business • Bayer Investor Presentation • Meet Management • June 2014 Acquisition of Algeta Strategic Pharma sGC Collaboration with Merck  Full control over Xofigo  Comprehensive life-cycle management program, including studies in earlier settings of prostate cancer, combination studies and other tumors  Complementing Bayer’s sGC franchise, including Adempas, with Merck’s cardiovascular capabilities  Leverage joint development capability to fully explore broad potential of sGCs  Building Bayer’s US presence in specialty pharma while leveraging Merck’s US strength Page 13
  16. 16. Pharma – Maximizing the Value of Launch Products Page 14 2013 Guidance 2014 Aspiration 2016 Sales Increase €11.2bn High-single digit % (neg. FX effect approx. -2%) 8% CAGR Adj. EBITDA Increase €3.5bn Low- to mid-single digit % (neg. FX effect approx. -€150m) Adj. EBITDA Margin 31.2% Level with prior year ≥33% Assuming average FX rates of Q4‘13 (USD 1.36) Sales ∆ % Fx & portf. adjusted, margin = EBITDA before special items to sales • Bayer Investor Presentation • Meet Management • June 2014
  17. 17. • Bayer Investor Presentation • Meet Management • June 2014Page 15 Aspire to Become the Leading OTC Company
  18. 18. • Bayer Investor Presentation • Meet Management • June 2014Page 16  Portfolio of some of the world’s most recognized brands  Outperforming market growth in past 7 out of 8 years  Successful expansion in EM focus markets, China, Brazil, and Russia  Selected bolt-on acquisitions in key countries: Steigerwald, Germany & Dihon, China  Acquisition of Merck’s Consumer Care business – a major step towards OTC leadership 3.4 3.5 3.9 3.9 2010 2011 2012 2013 +5% +7% +6% Consumer Care sales in € billion; ∆% Fx & portfolio adj. *planned acquisition, closing expected in H2 2014 Successfully Executing OTC Growth Strategy
  19. 19. • Bayer Investor Presentation • Meet Management • June 2014Page 17 Acquisition of Merck’s Consumer Care Business Makes us #2 Globally and #1 in US Highlights $14.2bn investment, all cash, fully debt financed Complementary portfolio offering scale in key categories and optimized geographic footprint Full trademark ownership for Claritin Market Positioning 2013* *Pro-forma OTC sales 2013; after allowing for the Novartis/Glaxo deal and Bayer/Merck transaction; CC: Consumer Care in € billion
  20. 20. Combination Offers Significant Synergy Potential • Bayer Investor Presentation • Meet Management • June 2014Page 18 Cost synergies of ~$200m p.a. by 2017 Tax benefits from year 1  Asset purchase with significant future tax savings  Savings in marketing costs  Savings in COGS, administration Step-up of EBITDA margin pre-special items at Consumer Care by ~1pp and core EPS accretion of 2% already in the first year Revenue synergies of already ~$400m by 2017  Incremental US sales  Realize brand penetration opportunities ex-US Revenue Cost Tax
  21. 21. Page 19 • Bayer Investor Presentation • Meet Management • June 2014 2013 Sales CAGR 2016e CropScience: Further Growth at Benchmark Profitability
  22. 22. Delivering Growth And Performance at CropScience 6.8 7.3 8.4 8.8 2010 2011 2012 2013  2013 – the 3rd year in a row delivering strong sales growth at record margin  New product sales 2013 up 33% at €1.5bn*  Strong start to 2014 season with sales up 12% Sales in € billion, ∆% Fx & portf. adjusted, Adj. EBITDA margin in % 19.0 24.2 25.5 22.8 +9% +12% Page 20 • Bayer Investor Presentation • Meet Management • June 2014 Customer-centric strategy bearing fruit *Sales with Crop Protection products launched since 2006 +9%
  23. 23. Significant Contribution from New Crop Protection Products • Bayer Investor Presentation • Meet Management • June 2014Page 21 *Sales with Crop Protection products launched since 2006 1.1 1.5 1.8 2.6 2012 2013 2014e 2016e +33% Sales from new Crop Protection products launched since 2006 in €bn ∆% y-o-y, () Fx adj. Q1 0.6  (+16%) - Superior ‘all-in-one’ cereal fungicide with yield-boosting effect  herbicide (+14%) - Excellent weed control in corn and cereals, also in case of glyphosate resistance  (+75%) - Broad-spectrum insecticide with fast, long-lasting action  (+112%) - New fungicide now available in several key markets Q1 2014 Highlights
  24. 24. Significant Investments in our Growth Platforms • Bayer Investor Presentation • Meet Management • June 2014Page 22 BiologicalsSeeds  >€300m R&D investments p.a. to support leadership positions in cotton & oilseed and to develop position in soybean and wheat  Further selected acquisitions to strengthen portfolio and regional setup, esp. in Latin America  Launch of first soybean brand Credenz (2014e)  Launch of first wheat variety (2015e)  Successful market entry with nematode seed treatment Poncho/Votivo (sales 2013: ~€150m)  Acquisition of AgraQuest, global provider of innovative biological pest management solutions  Acquisition of Prophyta, a provider of well-established products, e.g. nematicide BioAct  Acquisition of Biagro* adds nitrogen inoculants & plant health promoters *Subject to regulatory approvals
  25. 25. CropScience – Above Market Growth at Benchmark Profitability Page 23 2013 Guidance 2014 Aspiration 2016 Sales Increase €8.8bn Mid- to high-single-digit % (neg. FX effect approx. -3%) 6% CAGR Adj. EBITDA Increase €2.2bn Low-single-digit % (neg. FX effect approx. -€150m) Adj. EBITDA Margin 25.5% - 24-25% Assuming average FX rates of Q4‘13 (USD 1.36) Sales ∆ % Fx & portf. adjusted, margin = EBITDA before special items to sales • Bayer Investor Presentation • Meet Management • June 2014
  26. 26. • Bayer Investor Presentation • Meet Management • June 2014Page 24 MaterialScience: Improve Returns
  27. 27. • Bayer Investor Presentation • Meet Management • June 2014Page 25 Macro-Economic Environment for MaterialScience Likely to Improve  Oil price expected to stabilize in 2014 (budget of Ø $110 per bbl*)  Supply & demand balances of key products improving with:  Long-term demand drivers intact  Limited net new capacity to come on stream 21% 18% 27% 19% Automotive (+4%) Electro / Electronic (+6%) Construction (+4%) Furniture (+4%) Others (incl. Chemicals) 15% Sales by industry 2013 and expected 2014 growth Key Customer Industries Outlook Additional Key Performance Drivers *Ø 2013: $110 per bbl
  28. 28. • Bayer Investor Presentation • Meet Management • June 2014Page 26 Q1 2014 – MaterialScience: Demand Led Growth Sales Earnings **CAS: Coatings, Adhesives, Specialties; *** IO: Industrial Operations CAS** 0% (+7%) In € million, ∆% yoy, () = Fx & portf. adjusted *before special items; MaterialScience €2,803m; +1% (+5%) Price -3% Volume +8% Fx -3% Portfolio -1% 1,510659 IO*** -6% (-5%) Q1‘13 Q1‘14 Q1‘13 Q1‘14 Adj. EBITDA* Adj. EBIT* 204 366 +79% 43 221 469 165 Polyurethanes +3% (+6%) Polycarbonates -1% (+2%) >100%
  29. 29. MaterialScience – Asset Utilization and Efficiency Measures to Drive Cash Returns • Bayer Investor Presentation • Meet Management • June 2014Page 27 2013 Guidance 2014 Aspiration 2016 Sales Increase €11.2bn Mid-single-digit % (neg. FX effect approx. -2%) Volume growth > global GDP Adj. EBITDA Increase €1.1bn Increase (neg. FX effect approx. -€50m) - CFROI vs. WACC 5.5% < 6.9% - CFROI > WACC Assuming average FX rates of Q4‘13 (USD 1.36) Sales ∆ % Fx & portf. adjusted, margin = EBITDA before special items to sales
  30. 30. Bayer – Optimistic About Future Developments Peak sales potential of new pharma products of ≥€7.5bn Track record of performance: Core EPS with 10% CAGR since 2010 Successful start to 2014 – full-year 2014 group guidance maintained Page 28 Successfully executing on OTC growth strategy • Bayer Investor Presentation • Meet Management • June 2014
  31. 31. Page 29 Appendix • Bayer Investor Presentation • Meet Management • June 2014
  32. 32. EBIT in € million +26% 4,934 3,928 Sales in € million % currency & portfolio adj. +5% 40,15739,741 EBITDA adjusted* in € million +1% 8,4018,280 Core EPS in € +6% 5.61 5.30 *before special items FY’13FY’12 FY’13FY’12 FY’13FY’12 FY’13FY’12 FY 2013 – Encouraging Performance Driven by Life Sciences Page 30 • Bayer Investor Presentation • Meet Management • June 2014
  33. 33. FY 2013 – Regional Performance Page 31 Africa & Middle East Eastern Europe Emerging Economies Emerging Economies¹ +7% Others² +10% USA +4% Western Europe +2% 2013 Group Sales by Region Group €40,157m; +5% ~5,100 +15%~5,800 +4% ~1,700 -1%~2,500 +7% 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, Canada; 3: Emerging Asia = Asia w/o Japan, Australia, New Zealand In € million, ∆% yoy Fx adjusted 38% 10% 31% 21% Latin America Emerging Asia³ • Bayer Investor Presentation • Meet Management • June 2014
  34. 34. FY 2013 – HealthCare Page 32 *before special items 2013 Sales Earnings Pharma +4% (+9%) Consumer Health -1% (+3%) 36% HealthCare €18,924m; +2% (+7%) 11,1887,736 Price +1% Volume +6% Fx -6% Portfolio +1% In € million, ∆% yoy, () = Fx & portf. adjusted FY‘12 FY‘13 FY‘12 FY‘13 3,232 3,490 1,887 1,844 +8% -2% 5,119 5,334 +4% 1,460 -3% 3,787 3,973 +5% 2,327 1,421 Adj. EBITDA* Adj. EBIT* 2,552 +10% • Bayer Investor Presentation • Meet Management • June 2014
  35. 35. FY 2013 – CropScience Page 33 Crop Protection +7% (+11%) Environmental Science -4% (+1%) *before special items Seeds +1% (+1%) 2013 Sales Earnings In € million, ∆% yoy, () = Fx & portf. adjusted CropScience €8,819m; +5% (+9%) Price +3% Volume +7% Fx -5% Portfolio +1% 7,194 FY‘12 FY‘13 FY‘12 FY‘13 2,025 2,248 +11% 1,543 1,801 +17% Adj. EBITDA* Adj. EBIT* 651 974 • Bayer Investor Presentation • Meet Management • June 2014
  36. 36. FY 2013 – MaterialScience Page 34 2013 Sales Earnings In € million, ∆% yoy, () = Fx & portf. adjusted MaterialScience €11,238m; -2% (0%) Price 0% Volume +1% Fx -2% Portfolio 0% 6,054 FY‘12 FY‘13 FY‘12 FY‘13 Adj. EBITDA* Adj. EBIT* 1,263 1,072 -15% 613 429 -30% Polycarbonates -6% (-5%) CAS** -6% (-2%) 2,640 IO*** -4% (-4%) 1,863 681 Polyurethanes +1% (+4%) **CAS: Coatings, Adhesives, Specialties; *** IO: Industrial Operations *before special items; • Bayer Investor Presentation • Meet Management • June 2014
  37. 37. FY 2013 – Cash Flow And Net Debt Development Page 35 -€0.3bn 6.7 GCF oFCF 5,832 Invest- ments 2,157 3,014 ∆ y-o-y +28% +16% NCF 5,171 +14% +12% Dec 31, 2012 Dec 31, 2013 7.0 FY 2013 Cash Flow Net Debt Development Cash Flow in € million, Net Debt in € billion • Bayer Investor Presentation • Meet Management • June 2014
  38. 38. On Our Way to OTC Leadership Investor Handout – Meet Management Acquisition of Merck & Co.’s Consumer Care Business June 2014 – New York
  39. 39. Evolution of Bayer Consumer Care’s OTC Business 2008 Acquisition of OTC brand portfolio from Sagmel (CEE) and Topsun (China) 1999 Aspirin trademark centenary-worldwide sales > €500m 1899 ASPIRIN introduced as an over-the-counter (OTC) medicine 1994 Consumer Care business group created by the acquisition of North American OTC business of Sterling; Acquisition of the “Bayer Cross” Trademark in USA 2005 Acquisition of Roche Consumer Health 2013 Aspirin trademark sales of >€900m Acquisition of Steigerwald (Germany) Page 37 • Bayer Investor Presentation • Meet Management • June 2014 2014 Proposed acquisition of Merck’s Consumer Care business (US) Transaction agreement signed with Dihon Pharmaceutical Group (China)
  40. 40. • Bayer Investor Presentation • Meet Management • June 2014Page 38 Growth Strategy  Maximize brand potential  Global expansion of key brands  Exploit our innovation pipeline  Grow in emerging markets  Increase commercial power  Bolt-on acquisitions to strengthen portfolio & regional set-up 3.4 3.5 3.9 3.9 2010 2011 2012 2013 +5% +7% +6% Consumer Care sales in € billion; ∆% Fx & portfolio adj. Bayer Consumer Care – Outperforming Markets in Past 7 Out of 8 Years
  41. 41. Merck’s Consumer Care Business Fits Perfectly With Bayer Consumer Care • Bayer Investor Presentation • Meet Management • June 2014 Complementary Portfolio Building on core competencies  Creation of a global leader in OTC  Gaining scale in key categories CASF1, dermatology, and gastrointestinal  Optimizing footprint in North America  Strong track record of growing OTC brands  Strong geographical presence to broaden Merck’s portfolio globally  Utilizing integration skills from past transactions Page 39 Acquisition criteria fulfilled  Creating leadership positions in important consumer care categories and geographies  Increasing consumer care margin2 by ~1pp from year 1  Immediate core EPS accretion from year 13 1 cold, allergy, sinus, flu; 2 EBITDA pre-special items; 3 transaction incl. sGC collaboration
  42. 42. Page 40 • Bayer Investor Presentation • Meet Management • June 2014 Combined Portfolio Significantly Strengthens Global Positions Gastrointestinal Analgesics3 CASF2 Nutritionals Dermatology1 Total Others4 3,904 1,635 5,539 1,110 386 372 803 126 513 439 141 1,023 834 1 including sun care; 2 Cold, Allergy, Sinus, Flu; 3 including Cardio; 4 Foot Health, Women’s Health, Other 1,496 1,023 1,175 834 580 431 #1 #2 #3 #1 #2 Global position*2013 Sales in €m (pro-forma portfolio) Note: Merck sales converted at average USD rate of 1.33 (FY 2013) 305 *After allowing for the Novartis/Glaxo deal; excluding Dihon acquisition in China; excluding Rx MerckBayer
  43. 43. Page 41 • Bayer Investor Presentation • Meet Management • June 2014 Combined Portfolio Significantly Strengthens Geographic Footprint Note: Merck sales converted at average USD rate of 1.33 (FY 2013) *After allowing for the Novartis/Glaxo deal; excluding Dihon acquisition in China; excluding Rx Latin America Europe North America Total Asia/Pacific 3,904 1,635 5,539 1,117 1,105 1,621 170 389 513 141 777 2,222 1,791 946 580 #1 #1 #5 #2 Global position*2013 Sales in €m (pro-forma portfolio) 191 169 MerckBayer
  44. 44. FY 2013 sales in € million (∆% yoy Fx-adj.) 321 310 232 214** 207 176 158 257 *Total Aspirin includes Aspirin Complex and Aspirin Cardio (Rx) **Total Alka-Seltzer includes Alka-Seltzer and Alka-Seltzer Plus 916* = Rx Sales Page 42 • Bayer Investor Presentation • Meet Management • June 2014 Combined Top 10 Portfolio – Individual Brands with Annual Sales >€100m 576 Note: Merck sales converted at average USD rate of 1.33 (FY 2013); based on pro-forma FY 2013 net sales
  45. 45. • Bayer Investor Presentation • Meet Management • June 2014Page 43 Top Priorities To Be Executed Immediately After Closing of Transaction…  Ensure fast integration into operations  Safeguard product supply  Realize synergy potential  Prioritize brand strategies within combined portfolio  Realize Merck brand penetration opportunities ex-US  Define and execute individual brand strategies  Develop US scale advantage  Strive for leadership with trade customers  Provide a broader product portfolio Critical mass in US Brand Roll- Out ex-US Smooth integration
  46. 46. • Bayer Investor Presentation • Meet Management • June 2014Page 44 Clear Strategy For a Smooth Integration 2014 Q2 2014 Q42014 Q3 2015 (End State)  Smooth integration expected due to experienced management team • Ensure effective integration into Consumer Care • Safeguard on-going product supply • Prioritize and execute identified brand development / expansion strategies • Ensure sufficient future capacity for growth • Capitalize on Merck’s innovation capabilities • Achieve scale and revenue synergies • Capture consolidation and efficiency synergies by 2017  Deal signing  Deal closing  Consolidation / Integration
  47. 47. • Bayer Investor Presentation • Meet Management • June 2014Page 45 Enhanced Scale and Broader Category Scope Improve Product Offerings US Retail Sales CASF Benefits from Enhanced Scale  Co-promoting complementary brands  New item assortment and shelving opportunities  Improved merchandising efficiencies  Bigger and more impactful trade events  Foster strategic partnerships with retailers FY 2013 retail sales in CASF in $ million* $- $200 $400 $600 $800 $1,000 $1,200 RB Bayer & Merck J&J Merck & Co. P&G Pfizer Chattem Bayer GSK *Source: IRI; Latest 52WK; December 2013  Make Bayer Consumer Care Top Strategic Partner for US Retailers
  48. 48. Maximizing Brand Potential Through Global Expansion Brand Sales by Major Region 2013 Expansion Plans • Bayer Investor Presentation • Meet Management • June 2014Page 46 Analgesic ~80% in North America ~95% in North America Wound-healing ~75% in Europe Anti-fungal ~75% in Europe & LatAm Vitamins & minerals ~50% in Europe ~80% in North America CASF Sun Care
  49. 49. • Bayer Investor Presentation • Meet Management • June 2014Page 47 Russia Country OTC Market Sales Growth 2013* Execution Plans China  Global #2  Growing 2x the global rate  Use investments in footprint, brand-building and sales capabilities to extend Claritin leadership  Build sun care category with Coppertone Brazil  Global #7  Fastest growing market in LATAM  Use investments in brand-building and channel capabilities to develop key new categories (sun care, foot care, allergy)  Revitalize Coppertone and Dr. Scholl’s brands Russia  Global #4  Retail OTC is largest healthcare segment  Focus on CASF brands using current position to roll-out extended offerings  Achieve #2 position Execution Plan Focused on Key Brands in Key Emerging Markets +38% +26% +14% *Bayer Consumer Care sales, currency-adjusted
  50. 50. Consumer Care is Well-Positioned for Growth – Aspire to Clear OTC Leadership OTC Market Attractive Bayer Has Strong #2 Position Plans for Continued Future Growth  Trends favor continued growth  OTC market model based on long-term brand building  OTC businesses becoming more valuable over time  Leader in key categories  Multiple strong brands  Track record of outperforming market growth  Globalize established brands & launch innovation pipeline  Focus on emerging markets where most of growth will come  Strategic acquisitions and alliances Page 48 • Bayer Investor Presentation • Meet Management • June 2014
  51. 51. Investor Handout – Meet Management Bayer HealthCare June 2014 – New York
  52. 52. Leading Positions in Key Healthcare Markets • Bayer Investor Presentation • Meet Management • June 2014 Pharma €11,188m  Leading positions in key therapeutic categories Consumer Care €3,904m  Global #2 in OTC-pharmaceuticals Medical Care €2,526m  #1 in fluid injection systems, #1 in contrast media, #3 in blood glucose meters Animal Health €1,306m  Global #5, #2 in parasiticides Sales Split by Segment 2013 25% 59% 7% 21% 13% HealthCare €18,924m Page 50
  53. 53. FY 2013 – Growth Mainly Pharma Driven • Bayer Investor Presentation • Meet Management • June 2014 *before special items FY 2013 HealthCare Sales Earnings Pharma +4% (+9%) Consumer Health -1% (+3%) 36% 11,1887,736 In € million, ∆% yoy, () = Fx & portf. adjusted FY 12 FY 13 FY 12 FY 13 3,232 3,490 1,887 1,844 +8% -2% 5,119 5,334 +4% 1,460 -3% 3,787 3,973 +5% 2,327 1,421 Adj. EBITDA* Adj. EBIT* 2,552 +10% HealthCare €18,924m; +2% (+7%) Price +1% Volume +6% Fx -6% Portfolio +1% Page 51
  54. 54. FY 2013 – Top 10 HealthCare Product Performance • Bayer Investor Presentation • Meet Management • June 2014 MI: Myocardial infarction Sales in € million; ∆% y-o-y Fx adjusted +6% -12% -1% +3% +2% +10% -1% +2% +211% 1,202 1,038 916 771 949 719 853 722 603 487 Hemophilia A Multiple Sclerosis Anticoagulation Contraception Cancer Blood Glucose Meter Contraception Analgetic & sec. MI Prevention Parasiticide -13% Hypertension Page 52
  55. 55. FY 2013 – Strong Business Momentum in All Regions, Especially Emerging Markets • Bayer Investor Presentation • Meet Management • June 2014 Emerging Economies 25% FY 2013 HealthCare Sales Latin America Eastern Europe Africa & Middle East ~2,190 +7% ~1,980 +10% ~1,140 ~880 +4% 24% USA +5% 30% 33% 13% Sales in € million; ∆% y-o-y Fx adjusted Emerging Economies¹ +8% Emerging Asia³ Western Europe +6% Others² +12% HealthCare €18,924m; +2% (+7%) Page 53 +10% 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, Canada; 3: Emerging Asia = Asia w/o Japan, Australia, New Zealand
  56. 56. • Bayer Investor Presentation • Meet Management • June 2014 Recently Launched Pharma Products Drive Growth Page 54
  57. 57. Q1 2014 – HealthCare: Recently Launched Products Drive Growth Page 55 *before special items Sales Earnings Pharma +9% (+15%) Consumer Health -5% (+1%) 36% HealthCare €4,572m; +3% (+9%) 2,7821,790 Price 0% Volume +9% Fx -7% Portfolio +1% In € million, ∆% yoy, () = Fx & portf. adjusted Q1‘13 Q1‘14 Q1‘13 Q1‘14 832 873 445 428 +5% -4% 1,277 1,301 +2% 343 -6% 953 946 -1% 610 321 Adj. EBITDA* Adj. EBIT* 625 +2% • Bayer Investor Presentation • Meet Management • June 2014
  58. 58. Q1 2014 – Top 10 HealthCare Product Performance • Bayer Investor Presentation • Meet Management • June 2014 MI: Myocardial infarction Sales in € million; ∆% y-o-y Fx adjusted +133% -6% +14% +12% +239% -12% -1% -22% 342 270 183 178 190 146 181 157 140 Hemophilia A Multiple Sclerosis Anticoagulation Contraception Cancer Ophthalmology Contraception Analgetic & sec. MI Prevention -3% Hypertension Page 56 Blood Glucose Meter 217 +6%
  59. 59. • Bayer Investor Presentation • Meet Management • June 2014Page 57 2013 Sales CAGR 2016e Pharma: Maximize Value of Launch Products
  60. 60. 2011 2012 2013 2014 Page 58 Pharma – Incremental Investments For A New Performance Level * new indications and new countries; products include Xarelto, Eylea, Stivarga, Xofigo, Adempas• Bayer Investor Presentation • Meet Management • June 2014 Launch product sales in € bn  Launch product* sales target of ~€2.8bn in 2014 (old aspiration 2015: >€2.5bn)  Launch phase to continue with >100 new launch events*  Continuous R&D investments in life- cycle management  R&D investments in new drug candidates  Increased marketing and sales investments in emerging markets  Incremental marketing and R&D investments of €0.5bn planned in 2014 <0.1 0.4 1.5 ~2.8 Stivarga Xarelto Eylea Xofigo Recently launchd Pharma products*
  61. 61. Pharma – Additional Investments To Execute >100 Launch Events in 2014 • Bayer Investor Presentation • Meet Management • June 2014Page 59 1: regulatory process ongloing, launch preparations assuming approval DTC: Differentiated thyroid cancer; mCRC: Metastatic colorectal cancer ; mGIST: Metastatic gastrointestinal cancer; ACS: Acute coronary syndrome  ~ 30 launches planned in secondary prevention of ACS  Market introduction planned in >20 countries  > 30 launches planned in mGIST1 in EU and other markets; continue roll-out in mCRC (examples include Spain, Italy, Turkey)  ~ 15 launches planned, including wetAMD and additional indications (CRVO, mCNV1, DME1)  Launches1 planned in > 20 countries  > 30 launches planned in DTC1 in EU and other markets Major Examples  > 30 launches planned
  62. 62. • Bayer Investor Presentation • Meet Management • June 2014 Peak Sales Potential of Launch Products Raised in February 2014 Peak Sales Potential* * from 5 recently launched products: Xarelto, Eylea, Stivarga, Xofigo, Adempas Page 60
  63. 63. Page 61 Pharma – Peak Sales Potential of Launch Products Raised in February to ≥ € 7.5bn* *assuming approvals and launches as planned  Continued successful launch exe- cution and life cycle management  Continued successful launch exe- cution and life cycle management  Unchanged  Unchanged  Unchanged ~€3.5bn ≥€1.5bn ≥€1bn ≥€1bn ≥€0.5bn >€2bn ≥€1bn Old Current • Bayer Investor Presentation • Meet Management • June 2014
  64. 64. Xarelto – Broadest Profile of Any Novel Oral Anticoagulant • Bayer Investor Presentation • Meet Management • June 2014 Peak sales potential ~ €3.5bn  Oral Factor Xa inhibitor  Once-daily dosing advantage*  First launches in EU for secondary prevention of ACS underway  Two-dimensional approach in life-cycle management:  Expansion into additional thromboembolic disease areas  Strengthening the clinical profile in approved indications and special patient populations *exception 15mg BID dosing for treatment of acute DVT/PE or 2.5mg BID for ACS sec. prevention; ACS: Acute coronary syndromePage 62
  65. 65. • Bayer Investor Presentation • Meet Management • June 2014 Xarelto – Performance Exceeding Expectations Page 63  World-class launch, achieved leading position in the novel anticoagulants segment in key markets  Uptake significantly exceeding expectations  Sales target 2014: € 1.3-1.5bn131 155 219 259 316 342 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Xarelto sales in million €
  66. 66. Expanding and Strengthening the Profile of Xarelto • Bayer Investor Presentation • Meet Management • June 2014Page 64  Significant medical need in thromboembolic disease areas  Heterogeneous patient populations in existing indications deserve further characterisation  Two-dimensional approach in life-cycle management Expansion into addional thromboembolic disease areas Strenghtening the clinical profile in approved indications  Peripherial arterial disease / coronary arterial disease  Chronic heart failure with coronary arterial disease  Medically ill patients  Patients with percutaneus coronary intervention  Patients who undergo cardioversion  Patients undergoing ablation  Evaluate 10mg /20mg dose vs. ASA in secondary prevention of VTE ASA: Acetylsalicylic acid, VTE: Venous thromboembolism
  67. 67. Eylea – Developed for the Treatment of Multiple Back-of-the-Eye-Diseases • Bayer Investor Presentation • Meet Management • June 2014 Peak sales potential ≥ €1.5bn  Eylea is an anti-angiogenic therapy, formulated for injection into the eye  Strong adoption by retina community in wAMD based on convenient bimonthly dosing1 regimen  Comprehensive range of indications to address major eye diseases2:  Launched in wAMD and CRVO; roll-out ongoing  Filed for DME (EU: 11/13; J: 02/14)  Filed for mCNV in Japan (11/13)  Filing planned for BRVO (in J, other regions under evaluation) 1: after an initial phase of 3 consecutive monthly injections; 2: Bayer has marketing rights ex-US; wAMD: Wet age-related macular degeneration; CRVO: Central retinal vein occlusion; BRVO: Branched retinal vein occlusion; mCNV: Myopic choroidal neovascularization; DME: Diabetic macular edema Page 65
  68. 68. • Bayer Investor Presentation • Meet Management • June 2014 Eylea – Excellent Launch Trajectory Page 66  Excellent launch execution ahead of expectations  Market shares* > 45 % in Japan and Australia  Roll-out in Europe underway  Strong uptake in early launch markets Germany and Switzerland  Encouraging launch in France and UK  Positive NICE guidance for CRVO indication in UK obtained in 02/14  Progress with launch preparations for i) additional countries and ii) additional back-of-the-eye diseases** *Market share as of December 2013 (Source IMS) ** pending regulatory approval 14 49 73 85 126 157 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Eylea sales in million €
  69. 69. Stivarga – Developed as a Treatment for Cancers of the Digestive Tract • Bayer Investor Presentation • Meet Management • June 2014  Oral cancer drug, potently blocking multiple protein kinases  Launched for treatment of mCRC and mGIST in the US & Japan  Launched for treatment of mCRC (8/13) and filed for mGIST (9/13) in Europe  Encouraging initial uptake  Expanding to new indications  Phase III in 2nd line liver cancer ongoing  Phase III in CRC (adjuvant therapy after resection of liver metastases) ongoing mCRC: Metastatic colorectal cancer GIST: Gastrointestinal stromal tumors Peak sales potential ≥ €1bn Page 67
  70. 70. Entering Additional Cancers of the Gastro-Intestinal Tract with Stivarga • Bayer Investor Presentation • Meet Management • June 2014Page 68  Positive clinical data in metastatic colorectal cancer and 2nd-line hepatocellular carcinoma  Mode of action suggesting activity in a broad range of tumor types  Life-cycle management targets:  Phase III in 2nd-line hepatocellular carcinoma  Phase III in colorectal cancer after resection of liver metastases  Signal generating early clinical studies in various cancer types including gastric cancer HCC: Hepatocellular carcinoma CRC: Colorectal cancer Expand in HCC and CRC Expand to additional tumor types
  71. 71. • Bayer Investor Presentation • Meet Management • June 2014 Xofigo – A New Treatment for CRPC Patients with Bone Metastases  First in class alpha-pharmaceutical  Treatment of CRPC with symptomatic bone metastases and no known visceral metastatic disease  Launched in the US (06/13)  Approved in Europe (11/13) – launch underway  High awareness among oncologists and urologists  Life-cycle program initiated (including combination studies in earlier settings of prostate cancer) CRPC: Castration-resistant prostate cancer Peak sales potential ≥ €1bn Page 69
  72. 72. Addressing Multiple Life-Cycle Opportunities for Xofigo (Radium-223 dichloride) • Bayer Investor Presentation • Meet Management • June 2014Page 70 Life-Cycle Opportunities Repeat dosing in CRPC Higher dose in CRPC Earlier disease stages of CRPC Combination study in CRPC Expansion into additional cancer types Addressed Through Phase II trial assessing the short and long-term safety of re- treatment Phase II trial with dose higher than the approved 50 kBq/kg Phase I and/or II studies in breast cancer, osteosarcoma and potentially in additional cancer types Phase III combination trial with abiraterone / phase II combination with abiraterone or enzalutamide CRPC: Castration resistant prostate cancer Status initiated initiated initiated planned
  73. 73. Adempas – First-in-Class sGC Stimulator for Treatment of PAH and CTEPH • Bayer Investor Presentation • Meet Management • June 2014  Oral soluble guanylate cyclase (sGC) stimulator approved for treatment of PAH and CTEPH  First and only drug receiving marketing authorization for the treatment of CTEPH  Launched in the US for treatment of PAH and CTEPH (10/13)  Launched in J for treatment of CTEPH (04/14) – filed for PAH (04/14)  Launched in first EU countries for CTEPH and PAH (04/14)  Collaboration with Merck & Co. announced in May 2014 - 50/50 cost/profit split, joint development and commercialization strategy *for indications PAH and CTEPH; CTEPH; : Chronic thromboembolic pulmonary hypertension; PAH: Pulmonary arterial hypertension Peak sales potential ≥ €0.5bn* Page 71
  74. 74. Adempas – Life Cycle Management Beyond PAH and CTEPH • Bayer Investor Presentation • Meet Management • June 2014 PAH: Pulmonary arterial hypertension; CTEPH: Chronic thromboembolic pulmonary hypertension; PH-ILD: Pulmonary hypertension due to interstitial lung disease Page 72  Positive phase II data in PH-ILD prompt initiation of phase IIb in PH-IIP (a specific sub- segment of PH-ILD)  Majority of PH-IIP patients suffer from pulmonary hypertension due to idiopathic pulmonary fibrosis  No approved treatment option  Chronic systemic autoimmune disease characterized by fibrosis  No approved treatment  Strong preclinical antifibrotic data Pulmonary hypertension with idiopathic interstitial pneumonia (PH-IIP) Diffuse systemic sclerosis (SSc)
  75. 75. Page 73 Accelerating the Development of 5 early/mid-stage Pipeline Assets • Bayer Investor Presentation • Meet Management • June 2014 R&D
  76. 76. Five New Molecular Entities Selected For Accelerated Development • Bayer Investor Presentation • Meet Management • June 2014Page 74 Project Mechanism Indication Status Copanlisib (BAY 80-6946) PI3-Kinase Inhibitor Cancer Phase II in NHL ongoing Finerenone (BAY 94-8862) MR Antagonist Chronic heart failure (CHF) Diabetic nephropathy (DN) Phase IIb in CHF and phase II in DN ongoing Molidustat (BAY 85-3934) HIF-PH Inhibitor Anemia Phase IIb ongoing Vericiguat (sGC-Stimulator BAY 1021189) sGC Stimulator Worsening chronic heart failure Phase IIb ongoing; collaboration with Merck & Co. Inc. Vilaprisan (sPRM) (BAY 1002670) Progesterone Receptor Antagonist Symptomatic uterine fibroids Phase IIb ongoing MR: Mineralocorticoid receptor; NHL: Non-Hodkin´s lymphoma HIF-PH: HIF prolyl hydroxylase; sGC: Soluble guanylate cyclase; sPRM: Selective progesterone receptor modulator
  77. 77. Positive Proof-of-Concept Increases Confidence in NME-quality • Bayer Investor Presentation • Meet Management • June 2014Page 75 NME: New molecular entity CHF: Chronic heart failure EPO: Erythropoietin Copanlisib Finerenone Molidustat Vericiguat (sGC-Stimulator) Vilaprisan (sPRM) 100% of patients (6/6) with follicular lymphoma achieved a partial response as best response in phase I Phase II results in CHF patients suggest improved safety with at least similar efficacy compared to spironolactone Improvement in important cardiological parameters observed in phase I Significant increase in levels of endogeneous EPO and reticulocytes demonstrated in phase I Phase IIa data demonstrated reversible induction of amenorrhea
  78. 78. • Bayer Investor Presentation • Meet Management • June 2014Page 76 Copanlisib (BAY 80-6946) – A PI3K-Inhibitor in Phase II in Cancer ● In most tumor cells, the PI3K-signaling cascade is activated and provides important tumor growth and survival signals ● Copanlisib is a pan class I PI3K-inhibitor with dominant  activity ● Copanlisib has shown a broad anti- tumor spectrum in preclinical tumor models ● Phase II in Non-Hodgkin’s lymphoma is ongoing; completion expected 1H 2015 Phosphatidylinositol-3 kinases (PI3K) play a central role in cellular signal transduction processes Copanlisib
  79. 79. • Bayer Investor Presentation • Meet Management • June 2014Page 77 Copanlisib Has Shown Substantial Activity in Follicular Lymphoma *Data from Patnaik A et al.; ASH 2012; 18FDG-PET: 18fluorodeoxyglucose - positron emission tomography 18FDG-PET scans of a follicular lymphoma patient with partial response ● Phase I trial successfully completed ● 100% of patients (6/6) with follicular lymphoma (FL) responded to therapy achieving a partial response as best response* ● Maximum response duration > 840 days ● Encouraging signals in diffuse large B cell lymphoma patients ● 18FDG-PET data suggest that Copanlisib has rapid antitumor activity 52-year-old female with FL, grade 1-2, diagnosed stage IVa
  80. 80. • Bayer Investor Presentation • Meet Management • June 2014Page 78 Selective Progesterone Receptor Modulation for Treatment of Uterine Fibroids ● Uterine fibroids are the most common benign tumors in women of reproductive age: 5-10% of premenopausal population suffers from symptomatic fibroids ● Symptoms may include heavy menstrual bleeding and tumor size related symptoms ● Current therapies include surgical procedures or short-term use of GnRH analogs for estrogen depletion ● Growth of fibroids strongly depends on progesterone and estrogen ● Progesterone receptor modulation may offer long-term treatment of uterine fibroids without estrogen depletion side effects of GnRH analogs GnRH: Gonadotropin-releasing hormone sPRM: Selective progesterone receptor modulator PR Transcription Activation Endometrial Modulation & Fibroid Growth sPRM Transcription Endometrial Modulation & Fibroid Growth PR
  81. 81. • Bayer Investor Presentation • Meet Management • June 2014Page 79 Vilaprisan (sPRM; BAY 1002670) – For the Treatment of Symptomatic Uterine Fibroids ● Vilaprisan is a novel oral, highly potent and selective progesterone receptor modulator ● Exhibits marked efficacy in an innovative humanized fibroid disease model1 ● Phase IIa data (N=67) showed proof of concept including: ● Reduction of bleeding: induced amenorrhea (non-bleeding) in >60% of women treated with dosages >1mg/day ● Reversal of amenorrhea after treatment cessation ● No prohibitive safety findings 1 Wagenfeld et al. Hum Reprod. 2013 Aug;28(8):2253-64 Phase IIa data BAY Vilaprisan Dose effect curve for amenorrhea rate 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 0102030405060708090100 Point estimate (median) 90% Credible interval Observed rate Efficacy threshold Dose (mg) Amenorrhearate(%)
  82. 82. • Bayer Investor Presentation • Meet Management • June 2014Page 80 Renal Anemia is an Important Area of Unmet Medical Need ● Diseased kidneys do not produce sufficient levels of erythropoietin (EPO) in response to hypoxia, leading to anemia ● CKD/ESRD is the leading cause of anemia in industrialized countries ● Substitution with parenteral EPO is standard of care – however, un- physiologically high EPO doses correlate with significant side effects ● There is a need for novel therapies that lack the side effects of high doses of EPO-substitution CKD: Chronic kidney disease ESRD: End-stage renal disease Anemia Low oxygen level (Hypoxia) Normal kidney function Impaired kidney function EPO Red blood cell formation EPO Normal red blood cell count Insufficient formation of red blood cells
  83. 83. • Bayer Investor Presentation • Meet Management • June 2014Page 81 Molidustat – An Oral HIF-PH Inhibitor for Treatment of Renal Anemia Increased red blood cell production Inhibition of HIF-PH increases the stability of HIF resulting in production of endogeneous EPO - potential novel therapeutic approach for the treatment of renal anemia Under normal oxygen conditions, HIF gets hydroxylated by HIF-PH and then degraded Under hypoxia conditions, HIF is activated and induces the synthesis of erythropoietin (EPO) in the kidneys which stimulates red blood cell formation Nucleus HIFHIF Low oxygen levels HIF Hydroxylation HIF Normal oxygen levels HIF-PH O2 hHIFhHIF Degradation Degraded HIF HIFHIF Inhibition of HIF-PH in renal anemia HIF-PH O2 EPO ↑ Nucleus EPO ↑ Nucleus Increased red blood cell production HIF: Hypoxia-inducible factor HIF-PH: HIF prolyl hydroxylase (enzyme) hHIF: hydroxylated HIF
  84. 84. • Bayer Investor Presentation • Meet Management • June 2014Page 82 Molidustat (BAY 85-3934) – Proof of Concept Demonstrated EPO: Erythropoietin HIF-PH: HIF prolyl hydroxylase ● Molidustat is a novel oral inhibitor of the enzyme HIF-PH ● In development for the treatment of anemia associated with chronic kidney disease ● Phase I in healthy subjects showed: ● Significant increase of EPO levels after ≥ 12.5 mg ● Significant increase of reticulocytes for doses ≥ 37.5 mg ● No prohibitive safety findings Maximal EPO concentration after single dose administration of Molidustat (Phase I) 0 10 20 30 40 50 Placebo 5 mg 12,5 mg 25 mg 37,5 mg 50 mg EPO[U/L] Dose
  85. 85. • Bayer Investor Presentation • Meet Management • June 2014Page 83 MR-Inhibition is a Proven Principle in the Treatment of Heart Diseases MR: Mineralocorticoid receptor HF: Heart failure aldosterone / cortisol Overactivated MR causing e.g.   Na+ and water retention  K+ loss  Hypertensive effects  Vascular  inflammation/injury  Myocardial/renal fibrosis  Proteinuria MR antagonist KidneyHeart  MR has multiple functions:  Regulation of salt, fluid homoestasis and blood pressure  Mediator of oxidative stress, subsequent inflammation, fibrosis and cardiorenal disease  Steroidal MR antagonists spironolactone and eplerenone have been shown to be effective in reducing cardiovascular mortality in patients with HF but are underutilized due to the risk of hyperkalaemia, renal dysfunction and anti-androgenic / progestogenic side effects  Steroidal MR antagonists are not approved for kidney diseases eg. diabetic nephropathy
  86. 86. • Bayer Investor Presentation • Meet Management • June 2014Page 84 Finerenone – A Novel Non-Steroidal and Selective MR-Antagonist CHF: Chronic heart failure; CKD: Chronic kidney disease BNP: Brain natriuretic peptide; B. Pitt et al., Eur. Heart J. 2013; doi:10.1093/eurheartj/eht187 Mean increases in serum potassium concentration Finerenone10mg o.d.: 0.21 mmol/l Spironolactone: 0.45 mmol/l P <0.001 Mean change in estimated glomerular filtration rate Finerenone10mg o.d.: -2.69 ml/min/1.73m² Spironolactone: -6.70 ml/min/1.73m² P <0.05 Median change from baseline in NT-proBNP Finerenone 10mg o.d.: -193 pg/mL Spironolactone: -170 pg/mL (descriptive analysis) Decreased BNP/NT-proBNP – a key parameter for cardiac stress Indicates lower incidence of hyperkalaemia Indicates lower incidence of worsening of renal function Phase II results suggest improved safety with at least similar efficacy on key cardiac and renal parameters compared to spironolactone Data at Day 29 +/- 2 in part B of the study with 392 pts in total;Spironolactone was given at an initial dose of 25mg o.d. and uptitrated to 50mg o.d. on day 15±1 if sodium potassium concentration remained ≤4.8mmol/L; * eGFR 30-60 ml/min/1.73m² Key phase II findings in patients with CHF and moderate* (part B) CKD :
  87. 87. • Bayer Investor Presentation • Meet Management • June 2014Page 85 sGC Modulation Has Significant Potential  Cardiovascular diseases to be the #2 therapeutic area by 2019**  Significant areas of unmet medical need including heart failure, forms of pulmonary hypertension, resistant hypertension, etc.  Recently discovered mechanism of sGC modulation holds promise to address several areas of unmet need Unmet Medical Need in Cardiovascular Diseases sGC Modulation * sGC: Soluble guanylate cyclase; *cyclic guanosine monophosphate **DecisionResources 2014
  88. 88. Strategic Pharma sGC Collaboration with Merck & Co. Inc.  Maximize potential of all pipeline assets  Leverage R&D expertise in cardiovascular  Improve funding capabilities – thereby maximizing commercial potential of pipeline assets  Optimize combined marketing & sales power Collaboration between Merck and Bayer on sGC modulation to Page 86 Joint development and commercialization strategy with global 50-50 cost and profit sharing Merck to pay Bayer up to $2.1bn, comprising $1.0bn up-front and up to $1.1bn in contingent milestone payments • Bayer Investor Presentation • Meet Management • June 2014
  89. 89. Maximizing the Potential of sGC Modulation  Bayer has marketing rights in Americas; Merck in all other territories  Co-promotion option for both parties in territories of other party  Enables Bayer to build its commercial presence in US specialty pharma while maximizing value of Adempas *scope defined by sGC mechanism Adempas (Riociguat) Vericiguat (BAY 1021189)  Merck has marketing rights in Americas; Bayer in all other territories  Co-promotion option for both parties in territories of other party  Maximizes value of Vericiguat by leveraging Merck’s US strength Early/Future Pipeline Assets*  Option to include other sGC pipeline assets (of both parties) that successfully complete Phase 1 in the next 5 years  Global 50/50 cost/profit split; joint development and commercialization strategy Page 87 • Bayer Investor Presentation • Meet Management • June 2014
  90. 90. • Bayer Investor Presentation • Meet Management • June 2014Page 88 sGC Stimulation to Address Unmet Medical Need in Patients with Heart Failure ● Worsening chronic heart failure is an established indication with high medical need ● Limitations of standard of care include tolerance, oxidative stress, endothelial dysfunction and venoselectivity ● sGC stimulation can improve hemodynamics via restoration of cardiac and vascular cGMP signaling ● sGC stimulation may provide a new principle to reduce event rates in patients with worsening chronic heart failure Clinicalstatus Patients who require hospitalization due to HF (worsening HF) have a poor prognosis with high rates of re-hospitalization and death sGC: Soluble guanylate cyclase HF: Heart failure
  91. 91. • Bayer Investor Presentation • Meet Management • June 2014Page 89 Vericiguat (sGC Stimulator; BAY 1021189) – Improvement of Cardiovascular Function sGC: Soluble guanylate cyclase HF: Heart failure Phase I of Vericiguat show improved cardiac output (n = 36) Fi gur e: Means and st andard devi at i ons f or i mpedance cardi ography over t i me f or Cardi ac Out put (L/ mi n) over t i me (val i d f or PD) Day 1 0H 00M 1H 00M 2H 00M 3H 00M 4H 00M 3. 0 3. 5 4. 0 4. 5 5. 0 5. 5 6. 0 6. 5 7. 0  Placebo  5 mg  7.5 mg  10 mg 0 1 2 3 4 Time (h) 33.544.55.05.56.06.57.0  Vericiguat is a novel sGC stimulator suitable for once-a-day dosing  Phase I successfully completed – improvement observed in important cardiological parameters, including:  Cardiac output / index (“volume of blood pumped by the heart”)  Systemic vascular resistance  Stroke volume  No untoward safety findings in phase I  Collaboration with Merck & Co (50/50 cost/profit split), joint development and commercialization strategy Cardiacoutput(L/min)
  92. 92. The New sGC Franchise is Strong in the Industry Phase I Phase III Submitted LaunchedPhase IIIndicationProject PAH/CTEPH PH-IIP dSSc CF wCHF PH PH-HF Adempas Vericiguat MK 8892* rHT Research* in preparation in preparation in preparation Research/ Preclin. • Bayer Investor Presentation • Meet Management • June 2014Page 90 PH: Pulmonary hypertension; PAH:Pulmonary arterial hypertension; CTEPH: Chronic thrombmoembolic PH; PH-IIP: PH assoc. with interstitial idiopathic pneumonia; dSSc: Diffuse systemic sclerosis; CF: Cystic fibrosis; wCHF: Worsening chronic heart failure; rHT: Resistant hypertension; HF: Heart failure *Potential collaboration assets, subject to execution of options in the next 5 years after successful completion of Phase 1 BAY sGCstim * BAY sGCact * Raynaud’s
  93. 93. Major Expected Pharma Pipeline Newsflow 2014/2015 • Bayer Investor Presentation • Meet Management • June 2014 Estimated primary study completion as of May 2014 HCC: Hepatocellular carcinoma; NHL: Non-Hodkin‘s lymphoma;; MR: Mineralocorticoid receptor; HF: Heart failure; PI3-Kinase: Phosphatidylinositol-3 kinases, sGC :Soluble guanylate cyclase; HIF-PH: HIF prolyl hydroxylase Page 91 2014 2015 BAY 85-8501 (Elastase Inhibitor) Completion of phase II in bronchiectasis Copanlisib (PI3-Kinase Inhibitor) Completion of phase II in NHL Stivarga Completion of phase III in 2nd-line HCC Finerenone (MRAntagonist) Completion of phase II in diabetic nephropathy Vericiguat Completion of phase II in worsening chronic HF Molidustat (HIF-PH Inhibitor) Completion of phase II Finerenone (MR Antagonist) Completion of phase II in worsening chronic HF Nexavar Completion of phase III in breast cancer (RESILIENCE) Vilaprisan (SPRM) Completion of phase II
  94. 94. • Bayer Investor Presentation • Meet Management • June 2014 Established Pharma Products Page 92
  95. 95. 2010 2011 2012 2013 Hemophilia Franchise – Stable Growth • Bayer Investor Presentation • Meet Management • June 2014  Global # 2 in hemophilia A treatment  Competitive portfolio in hemophilia:  Positive phase III data with site- directed PEGylated long-acting Factor VIII (BAY 94-9027)  Product from plasma-free process (BAY 81-8973) – filing planned for 2014  Investment of € >500m planned to establish additional manufacturing capacities for recombinant FVIII products in development Sales in € million; ∆% Fx adj. 299 705 290 785 332 850 US Rest of the world 1,004 1,075 1,182 +6% Page 93 330 872 1,202
  96. 96. Prophylaxis in Hemophilia – Breakthrough in Prolonging Dosing Intervals • Bayer Investor Presentation • Meet Management • June 2014Page 94  Prophylaxis can protect hemophilia patients more effective compared to on- demand treatment in terms of  Reducing frequency and severity of bleeding episodes  Preserving joint health/function and  Maintaining overall long-term health status  However, current standard in prophylaxis involves two to three infusions per week  A long-time goal in hemophilia prophylaxis has been to reduce the burden from frequent infusions  PROTECT VIII demonstrated evidence of reliable prophylaxis of bleeding in hemophilia A with dosing at every 5 and 7 day intervals
  97. 97. Expanding the Hemophilia Franchise – Long- Acting Site-directed PEGylated Factor VIII • Bayer Investor Presentation • Meet Management • June 2014Page 95  Damoctocog alfa pegol (BAY 94- 9027) is a B-domain–deleted recombinant factor VIII (BDD-rFVIII) with site-specific PEGylation  Attachment of PEG extends half-life without reducing FVIII activity  Positive PROTECT VIII phase III data  Filing US, EU and other regions planned for 2H’2015 Site-specific PEGylation to extend FVIII half life B-domain deletion
  98. 98. Damoctocog alfa pegol (BAY 94-9027) – Design of the PROTECT VIII Phase III Study • Bayer Investor Presentation • Meet Management • June 2014Page 96  PROTECT VIII is a pivotal study assessing safety and efficacy of the site- directed PEGylated FVIII Damoctocog alfa pegol  Part A: On-demand and prophylactic treatment (completed)  Part B: Major surgery (ongoing) 6 Randomization 0 10 14 20 28weeks 2x/week 25 IU/kg (n  120) 2 or more breakthrough bleeds: No or 1 breakthrough bleeds: 36                    Screening Screening 2   On‐demand therapy individual dosage n=20 2x/week 30 to 40 IU/kg n=24* Every 5 days 45‐60 IU/kg n=43 Every 7 days 60 IU/kg n=43 * 13 assigned due to bleeding; 11 default/randomization arms full 38
  99. 99. Damoctocog alfa pegol Phase III Results - Reduction of Infusion Frequency in Prophylaxis • Bayer Investor Presentation • Meet Management • June 2014Page 97  Met primary objective of protection from bleeds with fewer infusions  Extending infusion intervals up to 7 days resulted in protection from bleeds  No inhibitors against FVIII developed during treatment period Study Arm Patients (n) remaining on treatment Patients with no bleeding Median ABR Prophylaxis: infusion 2x/week n.a. n.a. 17.4 (reduction to 4.1 after dose increase) Prophylaxis: infusion every 5 days 43/43 44% 1.9 Prophylaxis: infusion every 7 days 32/43 37% (incl. non-completers) 3.9 * (incl. non-completers) On-demand treatment n.a. n.a. 23.0 ABR: Annualized bleeding rate *Median ABR for the 32 (74%) completers was 0.96
  100. 100. The Leader in Women’s HealthCare • Bayer Investor Presentation • Meet Management • June 2014 Yaz family Sales ∆% y-o-y, () FX adj. Women’s Healthcare 2013 €3,034m -7% (-1%)* +6 (+10)Mirena -23 (-16)Diane -18 (-13) +7 (+12)Qlaira Other products +1 (+7) -13 (-8)Microgynon -2 (0)Valette -13 (-8)Meliane -7 (-1)Angeliq Page 98 * Fx & portf. adjusted growth -4% due to Essure with €74m sales in 2013
  101. 101. • Bayer Investor Presentation • Meet Management • June 2014 Strengthening Women‘s Health Business – Acquisition of Conceptus, Inc.  Bayer successfully completed the public tender offer to acquire all shares in Conceptus for a purchase price of €780m  US-based company developing the Essure® procedure, the leading non- surgical permanent birth control method proven by >700,000 procedures  Significant synergies expected from leveraging existing business power Essure ® Permanent Long-term Short-term No children Active family planning Family planning finalized IUD (Mirena) IUD (Skyla) Oral contraceptives (e.g. YAZ) Page 99
  102. 102. Mirena – The Leading Hormonal Long- Acting Contraceptive • Bayer Investor Presentation • Meet Management • June 2014  Intrauterine device, containing levonorgestrel, for reversible long- term contraception  Life-cycle opportunities:  Small low-dose long-acting (up to 3 years) device:  Jaydess; launched in EU  Skyla; launched in the US  Phase III for a long-acting (up to 5 years), low-dose, small contraception device underway Sales in € million; ∆% Fx adj. 2010 2011 2012 2013 285 254 313 268 385 292 US Rest of the world 539 581 677 +10% Page 100 415 304 719
  103. 103. Betaseron – Long-term Experience in Multiple Sclerosis Treatment • Bayer Investor Presentation • Meet Management • June 2014  First interferon launched in multiple sclerosis, introduced in 1993  Wealth of clinical experience  Demonstrating excellent efficacy and tolerability  21-year long-term follow-up study demonstrated significant survival advantage with Betaseron treatment  Launch of BETACONNECT (new electronic auto-injector) in Europe underway Sales in € million; ∆% Fx adj. 2010 2011 2012 2013 473 733 447 670 578 638 US Rest of the world 1,206 1,117 1,216 -12% Page 101 499 539 1,038
  104. 104. Nexavar – Our Cornerstone in Oncology • Bayer Investor Presentation • Meet Management • June 2014  Approved for kidney cancer (RCC), liver cancer (HCC) and radioactive iodine refractory differentiated thyroid cancer (DTC)  Only approved drug with overall survival benefit in HCC  Phase III trials in:  Breast cancer  RCC (adjuvant) Sales in € million; ∆% Fx adj. 2010 2011 2012 2103 174 531 174 551 204 588 US Rest of the world 705 725 792 +3% Page 102 219 552 771
  105. 105. Aspirin – Sustainable for More Than A Century • Bayer Investor Presentation • Meet Management • June 2014  One of the world’s most recognized brands  Available as OTC and Rx Aspirin  Bayer’s #1 product in Emerging Markets; 8% growth in China in 2013 Sales in € million; ∆% Fx adj. 2010 2011 2012 2013 358 418 404 471 476 494 Rx-Aspirin OTC-Aspirin 776 875 970 -1% Page 103 452 464 916
  106. 106. • Bayer Investor Presentation • Meet Management • June 2014Page 104 Aspire to Become the Leading OTC Company
  107. 107. Evolution of Bayer Consumer Care’s OTC Business 2008 Acquisition of OTC brand portfolio from Sagmel (CEE) and Topsun (China) 1999 Aspirin trademark centenary-worldwide sales > €500m 1899 ASPIRIN introduced as an over-the-counter (OTC) medicine 1994 Consumer Care business group created by the acquisition of North American OTC business of Sterling; Acquisition of the “Bayer Cross” Trademark in USA 2005 Acquisition of Roche Consumer Health 2013 Aspirin trademark sales of >€900m Acquisition of Steigerwald (Germany) Page 105 • Bayer Investor Presentation • Meet Management • June 2014 2014 Proposed acquisition of Merck’s Consumer Care business (US) Transaction agreement signed with Dihon Pharmaceutical Group (China)
  108. 108. • Bayer Investor Presentation • Meet Management • June 2014Page 106 Growth Strategy  Maximize brand potential  Global expansion of key brands  Exploit our innovation pipeline  Grow in emerging markets  Increase commercial power  Bolt-on acquisitions to strengthen portfolio & regional set-up 3.4 3.5 3.9 3.9 2010 2011 2012 2013 +5% +7% +6% Consumer Care sales in € billion; ∆% Fx & portfolio adj. Bayer Consumer Care – Outperforming Markets in Past 7 Out of 8 Years
  109. 109. Merck’s Consumer Care Business Fits Perfectly With Bayer Consumer Care • Bayer Investor Presentation • Meet Management • June 2014 Complementary Portfolio Building on core competencies  Creation of a global leader in OTC  Gaining scale in key categories CASF1, dermatology, and gastrointestinal  Optimizing footprint in North America  Strong track record of growing OTC brands  Strong geographical presence to broaden Merck’s portfolio globally  Utilizing integration skills from past transactions Page 107 Acquisition criteria fulfilled  Creating leadership positions in important consumer care categories and geographies  Increasing consumer care margin2 by ~1pp from year 1  Immediate core EPS accretion from year 13 1 cold, allergy, sinus, flu; 2 EBITDA pre-special items; 3 transaction incl. sGC collaboration
  110. 110. Page 108 • Bayer Investor Presentation • Meet Management • June 2014 Combined Portfolio Significantly Strengthens Global Positions Gastrointestinal Analgesics3 CASF2 Nutritionals Dermatology1 Total Others4 3,904 1,635 5,539 1,110 386 372 803 126 513 439 141 1,023 834 1 including sun care; 2 Cold, Allergy, Sinus, Flu; 3 including Cardio; 4 Foot Health, Women’s Health, Other 1,496 1,023 1,175 834 580 431 #1 #2 #3 #1 #2 Global position*2013 Sales in €m (pro-forma portfolio) Note: Merck sales converted at average USD rate of 1.33 (FY 2013) 305 *After allowing for the Novartis/Glaxo deal; excluding Dihon acquisition in China; excluding Rx MerckBayer
  111. 111. Page 109 • Bayer Investor Presentation • Meet Management • June 2014 Combined Portfolio Significantly Strengthens Geographic Footprint Note: Merck sales converted at average USD rate of 1.33 (FY 2013) *After allowing for the Novartis/Glaxo deal; excluding Dihon acquisition in China; excluding Rx Latin America Europe North America Total Asia/Pacific 3,904 1,635 5,539 1,117 1,105 1,621 170 389 513 141 777 2,222 1,791 946 580 #1 #1 #5 #2 Global position*2013 Sales in €m (pro-forma portfolio) 191 169 MerckBayer
  112. 112. FY 2013 sales in € million (∆% yoy Fx-adj.) 321 310 232 214** 207 176 158 257 *Total Aspirin includes Aspirin Complex and Aspirin Cardio (Rx) **Total Alka-Seltzer includes Alka-Seltzer and Alka-Seltzer Plus 916* = Rx Sales Page 110 • Bayer Investor Presentation • Meet Management • June 2014 Combined Top 10 Portfolio – Individual Brands with Annual Sales >€100m 576 Note: Merck sales converted at average USD rate of 1.33 (FY 2013); based on pro-forma FY 2013 net sales
  113. 113. • Bayer Investor Presentation • Meet Management • June 2014Page 111 Top Priorities To Be Executed Immediately After Closing of Transaction…  Ensure fast integration into operations  Safeguard product supply  Realize synergy potential  Prioritize brand strategies within combined portfolio  Realize Merck brand penetration opportunities ex-US  Define and execute individual brand strategies  Develop US scale advantage  Strive for leadership with trade customers  Provide a broader product portfolio Critical mass in US Brand Roll- Out ex-US Smooth integration
  114. 114. • Bayer Investor Presentation • Meet Management • June 2014Page 112 Clear Strategy For a Smooth Integration 2014 Q2 2014 Q42014 Q3 2015 (End State)  Smooth integration expected due to experienced management team • Ensure effective integration into Consumer Care • Safeguard on-going product supply • Prioritize and execute identified brand development / expansion strategies • Ensure sufficient future capacity for growth • Capitalize on Merck’s innovation capabilities • Achieve scale and revenue synergies • Capture consolidation and efficiency synergies by 2017  Deal signing  Deal closing  Consolidation / Integration
  115. 115. • Bayer Investor Presentation • Meet Management • June 2014Page 113 Enhanced Scale and Broader Category Scope Improve Product Offerings US Retail Sales CASF Benefits from Enhanced Scale  Co-promoting complementary brands  New item assortment and shelving opportunities  Improved merchandising efficiencies  Bigger and more impactful trade events  Foster strategic partnerships with retailers FY 2013 retail sales in CASF in $ million* $- $200 $400 $600 $800 $1,000 $1,200 RB Bayer & Merck J&J Merck & Co. P&G Pfizer Chattem Bayer GSK *Source: IRI; Latest 52WK; December 2013  Make Bayer Consumer Care Top Strategic Partner for US Retailers
  116. 116. Maximizing Brand Potential Through Global Expansion Brand Sales by Major Region 2013 Expansion Plans • Bayer Investor Presentation • Meet Management • June 2014Page 114 Analgesic ~80% in North America ~95% in North America Wound-healing ~75% in Europe Anti-fungal ~75% in Europe & LatAm Vitamins & minerals ~50% in Europe ~80% in North America CASF Sun Care
  117. 117. • Bayer Investor Presentation • Meet Management • June 2014Page 115 Russia Country OTC Market Sales Growth 2013* Execution Plans China  Global #2  Growing 2x the global rate  Use investments in footprint, brand-building and sales capabilities to extend Claritin leadership  Build sun care category with Coppertone Brazil  Global #7  Fastest growing market in LATAM  Use investments in brand-building and channel capabilities to develop key new categories (sun care, foot care, allergy)  Revitalize Coppertone and Dr. Scholl’s brands Russia  Global #4  Retail OTC is largest healthcare segment  Focus on CASF brands using current position to roll-out extended offerings  Achieve #2 position Execution Plan Focused on Key Brands in Key Emerging Markets +38% +26% +14% *Bayer Consumer Care sales, currency-adjusted
  118. 118. Consumer Care is Well-Positioned for Growth – Aspire to Clear OTC Leadership OTC Market Attractive Bayer Has Strong #2 Position Plans for Continued Future Growth  Trends favor continued growth  OTC market model based on long-term brand building  OTC businesses becoming more valuable over time  Leader in key categories  Multiple strong brands  Track record of outperforming market growth  Globalize established brands & launch innovation pipeline  Focus on emerging markets where most of growth will come  Strategic acquisitions and alliances Page 116 • Bayer Investor Presentation • Meet Management • June 2014
  119. 119. • Bayer Investor Presentation • Meet Management • June 2014Page 117 Animal Health – Operating in an Attractive Market Environment
  120. 120. • Bayer Investor Presentation • Meet Management • June 2014Page 118 Demonstrating a Solid, Long-Term Sales Growth Trajectory Sales in € million; ∆% Fx & portfolio adj.  Overall global #5 and global #2 in parasiticides  Ranked #3 in CAP (~60% of sales)  Sector driven by:  Emotional relationships to pets  Infectious and chronic diseases  Ranked #7 in FAP (~40% of sales)  Sector driven by:  Increasing customer/consumer awareness  Food safety & disease transmission  Globalization in farm exports Highlights 977 1,120 1,186 1,303 1,306 2009 2010 2011 2012 2013 +4%
  121. 121. • Bayer Investor Presentation • Meet Management • June 2014Page 119 Aspiring Further Sustainable Growth 6% AH Market 2013 by Player Zoetis Merck Merial Elanco Bayer Boehringer I. Novartis Virbac CEVA Others €21bn Growth Strategy  Expand market share of existing portfolio while delivering innovation  Strengthen and expand 2013 acquired TEVA US AH business  Drive research & development at a 10% sales ratio  Explore M&A opportunities for further growth
  122. 122. • Bayer Investor Presentation • Meet Management • June 2014Page 120 New Innovative Product Examples – Recent Launch Highlights  New benchmark for flea and tick protection  Outstanding efficacy based on combination of active ingredients  Up to 8 months protection due to innovative polymer matrix technology  Pradofloxacin, the new generation fluoroquinolone  Extended spectrum vs. previous fluoroquinolones  Greater potential to limit selection for resistance  Convenient formulations for dogs and cats  1st combined endopara- siticide against roundworm and coccidia in dogs  Easy and convenient once daily oral treatment  Can be used at 2-weeks old
  123. 123. • Bayer Investor Presentation • Meet Management • June 2014Page 121 Innovative Life-Cycle Management – Example of Advantage Family Highlights 2002 2013 202 487 Sales in € million  Successful franchise through:  Brand building – investments in direct-to-consumer for brand awareness  Channel diversification – meeting consumers where they are  Life Cycle Management (LCM) – ongoing with new claims
  124. 124. • Bayer Investor Presentation • Meet Management • June 2014Page 122 Selected R&D Activities New formulations Antimicrobials Pharmaceutical SpecialtiesParasiticides Focus to improve:  Convenience  Efficacy  Safety  Antibiotics (Quinolones)  Dairy Health  Respiratory Diseases Products  Allergy & Inflammation  Chronic Kidney Disease  Ecto- parasiticides  Endo- parasiticides  Endecto- parasiticides R&D Investment approx. 10% of turnover
  125. 125. • Bayer Investor Presentation • Meet Management • June 2014Page 123 Medical Care – Diabetes Care and Radiology DC & R
  126. 126. • Bayer Investor Presentation • Meet Management • June 2014Page 124 Radiology & Interventional Diabetes Care Sales Split 2013 Medical Care €2,526m; -5% (0%) 40% 60% Medical Care – Strong Legacies in Diabetes Care and Radiology In € million, ∆% yoy, () = Fx & portf. adjusted Diabetes Care:  Comprises self testing blood glucose monitoring devices Radiology  Combines our Contrast Media, Injector and Informatics businesses
  127. 127. • Bayer Investor Presentation • Meet Management • June 2014Page 125 Diabetes Care – Global Player in Blood Glucose Meters Highlights Sales in € million; ∆% Fx & portfolio adj. 1,000 993 1,002 1,047 1,007 2009 2010 2011 2012 2013 -1%  Global #3 in blood glucose meters  Stable business performance despite difficult market conditions  Market characterized by growth in prevalence, but pricing pressure  Latest innovation products include CONTOUR® Next and Next Link  MULTIPULSE technology ensures high accuracy blood glucose measurements  Wireless transmission of results to Medtronic insulin devices
  128. 128. • Bayer Investor Presentation • Meet Management • June 2014Page 126 1,363 1,474 1,498 1,606 1,519 2009 2010 2011 2012 2013 Sales in € million; ∆% Fx & portfolio adj. 0% Radiology – Leading Positions in Contrast Media and Application Devices  Integrated subsidiary Medrad Inc. and our contrast media business  The business comprises:  Contrast media: CT and MRI  Contrast media injectors: Medrad brand  Informatics  Services  Synergies through focus on similar centers / physicians Highlights
  129. 129. Investor Handout – Meet Management Bayer CropScience June 2014 – New York
  130. 130. 18% 25% 11% 11% 7% 28% Sales 2013: €8,819m Insecticides€1,622m Market position: Fungicides€2,195m 3Market position: SeedGrowth€921m 1-2Market position: Herbicides €2,456m 4Market position: Env. Science €651m 1Market position: Seeds €974m 7Market position: Page 128 CropScience – A Leader in Chemical Crop Protection • Bayer Investor Presentation • Meet Management • June 2014 1 Market positions based on company reportings and Cropnosis estimates Page 128
  131. 131. 25% 22% 14% 12% 8% 6% 6% 4%3% Fruits & Vegetables CerealsOilseeds Soy Corn Cotton Rice Sugar Crops * by major crop groups excluding industrial business and non-agricultural solutions CropScience Sales 2013* Other Fruits, Vegetables and Cereals – A Major Part of Our Portfolio • Bayer Investor Presentation • Meet Management • June 2014Page 129
  132. 132. Leading the Way in Integrated Crop Solutions Integrated Crop Solutions Chemical Crop Protection Biological Crop Protection Seeds  Herbicides  Fungicides  Insecticides  SeedGrowth  Microorganisms  Microbial extracts  Canola, cotton, rice, vegetables, soy, wheat  Conventional seeds  GMO seeds  Traits  Weed, pest & disease control  Stress tolerance Better harvest with improved:  Yield  Quality  Processability  Sustainability GMO: Genetically modified organism • Bayer Investor Presentation • Meet Management • June 2014Page 130
  133. 133. • Bayer Investor Presentation • Meet Management • June 2014Page 131 Strong Growth at Record Margin
  134. 134. FY 2013 – Strong Growth at Record Margin Page 132 Crop Protection +7% (+11%) Environmental Science -4% (+1%) *before special items Seeds +1% (+1%) 2013 Sales Earnings In € million, ∆% yoy, () = Fx & portf. adjusted CropScience €8,819m; +5% (+9%) Price +3% Volume +7% Fx -5% Portfolio 0% 7,194 FY‘12 FY‘13 FY‘12 FY‘13 2,025 2,248 +11% 1,543 1,801 +17% Adj. EBITDA* Adj. EBIT* 651 974 24.2% 25.5%Margin • Bayer Investor Presentation • Meet Management • June 2014
  135. 135. Emerging Economies 25% CropScience Sales in FY 2013 CropScience €8,819m; +5% (+10%) Latin America Eastern Europe Africa & Middle East Emerging Asia³ ~900 +11% ~2,200 +27% ~600 +9% ~300 +4% Page 133 17% USA +3% 25% 45% 13% Emerging Economies¹ +18% Western Europe +3% Others² +6% FY 2013 – Strong Growth in Emerging Economies Sales in € million, ∆% yoy Fx adjusted • Bayer Investor Presentation • Meet Management • June 2014 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, Canada; 3: Emerging Asia = Asia w/o Japan, Australia, New Zealand
  136. 136. • Bayer Investor Presentation • Meet Management • June 2014 Successful Start to The Year Page 134
  137. 137. Sales Earnings Q1 2014 – CropScience: Early Start to the Season in Europe Page 135 Crop Protection +6% (+12%) Environmental Science +1% (+8%) Seeds +3% (+12%) In € million, ∆% yoy, () = Fx & portf. adjusted CropScience €2,900m; +5% (+12%) Price +2% Volume +10% Fx -7% Portfolio 0% 2,231 Q1‘13 Q1‘14 Q1‘13 Q1‘14 1,081 1,098 +2% 969 988 +2% Adj. EBITDA* Adj. EBIT* 166 503 • Bayer Investor Presentation • Meet Management • June 2014 *before special items
  138. 138. Herbicides Fungicides Seeds 503 +12% Insecticides Sales in € million; ∆% y-o-y Fx & portfolio adj. Q1 2013 Nominal growth Q1 2014 • Bayer Investor Presentation • Meet Management • June 2014 Env. Science Q1 2014 – Growth Driven by All Segments Page 136 965 +8% 662 +17% 352 +13% 252 + 19% 166 + 8% Seed Growth  Strong demand for cereal herbicides in Europe  Early start to the season in Europe; Growth in LatAm mainly driven by Fox  High demand in the US, especially for Poncho family in corn and soybean  Marked sales increase in Europe and LatAm; excellent performance of Belt  Growth in the Americas, mainly driven by cotton and vegetable seeds  Positive performance for both professional and consumer business
  139. 139. • Bayer Investor Presentation • Meet Management • June 2014 Customer-Centric Strategy Pays Off Page 137
  140. 140. Customer-Centric Strategy Pays Off Strengthen Customer Centricity Lead the Way in Innovation Enhance Crop Protection & Environmental Science  Striving for first- and best-in-class solutions  Exploiting expertise in seeds, breeding, and chemical and biological crop protection  Driving commercial excellence in marketing and sales  Connecting partners in the value chain through integrated Go-to-Market practices  Improving portfolio through focused and integrated crop solutions  Increasing flexibility and efficiency Expand Seeds Business  Further strengthening position in vegetables, rice, oilseed rape and cotton  Extending portfolio by building up business in soybean and wheat • Bayer Investor Presentation • Meet Management • June 2014Page 138
  141. 141. Q1 2014 - Significant Contribution from New Crop Protection Products 1.1 1.5 1.8 2.6 2012 2013 2014e 2016e +33% Sales from new Crop Protection products launched since 2006 in €bn ∆% y-o-y, () Fx adj. • Bayer Investor Presentation • Meet Management • June 2014  (+16%) - Superior ‘all-in-one’ cereal fungicide with yield-boosting effect  herbicide (+14%) - Excellent weed control in corn and cereals, also in case of glyphosate resistance  (+75%) - Broad-spectrum insecticide with fast, long-lasting action  (+112%) - New fungicide now available in several key markets Q1 2014 Highlights Q1 0.6 Page 139
  142. 142. 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 Xpro  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 inhibitor • Bayer Investor Presentation • Meet Management • June 2014Page 140
  143. 143. 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 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 inhibitor • Bayer Investor Presentation • Meet Management • June 2014Page 141
  144. 144. Adengo Family – Highly Effective Weed Control in Corn  Thiencarbazone-methyl is a new sulfonyl-amino- carbonyl-triazolinone (SACT) herbicide  Additional crop selectivity in combination with HPPD inhibitor Isoxaflutole and safener Cyprosulfamide Grower benefits:  Controls annual grasses and broad leaved weeds in corn including those that are resistant to glyphosate  Offering flexibility in application timing  Strong enough to achieve one-pass weed control  Rapid burndown, long-lasting residual control • Bayer Investor Presentation • Meet Management • June 2014 Peak sales potential of more than €350m Page 142
  145. 145. Belt Insecticide - Preserve Yield Potential  Flubendiamide is a phthalic acid diamide  Acts as ryanodine receptor modulator, larvae loses muscle control Grower benefits:  Controls lepidoptera pests in a wide range of crops, including soybeans, corn and cotton  Fast action, larvae stops feeding immediately  Rainfast with excellent residual activity  Provides minimal risk to beneficial insects  Excellent resistance management tool • Bayer Investor Presentation • Meet Management • June 2014 Control + BELT® Heliothis Peak sales potential of more than €300m Page 143
  146. 146. Sustainable Alternatives to Fight Glyphosate Weed Resistance • Bayer Investor Presentation • Meet Management • June 2014  Weed resistance to glyphosate increasingly impacting crop production; almost 50% of U.S. growers are affected  Our LibertyLink is currently the only non-selective herbicide solution to glyphosate resistant weeds  Significant expansion of production capacity for Liberty planned  We are committed to develop new and more sustainable weed management solutions  Highly effective pre-emergent and selective herbicide portfolio launched 100 200 300 400 2010 2011 2012 2013 Liberty/Basta Sales in €m Page 144
  147. 147. Future Market Potential of Biologicals Expected to Increase Significantly  Biologicals are products derived from naturally-occurring living organisms or materials from plants or microorganisms  Increasing demand from consumers for safe and sustainably produced food, especially in fruits & vegetables area  Global retailers have more stringent residue reduction targets  Currently lower regulatory hurdles and faster registration process for biologicals compared to chemicals  Grower benefits from short pre-harvest and re-entry intervals and thus high flexibility on application timing  When used in combination or rotation with chemicals, biologicals provide new tools in resistance management • Bayer Investor Presentation • Meet Management • June 2014 Market potential expected to triple from $1.2bn in 2010 to $4bn in 2020 Page 145
  148. 148. Further Growth Opportunities in Biologicals with Bolt-On Acquisitions  Successful market entry with nematode seed treatment Poncho/Votivo in 2011 (Sales 2013: €150m)  AgraQuest acquired in Q3 2012 for €375m including milestone payments. Global provider of innovative biological pest management solutions based on natural microorganisms  Prophyta acquired in Q1 2013, a provider of well-established products, e.g. nematicide BioAct  Biagro acquisition* adds nitrogen inoculants and plant health promoters  We aim to become the world leader in integrated crop solutions • Bayer Investor Presentation • Meet Management • June 2014 * Clearance by Antitrust Authority in Argentina outstanding Page 146
  149. 149. Acquisition of Biagro to Strengthen our Soybean Business in Latin America  Argentinean company Biagro acquired in Q1 2014*  Biagro portfolio includes seed-applied biofertility inoculants and plant growth-promoting microorganisms  Acquisition is a further milestone to become a leader in biological seed treatments  Provides soybean growers in Latin America with innovative offerings to substantially improve productivity  Nitrogen essential for plant growth and soybean seed production  Biagro inoculants are a very effective and cost-efficient method of supplying nitrogen to soybeans and other legume crops • Bayer Investor Presentation • Meet Management • June 2014 * Clearance by Antitrust Authority in Argentina outstanding Inoculants containing high-quality Rhizobium bacteria strains enable plant roots to fix nitrogen from the atmosphere, resulting in enhanced plant growth, more vigorous root structure and greener plant foliage Page 147
  150. 150. Customer Centricity Along the Entire Value Chain • Bayer Investor Presentation • Meet Management • June 2014 Bayer CropScience Our offers Growers Distributors/ seedcompanies Retailers Advisors Providing Seed-to-Shelf Solutions Traders Foodprocessors Foodretailers Consumers  Around 240 food chain partnerships covering most of the main fruit & vegetable crops and rice  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 consumer Page 148
  151. 151. Serving Grower Needs Beyond Crop Protection and Seeds • Bayer Investor Presentation • Meet Management • June 2014 Services Examples Providing agronomic support  Crop advice  Expert trainings  On-farm trials  Field days Optimizing yield and quality by offering diagnostic and prediction tools  Weather forecast  Pest prediction  Disease diagnosis  Resistance risk calculator  Assessment of quality indicators Helping to optimize application process and seeding  Application collaborating with machinery providers  Seed treatment equipment checks Creating transparency by offering tracking / documentation support  Field documentation  RoI calculation  Certification support Improving farm management by financing and insurances  Ag input financing  Barter business  Crop price insurance Page 149
  152. 152. • Bayer Investor Presentation • Meet Management • June 2014 Translating R&D Effectively into Sales From to € Page 150
  153. 153. Pipeline Peak Sales Potential  €4bn from Products Launched 2011 - 2016* • Bayer Investor Presentation • Meet Management • June 2014 Crop Protection Life Cycle Management Seeds Cotton Canola Wheat Soybean Rice 2013 ~110 launches in vegetables & broad acre crops Roundup Ready Hybrid Canola Fungicide Serenade Optimum Bayer Oilseed Mustard Hybrids Seed Varieties 2014 Canola Yield Increase Numerous launches in vegetables & broad acre crops Verango / Velum Insecticide Insect Resistant Hybrid Rice TwinLink + GlyTol Cotton Seed Varieties 20162015 *estimated and subject to regulatory approval 2 joint project with MS Technologies Constant Life Cycle Management through new formulations and mixtures that also includes Biologicals Disease Resistant + Salinity Tolerant Hybrid Rice Insect + Disease Resistant Hybrid Rice Improved Canola Oil Profile Dual Herbicide Tol. + Novel Insect Resistant Cotton Insecticide Biologicals Seed Varieties Numerous launches in vegetables & broad acre crops GlyTol + HPPD Tolerant Soybeans2 Biologicals Fungicide Bayer Wheat Seed LibertyLink + Roudup Ready Hybrid Canola Council Herbicide Disease Resistant + Submergence Tol. Hybrid Rice Seed Varieties Numerous launches in vegetables & broad acre crops Sivanto Insecticide Page 151
  154. 154. Sivanto – Innovative and User-friendly Insecticide Against Sucking Pests  Active ingredient: flupyradifurone (novel insecticide class butenolides)  Control of sucking pests such as aphids, hoppers and whiteflies  Intended for use in fruits, vegetables, and broad acre crops  Favorable safety profile  Launch planned 2015* • Bayer Investor Presentation • Meet Management • June 2014 * first registrations for foliar application; SeedGrowth use planned to follow subsequentlyPage 152
  155. 155. Biological Crop Protection for Mite Control  Mites can significantly reduce yields and quality  Leading to rejection of produce along the value chain and lower sales  Microbial acaricide with new mode of action  Season-long effectiveness: curative, eradicant, protective  Registration expected in the U.S. in 2016* • Bayer Investor Presentation • Meet Management • June 2014 * subject to regulatory approval Two-spotted spider mite under scanning electron microscope (SEM) Page 153
  156. 156. Build up a Global Wheat Seed Business  Largest broad-acre crop worldwide  Market value still small, but major potential seen with productivity improvement  Hybrids provide opportunity for both yield increase and improved yield stability • Bayer Investor Presentation • Meet Management • June 2014 The Market* Our Efforts Our Goals • 7 breeding centers • Numerous collaborations • Significant R&D investments The Market • 226m ha of wheat acres, majority is farm-saved seed • Current market of €0.2bn (royalties only) • Slow productivity increase • Yield increase • Nitrogen use efficiency • Water use efficiency • Heat tolerance Market Entry • Launch of first variety planned in 2015 • Suitable for western and central regions of the Ukraine • Open pollinated variety * Source: FAO, Context Networks 2012 (seed co level) Corn: 60.7 EUR/ha  Wheat: 0.9 EUR/ha The Market Page 154
  157. 157. Acquisitions in Latin America Broaden our Portfolio in Soybean Seed  Building up proprietary seed business with high quality germ- plasm pool  Establishing best-in-class breeding platform  Leveraging the potential of our trait platform through out-licensing  Launch of Bayer soybean brand Credenz planned late 2014  Integrated business model combining seeds & crop protection • Bayer Investor Presentation • Meet Management • June 2014 * subject to clearance by Antitrust Authority in Argentina 2013 FN Semillas* soybean seed company Buenos Aires, Argentina 2011 Soytech soybean seed company Goiânia, Goiás 2013 Wehrtec soybean seed company Cristalina, Goiás 2013 Agropastoril soybean germplasm bank Cascaval, Paraná 2010 CVR plant breeding Rio Verde, Goiás Page 155
  158. 158. Strategic Progress Achieved Enhance Crop Protection & Env. Science Strengthen Customer Centricity Lead the Way in Innovation Expand Seeds Business ● €1.5bn sales in 2013 with products launched since 2006 ● Biologicals strengthened further with Prophyta and Biagro* ● Expansion of supply capacities for key active ingredients ● Support to increase productivity of small-scale farmers ● Improved channel management practices ● Broadened food chain partnership business model ● Pipeline Peak Sales Potential**  €4bn ● Increased investment in Seeds R&D ● Innovating at the interface between chemistry and biology ● Strengthened presence in Latin American soybean market ● Further investments done in wheat and vegetables ● Development of innovative traits • Bayer Investor Presentation • Meet Management • June 2014 * Clearance by Antitrust Authority in Argentina outstanding ** from products launched between 2011-2016Page 156
  159. 159. • Bayer Investor Presentation • Meet Management • June 2014 2013 Sales CAGR 2016e Further Growth at Benchmark Profitability Page 157
  160. 160. Global Trends in Agriculture • Bayer Investor Presentation • Meet Management • June 2014 GLOBAL FOOD PRODUCTION CLIMATE CHANGE -322 kg rice per hectare Yields under pressure +1°C FARMLAND PER CAPITA (ha) 1950 : 0.52 2010 : 0.20 2050 : 0.15 INSUFFICIENT STORAGE Up to 40% of fruit and vegetables lost in India Equivalent to the annual consumption in UK CHANGING CONSUMPTION PATTERNS Increasing demand for protein Need for a sustainable productivity increase By 2050 +70% HUNGER 1 in 8 goes hungry today POPULATION GROWTH 7 billion people on the planet today 9.6 billion people in 2050 Page 158
  161. 161. Crop Commodity Prices Declined in 2013, But Are Still At Relatively High Levels • Bayer Investor Presentation • Meet Management • June 2014 Source: Bloomberg 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 0 100 200 300 400 500 600 700 800 900 1,000 2008 2009 2010 2011 2012 2013 2014 Soybeans (LS) Corn (LS) Wheat (LS) Canola (LS) Rice (RS) Cotton (RS) USD/ton USD/ton Page 159
  162. 162. Seed and Crop Protection Market Expected to Grow  5% in 2014 • Bayer Investor Presentation • Meet Management • June 2014  In many growing regions farmer income level is healthy after 3 good years  Commodity prices still above critical threshold for farmers, triggering investment in high-value seeds and crop protection  Steady expansion of soybean farming in Latin America  Expansion of agricultural production in Asia/Pacific continues DESPITE  Prices for agricultural commodities expected to be below 2013 levels  Global stocks-to-use ratios for key crop commodities on upward trend Page 160
  163. 163. Promising 2014 Outlook  We expect to grow faster than the market  We plan to raise sales by a mid- to high-single-digit percentage on a currency- and portfolio-adjusted basis We anticipate negative currency effects of about 3%  We plan to increase EBITDA before special items by a low single-digit percentage, allowing for negative currency effects of approx. €150m • Bayer Investor Presentation • Meet Management • June 2014 Outlook depends on specific planning assumptions as detailed in the Annual Report Assuming average FX rates of Q4‘13 (USD 1.36)Page 161
  164. 164. CropScience – Above Market Growth at Benchmark Profitability 2013 Guidance 2014 Aspiration 2016 Sales Increase €8.8bn Mid- to high-single-digit % (neg. FX effect approx. -3%) 6% CAGR Adj. EBITDA Increase €2.2bn Low-single-digit % (neg. FX effect approx. -€150m) Adj. EBITDA Margin 25.5% - 24-25% Assuming average FX rates of Q4‘13 (USD 1.36) Sales ∆ % Fx & portf. adjusted, margin = EBITDA before special items to sales • Bayer Investor Presentation • Meet Management • June 2014Page 162
  165. 165.  Increasing demand for innovative and sustainable agricultural solutions  Expansion of production capacity of for herbicide glufosinate-ammonium  Broadening seeds infrastructure for soybean and wheat  Expanding and modernizing R&D facilities  CAPEX expansion to €2.4bn for 2013 - 2016 Stepping Up Investment Plans to Fuel Future Growth • Bayer Investor Presentation • Meet Management • June 2014 Capital Expenditures (PPE only, in €m) 303 453 620 2012 2013 2014e Page 163
  166. 166. Investor Handout – Meet Management Bayer MaterialScience June 2014 – New York
  167. 167. MaterialScience – Leading Positions in All Segments • Bayer Investor Presentation • Meet Management • June 2014 * Aliphatic isocyanates MaterialScience €11,238m Polyurethanes €6,054m  #1-2; approx. 19-24% market share 54% 6% 23% 17% Sales in € million Polycarbonates €2,640m  #1; approx. 27% market share Coatings, Adhesives, Specialties €1,863m  #1; >40% market share* Industrial Operations €681m Sales Split by Segment 2013 Page 165
  168. 168. MaterialScience – Global Production Network • Bayer Investor Presentation • Meet Management • June 2014Page 166 *Market share based on estimated sales following self-assessment # Europe, Middle East & Africa Headquarters Major Production Sites Downstream Businesses Position* Americas # 1 # 2 # 1 PUR PCS CAS Position* EMEA# # 1 # 1 # 1 PUR PCS CAS Position* Asia/Pacific # 2-3 # 1-2 # 1 PUR PCS CAS
  169. 169. • Bayer Investor Presentation • Meet Management • June 2014Page 167 Automotive Other industries* Construction Furniture / Wood Electro / Electronics 19% 18% 15%21% MaterialScience – Sales By Key Customer Industries Bayer MaterialScience sales by industry in 2013 = 73% + Chemicals *Sports/leisure, cosmetics, health 10% 17%
  170. 170. MaterialScience as an Integrated Solution Provider • Bayer Investor Presentation • Meet Management • June 2014Page 168 Megatrends offer business opportunities worldwide, with the emerging economies at the forefront Ongoing urbanization New and improved transportation systems Need for better energy efficiency Higher living standards Proportion of city dwellers expected to increase from 50% in 2010 to 70% in 2050* Lightweight cars New energy vehicle development High-speed rail trans- portation networks EcoConstruction with high thermal insulation standards Cold-chain efficiency Over 40m people enter the middle class every year Improved housing standards Source: Steria, The Future Report 2012
  171. 171. • Bayer Investor Presentation • Meet Management • June 2014Page 169 Performance Below Expectations

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