Bayer Commerzbank German Investment Seminar

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Bayer Commerzbank German Investment Seminar 2011, New York
Presentation by Werner Baumann, CFO of Bayer AG

Published in: Investor Relations
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Bayer Commerzbank German Investment Seminar

  1. 1. 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.
  2. 2. Who are we?
  3. 3. Bayer – A Science Based Business Model 12,400 people in R&D € 3.1bn R&D budget in 2010 Global footprint Network with leading institutions Transformational late- stage pharma pipeline Agchem pipeline with combined peak sales potential of €1.25bn New applications at MaterialScience Performance Customers Shareholders Employees Science For A Better Life Culture & Capabilities Innovation Value
  4. 4. Bayer – A Leader in Its Markets Break-down excluding reconciliation Sales 2009: €31.2bn CropScience Agrochemicals and seeds & traits, global # 2 in agrochemicals € 6.5bn MaterialScience Polyurethanes and polycarbonates, global #1 € 7.5bn HealthCare Pharmaceuticals €10.5bn, leading positions in key categories Consumer Health €5.5bn, OTC pharmaceuticals, blood glucose meters and veterinary medicines, global #2-4 € 16.0bn 22% 25% 53%
  5. 5. Bayer – Truly Global Footprint Jan-Sep 2010 sales by market € 3.4bn domestic sales 13% € 26.1bn foreign sales 87%
  6. 6. Bayer – Our Most Important Markets *Greater China includes PR China, Hongkong, Macau and Taiwan Δ% yoy Fx adjusted Sales by country Jan-Sep 2010 +1% +7% +32% +7% +5% +4% -6% 0% +5% +3% € bn 5.0 2.0 1.5 1.0 0.5 * +7% +26% +10% +1%
  7. 7. Bayer – Track Record of Performance 2006 2002 2003 2004 2005 2007 2008 3,300 3,479 4,287 4,342 1,466 14.4 2,244 828 3,772 Group sales of €31.2bn (-5.3%) EBITDA before special items of €6.5bn (-6.6%); 3rd highest ever Net income of €1.4bn (-20.9%) Net cash flow significantly improved to €5.4bn (+49.0%) Net financial debt reduced by €4.5bn to €9.7bn Unchanged DPS of €1.40 Underlying EBITDA-margin in % Underlying EBIT in € million 2009 Highlights 2009 20.9 20.9 18.6 21.1 12.0 15.1 19.3 Group targets largely achieved * ∆% vs. 2003 As reported in respective year 2002 as reported in 2003 2003 as reported in 2004 2006 excluding H.C. Starck and Wolff Walsrode margin in 2002 as reported
  8. 8. 9M 2010 – Bayer Lifts Sales And Earnings HealthCare – Small sales growth and flat earnings 26,076 23,296 Sales in € million % portfolio & currency adj. 9M´09 9M´10 +8% EBITDA pre-special items in € million 9M´09 9M´10 5,491 4,959 +11% Core EPS in € 9M´09 9M´10 3.30 2.74 +20% MaterialScience – Impressive recovery, sales and earnings significantly up CropScience – Improvement in Q3 after tough 1H’10
  9. 9. Bayer – Significant Investment Opportunities Product launches including Xarelto, VEGF-Trap Eye, Beyaz Pipeline development Emerging markets 1 HealthCare Capacity increase, in particular China 3 MaterialScience BioScience (seeds & traits) Emerging markets 2 CropScience Restructuring program launched to free-up resources and address performance issues at HealthCare and CropScience
  10. 10. Redirection of Resources to Improve Efficiencies And Cut Costs CropScience Contribution by Subgroup HealthCare Holding & Admin. Savings and efficiency initiative at HealthCare, CropScience and corporate level Annual cost savings of €800m starting 2013, reinvestment of ~50% One-time-charges of around €1bn by end of 2012, Plans include layoff of 4,500 people Savings Initiative ~54% ~34% ~12%
  11. 11. We innovate
  12. 12. Pharma Pipeline Maturing Cardiology Oncology Eye Diseases Imaging phase III inhibits formation of new blood vessels VEGF Trap-Eye 1st indication launched/ filed; phase III inhibits blood clot formation Xarelto phase III detects amyloid-betaplaques (Alzheimer’s disease) Florbetaben launched, additional indications in phase II/III inhibits enzymes important for tumor growth Nexavar phase III inhibits enzymes important for tumor growth Regorafenib phase III targeted treatment of bone metastases in prostate cancer Alpharadin lowers blood pressure in the lung What it does phase III Riociguat Status
  13. 13. Make Xarelto a success
  14. 14. Xarelto – Blockbuster Opportunity in Anticoagulation Therapy 2009 estimated treatment days (market for anticoagulants) ~ 0.1bn ~ 0.4bn ~ 0.35bn ~ 0.2bn ~ 1.6bn Primary VTE prevention excl. orthopedic surgery VTE: Venous thrombo-embolism ACS: Acute coronary syndrome Acute indications Chronic indications VTE prevention in adult patients after hip or knee replacement Prevention of VTE in medically ill patients Secondary prevention of ACS Stroke prevention in atrial fibrillation Treatment and secondary prevention of VTE
  15. 15. In All 7 Phase III Studies Reported Xarelto Demonstrated an Excellent Clinical Profile VTE prevention after orthopedic surgery Study Indication Clinical Trial Results # Extended sec. prevention of VTE Superior efficacy: 82% reduction of recurrent VTE Low incidence of major bleeding. No stat. significant difference Superior efficacy: 52% relative risk reduction* Rates of major bleeding low. No statistically significant difference Non-inferior efficacy - significantly improved net clinical benefit ** Composite of major and clinically relevant non major bleeding similar with numerically lower major bleedings 12,729 patients, Xarelto vs enoxaparin 1,197 patients, Xarelto vs placebo DVT treatment 3,449 patients, Xarelto vs enoxaprin followed by VKA    VTE: Venous thrombo-embolism; DVT: Deep vein thrombosis; VKA: Vitamin K antagonist; AF: Atrial fibrillation; ITT: Intention to treat # ) Selection, for full data see publications: RECORD data published in NEJM and Lancet, EINSTEIN-Ext. presented at ASH 2009, EINSTEIN-DVT presented at ESC 2010; ROCKET-AF presented at AHA 2010 *) Symptomatic VTE + all-cause mortality in pooled analysis of RECORD 1-4 **) Secondary outcome defined as composite of primary efficacy endpoint plus major bleeding Stroke prevention in atrial fibrillation 14,269 patients, Xarelto vs VKA  1-4 Non-inferiority vs. warfarin in ITT and per-protocol population. Active treatment superior to warfarin in reducing the risk of stroke and non-CNS embolism in the safety population. Composite of major and clinically relevant non major bleeding similar
  16. 16. Xarelto – Expected Upcoming Newsflow Filing for VTE prevention in medically ill patients / for secondary prevention of ACS Data of MAGELLAN phase III trial in VTE prevention in medically ill patients Completion of phase III ATLAS TIMI 51 in secondary prevention of ACS Completion of phase III EINSTEIN-PE in VTE treatment and sec. prevention Target: 2011 ACS: Acute coronary syndrome PE: Pulmonary embolism VTE: Venous thromboembolism Early 2011e Summer 2011e Summer 2011e
  17. 17. Strong data VEGF-Trap Eye
  18. 18. VEGF-Trap Eye # ) Selection, for published details see BAYER press releases from November 22 and December 20, 2010. Further data planned to be presented at Angiogenesis Conference, Miami, Florida, February 2011. Wet AMD Study Indication Clinical Trial Results # Primary efficacy endpoint met, demonstrating significant improvement in vision 56% of patients on VEGF-Trap Eye showed an improvement of vision of at least 15 letters after 6 months (vs. 12% in control) Primary efficacy endpoint met, non-inferiority demonstrated One year data demonstrated potential for less frequent dosing with comparable vision maintenance Encouraging Phase II data: primary endpoint met Visual acuity gains over 24 weeks were maintained or numerically improved up to completion of the study at week 52 vs. Lucentis vs. sham control injection   CRVO DME vs. laser treatment AMD: Age-related Macular Degeneration CRVO: Central Retinal Vein Occlusion DME: Diabetic Macular Edema 
  19. 19. VEGF-Trap Eye – Expected Upcoming News Flow Full data from wet AMD phase III VIEW program 2011e 1H 2011e Filing for wet AMD 1H 2011e Data from the CRVO phase III program AMD: Age-related Macular Degeneration CRVO: Central Retinal Vein Occlusion
  20. 20. Innovation Bioscience
  21. 21. Innovation Leadership in Agrochemicals, Promising BioScience Pipeline 2000 - 2009 23 new agrochemical active ingredients launched, generated sales of €2bn in 2009 2010 - 2012E Six new agrochemical substances with sales potential of more than €1bn to be launched Numerous early-stage research and early development projects in Crop Protection and BioScience Expect 18 new BioScience products to be launched 2010 - 2016E
  22. 22. Grow BioScience Sales to €1.4bn by 2018 240 503 >500 >1,000 ~1,400 *2002 sales pro-forma Bayer + Aventis CropScience Planned sales development Key growth drivers Fast growing established business in cotton, canola, rice and vegetables Regional expansion and introduction of new varieties Exploit traits potential through licensing agreements Extension of our crop-portfolio Significant R&D investment (~€130m in 2009; €200+m in 2012E) R&D capacities strengthened through acquisition of Athenix (2009) in € million CAGR 12% CAGR 11% First nine months adj. sales up 26%
  23. 23. New capacities in China
  24. 24. Pronounced Volume Recovery Drove Q3 MaterialScience Sales Above Pre-Crisis Level Q3’08 Volumes % yoy Prices % yoy ∆ % yoy, Fx adj. Sales in € billion pre-crisis During 2009 lower selling prices reduced sales by € 1.2bn 2.5 10.0 -33 -5 Q1’09 1.6 -38 -7.1 -12 -22 Q2’09 1.8 -34 6.6 -15 -6 Q3’09 2.0 -22 11.7 -3 41 Q1’10 2.2 38 13.0 8 33 41 -18 19 Q4’09 2.0 1 10.1 uEBITDA* margin 10 13 23 * = EBITDA pre-special items Q2’10 2.7 13.8 Q3’10 2.7 15.3
  25. 25. Economic Recovery Accelerated Business Shift to Asia MaterialScience Sales in Asia/Pacific in % 2005 2010 (1-9) € 2.1bn sales 21% € 2.1bn sales 28%
  26. 26. € 1bn New Investments to Support Future Growth € 2.1bn investment program in integrated polymer site in Shanghai, China until 2012 New investment of approx. €1bn in Shanghai by 2016 to Increase MDI capacity to 1,000kt/year More than double PCS capacity to 500kt/year Increase HDI capacity, new 50kt/year line planned Transfer of PCS Headquarters from Leverkusen to Shanghai Increasing downstream presence (investment of €110m by 2012) China already is the world’s largest PCS market China is set to become the world’s largest PUR market by 2015 Commitment to growth in China Asia/Pacific is leading the recovery PCS = Polycarbonates PUR = Polyurethanes
  27. 27. Focus Emerging markets
  28. 28. Performance of Top 15 Large Pharma Companies in The “Pharmerging” Markets Bayer shows: 0% 2% 4% 6% 8% 12% 14% 16% 18% 20% 22% 0% 5% 10% 15% 20% 25% 30% 35% % 2009 Revenue (Bubble size shows Pharmerging market sales)* % CAGR 2003-2009 BAYER S-A B-I AZ LILLY MERCK WYETH PFIZER GSK NOVARTIS S-P ROCHE BMS J&J ABBOTT Source : IMS Health Incorporates „Pharmerging shake-up“ 2010 “ Best ability to adapt to local markets” “ Superior local execution capabilities” “ A stable senior leadership team“ “ Continuous investments in mature products” (Glucobay or Adalat) 10%
  29. 29. Bayer is One of The Leading International HealthCare Companies in China Ultravist Aspirin Cardio 5% Impressive growth Driven by both Pharma (+23%) and Consumer Health (+35%) Pharma portfolio includes innovative products like Nexavar, Scilin Insulin and Xarelto Significant investment commitment Approx. 4,500 employees € 100m over 5 years to set-up a global R&D center in China Beijing manufacturing site expansion (~€45m through 2015) Partnership with Tsinghua University (joint drug discovery, student support) 25% 10% 15% 20% HealthCare 2009 €766m   +26% y-o-y (Fx-adj.) 30% 70% Glucobay Adalat Avelox Nexavar 35% Top products All growth rates are Fx-adj. Greater China includes PR China, Hongkong, Macau and Taiwan
  30. 30. CropScience in Brazil – Strong Growth in One of the World’s Largest Agchem Markets Brazil is the 2nd largest market for CropScience Bayer is one of the leading suppliers and growing strongly (20% CAGR between 2006 and 2009) Risk management systems in place to limit the potential impact of reduced credit availability Barter business expanded CropScience sales CAGR +20% (+20%) 421 2006 493 2007 724 2009 676 2008 In € million
  31. 31. Emerging Markets Drive Growth And Contribute Significantly to Group Sales Latin America Eastern Europe Africa & Middle East Emerging Economies Emerging Economies ¹ +17% Others² +5% USA +2% Emerging Asia³ 10% 35% 34% 21% Western Europe +4% 9M’10 Group sales by region Group €26,076m; +8% ~3,600 +29% ~2,700 +10% ~1,500 +11% ~1,200 +11% 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 minus Japan, Australia, New Zealand In € million, Δ% yoy Fx adjusted
  32. 32. Progress Outlook
  33. 33. Full Year 2010 Group Outlook Projects Strong Growth Over 2009 Sales Fx and portfolio adjusted Outlook depends on planning assumptions as detailed in the 2009 annual report confirmed >15% -13% € 3.64 Core EPS confirmed >€7bn -7% € 6.5bn uEBITDA Sales confirmed >5% -6% € 31.2bn Δ 2010E Q3 Update 2009
  34. 34. 2010 – A Year of Significant Progress New management Performance challenges in HealthCare and CropScience addressed Pharma pipeline maturing Xarelto demonstrated excellent clinical profile in important chronic indications Strong emerging markets growth - new investment program for MaterialScience in China First 9 month group performance solid, 2010 outlook projects strong growth over 2009 Optimistic for future developments
  35. 35. More Information? Join Our Meet Management Conference Bayer Analyst and Investor Day in Leverkusen Start: Tuesday, March 22, 2011 at 6:30 p.m. CET End: Wednesday, March 23, 2011 at approx. 3:30 p.m. CET. Program: Tuesday evening: Dinner hosted by Marijn Dekkers, CEO of Bayer AG Wednesday: Meet representatives of the Bayer AG and subgroup management boards. The focus will be on dialogue and open discussions in small groups without formal presentations. Meet Management 2011

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