Focus on Innovation

Overview

  • Merger of the research activities of Bayer and Monsanto establishes foundation for Breakthrough innovation is a term used to describe disruptive innovations in the form of pioneering advances in technology and business models with the power to change markets. in the agriculture industry
  • Joint precision cardiology laboratory opened at the Broad Institute in Boston; oncology portfolio strengthened by registration of larotrectinib (tradename: Vitrakvi™) in the United States, the first treatment with an initial registration in a tumor-agnostic indication
  • Synthetic biology joint venture Joyn Bio commences operations to improve nitrogen fixation in agriculture
  • Social innovation To tackle the challenges of our time, we need to think and work in a way that goes beyond the boundaries of scientific disciplines and institutions – both in the science sector and social domain. The term defines the process by which new social practices emerge, prevail and become more widespread in various areas of society. in Africa – driven by collaborations with the myAgro and One Acre Fund social enterprises

Innovations – which we define as new solutions that generate added value for our customers and society – are a cornerstone of our Group strategy. Our activities focus on innovative products based on our strong research and development (R&D) competencies supplemented with targeted process, service and business model innovations.

Our innovations help us contribute to solving global challenges in medical care and food security. In addition to the strong innovative capabilities of our employees throughout the company, our efforts concentrate on excellence in research and development, a broad open innovation network, and the use of new, groundbreaking technologies and data science findings.

By merging our innovative crop protection with Monsanto’s globally leading plant biotechnology and breeding R&D activities, we are establishing the foundation for breakthrough innovations in the agriculture industry.

To further develop the innovation expertise of the entire organization, we have trained more than 1,000 employees in modern methods such as Systematic Inventive Thinking, Design Thinking and Lean Start-up since these training programs began in 2016. We have also established an agile, worldwide, cross-segment and cross-functional network of more than 700 innovation coaches and over 80 innovation ambassadors to help our employees develop and drive forward new ideas and projects. An established online platform enables all employees to find information about new innovation trends and current projects as well as globally interconnect and exchange with each other on innovation topics. In addition, selected innovations are advanced in a cross-segment entrepreneurship program. Our innovation activities were internationally honored once again in 2018: Boston Consulting Group ranks Bayer among the world’s 50 most innovative companies.

Excellence in research and development

Bayer’s success has always been based on excellence in research and development. The R&D activities we pursue are aligned with the innovation strategies of our segments to improve human, animal and plant health. We are increasingly employing data science methods in all our R&D activities and bolstering our scientists’ expertise with targeted data science learning programs.

Bayer maintains a global network of R&D locations, which employ roughly 17,300 researchers. In 2018, our research and development investments increased by a nominal 16.5% to €5,246 million.

Information on Research and Development in 2018

 

 

R&D expenses

 

R&D expenses before special items

 

Share of R&D expenses

 

R&D expenses before special items

 

R&D employees

 

 

2017

2018

 

2017

2018

 

2017

2018

 

2017

2018

 

2017

2018

 

 

€ million

€ million

 

€ million

€ million

 

%

%

 

% of sales

% of sales

 

FTE

FTE

1

The 2018 R&D costs for Pharmaceuticals include income of approximately €190 million from a Xarelto™ development collaboration with Janssen Research & Development, LLC, a subsidiary of Johnson & Johnson.

Pharmaceuticals1

 

2,888

2,893

 

2,724

2,589

 

64.1

55.1

 

16.2

15.5

 

8,138

7,924

Consumer Health

 

240

226

 

228

221

 

5.3

4.3

 

3.9

4.1

 

368

346

Crop Science

 

1,166

1,950

 

1,120

1,856

 

25.9

37.2

 

11.7

13.0

 

5,174

8,526

Animal Health

 

155

143

 

145

141

 

3.4

2.7

 

9.2

9.4

 

333

440

Reconciliation

 

55

34

 

55

33

 

1.2

0.6

 

4.7

2.0

 

28

39

Total

 

4,504

5,246

 

4,272

4,840

 

100

100

 

12.2

12.2

 

14,041

17,275

Global open innovation network

Partnerships are integral to our innovation strategy. We enter into strategic alliances with various partners such as universities, governmental agencies, start-ups, suppliers and industry. This gives us access to complementary technologies and expertise that substantially broaden our spectrum for innovation.

Our open innovation network spans all parts of the company along the value chain, with our open innovation portal offering a platform for collaborations. We further extended our open innovation activities again in 2018. Measures included launching another incubator for biotech start-ups in Kobe, Japan (CoLaborator™ Kobe) and expanding our collaboration with the Broad Institute in Boston through the establishment of a joint laboratory for cardiovascular research. Furthermore, we invest in funds that finance start-up companies in the life science industry, such as High-Tech Gründerfonds III. The Monsanto acquisition also included the Monsanto Venture Capital Unit, which now operates as Bayer Growth Ventures. The aim here is to provide initial capital to start-ups in the life science sector. In the field of social innovation, we have launched partnerships with the myAgro and One Acre Fund social enterprises to support farmers in Africa.

Details of our open innovation activities can be found below and in the specific innovation sections for the respective segments.

CoLaborator™ in Kobe, Japan

Following the establishment of Bayer CoLaborator™ in Berlin, San Francisco, Moscow and West Sacramento, a further research incubator was founded in Kobe, Japan, in 2018. This makes Bayer the first foreign company active in the pharmaceuticals business to operate such a research facility in Japan. We offer young life science companies excellent research and development collaboration opportunities at the Biomedical Innovation Cluster in Kobe. Two companies – Epigeneron, Inc. and Myoridge Co. Ltd. – have already set up laboratories there and are developing technologies to identify drug-target interactions and the production of ultrapure cardiac muscle cells respectively.

High-Tech Gründerfonds

For Bayer, start-ups are important partners in the innovation ecosystem that help propel us toward our goal of developing new solutions in the fields of health care and nutrition. Following our investment in High-Tech Gründerfonds II, our company also joined High-Tech Gründerfonds III in 2018 and is focusing here on innovative start-ups in biotechnology and production technologies.

Social innovations in Africa

Bayer is engaging in targeted partnerships to support innovative ideas and business models that help improve living conditions in developing countries. In 2018, Crop Science entered into partnerships with the myAgro social enterprise in Mali and with the One Acre Fund in Kenya, which supports smallholders in East Africa. The myAgro model enables smallholder farmers who do not have a bank account or access to credit to save small amounts via a prepaid model. At the start of the planting season, high-quality seed and fertilizer are supplied to the farmers, even those in remote villages. This enables small farms – which are usually worked by the families themselves – to increase their yields by 50 to 100 percent on average.

Social innovation is an element of our societal engagement (see Chapter “Societal Engagement”).

Bayer invests in breakthrough innovations

Another key tool for achieving our strategic goals is the use of groundbreaking technologies. Access to these technologies is facilitated by Leaps by Bayer, a new innovation and collaboration model with locations in Berlin, Boston and San Francisco. This program aims to discover breakthrough innovations in health care (for example in relation to the regeneration of damaged cardiac muscle and / or brain cells to repair tissue damage following myocardial infarctions or to cure neurodegenerative diseases) and nutrition (for example to significantly reduce fertilizer use in farming). We have invested a total of approximately €600 million in start-ups and collaborations so far.

Via Leaps by Bayer, we have established the Joyn Bio joint venture together with Ginkgo Bioworks. This joint venture commenced research operations in Boston, Massachusetts, in March 2018 and also operates laboratories in West Sacramento, California. These activities seek to boost the agriculture industry’s efforts to improve sustainability, for example by reducing the environmental impact of nitrogen fertilizers with the help of novel synthetic biology methods. The program will initially focus on cereals that can use soil microbes to satisfy most of their nitrogen requirements.

Furthermore, we use our Life Science Collaboration Program to make cross-divisional assessments of innovations in the fields of biology and technology, such as developments in the areas of gene editing and artificial intelligence.

Patents protect Bayer’s intellectual property

Reliable global protection of intellectual property rights is particularly important for an innovation company like Bayer. In most cases, it would be impossible to cover the high costs incurred in the research and development of innovative products without this protection. We are therefore committed worldwide to protecting both the international patent system and our own intellectual property. Depending on the legal framework, we endeavor to obtain patent protection for our products and technologies in major markets. When we successfully market patent-protected products, this enables us to reinvest the profits in sustainable research and development.

Patent terms vary according to the laws of the country granting the patent, but the basic term is usually 20 years from the filing date of a patent application. Since it takes an average of 11 to 13 years to develop a new medicine or crop protection active ingredient, only seven to nine years of patent protection generally remain following the product’s approval. The same applies to the development of a new transgenic trait. In an attempt to nevertheless provide an adequate incentive to make the necessary major investments in research and development, the European Union (E.U.) member states, the United States, Japan and some other countries extend patent terms or issue supplementary protection certificates to compensate for the shortening of the effective patent protection period due to regulatory approval processes for new drugs. For the same reason, some countries also grant such extended patent terms for new crop protection products, but not for transgenic traits.

The following table shows the expiration dates for Bayer’s most significant Pharmaceuticals patents:

Pharmaceuticals Patent Expiration Dates

 

 

Market

 

 

Germany

 

France

 

Italy

 

Switzer- land

 

Spain

 

U.K.

 

China

 

Japan

 

Brazil

 

Canada

 

U.S.A.

a

Current expiration date; patent term extension applied for

b

Patent application pending

c

Patent term revised

d

Application-specific term extension(s)

e

Patent term extension granted

f

Separate claims granted for high-purity active ingredient

Products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adempas™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active ingredient

 

2028

 

2028

 

2028

 

2028

 

2028

 

2028e

 

2023

 

2027−2028d

 

2023b

 

2023

 

2026e

Production process / intermediate

 

2030

 

2030

 

2030

 

2030

 

2030

 

2030

 

2030

 

2030

 

2030b

 

2030

 

2030

Eylea™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active ingredient

 

2025

 

2025

 

2025

 

2025

 

2025

 

2025e

 

2020

 

2021−2023

 

2020b

 

2020

 

Formulation

 

2027

 

2027

 

2027

 

2027

 

2027

 

2027

 

2027b

 

2028−2029d

 

2027b

 

2027

 

Jivi™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active ingredient

 

2025

 

2025

 

2025

 

2025

 

2025

 

2025

 

2025

 

2025a

 

2025b

 

2025a

 

2025a

Formulation

 

 

 

 

 

 

 

 

2020

 

2020

 

 

Kogenate™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Formulation

 

 

 

 

 

 

 

 

2020

 

2020

 

 

Kovaltry™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Formulation

 

 

 

 

 

 

 

 

2023e

 

2020

 

 

Production process

 

2018

 

2018

 

2018

 

2018

 

2018

 

2018

 

2018

 

2023e

 

2023

 

2018

 

2021e

Production process (cell line / chaperone)

 

2029e

 

2024a

 

2029e

 

 

2024a

 

2024a

 

 

2028e

 

 

2024

 

2024

Mirena™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inserter

 

2029

 

2029

 

2029

 

2029

 

2029

 

2029

 

2029

 

2029

 

2029b

 

2029

 

2031

Nexavar™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active ingredient

 

2021

 

2021

 

2021

 

2021

 

2021

 

2021

 

2020

 

2021−2025d

 

2025

 

2020

 

2020

Salt form

 

2022

 

2022

 

2022

 

2022

 

2022

 

2022

 

 

 

 

 

Polymorph

 

2025

 

2025

 

2025

 

2025

 

2025

 

2025

 

2025

 

2025−2026d

 

2025b

 

2025

 

2027

Formulation

 

2026

 

2026

 

2026

 

2026

 

2026

 

2026

 

2026

 

2026−2027d

 

2026b

 

2026

 

2028e

Stivarga™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active ingredient

 

2028

 

2028

 

2028

 

2028

 

2028

 

2024a

 

2024

 

2026d

 

2028c

 

2024

 

2031

Monohydrate form

 

2027

 

2027

 

2027

 

2027

 

2027

 

2027

 

2027

 

2027d

 

2027b

 

2027

 

2032

Formulation

 

2025

 

2025

 

2025

 

2025

 

2025

 

2025

 

2025

 

2026d

 

2025b

 

2025

 

2031

Production process

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031f

 

2031b

 

2031

 

2031f

Coated tablet

 

2033

 

2033

 

2033

 

2033

 

2033

 

2033

 

2033b

 

2033b

 

2033b

 

2033b

 

2033b

Xarelto™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active ingredient

 

2023

 

2023

 

2023

 

2023

 

2023

 

2023

 

2020

 

2022−2025d

 

2022

 

2020

 

2024

Formulation

 

2024

 

2024

 

2024

 

2024

 

2024

 

2024

 

2024

 

2025−2028d

 

2028c

 

2024

 

2024

Xofigo™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Use

 

2024

 

2024

 

2024

 

2024

 

2024

 

2024

 

2019

 

2022e

 

 

2019

 

2022

Production process

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031b

 

2031

 

2031

Crop Science regularly applies for patent protection for its new crop protection active ingredients as well as for protection for inventions related to its manufacturing processes, innovative mixtures, formulations and uses. Additionally, we routinely obtain patent protection and / or plant variety protection for our seeds, genomics-related products and processes, breeding technology, and commercial varietal and hybrid seed products. Therefore, in the Crop Science area where products often combine multiple technologies – each separately patented in different areas of the world, with patents often granted only late in the product lifecycle – the link between patents and products is more complex than at Pharmaceuticals.

Although the patents have already expired for some of our crop protection active ingredients, such as glyphosate, trifloxystrobin, prothioconazole1 or imidacloprid, we have a portfolio of patents on formulations, mixtures and / or manufacturing processes for these active ingredients. Additionally, some of our younger active ingredients such as fluopyram and bixafen are still patent-protected in the United States, Germany, France, the United Kingdom, Brazil, Canada and other countries until at least 2023. In fact, fluopyram, for example, is patent-protected until 2024 in the United States and 2025 in Brazil.2 While our patent coverage on the first-generation Roundup Ready™ trait for soybeans has expired, most Roundup Ready™ soybeans in the U.S. are protected by patents covering specific varieties. In addition, most of our customers and licensees are choosing our second-generation Roundup Ready 2 Yield™ trait for soybeans with patent coverage that extends into the next decade. In Brazil and Argentina, farmers are increasingly adopting our next-generation Intacta RR2 PRO soybean that also has patent coverage extending into the next decade. Patents on our next-generation herbicide trait which confers dicamba tolerance extend into the next decade. In corn seed and traits, patent coverage on our first-generation YieldGard trait has expired. However, most farmers have already upgraded to next-generation branded corn traits with patent coverage extending into the next decade.

1 Last to expire for prothioconazole are the Supplementary Protection Certificates in several European countries expiring in 2019 and in some CIS countries in 2020.
2 Patent protection without considering any patent term extension or Supplementary Protection Certificate protection

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