Business Development by Segment

Pharmaceuticals

Pharmaceuticals market continues to grow

The pharmaceuticals market grew by 5% in 2018 (2017: 3%). Stronger growth momentum in the Americas, Europe and Asia more than offset the continuing decline in Japan. The overall market trend was boosted by higher volumes due to an aging population and improved access to medical care, and also by growth fueled by innovative – often high-end – products. Opposing factors persisted, including heightened price pressure from generics and reforms to national health care systems.

Key Data – Pharmaceuticals

 

 

Q4 2017

Q4 2018

Change1

 

2017

2018

Change1

 

 

€ million

€ million

Reported %

Fx & p adj. %

 

€ million

€ million

Reported %

Fx & p adj. %

Fx & p adj. = currency- and portfolio-adjusted

1

For definition see Chapter “Alternative Performance Measures Used by the Bayer Group”

Sales

 

4,215

4,291

+1.8

+2.6

 

16,847

16,746

–0.6

+3.4

Change in sales1

 

 

 

 

 

 

 

 

 

 

Volume

 

+6.4%

+3.9%

 

 

 

+5.2%

+5.7%

 

 

Price

 

–2.8%

–1.3%

 

 

 

–0.9%

–2.3%

 

 

Currency

 

–4.8%

–0.7%

 

 

 

–1.7%

–3.7%

 

 

Portfolio

 

–0.2%

–0.1%

 

 

 

0.0%

–0.3%

 

 

Sales by region

 

 

 

 

 

 

 

 

 

 

Europe / Middle East / Africa

 

1,720

1,699

–1.2

0.0

 

6,521

6,590

+1.1

+3.2

North America

 

1,027

1,019

–0.8

–2.7

 

4,229

3,965

–6.2

–2.0

Asia / Pacific

 

1,188

1,312

+10.4

+10.1

 

5,013

5,206

+3.8

+7.3

Latin America

 

280

261

–6.8

+6.8

 

1,084

985

–9.1

+6.7

EBITDA1

 

1,107

495

–55.3

 

 

5,576

4,797

–14.0

 

Special items1

 

(128)

(771)

 

 

 

(135)

(801)

 

 

EBITDA before special items1

 

1,235

1,266

+2.5

 

 

5,711

5,598

–2.0

 

EBITDA margin before special items1

 

29.3%

29.5%

 

 

 

33.9%

33.4%

 

 

EBIT1

 

795

(302)

.

 

 

4,325

3,213

–25.7

 

Special items1

 

(187)

(1,289)

 

 

 

(340)

(1,362)

 

 

EBIT before special items1

 

982

987

+0.5

 

 

4,665

4,575

–1.9

 

Net cash provided by operating activities

 

1,330

1,587

+19.3

 

 

3,867

4,376

+13.2

 

Increase in sales

Sales of Pharmaceuticals rose by 3.4% (Fx & portfolio adj.) to €16,746 million in 2018. This was again due primarily to a strong performance overall by our key growth products Xarelto™, Eylea™, Stivarga™, Xofigo™ and Adempas™, sales of which increased by 13.5% (Fx & portfolio adj.) to €6,838 million (2017: €6,196 million), and to substantial sales gains in China. Combined sales of our 15 best-selling Pharmaceuticals products advanced by 6.1% (Fx & portfolio adj.). Sales of Pharmaceuticals were held back in 2018 by the termination of a distribution agreement for Kogenate™ at the end of 2017. After adjusting for this effect, sales rose by 4.1% (Fx & portfolio adj.). As expected, temporary supply disruptions for some of our established products, such as Adalat™ and Aspirin™ Cardio, weighed on sales.

Best-Selling Pharmaceuticals Products

 

 

Q4 2017

Q4 2018

Change1

 

2017

2018

Change1

 

 

€ million

€ million

Reported %

Fx & p adj. %

 

€ million

€ million

Reported %

Fx & p adj. %

Fx & p adj. = currency- and portfolio-adjusted

1

For definition see Chapter “Alternative Performance Measures Used by the Bayer Group”

2

Marketing rights owned by a subsidiary of Johnson & Johnson, U.S.A.; transactional effects had a positive impact of around €5 million in the fourth quarter and a negative impact of approximately €16 million in the full year.

3

Marketing rights owned by Regeneron Pharmaceuticals Inc., U.S.A.

Xarelto™

 

914

993

+8.6

+9.6

 

3,298

3,631

+10.1

+12.8

of which U.S.A.2

 

178

159

–10.7

–10.6

 

519

508

–2.1

–2.1

Eylea™

 

507

600

+18.3

+19.1

 

1,880

2,185

+16.2

+19.6

of which U.S.A.3

 

0

0

.

.

 

0

0

.

.

Adempas™

 

72

96

+33.3

+29.9

 

295

356

+20.7

+24.1

of which U.S.A.

 

30

45

+50.0

+43.4

 

144

167

+16.0

+20.9

Xofigo™

 

101

81

–19.8

–21.0

 

408

351

–14.0

–10.3

of which U.S.A.

 

59

53

–10.2

–13.2

 

242

210

–13.2

–9.1

Stivarga™

 

80

86

+7.5

+8.3

 

315

315

0.0

+5.3

of which U.S.A.

 

41

42

+2.4

+2.0

 

166

149

–10.2

–6.2

Subtotal key growth products

 

1,674

1,856

+10.9

+11.4

 

6,196

6,838

+10.4

+13.5

Mirena™ product family

 

255

270

+5.9

+5.2

 

1,126

1,143

+1.5

+6.9

of which U.S.A.

 

161

164

+1.9

–1.2

 

746

750

+0.5

+6.2

Kogenate™ / Kovaltry™ / Jivi™

 

217

216

–0.5

–1.4

 

967

855

–11.6

–8.8

of which U.S.A.

 

68

80

+17.6

+15.8

 

322

313

–2.8

+2.4

Nexavar™

 

204

177

–13.2

–12.7

 

834

712

–14.6

–10.7

of which U.S.A.

 

67

54

–19.4

–21.9

 

294

216

–26.5

–23.4

YAZ™ / Yasmin™ / Yasminelle™

 

153

161

+5.2

+7.6

 

648

639

–1.4

+4.9

of which U.S.A.

 

14

17

+21.4

+17.6

 

83

74

–10.8

–7.0

Glucobay™

 

130

150

+15.4

+17.2

 

563

623

+10.7

+13.8

of which U.S.A.

 

0

1

.

.

 

2

2

0.0

–1.8

Adalat™

 

147

127

–13.6

–12.9

 

648

611

–5.7

–2.4

of which U.S.A.

 

0

0

.

.

 

0

0

.

.

Aspirin™ Cardio

 

137

137

0.0

+2.1

 

581

557

–4.1

–0.1

of which U.S.A.

 

0

0

.

.

 

0

0

.

.

Betaferon™ / Betaseron™

 

152

139

–8.6

–8.7

 

651

544

–16.4

–13.0

of which U.S.A.

 

80

63

–21.3

–22.4

 

357

269

–24.6

–20.8

Gadavist™ / Gadovist™

 

89

87

–2.2

–0.7

 

365

366

+0.3

+4.7

of which U.S.A.

 

25

20

–20.0

–22.7

 

116

112

–3.4

+2.0

Stellant™

 

84

92

+9.5

+8.3

 

336

342

+1.8

+5.8

of which U.S.A.

 

59

64

+8.5

+5.1

 

238

239

+0.4

+5.0

Total best-selling products

 

3,242

3,412

+5.2

+5.8

 

12,915

13,230

+2.4

+6.1

Proportion of Pharmaceuticals sales

 

77%

80%

 

 

 

77%

79%

 

 

Total best-selling products in U.S.A

 

782

762

–2.6

–4.6

 

3,229

3,009

–6.8

–2.9

Sales by product

  • We once again registered significant growth in sales of our oral anticoagulant Xarelto™ in 2018, which was primarily attributable to higher volumes in Europe, China and Canada. In the United States, where Xarelto™ is marketed by a subsidiary of Johnson & Johnson, license revenues – recognized as sales – were down year on year.
  • The significant expansion of business with our eye medicine Eylea™ resulted mainly from higher volumes in Europe, Japan and Canada.
  • We posted strong growth in sales of our pulmonary hypertension treatment Adempas™, primarily as a result of expanded volumes in the United States. As in the past, sales of the product also reflected the proportionate recognition of upfront and milestone payments resulting from the sGC collaboration with Merck & Co., United States.
  • Sales of our cancer drug Xofigo™ declined substantially. The decrease was mainly attributable to lower demand in the United States and Europe, which was due in particular to the Phase I-IV studies are clinical phases in the development of a drug product. The active ingredient candidate is generally tested in healthy subjects in Phase I, and in patients in Phases II and III. The studies test the therapeutic tolerability and efficacy of active ingredients in a specific indication. Phase IV studies are conducted following the approval of a new drug product to monitor its safety and efficacy over an extended period of time. The studies are subject to strict legal requirements and documentation procedures. of radium-223 dichloride in combination with abiraterone acetate and prednisone / prednisolone being halted prematurely in November 2017.
  • We registered an increase in sales of our cancer drug Stivarga™, primarily in China and Japan, where we continued to benefit from the market launches undertaken in previous years. In the United States, however, sales were down due to a highly competitive market environment.
  • Sales of the hormone-releasing intrauterine devices of the Mirena™ product family (Mirena™, Kyleena™ and Jaydess™ / Skyla™) increased, mainly as a result of the successful commercialization of Kyleena™ in the United States. We also registered considerably higher volumes in China and Canada.
  • Sales of our blood-clotting medicines Kogenate™ / Kovaltry™ / Jivi™ fell considerably, due mainly to the discontinuation of an agreement with a distribution partner. The encouraging recent sales growth (Fx & portfolio adj.) in the United States was not sufficient to offset this effect.
  • We registered a sharp decline in sales of our cancer drug Nexavar™ that was again the result of strong competitive pressure in the United States and Japan. The significant expansion of business in China only partly compensated for this development.
  • Sales of our YAZ™ / Yasmin™ / Yasminelle™ line of oral contraceptives increased on a currency- and portfolio-adjusted basis, primarily due to higher demand in China and the successful marketing of YazFlex™ in Japan. However, business in the United States was once again impacted by generic competition.
  • We posted significant sales gains for our diabetes treatment Glucobay™, driven by a robust expansion of volumes in China.
  • Sales of Adalat™, our product to treat hypertension and coronary heart disease, were down overall. Volumes declined overall, especially in Japan and Canada, but were significantly higher in China.
  • Sales of our Aspirin™ Cardio product for the secondary prevention of heart attacks were level with the prior year. Sales gains in China stood against declines in Europe.
  • The decrease in sales of our multiple sclerosis treatment Betaferon™ / Betaseron™ was again attributable to the competitive market environment in the United States.
  • We recorded encouraging sales gains for our MRI contrast agent Gadavist™ / Gadovist™, primarily due to the positive development of business in Europe.
  • Sales of our Stellant™ contrast agent injection system increased due to higher volumes, particularly in the United States.

Earnings

EBITDA before special items declined by 2.0% to €5,598 million in 2018. Adjusted for negative currency effects of €256 million, earnings were up by 2.5%. Earnings were held back mainly by an increase in the cost of goods sold, the effects of temporary supply disruptions, and higher selling expenses. Positive earnings contributions primarily resulted from a substantial increase in volumes – especially for Xarelto™ und Eylea™ – and income of approximately €190 million from a development collaboration with Janssen Research & Development, LLC, a subsidiary of Johnson & Johnson.

EBIT of Pharmaceuticals fell by a substantial 25.7% to €3,213 million after special charges of €1,362 million (2017: €340 million). These primarily comprised expenses for restructuring programs (€991 million), largely in connection with the impairment loss recognized for a newly constructed production facility in Germany, along with provisions for litigations (€323 million) and expenses for impairment losses on intangible assets (€43 million).

Special Items1 Pharmaceuticals

 

 

EBIT Q4 2017

EBIT Q4 2018

 

EBIT
2017

EBIT
2018

 

EBITDA Q4 2017

EBITDA Q4 2018

 

EBITDA 2017

EBITDA 2018

 

 

€ million

€ million

 

€ million

€ million

 

€ million

€ million

 

€ million

€ million

1

For definition see Chapter “Alternative Performance Measures Used by the Bayer Group”

Restructuring

 

(2)

(971)

 

(9)

(991)

 

(2)

(453)

 

(8)

(473)

Litigations

 

(124)

(323)

 

(124)

(323)

 

(124)

(323)

 

(124)

(323)

Impairment losses / loss reversals

 

(61)

(32)

 

(207)

(75)

 

(2)

(32)

 

(3)

(32)

Divestments

 

41

 

41

 

41

 

41

Other

 

(4)

 

(14)

 

(4)

 

(14)

Total special items

 

(187)

(1,289)

 

(340)

(1,362)

 

(128)

(771)

 

(135)

(801)

Compare to Last Year