Management Report
5. Performance by Subgroup, Segment and Region
5.1 HealthCare
| Key Data – HealthCare | [Table 2] |
|---|
| | 3rd
Quarter
2009 | 3rd
Quarter
2010 | Change | First
Nine
Months
2009 | First
Nine
Months
2010 | Change |
| | € million | € million | % | € million | € million | % |
| Sales | 3,936 | 4,271 | +8.5 | 11,824 | 12,445 | +5.3 |
| Change in sales | | | | | | |
| Volume | +1.4% | +1.5% | | +1.1% | +1.7% | |
| Price | +2.8% | -0.6% | | +2.0% | +0.1% | |
| Currency | +0.3% | +7.6% | | +2.1% | +4.3% | |
| Portfolio | -1.0% | 0.0% | | -0.3% | -0.8% | |
| Sales by segment | | | | | | |
| Pharmaceuticals | 2,548 | 2,732 | +7.2 | 7,769 | 8,011 | +3.1 |
| Consumer Health | 1,388 | 1,539 | +10.9 | 4,055 | 4,434 | +9.3 |
| Sales by region | | | | | | |
| Europe | 1,541 | 1,590 | +3.2 | 4,689 | 4,712 | +0.5 |
| North America | 1,146 | 1,161 | +1.3 | 3,473 | 3,500 | +0.8 |
| Asia/Pacific | 680 | 854 | +25.6 | 1,967 | 2,366 | +20.3 |
Latin America/Africa/
Middle East | 569 | 666 | +17.0 | 1,695 | 1,867 | +10.1 |
| EBITDA* | 1,037 | 1,049 | +1.2 | 3,256 | 3,144 | -3.4 |
| Special items | (104) | (50) | | (58) | (136) | |
| EBITDA before special items* | 1,141 | 1,099 | -3.7 | 3,314 | 3,280 | -1.0 |
| EBITDA margin before special items* | 29.0% | 25.7% | | 28.0% | 26.4% | |
| EBIT* | 681 | 712 | +4.6 | 2,177 | 2,003 | -8.0 |
| Special items | (105) | (50) | | (60) | (268) | |
| EBIT before special items* | 786 | 762 | -3.1 | 2,237 | 2,271 | +1.5 |
| Gross cash flow** | 876 | 684 | -21.9 | 2,381 | 2,142 | -10.0 |
| Net cash flow** | 979 | 694 | -29.1 | 2,274 | 2,102 | -7.6 |
* For definition see "Calculation of EBIT(DA) Before Special Items." ** For definition see "Financial Position of the Bayer Group." |
Sales of the HealthCare subgroup rose by 8.5% in the third quarter of 2010, to €4,271 million (Q3 2009: €3,936 million). Adjusted for currency and portfolio effects, business expanded by 0.9% thanks to the positive performance in the Consumer Health segment.
EBITDA before special items of HealthCare declined by 3.7% to €1,099 million (Q3 2009: €1,141 million) due to higher selling expenses in both segments. In addition, we increased spending on research and development. These factors were partially offset by positive currency effects. EBIT before special items was down by 3.1% at €762 million (Q3 2009: €786 million). Special items amounted to minus €50 million (Q3 2009: minus €105 million). EBIT rose by 4.6% to €712 million (Q3 2009: €681 million).
Pharmaceuticals
| Key Data – Pharmaceuticals | [Table 3] |
|---|
| | 3rd
Quarter
2009 | 3rd
Quarter
2010 | Change | First
Nine
Months
2009 | First
Nine
Months
2010 | Change |
| | € million | € million | % | € million | € million | % |
| Sales | 2,548 | 2,732 | +7.2 | 7,769 | 8,011 | +3.1 |
| Women’s Healthcare and General Medicine | 1,574 | 1,675 | +6.4 | 4,801 | 4,969 | +3.5 |
| Specialty Medicine | 974 | 1,057 | +8.5 | 2,968 | 3,042 | +2.5 |
| Sales by region | | | | | | |
| Europe | 996 | 1,014 | +1.8 | 3,059 | 3,028 | -1.0 |
| North America | 648 | 601 | -7.3 | 2,051 | 1,905 | -7.1 |
| Asia/Pacific | 540 | 687 | +27.2 | 1,576 | 1,900 | +20.6 |
Latin America/Africa/
Middle East | 364 | 430 | +18.1 | 1,083 | 1,178 | +8.8 |
| EBITDA* | 659 | 681 | +3.3 | 2,347 | 2,145 | -8.6 |
| Special items | (106) | (50) | | (57) | (136) | |
| EBITDA before special items* | 765 | 731 | -4.4 | 2,404 | 2,281 | -5.1 |
| EBITDA margin before special items* | 30.0% | 26.8% | | 30.9% | 28.5% | |
| EBIT* | 368 | 412 | +12.0 | 1,462 | 1,202 | -17.8 |
| Special items | (107) | (50) | | (59) | (268) | |
| EBIT before special items* | 475 | 462 | -2.7 | 1,521 | 1,470 | -3.4 |
| Gross cash flow** | 599 | 442 | -26.2 | 1,707 | 1,434 | -16.0 |
| Net cash flow** | 668 | 421 | -37.0 | 1,608 | 1,468 | -8.7 |
2009 figures restated * For definition see "Calculation of EBIT(DA) Before Special Items." ** For definition see "Financial Position of the Bayer Group." |
Sales of the Pharmaceuticals segment increased by 7.2% in the third quarter of 2010 to €2,732 million (Q3 2009: €2,548 million). Adjusted for currency and portfolio effects, business matched the prior-year period (0.0%). Sales in the emerging markets again rose strongly. However, the health care reforms in various countries had negative consequences, and there was a sharp drop in business in North America that was mainue to significantly lower sales of YAZ® in the United States. If YAZ® sales in the United States are factored out, revenues in the Pharmaceuticals segment improved by 4.4% (Fx & portfolio adj.) year on year.
| Best-Selling Pharmaceutical Products | [Table 4] |
|---|
| | 3rd
Quarter
2009 | 3rd
Quarter
2010 | Change | Cur-
rency-
adjusted
change | First
Nine
Months
2009 | First
Nine
Months
2010 | Change | Cur-
rency-
adjusted
change |
| | € million | € million | % | % | € million | € million | % | % |
Betaferon®/Betaseron®
(Specialty Medicine) |
283 |
308 |
+8.8 |
+1.2 |
904 |
893 |
-1.2 |
-5.1 |
| YAZ®/Yasmin®/Yasminelle® (Women’s Healthcare and General Medicine) |
320 |
243 |
-24.1 |
-28.1 |
964 |
819 |
-15.0 |
-17.7 |
| Kogenate® (Specialty Medicine) | 247 | 277 | +12.1 | +6.9 | 680 | 759 | +11.6 | +9.2 |
| Nexavar® (Specialty Medicine) | 161 | 175 | +8.7 | +1.3 | 445 | 516 | +16.0 | +11.9 |
| Adalat® (Women’s Healthcare and General Medicine) |
155 |
171 |
+10.3 |
-1.6 |
473 |
494 |
+4.4 |
-2.1 |
| Mirena® (Women’s Healthcare and General Medicine) |
105 |
138 |
+31.4 |
+20.7 |
367 |
404 |
+10.1 |
+5.5 |
| Avalox®/Avelox® (Women’s Healthcare and General Medicine) |
92 |
100 |
+8.7 |
+1.1 |
313 |
353 |
+12.8 |
+9.7 |
| Levitra® (Women’s Healthcare and General Medicine) |
92 |
110 |
+19.6 |
+9.4 |
265 |
292 |
+10.2 |
+5.2 |
| Glucobay® (Women’s Healthcare and General Medicine) |
77 |
91 |
+18.2 |
+5.2 |
243 |
260 |
+7.0 |
+1.1 |
| Aspirin® Cardio (Women’s Healthcare and General Medicine) |
78 |
94 |
+20.5 |
+12.8 |
232 |
259 |
+11.6 |
+8.5 |
| Ultravist® (Specialty Medicine) | 62 | 81 | +30.6 | +20.1 | 190 | 231 | +21.6 | +14.7 |
| Cipro®/Ciprobay® (Women’s Healthcare and General Medicine) |
83 |
61 |
-26.5 |
-30.1 |
253 |
197 |
-22.1 |
-23.6 |
| Magnevist® (Specialty Medicine) | 50 | 55 | +10.0 | -3.0 | 166 | 164 | -1.2 | -6.2 |
| Iopamiron® (Specialty Medicine) | 51 | 44 | -13.7 | -30.3 | 149 | 135 | -9.4 | -18.0 |
| Kinzal®/Pritor® (Women’s Healthcare and General Medicine) |
40 |
44 |
+10.0 |
+11.5 |
119 |
132 |
+10.9 |
+10.8 |
| Total | 1,896 | 1,992 | +5.1 | -2.6 | 5,763 | 5,908 | +2.5 | -1.4 |
| Proportion of Pharmaceuticals sales | 74% | 73% | | | 74% | 74% | | |
Sales of the Women’s Healthcare and General Medicine business unit increased by 6.4% to €1,675 million (Q3 2009: €1,574 million). After adjusting for currency effects, sales almost matched the prior-year period (-0.7%). Apart from significant declines for YAZ® and Cipro® in the United States, the business unit developed positively thanks to increased demand for our products, especially in China.
Sales of our YAZ®/Yasmin®/Yasminelle® line of oral contraceptives were substantially lower (Fx adj.
-28.1%) as a result of the steep drop in YAZ® sales in North America caused by generic competition in the United States. Business with YAZ® developed positively in the other regions. The encouraging growth in sales of the hormone-releasing intrauterine device Mirena® (Fx adj. +20.7%) was mainly due to the price increase implemented in the United States in March 2010. Our new oral contraceptive Natazia® has been on the market in the United States, too, since the second quarter of 2010.
Higher volumes – particularly in China – led to significant sales growth for Aspirin® Cardio (Fx adj. +12.8%), used for the prevention of myocardial infarction. Sales of our oral diabetes treatment Glucobay® (Fx adj. +5.2%) also moved ahead, due largely to successful marketing in China. Business with our erectile dysfunction treatment Levitra® (Fx adj. +9.4%) posted a gratifying improvement in the United States. The growth in sales of our antihypertensive Kinzal®/Pritor® (Fx adj. +11.5%) was primarily due to the indication expansion to include the prevention of cardiovascular disease. Sales of our antibiotic Avalox®/Avelox® (Fx adj. +1.1%) showed a small year-on-year increase, while those of Adalat® to treat high blood pressure and coronary heart disease were slightly down (Fx adj. -1.6%). Business with our antibiotic Cipro®/Ciprobay® shrank considerably (Fx adj. -30.1%), mainly due to the expiration of a U.S. government contract at the end of the first quarter of 2010.
Sales of the Specialty Medicine business unit improved by 8.5% to €1,057 million (Q3 2009: €974 million). Adjusted for currency and portfolio effects, the increase came to 1.2%.
Sales of the blood-clotting medication Kogenate® (Fx adj. +6.9%) developed positively, particularly in the Latin America/Africa/Middle East and North America regions. Sales of our cancer drug Nexavar® moved slightly ahead (Fx adj. +1.3%) from the very strong prior-year quarter, when business benefited from the product’s approval for the treatment of liver cancer in Japan in May 2009. Sales of the multiple sclerosis drug Betaferon®/Betaseron® also edged higher (Fx adj. +1.2%).
Sales of the X-ray contrast agent Ultravist® advanced significantly (Fx adj. +20.1%). This growth was largely attributable to the positive business performance in the Asia/Pacific region, where we recorded gratifying increases, particularly in China. Business with Ultravist® also expanded in Latin America, where we have almost completely ceased marketing our contrast agent Iopamiron®. Sales of Iopamiron® (Fx adj. -30.3%) were lower due to the resulting drop in volumes and particularly because of price reductions in Japan. In our MRI contrast agents business, the continuing decline in sales of Magnevist® (Fx adj. -3.0%) was more than offset by increases for Gadovist® (Fx adj. +10.9%), particularly in Europe.
EBITDA before special items of the Pharmaceuticals segment declined by 4.4% in the third quarter of 2010 to €731 million (Q3 2009: €765 million). This was partly due to pressure on margins caused by health care reforms and particularly to the adverse effects of the genericization of YAZ® in the United States. In addition, we incurred higher selling expenses in connection with product launches and growth initiatives in the emerging markets. At the same time, earnings were diminished by higher research and development expenses. By contrast, currency effects had a positive impact. EBIT before special items declined by 2.7% to €462 million (Q3 2009: €475 million). The special items of minus €50 million (Q3 2009: minus €107 million) were related to litigations concerning YAZ®/Yasmin®. EBIT climbed by 12.0% to €412 million (Q3 2009: €368 million).
In the first nine months of 2010, sales of our Pharmaceuticals segment grew by 3.1% to €8,011 million (9M 2009: €7,769 million). Adjusted for currency and portfolio effects, business was up by 0.6%. Pleasing sales increases were recorded for the blood-clotting medication Kogenate® (Fx adj. +9.2%), our cancer drug Nexavar® (Fx adj. +11.9%) and the antibiotic Avalox®/Avelox® (Fx adj. +9.7%). By contrast, there was a decline in business with our YAZ®/Yasmin®/Yasminelle® line of oral contraceptives (Fx adj. -17.7%), our antibiotic Cipro®/Ciprobay® (Fx adj. -23.6%) and the multiple sclerosis treatment Betaferon®/Betaseron® (Fx adj. -5.1%). EBITDA before special items for the first nine months of 2010 receded by 5.1% to €2,281 million (9M 2009: €2,404 million). EBIT before special items declined by 3.4% to €1,470 million (9M 2009:€1,521 million). The special items of minus €268 million (9M 2009: minus €59 million) resulted from litigations and an asset write-down related to the cancer drug Zevalin®. EBIT fell by 17.8% to €1,202 million (9M 2009: €1,462 million).
Consumer Health
| Key Data – Consumer Health | [Table 5] |
|---|
| | 3rd
Quarter
2009 | 3rd
Quarter
2010 | Change | First
Nine
Months
2009 | First
Nine
Months
2010 | Change |
| | € million | € million | % | € million | € million | % |
| Sales | 1,388 | 1,539 | +10.9 | 4,055 | 4,434 | +9.3 |
| Consumer Care | 777 | 880 | +13.3 | 2,230 | 2,460 | +10.3 |
| Medical Care | 360 | 375 | +4.2 | 1,075 | 1,109 | +3.2 |
| Animal Health | 251 | 284 | +13.1 | 750 | 865 | +15.3 |
| Sales by region | | | | | | |
| Europe | 545 | 576 | +5.7 | 1,630 | 1,684 | +3.3 |
| North America | 498 | 560 | +12.4 | 1,422 | 1,595 | +12.2 |
| Asia/Pacific | 140 | 167 | +19.3 | 391 | 466 | +19.2 |
Latin America/Africa/
Middle East | 205 | 236 | +15.1 | 612 | 689 | +12.6 |
| EBITDA* | 378 | 368 | -2.6 | 909 | 999 | +9.9 |
| Special items | 2 | 0 | | (1) | 0 | |
| EBITDA before special items* | 376 | 368 | -2.1 | 910 | 999 | +9.8 |
| EBITDA margin before special items* | 27.1% | 23.9% | | 22.4% | 22.5% | |
| EBIT* | 313 | 300 | -4.2 | 715 | 801 | +12.0 |
| Special items | 2 | 0 | | (1) | 0 | |
| EBIT before special items* | 311 | 300 | -3.5 | 716 | 801 | +11.9 |
| Gross cash flow** | 277 | 242 | -12.6 | 674 | 708 | +5.0 |
| Net cash flow** | 311 | 273 | -12.2 | 666 | 634 | -4.8 |
* For definition see "Calculation of EBIT(DA) Before Special Items." ** For definition see "Financial Position of the Bayer Group." |
Sales of our Consumer Health segment advanced by 10.9% in the third quarter of 2010 to €1,539 million (Q3 2009: €1,388 million). Business expanded by 2.6% on a currency- and portfolio-adjusted basis, with all regions contributing to this performance.
| Best-Selling Consumer Health Products | [Table 6] |
|---|
| | 3rd
Quarter
2009 | 3rd
Quarter
2010 | Change | Cur-
rency-
adjusted
change | First
Nine
Months
2009 | First
Nine
Months
2010 | Change | Cur-
rency-
adjusted
change |
| | € million | € million | % | % | € million | € million | % | % |
| Contour® (Medical Care) | 149 | 147 | -1.3 | -6.5 | 442 | 442 | 0.0 | -4.2 |
Advantage® product line
(Animal Health) |
88 |
103 |
+17.0 |
+7.5 |
275 |
333 |
+21.1 |
+14.7 |
| Aspirin®* (Consumer Care) | 99 | 110 | +11.1 | +3.4 | 289 | 305 | +5.5 | +1.4 |
| Aleve®/naproxen (Consumer Care) | 60 | 78 | +30.0 | +18.2 | 159 | 205 | +28.9 | +23.0 |
Bepanthen®/Bepanthol®
(Consumer Care) |
44 |
51 |
+15.9 |
+14.3 |
142 |
161 |
+13.4 |
+11.4 |
| Canesten® (Consumer Care) | 49 | 57 | +16.3 | +9.6 | 142 | 159 | +12.0 | +8.1 |
| One-A-Day® (Consumer Care) | 36 | 48 | +33.3 | +20.3 | 105 | 131 | +24.8 | +18.9 |
| Baytril® (Animal Health) | 37 | 44 | +18.9 | +12.1 | 105 | 117 | +11.4 | +7.3 |
| Supradyn® (Consumer Care) | 37 | 37 | 0.0 | -4.9 | 99 | 100 | +1.0 | -0.4 |
| Breeze® (Medical Care) | 34 | 31 | -8.8 | -16.9 | 105 | 93 | -11.4 | -15.6 |
| Total | 633 | 706 | +11.5 | +4.2 | 1,863 | 2,046 | +9.8 | +5.4 |
| Proportion of Consumer Health sales | 46% | 46% | | | 46% | 46% | | |
| * Total Aspirin® Q3 sales = €204 million (Q3 2009 = €177 million), 9M sales = €564 million (9M 2009 = €521 million), including Aspirin® Cardio, which is reflected in sales of the Pharmaceuticals segment. |
In the Consumer Care Division, sales moved ahead by 13.3% to €880 million (Q3 2009: €777 million). Adjusted for currency and portfolio effects, the increase came to 4.7%. All regions contributed to this growth in business, particularly North America. The analgesics Aleve® (Fx adj. +18.2%) and Aspirin® (Fx adj. +3.4%) and the One-A-Day® line of dietary supplements (Fx adj. +20.3%) achieved substantial sales growth in the United States. Business with our antifungal Canesten® (Fx adj. +9.6%) grew strongly, due primarily to new product launches in Canada and higher volumes in Italy. Sales of the skincare product Bepanthen®/Bepanthol® (Fx adj. +14.3%) developed particularly well in Brazil, Russia and France.
Sales of the Medical Care Division rose by 4.2% in the third quarter of 2010 to €375 million (Q3 2009: €360 million). Sales were down by 3.1% on a currency-adjusted basis, largely because of the negative development of the U.S. diabetes care market, where both prices and volumes declined on account of lower demand. This was the main reason for the drop in sales of our Breeze® (Fx adj. -16.9%) line of blood glucose meters. Sales of the Contour® (Fx adj. -6.5%) product line also fell on account of the development in the United States, while business increased in Europe. In contrast, sales of our medical devices business rose by 4.3% (Fx adj.) to €131 million.
Sales of the Animal Health Division rose by a gratifying 13.1% to €284 million (Q3 2009: €251 million). After adjusting for currency effects, the increase amounted to 3.9%, with all regions contributing to this positive performance. Our Advantage® line of flea, tick and worm control products (Fx adj. +7.5%) showed particularly strong growth in Europe. As in the second quarter, business also benefited from a new distribution channel in the United States. Business with the antibiotic Baytril® (Fx adj. +12.1%) expanded mainly because of higher sales to the U.S. livestock sector.
In the Consumer Health segment we achieved EBITDA before special items of €368 million in the third quarter of 2010 (Q3 2009: €376 million). The 2.1% decline occurred mainly because marketing and distribution costs returned to normal levels following their reduction in the previous year due to the crisis. This development was partially offset by positive currency effects. EBIT before special items receded by 3.5% to €300 million (Q3 2009: €311 million). There were no special items (Q3 2009: €2 million). EBIT declined by €13 million to €300 million (Q3 2009: €313 million).
In the first nine months of 2010, sales in the Consumer Health segment advanced by 9.3% to €4,434 million (9M 2009: €4,055 million). Business increased by 4.3% on a currency- and portfolio-adjusted basis. All regions, especially North America, contributed to this growth. The marked economic recovery and the associated rise in demand brought significantly higher sales for some of our Consumer Health products. Examples include the Advantage® line of flea, tick and worm control products (Fx adj. +14.7%), our analgesic Aleve® (Fx adj. +23.0%) and the One-A-Day® line of dietary supplements (Fx adj. +18.9%). By contrast, sales were down for our Diabetes Care products Contour® (Fx adj. -4.2%) and Breeze® (Fx adj. -15.6%). EBITDA before special items advanced by 9.8% in the first nine months of 2010 to €999 million (9M 2009: €910 million). EBIT before special items grew by an appreciable 11.9% to €801 million (9M 2009: €716 million). EBIT climbed by 12.0% to €801 million (9M 2009: €715 million).