The pharmaceuticals division of German conglomerate Bayer AG has reported that sales in 2015 rose by 14% year on year to EUR12.052 billion.
IHS Life Sciences perspective | |
Implications | Oral anticoagulant Xarelto continued to be Bayer's leading product in terms of sales, while several newer products recorded impressive sales growth during 2015. |
Outlook | Bayer has begun 2016 as an exclusively life-sciences-focused business, and it can be expected that research and development activities in the pharmaceuticals segment of the business will be intensified as the company seeks to consolidate its position and continue to bring new innovative products to market. |
German pharmaceutical and healthcare group Bayer AG has reported its full-year results for 2015, showing a strong performance in terms of top- and bottom-line earnings. Net sales for the year increased by 12.1% year on year (y/y) on a reported basis to EUR46.324 billion (USD51.060 billion), although on a foreign-exchange (Fx) and portfolio-adjusted basis the increase was calculated at a more modest 2.7% y/y. Sales of Bayer HealthCare – which encompasses the Pharmaceuticals (prescription pharmaceuticals) and Consumer Health (over-the-counter products: OTC) divisions – increased by 19.9% y/y on a reported basis to EUR22.874 billion (up 8.1% y/y on an Fx and portfolio-adjusted basis). Sales of the pharmaceuticals division were up 14.0% y/y on a reported basis to EUR12.052 billion (up 9.9% y/y on an Fx and portfolio-adjusted basis). A substantial increase was also recorded in the Consumer Health division, which saw annual sales up by 30% y/y (5.1% y/y on an Fx and portfolio-adjusted basis), principally due to the acquisition of the OTC assets of Merck & Co (US).
Bayer Group 2015 financial results | ||
| 2015 (EUR, bil.) | Y/Y, % change |
Bayer AG's group net sales | 46.324 | 12.1 |
Bayer HealthCare's net sales | 22.874 | 19.9 |
-Pharmaceuticals | 12.052 | 14.0 |
-Consumer Health | 9.129 | 30.0 |
Cost of goods sold | 21.158 | 6.3 |
Selling expenses | 12.367 | 13.0 |
R&D expenses | 4.281 | 21.0 |
General administration expenses | 2.098 | 23.2 |
Operating income* | 6.420 | 16.3 |
Operating margin** | 13.9% | 0.5pp higher |
R&D as % of net sales | 9.2 | 0.6pp higher |
Net income | 4.110 | 20.0 |
* IHS Life Sciences estimate: net sales minus cost of goods sold, selling, R&D, and general administration expenses. | ||
HealthCare and Pharmaceuticals post strong Q4 sales growth
Looking at Bayer's overall fourth-quarter financial results, the group as a whole recorded a 4.9% y/y increase in sales to EUR11.319 billion. Strong performances were shown by the HealthCare division – which saw an 8.6% y/y increase in sales on a reported basis, to EUR5.811 billion (up 8.5% y/y on an Fx and portfolio-adjusted basis) – while the Pharmaceuticals division saw a reported increase of 9.2% y/y in sales to EUR3.571 billion (up 9.6% y/y on an Fx and portfolio-adjusted basis). The main dampener on overall group sales in the final quarter of 2015 was the divestment of Bayer's plastics business, MaterialScience, now operating under the name Covestro.
Xarelto and Eylea lead in sales of individual products
In terms of sales in individual products of the Pharmaceuticals division, oral anticoagulant Xarelto (rivaroxaban) remained Bayer's best-selling drug, with sales in 2015 rising by 34.1% y/y on a reported basis to EUR2.252 billion. Bayer reports that the rise was mainly due to strong increases in sales volumes in Germany and Japan. Ophthalmology drug Eylea (aflibercept) improved its ranking to become the second-largest-selling product – with sales up by 61.8% y/y on a reported basis reaching EUR1.228 billion, based mainly on the new indications for which the drug was approved during 2015. Several newer products underwent dynamic increases in sales, including cancer medicines Stivarga (regorafenib) and Xofigo (radium Ra 223 dichloride).
Bayer Healthcare Pharmaceuticals, best-selling products 2015 | |||
| Full-year 2015 sales (EUR, mil.) | Y/Y, % change (reported) | Y/Y, % change (FX and portfolio-adjusted) |
Xarelto | 2,252 | 34.1 | 34.2 |
Eylea | 1,228 | 61.8 | 57.4 |
Kogenate | 1,155 | 4.1 | -1.1 |
Mirena product family | 968 | 18.2 | 5.7 |
Nexavar | 892 | 15.4 | 7.4 |
Betaferon/Betaseron | 824 | 0.1 | -8.1 |
YAZ/Yasmin/Yasminelle | 706 | -8.1 | -4.7 |
Adalat | 633 | 7.7 | 1.2 |
Aspirin Cardio | 524 | 7.8 | 2.3 |
Glucobay | 523 | 18.1 | 2.4 |
Avalox/Avelox | 379 | -0.5 | -2.3 |
Stivarga | 313 | 39.7 | 24.5 |
Xofigo | 257 | 63.7 | 43.2 |
Levitra | 226 | -7.8 | -8.0 |
Cipro/Ciprobay | 182 | -4.7 | -3.2 |
Total | 11,062 | 7.0 | 13.4 |
Proportion of pharmaceutical sales | 80% | - | - |
Source: Bayer AG | |||
Outlook and implications
Bayer is undergoing a phase of significant changes, with the announcement towards the end of 2015 – coinciding with the divestment of MaterialScience – that the HealthCare division will cease to function as a separate entity from the beginning of 2016, leaving an overall structure with three divisions: Pharmaceuticals, Consumer Health, and Crop Science. 2015 was therefore the final year in which the HealthCare division will report separate results.
Bayer recently announced the departure of CEO Marijn Dekkers, with Werner Baumann – who has been a member of Bayer's management board since 2010, holding responsibility for strategy and portfolio management – replacing Dekkers. Baumann will be tasked with navigating Bayer through the challenges the company will face in establishing itself in its new form – that of a wholly life-science-focused conglomerate.
This will certainly depend on Bayer's continuing to increase its investment in research and development (R&D) – and considering the 21% y/y increase in R&D spending in 2015, this is likely to remain the prevailing trend. Bayer has reported a considerable number of candidate treatments at Phase III level – including copanlisib, intended for the treatment of various forms of non-Hodgkin lymphoma, and BAY1841788, which is undergoing trials in the treatment of prostate cancer – with additional, already-approved products also at the Phase III stage in other indications.