New products drive Bayer HealthCare's sales up in Q3

German firm Bayer AG's HealthCare sub-group has reported encouraging results, with sales up by 0.5% year on year (y/y) in the third quarter (Q3) of 2013 to EUR4.7 billion (USD6.4 billion). Growth was driven by the positive performance of new pharmaceutical products: anticoagulant Xarelto (rivaroxaban), eye medicine Eylea (aflibercept), and cancer drugs Stivarga (regorafenib) and Xofigo (radium-223). During the third quarter, Bayer HealthCare achieved its strongest growth in Europe, with reported sales up 9.3% y/y in the region. Bayer's Asia-Pacific operations suffered the most over the third quarter, with sales down 6.3%, while HealthCare's sales recorded a 2.2% y/y drop in North America and a 3% y/y decrease in Africa, Latin America, and Middle East.

In terms of spending, Bayer Group's cost of goods sold decreased by 1.6% y/y to EUR4.6 billion. Meanwhile, selling expenses increased by 2.0% y/y, while general and administration expenses were down 0.8% y/y. Research and development (R&D) expenditures increased by 5.4% y/y to reach EUR781 million. Over the third quarter, Bayer's operating income – calculated by IHS Global Insight as net sales minus cost of goods sold, selling, R&D, and general and administration expenses – decreased by 2.3% y/y to EUR1.3 billion. Over the first nine months (9M) of 2013, Bayer spent a total of EUR2.3 billion on R&D, including EUR1.5 billion in HealthCare.

Bayer Group's pharmaceutical unit reported its sales were up 3.1% y/y to EUR2.8 billion during the third quarter. The performance of the sub-group was boosted by the strong sales growth of Xarelto, Eylea, Stivarga, and Xofigo, which posted combined sales of EUR407 million compared with EUR82 million in the third quarter of 2012. Sales of Bayer's former top-selling product Betaferon (interferon beta-1b) continued to recede over the third quarter, due to increased competition, particularly in the United States. Cancer drug Nexavar (sorafenib) achieved sales increase of 2.5% y/y, thanks to a price increase in the US.

Outlook and implications

Bayer expects HealthCare's sales to grow by a mid-single-digit percentage on a currency- and portfolio-adjusted basis to approximately EUR19 billion in 2013. The performance of the group's pharmaceutical division will continue to be driven by the good performance of Bayer's new products and future product launches. With nine promising products currently being assessed by various marketing authorisation organisations worldwide, Bayer's pharmaceutical division should continue to benefit from a positive business momentum in the medium term.