08 December 2005 12:25 [Source: ICIS news]
LONDON (ICIS news)--Bayer will exceed its operational and strategic targets in 2005 through realignments and Euro1.9bn ($2.2bn) of R&D allocations, mainly in the pharmaceuticals business, the company’s chief executive said on Thursday.
"Two thousand and five is a very successful year for the new Bayer," Werner Wenning told financial analysts at a company research and development and investor day review.
"Profitability is improving faster than expected,” he said. ”By the end of the year we will clearly have exceeded our goals operationally and strategically.”
Bayer has realigned in 2005 following the loss of patent protection of its top drug Cipro and the collapse of a potential blockbuster. The chemicals business was spun-off as Lanxess in January 2005 and Bayer re-focused as a holding company with a mid-sized pharmaceuticals arm.
Acquisition of the Roche consumer business gave it a step up in over-the-counter drug products. Strong performance from the MaterialScience plastics business helped drive group sales to Euro20.3bn after nine months of 2005 compared with Euro17.3bn in the 2004 period. Earnings before interest and tax (EBIT) pre-exceptionals, or "clean EBIT", after nine months was Euro2.69bn compared with Euro1.71bn.
The company forecast underlying EBIT growth of 50% for the year in its latest profits upgrade.
Bayer's realignment is also bearing fruit in R&D, Wenning said. "The pharmaceuticals (development) pipeline has the potential to transform the business,” he said.
Bayer is allocating Euro1.9bn to R&D this year with three quarters of this amount spent in pharmaceuticals. Renal cancer drug Nexavar, currently in phase III trials, has a peak sales potential of Euro1bn, Bayer said, and is backed by an array of similar active ingredients.
Its Factor Xa inhibitor used to treat thrombosis, which is also in phase III trials, has similar peak sales potential, the company said. Wenning said sales targets for existing products Kogenate and Trasylol have been raised to more than Euro1bn and over Euro500m respectively.
BayerCropScience has ten new active ingredients in late stage development; four fungicides, four herbicides and two insecticides. The company wants to be world number one in fungicides, Wenning said.
It sees peak sales potential around 2011 of Euro2bn from new active ingredients launched since 2000, including those under development. On average the company expects to launch two new active ingredients a year.
Bayer MaterialScience has a leadership position in production and technology, the Bayer chief executive said. The sub-group had produced above-market profit margins this year, he added.
The MaterialScience division is developing "self-healing" automotive coatings and polycarbonate for auto glazing and engineering components, among its portfolio of potential new products.
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