Bayer to set 2011 R&D budget in line with this year’s €3.1bn

08 December 2010 13:15  [Source: ICIS news]

LEVERKUSEN, Germany (ICIS)--Bayer plans to set its 2011 research and development (R&D) budget at a level similar to that for 2010, which increased 13% year on year to €3.1bn ($4.1bn), the Germany-based chemicals company said on Wednesday.

“For the coming year we are planning an R&D budget corresponding to 2010’s record level,” said Marijn Dekkers, chairman of Bayer.

“As a company we need these innovations, too. They are our lifeblood. To compete successfully, we depend on their development and their marketing,” he added.

Bayer MaterialScience accounted for 7%, or €230m, of the group’s total R&D investment in 2010, Dekkers said.

“We consider it a success that more than 20% of sales [in 2010] at MaterialScience are generated with products launched since 2005.”

Bayer’s health care segment accounted for the biggest share of R&D spending, with 67%.

Board member Wolfgang Plischke said that the group’s pharmaceutical pipeline was well stocked, with 53 projects currently all in clinical stages.

The group’s crop science business had the second largest share of R&D spending, with 25% of the overall research budget, Plischke added.

“Between 2000 and 2009, that subgroup launched 23 new crop protection active substances. By 2012, CropScience wants to bring in six new active substances, with sales potential totalling more than €1bn,” said Plischke.

Looking ahead, Dekkers said that it was important to put a high level of investment in R&D as well as marketing, adding that the group would expand its activities in emerging markets.

Dekkers said his most important task as CEO is to strengthen Bayer’s “innovation capability and to improve the marketing of our innovations. I am doing all I can to ensure our resources are used as effectively as possible for this purpose – and not for superfluous activities.”

However, Dekkers said that pressure was being exerted on sales and earnings in Bayer’s health care and crop science businesses, and that needed funds would have to be raised through the targeted reallocation of resources, in particular the reduction of administration costs, without going into further detail.

“This [pressure on sales] is attributable mainly to generic competition, rising development costs and the burdens of health system reforms in many countries…These plans [to raise the needed funds] will be supported by efficiency and cost-saving measures,” he said.

Last month, Bayer announced plans to cut 4,500 positions, including 1,700 in Germany, while creating 2,500 new jobs, mostly in emerging markets.

($1 = €0.75)

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By: Franco Capaldo
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