Management Report
5. Performance by Subgroup, Segment and Region
5.1 HealthCare
| Key Data – HealthCare | [Table 2] |
|---|
| | 1st Quarter 2009 | 1st Quarter 2010 | Change |
| | € million | € million | % |
| Sales | 3,843 | 3,869 | +0.7 |
| Change in sales | | | |
| Volume | -0.1% | +2.2% | |
| Price | +0.4% | +0.4% | |
| Currency | +2.4% | -0.6% | |
| Portfolio | +0.3% | -1.3% | |
| Sales by segment | | | |
| Pharmaceuticals | 2,587 | 2,531 | -2.2 |
| Consumer Health | 1,256 | 1,338 | +6.5 |
| Sales by region | | | |
| Europe | 1,572 | 1,523 | -3.1 |
| North America | 1,104 | 1,134 | +2.7 |
| Asia/Pacific | 635 | 667 | +5.0 |
| Latin America/Africa/Middle East | 532 | 545 | +2.4 |
| EBITDA* | 1,043 | 1,050 | +0.7 |
| Special items | (18) | (29) | |
| EBITDA before special items* | 1,061 | 1,079 | +1.7 |
| EBITDA margin before special items* | 27.6% | 27.9% | |
| EBIT* | 675 | 716 | +6.1 |
| Special items | (18) | (29) | |
| EBIT before special items* | 693 | 745 | +7.5 |
| Gross cash flow** | 745 | 719 | -3.5 |
| Net cash flow** | 699 | 742 | +6.2 |
* 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 0.7% in the first quarter of 2010, to €3,869 million (Q1 2009: €3,843 million). Adjusted for currency and portfolio effects, business was up by 2.6%. This growth was mainly attributable to the Consumer Health segment, which performed particularly well in the United States. Sales in the Pharmaceuticals segment remained at the previous year’s level.
EBITDA before special items of HealthCare increased by €18 million to €1,079 million (+1.7%). Earnings improved in the Consumer Health segment but declined slightly in Pharmaceuticals. EBIT before special items advanced by 7.5% to €745 million (Q1 2009: €693 million). Special charges totaled €29 million (Q1 2009: €18 million). EBIT rose by 6.1% to €716 million (Q1 2009: €675 million).
Pharmaceuticals
| Key Data – Pharmaceuticals | [Table 3] |
|---|
| | 1st Quarter 2009 | 1st Quarter 2010 | Change |
| | € million | € million | % |
| Sales | 2,587 | 2,531 | -2.2 |
| General Medicine | 859 | 874 | +1.7 |
| Specialty Medicine | 786 | 737 | -6.2 |
| Women’s Healthcare | 722 | 710 | -1.7 |
| Diagnostic Imaging | 220 | 210 | -4.5 |
| Sales by region | | | |
| Europe | 1,035 | 981 | -5.2 |
| North America | 703 | 687 | -2.3 |
| Asia/Pacific | 510 | 527 | +3.3 |
| Latin America/Africa/Middle East | 339 | 336 | -0.9 |
| EBITDA* | 809 | 768 | -5.1 |
| Special items | (18) | (29) | |
| EBITDA before special items* | 827 | 797 | -3.6 |
| EBITDA margin before special items* | 32.0% | 31.5% | |
| EBIT* | 505 | 497 | -1.6 |
| Special items | (18) | (29) | |
| EBIT before special items* | 523 | 526 | +0.6 |
| Gross cash flow** | 565 | 512 | -9.4 |
| Net cash flow** | 512 | 592 | +15.6 |
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 declined by 2.2% in the first quarter of 2010 to €2,531 million (Q1 2009: €2,587 million). After adjusting for currency and portfolio effects, business grew by 0.6%. Sales expanded in the North America and Asia/Pacific regions, but declined in Europe.
| Best-Selling Pharmaceutical Products | [Table 4] |
|---|
| | 1st Quarter 2009 | 1st Quarter 2010 | Change | Currency-
adjusted
change |
| | € million | € million | % | % |
YAZ®/Yasmin®/Yasminelle®
(Women’s Healthcare) | 319 | 287 | -10.0 | -10.2 |
| Betaferon®/Betaseron® (Specialty Medicine) | 301 | 283 | -6.0 | -5.0 |
| Kogenate® (Specialty Medicine) | 249 | 244 | -2.0 | -0.4 |
| Nexavar® (Specialty Medicine) | 137 | 155 | +13.1 | +16.0 |
| Adalat® (General Medicine) | 156 | 146 | -6.4 | -5.5 |
| Mirena® (Women’s Healthcare) | 125 | 143 | +14.4 | +16.5 |
| Avalox®/Avelox® (General Medicine) | 129 | 135 | +4.7 | +8.0 |
| Levitra® (General Medicine) | 83 | 86 | +3.6 | +5.1 |
| Glucobay® (General Medicine) | 82 | 79 | -3.7 | -1.7 |
| Cipro®/Ciprobay® (General Medicine) | 80 | 75 | -6.3 | -4.7 |
| Aspirin® Cardio (General Medicine) | 73 | 73 | 0.0 | +0.9 |
| Ultravist® (Diagnostic Imaging) | 62 | 68 | +9.7 | +6.1 |
| Magnevist® (Diagnostic Imaging) | 56 | 51 | -8.9 | -7.0 |
| Kinzal®/Pritor® (General Medicine) | 37 | 42 | +13.5 | +12.6 |
| Iopamiron® (Diagnostic Imaging) | 46 | 39 | -15.2 | -14.5 |
| Total | 1,935 | 1,906 | -1.5 | -0.3 |
| Proportion of Pharmaceuticals sales | 75% | 75% | | |
Sales of the General Medicine business unit increased by 1.7% to €874 million (Q1 2009: €859 million). Adjusted for currency changes, business grew by 3.4%. This was due especially to the positive business development in North America. Sales of our antibiotic Avalox®/Avelox® improved by 8.0% (Fx adj.) particularly as a result of business growth in the United States. Sales of our Levitra® erectile dysfunction treatment also increased (Fx adj. +5.1%). Our antihypertensive Kinzal®/Pritor® posted particularly strong growth (Fx adj. +12.6%), benefiting from the expansion of its indications in October 2009 to include the prevention of cardiovascular disease. Sales of Adalat® (Fx adj. -5.5%), Cipro®/Ciprobay® (Fx adj. -4.7%) and Glucobay® (Fx adj. -1.7%) moved back mainly as a result of generic competition.
Sales of the Specialty Medicine business unit fell by 6.2% to €737 million (Q1 2009: €786 million), partly as a consequence of the divestment of products from our oncology portfolio to Genzyme Corp., United States, in May 2009. After adjustment for currency and portfolio effects, business edged forward by 0.9%. Sales of our cancer drug Nexavar® (Fx adj. +16.0%) increased in all regions. In Japan, notably, we benefited from the product’s registration in May 2009 for the treatment of liver cancer. Sales of our blood-clotting drug Kogenate® remained at the prior-year level (Fx adj. -0.4%). Global demand for Kogenate® marketed by Bayer increased. However, sales to our distribution partner were well down against the prior-year quarter as a result of ordering schedule fluctuations. Sales of the multiple sclerosis drug Betaferon®/Betaseron® were down overall (Fx adj. -5.0%). This was largely attributable to lower sales in Europe caused mainly by heightened competition, particularly in Germany and Russia.
First-quarter sales of our Women’s Healthcare business unit edged down 1.7% to €710 million (Q1 2009: €722 million). Business receded by 2.3% on a currency-adjusted basis, mainly due to lower sales of our YAZ®/Yasmin®/Yasminelle® line of oral contraceptives (Fx adj. -10.2%) caused by a drop in demand for YAZ® and Yasmin® in the United States. Demand in the United States suffered particularly from the discussion surrounding the thrombosis risk of contraceptives containing drospirenone. However, the company continues to believe that the risk profile is comparable to that of other combination oral contraceptives and that YAZ® and Yasmin® remain good choices for contraception when used as directed. Sales moved ahead in the other regions, especially those of YAZ® in Europe and Yasmin® in Asia/Pacific. There was a pleasing increase in sales of the hormone-releasing intrauterine device Mirena® (Fx adj. +16.5 %), with particularly strong growth in demand in the United States due to the announcement of price increases.
Sales of the Diagnostic Imaging business unit receded by 4.5% to €210 million (Q1 2009: €220 million). After adjusting for currency and portfolio effects, sales slipped by 1.9%. The continuing decline in sales of Magnevist® (Fx adj. -7.0%) was partially offset by increases for Gadovist® (Fx adj. +10.2%), particularly in Europe. Sales of Ultravist® rose by 6.1% (Fx adj.) thanks largely to a positive performance in the Latin America and Europe regions. Ultravist® benefited from the cessation of marketing activities for Iopamiron® in Latin America.
EBITDA before special items of the Pharmaceuticals segment fell by 3.6% in the first quarter of 2010 to €797 million (Q1 2009: €827 million). Apart from the portfolio change, the main reason for the lower earnings was an increase in research and development expenditures. EBIT before special items came in at €526 million, up 0.6% from the prior-year period (Q1 2009: €523 million). Special charges of €29 million resulted from litigation-related expenses. EBIT dipped by 1.6% to €497 million (Q1 2009: €505 million).
Consumer Health
| Key Data – Consumer Health | [Table 5] |
|---|
| | 1st Quarter 2009 | 1st Quarter 2010 | Change |
| | € million | € million | % |
| Sales | 1,256 | 1,338 | +6.5 |
| Consumer Care | 704 | 744 | +5.7 |
| Medical Care | 324 | 335 | +3.4 |
| Animal Health | 228 | 259 | +13.6 |
| Sales by region | | | |
| Europe | 537 | 542 | +0.9 |
| North America | 401 | 447 | +11.5 |
| Asia/Pacific | 125 | 140 | +12.0 |
| Latin America/Africa/Middle East | 193 | 209 | +8.3 |
| EBITDA* | 234 | 282 | +20.5 |
| Special items | 0 | 0 | |
| EBITDA before special items* | 234 | 282 | +20.5 |
| EBITDA margin before special items* | 18.6% | 21.1% | |
| EBIT* | 170 | 219 | +28.8 |
| Special items | 0 | 0 | |
| EBIT before special items* | 170 | 219 | +28.8 |
| Gross cash flow** | 180 | 207 | +15.0 |
| Net cash flow** | 187 | 150 | -19.8 |
* For definition see “Calculation of EBIT(DA) Before Special Items.” ** For definition see “Financial Position of the Bayer Group.” |
Sales of the Consumer Health segment advanced by 6.5% in the first quarter of 2010 to €1,338 million (Q1 2009: €1,256 million). On a currency- and portfolio-adjusted basis, sales expanded by 6.8%. All divisions contributed to this increase. Business developed particularly well in the United States, where demand was boosted by the gradual recovery in the economy.
| Best-Selling Consumer Health Products | [Table 6] |
|---|
| | 1st Quarter 2009 | 1st Quarter 2010 | Change | Currency-
adjusted
change |
| | € million | € million | % | % |
| Contour® (Medical Care) | 124 | 131 | +5.6 | +4.6 |
| Aspirin® * (Consumer Care) | 96 | 90 | -6.3 | -5.3 |
| Advantage® product line (Animal Health) | 78 | 89 | +14.1 | +14.6 |
| Aleve®/naproxen (Consumer Care) | 43 | 59 | +37.2 | +40.9 |
| Bepanthen®/Bepanthol® (Consumer Care) | 48 | 55 | +14.6 | +12.0 |
| Canesten® (Consumer Care) | 43 | 44 | +2.3 | +1.3 |
| Baytril® (Animal Health) | 35 | 38 | +8.6 | +9.6 |
| One-A-Day® (Consumer Care) | 31 | 36 | +16.1 | +22.4 |
| Supradyn® (Consumer Care) | 31 | 31 | 0.0 | +2.9 |
| Breeze® (Medical Care) | 30 | 30 | 0.0 | +0.7 |
| Total | 559 | 603 | +7.9 | +8.5 |
| Proportion of Consumer Health sales | 45% | 45% | | |
| * Total Aspirin® Q1 sales = €163 million (Q1 2009 = €169 million), including Aspirin® Cardio, which is reflected in sales of the Pharmaceuticals segment. |
In the Consumer Care Division, sales advanced by 5.7% to €744 million (Q1 2009: €704 million). Adjusted for currency and portfolio effects, the increase was 5.6%. Our non-prescription medicines business recovered strongly, especially in North America. Our analgesics Aleve®/naproxen (Fx adj. +40.9%) and the One-A-Day® line of dietary supplements (Fx adj. +22.4%) benefited particularly from this trend. Our Bepanthen®/Bepanthol® line of skin care products (Fx adj. +12.0%) also posted significant growth in Europe. By contrast, sales of our Aspirin® pain reliever were down (Fx adj. -5.3%) due to a weak cold season.
Sales of the Medical Care Division advanced by 3.4% in the first quarter of 2010 to €335 million (Q1 2009: €324 million). On a currency-adjusted basis, business improved by 4.9%. A major part of this growth was attributable to higher sales of the Contour® line of blood glucose meters (Fx adj. +4.6%), which also benefited in Europe – particularly Germany – from the introduction of new products. This more than offset the drop in sales in North America. Buoyed by growth in the equipment service sector in North America, our medical devices business saw a further increase in sales to €111 million (Fx adj. +7.9%).
Sales of the Animal Health Division rose by 13.6% to €259 million (Q1 2009: €228 million). After adjusting for currency effects, the increase came to 12.9%. Growth was mainly attributable to higher sales in the North America region. Sales also advanced in the Europe and Asia/Pacific regions, driven by the Advantage® line of flea, tick and worm control products (Fx adj. +14.6%). The growth in sales of Advantage® resulted mainly from the first-time use of a new distribution channel in the United States. The positive sales trend for the broad-spectrum antibiotic Baytril® (Fx adj. +9.6%) was primarily due to higher demand in the United States resulting from a weather-related increase in susceptibility to infection.
EBITDA before special items of the Consumer Health segment grew by a substantial 20.5% to €282 million (Q1 2009: €234 million). This increase resulted from the positive sales performance, especially in the Animal Health and Consumer Care divisions. As in the first quarter of 2009, there were no special items. EBIT grew by 28.8% to €219 million (Q1 2009: €170 million).