Bayer has been reflecting on what was a disappointing year for the group's pharmaceuticals business and is hoping that its strong position in the emerging markets and a promising pipeline will help to offset patent expiries and the impact of healthcare reforms in the USA and Europe.
Speaking at the company's annual press conference in Leverkusen, chairman Marijn Dekkers acknowledged that the performance of Bayer HealthCare was "below expectations", hit by generic competition in the USA for the YAZ (drospirenone and ethinyl estradiol) line of oral contraceptives, down 15.8% to 1.11 billion euros. Health systems cut sales and earnings by 160 million euros last year, a figure which will rise to 270-300 million euros in 2011.
However, Bayer's performance in the markets outside the USA and Europe are encouraging. Pharmaceutical sales were up 23.1% in Asia Pacific to 2.63 billion euros, while Latin America/Africa/Middle East climbed 10.2% to 1.67 billion euros.
Dr Dekkers is particularly excited about Bayer's prospects in China, saying it is a "tremendous growth opportunity". He told PharmaTimes World News that the company is adding 1,000 sales reps in the country but said it is a major challenge to find the right employees in China. He also noted that training up staff and recruitment also involves a considerable investment.
The Bayer chief also stated his confidence in the company's "highly promising" pipeline and the potential for the anticoagulant Xarelto (rivaroxaban; more details in tomorrow's PharmaTimes World News). He also noted that the healthcare R&D spend last year topped 2 billion euros, but that should decrease this year as expensive Phase III trials were completed in 2010.
Major divestments 'an extreme option'
Dr Dekkers was asked again about Bayer's three-pillar business of healthcare, crop science and material sciences. Comments he had made recently suggested that the latter could be divested to fund a big deal but this was not an issue he wished to dwell on.
"I am happy to repeat what I have said about 10,000 times, all three sub-groups are strategically important", he said, noting that a sale of the material science division is "an extreme option". That would only happen if "we wanted to do something so big we had to use it as currency".
When pushed by PharmaTimes World News as to whether Bayer was indeed looking at big deals that would require such a divestment, he said that "looking is a big word" and "you don’t have to look far, because there are only 20 companies that count as a big acquisition".
He concluded by insisting that "at the moment, we are happy with the three subgroups we have". However, he does like the idea of smaller bolt-on acquisitions, which can be "a good way to spend your money", given their lower risk.