Germany’s Bayer has raised its profit forecast for the next three years after announcing that its healthcare unit, boosted by the acquisition of Schering AG, is performing even better than expected.
Speaking at an investor conference at the firm’s headquarters in Leverkusen, chairman Werner Wenning said that margin forecasts for earnings before interest, taxes, depreciation and amortisation for the group will exceed 20% this year, “and we are aiming for a margin above 22% by 2009". He added "with this target, we are headed toward a new order of magnitude for Bayer in terms of earnings and underscoring our confidence in the earning power of our healthcare business”.
Bayer estimates that it will save more than 800 million euros from the Schering purchase, up from an earlier forecast of 700 million euros by 2009, while margin forecasts for EBITDA will grow to 25% this year and 28% in 2009, 1% more than previously estimated.
Arthur Higgins, chairman of Bayer Healthcare, noted that the firm has recently completed the strategic realignment of its development portfolio, “a key milestone in the integration process that will enable us to concentrate on the most promising projects in the future". The new pipeline comprises 14 projects in Phase I, 17 in Phase II and 19 in Phase III, while another nine projects have already been submitted for marketing authorisation.
He noted that as a result of the evaluation, 20 pipeline projects will have been discontinued “due to either strategic reasons or low prospects for success”. These include the cancer drug PTK/ZK, leukine against Crohn’s disease and asoprisnil to combat benign uterine tumours. Mr Higgins added that “we are adjusting our pharmaceutical R&D budget for this year and in 2008 to about 15% of the division’s sales” and it will be between 15%-17% in the years thereafter."
Bayer added that in the future, its healthcare unit will focus on four areas: oncology, cardiology, women's health and diagnostic imaging.