German chemicals and pharmaceuticals group Bayer has lifted its first-quarter profit by 8%, ahead of expectations, while sales advanced 12% on the back of strong gains by its drug business.

Earnings before interest and taxes were 1.24 billion euros ($1.53bn) while sales came in at 7.49 billion euros, although net income fell 8% to 600 million euros, impacted by legal costs affecting its materials science business and discontinued operations such as fine chemical spin-out Lanxess.

Investors responded positively to the figures, with shares in Bayer rising 3.6% to 36.80 in mid-morning trading.

Bayer HealthCare put in the biggest sales and earnings gains in the quarter, with sales up 21% to 2.58 billion euros overall and pharma climbing by about the same margin to 1.15 billion euros.

“We got off to a dynamic start in 2006, continuing the previous year’s positive trend in terms of both sales and earnings,” said Bayer chairman Werner Wenning.

Leading the charge were recently-launched cancer drug Nexavar (sorafenib) and Kogenate (recombinant antihemophilic factor) for haemophilia. Kogenate sales rose 63% to 204 million euros in the quarter on strong demand in the USA and Europe. Nexavar, just launched for kidney cancer in the USA and Switzerland, caused turnover at Bayer’s new oncology business unit to reach 34 million euros for the quarter.

Bayer’s antibiotic Avalox/Avelox (moxifloxacin) rose 26% to 130 million euros and erectile dysfunction drug Levitra (vardenafil) climbed 30% to 78 million euros, although there were continued declines for Cipro/Ciprobay (ciprofloxacin) as a result of generic competition. The antibiotic fell 17% to 132 million, while Trasylol (aprotinin) for preventing blood loss during surgery fell 11% on safety concerns to 40 million euros.

Bayer’s pharma business will be transformed by the proposed acquisition of fellow German drugmaker Schering, which would create a unit with 9 billion euros in sales, a broader portfolio in specialty medicines in areas such as cardiovascular, oncology and reproductive health and a bolstered pipeline.

Sales of the Consumer Care segment in the first quarter rose 23% to 642 million euros, helped by newly-acquired products, while painkiller Aleve (naproxen) nearly doubled as concerns over the safety of non-steroidal anti-inflammatory drugs (NSAIDs) receded. Diagnostics advanced 24% to 110 million euros.

Bayer has not increased its forecasts for 2006 on the back of the strong first quarter, which surprised some analysts, but reiterated forcasts it made in March for EBIT growth of 19% for the group as a whole, and over 10% for HealthCare.