German drugs and chemicals group Bayer has warmed investors hearts again by lifting its full-year earning forecast a second time this year after a stellar performance during the third quarter, which benefited from strong sales of over-the-counter medicines to beat Wall Street expectations.
The group’s results for the period, including a 19% leap in sales 6.53 billion euros, have spurred Bayer’s new 2005 earnings growth forecast of 50% over the prior year, 10% above its initial target of 40% [[10/08/05a]], and the group is sticking to its original sales target of 26 billion euros.
Net income rocketed to 493 million euros from 52 million euros generated a year-ago. Results were given a helping hand by an extraordinary, non-cash gain of 280 million euros related to changes in Bayer's pension plans and, according to industry observers, better-than-predicted results from its agricultural chemicals division helped the firm overshoot general expectations for its performance during the period.
But it was Bayer HealthCare division which primarily drove group sales, its operating profit soaring 55% to 427 million euros (up 12.3% excluding the pension fund effect) as sales swelled 21% to 2.37 billion euros, led by product gains from the group’s 2.4 billion euro acquisition of Roche’s OTC segment late last year [[22/11/04c]].
The pharmaceuticals division booked robust organic growth once again, comfortably offsetting dwindling sales the antibiotic Cipro (ciprofloxacin) in the USA on generic competition. On a more positive note, the impotence drug Levitra (vardenafil) and cardiovascular drug Trasylol (aprotinin injection) were singled out by the firm as performing particularly well, while sales of the genetically-engineered haemophilia therapy Kogenate (Antihemophilic Factor [Recombinant]) leapt 31.7%, making it Bayer’s best-selling healthcare product in the period, Bayer noted.
Commenting on the results, management board chairman Werner Wenning said: “The third-quarter figures show that the strategic realignment of the Bayer Group has sustainably improved our earning power. Our extensive cost-containment and efficiency-improvement measures have paid off.” Furthermore, the results represent yet another nail in the Lipobay/Baycol (cerivastatin) coffin, indicating that the significant effects of the agent’s 2001 withdrawal [[08/08/01a]] are well and truly buried.
As of the end of October, Bayer has shelled out $1.1 billion to settle 3,058 cases worldwide related to its former cholesterol-buster, and around 6,055 cases are pending. But according to firm, there are less than 50 cases in the USA that hold a potential for settlement.
Looking forward, the group is expecting a fair flow of positive pipeline news through 2006, with the expected US launch of Nexavar (sorafenib tosylate) to treat advanced kidney cancer in the first half after positive results from a late-stage trial [[03/11/05e]], as well as from continuing Phase II and III clinical studies in several other forms of cancer. Furthermore, together with US healthcare giant Johnson & Johnson, Bayer is driving the development of its oral antithrombosis drug, the Factor Xa inhibitor, for which Phase III clinical trials are scheduled to start in the coming weeks. The early-stage pipeline is also looking strong, with 11 projects in Phase I and 16 in preclinical development.
