Management Report

5. Business Development by Subgroup, Segment and Region

5.1 HealthCare

Key Data – HealthCare [Table 4]
  1st Quarter
2014
1st Quarter
2015

Change
  € million € million % Fx & p adj. %
Sales 4,572 5,742 +25.6 +7.2
Change in sales        
Volume +8.9% +6.7%    
Price 0.0% +0.5%    
Currency -6.9% +7.8%    
Portfolio +0.9% +10.6%    
Sales        
Pharmaceuticals 2,782 3,200 +15.0 +7.2
Consumer Health 1,790 2,542 +42.0 +7.2
         
  € million € million % Fx. adj. %
Sales by region        
Europe 1,757 1,924 +9.5 +11.6
North America 1,132 1,797 +58.7 +39.0
Asia/Pacific 1,070 1,283 +19.9 +6.9
Latin America/Africa/Middle East 613 738 +20.4 +15.3
         
EBIT 962 1,040 +8.1  
Special items 16 (145)    
EBIT before special items1 946 1,185 +25.3  
EBITDA1 1,317 1,492 +13.3  
Special items 16 (123)    
EBITDA before special items1 1,301 1,615 +24.1  
EBITDA margin before special items1 28.5% 28.1%    
Gross cash flow2 881 1,102 +25.1  
Net cash flow2 659 1,264 +91.8  
Fx & p adj. = currency- and portfolio-adjusted; Fx adj. = currency-adjusted
1 For definition see Chapter 6 “Calculation of EBIT(DA) Before Special Items.”
2 For definition see Chapter 8 “Financial Position of the Bayer Group.”

Sales of the HealthCare subgroup increased by 7.2% on a currency- and portfolio-adjusted basis (Fx & portfolio adj.) to €5,742 million (reported: +25.6%) in the first quarter of 2015. This growth was driven by the continuing strong development of our recently launched pharmaceutical products and a significant expansion of business in the Consumer Health segment. The considerable reported increase was chiefly attributable to sales of products acquired from Merck & Co., Inc., United States, and currency effects.

HealthCare Quarterly Sales

ebit of the HealthCare subgroup rose by 8.1% in the first quarter of 2015 to €1,040 million, reflecting net special charges of €145 million (q1 2014: special gains of €16 million). ebit before special items improved considerably by 25.3% to €1,185 million (q1 2014: €946 million). ebitda before special items increased by a substantial 24.1% to €1,615 million (q1 2014: €1,301 million). The improvement in earnings resulted mainly from the favorable development of business at Pharmaceuticals and Consumer Health, the contributions from the acquired businesses, and positive currency effects of about €50 million. Earnings were held back by higher selling expenses in both segments, which at Consumer Health were particularly due to the acquired consumer care businesses, and by an increase in research and development expenses at Pharmaceuticals.

HealthCare Quarterly EBIT and EBITDA Before Special Items

Pharmaceuticals

Key Data – Pharmaceuticals [Table 5]
  1st Quarter
2014
1st Quarter
2015

Change
  € million € million % Fx & p adj. %
Sales 2,782 3,200 +15.0 +7.2
         
  € million € million % Fx adj. %
Sales by region        
Europe 1,035 1,131 +9.3 +10.1
North America 591 761 +28.8 +10.3
Asia/Pacific 801 915 +14.2 +1.5
Latin America/Africa/Middle East 355 393 +10.7 +6.5
         
EBIT 641 691 +7.8  
Special items 16 (24)    
EBIT before special items1 625 715 +14.4  
EBITDA1 889 964 +8.4  
Special items 16 (24)    
EBITDA before special items1 873 988 +13.2  
EBITDA margin before special items1 31.4% 30.9%    
Gross cash flow2 574 690 +20.2  
Net cash flow2 447 752 +68.2  
Fx & p adj. = currency- and portfolio-adjusted; Fx. adj. = currency-adjusted
1 For definition see Chapter 6 “Calculation of EBIT(DA) Before Special Items.”
2 For definition see Chapter 8 “Financial Position of the Bayer Group.”

Sales of our Pharmaceuticals segment rose by 7.2% (Fx & portfolio adj.) to €3,200 million in the first quarter of 2015. The main contributing factor here was the persistently dynamic sales growth of our recently launched products. XareltoTM, EyleaTM, StivargaTM, XofigoTM and AdempasTM posted combined sales of €898 million (q1 2014: €598 million). Our Pharmaceuticals business grew in all regions on a currency-adjusted basis. Development was particularly gratifying in North America and Europe.

Best-Selling Pharmaceuticals Products   [Table 6]
  1st Quarter
2014
1st Quarter
2015

Change
  € million € million % Fx adj. %
XareltoTM 342 482 +40.9 +38.4
KogenateTM 270 261 -3.3 -9.8
EyleaTM 157 253 +61.1 +55.1
MirenaTM product family 178 232 +30.3 +14.2
BetaferonTM/BetaseronTM 190 208 +9.5 -1.0
NexavarTM 183 196 +7.1 -3.7
YAZTM/YasminTM/YasminelleTM 181 181 0.0 -3.3
AdalatTM 140 162 +15.7 +2.9
AspirinTM Cardio 115 136 +18.3 +8.3
GlucobayTM 102 130 +27.5 +8.3
AvaloxTM/AveloxTM 108 110 +1.9 -8.2
StivargaTM 54 71 +31.5 +14.0
XofigoTM 36 54 +50.0 +28.0
LevitraTM 62 53 -14.5 -17.5
CiproTM/CiprobayTM 47 41 -12.8 -18.9
Total 2,165 2,570 +18.7 +9.8
Proportion of Pharmaceuticals sales 78% 80%    
Fx adj. = currency-adjusted

XareltoTM expanded its leading position among the new oral anticoagulants, particularly in Europe. Business with XareltoTM also developed very positively in the United States, where it is marketed by a subsidiary of Johnson & Johnson. We again posted robust gains for our eye medicine EyleaTM, particularly in Europe and Japan, where EyleaTM was approved in additional indications. Sales of the cancer drug StivargaTM increased mainly in the United States. Further positive contributions to sales development came from the cancer drug XofigoTM and from AdempasTM, our innovative product to treat pulmonary hypertension (AdempasTM sales: €38 million; q1 2014: €9 million).

Sales of the hormone-releasing intrauterine devices of the MirenaTM product family – MirenaTM and JaydessTM/SkylaTM – rose mainly as a result of higher volumes in the United States. AdalatTM for the treatment of hypertension and coronary heart disease, AspirinTM Cardio for secondary prevention of heart attacks and our oral diabetes treatment GlucobayTM registered rising demand, especially in China.

Sales of our blood-clotting medicine KogenateTM were below the prior-year level as a result of capacity shortages caused by the use of production capacities to develop the next-generation hemophilia medicines. Lower sales of our multiple sclerosis product BetaferonTM/BetaseronTM in Europe, Japan and other geographies were nearly offset by gains in the United States. Sales of our cancer drug NexavarTM declined overall, particularly in China and Japan. Receding sales of our yazTM/YasminTM/YasminelleTM line of oral contraceptives resulted from lower demand in the United States and Europe, while business developed positively in the Emerging Markets. Despite higher volumes in China, sales of the antibiotic AvaloxTM/AveloxTM declined overall due mainly to the expiration of the patent in Europe and the United States.

ebit in the Pharmaceuticals segment climbed by 7.8% in the first quarter of 2015 to €691 million, reflecting net special charges of €24 million (q1 2014: special gains of €16 million). ebit before special items rose by 14.4% to €715 million. ebitda before special items improved by 13.2% to €988 million. This earnings growth was primarily attributable to the good development of business, particularly for our recently launched products, and to positive currency effects of about €30 million. Earnings were diminished as expected by increased investment in research and development and higher selling expenses.

Consumer Health

Key Data – Consumer Health [Table 7]
  1st Quarter
2014
1st Quarter
2015

Change
  € million € million % Fx & p adj. %
Sales 1,790 2,542 +42.0 +7.2
Consumer Care 923 1,556 +68.6 +8.3
Medical Care 537 600 +11.7 +6.0
Animal Health 330 386 +17.0 +6.1
         
  € million € million % Fx adj. %
Sales by region        
Europe 722 793 +9.8 +13.7
North America 541 1,036 +91.5 +70.2
Asia/Pacific 269 368 +36.8 +23.0
Latin America/Africa/Middle East 258 345 +33.7 +27.5
         
EBIT 321 349 +8.7  
Special items 0 (121)    
EBIT before special items1 321 470 +46.4  
EBITDA1 428 528 +23.4  
Special items 0 (99)    
EBITDA before special items1 428 627 + 46.5  
EBITDA margin before special items1 23.9% 24.7%    
Gross cash flow2 307 412 +34.2  
Net cash flow2 212 512 +141.5  
Fx & p adj. = currency- and portfolio-adjusted; Fx adj. = currency-adjusted
1 For definition see Chapter 6 “Calculation of EBIT(DA) Before Special Items.”
2 For definition see Chapter 8 “Financial Position of the Bayer Group.”

Sales of the Consumer Health segment climbed by 7.2% (Fx & portfolio adj.) to €2,542 million in the first quarter of 2015. All divisions contributed to this positive development. Overall, we considerably increased sales in our Consumer Care Division thanks to the acquired products. The acquisitions also contributed to the robust growth in the Emerging Markets.

Best-Selling Consumer Health Products       [Table 8]
  1st Quarter
2014
1st Quarter
2015

Change
  € million € million % Fx adj. %
ContourTM product family
(Medical Care)1
170 209 +22.9 +14.5
ClaritinTM (Consumer Care)2 202 . .
AdvantageTM product family
(Animal Health)
130 144 +10.8 -1.3
AspirinTM (Consumer Care) 102 120 +17.6 +8.9
AleveTM (Consumer Care) 74 95 +28.4 +8.8
BepanthenTM/BepantholTM
(Consumer Care)
86 94 +9.3 +14.1
CoppertoneTM (Consumer Care)2 83 . .
UltravistTM (Medical Care) 69 73 +5.8 -0.7
GadovistTM/GadavistTM (Medical Care) 53 69 +30.2 +21.5
CanestenTM (Consumer Care) 60 64 +6.7 +2.2
Total 744 1,153 +55.0 +40.5
Proportion of Consumer Health sales 42% 45%    
Fx adj.= currency-adjusted
Total sales of AspirinTM (including AspirinTM Complex), also including AspirinTM Cardio, which is reflected in sales of the Pharmaceuticals segment, increased by 18.0% (Fx adj. 8.6%) in Q1 2015 to €256 million (Q1 2014: €217 million).
1 2014 figures restated. Figures for the ContourTM product family include sales of the ContourTM, ContourTM TS, ContourTM Next and ContourTM Plus systems.
2 product acquired from Merck & Co., Inc.

Sales of the Consumer Care Division rose by 8.3% (Fx & portfolio adj.) to €1,556 million. Our analgesic AspirinTM registered pleasing sales gains especially in Europe, due partly to a strong cold season. We achieved higher volumes for our analgesic AleveTM due to a product line expansion in the United States. Our BepanthenTM/BepantholTM line of skincare products developed positively, especially in the Emerging Markets.

Sales of the products acquired from Merck & Co., Inc., United States, totaled €495 million in the first quarter of 2015 and were in line with our expectations.

Sales of the Medical Care Division improved by 6.0% (Fx & portfolio adj.) to €600 million. This growth was mainly driven by the positive development of the Diabetes Care business, which was primarily due to a stabilized market environment in the United States. Sales of our ContourTM family of blood glucose meters rose substantially, with contributions from all regions. Our Radiology business with contrast agents and medical devices also grew, particularly in the United States. Our mri contrast agent GadovistTM/GadavistTM made an encouraging contribution to this development following its approval in further indications.

Sales in the Animal Health Division moved forward by 6.1% (Fx & portfolio adj.) to €386 million. This improvement was driven in particular by considerable sales growth for our SerestoTM flea and tick collar, especially in Europe and the United States. Sales of the AdvantageTM product family of flea, tick and worm control products were down slightly against the strong prior-year quarter.

ebit of the Consumer Health segment improved by 8.7% in the first quarter of 2015, to €349 million, after special charges of €121 million (q1 2014: €0 million). The special items included charges of €89 million for the integration of acquired businesses and €32 million for efficiency improvement measures. ebit before special items climbed by a substantial 46.4% to €470 million. ebitda before special items increased by 46.5% to €627 million (q1 2014: €428 million). The gratifying earnings contribution from the expansion of sales in all divisions – particularly Consumer Care – and positive currency effects of around €20 million were partly offset by higher selling expenses that largely resulted from the acquired consumer care businesses.

Last updated: April 30, 2015  Copyright © Bayer AG
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