Management Report
5. Performance by Subgroup, Segment and Region
5.1 HealthCare
| Key Data – HealthCare | [Table 2] |
|---|
| | 2nd
Quarter
2010 | 2nd
Quarter
2011 | Change | 1st
Half
2010 | 1st
Half
2011 | Change |
|
€ million |
€ million |
% | Fx
(& p)
adj. % |
€ million |
€ million |
% | Fx
(& p)
adj. % |
| Sales | 4,305 | 4,208 | -2.3 | +1.8 | 8,174 | 8,374 | +2.4 | +2.9 |
| Change in sales | | | | | | | | |
| Volume | +1.5% | +2.6% | | | +1.9% | +3.4% | | |
| Price | +0.5% | -0.8% | | | +0.4% | -0.5% | | |
| Currency | +5.6% | -4.4% | | | +2.6% | -0.7% | | |
| Portfolio | -1.2% | +0.3% | | | -1.3% | +0.2% | | |
| Sales by segment | | | | | | | | |
| Pharmaceuticals | 2,748 | 2,666 | -3.0 | +0.5 | 5,279 | 5,315 | +0.7 | +0.7 |
| Consumer Health | 1,557 | 1,542 | -1.0 | +4.1 | 2,895 | 3,059 | +5.7 | +6.9 |
| Sales by region | | | | | | | | |
| Europe | 1,599 | 1,592 | -0.4 | -0.3 | 3,122 | 3,188 | +2.1 | +1.6 |
| North America | 1,205 | 1,062 | -11.9 | -1.2 | 2,339 | 2,138 | -8.6 | -3.9 |
| Asia/Pacific | 845 | 878 | +3.9 | +7.0 | 1,512 | 1,728 | +14.3 | +11.6 |
| Latin America/Africa/Middle East | 656 | 676 | +3.0 | +7.4 | 1,201 | 1,320 | +9.9 | +9.6 |
| EBIT | 595 | 786 | +32.1 | | 1,255 | 1,555 | +23.9 | |
| Special items | (189) | (51) | | | (218) | (88) | | |
| EBIT before special items* | 784 | 837 | +6.8 | | 1,473 | 1,643 | +11.5 | |
| EBITDA* | 1,065 | 1,105 | +3.8 | | 2,059 | 2,208 | +7.2 | |
| Special items | (57) | (51) | | | (86) | (88) | | |
| EBITDA before special items* | 1,122 | 1,156 | +3.0 | | 2,145 | 2,296 | +7.0 | |
| EBITDA margin before special items* | 26.1% | 27.5% | | | 26.2% | 27.4% | | |
| Gross cash flow** | 759 | 760 | +0.1 | | 1,422 | 1,528 | +7.5 | |
| Net cash flow** | 666 | 636 | -4.5 | | 1,408 | 1,417 | +0.6 | |
2010 figures restated Fx (& p) adj. = currency- (and portfolio-)adjusted (Fx & p adj.: Sales and Sales by segment; Fx adj.: Sales by region) * For definition see Chapter 6 "Calculation of EBIT(DA) Before Special Items." ** For definition see Chapter 8 "Financial Position of the Bayer Group." |
Sales of the HealthCare subgroup amounted to €4,208 million in the second quarter of 2011 (reported: -2.3%). This corresponds to a currency- and portfolio-adjusted gain of 1.8%, which was largely due to the positive trend in the Consumer Health segment.
EBIT of the HealthCare subgroup grew by 32.1% in the second quarter of 2011 to €786 million. Earnings were diminished by special items of minus €51 million. Special charges of €70 million – relating mostly to restructuring measures – were partially offset by income of €19 million in connection with valuation adjustments for pension provisions. EBIT before special items rose by 6.8% to €837 million. EBITDA before special items rose by 3.0% to €1,156 million, due especially to lower costs at Pharmaceuticals.
Pharmaceuticals
| Key Data – Pharmaceuticals | [Table 3] |
|---|
| | 2nd
Quarter
2010 | 2nd
Quarter
2011 | Change | 1st
Half
2010 | 1st
Half
2011 | Change |
|
€ million |
€ million |
% | Fx
(& p)
adj. % |
€ million |
€ million |
% | Fx
(& p)
adj. % |
| Sales | 2,748 | 2,666 | -3.0 | +0.5 | 5,279 | 5,315 | +0.7 | +0.7 |
| General Medicine | 1,710 | 1,689 | -1.2 | +1.8 | 3,294 | 3,330 | +1.1 | +0.7 |
| Specialty Medicine | 1,038 | 977 | -5.9 | -1.7 | 1,985 | 1,985 | 0.0 | +0.6 |
| Sales by region | | | | | | | | |
| Europe | 1,033 | 991 | -4.1 | -4.1 | 2,014 | 1,987 | -1.3 | -1.8 |
| North America | 617 | 519 | -15.9 | -5.9 | 1,304 | 1,083 | -16.9 | -13.0 |
| Asia/Pacific | 686 | 716 | +4.4 | +7.3 | 1,213 | 1,400 | +15.4 | +12.6 |
| Latin America/Africa/Middle East | 412 | 440 | +6.8 | +10.0 | 748 | 845 | +13.0 | +11.8 |
| EBIT | 312 | 504 | +61.5 | | 771 | 1,003 | +30.1 | |
| Special items | (189) | (48) | | | (218) | (84) | | |
| EBIT before special items* | 501 | 552 | +10.2 | | 989 | 1,087 | +9.9 | |
| EBITDA* | 715 | 759 | +6.2 | | 1,445 | 1,526 | +5.6 | |
| Special items | (57) | (48) | | | (86) | (84) | | |
| EBITDA before special items* | 772 | 807 | +4.5 | | 1,531 | 1,610 | +5.2 | |
| EBITDA margin before special items* | 28.1% | 30.3% | | | 29.0% | 30.3% | | |
| Gross cash flow** | 499 | 513 | +2.8 | | 973 | 1,041 | +7.0 | |
| Net cash flow** | 455 | 399 | -12.3 | | 1,047 | 957 | -8.6 | |
2010 figures restated Fx (& p) adj. = currency- (and portfolio-)adjusted (Fx & p adj.: Sales; Fx adj.: Sales by region) * For definition see Chapter 6 "Calculation of EBIT(DA) Before Special Items." ** For definition see Chapter 8 "Financial Position of the Bayer Group." |
Sales in the Pharmaceuticals segment in the second quarter of 2011 came to €2,666 million (Fx & portfolio adj. +0.5%). Growth in sales in the emerging markets – and especially China – offset the weak performance in North America and western Europe. Sales of YAZ™ were down again in the United States, mainly because of generic competition. Furthermore, sales in the Pharmaceuticals segment were diminished by health reforms in various countries.
| Best-Selling Pharmaceuticals Products | [Table 4] |
|---|
| | 2nd
Quarter
2010 | 2nd
Quarter
2011 | Change | 1st
Half
2010 | 1st
Half
2011 | Change |
|
€ million |
€ million |
% | Fx
adj.% |
€ million |
€ million |
% | Fx adj.% |
| Betaferon™/Betaseron™ (Specialty Medicine) | 302 | 273 | -9.6 | -4.7 | 585 | 547 | -6.5 | -4.9 |
| Kogenate™ (Specialty Medicine) | 238 | 262 | +10.1 | +15.4 | 482 | 545 | +13.1 | +14.2 |
| YAZ™/Yasmin™/Yasminelle™ (General Medicine) | 289 | 263 | -9.0 | -7.0 | 576 | 505 | -12.3 | -12.6 |
| Nexavar™ (Specialty Medicine) | 186 | 171 | -8.1 | -4.4 | 341 | 343 | +0.6 | +0.9 |
| Adalat™ (General Medicine) | 177 | 156 | -11.9 | -9.5 | 323 | 313 | -3.1 | -5.3 |
| Mirena™ (General Medicine) | 123 | 144 | +17.1 | +26.2 | 266 | 287 | +7.9 | +11.1 |
| Avalox™/Avelox™ (General Medicine) | 118 | 105 | -11.0 | -6.8 | 253 | 252 | -0.4 | -0.6 |
| Aspirin™ Cardio (General Medicine) | 92 | 99 | +7.6 | +10.0 | 165 | 189 | +14.5 | +13.8 |
| Glucobay™ (General Medicine) | 90 | 90 | 0.0 | +6.0 | 169 | 178 | +5.3 | +5.7 |
| Levitra™ (General Medicine) | 96 | 82 | -14.6 | -10.6 | 182 | 164 | -9.9 | -9.1 |
| Ultravist™ (Specialty Medicine) | 82 | 82 | 0.0 | +2.7 | 150 | 157 | +4.7 | +5.3 |
| Cipro™/Ciprobay™ (General Medicine) | 61 | 58 | -4.9 | -0.8 | 136 | 117 | -14.0 | -14.1 |
| Magnevist™ (Specialty Medicine) | 58 | 46 | -20.7 | -15.3 | 109 | 91 | -16.5 | -14.9 |
| Kinzal™/Pritor™ (General Medicine) | 46 | 46 | 0.0 | -0.3 | 88 | 87 | -1.1 | -1.6 |
| Iopamiron™ (Specialty Medicine) | 52 | 42 | -19.2 | -20.7 | 91 | 86 | -5.5 | -10.4 |
| Total | 2,010 | 1,919 | -4.5 | -0.6 | 3,916 | 3,861 | -1.4 | -0.4 |
| Proportion of Pharmaceuticals sales | 73% | 72% | | | 74% | 73% | | |
| Fx adj. = currency-adjusted |
Sales in our General Medicine business unit amounted to €1,689 million. This corresponds to a currency- and portfolio-adjusted increase of 1.8%. There was a positive trend particularly for Mirena™, Aspirin™ Cardio and Glucobay™. The growth in sales of our hormone-releasing intrauterine device Mirena™ was based chiefly on higher volumes in the United States compared with the weak prior-year quarter. By expanding our marketing activities in China, we increased sales of Aspirin™ Cardio for the prevention of myocardial infarction and Glucobay™ to treat diabetes.
By contrast, we saw a significant decline in sales of our oral contraceptives YAZ™/Yasmin™/Yasminelle™. This resulted mainly from the drop in sales of YAZ™ in the United States following the market entry of generic competition in June 2010. We expanded business in the Latin America/Africa/Middle East and Asia/Pacific regions, however. Generic competition also held back sales of Adalat™ to treat high blood pressure and coronary heart disease, particularly in Canada and Japan. On the other hand, sales were up in China. Sales of our erectile dysfunction treatment Levitra™ and our antibiotic Avalox™/Avelox™ were down because of a partial reorganization of distribution for general practitioner products in the United States.
Sales in the Specialty Medicine business unit moved back by 1.7% on a currency- and portfolio-adjusted basis to €977 million. Sales of our multiple sclerosis drug Betaferon™/Betaseron™ declined. This was largely attributable to increased competition and price reductions in connection with health system reforms in Europe. In Latin America/Africa/Middle East we achieved sales growth primarily as the result of tender business. Sales of the cancer drug Nexavar™ dropped compared to a strong prior-year quarter, while business with our blood-clotting medicine Kogenate™ grew in all regions, especially in North America and Europe. This was chiefly due to higher demand in various European countries and larger shipments to our distribution partner in the United States.
EBIT of the Pharmaceuticals segment increased by 61.5% in the second quarter of 2011 to €504 million after special items of minus €48 million, comprising €62 million in charges for restructuring measures and €14 million in income from valuation adjustments for pension provisions. EBIT in the prior-year period was diminished by special items of minus €189 million. EBIT before special items rose by 10.2% to €552 million. EBITDA before special items was up by 4.5% to €807 million. This increase was mainly due to lower operating costs, including for research and development following the successful conclusion of most Phase III studies for our anticoagulant Xarelto™, as well as to one-time income of €22 million from a settlement. These factors were partially offset by selling price declines and negative currency effects.
Sales of our Pharmaceuticals segment in the first half of 2011 were level year on year at €5,315 million (Fx & portfolio adj. +0.7%). There was a very gratifying business trend in the emerging markets, particularly in China, while sales were down in a number of established markets, including especially North America. This was mainly attributable to health system reforms and generic competition. Products that posted gratifying sales growth included especially the blood-clotting medicine Kogenate™, Aspirin™ Cardio for the prevention of myocardial infarction and the hormone-releasing intrauterine device Mirena™. Our contraceptives YAZ™/Yasmin™/Yasminelle™ and the multiple sclerosis drug Betaferon™/Betaseron™ in particular saw sales decline.
EBIT improved by 30.1% in the first half of 2011 to €1,003 million, but was diminished by special charges of €84 million that related mainly to restructuring measures. EBIT before special items advanced by 9.9% to €1,087 million. EBITDA before special items increased by 5.2% to €1,610 million.
Consumer Health
| Key Data – Consumer Health | [Table 5] |
|---|
| | 2nd
Quarter
2010 | 2nd
Quarter
2011 | Change | 1st
Half
2010 | 1st
Half
2011 | Change |
|
€ million |
€ million |
% | Fx
(& p)
adj. % |
€ million |
€ million |
% | Fx
(& p)
adj. % |
| Sales | 1,557 | 1,542 | -1.0 | +4.1 | 2,895 | 3,059 | +5.7 | +6.9 |
| Consumer Care | 836 | 839 | +0.4 | +5.8 | 1,580 | 1,703 | +7.8 | +9.2 |
| Medical Care | 399 | 377 | -5.5 | +0.6 | 734 | 734 | 0.0 | +2.6 |
| Animal Health | 322 | 326 | +1.2 | +3.9 | 581 | 622 | +7.1 | +6.0 |
| Sales by region | | | | | | | | |
| Europe | 566 | 601 | +6.2 | +6.5 | 1,108 | 1,201 | +8.4 | +7.9 |
| North America | 588 | 543 | -7.7 | +3.8 | 1,035 | 1,055 | +1.9 | +7.6 |
| Asia/Pacific | 159 | 162 | +1.9 | +5.4 | 299 | 328 | +9.7 | +8.0 |
| Latin America/Africa/Middle East | 244 | 236 | -3.3 | +3.1 | 453 | 475 | +4.9 | +5.9 |
| EBIT | 283 | 282 | -0.4 | | 484 | 552 | +14.0 | |
| Special items | - | (3) | | | - | (4) | | |
| EBIT before special items* | 283 | 285 | +0.7 | | 484 | 556 | +14.9 | |
| EBITDA* | 350 | 346 | -1.1 | | 614 | 682 | +11.1 | |
| Special items | - | (3) | | | - | (4) | | |
| EBITDA before special items* | 350 | 349 | -0.3 | | 614 | 686 | +11.7 | |
| EBITDA margin before special items* | 22.5% | 22.6% | | | 21.2% | 22.4% | | |
| Gross cash flow** | 260 | 247 | -5.0 | | 449 | 487 | +8.5 | |
| Net cash flow** | 211 | 237 | +12.3 | | 361 | 460 | +27.4 | |
2010 figures restated Fx (& p) adj. = currency- (and portfolio-)adjusted (Fx & p adj.: Sales; Fx adj.: Sales by region) * For definition see Chapter 6 "Calculation of EBIT(DA) Before Special Items." ** For definition see Chapter 8 "Financial Position of the Bayer Group." |
Sales of the Consumer Health segment advanced by 4.1% (Fx & portfolio adj.) in the second quarter of 2011 to €1,542 million. All regions, particularly Europe and North America, contributed to this increase.
| Best-Selling Consumer Health Products | [Table 6] |
|---|
| | 2nd
Quarter
2010 | 2nd
Quarter
2011 | Change | 1st
Half
2010 | 1st
Half
2011 | Change |
|
€ million |
€ million |
% | Fx
adj.% |
€ million |
€ million |
% | Fx
adj. % |
| Contour™ (Medical Care) | 164 | 159 | -3.0 | +0.9 | 295 | 311 | +5.4 | +6.8 |
| Advantage™ product line (Animal Health) | 141 | 143 | +1.4 | +9.8 | 230 | 245 | +6.5 | +10.5 |
| Aspirin™* (Consumer Care) | 105 | 104 | -1.0 | +7.4 | 195 | 216 | +10.8 | +14.1 |
| Aleve™/naproxen (Consumer Care) | 68 | 68 | 0.0 | +11.6 | 127 | 135 | +6.3 | +11.8 |
| Bepanthen™/Bepanthol™ (Consumer Care) | 55 | 59 | +7.3 | +7.1 | 110 | 122 | +10.9 | +9.4 |
| Canesten™ (Consumer Care) | 58 | 58 | 0.0 | +3.2 | 102 | 113 | +10.8 | +10.0 |
| One A Day™ (Consumer Care) | 47 | 44 | -6.4 | +5.4 | 83 | 85 | +2.4 | +7.6 |
| Baytril™ (Animal Health) | 35 | 31 | -11.4 | -6.2 | 73 | 74 | +1.4 | +2.7 |
| Supradyn™ (Consumer Care) | 32 | 32 | 0.0 | +1.3 | 63 | 65 | +3.2 | +2.9 |
| Breeze™ (Medical Care) | 32 | 29 | -9.4 | -5.2 | 62 | 57 | -8.1 | -6.6 |
| Total | 737 | 727 | -1.4 | +4.9 | 1,340 | 1,423 | +6.2 | +8.5 |
| Proportion of Consumer Health sales | 47% | 47% | | | 46% | 47% | | |
Fx adj. = currency-adjusted * Total Aspirin™ Q2 sales totaled €203 million (Q2 2010: €197 million), H1 sales totaled €405 million (H1 2010: €360 million), including Aspirin™ Cardio, which is reflected in sales of the Pharmaceuticals segment. |
The Consumer Care Division achieved sales growth of 5.8% (Fx & portfolio adj.) to €839 million. This increase resulted especially from the performance of our analgesics Aspirin™ and Aleve™/naproxen and the One A Day™ line of dietary supplements in the United States. Contributing to the growth were new launches for Advanced Aspirin™, a particularly fast-acting new formulation, and for the One A Day™ line. Sales of our Bepanthen™/Bepanthol™ line of skincare products also rose significantly, particularly in Europe.
Sales of the Medical Care Division in the second quarter of 2011, at €377 million, came in at the prior-year level on a currency- and portfolio-adjusted basis (+0.6%). Here the positive trend in Europe and Latin America/Africa/Middle East was sufficient to offset the decline in our Diabetes Care business in North America that was chiefly attributable to lower volumes and selling prices for our Contour™ line of blood glucose meters in the United States. Rising demand and new launches contributed to the positive business trend for Contour™ in Europe. Sales of our medical equipment business were largely in line with the prior year.
Business in our Animal Health Division expanded by 3.9% (Fx & portfolio adj.) to €326 million, driven mainly by the positive development of our Advantage™ line of flea, tick and worm control products in Europe and North America. In the United States we increased sales of Advantage™ partly through the expansion of a distribution channel opened in the previous year. Sales of the antibiotic Baytril™ fell back particularly because of generic competition in Europe.
EBIT of the Consumer Health segment remained at the prior-year level in the second quarter of 2011, at €282 million (-0.4%). Earnings were diminished by special items of minus €3 million. EBIT before special items was €285 million (+0.7%). EBITDA before special items came in level year on year at €349 million (-0.3%). The positive earnings contributions from the expansion of business in the divisions were offset by a slight rise in operating costs and negative currency effects.
Sales of our Consumer Health segment in the first half of 2011 improved by 6.9% (Fx & portfolio adj.) to €3,059 million. All regions, particularly Europe and North America, contributed to this increase. Most of our Consumer Health products saw significant sales growth. Examples here included the analgesic Aspirin™, the Advantage™ line of flea, tick and worm control products, and the Contour™ line of blood glucose meters.
EBIT climbed by 14.0% in the first half of 2011 to €552 million. Special items totaled minus €4 million. EBIT before special items advanced by 14.9% to €556 million. EBITDA before special items increased by 11.7% to €686 million.