Bayer Raises Drug Sales Forecast as Quarterly Profit Lags

Bayer AG (BAYN) raised its forecast for peak sales of new drugs such as the blood thinner Xarelto even as fourth-quarter results and the revenue outlook for this year missed analyst estimates.

Bayer’s five most important new medicines will reach at least 7.5 billion euros ($10.3 billion) a year in combined revenue, the Leverkusen, Germany-based company said in a statement today. Previously, Bayer predicted 5.5 billion euros.

The forecast highlights how Bayer’s health-care business has buoyed profit even as the Material Science plastics division struggles. Fourth-quarter profit unexpectedly fell and Bayer said sales this year will be less than analysts estimate.

“While the near-term guidance is disappointing and near-term consensus will have to come down, the long-term story is robust and intact,” Alistair Campbell, an analyst at Berenberg Bank in London, wrote in a report today.

Bayer rose 3.1 percent to 102.9 euros in Frankfurt. Bayer has risen 0.9 percent this year, lagging behind the 9.1 percent return including dividends for the Bloomberg Europe Pharmaceutical Index.

Fourth-quarter earnings before interest, taxes, depreciation, amortization and special items fell 3.1 percent to 1.77 billion euros, missing the average estimate of 1.92 billion euros. Currency swings in Japan and emerging markets and higher spending on research and development hurt profit in the quarter.

‘Difficult Market’

Sales rose 0.3 percent to 9.89 billion euros, about half of which came from the health-care unit that includes consumer and animal health along with prescription drugs.

Revenue this year will be 41 billion euros to 42 billion euros, as much as 4.6 percent above 2013, adjusted for currencies and the company’s portfolio, Bayer said. Analysts predict 42.6 billion euros, the average of 25 estimates compiled by Bloomberg.

Sales in Material Science, which makes chemicals for industries including cosmetics and auto parts, dropped 2.2 percent last year to 11.2 billion euros in a “difficult market environment.”

Sales of blood thinner Xarelto, the cornerstone of Bayer’s new drug program, will reach 3.5 billion euros a year, the company said. That’s a boost from the previous peak estimate of 2 billion euros in annual sales. Analysts predict 2.74 billion euros in sales by 2018, according to the average of six estimates collected by Bloomberg.

Bayer also boosted its forecast for eye drug Eylea from at least 1 billion euros to at least 1.5 billion euros in annual sales. Xarelto, Eylea and cancer drugs Stivarga and Xofigo had 1.52 billion euros in sales last year.

Bayer took steps to consolidate its control of one of those drugs in December, agreeing to buy Algeta ASA (ALGETA), its Norwegian partner on the prostate-cancer medicine Xofigo, for about 17.6 billion kroner ($2.9 billion).

To contact the reporter on this story: Naomi Kresge in Leverkusen at nkresge@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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