Bayer Sees 8% Growth in Drug Sales on New Medicines

Bayer AG (BAYN) forecast 8 percent growth in pharmaceutical revenue through 2016 on higher sales of new medicines.

Bayer predicted 6 percent growth for its crop-science business, the company said in a statement today before executives meet with investors and analysts in Leverkusen, Germany, where Bayer is based. The company provided no specific forecast for its material-science chemicals unit, which some analysts speculate may be sold or spun off.

“I’m particularly confident about our health care business thanks to the encouraging development of the five pharmaceutical products we have recently launched,” Chief Executive Officer Marijn Dekkers said in the statement. He’s speaking at the event at 9 a.m. Frankfurt time.

Bayer last month raised its forecast for peak sales of five new drugs to at least 7.5 billion euros from more than 5.5 billion euros. The drugs are the blood thinner Xarelto, the Eylea eye medicine, the cancer products Stivarga and Xofigo and Adempas for pulmonary hypertension.

Bayer fell 0.8 percent to close at 95.63 euros yesterday in Frankfurt. The stock has returned 27 percent in the past year including reinvested dividends, compared with 22 percent for the Bloomberg Europe Pharmaceutical Index.

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Health-care sales will increase an average of 6 percent a year, including the 8 percent growth in drugs and a 3 percent increase in consumer health, Bayer said. Crop science aims for a profit margin of 24 percent to 25 percent, the company said.

For material science, which produces chemicals for industries including cosmetics and auto parts, the company forecast an increase in sales volume that’s greater than global economic growth, gave no prediction for profit growth and said the unit aims for a return on investment that’s greater than its cost of capital.

Bayer may get rid of the material science business in the next one to two years and use the proceeds to fund acquisitions in animal or consumer health, Jeffrey Holford, an analyst at Jefferies in London, said in a report last week.

Last year, health-care sales rose 7 percent excluding currency swings and changes in the company’s portfolio of products. Within health care, pharmaceutical sales climbed 9 percent and consumer health increased 3 percent.

Revenue for the crop-science unit that makes agricultural chemicals and seeds increased 9 percent in 2013, Bayer said Feb. 28.

Sales were unchanged in the material-science unit. Earnings before interest, tax, depreciation and amortization excluding some items declined 15 percent.

For Related News and Information: Bayer Raises Drug Sales Forecast as Earnings Miss Estimates (1)

To contact the reporter on this story: Phil Serafino in Paris at pserafino@bloomberg.net

To contact the editors responsible for this story: David Risser at drisser@bloomberg.net Phil Serafino, Kim McLaughlin

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