Bayer Raises Peak Sales Forecast for New-Medicine Portfolio

  • Five drugs have sales potential of more than $11 billion
  • Bayer sees Xarelto peak revenue climbing above $5.6 billion

Bayer AG raised the sales forecast for its latest blockbuster drugs, increasing optimism for the pharmaceutical unit as the German company pursues a $66 billion takeover of U.S. seeds giant Monsanto Co.

A group of five new medicines including clot-busting Xarelto and eye treatment Eylea could generate more than 10 billion euros ($11.2 billion) in annual revenue, up from a previous estimate of at least 7.5 billion euros, the Leverkusen-based conglomerate said in a statement on Tuesday. Top-seller Xarelto alone is likely to generate more than 5 billion euros a year in sales at its peak.

Crop sciences will probably replace health care as Bayer’s biggest business after the Monsanto deal is completed by the end of next year. Funded with a combination of debt and equity, the purchase will leave the company little scope for acquisitions to boost its pharmaceutical business. Bayer on Tuesday emphasized the potential of drugs it already has to drive growth beyond Xarelto, which loses patent protection in 2024.

“We are very confident about our pharmaceuticals business,” Chief Executive Officer Werner Baumann said in the statement. He highlighted the potential of Bayer’s experimental drugs, saying six of them could generate at least 6 billion euros in annual sales following regulatory approval.

The shares rose 1.1 percent to 92.59 euros by 9:49 a.m. in Frankfurt on Tuesday, paring the year’s decline to 20 percent. Bayer is hosting analysts and investors in Cologne, Germany, from 8:30 a.m.

Bayer said its goal for average annual sales growth by the end of 2018 is about 6 percent for its prescription-drug unit. That excludes currency effects, acquisitions or divestments, with a profit margin of 32 percent to 34 percent of 2018 revenue. Over-the-counter drug sales will grow slightly more slowly at between 4 percent and 5 percent, the company said. Health-care sales accounted for 44 percent of total revenue last year.

Margins in the crop-science division should climb to more than 30 percent of sales three years after the Monsanto deal is completed, Bayer said. That compares with 27 percent last year.

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