Post on 21-Apr-2017
Meet Management March 2012 I Leverkusen
Investor Presentation
Disclaimer
This presentation may contain forward-looking statements based on currentassumptions and forecasts made by Bayer Group or subgroup management.Various known and unknown risks, uncertainties and other factors could lead tomaterial differences between the actual future results, financial situation,development or performance of the company and the estimates given here.These factors include those discussed in Bayer’s public reports which areavailable on the Bayer website at www.bayer.com. The company assumes noliability whatsoever to update these forward-looking statements or to conformthem to future events or developments.
• Bayer Investor Presentation • Meet Management • March 2012 Page 2
• Bayer Investor Presentation • Meet Management • March 2012 Page 1
Bayer –Science For A Better Life
Mid-term targets show significant further value generation potential
Market leading positions in vast majority of portfolio
New product pipeline strength in Pharma, CropProtection & BioScience
Strong and profitable growth in emerging markets, especially China
Unique opportunity at the interfaces of human, animal and plant health
Group wide excellence initiatives to further boost earnings and free-up growth resources
Incentive systems aligned to business specific challenges
EBITin € million
+52%
FY´10 FY´11
4,149
2,730
• Bayer Investor Presentation • Meet Management • March 2012
Salesin € million% portfolio & currency adj.
+6%
FY´10 FY´11
36,52835,088
EBITDAadjusted*in € million
+7%
FY´10 FY´11
7,6137,101
Core EPSin €
+15%
FY´10 FY´11
4.834.19
Page 2
Full Year 2011 –Record Sales and EBIT
*before special items
• Bayer Investor Presentation • Meet Management • March 2012
2007 – 2011A Period of Significant Progress
* 2007 - 2008 from continuing operations
6.8 6.96.5
7.1
2007 2008 2009 2010 2011
7.6
Page 3
Sales (€ billion)
3.804.17
3.644.19
3
4
5
6
2007 2008 2009 2010 2011
4.83
EBITDA before special items* (€ billion) Core earnings per share* (€)
20.921.1
20.8
20.2
20
21
22
2007 2008 2009 2010 2011
20.832.4 32.9
31.2
35.1
2007 2008 2009 2010 2011
36.5
EBITDA before special items margin* (%)
• Bayer Investor Presentation • Meet Management • March 2012
2007 – 2011Consistent Strong Cash Generation
Trade working capital to sales ratio (%)
Net financial debt** (€ billion)
*2007 - 2008 from continuing operations ** year-end data
4.33.6
5.4 5.8
2007 2008 2009 2010 2011
5.1
29.631.2 30.4
26.4
20
25
30
35
40
2007 2008 2009 2010 2011
26.4
Page 4
4.8
5.3
4.74.8
2007 2008 2009 2010 2011
5.2
Gross Cash Flow* (€ billion)
12.214.2
9.7 7.9
0
4
8
12
16
20
2007 2008 2009 2010 2011
7.0
Net Cash Flow* (€ billion)
• Bayer Investor Presentation • Meet Management • March 2012 Page 5
2012 –
Financial Outlook
Outlook 2012 –Planning Assumptions
• Bayer Investor Presentation • Meet Management • March 2012 Page 6
2.6
0.7
1.7
3.3
4.84
3
2
1
5.15
Global economic/political risks remain high
Outlook for economic growth marked by uncertainty
Positive signals for North America, in Europe we expect slower expansion in 2012 than 2011
Asian emerging markets continue to drive growth
$/€ 1.40, 1% depreciation of Euro increases sales by ~€70m and EBITDA by ~€20m
Crude oil: average $110/bbl (Brent)
GDP growth by regions in % vs previous yer
Outlook 2012 –Planning Assumptions
• Bayer Investor Presentation • Meet Management • March 2012 Page 7
Expected 2012 Global Market Development
5% Electro/electronicRobust growth
27% Rx-pharmaMid-single digit growth, driven by emerging markets
10% OTC-pharmaLow- to mid-single digit growth 3% Diabetes care
low-single digit growth
3% Animal HealthModerate growth
20% Agrochemicals/SeedsPositive development
6% AutomotiveRobust growth
6 % ConstructionOngoing recovery
5% Furniture/woodOngoing recovery,small growth
15% Others
2011 Group sales break-down in %, growth estimates in %
• Bayer Investor Presentation • Meet Management • March 2012 Page 8
2011 ∆ vs. 2010 2012E
Sales €36.5bn +6% +~3% or~€37bn*
Adj. EBITDA €7.6bn +7% Slightly improve
Core EPS €4.83 +15% Slightly improve
Sales ∆ Fx and portfolio adjusted, EBITDA before special items
Fiscal 2012 Outlook Projects Further Growth And Higher Earnings
*Assuming Fx rate of $1.40 per €Outlook depends on specific planning assumptions as detailed in the Annual Report
• Bayer Investor Presentation • Meet Management • March 2012 Page 9
HealthCare Expect sales to increase by low- to mid-single-digit percentage. Plan to slightly improve adj. EBITDA .
Pharma Expect sales to remain stable or move slightly higher, and adj. EBITDA to approx. match prior year level.
Consumer Health
Anticipate mid-single-digit percentage growth of sales and adj. EBITDA.
CropScience Plan to grow above market and to increase sales and adj. EBITDA by mid-single-digit percentages.
MaterialScience
Expect sales and adj. EBITDA to remain level with prior year. Should market develop more favorably than anticipated, we expect sales and earnings to increase accordingly. Q1’12: Expect sales to be roughly level with Q4’11 and adj. EBITDA to be well above Q4’11 but below Q1’11.
Sales ∆ Fx and portfolio adjusted, EBITDA before special itemsOutlook depends on specific planning assumptions as detailed in the Annual Report
Fiscal 2012 –Guidance By Subgroup
• Bayer Investor Presentation • Meet Management • March 2012 Page 10
Strategic Priorities
• Bayer Investor Presentation • Meet Management • March 2012
Building A World-Class Innovation Company
Page 11
Portfolio ProductivityGrowth
Enhance competitive position
Strengthen LifeSciences
Intensify cooperation & licensing activities
Exploit synergy potential of human, animal and plant health
Invest in innovation capabilities
Maximize value of new product pipeline strength
Leverage competitive advantage of new TDI gas phase technology
Realize emerging market opportunity
Decomplexstructures and processes
Implement two-year group restructuring plan
Further adjust business processes at MaterialScience to ongoing commoditization
• Bayer Investor Presentation • Meet Management • March 2012
Two Distinct Business Models
Page 12
LifeSciences Product innovation,
R&D-ratio ~11% of sales
COGS relatively low,selling & distribution relatively high
High profitability,adj. EBITDA-margins23-27%*
Increasing generic competition & government intervention
Structural risk: approvals, meta-analysis, product liability
MaterialScience
Breakdown excl. Reconciliation*EBITDA before special items in % of sales, 2011
**Selling, administration and R&D
Sales2011
Process innovation,capital intensive
COGS high (~79%) marketing & selling relatively low (SAARE** ~11%)
Lower profitability, adj. EBITDA margins ~11%*
Few competitors, new entrants from Asia, Middle East
Cyclical risk: demand and supply fluctuationsAdj. EBITDA
2011
31%
69%
16%
84%
• Bayer Investor Presentation • Meet Management • March 2012 Page 13
Mid-term Targets
• Bayer Investor Presentation • Meet Management • March 2012 Page 14
HealthCare –Building Growth Momentum
Priority Target 2014
Accelerate growth HealthCare sales of ~€20bn
Pharma: Successfully commercialize late-stage pipeline and realize emerging markets (EM) opportunity
Sales of ~€11.5bn High-single to low-double-digit % EM
growth
Consumer Health: Aspire to become world-leading OTC company Sales of ~€8.5bn
Improve profitability HealthCare margin* of ≥28% Pharma margin* of >30% Consumer Health margin* of ~25%
*EBITDA before special items to sales in %
• Bayer Investor Presentation • Meet Management • March 2012 Page 15
CropScience –Propelling Future Growth
Priority Target 2014 (normal market conditions)
Above market growth >€8bn sales
Translate R&D effectively into sales New crop protection product sales (=launched since 2006) of ~ €1.5bn
Extend BioScience footprint Aspiration to grow business in-line with
average of last 3 years, i.e. CAGR ~20% p.a.
Improve profitability Generate adj. EBITDA* margin of ~24%
*EBITDA before special items to sales in %
• Bayer Investor Presentation • Meet Management • March 2012 Page 16
MaterialScience –Earn A Premium Over Cost of Capital
Priority Performance Targets
Growth Grow business (volume) above global GDP
Leadership Defend #1 market positions in polycarbonates and MDI
Leverage competitive advantage of TDI gas-phase technology
Increase market share of TDI business (2011: 23-24%*)
Closely monitor timing and necessity of capital investments
CapEx (PPE) budget of €1.5-2bn until 2014
Expand Caojing, China site Establish world-scale facilities in Germany
Earn a premium over cost of capital CFRoI after reproduction > WACC
*by volume
• Bayer Investor Presentation • Meet Management • March 2012 Page 17
New Incentive Scheme Reflects Business Specific Challenges
Group
Performance
Subgroup
Performance
Individual
Performance
IndividualBusinessTargets
HealthCare Sales growth & adj.
EBITDA* margin, innovation
CropScience Sales growth & adj.
EBITDA* margin; relative performance vs. peers, innovation
MaterialScience CFRoI vs. cost of capital,
process innovation
Core EPS
++
*before special items
• Bayer Investor Presentation • Meet Management • March 2012 Page 18
Innovation
Pharma Pipeline –2011 - Significant Progress Achieved
• Bayer Investor Presentation • Meet Management • March 2012 Page 19
Project Indication Peak Sales Potential
Status & Targets
Xarelto Cardiology / Anticoagulation
> €2bn SPAF: launched (US, EU, others) DVT treatment and sec. prevention: launched VTE prev. ORS: launched in US Sec. prev. ACS: filed
VEGF Trap-Eye
Ophthalmology / Inhibition of blood vessel growth
≥ €1bn Filed for wet AMD in EU and Japan Phase III for DME and wet AMD (China)
initiated Positive phase III data in CRVO
Alpharadin Oncology / Targeting of bone metastases
≥ €1bn CR prostate cancer: 44% improvement of OS Fast track designation by FDA Filing target: mid 2012
Regorafenib Oncology / Oral multi-kinase inhibition
≥ €1bn Metastatic colorectal cancer: 29% improvement of OS
Fast track designation by FDA Filing target: 1H 2012
SPAF: stroke prevention in atrial fibrillation; DVT: deep vein thrombosis; ORS: orthopedic surgery; ACS: acute coronary syndrome; VTE: venous thromboembolism
AMD: age-related macular degeneration; DME: Diabetic macular edemaCRVO: central retina vein occlusion; CR: castration refractory; OS: overall survival
Crop Protection –Pipeline with €2bn Sales Potential
Launches 2011–2015e*
• Bayer Investor Presentation • Meet Management • March 2012 Page 20
2011 Peak salespotential
Insecticide
Fungicide
Fungicide
Herbicide
SeedTreatment
Herbicide
Seed Treatment
Triafamone
Sivanto~ 0.2
~ 2.0
* subject to regulatory approval
Sales in €bn from launches 2011-2015e
• Bayer Investor Presentation • Meet Management • March 2012 Page 21
Paradigm: Mammals and crops differ substantially from each
other► Strong silo mentality in research
Paradigm: There is more common ground between mammals and
crops than assumed before► Growing interest of researchers in different species
(„cross fertilization“)
New Technologies
New Perspectives
New LifeSciences’ Technologies Allow For A Stronger Cross-Fertilization
… to a multi-species research approachFrom a species-oriented research …
Animal Health Plant Health Animal Health Plant HealthHuman HealthHuman Health
• Bayer Investor Presentation • Meet Management • March 2012 Page 22
OpportunityEmerging Markets
• Bayer Investor Presentation • Meet Management • March 2012 Page 23
Africa & Middle East
EasternEurope
Emerging Markets –Sales Growth Well Above Global Average
Emerging Economies
EmergingEconomies¹
+9%
Others²+4%
USA+3%
Western Europe+4%
FY2011 Group Sales by Region
Group €36,528m; +6%
~4,300
+12%~5,100
+5%
~1,800
+9%~2,100
+12%
¹ Emerging economies include: Latin America, Asia w/o Japan, Australia,New Zealand, Africa and Middle East incl. Turkey, Eastern Europe
² Others = Japan, Australia, New Zealand, Canada³ Emerging Asia = Asia w/o Japan, Australia, New Zealand
In € million, ∆% yoy Fx adjusted
36%
11%34%
19%
Latin America
Emerging Asia³
• Bayer Investor Presentation • Meet Management • March 2012 Page 24
= Developed Markets
HealthCare CropScience MaterialScience
+10% +11% +7%= Emerging Markets1
FY 2011 Group sales breakdown; ∆% yoy Fx adjusted
¹ Emerging markets: Latin America; Asia/Pacific w/o Japan, Australia,New Zealand; Africa and Middle East incl. Turkey; Eastern Europe
43%32% 42%
Emerging Markets –All Subgroups Have Strong Foothold
All BRIC-Countries in Our Most Important Country Portfolio
* Greater China includes PR China, Hong Kong, Macau and Taiwan• Bayer Investor Presentation • Meet Management • March 2012
FY 2011 sales in € billion; ∆% yoy Fx adjusted
Page 25
*
+3%+5%
+4%
+3%
+13%
+5%+5%
2.0
1.0+10%
+11% +14%+15%
3.0
4.0
+2%
-2%
+1%
• Bayer Investor Presentation • Meet Management • March 2012 Page 26
Bayer in Greater China – Key Facts
Sales Bayer FY 2011In € million
€2,957m58%BMS
5%BCS
37%BHC
€36,528m
8%China: €2,957m
EmployeesBayer Greater China (FTE)
Sales DevelopmentBayer Greater China (in € billion)
2009 2010
10,0018,350
10,924
2011 2006
1.5
20102009
2.1
2008
1.9
2007
1.8
3.0
2011
2.9
Greater China: PR China, Hongkong, Macao, Taiwan
• Bayer Investor Presentation • Meet Management • March 2012 Page 27
China - A Growth Engine for Bayer
3.0bn
~6.0bn
2011 2015e
~19% p.a.
Sales Greater China in €bn
HealthCare 1.1 ~2.5CropScience 0.1 ~0.3MaterialScience 1.7 ~3.0
Group Sales Target 2015 Expansion in All Subgroups
Well positioned to capture opportunities in one of the world´s fastest-growing economies
Sales targets by subgroup:
€bn 2011 2015e
• Bayer Investor Presentation • Meet Management • March 2012 Page 28
Efficiency
Contribution by Subgroup
Restructuring Program Fully On Track
• Bayer Investor Presentation • Meet Management • March 2012 Page 29
Target: €800m annual cost savings by 2013
Reinvestment of ~50%
One-time-charges of approx. €1bn of which €803m booked in 2010/11
Plans include staff reductions of 4,500
2,500 new hires in growth and innovation, particularly in emerging markets
Measures with €543m annualized savings already implemented by end
of 2011
CropScience
HealthCareHolding & Admin.
~54%
~34%
~12%
€800m€800m
Full Year 2012 –R&D And CapEx Budgets
• Bayer Investor Presentation • Meet Management • March 2012 Page 30
1%
MaterialScience0.2bn
HealthCare2.0bnthereof Pharma 1.5bn
MaterialScience0.5bn
HealthCare0.5bn
Reconciliation0.05bn
67%
24%
8%
Reconciliation0.2bn
CropScience0.8bn
CropScience0.3bn
CapEx (PPE) 2012e: ~€1.5bnR&D 2012e: ~€3.0bn
25%
66%
8% 34%
20%
33%
13%
• Bayer Investor Presentation • Meet Management • March 2012 Page 31
Appendix
• Bayer Investor Presentation • Meet Management • March 2012 Page 32
Financial Performance –
Q4 2011
4th Quarter 2011 –Mixed Business Performance
• Bayer Investor Presentation • Meet Management • March 2012 Page 33
Q4‘10 Q4‘11 ∆%€ million € million
Sales 9,012 9,191 +2 (+2)
EBITDA- reported 1,510 1,415 -6
- adjusted* 1,689 1,541 -9
EBIT- reported 51 629 •
- adjusted* 1,005 844 -16
Net income -145 397 •
NCF 1,941 1,152 -41
oFCF 1,417 427 -70
EPS- reported -0.18 0.48 •
- core 0.95 0.97 +2
Highlights of Financial Results
Top-line driven by ConsumerHealth andCropScience
Emerging Markets sales up 5%
Improvement of reported EBIT due tolower special charges
Adj. EBITDA* declined due to a sharp drop at MaterialScience
Net cash flow impacted by payments in connection with LL Rice (€484m)
( ) = Fx & portfolio adjusted
*before special items
4th Quarter 2011 –HealthCare
• Bayer Investor Presentation • Meet Management • March 2012 Page 34
Pharma+1% (+1%)
ConsumerHealth
+5% (+5%)36%
Q4’11 Sales
HealthCare €4,595m; +3% (+2%)
2,6801,915
Price1%
Volume2%
Fx0%
Portfolio0%
In € million, ∆% yoy, () = Fx & portf. adjusted
Earnings
Q4‘10 Q4‘11 Q4‘10 Q4‘11
Adj.EBITDA*
Adj.EBIT*
771 758
367 422
-2%
+15%
1,138 1,180 +4%
231 +37%
772 815 +6%
541 498 -8%
317
*before special items
4th Quarter 2011 –CropScience
• Bayer Investor Presentation • Meet Management • March 2012 Page 35
Crop Protection /BioScience+2% (+4%)
EnvironmentalScience
-5% (-6%)36%
CropScience €1,676m; +1% (+3%)
1,528148
270 273 +1%
Q4‘10 Q4‘11 Q4‘10 Q4‘11Price-1%
Volume3%
Fx0%
Portfolio-1%
144 145
Adj.EBITDA*
Adj.EBIT*
+1%
Q4’11 Sales In € million, ∆% yoy, () = Fx & portf. adjusted
Earnings
*before special items
4th Quarter 2011 –MaterialScience
• Bayer Investor Presentation • Meet Management • March 2012 Page 36
36%
MaterialScience €2,596m; 0% (0%)
1,341667
420
168
**CAS: Coatings, Adhesives, Specialties*** IO: Industrial Operations
Polyurethanes+5% (+5%)
Polycarbonates-9% (-10%)
CAS**0% (-1%)
Price4%
Volume-4%
Fx0%
Portfolio0%
IO***+13% (+11%)
297
106 -64%
Q4‘10 Q4‘11 Q4‘10 Q4‘11
156
-48
Adj.EBITDA*
Adj.EBIT*
•
Q4’11 Sales In € million, ∆% yoy, () = Fx & portf. adjusted
Earnings
*before special items
• Bayer Investor Presentation • Meet Management • March 2012 Page 37
+€25m
4th Quarter 2011 –Cash Flow And Net Debt Development
Q4’11 Cash Flow Net Debt Development
7.0
GCF oFCF
1.004
Invest-ments
725 427
∆ %y-o-y -29 -70
NCFcont.
1,152
-41 +38Q3´11 Q4´11
7.0
Cash Flow in € million, Net Debt in € billion,
• Bayer Investor Presentation • Meet Management • March 2012 Page 38
Financial Performance –
Fiscal 2011
2011 Outlookoriginal
2011actual
2011∆ Comments
Sales 4-6% to €35-36bn €36.5bn +6% Raised to 5-7% or €36-37bn
in Q1
Adj. EBITDA
increase towards €7.5bn
€7.6bn +7% Raised to >€7.5bn in Q1
Core EPS Increase by~10% €4.83 +15% Raised to ~15% in Q1
Net Debt reduce €7.0bn -€0.9bn Record GCF
Fiscal 2011 –All Group Targets Achieved
• Bayer Investor Presentation • Meet Management • March 2012 Page 39
Sales ∆ Fx and portfolio adjusted, EBITDA before special items
Fiscal 2011 –Subgroup Performance vs. Targets
• Bayer Investor Presentation • Meet Management • March 2012 Page 40
in € million 2011 Outlook original
2011actual adj. ∆ Comments
HealthCare Targets achieved or exceeded Top-line driven by Consumer
Health Pharma margin up 140 bpts.
Sales low/mid single-digit increase
17,169 +2%
Adj. EBITDA* small improvement 4,702 +7%
CropScience
Achieved or exceeded all targetsSales ≥ mid-single digit increase 7,255 +9%
Adj. EBITDA* grow at higher rate than sales 1,654 +28%
MaterialScience Sales growth above, bottom-line clearly below expectations
Pressure from higher raw material prices and deteriorating business environment
Sales mid single-digit increase 10,832 +8%
Adj. EBITDA* grow at higher rate than sales 1,171 -14%
*before special items
Investor Handout – Meet ManagementBayer HealthCare
March, 2012 – Leverkusen
Leading Positions in Key Healthcare Markets
• Bayer Investor Presentation • Meet Management • March 2012Page 2
Sales Split by Segment 2011Sales in € million
25%
58%
7%
20%
14%
Pharma€9,949m Leading positions in key therapeutic categories
HealthCare €17,169m
Consumer Care €3,534m Global #2 in OTC-pharmaceuticals
Medical Care €2,500m #1 in fluid injection systems, #1 in contrast media,
#4 in blood glucose meters
Animal Health €1,186m Global #4
Sales 16,913 17,169 +1.5
EBIT 1,861 3,191 +71.5
EBIT adjusted* 3,030 3,367 +11.1
EBITDA adjusted* 4,405 4,702 +6.7
Gross cash flow 2,948 3,254 +10.4
Net cash flow 3,320 3,357 +1.1
CapEx 605 611 +1.0
Free operating cash flow 2,747 2,749 +0.1
R&D expenses 2,066 1,948 -5.7
Capital invested (average) 23,022 22,757 -1.2
CFRoI 12.8 % 14.3 % ●
Fiscal 2011 –Key Financials HealthCare
• Bayer Investor Presentation • Meet Management • March 2012Page 3 * before special items
In € million FY 2010 FY 2011 ∆%
Fiscal 2011 -Operating Performance
• Bayer Investor Presentation • Meet Management • March 2012Page 4
EarningsSales
25%
42%
58%
HealthCare €17,169m +1.5% (+2%)
ConsumerHealth+4% (+5%)
2010 2011
AdjustedEBITDA*
4,4054,702
2,832 2,972
1,573 1,730
2010 2011
AdjustedEBIT*
3,0303,367
1,900 2,042
+7%
+5%
+10%
+11%
+7%
+17%
Price+0.2%
Volume+2.2%
Fx-1.2%
Portfolio0.3%
Sales in € million; ∆% y-o-y, () Fx & portfolio adj.
* before special items
Pharma0% (+1%)
1,130 1,325
Fiscal 2011 -Regional Sales Split
• Bayer Investor Presentation • Meet Management • March 2012Page 5
Consumer HealthPharmaceuticals
€ 9,949m
Europe -3.5%
North America -10.5%
LA / Africa / Middle East
+11.3%
Asia/Pacific +11.8%
Sales in € million; ∆% y-o-y, Fx adj.
21% 17%
25%
37%
€ 7,220m
Europe +4.8%
North America +6.0%
LA / Africa / Middle East
+8.3%
Asia/Pacific +4.4%
32%
15%
16%
38%
Fiscal 2011 - Strong Business Momentum in Emerging Markets
• Bayer Investor Presentation • Meet Management • March 2012Page 6
Emerging Economies
25%
2011 HealthCare Sales
HealthCare €17,169m LatinAmerica
Eastern Europe
Africa & Middle East
~1,700
+13%
~1,900
+11%
~1,000
+6%
~886
+9%
¹ Emerging economies include: Latin America, Asia w/o Japan, Australia,New Zealand, Africa and Middle East incl. Turkey, Eastern Europe
23%
USA-2%
31%
32%
14%
Sales in € million; ∆% y-o-y Fx adjusted
Western Europe -1%
EmergingEconomies¹+10%
Others²+4%
² Others = Japan, Australia, New Zealand, Canada³ Emerging Asia = Asia without Japan, Australia, New Zealand
Emerging Asia³
Bayer is One of The Leading International HealthCare Companies in China
• Bayer Investor Presentation • Meet Management • March 2012Page 7
Driven by Pharmaceuticals (+26% Fx-adj)
~1,000 sales representatives added in 2011
Approx. 6,200 employees
€100m over 5 years to set-up a global R&D center in China
Beijing manufacturing site expansion (~€45m through 2015)
Partnership with Tsinghua University (joint drug discovery, student support)
HealthCare 2011 ~€1bn +19% y-o-y (Fx-adj.)*
Adalat
Avelox
Top products growth in 2011*Aspirin
+22%
+24%
+35%
+24%
Nexavar
Sales in € million; ∆% y-o-y Fx adjusted
+19%
Nexavar
* People‘s Republic of China
Glucobay
Avelox
Fiscal 2011 -Major Progress Achieved
• Bayer Investor Presentation • Meet Management • March 2012Page 8LCS: Levonorgestrel contraceptive system
*Adjusted EBITDAEM: Emerging markets
Emerging Markets HealthCare EM-sales growth of +10% PR China: Above market growth at Pharma (+26%) Expansion of marketing and sales organization
Pipeline
Performance Improved margins* at Pharma and Consumer Health (+140
bp each) Above market growth at Consumer Health
First Xarelto-launches in chronic indications Regulatory filings for Xarelto, VEGF-Trap-Eye, LCS Successful completion of major clinical studies (incl. programs
for Xarelto, Alpharadin, Regorafenib, VEGF Trap-Eye)
Sales in € million; ∆% y-o-y Fx adjusted
HealthCare -Positioned for Future Growth
• Bayer Investor Presentation • Meet Management • March 2012Page 9
Consumer Health
Pharma 4 potential blockbusters to be launched near-term
Limited patent expiration exposure
Strong presence in emerging markets
Strong brands
Leading positions in all businesses
Increasing share in mature and expand in Emerging Markets
Opportunities
• Bayer Investor Presentation • Meet Management • March 2012Page 10
Financial Outlook
Market Outlook 2012
• Bayer Investor Presentation • Meet Management • March 2012Page 11
For the OTC market we expect low-to-mid single-digit percentage growth
The Diabetes Care market is expected to grow by a low-single-digit percentage
Moderate growth expected in Animal Health market
The Pharma market is expected to grow in the mid-single-digit percentage range driven by Emerging Markets
Financial Outlook 2012
• Bayer Investor Presentation • Meet Management • March 2012Page 12
Expect sales to increase by a low- to mid-single-digit percentage (Fx & portf.–adj.) Plan to slightly improve adjusted EBITDA*
HealthCare
Pharmaceuticals
Consumer Health
Expect sales to remain stable or move slightly higher (Fx & portf.–adj.) Expect adjusted EBITDA* to approx. match prior-year level
Anticipate mid-single digit percentage growth of sales (Fx & portf.–adj.) Anticipate mid-single digit percentage growth of adjusted EBITDA*
* before special items
• Bayer Investor Presentation • Meet Management • March 2012Page 13
Building Growth Momentum –
Pharmaceuticals
Pharma – Top 10 Products
• Bayer Investor Presentation • Meet Management • March 2012Page 14
YAZ-Family
Betaseron
Kogenate
Adalat
Glucobay
Avelox
Nexavar
Mirena
Levitra
1,075
1,117
1,070
640
332
486
725
581
404Aspirin C.
362
Rest of the worldU.S.
2011 sales in € million (y-o-y changes Fx-adj.)
-5%
+8%
-3%
+4%
-5%
+11%
-2%
+13%
+4%
-22%
785 (+11%)
670 (-9%) 447 (0%)
637 (-5%) 3 (•)
227 (+7%)
398 (+8%) 88 (-31%)
551 (+3%)
268 (+6%) 313 (+15%)
404 (+13%)
362 (+4%)
290 (+2%)
174 (+5%)
891 (+6%) 179 (-30%)
105 (-51%)
The Leader in Women’s HealthCare
• Bayer Investor Presentation • Meet Management • March 2012Page 15
Yaz family
Sales ∆% y-o-y, () Fx adj.
Women’s Healthcare 2011
€2,992m+2% (+3%)
+8 (+11)Mirena
+6 (+7)Diane
-4 (-3)
+67 (+69)Qlaira
Other products +4 (+5)
-2 (-1)Microgynon
-3 (-2)Valette
-6 (-6)Meliane
+13 (+14)Angeliq
Mirena - The Leading Hormonal Long-Acting Contraceptive
• Bayer Investor Presentation • Meet Management • March 2012Page 16
2009 2010
490539
254
218
272 285
Leading long-acting (up to five years) reversible contraception device
2011 growth driven by higher volumes in the US
Life-cycle opportunities: Small, low-dose long-acting (up to
three years) LCS filed in the US and EU in 2011
Further phase III program for a long-acting contraception LCS for up to five years underway
2012e sales: high-single/low-double digit % increase
2011
+11%
581
268
313
LCS: Levonorgestrel-releasing system
Rest of the worldU.S.
Sales in € million; ∆% Fx adj.
Hemophilia Franchise -Growth Trajectory Intact
• Bayer Investor Presentation • Meet Management • March 2012Page 17
2009 2010
8881,004
705638
250 299
Global # 2 in hemophilia A treatment
Increased market share in 2011
Development program underway
Longer acting factor VIII: Start of a pivotal study targeted for 2012
Recombinant FVIIa: Target to initiate a phase II/III study in 2012
Studies with plasma-free formulation on track
2012e sales: mid-single digit % increase
2011
+8%
1,075
785
290
Rest of the worldU.S.
Sales in € million; ∆% Fx adj.
Betaseron - Long-term Experience in MS Treatment
• Bayer Investor Presentation • Meet Management • March 2012Page 18
Rest of the worldU.S.2009 2010
1,214 1,206
733735
479 473
Wealth of clinical experience, demonstrating excellent efficacy and tolerability of Betaseron
21-year long-term follow-up study demonstrated significant survival advantage with Betaseron treatment
2012e sales: mid-to-high single-digit % decline
2011
-5%
1,117
670
447
Sales in € million; ∆% Fx adj.
Nexavar - Our Cornerstone in Oncology
• Bayer Investor Presentation • Meet Management • March 2012Page 19
Rest of the worldU.S.2009 2010
604705
531450
154 174
Approved for kidney cancer (RCC) and for liver cancer (HCC)
Only approved drug with overall survival benefit in HCC
Comprehensive development program underway, including phase III trials in Lung cancer (NSCLC) Thyroid cancer Breast cancer RCC (adjuvant) HCC (adjuvant) HCC (combination)
2012e sales: low-to-mid single-digit % increase
2011
+4%
725
551
174
RCC: Renal cell carcinoma, HCC: Hepatocellular carcinoma, NSCLC: Non-small cell lung cancer
Sales in € million; ∆% Fx adj.
Aspirin –More Than A Century of Growth
• Bayer Investor Presentation • Meet Management • March 2012Page 20
2009 2010
715
776
358315
400 418
2011
+10%
844
404
440
One of the world’s most recognized brands
Available as OTC and Rx Aspirin
Bayer’s #2 product in Emerging Markets; over-proportional growth
Aspirin grew 35% Fx-adj. in 2011 in China
2012e sales: mid-to-high single-digit % increase (Rx-Aspirin Cardio)
Rx-AspirinOTC-Aspirin
Sales in € million; ∆% Fx adj.
Xarelto -Key Features and Differentiators
Effectively reducing the risk of stroke and systemic embolism in AF-patients
Novel single-drug approach for DVT-treatment and sec. prevention
Superior efficacy with no increase in bleeding in VTE prevention after orthopedic surgery
Convenient once-daily, fixed oral dose; no need for routine coagulation monitoring
Proven efficacy in the broadest range of indications tested among novel anticoagulants
Only novel anticoagulant to complete successful study in ACS also showing mortality benefit
Unique phase III program for stroke prevention in AF-patients in Japan
• Bayer Investor Presentation • Meet Management • March 2012Page 21AF: atrial fibrillation, DVT: Deep vein thrombosis;
VTE: Venous thromboembolism; ACS: Acute coronary syndrome
Xarelto –Above €2bn Commercial Opportunity1
• Bayer Investor Presentation • Meet Management • March 2012Page 22
LMWHs: low molecular weight heparins, UFH: unfractionated heparins, VKA: vitamin K antagonists, DTI: direct thrombin inhibitors (incl. Pradaxa), Other antithrombotics (incl. Xarelto); MAT: Moving annual total
AF: atrial fibrillation, ACS: acute coronary syndrome, MI: myocardial infarction, VTE: venous thromboembolism
~$9.2bn 6.3369%
0.718%
0.637%
0.768%
0.738%
LMWH
VKA
UFH
DTI
Other
~2,100~100
~400
~200
~350
Strokepreventionin AF
VTE preventionafter orthopedicsurgery
Post ACS/MI
Otherprimaryprevention
VTEtreatment
~3,100m
Anticoagulants salesMAT 9/2011
Anticoagulants estimated treatment daysin 2010
1 Subject to approvalSource: IMS MIDAS, GERS, FARMINFORM for sales
Bayer estimates for patient treatment days in main markets
Xarelto – Targeting A Broad Range of Major Chronic Thromboembolic Diseases
• Bayer Investor Presentation • Meet Management • March 2012Page 23LMWH: Low molecular weight heparins; SOC: Standard of care; VKA: Vitamin
K antagonists; OAC: Oral anticoagulants; MI: Myocardial infarction
● Caused by embolism of a clot that migrates to the lungs where it becomes trapped
● Leading cause of in-hospital death
● Thrombi (clots) are formed in the deep veins of the leg
● Risk factors include surgery, particularly orthopedic, and age
● High risk of recurrent events, or developing a pulmonary embolism
DVT + PE = VTE(venous thromboembolism)
Pulmonary embolism (PE)
Deep venous thrombosis (DVT)
Venous
Stroke prevention in atrial fibrillation
Secondary prevention in ACS
Arterial
● Acute coronary syndromes (ACS) comprise unstable angina and MI
● The underlying cause is thrombosis● After initial treatment, patients remain
at high risk● Annual cases of ACS in US, EU major
5 and J estimated to be ~ 2 million● SOC: antiplatelets
● Atrial fibrillation (AF) can cause the development of clots, via stasis in the atria, which can travel to the brain
● AF increases stroke risk ~5-fold● ~ 3.5 million AF-patients in the US,
> 6 million in EU and > 800,000 in J ● SOC: OAC
● Estimated ~ 900,000 cases/year in major EU countries
● SOC: LMWH followed by VKA; Xarelto approved in Europe
Xarelto –Rolled-out for Success
• Bayer Investor Presentation • Meet Management • March 2012Page 24
Launched in >110 countries for VTE prevention following total knee/hip replacement surgery
Launched in Europe and Canada in SPAF and DVT treatment
Launched in SPAF in US
Approved for SPAF in Japan
Filed in ACS in Europe and US (priority review)
SPAF: prevention of stroke and systemic embolism in patients with non-valvularatrial fibrillation, DVT: deep vein thrombosis
Xarelto in SPAF –Global Launch Underway
• Bayer Investor Presentation • Meet Management • March 2012Page 25SPAF: prevention of stroke and systemic embolism in patients with non-valvular
atrial fibrillation, Rx: prescription; OAC: Oral anticoagulant; SMC: ScottishMedicines Consortium; NICE: National Institute for Health and Clinical excellence
Status as of March 2012
J&J: generating positive launch momentum and steady growth; growing faster than competition in new Rx’s among novel OACs overall; favorable formulary access across majority of plans
First weeks of sales in SPAF in-line with expectations
Strong market uptake
Positive recommendation by SMC for SPAF, discussion with NICE ongoing
Pricing and reimbursement discussions underway
Approved, launch planned for Q2
Xarelto –Strong Market Performance in Germany*
• Bayer Investor Presentation • Meet Management • March 2012Page 26Source: IMS Health, Weekly Retail Sell-Out Data; BAYER
Sales market share estimates based on AC market
Sales Market Share in %(based on ex-manufacturer prices)
0
200
400
600
800
1.000
1.200
1.400
1.600
1.800
calendar week 7 after launch
Cum
ulat
edD
aily
The
rpai
es(0
00)
Cumulated daily therapies (DDD) - all dosage strengths and pack sizes at
week 7 after launch
Xarelto
Pradaxa
* As of March 2012
7,2
6,26,8
6,05,7
6,8
1,4
1/2/12 2/27/122/13/121/30/121/16/12
10,0
7,5
5,0
2,5
5,5
1,8
Xarelto
Secondary Prevention of ACS –Key Findings from the ATLAS Phase III Study
• Bayer Investor Presentation • Meet Management • March 2012Page 27ACS: Acute coronary syndrome,
BID: twice daily
16 percent relative risk reduction for cardiovascular (CV) death, stroke or myocardial infarction in patients taking rivaroxaban
> 30 percent reduction of risk of CV death or all cause death if rivaroxaban(2.5 mg BID) is added to standard anti-platelet therapy
> 30 percent reduction in stent thrombosis in patients taking rivaroxaban
More TIMI major bleeding in the rivaroxaban groups (up to 2.4% in the 5mg BID group) compared to placebo (0.6%)
No excess risk of fatal intracranial hemorrhage or fatal bleeding associated with rivaroxaban compared to placebo
EINSTEIN PE – Study Design
• Bayer Investor Presentation • Meet Management • March 2012Page 28
Objectively confirmed PE ±
DVTR
N=4,833
LMWH: Low molecular weight heparin; VKA: Vitamin K antagonist; DVT: Deep vein thrombosis; R: Randomization: PE: Pulmonary embolism;
INR: International normalized ratio
15 mg bid
RivaroxabanDay 1 Day 21
Enoxaparin 1.0 mg/kg bid for ≥5 days, followed by
VKA, INR range 2–3
Treatment period: 3, 6 or 12 months*
20 mg od
30-d
ay o
bser
vatio
n
pe
riod
Rivaroxaban
*Decision to treat for 3, 6 or 12 months made by investigator at time of randomization; up to 48 hours pre-treatment with heparins/fondaparinux permitted before study entry
● Randomized, open-label, event-driven, non-inferiority study
The EINSTEIN PE study addresses the treatment of pulmonary embolism (PE) and the secondary prevention of venous thromboembolism (VTE) using
oral rivaroxaban alone vs. standard therapy (LMWH followed by VKA)
Xarelto –Major Expected Upcoming Newsflow
• Bayer Investor Presentation • Meet Management • March 2012Page 29
EINSTEIN PE Phase III data presentation at ACC, March 26, 2012
Secondary prevention of ACS – approval expected summer 2012
(US) and end 2012 (EU)
• Bayer Investor Presentation • Meet Management • March 2012Page 30
Building Growth Momentum –
Consumer Health
Consumer Health Businesses –A Highly Attractive Part of Our Portfolio
• Bayer Investor Presentation • Meet Management • March 2012Page 31
Predictable cash flow
Attractive growth potential
Consistent, attractive returns at modest risk
Evolution from “passive patient” to “pro-active consumer”
Consumer expertise becoming a required competency for success
Aging population and increasing life expectancy
Emerging markets: OTC growth due to accessibility and lower cost
Attractiveunderlying trends
Sustainablebrands
Consumer centered
Financiallyattractive
Less patent dependent
Less R&D and capital intensive
Strong consumer brands have attractive long lifetimes
Consumer Care –Gained Share in 2011
• Bayer Investor Presentation • Meet Management • March 2012Page 32
+7%
Global #2 in a growing market
Track record of performance
Some of the world’s most recognized brands
Acquired Roche OTC, Citracal, Sagmeland Topsun
Performance
Sales in € million; ∆% Fx & portfolio adj.
2,531 2,634
3,020 3,0803,371
3,534
2006 2007 2008 2009 2010 2011
Consumer Care –Strong Brands Matter
• Bayer Investor Presentation • Meet Management • March 2012Page 33
Brand 2011 Sales y-o-y Growth
440*
285
235
224
174
140
+9%
+9%
+11%
+7%
+2%
+4%
* Only Aspirin CC sales, excluding Rx Aspirin Cardio
Sales in € million; ∆% Fx adj.
Radiology & Interventional – Combining Medrad and Diagnostic Imaging
• Bayer Investor Presentation • Meet Management • March 2012Page 34
Medrad: Clear #1 Active in fluid injection systems for
contrast media and endovascular devices Business strengthened around strategic
core through adjacent acquisitions of Possis (thrombectomy) and Pathway (mechanical atherectomy)
Diagnostic Imaging: Clear market leader in contrast media
Synergy creation through integration underway
Highlights
1,371*1,298 1,323 1,363
1,474 1,498
2006 2007 2008 2009 2010 2011
+2%
Sales in € million; ∆% Fx & portfolio adj.
* pro forma sales
Diabetes Care –Global Player in Blood Glucose Meters
• Bayer Investor Presentation • Meet Management • March 2012Page 35
+2%
810
934 9561,000 993 1,002
2006 2007 2008 2009 2010 2011
Global #4 in blood glucose meters
Latest innovation products include CONTOUR™ USB meter with Plug & play technology for instant access to
patterns and trends
Patients can share data with their healthcare professional
Performance
Sales in € million; ∆% Fx & portfolio adj.
Animal Health – A Top Player in an Attractive Market
• Bayer Investor Presentation • Meet Management • March 2012Page 36
Sales in € million; ∆% Fx & portfolio adj.
+5%
Global #4 in a growing market
Ranked #3 in companion animal products (CAP)
#5 in food animal products (FAP)
Outpaced the market – in the majority of last years
Industry leading profitability
Successful integration of Bomac
905956 963 977
1,1201,186
2006 2007 2008 2009 2010 2011
Performance
New Animal Health Products
• Bayer Investor Presentation • Meet Management • March 2012Page 37
Veraflox
Procox
“1st combined endoparasiticide against roundworm and coccidiain dogs”
“Pradofloxacin, the new generation fluoroquinolone with unique microbiology”
Dual targeting action with extended spectrum vs previous fluoroquinolones(greater Gram+ activity, anaerobes)
Greater potential to limit the selection for resistance
Convenient formulations for both dogs and cats
Easy and convenient single oral dose treatment
Can be used already from 2 weeks of age
Completes the endoparasiticides portfolio based on the active ingredient emodepside
• Bayer Investor Presentation • Meet Management • March 2012Page 38
Pharma Pipeline –
VEGF Trap-Eye
VEGF Trap-Eye – Bayer’s Entry into Ophthalmology
• Bayer Investor Presentation • Meet Management • March 2012Page 39
FoveaFovea
MaculaMacula
Normal retina Abnormal vessel growth
VEGF: Vascular endothelial growth factor; AMD: age-related macular degeneration, CRVO: central retinal vein occlusion, DME: diabetic macular edema,
CNV: choroidal neovascularization
VEGF Trap-Eye: fully human fusion protein, specifically formulated for injection into the eye
“traps” VEGF which induces abnormal vessel growth
Collaboration with Regeneron; Bayer has marketing rights ex-US
Filed for wet AMD in Europe and Japan
Filing for CRVO targeted for 2H 2012
Phase III in DME and mCNVongoing
Retina Treatment is The Fastest Growing Area Within Ophthalmology
• Bayer Investor Presentation • Meet Management • March 2012Page 40
10
1
4
10
6
Glaucoma
Dry eyeOther
2018
23.8
6.1
5.9
6.2
4.3
1.3
20081
5.0
4.1
2.4
1.7
Anti-allergry/infec-tive/ inflammatory
Source: IMS Health1 2009 value is $14.7bn
Global Ophthalmology Market in $bn CAGR 2008-2018 in %
Retinal disorders
13.9
6.1
5.9
6.2
4.3
1.3
5.0
4.1
2.41.7
0.7
High Prevalence of Retinal Diseases
• Bayer Investor Presentation • Meet Management • March 2012Page 41
Wet AMD is the leading cause of acquired blindness in the elderly approx. 1.2 million patients in the US
DME is the most prevalent cause of vision loss in patients with diabetes and a leading cause of acquired blindness in the adults aged < 50 years Approx. 370,000 patients suffer from clin. significant DME in the US, with 95,000
new cases / year
CRVO may lead to vision loss and other serious complications > 100,000 people in the US and > 66,000 people in key EU countries are
estimated to suffer from CRVO
Severe myopia is common in Asia; in Japan, mCNV is the second most common cause of blindness Prevalence in Japan is estimated to be approx. 200,000
AMD: Age-related macular degeneration; DME: Diabetic macular edema; CRVO: Central Retinal Vein Occlusion;
mCNV: Myopic choroidal neovascularization;
Ex-US Territories Represent a Significant Opportunity for VEGF Trap-Eye in wet AMD
• Bayer Investor Presentation • Meet Management • March 2012Page 42Source: Annual incidence: NICE; Worldwide incidence: AMD Alliance International.
Increasing Understanding of Wet Age-Related Macular Degeneration (AMD) as a Chronic Disease. April 2011
34
49
39
25
32
120
20
37
167USA
Brazil
Canada
Japan
UK
Spain
Italy
Germany
France 300
422
332
214
276
348
148
332
1,229
Total prevalence (2012e)wAMD patients (thousands)
Annual incidence (2012e)Annual newly diagnosed wAMD patients (thousands)
USA
Brazil
Canada
Japan
UK
Spain
Italy
Germany
France
VEGF Trap-Eye -Multiple Retinal Disease States
• Bayer Investor Presentation • Meet Management • March 2012Page 43
MYRROR study:Completion1 2012/2013e
US: launched 2011*
EU: launch planned for end 2012#
VIVID study:Completion1 2013/14e
VISTA* study:Completion1 2013/14e
US: filed*
Filing EU: 2H 2012e
wAMD
Positive PIII(US)
Positive PIII (Europe, J, etc)
China PIIIStudy started
Positive PIII(ROW)
Positive PIII (US)
CRVO
DME
Positive PII Completed
PIII ongoing (Europe, J, others)
PIII ongoing (US, others)
PIII Japan/Asia Pacific Ongoing
mCNV
* Regeneron# subject to regulatory approval
1: completion refers to primary completion estimated
Phase III Studies in wet AMD – Every Other Month Dosing Possible with VEGF Trap-Eye
• Bayer Investor Presentation • Meet Management • March 2012Page 44
Out of 8 possibleinjections (5 in last 10 months)
Ranibizumab VEGF Trap-EyeTreatment arm in VIEW
# of injections
14
12
10
8
6
4
2
0
Out of 13 possible injections
Full analysis set:Rq4 n=5952q4 n=613
0.5q4 n=5972q8 n=607
12.3 12.3 12.2
7.5
2q4 0.5q4 2q8
VIEW 1,2 Phase III study results demonstrate comparable efficacy vs. Ranibizumabwith every other month injection through first year
2q4: VEGF Trap-Eye 2mg once every month; Rq4: Ranibizumab 0.5mg once every month; 2q8: VEGF Trap-Eye 2mg every other month;
0.5q4: VEGF Trap-Eye 0.5mg once every month
02468
101214
0 4 8 12 16 20 24 28 32 36 40 44 48 52
ETDR
S Le
tters
Week
Rq4 2q4 0.5q4 2q8
VIEW 1 & 2 – Vision Maintained With VEGF Trap-Eye Dosed Every Other Month
• Bayer Investor Presentation • Meet Management • March 2012Page 452q4: VEGF Trap-Eye 2mg once every month; Rq4: Ranibizumab 0.5mg once every month; 2q8: VEGF Trap-Eye 2mg every other month;0.5q4: VEGF Trap-Eye 0.5mg
once every month; *P = 0.0054; †P = NS vs. Rq4
02468
101214
0 4 8 12 16 20 24 28 32 36 40 44 48 52
ETDR
S Le
tters
VIEW 29.4Rq4 (n=291)
7.6† 2q4 (n=309)
9.7†0.5q4 (n=296)
8.9† 2q8 (n=306)
8.1 Rq4 (n=304)10.9* 2q4 (n=304)
6.9†0.5q4 (n=301)7.9†2q8 (n=301)
VIEW 1
VEGF Trap-Eye –Positive Clinical Data in CRVO
• Bayer Investor Presentation • Meet Management • March 2012Page 46
Marked improvement in vision in CRVO-patients treated with VEGF Trap-Eye
● Phase III program with two studies (COPERNICUS, GALILEO) in central retinal vein occlusion (CRVO)
● VEGF Trap-Eye vs. sham control injection
● Both studies met primary endpoint: Visual acuity change vs. baseline after 6 months of treatment
● Positive one-year results confirm primary endpoint results seen after 24 weeks
Sham injections
VEGF Trap-Eye2 mg monthly
22.1%
60.2%
GALILEO: p<0.0001 COPERNICUS: p<0.0001
56.1%
12.3%
Percentage of patients with improvement of vision of at least 15 letters after 6 months
CRVO: Central Retinal Vein Occlusion
VEGF Trap-Eye –Major Expected Upcoming Newsflow
• Bayer Investor Presentation • Meet Management • March 2012Page 47
Wet AMD – Launch in Europe planned for end 2012
CRVO – Filing targeted for 2H 2012 in Europe
• Bayer Investor Presentation • Meet Management • March 2012Page 48
Pharma Pipeline –
Regorafenib
Regorafenib – Three Dimensional Mode of Action
• Bayer Investor Presentation • Meet Management • March 2012Page 49
Regorafenib is an oral tumor deactivation agent that potently blocks multiple protein kinases, including kinases involved in:
Tumor angiogenesis (VEGFR1, -2, -3, TIE2)
Oncogenesis (KIT, RET, RAF-1, BRAF, BRAFV600E)
Tumor microenvironment (PDGFR, FGFR)
Inhibition of neoangiogenesis
Inhibition of tumormicroenvironment signals
Inhibition of proliferation of certain tumor cells
VEGFR: Vascular endothelial growth factor receptor; TIE2: Tyrosine kinase with immunoglobulin-like and EGF-like domains ; PDGFR: Platelet derived growth factor
receptor; FGFR: Fibroblast growth factor receptor;
Regorafenib – Our Novel Multi-Kinase Inhibitor
• Bayer Investor Presentation • Meet Management • March 2012Page 50
CORRECT phase III trial in mCRC* stopped early on success (Oct ‘11)
Study met its primary endpoint of significantly improving overall survival in patients with mCRC who have progressed after failure of standard therapy
Submission for marketing authorization in mCRC planned for 1H 2012
Phase III program in GIST ongoing, data expected 1H 2012
FDA granted orphan drug (GIST) and Fast Track (GIST & mCRC) designation
Phase II program ongoing in multiple tumor types
mCRC: Metastatic colorectal cancer; * for patients whose disease has progressed after approved standard therapies; GIST: Gastrointestinal stromal tumors;
Regorafenib – Phase III Results in mCRC Show Promise
• Bayer Investor Presentation • Meet Management • March 2012Page 51
The study met its primary endpoint of significantly improving overall survival by 29 % (p=0.0052, HR=0.77) at the preplanned interim analysis
The trial also met key secondary efficacy endpoints including significant improvement of
Progression-free survival (HR=0.49, p<0.000001), and
Disease control rate (p<0.000001)
No new or unexpected safety findings:
Main treatment-related adverse events observed in the regorafenib arm were fatigue, hand–foot skin reaction, diarrhea, anorexia, voice changes, hypertension, oral mucositis, and rash/desquamation
mCRC: Metastatic colorectal cancer
Colorectal Cancer – Common Cancer Type With High Unmet Medical Need
• Bayer Investor Presentation • Meet Management • March 2012Page 52
■ Unmeet need:
■ A common cancer:● Incidence of 1.2million cases globally, third leading cause of cancer-related death
● There are currently no approved treatments for mCRC after progression on standard therapies
● The current 5-year relative survival rate is on average 65%● Oral therapy provides convenience to patients
Source: Decision Resources Jan 2011 CRC Report
mCRC: Metastatic colorectal cancer
Gastro-intestinal Stromal Cancer (GIST)
• Bayer Investor Presentation • Meet Management • March 2012Page 53
GIST is a rare sarcoma affecting the digestive tract and occurs in the stomach or small intestine
The incidence of GIST in the U.S. is estimated to be 4,100 -6,000 / year
Overall 5-year survival rates for primary resected disease are in the order of 50%–55%1
Imatinib and sunitinib are established standards
1 Din, Omar S, Woll, Panella J, Treatment of gastrointestinal stromal tumor: focus on imatinib mesylate. Academic Department of Clinical Oncology, University of Sheffield,Weston Park Hospital, Sheffield, UK ; *DeMatteo RP, Heinrich MC, El Rifai WM, et al. Clinical management of gastrointestinal stromal tumors: before and after STI-571. HumPathol. 2002;33:466–477. ; W.-L. Wang et al Cancer Chemother Pharmacol (2011) 67 (Suppl 1):S15–S24; Photo: www.gistalliance.com
No standard of care beyond imatinib and sunitinib A clear need for additional lines of treatmentUnmet need
GISTs in the GI Tract
Regorafenib Phase III in GIST (GRID) -Study Design
• Bayer Investor Presentation • Meet Management • March 2012Page 54
AdvancedGISTafter failure ofat least imatiniband sunitinib
Regorafenib 160 mg od 3 wks on /1 wk off
Placebo
Primaryendpoint:PFS
2:1randomisation
● Primary endpoint: progression-free survival (PFS) per blinded central radiology review; (significance level/power: 0.01 (one-sided) / 90%)
● Secondary endpoints (selection): overall survival; time to progression tumor response rate; duration of response
● Time frame (months): approx. 12● Total number of PFS events (plan): 144● Total number of patients enrolled: 199
GIST: Gastrointestinal stromal tumor
Regorafenib –Clinical Program*
• Bayer Investor Presentation • Meet Management • March 2012Page 55
Safety study of BAY73-4506 in patients with hepatocellular carcinoma
N=36
MilestonesPhase IIIPhase II
3rd/4thline metastatic colorectal cancer (CRC) Filing target1H2012
Facts Metastatic colorectal cancer after
failure of standard therapy; regorafenib + best supportive care (BSC) vs. placebo + BSC; N=760
Study
CORRECTNCT01103323
GRIDNCT01271712
Phase I
Gastrointestinal stromal tumors (GIST) ≥ 3rd line
Metastatic/unresectablegastrointestinal stromal tumors (GIST) ≥ 3rd line
N=199
NCT01298570** Metastatic CRC
Regorafenib + FOLFIRI versus placebo+FOLFIRI as 2nd line Tx in K-RAS/BRAF mutant metastatic CRC; N=240
Data 1H 2012e
NCT01289821 Metastatic CRC
Regorafenib + mFOLFOX6 as first line therapy in patients with metastatic CRC
N=54
Hepatocellular carcinomaNCT01003015 Data reported
NCT01068769** Regorafenib in patients with
metastatic and/or unresectableGIST; N=34
Metastatic / unresect. GIST
NCT00664326 Regorafenib in previously untreated
patients with metastatic or unresectable RCC; N=49
Renal cell carcinoma Data reported
*selection of studies** investigator-sponsored study
Regorafenib –Major Expected Upcoming Newsflow
• Bayer Investor Presentation • Meet Management • March 2012Page 56
Metastatic Colorectal Cancer – Filing targeted for 1H 2012
Phase III 3rd-line GIST (GRID) – data expected 1H 2012
• Bayer Investor Presentation • Meet Management • March 2012Page 57
Pharma Pipeline –
Alpharadin
Alpharadin – New Potential Therapy to Prolong Life in CRPC Patients
• Bayer Investor Presentation • Meet Management • March 2012Page 58
Alpha-pharmaceutical (Radium-223, delivering highly energetic, short ranging radiation) - in-licensed from Algeta
Radium as natural bone seeker targeting bone metastases ALSYMPCA (phase III) trial in symptomatic castration-resistant prostate cancer
(CRPC) patients with bone metastases stopped early - Alpharadin demonstrated 44% improvement in overall survival
Filing targeted mid 2012 Fast track status granted by FDA
Tumor cellsNewly formedbone
Radium-223 deposition Radium-223: highly localized tumor cell killingBone metastases
Significant Unmet Need for Treatments for CRPC Patients with Bone Metastases
• Bayer Investor Presentation • Meet Management • March 2012Page 59CRPC: Castration-resistant prostate cancer
Prostate cancer: Sixth leading cause of death from cancer in men; most commonly diagnosed cancer among men in the US and Europe
In 2008, 899,000 men were diagnosed and 258,000 died from prostate cancer worldwide1
CRPC is a form of advanced prostate cancer in which the tumor grows despite castrate levels of testosterone
Majority of CRPC patients have radiological evidence of bone metastases
Bone metastases are the main cause of disability and death in patients with CRPC
Bone metastasis in prostate cancer
1 World Health Organization. GLOBOCAN 2008.; 2Mundy GR. Nat Rev Cancer. 2002;2(8):584-93 3Bubendorf L, et al. Hum Pathol. 2000;31(5):578-83
Alpharadin – Prolonged Life in CRPC* Patients in the ALSYMPCA Phase III Study
• Bayer Investor Presentation • Meet Management • March 2012Page 60 CRPC: Castration-resistant prostate cancer
In CRPC patients with bonemetastases Radium-223:
Significantly prolonged OS P value = 0.00185;
HR = 0.695; 95% CI, 0.552-0.875
Significantly prolonged time to first SRE P value = 0.00046;
HR = 0.610; 95% CI, 0.461-0.807
Was very well tolerated
* The ALSYMPCA trial was a Phase III, randomized (2:1), double-blind, placebo-controlled international study of Alpharadin plus best standard of care compared with placebo plus best standard of care in patients with symptomatic CRPC that has spread to the bone.
** Parker C, Heinrich D, O’Sullivan JM et al. Overall survival benefit of Alpharadin in the treatment of patients with symptomatic bone metastases in castration-resistant prostate cancer (CRPC): a Phase III randomized trial (ALSYMPCA). Presented at the 2011 European Multidisciplinary Cancer Congress. September 24, 2011
ALSYMPCA* Overall Survival**
Alpharadin – Strong Improvement of Skeletal-related Events in ALSYMPCA
• Bayer Investor Presentation • Meet Management • March 2012Page 61
In addition to OS benefit, Alpharadin improved important skeletal-related event (SRE) components being associated with a 64% improvement in median time to first SRE of 13.5 months vs. 8.4 months for placebo (HR=0.610, p=0.00046) SREs are associated with a poor prognosis in CRPC patients with bone
metastases, leading to pain, a decrease in quality of life and hospitalization Spinal cord compression can be devastating for patients as it can cause
paralysis, as well as bladder and bowel dysfunction
CRPC: Castration-resistant prostate cancerOS: Overall survival
SRE Components: Number of Patients and Time to First EventNo (%) of Patients Time to First Event (Alpharadin vs. Placebo)
Alpharadin(n=541)
Placebo(n=268)
P-value* HR (95%CI)
External beam radiotherapy
122 (23) 72 (27) 0.0038 0.65(0.48-0.87)
Spinal cord compression
17 (3) 16 (6) 0.016 0.44 (0.22-0.88)
Pathologic bone fracture
20 (4) 18 (7) 0.013 0.45(0.24-0.86)
Surgical intervention 9 (2) 5 (2) 0.69 0.80(0.27-2.4)
Alpharadin –Major Expected Upcoming Newsflow
• Bayer Investor Presentation • Meet Management • March 2012Page 62
Filing for treatment of bone metastases in castration-resistant prostate cancer (CRPC) targeted for mid 2012
Initiation of additional clinical studies targeted for 2H 2012
• Bayer Investor Presentation • Meet Management • March 2012Page 63
Pharma Pipeline –
Riociguat
Pulmonary Hypertension (PH) –A Devastating Disease
• Bayer Investor Presentation • Meet Management • March 2012Page 64
Mean pulmonary arterial pressure > 25 mm Hg at rest or > 30 mmHg with exercise (mean normal pressure ~15 mm Hg)
Breathlessness, fatigue, weakness, angina, syncope, abdominal distension
Symptoms at rest in advanced stages
PH is continuous high blood pressure in the pulmonary artery, a critical blood vessel which channels blood from the heart to the lungs for re-oxygenation
Patients ~ 700,000 patients diagnosed* with diseases related to /
including PH, thereof ~ 300,000 might be eligible for PH treatment
* Diagnoses estimated in 2009 in US, EU5, J
Definition of PH
Criteria
Clin. Symptoms
Patients
Riociguat – A New Mode of Action
• Bayer Investor Presentation • Meet Management • March 2012Page 65
Oral stimulator of soluble guanylatecyclase (sGC)
Acts independently of nitric oxide (NO)
Enhances the sensitivity of sGC to low levels of bioavailable NO
Increased cGMP levels lead to vasodilatation
Maintains the crucial balance between oxygen supply and blood flow, avoiding a drop of oxygen in the blood
Reduction of pulmonary vascular resistance and alleviation of disease symptoms
ConstrictedPressureFlow rate
RelaxedPressureFlow rate
sGC*Riociguat cGMP
NO
*native (intact)cGMP: cyclic Guanylate Monophosphate
Riociguat – Clinical Program
• Bayer Investor Presentation • Meet Management • March 2012Page 66
Next steps and options in other forms of Pulmonary Hypertension being evaluated
PH-LHD: PH owing to left heart disease
MilestonesPhase IIIPhase II
Pulmonary Arterial Hypertension (PAH)Fully recruited
Completion 2H 2012e
Fully recruited
Completion 2H 2012e
Facts
~ 460 patients (treatment-naïve or pre-treated) vs.placebo (PATENT-1); Efficacy study and long-term extension
~ 270 patients vs.placebo(CHEST-1); Efficacy study and long-term extension
Phase I
Chronic Thromboembolic Hypertension (CTEPH)
Study
Completion mid 2012e
~ 180 patients vs.placebowith left ventricular systolic dysfunction
PH-LHD
Riociguat – PATENT-1/2: Phase III Efficacy and Long-term Extension Trial in PAH
• Bayer Investor Presentation • Meet Management • March 2012Page 67
PAH: Pulmonary arterial hypertension
Primary outcome measure: change from baseline in 6 Minute Walking Distance (6 MWD) test after 12 weeks*
Secondary outcome measures: Change from baseline in Pulmonary Vascular Resistance (PVR), change from baseline in
WHO functional class, change from baseline in NT-pro BNP, change from baseline in Borg dyspnea, change from baseline in EQ-5D and LPH, time to clinical worsening
Safety**
*Secondary outcome in extension, ** primary outcome in extension; p.o.: per os - oral; TID: three times daily; NT-pro BNP: N-terminal pro brain natriuretic peptide; EQ-5D:
quality-of-life measures; LPH: Living with Pulmonary Hypertension Questionnaire
Riociguat – CHEST-1/2: Phase III Efficacy and Long-term Extension Trial in CTEPH
• Bayer Investor Presentation • Meet Management • March 2012Page 68
CTEPH: Chronic thromboembolic pulmonary hypertension
Primary outcome measure: change from baseline in 6 Minute Walking Distance (6 MWD) test after 16 weeks*
Secondary outcome measures: Change from baseline in Pulmonary Vascular Resistance (PVR), change from baseline in
WHO functional class, change from baseline in NT-pro BNP, change from baseline in Borg dyspnea, change from baseline in EQ-5D and LPH-Q, time to clinical worsening
Safety**
*Secondary outcome in extension, ** primary outcome in extension; p.o.: per os - oral; TID: three times daily; NT-pro BNP: N-terminal pro brain natriuretic peptide; EQ-5D:
quality-of-life measures; LPH: Living with Pulmonary Hypertension Questionnaire
Riociguat –Major Expected Upcoming Newsflow
• Bayer Investor Presentation • Meet Management • March 2012Page 69
Completion Phase III in PAH (PATENT-1) expected 2H 2012
Completion Phase III in CTEPH (CHEST-1) expected 2H 2012
PAH: Pulmonal arterial hypertensionCTEPH: Chronic Thromboembolic pulmonary hypertension
PH-LHD: PH owing to left heart disease
Completion Phase II in PH-LHD (LEPHT) expected 2H 2012
• Bayer Investor Presentation • Meet Management • March 2012Page 70
Pharma Pipeline –
Other Pipeline
Development Pipeline
• Bayer Investor Presentation • Meet Management • March 2012Page 71 Selection of major Pharma Pipeline Projects in clinicial Phase I to III
Phase I (14) Phase II (8) Phase III (21)Cancer BAY 80-6946(PI3K Inhibitor)
Heart FailureBAY 1067197(Part. Aden. A1 Agonist)
CHFBAY 94-8862(MR Antagonist)
Additional IndicationsNexavar
PAHRiociguat (sGC Stimulator)
VTE TreatmentXarelto
CancerBAY 1000394(CDK-Inhibitor)
Heart FailureBAY 86-8050(Vasopr. Rec. Antag.)
CancerBAY 86-9766(MEK-Inhibitor)
Lung InfectionCipro inhale
CTEPHRiociguat (sGC Stimulator)
NSCLCNexavar
CancerBAY 87-2243(HIF1 – Inhibitor)
Heart FailureBAY 1021189(sGC Stimulator)
Gram-negative PneumoniaAmikacin inhale
Submental fat removalATX-101
Thyroid CancerNexavar
CancerBAY 94-9343(Mesothelin-ADC)
EndometriosisBAY 1026153
Pulmonary HypertensionRiociguat (sGC Stimulator)
Bone Mets CRPCAlpharadin
Breast CancerNexavar
AnemiaBAY 85-3934(HIF-PH)
MCIBAY 94-9172(Florbetaben)
CancerAlpharadin
Skin and Lung InfectionsTedizolid
Adjuvant HCCNexavar
Sympt. Uterine FibroidsBAY 1002670 (S-PRAnt)
CancerRegorafenib
mCRCRegorafenib
Adjuvant RCCNexavar
Diagnostic ImagingPET-Tracer
GISTRegorafenib
Contraception FC Patch Low
HemophiliaBAY 94-9027(peg rFVIII)
Alzheimer PET ImagingBAY 94-9172(Florbetaben)
MRI LCM Gadovist
HemophiliaBAY 86-6150(rFVIIa)
Myopic CNVVEGF Trap-Eye
VV Atrophy Vaginorm
DMEVEGF Trap-Eye
ContraceptionLCS 16
CRVOVEGF Trap-Eye
New molecular entities(NME)
Life cycle management(LCM)
Status as of February 2012
Heart Health and Hematology at BHC –Driving Our Expertise
• Bayer Investor Presentation • Meet Management • March 2012Page 72
Anemia / HIF-PH
Hemophilia / peg. rFVIII (BAY 94-9027)
Hemophilia / rFVIIa (BAY 86-6150)
CHF / MR Antagonist (BAY 94-8862)
PH / Riociguat (sGC Stimulator)
VTE Treatment / Rivaroxaban
PAH / Riociguat (sGC Stimulator)
CTEPH / Riociguat (sGC Stimulator)
Phase IIIPhase IIPhase I
Riociguat – Phase III/Phase II A soluble guanylate cyclase (sGC) stimulator; in development for
the treatment of various forms of pulmonary hypertension Hematology: Start of pivotal study with longer-acting pegylated rFVIII planned for
2012 Start of combined phase II/III with rFVIIa planned for 2012
Additional novel approaches – Phase I/preclinical Focus on disease modification in additional cardiovascular diseases
Heart Failure / part. Adenosine A1 Agonist
Heart Failure / Vasopress. Rec. Antagonist
Heart Failure / sGC Stimulator
Oncology – Building A Sustainable Franchise In Fighting Cancer
• Bayer Investor Presentation • Meet Management • March 2012Page 73
Sorafenib (Nexavar) Several Phase III studies ongoing
MEK-Inhibitor Small molecule mitogen-activated ERK kinase (MEK) inhibitors for the
treatment of solid tumors Under evaluation in advanced cancer patients of different tumor types
as a single agent as well as in combination, for instance with Nexavar(Phase I/II) or in combination with PI3K-I (Phase I/II)
Solid portfolio of promising early-stage projects
Phase IIIPhase IIPhase ICancer / PI3K Inhibitor
Cancer / CDK Inhibitor
Cancer / HIF1 Inhibitor
Cancer / Mesothelin-ADC
Cancer / Regorafenib
Cancer / MEK-Inhibitor
Cancer / Alpharadin
Additional Indications / Sorafenib
NSCLC / Sorafenib
Thyroid Cancer / Sorafenib
Breast Cancer / Sorafenib
Adjuvant RCC and HCC / Sorafenib
CRC / Regorafenib
GIST / Regorafenib
Bone Mets CRPC / Alpharadin
CDK: Cyclin dependent kinase; CRC: Colorectal cancer; HCC: Hepatocellular carcinoma; CRPC: Castration-resistant prostate cancer; NSCLC: Non-small cell lung cancer ; PI3K:Phospharidylinositol-3 kinase; MEK:Inhibitor of MEK proteinkinase ; GIST: Gastrointestinal stromal tumor; RCC: Renal cell carcinoma
Women’s Health – Building On Our Leading Position
• Bayer Investor Presentation • Meet Management • March 2012Page 74
Further expanding the world-leading position in Women‘s Healthcare
LCS: New low dose levonorgestrel releasing intrauterine system (IUS); program for up to 5 years of contraception in phase III
FC Patch Low: Once a week fertility control patch. Smallest, thinnest and only transparent patch for women who prefer non-daily contraception
Vaginorm: Treatment of vulvo-vaginal atrophy, intra-vaginal application of dehydroepiandrosterone (DHEA)
Phase IIIPhase ISympt. Uterine Fibroids / S-PRAnt Contraception / LCS-16
Contraception / FC Patch Low
VV Atrophy / VaginormEndometriosis / BAY 1026153
LCS: Levonorgestrel contraceptive system
Dermatology – Progressing in Aesthetic Medicine
• Bayer Investor Presentation • Meet Management • March 2012Page 75
Long-standing position in Rx-Dermatology
ATX-101 (First-in-class injectable adipolytic agent) In-licensed from Kythera Currently in development for the treatment of submental
fat (double chin) Phase III completion expected mid 2012
Phase IIISubmental fat removal / ATX-101
Expected Major Pipeline Newsflow 2012
• Bayer Investor Presentation • Meet Management • March 2012Page 76
Pipeline Project Newsflow Timeframe
Xarelto Data from Einstein PE Data at ACC, March 26, 2012 Chicago
Approval for ACS Secondary prevention of ACS – approval expected summer 2012 (US); end 2012 (EU)
VEGF Trap-Eye Launch EU (wet AMD) End 2012e
Filing CRVO 2H 2012e
Alpharadin Filing CRPC Mid 2012
Regorafenib Filing mCRC 1H 2012e
Data from phase III GIST trial (GRID) 1H 2012e
Riociguat Phase III PAH and CETPH Completion 2H 2012e
Nexavar Phase III non-small cell lung cancer(NSCLC) (MISSION)
Completion mid 2012e
Phase III thyroid cancer (DECISION) Completion mid 2012e
Phase III hepatocellular carcinoma (HCC) ±Tarceva (SEARCH)
Completion 1H 2012e
Phase III HCC adjuvant (STORM) Completion end 2012e / early 2013
Peg rFVIII (BAY 94-9027) Start pivotal study 2012e
rFVIIa (BAY 86-6150) Start combined phase II/III 2012e
Note: completion refers to primary completion estimated
Investor Handout – Meet ManagementBayer CropScience
March 2012 – Leverkusen
Fiscal 2011 –A Year of Significant Progress
Page 2
Innovation Refocused R&D investments
Strong track-record of innovations in 2011-2012
Strategy
Performance & Productivity
2011: 9% organic growth and +28% adjusted EBITDA*
€265m savings on target by 2012
Outlook Market conditions expected to remain favorable in 2012
Positive outlook for our business
• Bayer Investor Presentation • Meet Management • March 2012
Developed and communicated new business strategy
Executing aggressively; accelerated licensing; selective M&A
* before special items
Executing Our Strategic Roadmap
• Bayer Investor Presentation • Meet Management • March 2012Page 3
Reinvent customer-centricity along the entire value chain
Rebalance andrefocus innovation
Rejuvenate the core Crop Protection business
Raise overall R&D spend to more than €850 million by 2015
Increase BioScienceR&D to be level with AgChem spend
Intensify interdisciplinary work at chemistry / biology interface
Better understand andserve interconnectedneeds of customers, from seed to shelf
Foster food chainpartnerships
Streamline portfolio and focus on core crops, brands and countries
Optimize our supply chain model and asset footprint
Deliver savings of €265 million through 2012
Extend BioSciencefootprint
Strengthen our position in established crops
Develop leading positions in 3 of 4 broad acre crops
Fiscal 2011 –Key Financials CropScience
• Bayer Investor Presentation • Meet Management • March 2012Page 4* before special items
Sales 6,830 7,255 +6.2
EBIT 261 562 +115.3
EBIT adjusted* 787 1,168 +48.4
EBITDA adjusted* 1,293 1,654 +27.9
Gross cash flow 546 900 +64.8
Net cash flow 1,399 691 -50.6
CapEx 366 315 -13.9
Free operating cash flow 1,097 411 -62.5
R&D expenses 722 723 +0.1
Capital invested (average) 9,189 8,772 -4.5
CFRoI 5.9% 10.3% ●
In € million FY 2010 FY 2011 ∆%
Fiscal 2011 – Sales Increase and Strong Earnings Growth
Crop Protection /BioScience+7% (+10%)
EnvironmentalScience
-4% (-2%)36%
CropScience €7,255m; +6% (+9%)
6,629626
Price-1%
Volume+10%
Fx-2%
Portfolio0%
1,293
1,654 +28%
2010 2011 2010 2011
787
1,168
AdjustedEBITDA*
AdjustedEBIT*
+48%
• Bayer Investor Presentation • Meet Management • March 2012Page 5
Sales EarningsSales in € million; ∆% y-o-y, () Fx & portfolio adj.
* before special items
• Bayer Investor Presentation • Meet Management • March 2012Page 6
35%
17%25%
23%
Asia/Pacific
Sales: €1,244 (+3% Fx adj.) Main Drivers: Fungicides moved ahead strongly; insecticides impacted by portfolio streamlining; seed treatment expansion; Japan flat
Europe
Sales: €2,505 (+6% Fx adj.)Main Drivers: Strong growth in Eastern Europe; seed treatment and herbicide gains; successful launch of Xpro fungicide
North America
Sales: €1,703m (+14% Fx adj.)Main Drivers: Fungicides gained from launch of Stratego YLD; new corn herbicides; seed treatment benefited from Poncho/Votivo; BioScience expansion
LatAm/Africa/Middle East
Sales: €1,803m (+11% Fx adj.)Main Drivers: Insecticides rose from Belt and new products; growth for cotton and corn herbicides; new Fox fungicide; BioScience gains
Fiscal 2011 – Growth in all Regions, Mainly Driven by New Products
Herbicides
Fungicides
Seed Treatment
BioScience
Innovations Driving Growth in 2011
• Bayer Investor Presentation • Meet Management • March 2012Page 7
Strong growth in Europe and in the Americas; new corn herbicides
Market share gains in the US;New Xpro above €100m sales
Impacted by cessation of marketing of WHO Class I products (about -€100m)
Double-digit growth in all regions; Launch of Poncho/Votivo in the US
Lower Specialty Actives sales partly offset by increased US business
Double-digit growth in all established crops
EnvironmentalScience
2,079+9%
1,709+12%
1,2900%
731+24%
626-2%
820+19%
Insecticides
Sales in € million; ∆% y-o-y Fx & portfolio adj.
FY 2010 Nominal growth/decline FY 2011
• Bayer Investor Presentation • Meet Management • March 2012Page 8
2010 2011
Asia / Pacific
LatAm/Africa/Middle East
Europe
NorthAmerica
2011 strong performance of Seed Treatment portfolio in all regions
Successful introduction of Poncho/Votivo in corn in the US, launch in soybeans and cotton for the 2012 season
Seed treatment application centers opened in Argentina, Brazil and China
New fungicidal seed treatmentEmesto/EverGol ready for launch in Europe in 2012/2013
On track to develop remarkable seed treatment segment in Asia/Pacific
609
731 (+24%)
Seed Treatment Back on Growth PathSales in € million; ∆% y-o-y Fx adj.
2011 - Significant Margin Increase
• Bayer Investor Presentation • Meet Management • March 2012Page 9
Commitment to deliver on efficiency and restructuring program
Adjusted EBITDA* margin rose 380 bps to 22.8% in 2011 Earnings growth driven by significant volume increases and the resulting
marked improvement in capacity utilization Efficient production and strict cost management enabled us to hold
COGS down R&D expenses steady, selling expenses rose at a slower rate than sales €38m one-time gains from Crop Protection divestments (2010: €58 million) Efficiency program on track
* before special items
Optimizing our Supply Chain Model and Asset Footprint
Efficient global production network and operating model create high flexibility and less capital employment
Innovative chemistry and process technology drive cost leadership, as well as safety and sustainability excellence
Fully integrated supply chain
2011: COGS/net sales ratio down by approx. 4 pp despite higher raw material prices
• Bayer Investor Presentation • Meet Management • March 2012Page 10
First registration or authorization received; launch planned for 2012/2013
New canola varieties with improved agronomic traits
Cereal fungicide
Seed treatment against nematodes
Herbicide for perennial crops
Fungicide for corn and soybeans
New cotton varieties
Proprietary glyphosate-tolerance
Combined insect-resistance andherbicide-tolerance
Numerous new vegetable varieties
Herbicide for IVM and turf segmentFungicide for fruits & vegetables
Conventional oilseed rape seed for Europe
• Bayer Investor Presentation • Meet Management • March 2012Page 11
Market launch
New soybean varieties
Seed treatment fungicide
Strong Track-record of Innovation -Highlights 2011 - 2012
IVM: Integrated vegetation management
Xpro - New Cereal Fungicide with Yield-Boosting Effect
Pyrazole fungicide from a new generation of SDHI* for foliar use in cereals
Combined formulation of Bixafen and Prothioconazole leading to superior "all-in-one" cereal fungicide
Excellent control of key cereal diseases including strobilurin-resistant Septoria
Boosting yield through long-lasting disease control and positive impact on plant physiology
Achieved above €100m sales in its first year of launch (2011)
Global peak sales potential of more than €300m
• Bayer Investor Presentation • Meet Management • March 2012Page 12* SDHI: Succinate dehydrogenase inhibitor
Luna - Outstanding Fungicide for Managing Problematic Crop Diseases
New SDHI* fungicide for use in foliar application and seed treatment on more than 70 horticultural and industrial crops
Control for a broad range of problematic diseases including Alternaria blight, scab, powdery mildew and white mold
Benefits for the food chain industry through better storability and longer shelf-life of harvested produce
US registration received and available for the 2012 planting season;further registrations expected in Europe and in Canada in the coming months
Global peak sales potential of more than €250m
• Bayer Investor Presentation • Meet Management • March 2012Page 13* SDHI: Succinate dehydrogenase inhibitor
Sales in €bn from launches 2011-2015e
€2bn Peak Sales Potential withCrop Protection Pipeline 2011-2015
2011 Peak salespotential
Launches 2011–2015e*
Insecticide
Fungicide
Fungicide
Herbicide
SeedTreatment
Herbicide
Seed Treatment
~ 0.2
~ 2.0
• Bayer Investor Presentation • Meet Management • March 2012Page 14* subject to regulatory approval
We Are The Company to Offer a Sustainable Alternative to Glyphosate
Weed resistance increasingly impacting crop production; spreading from US to Canada
LibertyLink is currently the only non-selective solution to glyphosate resistant weeds
Herbicide innovation is urgently required
In-line with our view on sustainable agriculture, we are committed to develop new and more sustainable weed management solutions Innovation with new mode of action, HPPD herbicide tolerance, in soybeans and cotton
Developing of new herbicide tolerance traits in soybeans in collaboration with other companies
Return of older chemistry - 2,4D and Dicamba - not sufficient or sustainable options in future herbicide tolerance landscape
Highly effective pre-emergent and selective herbicide portfolio recently launched
• Bayer Investor Presentation • Meet Management • March 2012Page 15
Bayer CropSciencesustains the "Respect the Rotation" initiative to overcome weed management challenges
HPPD: Hydroxyphenyl-pyruvate dioxygenase
BioScience – Double-digit Growth in all Established Crops
273 299
168227
152
17934
40
2010 2011
Other
Rice (+29%)
Cotton (+23%)
Oilseeds (+26%)
Vegetables (+12%)
• Bayer Investor Presentation • Meet Management • March 2012Page 16
687
820 (+19%)
Highlights
InVigor oilseeds outperformed the market
Important launches in cotton Proprietary glyphosate herbicide
tolerance technology GlyTol in the US
Double herbicide tolerant cotton (LibertyLink&GlyTol)
Market share gains in vegetable seedsbusiness
About 70 new vegetable seed varietieslaunched across the whole portfolio
Sales in € million; ∆% y-o-y, () Fx & portfolio adj.
Extend BioScience Footprint In the coming years we expect to grow organically at a similar
rate as the last 2–3 years Grow our core brands & assets
Leverage – and strengthen – our robust innovation pipeline, doubling annual R&D investment by 2015 (2010: €200 million)
Fully exploit our pipeline by driving regional expansion, new market entries and game-changing technology launches
Extend our footprint in new crops & markets,expand seed and trait research activities in wheat and soybean
Deliver customer-focused innovations by Nunhemsin strategic vegetable crops driven by molecular breeding excellence and unique, crop-based marketing
• Bayer Investor Presentation • Meet Management • March 2012Page 17
Significant Investments in BioSciencein 2011
• Bayer Investor Presentation • Meet Management • March 2012Page 18
Bayer CropScience acquires access to wheat germplasm from leading Romanian agricultural research institution*** Bayer CropScience and DuPont announce canola trait licensing agreement *** Bayer CropScience
subsidiary HILD opens new seed technology facility for vegetables and herbs *** Bayer CropScience to acquireUS-based Hornbeck Seed Company *** Alternative mode of action for herbicide tolerance now in co-development by Bayer CropScience and Syngenta *** Bayer CropScience invests USD 20 million in new BioScience
greenhouse at North American headquarters *** Bayer CropScience strengthens seed platform inEurope through acquisition of the Raps GbR oilseed rape business *** Bayer CropSciencesets up European Wheat Breeding Center *** Bayer CropScience opens Seed Analytics Laboratory in Singapore ***
Targeted acquisitions to strengthen core crops
Hornbeck Seed - to invest in southern US soybean seed market
Raps GbR - to strengthen oilseed rape business seed platform in Europe
Wheat breeding stations set-up in Europe and US
3 agreements with wheat players to broaden access to germplasm
Several research collaborations with leading technology providers
R&D investment increased by ~20%
Robust Broad Acre Seeds &Traits Development Pipeline 2012-2016*
*subject to regulatory approval / Pipeline includes both GM and Non-GM projects
2012 2013 2014 2015 2016
• Bayer Investor Presentation • Meet Management • March 2012Page 19
TwinLink + GlyTol Cotton
US
Roundup Ready HybridCanola
AUS
Canola Yield Increase
NA
Insect Resistant Hybrid Rice
Asia
LibertyLink + Roundup Ready Hybrid Canola
NA
Bayer Oilseed Rape Seed
EU
Bayer Soybean Seed
Global
GlyTol + HPPD Tolerant Soybeans
US
SubmergenceTolerant Hybrid Rice
Asia
Salinity Tolerant Hybrid Rice
Asia
Improved Canola Oil Profile
NA
Roundup Ready 2 Hybrid Canola
AUS
Dual Herb. Tol. + Novel Insect Tol. Cotton
US
Disease Resis-tant + Salinity Tol. Hybrid Rice
Asia
Disease Res. + SubmergenceTol. Hybrid Rice
Asia
Bayer WheatSeed
EU
Pipeline Highlights
Regional expansion ● Technology excellence ● Focus crop entry
Insect + Disease Res. Hybrid Rice
Asia
Changing the Game in Cotton –TwinLink + GlyTol in 2013
• Bayer Investor Presentation • Meet Management • March 2012Page 20* Pending regulatory approvals
Bayer launched first dual herbicide - dual insecticide product 2–3 years ahead of competition; TwinLink + GlyTol will provide another choice:
Two-genes for effective Lepidopteran control
Built-in tolerance to glufosinate-ammonium and glyphosate for broad-spectrum weed control
Powerful new insect and weed technology in high-yielding FiberMax & Stoneville varieties
New choices for efficient and effective crop management and increased productivity
A critical tool in the fight against weed resistance
Anticipated launch 2013 in United States; further launches planned* in Latin America and India
Build up a Global Wheat Seed Business
Broad crop knowledge and customer insight based on leading position in crop protection with strong brands and a broad presence
Invest significant resources into R&D of new wheat varieties and traits
Initial focus on productivity,stress tolerance, nutrient uptake
Establish a broad germplasm pool
Global breeding network
Collaborations with leadinginstitutions for seeds and traits
Page 21 • Bayer Investor Presentation • Meet Management • March 2012
Canada: Spring Wheat
Northern US: Spring Wheat
Nebraska: Winter Wheat
France: Winter Wheat
Germany: Winter Wheat
Ukraine: Winter and Spring Wheat
Global wheat germplasm / breeding infrastructure
Australia: Spring Wheat
1st phase : North America / Europe / Australia 2nd phase : Latin America / Asia
First new wheat varieties expected to be available by 2015 in Europe
Building a Proprietary Soybean Seed Business
2009 launch of LibertyLink herbicide tolerance technology in soybeans, licensed by more than 100 US soybean seed players
Acquisition of Hornbeck Seed Company
Supplying soybean varieties in the southern US-market
In-house soybean breeding program
Broaden market access with launch of Bayer soybean seed in 2012
Assembling a broad soybean germplasm pool throughbreeding infrastructure in North and South America
Industry-leading soybean trait pipeline
Multi-gene herbicide tolerance for sustainable, effective weedcontrol and resistance management
Game-changing Soybean Cyst Nematode (SCN) controldelivering higher yields
• Bayer Investor Presentation • Meet Management • March 2012Page 22
PositiveOutlook
• Bayer Investor Presentation • Meet Management • March 2012Page 23
Positive Outlook
We expect market conditions for our CropScience business to remain favorable in 2012
We predict above-market growth and anticipate that currency- and portfolio-adjusted sales and EBITDA before special items will advance by mid-single-digit percentages
• Bayer Investor Presentation • Meet Management • March 2012Page 24
Some more figures –
Appendix
• Bayer Investor Presentation • Meet Management • March 2012Page 25
• Bayer Investor Presentation • Meet Management • March 2012
Sales 2011: €7,255m
18%
23%
10%11%
9%
29%
Bayer CropScience –Balanced Portfolio Position
Insecticides€1,290m1-2Market position:
Fungicides€1,709m3Market position:
Seed Treatment€731m1-2Market position:
Herbicides €2,079m2Market position:
Env. Science €626m1Market position:
BioScience €820m6Market position:
Page 26preliminary estimates
Q4 2011 –Key Financials CropScience
• Bayer Investor Presentation • Meet Management • March 2012Page 27* before special items
Sales 1,653 1,676 +1.4
EBIT 118 47 -60.2
EBIT adjusted* 144 145 +0.7
EBITDA adjusted* 270 273 +1.1
Gross cash flow 188 180 -4.3
Net cash flow 410 (327) •
CapEx 158 126 -20.3
Free operating cash flow 289 (446) •
R&D expenses 197 202 +2.5
In € million Q4 2010 Q4 2011 ∆%
Emerging Economies
25%
CropScience Sales
CropScience €7,255m; +6% (+9%)Latin
AmericaEastern Europe
Africa & Middle East
Emerging Asia³
~800
+5%
~1,500
+13%
~500
+21%
~300
+6%
¹ Emerging economies include: Latin America, Asia w/o Japan, Australia,New Zealand, Africa and Middle East incl. Turkey, Eastern Europe
² Others = Japan, Australia, New Zealand, Canada³ Emerging Asia = Asia without Japan, Australia, New Zealand
16%
USA+14%
28%
43%
13%
EmergingEconomies¹+11%
Western Europe +2%
Others²+7%
2011 - Business Momentum in Emerging Markets Maintained
• Bayer Investor Presentation • Meet Management • March 2012Page 28
Sales in € million, ∆% yoy Fx adjusted
Herbicides
Fungicides
Seed Treatment
BioScience
Q4 2011 – Strong Growth of Seed Treatment and BioScience
• Bayer Investor Presentation • Meet Management • March 2012Page 29
Growth mainly driven by EuropeDecline in Asia Pacific
Successful Fox launch in Brazil Western Europe business weaker
Impacted by cessation of marketing of WHO Class I products
Business expansion in all regionsStrong performance of Poncho/Votivo
Lower specialty actives sales in EuropeBusiness increase in the US
Double-digit growth in North America, Asia/Pacific and Latin America
EnvironmentalScience
444+3%
397+4%
350-7%
180+21%
148-6%
157+24%
Insecticides
Sales in € million; ∆% y-o-y Fx & portfolio adj.
Q4 2010 Nominal growth/decline Q4 2011
• Bayer Investor Presentation • Meet Management • March 2012
Cereals, Vegetables and FruitsA Major Part of Our Portfolio
Cereals
Vegetables/Potatoes
Fruits/Grapes
Cotton
Soy
Corn
Oilseeds
Rice
Sugar Crops
Page 30* by major crop groups excluding industrial business and non-agricultural solutions
Bayer CropScience Sales 2011*
Other
Page 30
Global Ag Market Environment Expected to Remain Favorable in 2012
Crop commodity prices to remain relatively high, despite volatility
Farmers’ overall economic prospects should therefore remain favorable, prompting further investment in seeds and crop protection products
Latin America expected to post the strongest growth in 2012 due to benefit mainly from increase in soybean cultivation
In Asia/Pacific, agricultural production anticipated to rise, though at slower rates than in Latin America. Expansion will be driven by specialty crops such as fruit and vegetables, as well as by rice and cereals
Lower growth expected in industrialized regions of the northern hemisphere
• Bayer Investor Presentation • Meet Management • March 2012Page 31
Crop Commodity Prices Volatile, But Still at Attractive Levels
• Bayer Investor Presentation • Meet Management • March 2012Page 32Source: Reuters
Investor Handout – Meet ManagementBayer MaterialScience
March, 2012 – Leverkusen
MaterialScience –Leading Positions in All Segments
• Bayer Investor Presentation • Meet Management • March 2012 Page 2
€10,832m
Polyurethanes€5,435m #1-2; approx. 22-24% market share*
50%6%
27%
17%
Sales in € million
Polycarbonates€2,893m #1; approx. 27% market share
Coatings, Adhesives, Specialties€1,845m #1; >40% market share**
Industrial Operations €659m
*depending on segment** arom. & aliph. isocyanates
Sales Split by Segment 2011
MaterialScience –Sales By Key Customer Industries
• Bayer Investor Presentation • Meet Management • March 2012 Page 3
Others(sports, leisure, footwear packaging, medical, etc.)
Furniture / Wood
AutomotiveChemicals
Electro/Electronics
Construction
16%
28%
19%
20%
8%21%
16%
Bayer MaterialScience sales by industry in 2011
• Bayer Investor Presentation • Meet Management • March 2012 Page 4
2011 – FurtherSales Growth, Lower Earnings
Fiscal 2011 –Key Financials MaterialScience
• Bayer Investor Presentation • Meet Management • March 2012 Page 5* before special items
Sales 10,154 10,832 +6.7
EBIT 780 633 -18.8
EBIT adjusted* 780 589 -24.5
EBITDA adjusted* 1,356 1,171 -13.6
Gross cash flow 1,058 939 -11.2
Net cash flow 763 775 +1.6
CapEx 505 574 +13.7
Free operating cash flow 265 210 -20.8
R&D expenses 231 237 +2.6
Capital invested (average) 9,589 10,157 +5.9
CFRoI 11.0% 9.2% ●
In € million FY 2010 FY 2011 ∆%
Fiscal 2011 –Operating Performance
• Bayer Investor Presentation • Meet Management • March 2012 Page 6
25%
50%
27%
Polycarbonates +4% (+6%)
Polyurethanes+8% (+10%)
2010 2011
AdjustedEBITDA*
1,356
1,171
* before special items
2010 2011
AdjustedEBIT*
780
589
-14%
-24%
Sales Earnings
17%6%
Sales in € million; ∆% y-o-y, () Fx & portfolio adj.
Coatings, Adhesives, Specialties +3% (+4%)
IndustrialOperations
+20% (+22%)
Price+7.2%
Volume+1.0%
Fx-1.7%
Portfolio+0.2%
MaterialScience €10,832m; +7% (+8%)
Fiscal 2011 –Regional Sales Development
• Bayer Investor Presentation • Meet Management • March 2012 Page 7
Emerging Economies
25%
FY2011 MaterialScience Sales
MaterialScience €10,832m; +8%Latin
AmericaEastern Europe
Africa & Middle East
Emerging Asia³
~2,530
+2%
~810
+13%
~630
+18%
~605
+12%
¹ Emerging economies include: Latin America, Asia w/o Japan, Australia,New Zealand, Africa and Middle East incl. Turkey, Eastern Europe
² Others = Japan, Australia, New Zealand, Canada³ Emerging Asia = Asia without Japan, Australia, New Zealand
1%
USA+10%
36%
Western Europe +11%
42%
EmergingEconomies¹+7%
4%Others²-1%
Sales in € million; ∆% y-o-y Fx adjusted
18%
35%
42%
5%
Fiscal 2011 –Higher Input Prices Not Fully Compensated
• Bayer Investor Presentation • Meet Management • March 2012 Page 8
11%margin
13%margin
Adjusted EBITDA* in € million
Actual FY‘10 Actual FY‘11Volume Price OthersSavingsRaw material/energy prices
1,171 -14% y-o-y
1,356
- Inventory reduction- Facility & asset
management costs- Start up costs for
new TDI train- Higher fixed costs
* before special items
Fiscal 2011 –Impact of Raw Materials
• Bayer Investor Presentation • Meet Management • March 2012 Page 9
Petrochemical feedstock prices on a high level and very volatile in the past 12 months
Total raw material costs at €5.1bn in 2011, vs. €4.3bn in 2010
Energy costs in 2011 unchanged from 2010 at €600m
Raw material price increase negatively influenced EBITDA by €780m not fully compensated by price increases
Raw Material Cost Split 2011*
Exposure by valueBenzene (incl. phenol, aniline, styrene)PropyleneTolueneOther petrochemical feedstockOthers
* Material Science raw material basket used as proxy, coversapprox. 80% of total purchased raw materials
Fiscal 2012 –Business Outlook
• Bayer Investor Presentation • Meet Management • March 2012 Page 10
Q1´2012 outlook Fx- and portfolio- adjusted sales roughly in
line with Q4´2011 Adjusted EBITDA* expected well above the
level of Q4´2011, but below the respective prior year level
FY´2012 outlook In light of the weaker development in 2011,
we currently forecast Fx- and portfolio-adjusted sales and adjusted EBITDA* to remain level with the prior year
Should the market environment develop more favorably than anticipated, we expect sales and earnings to increase accordingly
* before special items
Positive Long-term Trend To Continue
• Bayer Investor Presentation • Meet Management • March 2012 Page 11
100 %
1992 2011
Business sales growth: 1992-2011 CAGR: +8%
Global GDP growth: 1992-2010 CAGR: +5%
Major products performing above GDP growth
Historically, long-term growth trend intact across the business cycles
Growth trend expected to continue as global megatrends need sustainable solutions
Business DevelopmentMajor products sales growth (polyurethanes and polycarbonates)
Global GDP index (nominal)Index 1992 = 100
• Bayer Investor Presentation • Meet Management • March 2012 Page 12
On Global
Megatrends
Capitalize
Capitalize on Global Megatrends and Spur Future Growth
• Bayer Investor Presentation • Meet Management • March 2012 Page 13*Source: UNEP, Sustainable Buildings and Climate Initiative
**Source: World Resources Institute*** WHO recommends less than 30 dB(A); dB(A): A-weighted decibel quality
About 30% of the EU population are exposed to road traffic noise in excess of 55 dB(A) during night time***
14% of greenhouse gases worldwide origin from the transport of goods, making it the third largest emission source**
Buildings are responsible for more than 40% of globalenergy use*
Urbanization – Increasing Energy Consumption
Globalization – Increase of Greenhouse-gas Emissions
Mobility – Increasing Noise Pollution
Examples of Bayer’s Materials for Zero-emission Buildings
• Bayer Investor Presentation • Meet Management • March 2012 Page 14
Polyurethane-based Insulation for Residential & Commercial Buildings
• Bayer Investor Presentation • Meet Management • March 2012 Page 15
PUR Isoboards for Thermal Insulation
Growth drivers Directive 2010/31/EU of the
European Parliament: From 2020 on, new buildings have to be constructed as “nearly zero-energy buildings”
IECC* in the US: From 2012 on new and renovated homes and commercial buildings have to use 30% less energy than those build to current standards
1 kg polyurethane saves 360 to 755 kg CO2 emissions**
PUR in construction industry in 2011: approx. €4.8bn, estimated average growth rate of ~8% p.a.
*International Energy Conservation Code **Additional insulation. Savings over entire product life-cycle of 50 years, including production and end-of-life stages
PUR: polyurethane
For buildings under construction Applicable insulation for walls, roofs and floors Advantages: highest thermal insulating capacity
relative to wall thickness, moisture resistant, easy to apply, excellent long-term behavior
PUR Metal Sandwich Panels Metal – rigid PUR foam sandwich panels are
prefabricated and mainly applied for industrial and commercial buildings
Lightweight panels allow easy handling and fast site assembly
High energy efficiency for cold and freezer storage
Polycarbonate Sheets for Heat Management in Buildings
• Bayer Investor Presentation • Meet Management • March 2012 Page 16
Combined light and heat management to reduce energy requirements
Significant reduction of CO2 emissions with energy-saving multi-wall sheets
Integration of solar energy panels for renewable energy solutions
Hail-impact resistance as well as good weather stability
Several advantages versus glass: Design freedom, safety, weight
Growing demand for non-electrical indoor climate control
Translucency levels of 65-85%, ensure the maximum amount of daylight can flood into buildings while infrared radiation is absorbed
Makrolon® meets international fire protection requirements (not self-igniting, does not drip flaming particles and does not allow fire to spread)
Global market size 2011 approx. 45 kt, estimated average growth rate of ~10% p.a.
Polycarbonate Multi-Wall Sheets
Growth drivers
Polyurethane-based Insulation Along the Cold Chain
• Bayer Investor Presentation • Meet Management • March 2012 Page 17
For e.g. refrigerated trucks, reefer container, portable coolers
PUR combines high mechanical strength, high insulating capacity and low weight
Transportation
Growth drivers A 10 cm insulating layer can
keep food cool for up to five days without electricity – even at external temperatures of over 40 degrees Celsius
Increasing demand for trans-porting temperature sensitive goods
Increasing standard of living triggers continuously growing demand for appliances
PUR along the cold chain 2011: approx. €3bn, estimated average growth rate of ~6% p.a.
Refrigerators Replacing all old refrigerators with A++
appliances could cut annual CO2 emissions in the EU by 22 million metric tons
Insulation made out of polyurethanes helped reduce energy consumption of refrigerators by 65% from 1950-2005
PUR: polyurethane
Examples of Bayer’s Materials for Energy Efficient Cars
• Bayer Investor Presentation • Meet Management • March 2012 Page 18
Load floor out ofpolyurethanes
Polycarbonate tailgate
Roof elements out of polycarbonate and polyurethanes
Seats out of polyurethanes
Instrument panels out of polycarbonate and polyurethanes
Colored polycarbonate parts for the body
Polycarbonate for flame resistant battery housings
Polyurethanes, coatings and adhesives for the body shell
Housings for chargingstations out of polycarbonate
MaterialScience‘s Solutions for Saving Weight
14
Development of material share in %*
27
5949
32
19
Polymers Steel/MetalOthers
* Based on an average automotive weight of 1,300 kg
Increased Energy Efficiency in Cars Through Polyurethanes
• Bayer Investor Presentation • Meet Management • March 2012 Page 19
Growth drivers
10% less weight reduces the fuel consumption of an average car by around 5%
Polyurethane offers versatile opportunities for lightweight car design
77m light vehicles* produced globally in 2011, estimated average growth rate of 5-6% p.a.
Polyurethanes Polyurethanes are used for interior and
exterior applications like seating, instrument panels and bumpers
High noise-absorption qualities (lower acoustic level inside the car)
Bayflex® RIM Light Weight, a new material for bodywork parts reduces the weight of the parts by 20 to 30%** while retaining the mechanical properties
*includes cars and light commercial vehicles up to a weight of 6t** compared with conventional polyurethane solutions
PUR: polyurethane
Increased Energy Efficiency in Cars Through Polycarbonates
• Bayer Investor Presentation • Meet Management • March 2012 Page 20
Growth drivers
Polycarbonates Heat stability and optical quality enable new
LED-based lamp lighting systems Battery housings made from flame-retardant
polycarbonate blends will protect batteries used in future cars with hybrid engines
Colored car body parts like roofs, spoilers or pillar covers from polycarbonate blends reduce weight
Automotive glazing from polycarbonate combines high weight saving potential with outstanding thermal insulation
Broad global political initiatives are promoting e-mobility
Increasing need for electrical devices requires flame retardancy of plastics
Polycarbonate glazing offers a weight advantage of 30-50% compared to real glass
77m light vehicles* produced globally in 2011, estimated average growth rate of 5-6% p.a.
*includes cars and light commercial vehicles up to a weight of 6t
Noise Reduction in the Transportation Sector
• Bayer Investor Presentation • Meet Management • March 2012 Page 21
Durflex® track system stabilizes ballast stones with polyurethane foam
Creates a durable track system with long-term elasticity
Combining the strengths of ballast track (elasticity & dampening effect) with strengths of slab track (durability)
Improving the economics of track operations Reduced maintenance costs Increasing availability of the tracks
Polyurethane Noise absorption of up to
3dB(A) Reduction of vibrations by
approx. 40% 1.37 million km rail network
worldwide Addresses especially highly
frequented high-speed and heavy cargo lines
Growth drivers
Noise Reduction in the Transportation Sector
• Bayer Investor Presentation • Meet Management • March 2012 Page 22
Governmental guidelines increasingly require noise reduction
Makrolon® Silent Sound reduces noise pollution up to 34dB(A)
Certified according to DIN EN 1793-2 (Noise protection measures on streets - test procedure for the determination of acoustic properties)
Wall-thickness of 18 mm with a weight of only ~22 kg/m²
Growth drivers
Polycarbonates Transparent sound walls more and more
preferred in urban environments Advantages of being transparent, light weight,
vandalism proof, flame retardant and ageing stabile
Light weight noise protection is inevitable on bridges
Used on building sites without major machine expenditure
100% recyclable
• Bayer Investor Presentation • Meet Management • March 2012 Page 23
Invest toImprove & Grow
World Leading Positions in Markets with Positive Long-term Demand Growth
• Bayer Investor Presentation • Meet Management • March 2012 Page 24
4,700 ktMarket capacities 2011 (name plate)
~2%Expected market capacity growth 2012
6-7%Expected average long-term demand growth p.a. (by volume)*
~27%
#1
PCS
Bayer share in business 2011 (by volume)*
Market position 2011
5,700 kt
~3-4%
6-7%
~22-23%
#1
MDI
2,200 kt
~9%
4-5%
~23-24%
#1-2
TDI
*internal estimates MDI: methyl diphenylene diisocyanate, TDI: toluene diisocyanate PCS: polycarbonate
Cash Generation in Excess of Own Investment Need, A Real Success Story
• Bayer Investor Presentation • Meet Management • March 2012 Page 25
CapEx (cash-relevant)
Net Cash Flow
Free Operating Cash Flow~€ 3.5bn FOCF in 10 years
2002 and 2003 as reported in 2004 excluding acquisitions or divestments
902
464
332
715 690* 870*
649
206 166
673
277
592
1,1131,108 1,388498 1,1471,281 110
672
782
345
504
849
265
498
763
210
565
775
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
In € million
Sustain Leading Positions in Established Regions, Grow in Asia
• Bayer Investor Presentation • Meet Management • March 2012 Page 26
Planned Capital Expenditures (PPE* only)
2011 2012e 2013e 2014e
€533m ~€520m
~€770m~€690m
CapEx timeline adjusted to invest in-line with growing market demand
Investments focused on two elements: Further improve cost efficiency
to sustain leading positions Grow in developing markets
Major projects include: Germany: Focus on improving
cost efficiency to sustain leadership positions
China: Focus on expansion to capture further growth potential
* Property, plant & equipment
Build on European Market Leadership WithFurther Investments
• Bayer Investor Presentation • Meet Management • March 2012 Page 27
€700m in Capital Expenditures Planned in Germany
Investments focused on meeting growing local demand
New facilities use innovative process technologies for more efficient production Construction of a new multipurpose plant
for HDI and IPDI until 2013 Construction of a new 300kt/year TDI
plant* until 2014 Expansion of MDI capacity by 220kt/year
(timing t.b.d.) Expansion of PCS capacity by
100kt/year(timing t.b.d.) Chlorine production unit with new oxygen
depolarized cathode technology
* Construction of a new 300kt/year TDI facility replacing existing 205ktIPDI: isophoron diisocynate, MDI: methyl diphenylene diisocyanate, TDI: toluene
diisocyanate, HDI: hexamethylene diisocyanate, PCS: polycarbonate
Grow in China by Expanding Bayer´s Largest, Fully Integrated Site in Shanghai
• Bayer Investor Presentation • Meet Management • March 2012 Page 28
Strengthening Leadership Through Further Local Production and Know-how
Second investment stage New investment of approx. €1bn in
Shanghai until 2016 to: Increase MDI capacity to
1,000kt/year Increase PCS capacity to
500kt/year Increase HDI capacity, new
50kt line planned New IPDI line planned
PCS headquarters transferred to Shanghai mid 2011
Expansion of local R&D activities
CAS
HDI30 kt in 2011
+50 kt
PUR
MDI350 kt in 2011
+650 kt
TDI250 kt in 2011
PCS
PCS200 kt in 2011
+300 kt
MDI: methyl diphenylene diisocyanate, TDI: toluene diisocyanate, IPDI: isophoronediisocyanate, HDI: hexamethylene diisocyanate, PCS: polycarbonate
MaterialScience Sales Development in Greater China
• Bayer Investor Presentation • Meet Management • March 2012 Page 29
2005 2011
+11% p.a.
MaterialScience €9.4bn MaterialScience €10.8bn
8%Gr. China€1.7 bn
8%Gr. China€0.9 bn
Greater China incl. PR China, Macau, Hong Kong & Taiwan
Bayer MaterialScience Sales in Greater China in %
China – Center of Gravity of MaterialScience´s Customer Industries
• Bayer Investor Presentation • Meet Management • March 2012 Page 30
The largest construction market in the world
The largest automotive market in the world
The largest railway market in the world
The largest consumer electronics market in the world
World’s second largest economy with strong momentum
World’s largest exporter
World’s largest PCS market
To become the world’s largest PUR market soon
A close second behind the US for the world’s largest Coatings market
PUR: polyurethane, PCS: polycarbonate
Opportunities for MaterialScience from China‘s 12th 5-Year Plan
• Bayer Investor Presentation • Meet Management • March 2012 Page 31
Increase non-fossil fuel use to 11-12%* by 2015
Reduce energy consumption per unit of GDP by 16% by 2015Promote clean energy
Improve building energy efficiency
New energy vehicle development
Foster rail freight transportation
Heat measuring and energy saving in existing buildings
15% of energy consumption with renewable energy by 2020
Invest RMB100 billion until 2020 in electric vehicles
Target production capacity of 1m new energy vehicles by 2015
Extend high speed network to 45,000 km** by 2015
Connect every city with a population ≥500,000 habitants
*Up from currently ~8% ** Up from currently 10.000km Sources: SAI Strategic Analysis, KPMG
Getting Closer to Our Customers –Polymer R&D Center Shanghai
• Bayer Investor Presentation • Meet Management • March 2012 Page 32
Broad service range:
Technical service/help
Customer trainings
Specialized laboratories for product and process R&D
Technical Service Application Development Product Development ResearchTechnical SalesPhase I started 2001 Phase II started 2006 Phase III started 2011
Phase III expansion part of our €1 billion investment program
Number of employees expected to double from currently 130
Providing a full range of R&D expertise
• Bayer Investor Presentation • Meet Management • March 2012 Page 33
Focus onTechnology
Leadership
Employing State-of-the-Art Technologies in World-Scale Format
• Bayer Investor Presentation • Meet Management • March 2012 Page 34
PolycarbonatesWorld-scale standard: 100kt single trains 100kt line with melt process: conversion costs -30%
MDI New world-scale standard: 350kt (becoming 500kt) Adiabatic nitration (aniline): conversion costs -25% High efficiency phosgenation: conversion costs -45% ODC* chlorine recycling: energy costs -30%
TDI New world-scale standard: 300kt Gas phase phosgenation: energy costs -40% Chlorine recycling: energy costs -50%
HDI Gas phase phosgenation: energy costs -65%
BPA and polycarbonate plant
HDI plant
MDI storage tanks
HDI plant
All improvements compare to conventional process technology
*ODC: Oxygen Depolarized Cathode
World Scale in Polycarbonates Production Reduces Costs Through Economies of Scale
• Bayer Investor Presentation • Meet Management • March 2012 Page 35
2002 Map Ta Phut, Thailand(first 100kt line worldwide)
2003 Uerdingen, Germany
2006 Caojing, China
2009 Caojing ll, China
+ Further expansion of Caojing
Bayer is the only PCS producer that runs highly efficient, single
100kt lines
Name plate capacity in kt p.a. per production line
Con
vers
ion
cost
inde
x
Effect of capacity increase on conversion costs
60
70
80
90
100
60 70 80 90 100
Peer group 75kt
average
50
Bayer60kt
Bayer50kt
Bayer 100kt
world scale
100kt lines are operated in:
Bayer Has a Competitive Production Line Concept in All 3 World Regions
PCS: polycarbonate
TDI Gas Phase Process Sets New Standards For Efficiency and Safety
• Bayer Investor Presentation • Meet Management • March 2012 Page 36
Process characteristics
Reaction of phosgene and TDA in the gas phase
Proprietary process new standard for efficiency
Benefits of gas phase process
Reduced conversion costs due to lower energy demand and reduced solvent usage
Reduced energy costs by approx. 40%
All improvements compare to conventional process technology
Successful operation of a 60kt pilot plant in Germany
World-scale 250kt production line in Caojing started in 2011
New Process Extends Bayer’s Cost and Technology Leadership in TDI Production
TDI: toluene diisocyanate
Sustainable Production –Making Carbon Dioxide a Feedstock
• Bayer Investor Presentation • Meet Management • March 2012 Page 37
Production of high quality polyurethane foam with the help of carbon dioxide (CO2)
Substitute partially petroleum by CO2, reduce raw material costs
Unique technology, good properties of final (foam) products
Pilot plant started operating in Germany in 2011
Project partnered with RWE (supplies CO2) and RWTH Aachen
Industrial production expected to start 2015 earliest
The “Dream Production” project receives federal fundingCO2 as Feedstock