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Transcript of Meet Management 2013 Investor Handout
Meet Management 2013Leverkusen, March 19, 2013Investor Handout
• Bayer Investor Presentation • Meet Management • March 2013Page 2
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 2013Page 1
Our Mission –Innovation and Customer Value
Bayer is an innovation company
With a strong “innovation portfolio”
Addressing new growth areas
Capable of identifying and using breakthrough innovations
Bayer is innovative in many ways: Products, technologies, processes, business models, strategies
Bayer products improve the quality of people’s lives
Bayer has an excellent understandingof human, animal and plant health, as well as of high-quality materials
Respect for people and nature is an essential part of our values
Science / Innovation Better Life
Science For A Better Life
• Bayer Investor Presentation • Meet Management • March 2013Page 2
Our Business Portfolio –Leading in Its Markets
Break-down excluding reconciliation
Sales 2012: €39.8bn
CropScienceChemical crop protection & biologicals, global #2, seeds & traits
€8.4bn
MaterialSciencePolyurethanes and polycarbonates,global #1/2
€11.5bn
HealthCarePharmaceuticals €10.8bn,leading positions in core indications
Consumer Health €7.8bn,OTC pharmaceuticals, blood glucose meters, contrast media and veterinary medicines, global #2-5
€18.6bn
22%
30%
48%
We are Generating the Vast Majority of our Business in the Life Sciences
• Bayer Investor Presentation • Meet Management • March 2013Page 3*EBITDA before special items
22%
30%
45%
85% 15%
Sales 2012 Adj. EBITDA 2012*
HumanHealth
3%
Breakdown excluding Reconciliation
MaterialScience
Plant Health
AnimalHealth
LifeSciences
MaterialScience
• Bayer Investor Presentation • Meet Management • March 2013Page 4
Full Year 2012: Significant Strategic and Operational Progress
• Bayer Investor Presentation • Meet Management • March 2013Page 5
Full Year 2012 –Very Good Year, Operational Targets Achieved
EBITin € million
-5%
3,9604,149
Salesin € million% currency & portfolio adj.
+5%
39,76036,528
EBITDAbefore special itemsin € million
+9%
8,2847,613
Core EPSin €
+11%
5,354,83
FY’12FY’11 FY’12FY’11 FY’12FY’11 FY’12FY’11
Full Year 2012 –All Subgroups With Higher Sales and EarningsSales & adj. EBITDA (=before special items) in € million, sales ∆% y-o-y Fx and portfolio adjusted
HealthCare
Pharma
Consumer Health
CropScience
MaterialScience
Sales Adj. EBITDA
3,203+8%
1,865+8%
2,008+21%
1,251+7%
5,068+8%
10,803+4%
7,809+4%
8,383+12%
11,503+3%
18,612+4%
• Bayer Investor Presentation • Meet Management • March 2013Page 6
• Bayer Investor Presentation • Meet Management • March 2013Page 7¹ Emerging economies include: Latin America, Asia w/o Japan, Australia,
New Zealand, Africa and Middle East incl. Turkey, Eastern Europe
2012 Group Sales Highlights Emerging EconomiesIn € million, ∆% yoy Fx adjusted
BRIC
+13% with HealthCare +23% and CropScience +20%
+16% driven by CropScience, but also MaterialScience strong
+19% with both Consumer Healthand MaterialScience +25%
+8% driven by CropScience and MaterialScience
+12% driven mainly by ourLifeScience businesses
EmergingEconomies¹
+7%
Developed Economies
+3%
Group €39,760m; +5%
63%
Full Year 2012 –Continued Strong Emerging Markets Growth
37%
• Bayer Investor Presentation • Meet Management • March 2013Page 8
Workforce in the Emerging Markets Consistently Increased
2009 2010 2011 2012Emerging Economies Developed Economies
111.0 111.4 111.8 110.5
65% 64% 63% 62%
35% 36% 37% 38%
Net reduction in total workforce by ~500 during last 4 years
Net increase of workforce in Emerging Countries (~3,200),especially in Emerging Asia
Concurrent workforce decline in Western Europe and North America
Breakdown FTE figures in 1,000 as of Dec 31
Initiated shift of workforce in linewith business to Emerging Markets
Sales in €bn
31.2 35.1 36.5 39.8
• Bayer Investor Presentation • Meet Management • March 2013Page 9CRPC: Castration resistant prostate cancer; PAH: Pulmonary arterial hypertension,
CTEPH: Chronic thromboembolic pulmonary hypertension;GIST: Gastrointestinal cancer
Full Year 2012 – Important Progress on Key Pharma Pipeline Assets
2012 sales of €322m above target following further launches and indication expansions
Encouraging early feedback from first launches
Positive feedback from commercial launch in the US, received US approval for GIST in Feb. 2013
Submitted for treating bone metastases in patients with CRPC (Dec. 2012)
Demonstrated efficacy in PAH and CTEPH in pivotal phase III trials, submitted (Feb. 2013)
Radium-223 dichloride
Combined peak sales potential of >€5.5bn
Innovations at CropScience
• Bayer Investor Presentation • Meet Management • March 2013Page 10IVM: Integrated vegetation management
Cereals
Corn and soybeans
Fruits & vegetables
Perennial crops
IVM and turf segment
Protects against fungus Rhizoctonia
Protects against nematodes
Conventional oilseed rape for Europe
New cotton varietiesProprietary glyphosate tolerance
New soybean varieties
New canola varieties with improved agronomic traits
Numerous new vegetable varieties
Fungicides
Herbicides
SeedGrowth
Seeds
• Bayer Investor Presentation • Meet Management • March 2013Page 11
Full Year 2012 –Dividend Proposal
Target is to pay out 30 to 40% of core EPS
Successive history of dividend payment for 60 years
Proposed dividend of €1.90 for 2012 up 15% vs. prev. year
Proposal corresponds to a payout of 2012 core EPS of 36% or €1,571m
2007-2012* Dividend Policy
EPS (IFRS) Core EPS Dividend per share
*in Euro per share#proposed dividend
1.35 1.40 1.40 1.501.65
0
1
2
3
4
5
6
2007 2008 2009 2010 2011 2012
1.90#
• Bayer Investor Presentation • Meet Management • March 2013Page 12
Priorities, Targets, Aspirations
Full Year 2013 Outlook Projects Further Growth And Higher Earnings
• Bayer Investor Presentation • Meet Management • March 2013Page 13
2012 ∆ vs. 2011 2013E
Sales €39.8bn +5% +4-5% to~€41bn*
adj. EBITDA €8.3bn +9% mid-single-digit % increase
Core EPS €5.35 +11% high-single-digit % increase
Sales ∆ Fx and portfolio adjusted, EBITDA before special items
*Assuming Fx rate of $1.29 per €Outlook depends on specific planning assumptions as detailed in the Annual Report
Full Year 2013 –R&D And CapEx Budgets
• Bayer Investor Presentation • Meet Management • March 2013Page 14
2%
MaterialScience~€0.2bn
HealthCare~€2.1nthereof Pharma~€1.7bn
MaterialScience~€0.6bn
HealthCare~€0.6bn
Reconciliation~€0.1bn
65%
26%
7%
Reconciliation~€0.3bn
CropScience~€0.8bn
CropScience~€0.5bn
CapEx (PPE) 2013e: ~€1.9bn (+24%)R&D 2013e: ~€3.2bn (+7%)
32%
25%
28%
14%
• Bayer Investor Presentation • Meet Management • March 2013Page 15
Priority 2012 Target 2013*
Aspiration 2015
HealthCare: Accelerate sales growth €18.6bn
Pharma: Successfully commercialize new products and realize emerging markets (EM) opportunity New product sales¹ EM growth
Consumer Health: Aspire to become #1 OTC company €7.8bn ~€9bn
HealthCare: Improve margins Pharma Consumer Health
27.2%29.6%23.9%
slightly upslightly up
at level
towards 29%≥31%~25%
HealthCare –Building Growth Momentum, Improving Margins
¹ Xarelto, Eylea, Stivarga, Radium-223 dichloride and Riociguat; subject to regulatory approval*Assuming Fx rate of $1.29 per €
Outlook depends on specific planning assumptions as detailed in the Annual Report
€10.8bn
€368m7.5%
mid-single-digit % to ~€11bn
~€1bnhigh-single
digit %
CAGR ~7% towards €13bn
>€2.5bnhigh-single
digit %
CAGR ~6% towards €22bn
mid-single-digit % to ~€8bn
mid-single-digit % to ~€19bn
Sales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales
Pharma – New Products Drive Growth and Rejuvenate Portfolio
• Bayer Investor Presentation • Meet Management • March 2013Page 16
86
368
~1,000
>2,500
2011 2012 2013e 2015e
Sales from new Pharma pipeline in €m
Xarelto 322Eylea 14Stivarga 32
Global roll-out ongoing, targeting ~€600m sales in 2013
Global roll-out in wAMD, first launches in CRVO expected during H2 2013
US launch ongoing, CHMP opinion expected 1H 2013, Japan submitted July 2012
Regulatory decision in the US expected for 2H 2013 (filed Dec. 2012)
Radium-223 dichloride
Submitted for PAH and CTEPH (Feb. 2013)
CTEPH: chronic thromboembolic pulmonary hypertension; CRVO: central retinalvein occlusion; PAH: pulmonary arterial hypertension;
wAMD: wet age-related macular degeneration
• Bayer Investor Presentation • Meet Management • March 2013Page 17
CropScience – Above Market Growth at Benchmark Profitability
Priority 2012 Target 2013*
Aspiration 2015
Above-market sales growth +12.4% to €8.4bn
high-single digit %
towards €9bn
CAGR ~6% towards €10bn
Translate R&D effectively into new product sales (CP products launched since 2006)
€1.1bn ~€1.4bn ~€1.9bn
Extend seeds footprint +14%
Maintain industry leading profitability level 24.0% slight improvement ~24%
Sales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales
double-digit % growth p.a.
CP: Crop Protection*Assuming Fx rate of $1.29 per €
Outlook depends on specific planning assumptions as detailed in the Annual Report
double-digit % growth
CropScience – Translate R&D Effectively into New Product Sales
• Bayer Investor Presentation • Meet Management • March 2013Page 18
Xpro (+61%) - New cereal fungicide with yield-boosting effect
Adengo herbicide family (+85%) -Excellent weed control in corn and cereals, also in case of glyphosate resistance
Belt (+54%) - Broad-spectrum insecticide with fast and long-lasting action
Launch of Luna fungicide in the US
First launch of new SeedGrowth family EverGol/Emesto in Canada
0.02
0.3
0.7
1.1
~1.4
~1.9
2007 2009 2011 2012 2013e 2015e
+60%
2012 HighlightsSales from new Crop Protection products launched since 2006 in €bn∆% y-o-y, () Fx adj.
• Bayer Investor Presentation • Meet Management • March 2013Page 19
Sales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales
*Assuming Fx rate of $1.29 per €#after reproduction
Outlook depends on specific planning assumptions as detailed in the Annual Report
MaterialScience – Higher Asset Utilization & Efficiency Measures Are Driving Performance
2012 Target 2013 Aspiration 2015
Sales +3.0% to €11.5bn (volumes +2%)
Adj. EBITDA +7% to €1,251m
CFROI# 5.6% < WACC 7.1%
Sales to slightly increase to ~€12bn
Adj. EBITDA to further improve
Q1‘2013 vs Q4‘2012: Sales to further increase and adj. EBITDA at same level
Grow business (volume) above global GDP
Defend market leading positions in PCS and PUR
Realize 150 bp margin contribution through new efficiency initiative
Optimize asset structure in Germany
CFROI# > WACC
• Bayer Investor Presentation • Meet Management • March 2013Page 20
Appendix
Q4 2012 –Cash Flow and Net Debt Development
• Bayer Investor Presentation • Meet Management • March 2013Page 21
+€223m 7.0GCF oFCF
755
Invest-ments
743 160
∆ %y-o-y -25 -63
NCFcont.
903
-22 +2Q3´12 Q4´12
6.8
Q4’12 Cash Flow Net Debt DevelopmentCash Flow in € million, Net Debt in € billion
Net debt increase of €1bn due to pension funding, partly offset by positive cash generation
Q4 2012 –HealthCare
• Bayer Investor Presentation • Meet Management • March 2013Page 22*before special items
Q4’12 Sales Earnings
Pharma+7% (+5%)
ConsumerHealth
+7% (+5%)36%
HealthCare €4,923m; +7% (+5%)
2,8672,056
Price0%
Volume+5%
Fx+2%
Portfolio0%
In € million, ∆% yoy, () = Fx & portf. adjusted
Q4‘11 Q4‘12 Q4‘11 Q4‘12
758827
422515
+9%
+22%
1,180
1,342 +14%
317 +28%
8151,001 +23%
498
407
Adj.EBITDA*
Adj.EBIT*
594 +19%
Q4 2012 –CropScience
• Bayer Investor Presentation • Meet Management • March 2013Page 23
Crop Protection+12% (+11%)
EnvironmentalScience
+18% (+16%)
*before special items
Seeds-10% (-11%)
Q4’12 Sales Earnings In € million, ∆% yoy, () = Fx & portf. adjusted
CropScience €1,856m; +11% (+9%)
Price0%
Volume+9%
Fx+2%
Portfolio0%
1,540
Q4‘11 Q4‘12 Q4‘11 Q4‘12
273289 +6%
145162 +12%
Adj.EBITDA*
Adj.EBIT*
174142
Q4 2012 –MaterialScience
• Bayer Investor Presentation • Meet Management • March 2013Page 24 **CAS: Coatings, Adhesives, Specialties*** IO: Industrial Operations
Polyurethanes+11% (+9%)
Polycarbonates0% (-3%)
CAS**+3% (+5%)
Q4’12 Sales Earnings In € million, ∆% yoy, () = Fx & portf. adjusted
*before special items
MaterialScience €2,761m; +6% (+5%)
Price+2%
Volume+3%
Fx+2%
Portfolio-1%
1,473669
IO***0% (-1%)
Q4‘11 Q4‘12Q4‘11
Q4‘12
Adj.EBITDA*
Adj.EBIT*
106
255 +141%
-48
93 +294%451
168
• Bayer Investor Presentation • Meet Management • March 2013Page 25
Q4 2012 –Regional Performance
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
Western Europe
+1%
~1,560
~1,420
+14%
~460
-1%~520
+12%
Q4’12 Group Sales by Region Emerging EconomiesIn € million, ∆% yoy Fx adjusted
Group €9,862m; +5%
Emerging Asia³
LatinAmerica
EasternEurope
Africa & Middle East
EmergingEconomies¹
+9%
Others²+2%
USA+5%
40%
30%
20%
10%
+7%
Full Year 2012 –Cash Flow and Net Debt Development
• Bayer Investor Presentation • Meet Management • March 2013Page 26
+€15m 7.0GCF oFCF
4,599
Invest-ments
1,929 2,603
∆ %y-o-y -11 -24
NCFcont.
4,532
-10 +19FY´11 FY´12
7.0
2012 Cash Flow Net Debt DevelopmentCash Flow in € million, Net Debt in € billion
Net debt constant, despite €1bn pension funding in Q4’2012
Full Year 2012 –HealthCare
• Bayer Investor Presentation • Meet Management • March 2013Page 27*before special items
2012 Sales Earnings
Pharma+9% (+4%)
ConsumerHealth
+8% (+4%)36%
HealthCare €18,612m; +8% (+4%)
10,8037,809
Price0%
Volume+4%
Fx+4%
Portfolio0%
In € million, ∆% yoy, () = Fx & portf. adjusted
FY‘11 FY‘12 FY‘11 FY‘12
2,9723,203
1,7301,865
+8%
+8%
4,7025,068 +8%
1,325 +9%
3,3673,736 +11%
2,042
1,438
Adj.EBITDA*
Adj.EBIT*
2,298 +13%
Full Year 2012 –CropScience
• Bayer Investor Presentation • Meet Management • March 2013Page 28
Crop Protection+16% (+13%)
EnvironmentalScience
+9% (+5%)
*before special items
Seeds+17% (+14%)
2012 Sales Earnings In € million, ∆% yoy, () = Fx & portf. adjusted
CropScience €8,383m; +16% (+12%)
Price+1%
Volume+12%
Fx+4%
Portfolio-1%
6,741
FY‘11 FY‘12 FY‘11 FY‘12
1,654
2,008 +21%
1,168
1,526 +31%
Adj.EBITDA*
Adj.EBIT*
680962
Full Year 2012 –MaterialScience
• Bayer Investor Presentation • Meet Management • March 2013Page 29 **CAS: Coatings, Adhesives, Specialties*** IO: Industrial Operations
2012 Sales Earnings In € million, ∆% yoy, () = Fx & portf. adjusted
*before special items
MaterialScience €11,503m; +6% (+3%)
Price+1%
Volume+2%
Fx+4%
Portfolio-1%
5,995
FY‘11 FY‘12 FY‘11 FY‘12
Adj.EBITDA*
Adj.EBIT*
1,1711,251 +7%
589629 +7%
Polycarbonates-2% (-7%)
CAS**+3% (+4%)
2,823
IO***+8% (+6%)
1,972
713
Polyurethanes+12% (+8%)
Full Year 2012 –Regional Performance
• Bayer Investor Presentation • Meet Management • March 2013Page 30
Africa & Middle East
EasternEurope
Emerging Economies
EmergingEconomies¹
+7%
Others²+4%
USA+9%
Western Europe0%
2012 Group Sales by Region
Group €39,760m; +5%
~4,900
+12%~5,700
+5%
~1,800
0%~2,400
+10%
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
37%
11%31%
21%
Latin America
Emerging Asia³
Investor Handout – Meet ManagementBayer HealthCare
March 2013 – Leverkusen
Leading Positions in Key Healthcare Markets
• Bayer Investor Presentation • Meet Management • March 2013Page 32
Pharma€10,803m Leading positions in key therapeutic categories
Consumer Care €3,853m Global #2 in OTC-pharmaceuticals
Medical Care €2,653m #1 in fluid injection systems, #1 in contrast media,
#4 in blood glucose meters
Animal Health €1,303m Global #5, #2 in parasiticides
Sales Split by Segment 2012
25%
58%
7%
21%
14%
HealthCare €18,612m
Full Year 2012 –Growth in All Segments
• Bayer Investor Presentation • Meet Management • March 2013Page 33*before special items
2012 Sales Earnings
Pharma+9% (+4%)
ConsumerHealth
+8% (+4%)36%
HealthCare €18,612m; +8% (+4%)
10,8037,809
Price0%
Volume+4%
Fx+4%
Portfolio0%
In € million, ∆% yoy, () = Fx & portf. adjusted
2011 2012 2011 2012
2,9723,203
1,7301,865
+8%
+8%
4,7025,068 +8%
1,325 +9%
3,3673,736 +11%
2,042
1,438
Adj.EBITDA*
Adj.EBIT*
2,298 +13%
Full Year 2012 – Strong Business Momentum in Emerging Markets
• Bayer Investor Presentation • Meet Management • March 2013Page 34
Emerging Economies
25%
2012 HealthCare Sales
LatinAmerica
Eastern Europe
Africa & Middle East
~2,100
+12%
~2,100
+8%
~1,100
+9%
~900
+1%
24%
USA+6%
29%
33%
14%
Sales in € million; ∆% y-o-y Fx adjusted
EmergingEconomies¹+8%
Emerging Asia³
Western Europe -1%
Others²+1%
HealthCare €18,612m¹ Emerging economies include: Latin America, Asia w/o Japan, Australia,
New Zealand, Africa and Middle East incl. Turkey, Eastern Europe² Others = Japan, Australia, New Zealand, Canada³ Emerging Asia = Asia without Japan, Australia, New Zealand
Bayer is One of The Leading International HealthCare Companies in China
• Bayer Investor Presentation • Meet Management • March 2013Page 35
Driven by Pharmaceuticals (+21% Fx-adj)
~1,500 sales representatives added since 2011
Improved presence in lower-tier cities in 2012: Bayer has presence in all tier 1-4 cities and in a substantial number of tier 5 cities
€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 2012 ~€1.5bn +21% y-o-y (Fx-adj.)
Adalat
Avelox
Top products growth in 2012Aspirin
+17%
+26%
+39%
+17%
Glucobay
Sales in € million; ∆% y-o-y Fx adjusted
+12%
Nexavar
Avelox
Ultravist +29%
Launch in SPAF Positive phase III-data in EINSTEIN PE Approval/launch in PE/DVT-treatment (US) Approval/launch in PE-treatment (EU)
First launches in wAMD Filings for CRVO
US-launch in mCRC (2012) and mGIST (Feb. 2013) Positive phase III-data in mCRC Positive phase III-data in GIST Filings in GIST and mCRC
Full Year 2012 – Outstanding Clinical and Regulatory Progress
• Bayer Investor Presentation • Meet Management • March 2013Page 36
SPAF: stroke prevention in atrial fibrillation; PE: pulmonary embolism; DVT: deep vein thrombosis; wAMD: wet age related macula degeneration; CRVO: central retinal vein occlusion; mCRC: metastatic colorectal cancer: GIST:
gastrointestinal stromal rumors; PAH: pulmonary arterial hypertension; CTEPH: chronic thromboembolic pulmonary hypertension;mCRPC: metastatic castration resitant prostate cancer
Positive phase III-data in PAH and CTEPH Filed for PAH and CTEPH in Feb‘13
US and EU filings in mCRPC
Flexyess: successful conclusion of EU registration
Phase III-data for LNG-IUS12 and LNG-IUS16 Jaydess: successful conclusion of EU
registration
Initiation of phase III for longer-acting rFVIII(BAY 94-9027) and phase II/III for rFVIIa(BAY86-6150)
Radium-223 dichloride
Women‘s Healthcare
Hemophilia
Top 10 Pharma Product Performance in 2012
• Bayer Investor Presentation • Meet Management • March 2013Page 37
FY 2012 sales in € million (∆% yoy Fx-adj.)
YAZ-family
Betaseron
Kogenate
Adalat
Glucobay
Avelox
Nexavar
Mirena
Xarelto
Aspirin C.
+4%
+5%
-5%
+4%
+9%
-2%
-5%
+12%
+4%
+266%
1,216
1,182
1,045
677
322
486
792
670
476
408
Multiple Sclerosis
Hemophilia A
Contraception
Cancer
Contraception
Hypertension
Antiinfective
MI prevention
Diabetes
Anticoagulation
MI: Myocardial infarction
Consumer Health –Best-Selling Products in 2012
• Bayer Investor Presentation • Meet Management • March 2013Page 38
494*
323
269
250
196
174
+1%
+5%
+14%
+8%
+4%
-12%
722 +9%
495 +11%
324 -1%
209 +27%
* Only Aspirin CC sales, excluding Rx Aspirin Cardio
FY 2012 sales in € million (∆% yoy Fx-adj.)
• Bayer Investor Presentation • Meet Management • March 2013Page 39
Building Growth Momentum –Improving Margins
HealthCare –Building Growth Momentum, Improving Margins
• Bayer Investor Presentation • Meet Management • March 2013Page 40
Priority 2012 Target 2013*
Aspiration 2015
HealthCare: Accelerate sales growth €18.6bn
Pharma: Successfully commercialize new products and realize emerging markets (EM) opportunity New product sales¹ EM growth
Consumer Health: Aspire to become #1 OTC company €7.8bn ~€9bn
HealthCare: Improve margins* Pharma Consumer Health
27.2%29.6%23.9%
slightly upslightly up
at level
towards 29%≥31%~25%
€10.8bn
€368m7.5%
mid-single-digit % to ~€11bn
~€1bnhigh-single
digit %
CAGR ~7% towards €13bn
>€2.5bnhigh-single
digit %
CAGR ~6% towards €22bn
mid-single-digit % to ~€8bn
mid-single-digit % to ~€19bn
Sales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales
¹ Xarelto, Eylea, Stivarga, Radium-223-Dichloride and Riociguat; subject to regulatory approval*Assuming Fx rate of $1.29 per €
Outlook depends on specific planning assumptions as detailed in the Annual Report
The Leader in Women’s HealthCare
• Bayer Investor Presentation • Meet Management • March 2013Page 41
Yaz family
Sales ∆% y-o-y, () Fx adj.
Women’s Healthcare 2012
€3,154m+5% (+2%)
+17 (+9)Mirena
+7 (+5)Diane
-2 (-5)
+37 (+35)Qlaira
Other products +13 (+10)
0 (-1)Microgynon
-31 (-31)Valette
-8 (-8)Meliane
+6 (+4)Angeliq
Mirena – The Leading Hormonal Long-Acting Contraceptive
• Bayer Investor Presentation • Meet Management • March 2013Page 42
Intrauterine device, containing levonorgestrel, for reversible long-term contraception
Life-cycle opportunities: Small low-dose long-acting (up to 3
years) device: Jaydess: successful conclusion
of EU registration Skyla: US-launch in Feb. 2013
Phase III for a long-acting (up to 5years), low-dose, small contraception device underway
2013 sales target: high-single to low-double-digit % increase
Sales in € million; ∆% Fx adj.
2009 2010 2011 2012
272
218
285
254
313
268
385
292
US Rest of the world
490539
581
677+9%
2009 2010 2011 2012
Hemophilia Franchise –Stable Growth
• Bayer Investor Presentation • Meet Management • March 2013Page 43
Global # 2 in hemophilia A treatment
Competitive development program in hemophilia underway:
Phase III with long-acting Factor VIII (BAY 94-9027)
Phase III with product from plasma-free process (BAY 81-8973)
Phase II/III with modified recombinant Factor VIIa (BAY 86-6150)
2013 sales target: low-single-digit % increase
Sales in € million; ∆% Fx adj.
250
638
299
705
290
785
332
850
US Rest of the world
8881,004
1,0751,182+5%
Betaseron – Long-term Experience in Multiple Sclerosis Treatment
• Bayer Investor Presentation • Meet Management • March 2013Page 44
First interferon launched in multiple sclerosis, introduced in 1993
Wealth of clinical experience
Demonstrating excellent efficacy and tolerability
21-year long-term follow-up study demonstrated significant survival advantage with Betaseron treatment
2013 sales target: high-single-digit % decline
Sales in € million; ∆% Fx adj.
2009 2010 2011 2012
479
735
473
733
447
670
578
638
US Rest of the world
1,214 1,2061,117
1,216+4%
Nexavar –Our Cornerstone in Oncology
• Bayer Investor Presentation • Meet Management • March 2013Page 45
Approved for kidney cancer (RCC) and for liver cancer (HCC)
Only approved drug with overall survival benefit in HCC
Positive phase III data in radioactive iodine refractory differentiated thyroid cancer (DECISION-trial)
Phase III trials in: Breast cancer RCC (adjuvant) HCC (adjuvant)
2013 sales target: mid-single-digit % increase
Sales in € million; ∆% Fx adj.
2009 2010 2011 2012
154
450
174
531
174
551
204
588
US Rest of the world
604
705 725792+4%
Nexavar –Design of the DECISION Phase III Study
• Bayer Investor Presentation • Meet Management • March 2013Page 46
Locally Advanced, Metastatic
RAI-Refractory Differentiated
Thyroid Cancer
Sorafenib 400 mg bid
Placebo
Primaryendpoint:PFS
randomisation
RAI: radioactive iodinebid: twice a day
● Study met primary endpoint ● Data to be presented at an upcoming scientific meeting ● Submission planned for 2013
Primary endpoint: Progression-free survival (PFS)
Secondary endpoints (selection): Overall survival, time to progression, response rate, disease control rate
Total number of patients enrolled: 419
Aspirin –More Than A Century of Growth
• Bayer Investor Presentation • Meet Management • March 2013Page 47
One of the world’s most recognized brands
Available as OTC and Rx Aspirin
Bayer’s #1 product in Emerging Markets
Aspirin grew 17% in 2012 in the Emerging Markets
Aspirin grew 39% in 2012 in China
Sales in € million; ∆% Fx adj.
2009 2010 2011 2012
315
400
358
418
404
471
476
494
Rx-Aspirin OTC-Aspirin
715776
875970+6%
• Bayer Investor Presentation • Meet Management • March 2013Page 48
New Products Drive Growth and Rejuvenate Portfolio
New Product Pipeline Strength
• Bayer Investor Presentation • Meet Management • March 2013Page 49*Combined peak sales potential for Xarelto, Stivarga, Eylea, Radium-223 dichloride
and Riociguat assuming approvals and launches planned
Combined* Peak Sales Potential >€5.5bn
First launches in first / main indication*
Rivaroxaban VEGF Trap-EyeRegorafenib Radium-223
dichloride Riociguat
2011 2012 2012 2013e 2014e
Radium-223dichloride
• Bayer Investor Presentation • Meet Management • March 2013Page 50
Xarelto –Strong Launch
Execution
Xarelto –Effective Anticoagulation For More Patients
• Bayer Investor Presentation • Meet Management • March 2013Page 51
Peak sales potential > €2bn
Breadth of indications: met or exceeded primary efficacy endpoint in 11/11 phase III studies
Phase III trial initiated for the secondary prevention of myocardial infarction and death in patients with coronary or peripheral artery disease
1) Clinical
2) Regulatory
VTE prevention following total knee/hip replacement surgery Stroke prevention in patients with atrial fibrillation (SPAF) Treatment of DVT, PE and to reduce the risk of recurrent DVT and PE
Filed for secondary prevention of ACS in Europe and US (Complete Response LetterMarch 2013)
3) Marketing
SPAF: prevention of stroke and systemic embolism in patients with non-valvular atrial fibrillation; DVT: deep vein thrombosis; VTE: venous
thromboembolism; ACS: acute coronary syndrome
The Market for Anticoagulants is Attractive
• Bayer Investor Presentation • Meet Management • March 2013Page 52
Anticoagulants sales(MAT 9/2012)
Anticoagulants estimated treatmentdays in m (MAT 9/2012)
~$10.7bn
62%
7%
6%
15%10%
LMWH
VKA
UFH
DTI
Other
LMWHs: low molecular weight heparinsUFH: unfractionated heparinsVKA: vitamin K antagonistsDTI: direct thrombin inhibitors (incl. dabigatran)Other antithrombotics (incl. Xarelto®)
~2,200~100
~420
~200
~360
Strokepreventionin AF
VTE preventionafter orthopedicsurgery
Post ACS/MI
Otherprimaryprevention
VTEtreatment
~3,300m
AF: atrial fibrillationVTE: venous thromboembolismACS: acute coronary syndromeMI: myocardial infarction
Source: IMS MIDAS, GERS, FARMINFORM for sales Bayer estimates for patient treatment days in main markets
Xarelto –Strong Launch Execution
• Bayer Investor Presentation • Meet Management • March 2013Page 53
Q4'11 Q1'12 Q2'12 Q3'12 Q4'12
272
23
US* Rest of the world
31
Sales in € million; ∆% Fx adj.
8
34
42
8
57
68
11
67
81
14
109
131
22
*Bayer reporting, not reflecting in-market sales
Exceeded 2012 sales target
Sales 2012: €322m
Sales advanced strongly in all regions following further product launches and indication expansions
Most successfull launch ever in theGerman cardiovascular market
Sales target 2013: ~€0.6bn
Xarelto –Development in Key Markets
• Bayer Investor Presentation • Meet Management • March 2013Page 54
Market Performance Market Share (IMS)
Germany: most successful launch ever in the cardiovascular market
Market share1 ~30% vs. dabigatran~10%
Japan: 2 week prescription limitation to be lifted in April 2013
Market share2 ~9%
Brazil: patient and prescriber base continously growing; now leader in the anticoagulant market
Market share3 ~34%
UK: generally low acceptance for novel oral anticoagulants
Market share 2~4% vs. dabigatran~4%
France: now level with dabigatran Market share1 ~13%, dabigatran~13%
US4: steady uptake with consistent positive indicators especially in cardiology, expanding access
~30% new to brand prescriptionshare5
Source: IMS; 1 sales market share anticoagulants (AC) ex manufacturer prices, retail; 2 anticoagulants retail and hospitals, 3 sales market share AC , retail;
4:marketed by J&J; 5: oral anticoagulant market
Status as of mid Feb 2013
Market Performance Market Share (IMS)
• Bayer Investor Presentation • Meet Management • March 2013Page 55
Eylea –Launch
Underway
Eylea –Major Progress Achieved
• Bayer Investor Presentation • Meet Management • March 2013Page 561: Regeneron has US marketing rights; AMD: age-related macular degeneration;
CRVO: central retinal vein occlusion; mCNV: myopic choroidal neovascularization
Bayer has marketing rights ex-US1, launched in first markets in wet AMD end 2012 (sales 2012: €14m)
Further roll out in wet AMD planned in Europe, Latin America & Asia in 2013 First launches in CRVO planned for 2H 2013
1) Clinical
2) Regulatory
3) Marketing
Positive phase III data in wet AMD and CRVO reported Phase III in DME and mCNV ongoing First phase III data in mCNV expected 1H 2013 First phase III data in DME expected 2H 2013
Filed for CRVO in EU/J
• Bayer Investor Presentation • Meet Management • March 2013Page 57
Retina Treatment is The Fastest Growing Area Within Ophthalmology
14
5
3
3
5
Glaucoma
Dry eyeOther
35.6
5.0
4.1
2.4
1.7
Anti-allergy / infec-tive/ inflammatory
Global Ophthalmology Market in $bn CAGR 2010-2022e in %
Retinal disorders
2010 2022
16.0
9.0
6.3
14.8
2.72.8
5.2
4.3
3.02.01.5
Source: Visiongain report, “Ophthalmic Drugs: World Market Prospects ”
e
Eylea – Developed for the Treatment of Various Back of the Eye Diseases
• Bayer Investor Presentation • Meet Management • March 2013Page 58
Peak sales potential ≥ €1bn
Eylea has been in-licensed from Regeneron; Bayer has exclusive marketing rights ex-USpatient numbers are Bayer estimates
Wet age-related macular degeneration (wet AMD) One of the leading cause of severe vision loss Globally an estimated 12 million patients in the 50+ age group
Diabetic macular edema (DME) The most frequent cause of blindness in young and mid-aged adults Globally. the treatable patient population for DME is estimated ~6.2 million
Central retinal vein occlusion (CRVO) 90% occur in patients aged ~50, it can affect all ages A common retinal vascular disorder affecting ~2.5 million people globally
Myopic choroidal neovascularization (myopic CNV) High prevalence in Asian population In Japan and China treatable population of mCNV is approx. 2 million, with
approx. 0.2 million new cases/year
• Bayer Investor Presentation • Meet Management • March 2013Page 59
Stivarga –Encouraging
Start
Stivarga (Regorafenib) – Three Dimensional Mode of Action
• Bayer Investor Presentation • Meet Management • March 2013Page 60
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;
Stivarga –Major Milestones Achieved
• Bayer Investor Presentation • Meet Management • March 2013Page 61mCRC: metastatic colorectal cancer; mGIST: metastatic gastrointestinal
stromal tumors; HCC: hepatocellular carcinoma
1) Clinical Positive phase III data in mCRC and mGIST Phase III in 2nd line HCC initiated (RESORCE) Colorectal cancer (adjuvant therapy) expected to start 2H 2013
2) Regulatory
3) Marketing Launched in mCRC (Sep 2012) / mGIST (Feb 2013) in the US Sales of €32m in 2012, peak sales potential ≥ €1bn
Filed for mCRC in EU & Japan (priority review) Regulatory decision in Europe expected 1H 2013 Filed for mGIST in Japan (priority review) Filing for mGIST in Europe H1 2013e
• Bayer Investor Presentation • Meet Management • March 2013Page 62
AdvancedHCCafter failure ofsorafenib
Regorafenib 160 mg od 3 wks on /1 wk off
Placebo
Primaryendpoint:OS
2:1randomisation
Regorafenib Phase III in 2nd Line HCC (RESORCE) – Study Design
HCC: hepatocellular carcinoma (liver cancer)od: once a day
Primary endpoint Overall survival (OS)
Secondary endpoints (selection): Time to progression; progression-free survival; objective tumor response; disease control
Time frame (months): ~33
Number of patients to be enrolled: 530
• Bayer Investor Presentation • Meet Management • March 2013Page 63
Radium-223 dichloride –
First-in-Class Alpha-Pharmaceutical
Radium-223 dichloride – Addressing Significant Unmet Need
• Bayer Investor Presentation • Meet Management • March 2013Page 64CRPC: castration-resistant prostate cancer
Peak sales potential ≥ €1bn
Tumor cellsNewly formedbone
Radium-223 deposition highly localized tumor cell killingBone metastases
First-in-class alpha-pharmaceutical (Radium-223 dichloride)
Radium is a natural bone seeker, selectively targeting bone metastases with high-energy, short-range alpha-particles
Bone metastases occur at high incidences in certain late-stage cancers, for example prostate cancer
Inlicensed from Algeta
Radium-223 dichloride –Regulatory Progress Achieved
• Bayer Investor Presentation • Meet Management • March 2013Page 65
Submitted for treating bone metastases in patients with CRPC in Europe and the US in Dec 2012 (priority review granted by the FDA)
1) Clinical
Phase III (ALSYMPCA) in symptomatic castration-resistant prostate cancer (CRPC) patients with bone metastases stopped early – Radium-223 dichloride demonstrated 44% improvement in overall survival
Broader clinical development program planned: studies in earlier settings of prostate cancer, including combination studies and studies in other tumors (such as breast cancer and osteosarcoma)
2) Regulatory
3) Marketing
Launch preparations underway
Treatments for CRPC Patients with Bone Metastases Needed
• Bayer Investor Presentation • Meet Management • March 2013Page 66
~900,000 men diagnosed and ~260,000 died from prostate cancer p. a. worldwide1
CRPC is a form of advanced prostate cancer in which the tumor grows despite castrate levels of testosterone
Up to 90% of CRPC patients have radiological evidence of bone metastases
Bone metastases are the main cause of disability and death in patients with CRPC
No survival benefit from current bone-targetedagents
Bone metastasis occurs in almost all prostate cancer patients during the natural course of their disease
and typically targets the lumbar spine, vertebrae and pelvis2
1 World Health Organization. GLOBOCAN 20082 Bubendorf L, et al. Hum Pathol. 2000;31(5):578-83
CRPC: castration-resistant prostate cancer
• Bayer Investor Presentation • Meet Management • March 2013Page 67
Riociguat –Adressing
Unmet Medical Need
Riociguat – A New Mode of Action
• Bayer Investor Presentation • Meet Management • March 2013Page 68
Pulmonary hypertension (PH) is associated with endothelial dysfunction, impaired synthesis of nitric oxide (NO) and insufficient stimulation of the NO-sGC-cGMPpathway
Riociguat targets sGC to increase production of cGMP Stimulates native form of sGC
directly (independently of NO) Activity unaffected by depleted
NO levels Makes sGC more sensitive to the
body‘s own residual / existing NO
Vasodilatation
Nitric Oxide (NO)
Riociguat
sGC
cGMP↑
sGC: Soluble guanylate cyclase; cGMP: cyclic guanosine monophosphate
Forms and Epidemiology of Pulmonary Hypertension
• Bayer Investor Presentation • Meet Management • March 2013Page 69
CTEPH~20,000
PH owing to lung disease~410,0002
~30,000
PH-LVD~240,000
Pulmonary hypertension (PH) encompasses multiple disease subtypes but approved treatments are only indicated for pulmonary arterial hypertension (PAH)
~700,000 patients diagnosed1 with diseases related to / including PH with ~300,000 patients thereof being potentially eligible for PH treatment
1Diagnoses estimated in 2009 in US, EU5, J; 2Thereof ~ <20% could be treated for PH
CTEPH: Chronic thromboembolic pulmonary hypertension LVD: left ventricular disease
PAH
Riociguat – Demonstrated Efficacy in PAH and CTEPH
• Bayer Investor Presentation • Meet Management • March 2013Page 70
Phase III trials in two forms of pulmonary hypertension, PAH & CTEPH, reported at CHEST in October 2012
Both trials met the primary efficacy endpoint (6MWDT) PATENT-1: +36m from baseline after 12 weeks compared with placebo
(p<0.0001) in patients with PAH
CHEST-1: +46m from baseline after 16 weeks compared with placebo (p<0.0001) in patients with CTEPH
Significant improvement observed in relevant secondary endpoints
First interim analysis of CHEST-2 showed further increase in 6MWD to 63 meters in former Riociguat patients and 35 meters in former placebo patients compared with CHEST-1 baseline.
Filed in PAH and CTEPH in US and EU (Feb 2013)
6MWDT: 6 Minutes walking distance test , CTEPH: chronic thromboembolic pulmonary hypertension, PAH: pulmonary arterial hypertension, sGC soluble guanylate cyclase
Peak sales potential > €500m
• Bayer Investor Presentation • Meet Management • March 2013Page 71
Additional Promising Pipeline Projects
Development Pipeline
• Bayer Investor Presentation • Meet Management • March 2013Page 72Selection of major Pharma Pipeline Projects in clinicial Phase I to III
* combined Phase II/III
Phase I (11) Phase II (8) Phase III (14)CancerBAY 1000394(CDK-Inhibitor)
Heart FailureBAY 1067197(Part. Aden. A1 Agonist)
CHFBAY 94-8862(MR Antagonist)
Additional IndicationsSorafenib
Submental fat removalSodium Deoxycholate(ATX-101)
Thyroid CancerSorafenib
CancerBAY 94-9343(Mesothelin-ADC)
Heart FailureBAY 86-8050(Vasopr. Rec. Antag.)
CancerRefametinib(MEK-Inhibitor)
Gram-negative PneumoniaAmikacin inhale
Skin and Lung InfectionsTedizolid
Breast CancerSorafenib
AnemiaBAY 85-3934(HIF-PH)
Heart FailureBAY 1021189(sGC Stimulator)
Cancer BAY 80-6946(PI3K Inhibitor)
Pulmonary HypertensionRiociguat (sGC Stimulator)
HemophiliaBAY 94-9027(peg rFVIII)
Adjuvant HCCSorafenib
Sympt. Uterine FibroidsBAY 1002670 (S-PRAnt)
EndometriosisBAY 1026153
CancerRadium-223-Dichlorid
HemophiliaBAY 86-6150*(rFVIIa)
Adjuvant RCCSorafenib
BronchiectiasisBAY 85-8501Neutroph. Elastase Inhibit.
CancerBAY 1082439PI3K Inhibitor
CancerRegorafenib
Myopic CNVAflibercept
VV Atrophy Prasterone(Vaginorm)
CancerBAY 2010112PSMA BiTE Antibody
DMEAflibercept
ContraceptionLCS 16
MACE preventionRivaroxaban
Lung InfectionCipro inhale
New molecular entities(NME)
Life cycle management(LCM)
Status as of February 2013
Expanding the Hemophilia Franchise With a Long-Acting Recombinant Factor VIII
• Bayer Investor Presentation • Meet Management • March 2013Page 73
B-domain–deleted recombinant factor VIII (BDD-rFVIII) with site-specific PEGylation (BAY 94-9027)
Attachment of PEG extends half-life without reducing FVIII activity
Phase I data showed
prolonged half-life vs. Kogenate FS
BAY 94-9027 was well tolerated
A combined phase II/III study started in summer 2012
rFVIIa (Bay 86-6150) is a Potential Molecule to Expand Beyond Hemophilia A
• Bayer Investor Presentation • Meet Management • March 2013Page 74
Recombinant factor VIIadesigned to increase circulating half-life and platelet affinity without modification of the active site
BAY 86-6150 is developed as a new treatment option for Hemophilia A and B patients with inhibitors
Phase I successfully completed
Combined Phase II/III study started 2012
Refametinib (BAY 86-9766) – A MEK-Inhibitor in Phase II in Cancer
• Bayer Investor Presentation • Meet Management • March 2013Page 75
Ras-Raf-MEK-ERK pathway: cascade of MAPK (Mitogen-activated protein kinases) - originally called ERK (extracellular signal-regulated kinases); AKT: is a protein kinase that plays a key role in multiple cellular processes, mTOR: mammalian target of rapamycin – a kinase; HCC: Hepatocellularcarcinoma; Puehler F. et al, Meeting of the EORTC-NCI-AACR, Poster 108. November 2010, Berlin, Germany
● Refametinib is currently in Phase II for pancreatic and liver cancer
● Ras-Raf-MEK-ERK pathway is one of the main pathways deregulated in cancer:
● Controls cellular proliferation, differentiation, apoptosis and migration
● Rationale to use in combination with other pathway inhibitors, e.g. sorafenib, PI3K-, AKT-, mTORinhibitors
BAY 80-6946 – A PI3K-Inhibitor in Phase II in Cancer
• Bayer Investor Presentation • Meet Management • March 2013Page 76
RTK: receptor tyrosine kinase; GPCR: G-protein coupled receptor;; PI3K:phospharidylinositol-3 kinase; Liu N et al, Annual Meeting of the American Association for Cancer Research. Poster 4476, April, 2010, Washington DC
● BAY 80-6946 is a pan class I PI3K-inhibitor
● Currently in phase II for non-Hodkin’slymphoma
● PI3 kinases signal downstream of most growth factor RTKs, where inhibitors do exist
● In most tumor cells, the PI3K-signaling cascade is activated and provides important tumor growth and survival signals
● Broad anti-tumor spectrum in preclinical tumors models
● Preclinical data support combination with MEK-inhibitor
MR Antagonist (BAY 94-8862) – Progressing in the Clinical Program
• Bayer Investor Presentation • Meet Management • March 2013Page 77
● BAY 94-8862 is a novel non-steroidal, potent and selective next generation MR antagonist
● Two steroidal MR antagonists (Spironolactone and Eplerenone) are approved for treating heart failure
● BAY 94-8862 efficacy and selectivity vshormone receptors as well as its balance between cardiac and renal efficacy is expected to result in an improved benefit-risk profile
● BAY 94-8862 is currently in Phase II for chronic heart failure and chronic kidney disease
● Phase IIa data planned for presentation at a scientific meeting in 2013
and injury
BAY 94-8862
MR-Signaling
Potassiumloss
Hypertension
Vascularinflammationand Injury
Sodiumretention
Myocardial/ Renal Fibrosis
CardiorenalDisease
MR: mineralocorticoid receptor
Expected Major Pipeline Newsflow 2013
• Bayer Investor Presentation • Meet Management • March 2013Page 78
Pipeline Project
Newsflow Timeframe
Xarelto Regulatory decision on secondary prevention of ACS (EU) 1H 2013e
Eylea Phase III study in mCNV (MYRROR) Data expected 1H 2013
Phase III study in DME (VIVID-DME) Data expected 2H 2013
Radium-223 dichloride
Initiation of additional clinical studies 2013e
Regulatory decision mCRPC US 2H 2013e
Regulatory decision mCRPC EU End 2013e / early 2014
Riociguat Update on potential next steps in the development program 1H 2013e
Nexavar Phase III breast cancer (RESILIENCE) Data expected Q1 2014
Regorafenib Regulatory decision mCRC EU 1H 2013e
Filing mGIST EU 1H 2013e
Initiation of phase III in CRC (after resection of liver mets) 2H 2013e
BAY 94-9027 Phase III study in hemophilia A Data expected early 2014
• Bayer Investor Presentation • Meet Management • March 2013Page 79
Global Leader in Consumer Health
Consumer Care –Gained Share in 2012
• Bayer Investor Presentation • Meet Management • March 2013Page 80
Global #2 with a portfolio of some of the world’s most recognized brands
Track record of performance
Continued market share gains
Highlights
Sales in € million; ∆% Fx & portfolio adj.
3,020 3,0803,371
3,5343,853
2008 2009 2010 2011 2012
+6%
Consumer Care –Multiple Brands with ≥ €100m Sales
• Bayer Investor Presentation • Meet Management • March 2013Page 81* Only Aspirin CC sales, excluding Rx Aspirin Cardio
494*
323
269
250
196
146
+1%
+5%
+14%
+8%
+4%
+3%
130 +8%
122 +5%
101 +8%Redoxon100 +8%
FY 2012 sales in € million (∆% yoy Fx-adj.)
Consumer Care – Aspire to Become #1 in Over-The-Counter Business
• Bayer Investor Presentation • Meet Management • March 2013Page 82
Leverage opportunities for all divisions across Bayer HealthCare platforms
Establish functional excellence in commercial organization
Fully maximize the potential of leading brands
Build a winning future portfolio
Improve position in emerging markets
Capture advantages
of our multidiv-isional setup
Invest in innovation
Open for bolt-on acquisitions and licensing
Major Brands Have Further Penetration Opportunities
• Bayer Investor Presentation • Meet Management • March 2013Page 83
Bepanthen
~ 75% Europe~75%
US
Aleve
~80%
Americas
Alka-Seltzer
Regional sales distribution FY 2012
Animal Health –A Top Player in an Attractive Market
• Bayer Investor Presentation • Meet Management • March 2013Page 84
Sales in € million; ∆% Fx & portfolio adj.
Global #5 in a growing market #3 in companion animal products (CAP)
#6 in food animal products (FAP)
Leading parasiticide-portfolio
Broadened portfolio and marketing reach by acquisition of Bomac and TEVA Animal Health
Highlights963 977
1,1201,186
1,303
2008 2009 2010 2011 2012
+4%
Animal Health – Rich Portfolio of Companion and Food Animal Products
• Bayer Investor Presentation • Meet Management • March 2013Page 85
Food Animal
Products
~40%
Companion Animal
Products
~60%
● Leading portfolio of endo- and ectoparasticides
● Complemented by a range of products including pharmacologicals, antibiotics etc.
Sales 2012 by segment
● Leading portfolio of endo- and ectoparasticides
● Rich portfolio further includes antibiotics, nutraceuticals, joint health products etc.
Animal Health – New Products to Strengthen Business
Pradofloxacin, the new generation fluoroquinolone Extended spectrum vs. previous fluoroquinolones Greater potential to limit selection for resistance Convenient formulations for both dogs and cats
1st combined endoparasiticide against roundworm and coccidia in dogs Easy and convenient single oral dose treatment Can be used already from 2 weeks of age Complements the endoparasiticides portfolio based on the active
ingredient emodepside
Seresto The new benchmark for flea and tick protection Outstanding efficacy based on combination of active ingredients Up to 8 months protection thanks to innovative polymer matrix technology Launch in EU 2012 / US January 2013, launch in further countries planned
for 2013
Veraflox
Procox
• Bayer Investor Presentation • Meet Management • March 2013Page 86
Radiology & Interventional – Combining Medrad and Diagnostic Imaging
• Bayer Investor Presentation • Meet Management • March 2013Page 87
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 – similar centers/physicians
Highlights
1,323 1,3631,474 1,498
1,606
2008 2009 2010 2011 2012
Sales in € million; ∆% Fx & portfolio adj.
* pro forma sales
+1%
Diabetes Care –Global Player in Blood Glucose Meters
• Bayer Investor Presentation • Meet Management • March 2013Page 88
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
Highlights
Sales in € million; ∆% Fx & portfolio adj.
9561,000 993 1,002
1,047
2008 2009 2010 2011 2012
+4%
Investor Handout – Meet ManagementBayer CropScience
March 2013 – Leverkusen
Crop Protection Saves Harvests and Boosts Yields
• Bayer Investor Presentation • Meet Management • March 2013Page 90
Committed to food security with focus on innovative, integrated and sustainable crop solutions to secure harvests and to increase yields
SeedGrowth solutions to give crops the right start
Herbicides to manage weeds and overcome resistance issues
Insecticides to control biting and sucking pests and help farmers reduce harvest losses
Fungicides to prevent the infection of crops by fungal diseases
Biologics for integrated pest and disease management
Seeds Lay the Foundation for a Successful Planting Season
• Bayer Investor Presentation • Meet Management • March 2013Page 91
Protect harvests against weeds, insects, diseases and stresses like drought and heat
Enhance yields to boost productivity and sustainability
Improve the quality and characteristics of harvested crops to meet the needs from seed to shelf; e.g. cotton fibers with better fiber properties
High quality seeds and traits can deliver solutions to farmers that will help them to:
Environmental Science Offers a Better Quality of Life
• Bayer Investor Presentation • Meet Management • March 2013Page 92
Bayer Garden / Advanced for the do-it-yourself gardener and home owner
Our Green Industry business which provides solutions for the public and private park and forestry sector
Professional Pest Management to help safeguard and guarantee hygiene
Vector Control which contributes to protect human health
Our products and services help to control pests and weeds and to solve health and hygiene issues with:
Leading the Way in Sustainable Crop Solutions
Sustainable Crop Solutions
Chemical Crop
Protection
BiologicalCrop
Protection
Seeds
Herbicides Fungicides Insecticides SeedGrowth
Microorganisms Microbial
extracts
Canola, cotton, rice, soy, wheat, vegetables
Conventionalseeds
GMO seeds Traits
Weed, pest & disease control
Resistance management
Better harvestwith improved: Yield Quality Processability Sustainability
GMO: Genetically modified organism• Bayer Investor Presentation • Meet Management • March 2013Page 93
Sales 2012: €8,383m
Insecticides€1,514mMarket position:
Fungicides€1,974m3Market position:
SeedGrowth€897m1Market position:
Herbicides €2,356m4Market position:
Env. Science €680m1Market position:
Seeds €962m7Market position:
Page 94
CropScience –A Leader in Chemical Crop Protection
• Bayer Investor Presentation • Meet Management • March 2013
1
Market positions based on company reportings and Cropnosis estimates
18%
24%
11%11%
8%
28%
26%
22%13%
9%
9%
7%6%
5% Fruits & Vegetables
CerealsOilseeds
Soy
Corn
Cotton
Rice
Sugar Crops
* by major crop groups excluding industrial business and non-agricultural solutions
CropScience Sales 2012*
Other
Fruits, Vegetables and Cereals –A Major Part of Our Portfolio
• Bayer Investor Presentation • Meet Management • March 2013Page 95
• Bayer Investor Presentation • Meet Management • March 2013Page 96
2012 – Excellent Performance in Positive Environment
Full Year 2012 –Excellent Performance
• Bayer Investor Presentation • Meet Management • March 2013Page 97
Crop Protection+16% (+13%)
EnvironmentalScience
+9% (+5%)
*before special items
2012 Sales Earnings In € million, ∆% yoy, () = Fx & portf. adjusted
CropScience €8,383m; +16% (+12%)
Price+1%
Volume+12%
Fx+4%
Portfolio-1%
6,741
FY‘11 FY‘12 FY‘11 FY‘12
1,654
2,008+21%
1,168
1,526+31%
Adj.EBITDA*
Adj.EBIT*
680962
Seeds+17% (+14%)
Herbicides
Fungicides
Seeds
Growth in all regions, especially in the US (new corn herbicides) and Brazil
Double-digit growth in several key markets (e.g with Fox in Brazil)
Growth in all regions; phase-out of WHO Class I products completed
Strong business expansion; high demand for innovative Poncho/Votivo
Double-digit growth in broad-acre crops; slight decline with vegetable seeds
Products both for professional users and consumers posting gains
2,356+10%
1,974+13%
1,514+15%
897+17%
680+5%
962+14%
Insecticides
Sales in € million; ∆% y-o-y Fx & portfolio adj.
FY 2011 Nominal growth FY 2012
Page 98 • Bayer Investor Presentation • Meet Management • March 2013
SeedGrowth
Env.Science
Full Year 2012 –All Segments Contributing to Growth
High demand for InVigor in Canada; launch of conventional oilseed rapein Europe
Expansion of cotton seed business driven by US and Brazil
Growing rice seed business in Asia(esp. India)
About 70 new vegetable seed varietieslaunched
Successful launch of Bayer soybean seed in the US
Build-up of global wheat seed business continued with new research cooperations
• Bayer Investor Presentation • Meet Management • March 2013Page 99
299 304
227311
17919940
47
2011 2012
820
962
Sales in € million; ∆% y-o-y, () Fx & portfolio adj.
2012 Highlights
Vegetables (-2%)
Rice (+23%)
Oilseeds (+33%)
Soybean (+83%)
Cotton (+10%)
Other+14%
Seeds – Double-Digit Growth in All Our Broad Acre Crops in 2012
Emerging Economies
25%
CropScience Sales in FY 2012
CropScience €8,383m; +16% (+12%)Latin
AmericaEastern Europe
Africa & Middle East
Emerging Asia³
~900
+7%
~1,800
+15%
~600
+16%
~300
+7%
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
18%
USA+19%
25%
43%
14%
EmergingEconomies¹+12%
Western Europe +5%
Others²+13%
Full Year 2012 –Growth in All RegionsSales in € million, ∆% yoy Fx adjusted
• Bayer Investor Presentation • Meet Management • March 2013Page 100
• Bayer Investor Presentation • Meet Management • March 2013Page 101
Executing our Strategic Roadmap
Executing Our Strategic Roadmap
Strengthen Customer Centricity
Lead the Way in Innovation
Enhance Crop Protection
Striving for first- and best-in-class solutions
Exploiting expertise in seeds, breeding, and chemical and biological crop protection
Driving commercial excellence in marketing and sales
Connecting partners in the value chain through integrated Go-to-Market practices
Improving portfolio through focused and integrated crop solutions
Increasing flexibility and efficiency
ExpandSeeds Business
Further strengthening position in vegetables, rice, oilseed rapeand cotton
Extending portfolioby building up business in soybean and wheat
• Bayer Investor Presentation • Meet Management • March 2013Page 102
Translate R&D Effectively into New Product Sales
• Bayer Investor Presentation • Meet Management • March 2013Page 103
Xpro (+61%) - New cereal fungicide with yield-boosting effect
Adengo herbicide family (+85%) -Excellent weed control in corn and cereals, also in case of glyphosate resistance
Belt (+54%) - Broad-spectrum insecticide with fast and long-lasting action
Launch of Luna fungicide in the US
First launch of new SeedGrowth family EverGol/Emesto in Canada
0.02
0.3
0.7
1.1
~1.4
~1.9
2007 2009 2011 2012 2013e 2015e
+60%
2012 HighlightsSales from new Crop Protection products launched since 2006 in € bn∆% y-o-y, () Fx adj.
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
Global peak sales potential of more than €300m
* SDHI: Succinate dehydrogenase inhibitorPage 104 • Bayer Investor Presentation • Meet Management • March 2013
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
Available since 2012 planting season in several key markets
Global peak sales potential of more than €250m
* SDHI: Succinate dehydrogenase inhibitor• Bayer Investor Presentation • Meet Management • March 2013Page 105
We Are The Company to Offer a Sustainable Alternative to Glyphosate to Fight Weed Resistance
• Bayer Investor Presentation • Meet Management • March 2013Page 106
Bayer CropSciencesustains the "Respect the Rotation" initiative to overcome weed management challenges
HPPD: Hydroxyphenyl-pyruvate dioxygenaseMGI: Mesotrione, Glufosinate-ammonium and Isoxaflutole
Weed resistance to glyphosate increasingly impacting crop production
Our LibertyLink is currently the only non-selective herbicide solution to glyphosate resistant weeds
We are committed to develop new and more sustainable weed management solutions
Innovation with new mode of action, HPPD herbicide tolerance, in soy and cotton
MGI triple stack herbicide-tolerance soybean trait submitted for approval
Highly effective pre-emergent and selective herbicide portfolio launched
Realising Further Growth Opportunities in Biologics
Biologics are bio-based products, either consisting of naturally-occurring living organisms or containing materials derived from plants, bacteria, fungi, yeasts or viruses
The market potential for Biologics is expected to triple from $1.2bn in 2010 to around $4bn in 2020
AgraQuest acquired in Q3 2012 for $425m (~€340m) plus milestone payments.Leading global provider of innovative biological pest management solutions based on natural microorganisms
German company Prophyta acquired in Q1 2013, provides customers well-established products primarily based on biological control agents, e.g. nematicide BioAct.
Acquisitions strengthen strategically important fruit and vegetables business
We aim to become the world leader in sustainable crop solutions
• Bayer Investor Presentation • Meet Management • March 2013Page 107
Customer Centricity Along the Entire Value Chain
• Bayer Investor Presentation • Meet Management • March 2013Page 108
240 food chain partnerships covering most of the main fruit & vegetable crops
Premium seeds and effective crop protection products to maximize yield
Consistent and high harvest quality for efficient food processing
Meeting highest food safety standards
Better product quality for the consumer
Bayer CropScience
Our offers GrowersDis
trib
utor
s /
seed
com
pani
es
Ret
aile
rs
Adv
isor
s
Providing Seed-to-Shelf Solutions
Trad
ers
Food
pro
cess
ors
Food
reta
ilers
Consumers
Best-Practice Examples of our New Go-To-Market Approach
• Bayer Investor Presentation • Meet Management • March 2013Page 109
Approach Achievement
Food chain partnerships in grapes in Brazil, Chile, Italy and India
Market share in grapes in Brazil +5% ~ 60% market share in table grapes in
Chile (largest exporter worldwide)
"On demand" SeedGrowth system with a global network of 10 Seed Treatment Application Centers
2012 SeedGrowth sales* +17% Further roll-out of SeedGrowth franchise
in Asia Pacific (sales in China* +30%)Combine innovative technology of Moventoinsecticide with additional service offerings 2012 Movento sales* +49%
BayDir service in Germany offers tailored and immediate information for farmers through Internet and mobile phone apps
Further strengthened our position in the German market
* Sales ∆% y-o-y Fx adj.
Unique combination of Seeds, Small Molecules and Biologics in R&D Operations
• Bayer Investor Presentation • Meet Management • March 2013Page 110
Commercial deployment
Combining state-of the art techniquesIntegrated approach
Regulatory excellence
Collaboration with best-in-class organizations
Traits• Agronomic traits• Germplasm• Biotech
• Bacteria• Naturals
Biologics
Seeds
BiologicsSmallMolecules
Breeding
• Insecticides• Fungicides• Herbicides
Chemicals
• Computational life science
• Phenotyping, field trials• Genome sequencing • Gene expression
• Genes of interest• Specific molecular targets
• Marker assisted breeding• Trait selection chemistry• Microbial strain collection Integrated plant
health solution
Next generationproduct
Commercial deployment
Pipeline Peak Sales Potential €4bn from Products Launched 2011 - 2016*
• Bayer Investor Presentation • Meet Management • March 2013Page 111
Crop Protection (excl. Biologics)
Cotton
Canola
Wheat
BiologicsSeeds & Vegetables
Soybean
Rice
2011
Fungicide
Herbicide
SeedGrowth**
GlyTol Cotton
Seed Varieties~80 launches in vegetables & broad acre crops
2012
~ 100 launches in vegetables & broad acre crops
Bayer Oilseed Rape Seed
Fungicide
Bayer Soybean Seed
SeedGrowth**
Seed Varieties
2013
~110 launches in vegetables & broadacre crops
Roundup Ready HybridCanola
SeedGrowth** / Fung.B. Subtilis
FungicideOPTIVA
Bayer Oilseed Mustard Hybrids
Seed Varieties
2014
Canola Yield Increase
Numerous launches in vegetables & broad acre crops
SivantoInsecticide
New Bayer BrandInsecticide
Insect Resistant Hybrid Rice
TwinLink + GlyTol Cotton
Seed Varieties
2016
Disease Res. + Salinity Tol. Hybrid Rice
Insect + Disease Res. Hybrid Rice
Improved Canola Oil Profile
Dual Herb. Tol. + Novel Ins. Res. Cotton
Fungi- / Bactericide
Serenade AEW
Seed VarietiesNumerous launches in vegetables & broad acre crops
2015
LibertyLink + R. Ready Hybrid Canola
Biologics Fungicide
Biologics Fungi- / Bactericide
TriafamoneHerbicide
GlyTol + HPPD Tolerant Soybeans
Bayer Wheat Seed
BiologicsInsecticide
Disease Res. + Submerge. Tol. Hybrid Rice
Seed VarietiesNumerous launches in vegetables & broad acre crops
BiologicsInsecticide
*Estimated and subject to regulatory approval**Formerly called Seed Treatment
Sivanto – Innovative and User-friendly Broad-spectrum Insecticide
Active ingredient: flupyradifurone
Control of sucking pests such as aphids, cicadas and whiteflies
Intended primarily for fruit and vegetables, but also for broad acre crops
Improved environmental profile
Launch planned 2014 / 2015
• Bayer Investor Presentation • Meet Management • March 2013Page 112
2010 2011 2012 2016e
Crop Protection/Environmental ScienceSeeds
Increasing the R&D Share for Seeds
• Bayer Investor Presentation • Meet Management • March 2013Page 113
In € million
Seeds Fungicides BiologicsInsecticides SeedGrowth Herbicides
~1,200
~800~600
~500
~500
~400
Pipeline Peak Sales Potential €4bn from Products Launched 2011 – 2016*.
* Estimated and subject to regulatory approval
63%
37%35%
65%70%
30%
722 723 782
Pipeline Value by SegmentR&D Split
Sales in € million; ∆% y-o-y Fx & portfolio adj.
820962
2011 2012 2015e
Aspiring Double-Digit Seeds Growth p.a.
• Bayer Investor Presentation • Meet Management • March 2013Page 114
+14%
Double-digit % CAGR expected
Market leading positions in chosen crops: #1 in canola #1 in cotton #1 in hybrid rice #4-5 in vegetables
Strategy to develop soybean and wheat business in place
Increase R&D investment
Complement business expansion through bolt-on acquisitions
Extending the Seed Footprint
TwinLink + GlyTolin cotton
Build up a global wheatseed business
Building a proprietarysoybean seed business
First dual herbicide – dual insecticide product
Two genes for effectiveinsect control
Herbicide tolerance forglufosinate and glyphosate
Applied in high-yieldingFibermax and Stonevillecotton varieties
Anticipated launch in 2014
Significant investment intoR&D of new wheat varietiesand traits
Focus on productivity, stress tolerance, nutrient uptake
Establishing a broadgermplasm pool
Global breading network First new varieties expected
by 2015 in Europe
LibertyLink herbicidetolerance technologybroadly outlicensed
Acquisition of HornbeckSeed Company in the US
Bayer soybean seedlaunched in 2012
Broad germplasm pool andpromising trait pipeline
• Bayer Investor Presentation • Meet Management • March 2013Page 115
Significant Investments in Seeds Since 2011
Targeted acquisitions to strengthen core crops
Hornbeck Seed - to invest in southern US soybean seed market
Raps GbR - to strengthen oilseed rape business in Europe
Abbott & Cobb – significant step forward in US watermelon market
Germplasm assets of ProSoy Genetics, US – well adapted to the broad Midwest growing region
Wheat breeding stations set-up in Europe, US, Australia
Several agreements with wheat players to broaden access to germplasm
Around 90 research collaborations with partners in the public and private sector
R&D investment increased by ~15% in 2012 to ~€300m
• Bayer Investor Presentation • Meet Management • March 2013Page 116
Strategic Progress Achieved
EnhanceCrop Protection
Strengthen Customer Centricity
Lead the Way in Innovation
Expand Seeds Business
● €1.1bn sales in 2012 with products launched since 2006● All WHO class I insecticides removed from our portfolio● Expansion of Biologics
● Increased grower orientation ● Improved channel management practices● Broadened food chain partnership business model
● Pipeline Peak Sales Potential* €4bn● Increased investment in Seeds R&D● Innovating at the interface between chemistry and biology
● Strengthened positions in cotton, canola and rice● Increased investments in soybean, wheat and vegetables● Development of innovative traits
• Bayer Investor Presentation • Meet Management • March 2013Page 117* from products launched between 2011-2016
• Bayer Investor Presentation • Meet Management • March 2013Page 118
Positive Outlook
Crop Commodity Prices Volatile, But Still at Attractive Levels
• Bayer Investor Presentation • Meet Management • March 2013Page 119Source: Bloomberg
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
0
100
200
300
400
500
600
700
800
900
1,000
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13
Soybean (LS) Corn (LS) Wheat (LS) Canola (LS) Rice (RS) Cotton (RS)Right scale (RS); Left scale (LS)
USD/ton USD/ton
Seeds and Crop Protection Markets Expected to Grow 5% in 2013
• Bayer Investor Presentation • Meet Management • March 2013Page 120
Market environment expected to remain positive, though volatile
Attractive crop commodity price levels predicted at least for 1H 2013
Latin America: strongest market growth due to increasing soybean acreage
Asia / Pacific: cereals, rice and specialty crops fueling market growth
Eastern Europe: Above-average growth potential
Industrialized regions of the northern hemisphere: market expansion, but much more slowly than in 2012
• Bayer Investor Presentation • Meet Management • March 2013Page 121
CropScience – Above Market Growth at Benchmark Profitability
Priority 2012 Target 2013*
Aspiration 2015
Above-market sales growth +12.4% to €8.4bn
high-single digit %
towards €9bn
CAGR ~6% towards €10bn
Translate R&D effectively into new product sales (CP products launched since 2006)
€1.1bn ~€1.4bn ~€1.9bn
Extend seeds footprint +14%
Maintain industry leading profitability level 24.0% slight improvement ~24%
Sales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales
double-digit % growth p.a.
CP: Crop Protection*Assuming Fx rate of $1.29 per €
Outlook depends on specific planning assumptions as detailed in the Annual Report
double-digit % growth
050
100150200250300350400450500
2012 2013e 2014e 2015e
Building up capacity for top Crop Protection brands including our herbicide Liberty/Basta and ourfungicide product families Nativoand Prosaro
Expanding the infrastructure for our Seeds business (breeding stations, greenhouses and seed processing facilities)
Expanding and modernizing R&D facilities (RTP/USA, Davis/USA, Monheim/Germany)
We are Ensuring a World-Class Product Supply by Further Investing
• Bayer Investor Presentation • Meet Management • March 2013Page 122
Capital Expenditures (PPE only, in €m)
Investor Handout – Meet ManagementBayer MaterialScience
March 2013 – Leverkusen
MaterialScience –Operating in Attractive Markets
• Bayer Investor Presentation • Meet Management • March 2013Page 124
Market Positioning Financial Performance Business Perspectives
2012 volume growth in line with global real GDP development
Capital return below cost of capital, burdened by high investments
History of cash generation in excess of own investment needs
Global megatrends driving growth
Target to grow volumes above GDP
Closely monitor timing and necessity of capacity expansions
Earn a premium over Cost of Capital
Leading positions (#1/2) in all business segments
Operating a state-of-the-art global production network
Maintaining close customer relationships
A leader in process technology / sustainability
• Bayer Investor Presentation • Meet Management • March 2013Page 125
Market Positioning
MaterialScience –Leading Positions in All Segments
• Bayer Investor Presentation • Meet Management • March 2013*depending on segment
** aliph. isocyanates
MaterialScience €11,503m
Polyurethanes€5,995m #1-2; approx. 20-24% market share*
52%6%
25%
17%
Sales in € million
Polycarbonates€2,823m #1; approx. 27% market share
Coatings, Adhesives, Specialties€1,972m #1; >40% market share**
Industrial Operations €713m
Sales Split by Segment 2012
Page 126
MaterialScience –Sales By Key Customer Industries
• Bayer Investor Presentation • Meet Management • March 2013
Others(sports, leisure, footwear packaging, medical, etc.)
Furniture / Wood
AutomotiveChemicals
Electro/Electronics
Construction17%
28%
19%
20%
8%20%
16%
Bayer MaterialScience sales by industry in 2012
Page 127
A Global Leader in its Markets Operating a Worldwide State-of-the-Art Plant Network
• Bayer Investor Presentation • Meet Management • March 2013Page 128
HeadquartersMajor Production SitesDownstream Businesses
Position*
Americas
# 1 # 2 # 1 PUR PCS CAS
Position*
EMEA#
*Market share based on estimated sales following self-assessment# Europe, Middle East & Africa
# 1 # 1 # 1 PUR PCS CAS
Position*
Asia/Pacific
# 2-3 # 1-2 # 1 PUR PCS CAS
Bayer´s Largest, Fully Integrated Polymer Site, Constructed in Shanghai
• Bayer Investor Presentation • Meet Management • March 2013Page 129
Leadership Strengthened Through Local Production and Know-how
Existing Capacities
CAS – HDI30 kt
PUR – MDI350 kt
PUR – TDI250 kt
PCS200 kt
CAS: coatings, adhesives & specialties; HDI: hexamethylenediisocyanate; MDI: methyl diphenylene diisocyanate; TDI: toluene
diisocyanate; PCS: polycarbonate; PUR: polyurethanes
Integrated production site for polycarbonate, polyurethanes and coating raw materials
>€2bn invested in greenfield project All production lines in world-scale format Excellent infrastructure and customer
proximity State-of-the-art technologies lead to:
Lower conversion costs Energy savings
Further Expansion Planned
A Leader in Process Technology & Sustainability
• Bayer Investor Presentation • Meet Management • March 2013
Proc
ess
Ben
efits
*St
atus
TDI Gas Phase Phosgenation
Adiabatic Aniline Production
ODC Technology for Chlorine Production
*Compared with conventional technologyODC: Oxygen depolarized cathode
Uses up to 60% lessenergy
Requires 80% less solvent
CapEx reduced by 20%
Uses 25% less energy
20% less CO2 emissions
CapEx reduced by 30%
Uses 30% less energy
Reduces indirect CO2emissions
World-scale facilitysince 2011 in Shanghai, China
Technology to be used in new TDI plant in Dormagen
Pilot plant in Antwerp, Belgium
Plant in Shanghai since 2010
Demo facility in Krefeld-Uerdingen
External marketing planned from 2013
Page 130
• Bayer Investor Presentation • Meet Management • March 2013Page 131
Financial Performance
• Bayer Investor Presentation • Meet Management • March 2013
Full Year 2012 –Operating Performance
25%5,995
2,823
Polycarbonates -2% (-7%)
Polyurethanes+12% (+8%)
2011 2012
AdjustedEBITDA*
1,1711,251
* before special items
2011 2012
AdjustedEBIT*
589 629
+7%
+7%
2012 Sales Earnings
1,972713
Sales in € million; ∆% y-o-y, () Fx & portfolio adj.
Coatings, Adhesives, Specialties +3% (+4%)
IndustrialOperations+8% (+6%)
Price1%
Volume+2%
Fx+4%
Portfolio-1%
MaterialScience €11,503m; +6% (+3%)
Page 132
Full Year 2012 –Regional Sales Development
• Bayer Investor Presentation • Meet Management • March 2013
Emerging Economies2012 MaterialScience Sales
MaterialScience €11,503m; +2%Latin
AmericaEastern Europe
Africa & Middle East
Emerging Asia³
~2,760
+1%
~930
+15%
~680
+7%
~575
-5%
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
USA+7%
36%
Western Europe -1%
42%
EmergingEconomies¹+3%
4%Others²+2%
Sales in € million; ∆% y-o-y Fx adjusted
20%
32%
43%
5%
Page 133
• Bayer Investor Presentation • Meet Management • March 2013Page 134
Full Year 2012 –Impact of Raw Materials
Petrochemical feedstock prices on a record level
Total raw material costs at ~€5.7bn in 2012, vs ~€5.1bn in 2011
Energy costs at ~€0.5bn in 2012, down ~€0.1bn vs 2011
Raw material price increases only partly compensated by higher selling prices
Raw Material Cost Split 2012*
Exposure by valueBenzene (incl. phenol, aniline, styrene)ToluenePropyleneOther petrochemical feedstockOthers
* MaterialScience raw material basket used as proxy, coversapprox. 80% of total purchased raw materials
Cash Generation in Excess of Own Investment Need
• Bayer Investor Presentation • Meet Management • March 20132002 and 2003 as reported in 2004 excluding acquisitions or divestments
In € million
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
902
1,108
464
1,113
332
498
715
1,388
690
1,281
870
672
1,147
782
504 498565
775763849
Page 135
620739
CapEx (cash-relevant)
Net Cash Flow
~€3.6bn Free Operating Cash Flow in 11 years Free Operating Cash Flow
206 649
166
673592
277
110345
265 210 119
• Bayer Investor Presentation • Meet Management • March 2013Page 136
Business Perspectives
• Bayer Investor Presentation • Meet Management • March 2013Page 137
Sales ∆ Fx & portf. adjusted, margin = EBITDA before special items to sales
Higher Asset Utilization & Efficiency Measures Are Driving Performance
2012 Target 2013 Aspiration 2015
Sales +3.0% to €11.5bn (volumes +2%)
Adj. EBITDA +7% to €1,251m
CFROI# 5.6% < WACC 7.1%
Sales to slightly increase to ~€12bn
Adj. EBITDA to further improve
Q1‘2013 vs Q4‘2012: Sales to further increase and adj. EBITDA at same level
Grow business (volume) above global GDP
Defend market leading positions in PCS and PUR
Realize 150 bp margin contribution through new efficiency initiative
Optimize asset structure in Germany
CFROI# > WACC
*Assuming Fx rate of $1.29 per €#after reproduction
Outlook depends on specific planning assumptions as detailed in the Annual Report
• Bayer Investor Presentation • Meet Management • March 2013Page 138
Outlook 2013 –Economy and Key Customer Industries
20%
17%
28%
19%
Automotive(+2%)
Electro /Electronic
(+5%)
Construction(+4%)
Furniture(+5%)
Others(incl. Chemicals)
2.5
0.1 0.4
1.7
5.1
4
3
2
1
5
GDP growth % prev. year
16%
*Assuming Fx rate of $1.29 per €Outlook depends on specific planning assumptions as detailed in the Annual Report
Sales by industry 2012 and expected 2013 growth
Global Economic GDP Outlook Key Customer Industries Outlook
• Bayer Investor Presentation • Meet Management • March 2013Page 139
Approaching industry capacityutilization rates around 90*
Approaching industry capacityutilization rates in the high 80’s
Approaching industry capacityutilization rates in the high 80’s
= nameplate market capacities based on CMAI data, public competitor announcements and internal Bayer estimates
* adjusted for non available capacities
PCS Supply MDI SupplyTDI Supply
Demand > Supply~6-7% p.a ~5-6% p.a.
Demand > Supply~4% p.a ~1-2% p.a.
Demand > Supply~6% p.a ~3-4% p.a.
1,100500
2012 2015e
5,900
~7,000
2012 2015e
2,400 ~2,500100
2012 2015e
4,800~5,300
Demand / Supply Balance in the Industry Expected to ImproveSupply in kt p.a.
• Bayer Investor Presentation • Meet Management • March 2013Page 140
Profitability Improvement Through New Efficiency Initiative Until 2015
New efficiency initiative improves cost structure and increases adjusted EBITDA margin by 150bp
Initiative comprises more than 100 measures across the entire value chain
Examples
Business Units Consolidation of system houses Pricing excellence programs
Organization Optimization of regional structures (e.g. Canada & US)
Production Further initiatives to improve asset productivity (e.g. maintenance schedules, engineering setup)
Supply Chain Optimization of logistics services
Selling & Administration
Further reduce costs by leveraging established global ERP platform and standardized processes
ERP: enterprise resource planning
Two Major Projects to Optimize Plant Structure in Germany
• Bayer Investor Presentation • Meet Management • March 2013
Replacement of existing 205 kt TDI capacities by new world-scale 300 kt plant using innovative gas-phase phosgenation process by 2014
MDI: methyl diphenylene diisocyanate, TDI: toluene diisocyanatePage 141
TDI Dormagen
After finishing the TDI project, conversion of existing TDI facility in Brunsbüttel into MDI plant, incorporating adiabatic aniline process innovation
New site will become a world-scale plant
MDI Brunsbüttel
MaterialScience as an Integrated Solution Provider
• Bayer Investor Presentation • Meet Management • March 2013Page 142
Megatrends offer business opportunities worldwide, with the emerging economies at the forefront
Ongoing urbanization
New and improved
transportation systems
Need for better energy
efficiency
Higher living
standards
Proportion of city dwellers expected to increase from 50% in 2010 to 70% in
2050*
Lightweight carsNew energy vehicle
development High-speed rail trans-
portation networks
EcoConstruction with high thermal insulation
standardsCold-chain efficiency
Over 40m people enter the middle class
every yearImproved housing
standards
Source: Steria, The Future Report 2012
• Bayer Investor Presentation • Meet Management • March 2013Page 143
Our High-tech Materials Meet Key Customer Industry Needs
Poly-carbonates
Poly-urethanes
& CAS
Low weight for better energy efficiency in transportation High mechanical strength enables product durability Transparency for optical applications and architectural glazing High heat resistance and reliable electrical insulation properties Excellent design flexibility that goes beyond that of glass
Outstanding thermal insulation properties Versatility allowing full spectrum of flexible to rigid foam applications Excellent abrasion resistance and rebound resilience Durability for reliable protective coatings
AutomotiveConstruction Electro / Electronics
CAS: Coatings, Adhesives, Specialties
Polyurethane-based Insulation for Residential & Commercial Buildings
• Bayer Investor Presentation • Meet Management • March 2013
PUR Isoboards for Thermal Insulation
Growth drivers EU: From 2020 on, new
buildings have to be constructed as “nearly zero-energy buildings”
US: New standard requires 30% less energy use for renovated homes and commercial buildings
1 kg polyurethane saves 360 to 755 kg CO2 emissions*
PUR in construction industry in 2012: approx. €5.7bn, estimated average growth rate of ~8% p.a.
*Additional insulation, savings over entire product life-cycle of 50 years, including production and end-of-life stages; PUR: polyurethane
External Thermal Insulation Composite Systems (ETICS) save >25% energy compared with other insulation materials
Joint solution development with key industry players to fulfill high industry requirements
PUR Metal Sandwich Panels Prefabricated and mainly applied for industrial
and commercial buildings as well as cold storage
Easy handling and fast site assembly
Page 144
Polycarbonate Sheets for Heat Management in Buildings
• Bayer Investor Presentation • Meet Management • March 2013
Combined light and heat management to reduce energy requirements
Significant reduction of CO2 emissions
Integration of solar energy panels
Good weather stability
Advantages over glass: Design freedom, safety, weight
Growing demand for non-electrical indoor climate control
Translucency levels of 65-85%, ensure the maximum amount of daylight inside buildings
Makrolon® meets international fire protection requirements (not self-igniting)
Global market size 2012: approx. 320 kt* (complete roofing market), estimated average growth rate of ~4% p.a.
Polycarbonate Multi-Wall Sheets
Growth drivers
Page 145* Internal estimate
• Bayer Investor Presentation • Meet Management • March 2013Page 146
Polyurethane-based Insulation in Cold Chain
Growth drivers Globally more stringent energy
saving regulations Increasing demand for trans-
porting temperature sensitive goods
Increasing standard of living in emerging markets triggers continuously growing demand for appliances
PUR in refrigerator industry 2012: approx. €2.6bn, estimated average growth rate of ~6% p.a.
Refrigerators Refrigeration accounts on average for 20% of
a household’s electricity consumption
Replacing all old refrigerators with A++ appliances could cut annual CO2 emissions in the EU by 22 million metric tons
PUR insulation increased energy efficiency of refrigerators by 65% from 1950-2005
BMS’s innovative Baytherm® Microcell foam: Reduces pore size of foam up to 40% Reduces thermal conductivity up to 10%
PUR: polyurethane
Examples of Bayer´s Materials for Energy Efficient Cars
• Bayer Investor Presentation • Meet Management • March 2013
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
* Based on an average automotive weight of 1,300 kgPage 147
10% less weight
5% less fuel*
=
Increased Energy Efficiency in Cars Through Polycarbonates
• Bayer Investor Presentation • Meet Management • March 2013
Growth drivers
Polycarbonates Heat stability and optical quality enable new
LED-based lighting systems
Flame-retardant polycarbonate blends protect batteries used in future cars with hybrid engines
Car body parts made from polycarbonate blends reduce weight
Automotive glazing out of polycarbonate combines high weight saving potential with outstanding thermal insulation
Broad global political initiatives promoting e-mobility
Increasing use of electrical devices requires flame retardancy of plastics
Polycarbonate glazing offers a weight advantage of 30-50% compared to real glass
81m light vehicles* produced globally in 2012, estimated average growth rate of 5-6% p.a.
*includes cars and light commercial vehicles up to a weight of 6tPage 148