Bayer Investor Presentation Roadshow Frankfurt

Roadshow Frankfurt

Investor Presentation
Dr. Marijn Dekkers
CEO

2011, November 4

Disclaimer
This presentation may contain forward-looking statements based on current
assumptions and forecasts made by Bayer Group or subgroup management.
Various known and unknown risks, uncertainties and other factors could lead to
material 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 are
available on the Bayer website at www.bayer.com.
The company assumes no liability whatsoever to update these forward-looking
statements or to conform them to future events or developments.

Das Bild k ann zurzeit nicht angezeigt werden.

3rd quarter 2011

Group Outlook confirmed

Page 1 • Investor Presentation • Roadshow Frankfurt • Marijn Dekkers, CEO • November 4, 2011

3rd Quarter 2011 –
Bayer Confirms Group Outlook
 Delivered growth and performance, adj. sales up 5%, adj. EBITDA up 8%, reported
EPS +123%, Core EPS +18%

 Further strategic progress:
 Innovation pipeline: Xarelto: positive AdCom vote, positive CHMP opinion and
successful ATLAS trial; Alpharadin: FDA fast track designation; Regorafenib: phase III
mCRC stopped early on success

 Emerging markets: 10% organic growth
 Productivity: Group wide restructuring plans with €320 million annualised savings
already implemented

 Full-year 2011 Group financial outlook reiterated: On track for 5-7% organic
sales growth, adj. EBITDA > €7.5bn and Core EPS growth of ~15%


Successful Development Continued
Q3‘11 ∆% Highlights of Financial Results
€ million € million

Sales 8,670 +1 (+5)  All subgroups contributed to sales
EBITDA
growth
- reported 1,731 +41
 Continuing momentum in emerging
- adjusted 1,805 +8
markets
EBIT
- reported 1,099 +95  Adj. EBITDA raised on lower costs
- adjusted 1,174 +17 at HealthCare and higher volumes
Net income 642 +125
at CropScience. MaterialScience
lower due to higher raw material and
Net cash flow 1,577 +1
energy costs
Free operating cash flow 1,223 +5
EPS  Reported EBIT impacted by net
- reported 0.78€ +123 special charges of €75m (prev. year
- core 1.12€ +18 €436m)
( ) = Fx & portfolio adjusted


Cash Flow And Net Debt Development
Q3 2011 Cash Flow Net Debt Development
In € million In € billion

-0.4
GCF NCF Invest- oFCF
cont. ments
7.4 7.0

1,327 1,577 354 1,223

∆%
y-o-y +50 +1 -10 +5
Q2´11 Q3´11


HealthCare –
Emerging Markets Driving Growth
Q3’11 Sales Earnings
in € million, ∆% yoy, () = Fx & portf. adjusted Adj. Adj.
Pharma EBITDA EBIT
Consumer
Health 36% -3% (0%) 1,226 +9%
0% (+4%) 1,122
1,537 2,663
909 +16%
785
739 853 +15%
470 600 +28%

383 373 -3% 315 309 -2%

HealthCare €4,200m; -2% (+2%) Q3‘10 Q3‘11 Q3‘10 Q3‘11

Price Volume Fx Portfolio
0.6% 1.0% -3.5% 0.2%


CropScience –
Strong Volume Growth At Crop Protection
Crop Protection / EBITDA EBIT
Environmental
Science 36% BioScience
-9% (-3%) +4% (+11%) 165 +47%
114 1,265

112

470 600

46
·
-18
CropScience €1,379m; +3% (+9%)
Q3‘10 Q3‘11 Q3‘10 Q3‘11
Price Volume Fx Portfolio
-1.9% 11.3% -5.9% -0.7%


MaterialScience –
Sales Driven By Higher Selling Prices
EBITDA EBIT
Polycarbonates Polyurethanes
+3% (+7%) 36% +4% (+7%)
408
749 1,371
348 -15%

259
196 -24%
CAS* 475
0% (+3%)
173
IO**
+21% (+24%)

MaterialScience €2,768m; +4% (+7%) Q3‘10 Q3‘11 Q3‘10 Q3‘11

Price Volume Fx Portfolio *CAS: Coatings, Adhesives, Specialties
7.1% 0.3% -3.7% 0.2% ** IO: Industrial Operations


Full Year 2011 –
Group Outlook Confirmed
Sales ∆ Fx and portfolio adjusted, EBITDA pre-special items

2011E 2011E
2010 ∆
Original Actual1

Sales 4-6% 5-7% to
(Fx & portf. €35.1bn +8%
adjusted) €35-36bn €36-37bn

adj. Improve
€7.1bn +10% > €7.5bn
EBITDA toward €7.5bn

Core EPS €4.19 +15% ~10% ∽15%

1 As published with Q3 stockholder’s newsletter
Outlook depends on specific planning assumptions
Page 8 • Investor Presentation • Roadshow Frankfurt • Marijn Dekkers, CEO • November 4, 2011 as detailed in the Annual/ Quarterly Report

Fiscal 2011 –
Guidance By Subgroup
Updated:
Low-single digit (prev.: low- to mid-single digit) increase of sales.
HealthCare Expect adjusted EBITDA to grow by a mid-single digit percentage
to at least €4.6bn (prev.: small improvement).
Updated:
Expect virtually unchanged or only slightly higher sales (prev.:
Pharma low- to mid-single digit increase). Plan to increase adj. EBITDA by
about 5%, improving the adj. EBITDA margin to approx. 30%
(prev.: raise adj. EBITDA margin).

Consumer Unchanged:
Health Mid-single digit growth of sales and adj. EBITDA.

Updated:
High-single-digit percentage higher sales and growth of adj.
CropScience EBITDA by more than 20% (prev.: about 20%) compared to weak
prior year.
Updated:
Higher Q4’11 sales but lower adj. EBITDA than in Q4’10 in view of
continued increases in raw material and energy costs. Expect to
MaterialScience raise full-year sales by high-single-digit, posting slightly lower adj.
EBITDA in the region of €1.3bn (prev.: grow adj. EBITDA at a
higher rate than sales).
Outlook depends on specific planning assumptions
Page 9 • Investor Presentation • Roadshow Frankfurt • Marijn Dekkers, CEO • November 4, 2011 as detailed in the Annual/ Quarterly Report

Building a World-Class
Innovation Company


Building A World-Class Innovation
Company

Portfolio Growth Productivity

Build on leading industry Invest in innovation Decomplex structures
position in all 3 capabilities and processes
subgroups
Maximize value of new Implement two-year
Enhance competitive product pipeline strength group restructuring plan
position
Realize emerging market
opportunity

Target is to deliver mid-single digit organic sales growth in 2011
and to invest €15bn in growth during 2011 - 2013


Bayer –
A Leader in Its Markets
€16.9bn HealthCare
Pharmaceuticals €10.9bn,
leading positions in key categories

Consumer Health €6.0bn,
20% OTC pharmaceuticals, blood glucose meters and
50% veterinary medicines, global #2-4

€6.8bn CropScience
Agrochemicals and seeds & traits,
global #2 in agrochemicals
30%

€10.2bn MaterialScience
Polyurethanes and polycarbonates,
global #1/2

Sales 2010: €35.1bn

Break-down excluding reconciliation


New Product

Pipeline Strength


Promising Late-Stage Pharma Pipeline

What it does Status
Cardiology

1st indication launched, filed;
Xarelto inhibits blood clot formation
phase III

lowers blood pressure in the
Riociguat lung
phase III

inhibits enzymes important for launched, additional indications
Nexavar tumor growth in phase II/III
Oncology

inhibits enzymes important for CORRECT trial (phase IIII) in
Regorafenib tumor growth CRC stopped early on success

targeted treatment of bone ALSYMPCA trial (phase III)
Alpharadin metastases in prostate cancer stopped early on success
Diseases

inhibits formation of new blood
Eye

VEGF Trap-Eye vessels
1st indication filed; phase III


Xarelto –
Novel Direct Factor Xa Inhibitor
 Large global program involving over 75,000 patients
 Met primary efficacy endpoints in 9 phase III studies:
 RECORD 1-4, EINSTEIN DVT and EINSTEIN Extension; Rocket AF; ATLAS
TIMI51; MAGELLAN
 Marketing & regulatory status:
 Launched in >85 countries for VTE prevention following total knee / hip
replacement surgery
 Filed for stroke prevention in patients with atrial fibrillation (SPAF) in all major
regions
 Positive FDA AdCom vote on approvability in SPAF
 European Committee (CHMP) recommends approval in SPAF and DVT
treatment
 ATLAS TIMI51 phase III trial (ACS) met primary efficacy endpoint; data to be
presented at AHA (Nov. 13, 2011); filing planned for end 2011
 EINSTEIN PE phase III program ongoing – data expected
end 2011/early 2012
DVT: deep vein thrombosis
VTE: venous thromboembolism

VEGF Trap-Eye –
Fusion Protein To Combat Eye Diseases

 In-licensed from Regeneron – Bayer has exclusive marketing rights ex-US
 Met primary efficacy endpoint in 4 phase III studies (VIEW I & II, Copernicus
& Galileo)
 Submitted for marketing approval to European and Japanese health
authorities for wet age related macular degeneration1
 Filing for central retinal vein occlusion planned for 2012
 Additional studies in diabetic macular edema and myopic choroidal
neovascularization ongoing

1 US submission (February 2011) by Regeneron


Alpharadin – New Opportunity to Treat
Bone Metastases
 Alpha-pharmaceutical (based on 223Radium, delivering highly energetic,
short ranging radiation) - in-licensed from Algeta
 Radium as natural bone seeker targeting bone metastases
 ALSYMPCA (phase III) in patients with bone metastases in prostate cancer
(HRPC) stopped early - Alpharadin demonstrated 44% improvement in
overall survival
 Filing targeted mid 2012
 Fast track status granted by FDA

Tumor cells
Newly formed
bone

Bone metastases Radium-223 deposition Radium-223: highly localized tumor cell killing

HRPC: symptomatic hormone-refractory prostate cancer

Regorafenib –
New Treatment Option in Cancer
 Oral multi-kinase inhibitor of angiogenic, stromal and oncogenic receptor
tyrosine kinases
 Currently studied in late-stage clinical trials in colorectal and gastrointestinal
stromal tumors (GIST)
 CORRECT phase III trial in metastatic colorectal cancer* (mCRC) stopped
early on success (Oct ‘11)
 Study met its primary endpoint of significantly improving overall survival
 Full data expected to be presented at a scientific congress in Q1’12
 Phase III program in GIST ongoing, expect results early 2012
 FDA granted orphan drug (GIST) and Fast Track (GIST & mCRC)
designation

* for patients whose disease has progressed after
approved standard therapies


CropScience –
Innovation Leadership
R&D spending in € million
Best-in-class R&D pipeline
>850
 23 new agrochemical active ingredients
722 launched since 2000, generated sales of €2bn
664 in 2009

 Launched >45 AgChem formulations and
>170 seed varieties since 2010

 Planning to launch 4 new molecules between
2012 and 2015

 Refocus R&D: BioScience investment
significantly increased

2005 2010 2015e

AgChem BioScience


MaterialScience –
World-Class Applications Research
Bayseal ® Baytherm®
Creates a seamless air Combines high mechanical
barrier system working like a strength with high insulating
building envelope capacity and low weight

Makrolon®
DurFlex® Forming lightweight exterior
Improving noise reduction car body parts from
and economics of rail track polycarbonate
operations

Bayblend® FR Bayfol Reflex ®
A new safety concept for car Actuators out of polymers
batteries to make housings give tactile feedback precisely
flame retardant adjusted to requirements

Makrofol®ID Baycusan®
Film for ID cards providing Solvent-free polyurethane
scratch resistance and based polymers for cosmetic
protecting against counterfeit applications


Opportunity

Emerging Markets


9 Months 2011 –
Emerging Markets Leading The Growth
9M’2011 Group sales by region Emerging Economies
+9%
USA Emerging ~3,800
+4% Economies¹
20% 36% +11% +10%
19% 36%
~2,900

+14%

~1,700 +13%
34% 11% ~1,300

Western Europe Others²
+5% +5%

Group €27,337m; +7% Emerging Latin Eastern Africa &
Asia³ America Europe Middle East

In € million, ∆% yoy Fx adjusted 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, Canada
³ Emerging Asia = Asia w/o Japan, Australia, New Zealand

All BRIC-Countries in Our Most
Important Country Portfolio
Sales in € bn ∆% yoy Fx adjusted
Sales by country full year 2010
7.0 +0%

+7%
3.0
+30%

2.5

2.0
+6%

1.5 +10%
-5% +6%

1.0
0%
+5% +1% +5%
0.5 +3% +23% +12%

*

Page 23 • Investor Presentation • Roadshow Frankfurt • Marijn Dekkers, CEO • November 4, 2011 *Greater China includes PR China, Hongkong, Macau and Taiwan

Bayer is One of The Leading International
HealthCare Companies in China
Sales in € million; ∆% y-o-y Fx adjusted
Strong growth
HealthCare 9M’2011  Driven by Pharmaceuticals (+27% yoy)
€713m +24% y-o-y (Fx-adj.)*
 1,000 sales representatives to be added
through 2011

Significant investment commitment
 Approx. 5,300 employees (2010)
 €100m over 5 years to set-up a global
R&D center in China
Top products growth in 9M‘2011*
 Beijing manufacturing site expansion
Aspirin +48% (~€45m through 2015)
Adalat +30%
 Partnership with Tsinghua University
Avelox +24%
(joint drug discovery, student support)
Glucobay +23%
Ultravist +14%
* People‘s Republic of China


€1bn New Investment Plan
at MaterialScience in China
China’s importance further growing Commitment to growth in China

 China already is the world’s largest PCS  €2.1bn investment program in integrated
market polymer site in Shanghai, China until 2012

 China is set to become the world’s largest PUR  New investment of approx. €1bn in Shanghai
market by 2015 by 2016 to
 Increase MDI capacity to 1,000kt/year
 More than double PCS capacity to
500kt/year
 Increase HDI capacity, new 50kt/year
line planned
 Transfer of PCS Headquarters from
Leverkusen to Shanghai
 Increasing downstream presence (investment
of €110m by 2012)

PCS = Polycarbonates
PUR = Polyurethanes


CropScience in Brazil – Gained Share in
One of the World’s Largest Ag Markets
 Brazil is the 2nd largest market
for CropScience

 Bayer is one of the leading suppliers
and growing strongly

 Bayer gained market share in each of
the past 3 years

 Risk management systems in place to
limit the potential impact of reduced
credit availability; established barter
business
CropScience sales (in €m)
CAGR
847 +19%
676 724
421 493

2006 2007 2008 2009 2010


More Innovation

Less Administration


€800m Restructuring Program Underway

Contribution by Subgroup Savings Initiative
 Savings and efficiency initiative at
Holding & Admin. HealthCare HealthCare, CropScience and
corporate level
~12%  Annual cost savings of €800m
starting 2013, reinvestment of ~50%

~34% ~54%  One-time-charges of around €1bn by
end of 2012

 Plans include reductions of 4,500 people

 2,500 new hires in growth and
CropScience innovation, particularly in emerging
markets


Reporting Events and AGM

Date Event Publication
China Conference 2011,
November 16-18, 2011
Shanghai
Tuesday,
Investor Conference Call 2011 Annual Report
February 28, 2012
Thursday, 1st Quarter 2012 Results
Investor Conference Call
April 26, 2012 Stockholders’ Newsletter
Friday,
Annual General Meeting
April 27, 2012
Tuesday, 2nd Quarter 2012 Results
July 31, 2012 Stockholders’ Newsletter
Tuesday, 3rd Quarter 2012 Results
October 30, 2012 Stockholders’ Newsletter


Investor Relations Contacts
Dr. Alexander Rosar
Head of Investor Relations
Phone: +49-214-30-81013
E-mail: alexander.rosar@bayer.com

Dr. Jürgen Beunink Ute Menke
Phone: +49-214-30-65742 Phone: +49-214-30-33021
E-mail: juergen.beunink@bayer.com E-mail: ute.menke@bayer.com

Peter Dahlhoff Judith Nestmann
Phone: +49-214-30-33022 Phone: +49-214-30-66836
E-mail: peter.dahlhoff@bayer.com E-mail: judith.nestmann@bayer.com

Fabian Klingen Dr. Olaf Weber
Phone: +49-214-30-35426 Phone: +49-214-30-33567
E-mail: fabian.klingen@bayer.com E-mail: olaf.weber@bayer.com


Bayer Investor Presentation Roadshow Frankfurt

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