Bayer sees at least 7.5 billion euros in sales from five key drugs

Bayer announced Friday alongside its fourth-quarter financial results that it expects combined peak annual sales of five key drugs, including Xarelto, Stivarga and Eylea, to reach at least 7.5 billion euros ($10.3 billion), up from an earlier estimate of more than 5.5 billion euros ($7.5 billion). However, CEO Marijn Dekkers cautioned that "further investments in marketing, distribution and life-cycle management will be required to exploit these opportunities and actually achieve the aforementioned sales potential."

The company said that estimated peak annual sales of Xarelto have been increased from more than 2 billion euros ($2.7 billion) to approximately 3.5 billion euros ($4.8 billion), while the forecast for Eylea was raised from at least 1 billion euros ($1.4 billion) to at least 1.5 billion euros ($2.1 billion). Analysts predict sales of about 2.7 billion euros ($3.7 billion) for Xarelto by 2018. The other two drugs include Adempas and Xofigo, with Bayer set to gain full rights to the latter following the expected completion of its purchase of Algeta later this year.

In the fourth quarter, sales in Bayer's healthcare unit rose less than 1 percent to 4.9 billion euros ($6.7 billion), with revenue from Xarelto reaching 316 million euros ($436 million), versus 131 million euros ($181 million) in the year-ago period. In addition, sales of Kogenate slipped 8.1 percent to 274 million euros ($378 million), while revenue from Betaferon/Betaseron dropped 21.3 percent to 259 million euros ($357 million). Meanwhile, sales of the YAZ family of products fell 18.9 percent to 219 million euros ($302 million).

Bayer said that overall revenue increased less than 1 percent to 9.9 billion euros ($13.6 billion), just missing analysts estimates of around 10 billion euros ($13.8 billion). Meanwhile, net income in the three-month period jumped 24.3 percent to 455 million euros ($624 million), below analyst estimates of 626 million euros ($864 million). Chief financial officer Werner Baumann remarked that although "Bayer posted encouraging sales growth in the final three months of the year...[earnings] before special items came in below the prior-year level. This was due mainly to substantial negative currency effects, as well as higher research and development expenditures."

For 2013, sales from Bayer's healthcare unit increased 1.7 percent to 18.9 billion euros ($26.1 billion). Dekkers noted that "this was largely attributable to gains posted by the recently launched pharmaceutical products," adding "consumer care also saw positive sales development." The company indicated that Xarelto, Eylea, Stivarga and Xofigo posted combined sales of 1.5 billion euros ($2.1 billion) last year, up from 368 million euros ($508 million) in 2012. Overall annual sales rose 1 percent to 40.2 billion euros ($55.5 billion), with net income surging 32.7 percent to 3.2 billion euros ($4.4 billion).

Dekkers remarked "we are also optimistic about 2014," adding "we aim to maintain the growth of our recently launched products." Bayer indicated that sales of pharmaceuticals are expected to grow by a high-single-digit percentage this year, with recently launched products accounting for revenue of about 2.8 billion euros ($3.9 billion). Overall company sales in 2014 are estimated to rise by about 5 percent to between 41 billion euros ($56.6 billion) and 42 billion euros ($57.9 billion), with analysts looking for revenue of around 42.5 billion euros ($58.6 billion). Meanwhile, earnings are expected to rise by a low- to mid-single-digit percentage, which the company said includes negative currency effects of about 450 million euros ($621 million) or around 5 percent.

"While the near-term guidance is disappointing and near-term consensus will have to come down, the long-term story is robust and intact," commented Berenberg Bank analyst Alistair Campbell. Lilian Montero of Julius Baer added "Bayer wants to continue investing in healthcare, in drug trials and market launches, and that could be why the margins outlook doesn't look quite so good. But the overall story remains solid." The company suggested that it will increase its R&D expenses to 3.5 billion euros ($4.8 billion) in 2014.

To read more Top Story articles, click here.