Bayer is setting its course for the future with a clear plan of action. The company is taking steps aimed at strengthening sales growth, profitability and free cash flow.

Speaking at the virtual Capital Markets Day, Werner Baumann, CEO, Bayer emphasized the company’s long-term growth perspectives.

 “Bayer is a leading life science company, uniquely positioned at the intersection of health and nutrition – with attractive prospects for growth, earnings and cash flow.” All three divisions are projected to contribute to the company’s success in the coming years, Baumann said. “At Crop Science we’re targeting above-market growth from 2022. We’re also aiming for above-market growth at Consumer Health. And at Pharmaceuticals, we are seeing success in our late-stage pipeline and are very well positioned with the investments we are making in our future. We plan to continue to grow at Pharmaceuticals despite patent expirations and only expect to register a modest decline in sales in 2024,” he said.

Baumann cited three drivers for growing the business and increasing enterprise value. First, innovations in the life sciences are in greater demand than ever before – thanks to long-term megatrends such as the growing and aging world population and the increasing need for more sustainable economic development. Second, the biorevolution is driving innovation in all of Bayer’s divisions – with major progress in cell biology, gene editing and data science. And third, the company is accelerating its transformation and further increasing efficiency.

Societal megatrends and the advancing biorevolution are increasing the dynamics of the markets in which Bayer operates. “In the pharmaceutical sector, new technologies could help us not only to treat but probably cure or even prevent diseases,” Baumann said. New opportunities are also arising in agriculture.

“New crop varieties that will decrease the plant’s need for fertilizer, crop protection or water will reduce the environmental impact of agriculture – while at the same time increasing yields,” he said. In addition, new business models are being pioneered, with farmers paying for achieved results rather than individual products and being incentivized for sustainable practices, such as sequestering carbon into the soil. “We are in an excellent position to take advantage of the opportunities these dynamics present – for the benefit of the people who use our products and, through sustainable growth, for the benefit of our stockholders,” said Baumann.

Sustainability forms an integral part of Bayer’s business strategy, growth plans and incentive systems, Baumann stressed, citing as an example the company’s decision to become carbon-neutral by 2030.

Bayer is also displaying its sense of responsibility during the COVID-19 crisis, applying its knowledge and resources to help in tackling the virus – in line with the company’s vision “Health for all, Hunger for none.” This includes its collaboration with CureVac, with Bayer assisting the company with the ongoing development, manufacture and supply of its COVID-19 vaccine.

In a press release issued to media, Bayer stated that net sales are planned to reach 43 to 45 billion euros by 2024.

The Crop Science Division is projected to grow at a currency- and portfolio-adjusted (Fx & portfolio adj.) rate of 3 to 5 percent annually from 2022 through 2024, and thus faster than the market. “We have made strong progress in digital farming and with the regulatory approvals recently received for corn, soybeans and cotton. Both these aspects will help us accelerate growth going forward,” Baumann explained.

These new approvals will enable an upgrading of soybean technology in the Americas with the launches of XtendFlex soybeans combined with the crop protection product XtendiMax in North America and Intacta2Xtend soybeans in Latin America.

Additionally, strong growth is expected from the crop protection portfolio, with eight new formulations every year. Beyond 2021 numerous product introductions are planned, including several hundred new corn, soybean and vegetable varieties each year.

The Pharmaceuticals Division is also expected to post robust annual sales growth of 3 to 5 percent (Fx & portfolio adj.) through 2023. In 2024, Bayer anticipates a low- to mid-single digit percentage decline in this division’s sales due to the patent expirations for its established blockbuster products Xarelto™ and Eylea™, with Pharmaceuticals set to return to sustainable growth in 2025.

Bayer is also making substantial progress in strengthening its innovation capabilities by establishing a leading position in cell and gene therapy and pursuing bolt-on acquisitions, partnerships and licensing agreements. Last year alone, the company concluded more than 25 collaboration and licensing agreements and acquisitions in its Pharmaceuticals Division. One example is the acquisition of Asklepios BioPharmaceutical (AskBio), a leading company in the field of gene therapy.

Bayer was recently able to announce promising initial results achieved by its subsidiary BlueRock Therapeutics. “We have begun clinical trials with a new therapeutic approach for Parkinson’s, a neurological disorder, that could hopefully pave the way for major advances in the battle against this debilitating illness – this represents a major step forward for the entire field of stem cell therapy,” Baumann said.

Sales at Consumer Health are also projected to increase by 3 to 5 percent (Fx & portfolio adj.) annually, with the division set to gain further market share. “The primary goal now for Consumer Health is to consolidate the substantial growth and margin improvements seen over the past 18 months. Our focus is now on sustainable, profitable above-market growth at the top of our industry,” Baumann explained. Growth is to be driven by leading innovation and strong brands, a further digitalization of the business, and potentially also by bolt-on acquisitions.

Commenting on the future prospects for earnings, the company said that Crop Science is planned to achieve an EBITDA margin before special items of between 27 and 29 percent by 2024 on the back of further efficiency improvements.

In light of increased R&D investment, the Pharmaceuticals Division is expected to achieve an EBITDA margin before special items of 32 to 34 percent through 2023. Its margin is projected to remain above 30 percent even in 2024 despite the effect of the patent expirations. For Consumer Health, Bayer anticipates to further increase the EBITDA margin before special items toward a mid-twenties percentage.