Bayer feels cost of restructuring
pharmafile | March 25, 2004 | News story | |Â Â Â
German pharmaceutical company Bayer has posted the biggest losses in its history after paying a hefty price for restructuring the company.
Bayer suffered record losses of E1.2 billion last year after taking an E3 billion hit to split itself into Bayer HealthCare, Bayer CropScience and Bayer MaterialScience divisions, as part of a drive to refocus the business after poor performance in recent years.
Last year the company's pharmaceuticals division increased sales by 10.5%, driven by last year's launch of Levitra, the erectile dysfunction rival to Viagra that Bayer co-markets with GlaxoSmithKline.
Sales of Levitra totalled E144 million in 2003, but both companies are continuing their litigation battle with Pfizer, over the latter's claims that its Viagra patent has been infringed.
Total healthcare sales fell by 5% to E8.9 billion and earnings before interest and tax dropped by 43% to E334 million as the company continued to feel the effects of its 2001 withdrawal of Lipobay/Baycol.
The cholesterol lowering statin drug was pulled from the market after potentially-fatal side effects emerged, and two years on Bayer is still counting the cost, having spent E600 million mainly on redundancies and accounting measures to deal with the continued fallout.
Meanwhile, sales of Bayer's biggest pharmaceutical product antibiotic Cipro were flat in 2003 at E1.4 billion, and will shortly suffer patent expiry, which chief executive Werner Wenning admitted would be another serious blow to the company's earnings.
Mr Wenning confirmed the patent expiry is likely to drag down the healthcare division's performance in 2004, but said the company expects to increase its operating position before special items.
In terms of new products Mr Wenning said that the company currently has "a promising cancer drug", a Raf kinase inhibitor, that it has developed with US-based Onyx Pharmaceuticals, undergoing phase III clinical trials. The drug is currently being investigated for use in the treatment of several types of cancer, including advanced renal cell carcinoma.
The company also has a factor Xa inhibitor that it is testing for use in the prevention and treatment of thrombosis, which is expected to go into phase III clinical trials later this year. It will also decide this year whether to commence phase III trials for its acute ischaemic stroke treatment repinotan.
Bayer has reduced its growth expectations for the future and Mr Wenning again confirmed that he would be seeking to position the pharmaceuticals division as a leading "medium-sized pharmaceutical supplier".
"With our systematic restructuring and the successful launch of our anti-impotence drug Levitra, we have taken the first steps toward the necessary strengthening of this business," he said.
As part of this plan Bayer will spin off parts of its polymers and chemicals activities into a new, independent company called Lanxess, which it intends to float on the stockmarket by 2005.
In addition to the restructuring programme, by 2005, Bayer aims to make additional savings of more than E2.5 billion through efficiency programmes.
Related articles:
Slimmed down Bayer rules out merger
Wednesday, November 12, 2003
