Germany-based major Bayer (ETR: BAYN) published its financial report for the third quarter of 2023, revealing global sales of EUR 35.8 billion (USD 38.3 billion) between Q1 and Q3, marking a 3.2% year-on-year (YOY) decline. Despite this, the company confirmed its 2023 guidance of EUR 48.5 billion to EUR 49.5 billion (USD 52.0 to 53.0 billion) for annual turnover, expecting a YOY decline of only 2% to 3%, which it aims to achieve with a strong fourth quarter, as stated by CEO Bill Anderson.
Performance by Business Unit
The only driver of performance during the 9-month period was the Consumer Health unit, which saw a 3.7% increase in sales to EUR 4.4 billion (USD 4.8 billion). This growth was overshadowed by the Pharmaceuticals business’s 1.0% decline to EUR 13.5 billion (USD 14.5 billion), partly due to challenges in China, and the Crop Science sector’s 6.4% fall to EUR 17.6 billion (USD 18.9 billion).
Consideration of Unit Separation
During the earnings conference call, Anderson mentioned that the company is considering the separation of either the Consumer Health or Crop Science units. The idea of splitting the company into three businesses has been discarded due to the complexity of a two-step process that could impact operational performance.
Pharmaceuticals Division and Top-Selling Drugs
Within the Pharmaceuticals division, the top-selling drugs between Q1 and Q3 were anticoagulant Xarelto (rivaroxaban), ophthalmic injection Eylia/Eylea, contraceptive Jaydess (levonorgestrel), debuting cancer drug Nubeqa (darolutamide), and antihemophilic Kovaltry (octocog beta), generating global sales of EUR 3.0 billion (USD 3.2 billion), EUR 2.4 billion (USD 2.6 billion), EUR 939 million (USD 1.0 billion), EUR 611 million (USD 654 million), and EUR 557 million (USD 597 million), respectively.
Geographical Sales Performance
Geographically, Bayer experienced growth in the Europe/Middle East/Africa region at 1.9% YOY, reaching EUR 11.0 billion (USD 11.8 billion), but saw declines in North America (-6.2% to EUR 12.5 billion (USD 13.4 billion)), Latin America (-5.5% to EUR 6.0 billion (USD 6.4 billion)), and Asia/Pacific (-3.5% to EUR 6.3 billion (USD 6.8 billion)).
Challenges in the China Market
The China market reported more headwinds than anticipated, with a double-digit percentage drop in Q3 as Bayer faces relatively high exposure to volume-based procurement (VBP). The effects of VBP 5 to 8 are expected to extend into next year, with zero 2024 growth anticipated. Several products, including Adalat (nifedipine), Aspirin Cardio (acetylsalicylic acid), Xarelto (rivaroxaban), and Kovaltry, suffered declines in China sales due to various factors, including VBP, competitive pressure, and changes in hospital buying patterns amid the country’s anti-corruption campaign. Additionally, declining birth rates in China have affected the Consumer Health unit’s maternal product portfolio.- Flcube.com
