Germany-based multinational Bayer AG (ETR: BAYN) has released its financial report for the second quarter and first half of 2023, which indicates the group is facing difficulties due to the performance of its crop science and pharmaceutical business units. The China market, in particular, has been identified as a significant drag on the pharmaceuticals unit. Global group sales for the quarter reached EUR 11.04 billion (USD 12.1 billion), marking an 8.2% year-on-year (YOY) decrease in constant currency terms.
Pharmaceuticals and Consumer Health Sales by Region
In the pharmaceuticals sector, sales only rose by a modest 0.2% YOY to EUR 4.6 billion (USD 5 billion). The Asia-Pacific region was the only one to report a decline, with sales down 5.2% YOY to EUR 1.4 billion (USD 15.37 billion). In contrast, the consumer health segment reported a more robust 5.4% increase in total sales, reaching EUR 1.466 billion.
Territory-Wise Sales Breakdown
- Pharmaceuticals:
- Europe/Middle East/Africa: EUR 1,789 million, up 0.4%
- North America: EUR 1,171 million, up 5.0%
- Asia-Pacific: EUR 1,356 million, down 5.2%
- Latin America: EUR 241 million, up 9.7%
- Total: EUR 4,557 million, up 0.27%
- Consumer Health:
- Europe/Middle East/Africa: EUR 448 million, up 5.2%
- North America: EUR 594 million, up 0.7%
- Asia-Pacific: EUR 228 million, up 3.0%
- Latin America: EUR 196 million, up 24.1%
- Total: EUR 1,466 million, up 5.4%
Source: Bayer
Market Performance and Impact of Volume-Based Procurement (VBP)
Stefan Oelrich, President of the Pharmaceuticals Division, addressed the market performance during an earnings conference call, highlighting China as a key factor in the Asia-Pacific slowdown. He cited a softer-than-anticipated post-pandemic recovery in China and ongoing challenges from volume-based procurement related headwinds. The VBP tendering process continued to impact global sales of blood thinner Xarelto (rivaroxaban), which fell by 3% during the quarter. Angina treatment Adalat (nifedipine) also faced difficulties due to VBP impact.
Contrasting Portfolio Performance and Outlook
Oelrich noted a split in the company’s portfolio performance, with off-patent brands experiencing a slowdown, even without VBP impact, while innovative drugs have thrived. Notably, prostate cancer treatment Nubeqa (darolutamide) and chronic kidney disease drug Kerendia (finerenone) benefited from immediate inclusion in the National Reimbursement Drug List (NRDL) upon approval. Nubeqa’s local launch was described as “extremely strong,” with China emerging as the strongest market share geography for the drug. However, due to the overall China performance, Bayer has downgraded its forecast for the Pharmaceutical unit’s full-year growth performance to 0% YOY, from a previous prediction of a 1% expansion.-Fineline Info & Tech
