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Tuesday - November 22, 2005
Bayer Week plays its part in "Germany in Japan 2005/2006" Bayer committed to outpacing market growth in Japan Nine-month sales rise by 7.8 percent to Yen 149 billion / Investments worth more than EUR 130 million planned by 2008
Leverkusen/Tokyo - The Bayer Group is targeting further expansion in Japan and plans to invest over EUR 130 million by 2008. "Japan is the biggest and most successful country for Bayer in the Asia-Pacific region," said Werner Wenning, Chairman of the Board of Management, at a press conference in Tokyo during "Bayer Week", an event held in conjunction with Japan's "Germany Year". Group sales in Japan rose by 7.8 percent in the first 9 months of 2005 to Yen 149 billion (approximately EUR 1.1 billion). This makes the country the Group's third largest sales market behind the USA and Germany. "It is our firm intention to further expand our presence in Japan and to continue to grow faster than the market," explained Wenning.
"All three subgroups are firmly established in Japan," continued the Chairman of the Board of Management. Bayer HealthCare accounts for the largest volume of sales. From January to September, the subgroup increased its revenue by 5.6 percent over the previous year to Yen 73 billion, accounting for almost half the Group's sales in Japan. The pharmaceuticals segment, by far the largest HealthCare division, recorded stable growth despite difficult market conditions. The results for cardiovascular risk management products, especially Adalat®, Glucobay® and Bayaspirin®, were particularly encouraging. The HealthCare divisions Diabetes Care, Diagnostics and Animal Health achieved outstanding growth rates of 27, 11 and 17 percent respectively in the first 9 months.
Wenning was also optimistic about the prospects for the company's future: "Our HealthCare franchise in Japan is developing very well and we are confident that we can outpace market growth in the coming years." In October Bayer obtained marketing approval for the broad-spectrum antibiotic Avelox® in Japan. The Group will market this drug, which is primarily used to treat respiratory tract infections, via its sales partner Shionogi & Co Ltd., who expects to launch the product in December. The Japanese market for oral antibiotics was worth around EUR 2 billion in 2004.
There are also plans to strengthen the HealthCare business in future with the cardiovascular drug Zetia® from Schering-Plough, pending approval by the Japanese authorities. A co-marketing agreement for this product in Japan has been concluded between the US company and Bayer Yakuhin. There were also highly promising products in the Bayer pipeline, noted Wenning. Key developments included the new cancer drug Nexavar® and the antithrombosis drug Factor Xa-Inhibitor.
With sales of Yen 26 billion, the Bayer CropScience subgroup recorded a fall in business compared with the same period in the previous year. This was largely due to the divestment of several products. However, net earnings were up primarily as a result of improved cost management. In the next five years, Bayer CropScience plans to introduce a total of seven active ingredients onto the Japanese market.
Bayer MaterialScience enjoyed the largest growth in sales, with a rise of 24.7 percent to Yen 50 billion in the first 9 months. The markets for polycarbonate and polyurethane - especially the high-tech plastic Makrolon® and the rigid foam pre-product MDI - were characterized by strong demand. This led to a gratifying business development in which the significant rises in raw material costs were compensated for by price increases. Wenning forecast good growth prospects in the future, particularly for Makrolon®, coating raw materials and foams.
Bayer can look back on a long and successful history in Japan, observed Wenning. The company's first business contacts in the country date back to 1886 and the first fully owned Bayer subsidiary was founded there in 1911. In 2004, the Group achieved sales of EUR 1.449 billion in Japan, where it employed a workforce of around 2,500. Bayer supplies the Japanese market with its entire portfolio of products ranging from health care and nutrition products to high-tech materials. One of the Group's key strengths is innovation. Since 1990, Bayer has invested around EUR 900 million for research in Japan.
Wenning also underlined the importance of the entire Asia-Pacific region to Bayer. Despite a slight slowdown in 2003 that was largely due to adverse exchange rates, Bayer's business development in the region during the past 14 years shows that the long-term growth potential remains strong. Bayer sales (including Lanxess) in Asia-Pacific grew by an average of 5.2 percent per annum between 1990 and 2004, more than twice the company's worldwide average.
"Bayer has a very strong interest in the Asia-Pacific region, which will be the focus of our capital investments during the present decade," said Wenning. Over the period from 1990 to 2004, the Group's capital spending and R&D expenditures in the region totaled some EUR 2.9 billion. Bayer plans to put in additional resources here in order to further promote growth. In the first 9 months of 2005 alone, some 1,400 new employees were hired in Asia-Pacific, more than in any other region.
However, the main focus of Bayer's current investment program is China.
Bayer is planning to invest a total of USD 1.8 billion in the Caojing site near Shanghai by 2009, particularly in the production of Makrolon® and raw materials for foams. In Japan, the second largest pharmaceutical market in the world and the largest pesticide market in Asia, the emphasis is on strengthening the pipeline of innovative HealthCare and CropScience products. "We aim to raise the proportion of Group sales generated in the Asia Pacific region from the current figure of 17 percent to 25 percent by 2010," stated Wenning.
More than 1000 events will be held by March next year under the motto "Germany in Japan 2005/2006". The aim is to give the Japanese public a broader perspective on modern Germany. The program ranges from cultural events, scientific projects and sports to events hosted by German business.
The Bayer Group's commitment is reflected in its "Bayer Week", which is currently under way in Tokyo. The week features a range of events for customers, investors, employees and the media. For example, Management Board Chairman Werner Wenning will be the only foreign guest speaker at an international symposium on "Corporate Social Responsibility". Wenning will talk about the Group's social program which encompasses more than 300 projects. In a subsequent panel discussion, Management Board member Dr. Udo Oels will discuss Bayer's environmental activities.
Forward-Looking Statements
This news release contains forward-looking statements based on current assumptions and forecasts made by Bayer Group management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here.
These factors include those discussed in our public reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission (including our Form 20-F). The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments. |
