Bayer has raised its annual forecast for the second time, citing strong results in its pharmaceutical business. Chief Executive Bill Anderson said the division had reached a turning point in its growth and was now moving upwards as the company reported third-quarter results on Tuesday.
Two newer medicines, the cancer treatment Nubeqa and kidney drug Kerendia, recorded significant growth. Nubeqa generated more than €1 billion in sales in the third quarter alone. Bayer also recently received its first approval in China for Asundexian, a medicine from a new class of drugs intended to reduce the risk of recurrent strokes. The company expects the treatment to have substantial sales potential and is seeking approval in the United States next.
New product launches have helped offset falling sales of Xarelto, a blood thinner, and Eylea, an eye treatment. Both medicines face competition as their patents expire. Bayer expects further launches to support renewed growth in its pharmaceutical division.
Pharmaceutical sales reached €13.4 billion in the first nine months of the year, up 2.2% from the same period a year earlier. That was below the agricultural division’s €16.4 billion, but pharmaceuticals were more profitable: the division’s EBITDA margin was 26.8%, compared with 24.6% for agriculture. Bayer has raised its forecast for the pharmaceutical margin to between 25% and 27%.
The company now expects adjusted operating profit of €9.8 billion to €10.3 billion, up from its previous range of €9.6 billion to €10.1 billion. Bayer also improved its expectations for debt reduction and free cash flow. Its agriculture and Consumer Health divisions are expected to perform in line with prior guidance.
Bayer shares rose by more than 5% on Tuesday. The company’s outlook has also drawn support from investor hopes that it can reduce legal risks related to glyphosate, the weedkiller ingredient in Roundup.
Bayer has set aside $7.25 billion for a proposed class settlement intended to address future claims alleging that Roundup causes cancer. Hearings took place in September, and the company is awaiting approval. Anderson said a decision could come before Christmas.
The company has also pointed to recent court decisions in its favor. The U.S. Supreme Court rejected claims that Bayer failed to provide adequate warnings about glyphosate, while a separate case last week involving allegations that Monsanto ignored development risks also ended in Bayer’s favor. Anderson described the outcome as a strong sign that the company was making progress in containing the legal exposure.
Sources: FAZ.