In March, Bayer CEO Marijn Dekkers boldly predicted that the company's 5 new drugs--including the blood thinner Xarelto and the macular degeneration treatment Eylea--would help his company achieve 8% annual sales growth through 2016. Judging from the company's second quarter results, Bayer is well on its way to making good on that goal.
Sales of the new drugs more than doubled year-over-year to €702 million ($939.4 million), beating analysts estimates and helping nudge the company's total sales up about a percent to €10.5 billion ($14 billion).
Bayer's suite of new products continue to blow past expectations, despite some notable hurdles. Xarelto, which is partnered with Johnson & Johnson ($JNJ), has faced fierce competition from Boehringer Ingelheim's Pradaxa, as well as safety concerns and rumors of resulting consumer lawsuits. Still, sales of the drug continue to grow, as do sales of Bayer's new cancer drugs, Stivarga and Xofigo, and its pulmonary arterial hypertension drug Adempas.
As for Eylea, it continues to win regulatory approvals in new indications, which has helped it compete against Roche's ($RHHBY) Lucentis. Wednesday, Bayer's global development partner, Regeneron ($REGN), which markets Eylea in the U.S., announced that the FDA approved the drug to treat diabetic macular edema. Bayer also said that Stivarga won the green light in Europe to treat gastrointestinal stromal tumors.
Such strong performance from Bayer's new drugs is helping cushion the blow of currency fluctuations, analysts say. "It's mainly thanks to the good development of new pharma products that Bayer achieved slight gains in sales and earnings in Q2 2014 despite the persistent strain from foreign exchange rates," Nord LB analyst Thorsten Strauss told Reuters. Strauss maintains a "buy" rating on the company.
Overall, Bayer's earnings excluding interest, taxes, depreciation, amortization and one-time items also gained about a percent, coming in at €2.2 billion ($2.9 billion), which was slightly below estimates. In its earnings release, the company noted that "substantial negative exchange rate effects" dampened earnings by about 9%.
Bayer isn't just counting on prescription drugs to fuel its growth going forward. In May, the company laid out $14.2 billion to buy Merck's ($MRK) consumer healthcare business, gaining such brands as Claritin, Coppertone, and Dr. Scholl's.
Dekkers told Bloomberg Television that the consumer brands Bayer is getting from Merck would be a "fantastic growth business." And despite sanctions against Russia that the EU announced this week, he said Bayer will continue to invest in growing its business there. "Russian citizens use our products every day," Dekkers said during the Bloomberg interview. "I think those businesses that are really focused on the Russian citizen will be less affected by potential sanctions."
- here's Bayer's earnings release
- read more at Reuters
- here's Bloomberg's take
Special Reports: Top 15 drug launch superstars – Eylea | The top 10 pharma companies by 2013 revenue – Bayer