Bayer's bets on consumer health deliver during Q2

Bayer CEO Marijn Dekkers

Bayer CEO Marijn Dekkers bet that picking up Merck's ($MRK) consumer business last year would work some magic on the company's numbers, giving it a boost as it prepares to hive off its plastics unit and refocus on life sciences. Now Dekkers' gamble appears to be paying off, as the Leverkusen-based drugmaker beat analysts' estimates in Q2 with the help of its new consumer business and recent launches.

The company's Q2 core earnings per share shot up 33.8% to €1.98 per share and EBITDA was up 33% as well to €2.9 billion ($3.2 billion) from €2.2 billion a year ago, exceeding the €2.7 billion average of 9 analysts surveyed by Bloomberg. Bayer can partly thank its pickup of Merck's OTC unit for the beat. Sales for its consumer health unit grew by 4% to €2.4 million, with products acquired through the deal such as allergy med Claritin chipping in €528 million in sales.

The numbers mark a turning point for Bayer, which struggled to gain traction after acquiring the business for $14.2 billion last year. But Dekkers defended the deal, pointing to a suite of meds that could expand the company's offerings.

"This is the first quarter after an acquisition. … It's a transition situation," Dekkers said earlier this year. "In OTC, critical size actually makes a difference. You go into a drug store and it's about shelf space. Now, we have products like Claritin, Aleve and Aspirin all next to each other, and that is a tremendous advantage."

New products also helped the company during Q2. The Leverkusen-based drugmaker is counting on strong performances of its top 5 drugs, including new-age anticoagulant Xarelto, eye med Eylea, cancer drugs Stivarga and Xofigo, and pulmonary arterial hypertension treatment Adempas, to bolster sales. And the drugs delivered, with Xarelto bringing in €549 million and Eylea posting €301 million in sales during the quarter.

Bayer thinks it can keep up the positive momentum, confirming the full-year forecast it laid out earlier this year and expecting earnings before EBITDA to gain in the "high teens" on the back of strong consumer health and healthcare sales, the company said in a statement.

Analysts seem to think Bayer's latest developments bode well for the company. "It's definitely positive that guidance has been confirmed for the pharma division," Ulrich Huwald, an analyst at Warburg Research in Hamburg, told Bloomberg.

Meanwhile, the German drugmaker remains focused on spinning off some of its noncore businesses and doubling down on life sciences. The company earlier this year said it would concentrate on its HealthCare and CropSciences units, carving out its plastics business by September to lighten its load. Plans to unload the unit, which will be renamed Covestro, "are on schedule," Dekkers said in the statement.

- read Bayer's statement
- here's the Bloomberg story
- get the Reuters article

Special Reports: The top 15 pharma companies by 2014 revenue - Bayer | Pharma's top 10 M&A deals of 2014 - Bayer/Merck Consumer Health

Suggested Articles

Johnson & Johnson faces a litany of problems, but executives are clearly not concerned—at least not about the company's short-term fortunes.

This week, Goldman Sachs resurrected a burning question: How can pharma companies profit from curing patients with one-time gene and cell therapies?

CMS has determined how it'll pay for Gilead's CAR-T cancer therapy, Yescarta, for outpatient use, but hasn't yet decided on Gilead's…