Bayer's new drugs shine, fueling 5.5% pharma growth

Bayer is warning that its 2013 profits goals look a bit too ambitious now--but that's not because of its drug business. Thanks to unexpectedly strong new-drug sales, Bayer now says it expects pharma revenue to jump by a high single-digit percentage. In fact, it hiked its forecast for sales from its newest products by 40%.

Bayer CEO Marijn Dekkers

Indeed, the German company's pharma unit grew by 5.5%, adding €2.83 billion ($3.8 billion) to the top line. The MaterialScience business is more than making up for that, however, because demand is lagging, CEO Marijn Dekkers told Bloomberg.

Naturally, Dekkers prefers to talk about the three new drugs that are going gangbusters. "Our new pharmaceutical products contributed substantially to growth," Dekkers said in a statement. The clot-fighter Xarelto, cancer treatment Stivarga and macular degeneration treatment Eylea have outstripped their targets so far this year. So, Bayer raised its estimates for new-drug sales to €1.4 billion, or about $1.9 billion, up from its previous €1 billion estimate.

Bayer's pharma business isn't immune from the generic erosion plaguing the rest of Big Pharma; its Yaz line of contraceptives slumped on copycat competition in Western Europe and the U.S. (Safety worries about blood clots probably didn't help, either.)

Meanwhile, the multiple sclerosis treatment Betaferon/Betaseron slid "as expected," the company said; it's facing competition from newer oral treatments. On the positive side, Bayer's kidney and liver cancer treatment Nexavar continues to chug along, with 7.2% growth for the quarter, while the clotting drug Kogenate saw sales swell by 9.5%, the company said.

So, why not hive off that pesky MaterialScience business to give the HealthCare unit more room to shine? Analysts figure Bayer will, just not immediately. As Reuters reports, MaterialScience probably wouldn't fetch a fantastic price right now, and Bayer worries that a buyer would cut jobs at the unit, causing all sorts of consternation in Germany. Other spinoffs and sales--by Pfizer ($PFE), AbbVie ($ABBV), and GlaxoSmithKline ($GSK), for instance--probably won't pressure Bayer to act quickly, analysts said.

Still, Dekkers is a dealmaker, and he's tagged his life sciences for growth by acquisition, eschewing deals to augment the plastics business. Citigroup analyst Andrew Baum told investors in a note today (as quoted by Bloomberg), "Longer term, we believe the much-speculated separation of the MaterialScience group is a high probability event."

- check out the Bayer release
- read the Bloomberg story
- get more from Reuters

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