Bayer plans further expansion in Russia
Moscow, September 5, 2013 – The Bayer Group plans to further expand its business in Russia. The company intends to raise sales by 80 percent from their 2012 level to EUR 1.3 billion by 2017. At the same time, the number of employees is expected to grow from 1,570 in 2012 to some 2,400 in 2017 – an increase of more than 800 jobs. "We are committed to Russia as a partner and want to continue to offer valuable contributions to the development in this country, both in business and in the Russian community," Bayer CEO Dr. Marijn Dekkers said in Moscow on Thursday at a press conference. Bayer innovations and know-how will support Russia's strategic goals under the current government programs.
The company had sales of EUR 726 million in Russia in 2012, with the HealthCare business accounting for 67 percent. In the first half of 2013, Bayer again made good progress with sales growth of 12.5 percent. "The middle class, which is an incremental driver of overall consumption, is rapidly expanding. This trend is expected to continue and plays out for industry sectors relevant to Bayer," said Dekkers, underlining the company's growth prospects in Russia. He expects all subgroups to see significant growth in sales. The EUR 2 billion sales threshold could be exceeded in 2022, which would put Russia among the top ten markets for Bayer.
Dekkers said the Bayer Group's health care business – Bayer HealthCare – will benefit from the strong growth in the Russian market for both prescription-only and non-prescription pharmaceutical products. It is currently the country's fourth largest health care company. HealthCare sales are projected to grow by an average of about 14 percent a year, putting Bayer in third place by 2017 with sales of some EUR 910 million, thanks mainly to new product introductions. Examples include the expected indication expansion for the kidney cancer drug Nexavar™ to include thyroid and breast cancer, the launch of the colorectal cancer drug Stivarga™ and riociguat for the treatment of pulmonary hypertension. In the non-prescription (OTC = over-the-counter) segment, new products include Supradyn™ multivitamins, along with further presentations of Bepanthen™ for dermatological and cosmetic applications and Bayer's best-known medicine, Aspirin™. Other impending product launches are the Contour Plus™ high accuracy blood glucose monitoring system for patients with diabetes and a flea and tick collar for pets.
A further factor for the anticipated growth is the fact that health care spending as a proportion of GDP is below average compared to other countries. "To achieve average healthcare expenditure, Russia would need to increase its spending by 30 percent over today's levels," Dekkers said. Life expectancy is increasing and will continue to do so due to government programs such as Pharma 2020 or the Program for Healthcare Development 2020. However, statistics are also evidence of the need for more and better health care products.
Bayer Material Science – which manufactures precursors for high-tech polymer-based materials and accounted for 20 percent of Bayer's sales in Russia in 2012 – is experiencing strong growth in its customer industries like construction, automotive, electrical/electronics and furniture. Sales at MaterialScience are expected to climb from EUR 149 million in 2012 to EUR 230 million in 2017, equivalent to an annual growth rate of 9 percent. "Currently, the per capita usage of plastics materials in Central Europe and CIS is four times lower than in Western Europe," said Dekkers, pointing to the potential remaining in the Russian market for the use of modern materials. Bayer already has substantial market shares in the relevant customer industries.
Bayer's CEO also sees major development potential in the markets of Bayer CropScience, the Group's agricultural business. Last year the CropScience business in Russia had sales of EUR 93 million, or 13 percent of total Bayer sales. Revenues are expected to climb to EUR 150 million by 2017, which would mean an annual growth rate of some 8 percent. Spending for crop protection products in Russia currently stands at EUR 10 per hectare, compared with EUR 150 in Germany or EUR 165 in France. "In the face of an ever increasing population and the growing demand for better food and nutrition worldwide, a continuous improvement in agricultural productivity is vital," Dekkers said. With Russia having four times as much agricultural land as France and six times as much as Germany, "we can easily imagine that with a slightly more intensive approach, Russian agriculture could increase its total production significantly." Bayer plans to launch 23 new crop protection products in the coming years.
Collaborations and partnerships play a major role in the company's continuing development in Russia. "These are key factors for increasing Bayer's overall visibility, strengthening business opportunities and supporting the Russian government's key economic and social development objectives," explained Dekkers. Tolling cooperations in all subgroups not only help grow the business but at the same time support local industries. As an example for cooperations with local universities and institutes in research and development, the CEO cited the national campaign on the prevention of cardiovascular disease to be launched together with the Center of Preventive Medicine.
Bayer HealthCare has entered into a strategic partnership with local drug manufacturer Medsintez to jointly manufacture and commercialize diagnostic imaging products as well as pharmaceuticals, starting with the anti-infective Avelox™. The Energy Center represents a pool of expertise from various partners including Bayer in the area of energy saving and efficiency – fully in line with the Russian government's objectives, such as the Energy Strategy 2020. At Bayer CropScience, the Field Academy aims to create a better understanding of modern technologies by sharing knowledge that should help farmers in their work and propel the industry forward. Elaborating on Bayer's activities in the field of Corporate Social Responsibility, Dekkers referred to the significance of projects like the Chemical Olympiad 2013 for science students, the value of providing support to an orphanage at Noginsk and the importance of the charity fund "Gift of Life," which helps children with cancer.
Bayer: Science For A Better Life
Bayer is a global enterprise with core competencies in the fields of health care, agriculture and high-tech materials. As an innovation company, it sets trends in research-intensive areas. Bayer's products and services are designed to benefit people and improve the quality of life. At the same time, the Group aims to create value through innovation, growth and high earning power. Bayer is committed to the principles of sustainable development and acts as a socially and ethically responsible corporate citizen. In fiscal 2012, the Group employed 110,500 people and had sales of EUR 39.8 billion. Capital expenditures amounted to EUR 2.0 billion, R&D expenses to EUR 3.0 billion. For more information, go to www.bayer.com.
Information for editors:
The text of the speech by the Chairman of the Board of Management Dr. Marijn Dekkers is available on the internet at www.presse.bayer.de/baynews/baynews.nsf/id/2013-1510-e
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