Bayer unveils first look at its post-Xarelto, post-Eylea life—and it's better than expected

Investors have long been concerned about the future of Bayer’s pharma franchise, given the upcoming patent cliff facing its bread and butter—heart drug Xarelto and eye med Eylea.

Now the German conglomerate is providing a first look at life after those patent expirations, which are expected around 2023. And it looks better than analysts expected it would.

Bayer expects a low- to mid-single-digit percentage sales decline for its pharma division in 2024, followed by an immediate return to growth in 2025, the company said at an investor event Wednesday. Before that, it expects annual sales growth of 3% to 5% through 2023, after adjusting for portfolio and currency changes.

As Bayer’s pharma chief Stefan Oelrich noted during his presentation, those numbers were sunnier than Wall Street’s projections. The consensus was that Bayer’s pharma sales would grow 2% through 2023, and fall 5% in 2024, according to Bernstein.

So what accounts Bayer’s optimism?

Between 2020 and 2027 period, Bayer projected a €3 billion sales decline driven mostly by Xarelto. Eylea’s sales decline should be modest by comparison and compensated by growth from Bayer’s line of contraceptive devices, as well as its cancer drugs Stivarga and Xofigo, Oelrich said.

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In the meantime, Bayer hopes new launches could add €4 billion to the mix. These include prostate cancer drug Nubeqa, tumor-agnostic therapy Vitrakvi, the Merck-partnered heart failure med Verquvo and investigational heart therapy finerenone. The company also included in its calculation a risk-adjusted contribution from newly acquired menopause remedy elinzanetant and BAY1817080, a P2X3 receptor antagonist for chronic cough.

Oelrich added that additional sales could come from gene therapy licensing income generated by AskBio, which Bayer acquired last year. AskBio’s CDMO business will also help, he said.

Bayer has invested heavily in cell and gene therapy with its acquisitions of AskBio and BlueRock Therapeutics. “We expect the full value of the cell and gene therapy platform to crystalize” beyond 2027, just as the sales decline from Xarelto bottoms out, Oelrich said.

Managing the Xarelto and Eylea declines will be a challenging task for Bayer, Oelrich acknowledged. The company markets the meds outside the U.S., and it also recognizes licensing revenue on Xarelto from Johnson & Johnson in the U.S. In 2020, the drugs brought in combined sales of €6.98 billion, accounting for 40% of the pharma unit’s total haul.

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For Eylea, Bayer expects “more moderate genericization dynamics given that it’s a biological product,” especially for its ex-U.S. markets, Oelrich said. The drug lost patent protection in China in 2020, and it’s set for a loss-of-exclusivity in major EU markets and Japan between now and 2025.

Bayer is still counting on Eylea to show some growth and maintain a “leading market position” for a while, driven by continued generation of real-world evidence and its extended dosing schedule, Oelrich said. Roche and Novartis’ rival drug Lucentis has long lagged Eylea in sales, and Novartis’ newly launched follow-on therapy Beovu doesn’t look like much of a threat after a safety scare that the Swiss pharma is still trying to fully understand.  

Xarelto, an oral blood thinner, is facing a generic threat in China, and the product will lose its patent protection over the next several years across other major markets, Oelrich noted.

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Only 11% of Xarelto revenue comes from U.S. license payments, while European sales contribute more than half of the total haul. Oelrich stressed that sales distribution is an important factor when assessing the impact of the loss of exclusivity for Xalreto.

“Historic genericization pattern of other small molecules revealed that post-patent expiry sales are decreasing [moderately] over time in many parts of Europe and in many emerging markets as well, while in the U.S. the sales decline can be very pronounced,” Oelrich said. Therefore, Bayer expects a “staggered impact” from Xalreto with a top-line “trough” in 2024, he added.