Bayer hikes guidance as its pharma darlings Xarelto, Eylea power better-than-expected sales growth

By Tracy Staton Jul 27, 2016 9:16am

Editor's note: Adds comments and information from earnings call with analysts.

Bayer’s pharma lineup churned out growth for yet another quarter, making up for the German company’s lagging crops unit and a currency hit to consumer health.

Prescription drug sales leapt by 5.5% to €4.1 billion, fueled by a quintuplet of newer meds Bayer has touted as its key pharma growth drivers. The blood thinner Xarelto, for example, jacked up sales by almost one-third despite competition from other next-gen anticoagulants. And the vision treatment Eylea outperformed even more, with growth of almost 41% in the face of head-to-head rival Lucentis, marketed in Europe by Novartis.

Xarelto’s Q2 sales amounted to €703 million, ahead of analyst expectations. Eylea, developed in partnership with U.S.-based biotech Regeneron, brought in €418 million. Bayer updated its expectations for these two meds, tagging full-year growth at almost 30% each, rather than the 20% previously forecast, “based on the great momentum that we have experienced and the significant remaining growth potential,” Dieter Weinand said during the Q2 earnings call.

Together with other “growth engines” --cancer meds Xofigo and Stivarga, and pulmonary arterial hypertension remedy Adempas--the drugs brought in €1.33 billion, or almost $1.5 billion.

Consumer health, another field Bayer has pegged for growth, wasn’t so fortunate; thanks to currency hits, sales in that business slid by 2.3%. Adjusted for FX, the unit grew by 4%, thanks mainly to the Claritin franchise and its launch of an allergy spray in the U.S.

“We have a very, very strong business. I think quarter two has been a testimony to it,” Chairman Marijn Dekkers said of the pharma unit during the call, noting that the company has now raised its sales forecast for the year.

Overall group sales, including animal health and crop science, came to €11.8 billion, an increase of 2.3%, the company said. Profits declined, despite improved margins in the pharma business, partly because of increased spending on new launches, including consumer health’s ClariSpray and Aleve Direct.

Bayer’s numbers are likely to be overshadowed by talk of its attempt to take over Big Ag rival Monstanto. Bayer has made a series of offers to the company, only to be rejected, and recently was said to be weighing a hostile bid. Its most recent bid amounted to $64 billion. At least one analyst has said the buyout could put a damper on Bayer’s pharma and consumer health growth by diverting money away from R&D.

Bayer suffered a couple of drug-development setbacks this year: Notably, it halted an Adempas trial for safety reasons, saying that the patients in the study--whose PAH was associated with idiopathic interstitial pneumonias--might be at increased frisk of death and other serious side effects. The company had hoped to expand Adempas into that form of the disease. Adempas’ growth expectations may be in danger after that stopped trial, analysts say.

Besides Xarelto and Eylea, Bayer’s growth-drug sales all remain in the double digits, though Xofigo and Adempas each racked up big increases. Stivarga, on the other hand, took a 25% dive, “due in intensified competition in the U.S.” But Stivarga recently posted solid data in liver cancer patients who’ve failed on Nexavar, opening up a potential new use for that med.

- see the Bayer release

Earnings Bayer Financials Launches