Bayer's Eylea shows pandemic resilience, but major China price cut drags on business

Like many of its peers, Bayer was hurt by pandemic-related business slowdowns last quarter. As patients canceled or postponed doctor’s visits and non-urgent treatments during COVID-19, the company suffered from declines in its women’s health and ophthalmology departments. And the situation was only worsened by a newly implemented price cut in China.

Still, Eylea, a physician-administered macular degeneration injection to which Bayer holds ex-U.S. rights, hung in there, with sales down just 6%. While that’s a decrease, it’s a much smaller one than the 25% drop Roche and Novartis recorded for their rival anti-VEGF med Lucentis.

During a Tuesday conference call with investors, Bayer’s pharma chief Stefan Oelrich attributed Eylea’s resilience to its longer treatment interval, which is important given COVID-19 lockdowns. In the phase 4 Altair study, more than 40% of wet AMD patients achieved injection intervals of four months. In contrast, the FDA recommends that doctors give Lucentis injections a month apart.

RELATED: Novartis, Regeneron wage acrimonious patent fight over Eylea's prefilled syringe

Plus, thanks to the launch of a more convenient prefilled syringe, as well as volume gains in Japan as a result of price reductions, the drug’s Q2 haul of €568 million ($667 million) for Bayer came in 4% above industry watchers’ predictions.

But the German company felt the burn of another price cut in China. Sales of its diabetes med Glucobay—sold in the U.S. under the brand name Precose—plummeted by a whopping 74% over the same period last year to merely €40 million, mainly due to volume-based procurement in China. Although Bayer successfully participated in the government-led purchase scheme, a share gain couldn't fill the gap left by a jaw-dropping 90% price cut.

On top of that, Bayer's hormone-releasing birth control device portfolio, including Mirena, came in 34% below consensus as substantially fewer product insertions dragged down sales by 37% to €185 million.

On the brighter side, Johnson & Johnson-shared oral anticoagulant Xarelto managed to grow by 5%, benefiting from higher volumes in China, Russia and Germany. The company could soon have another heart med to its name in Merck & Co.-partnered vericiguat, which is under FDA priority review in heart failure with reduced ejection fraction.

New colorectal cancer drug Stivarga brought in €129 million on 25% year-over-year expansion, too. Overall, sales from Bayer’s pharmaceutical business totaled €3.99 billion ($4.70 billion), down 9% year over year after adjusting for portfolio and foreign exchange rate effects.

But Bayer has plenty going outside its pharma unit, too. On Monday, it wrapped up its animal health sale to Elanco in its largest and final transaction item, as laid out in a restructuring initiative unveiled in late 2018.

RELATED: Bayer reworks part of Roundup settlement after judge proves reluctant to approve it

Now, a key focus at the German conglomerate is putting the Roundup litigation behind it through a settlement. But a potentially $10 billion-plus deal Bayer reached with the plaintiffs in June hit a snag after the presiding judge raised questions about a $1.25 billion portion focused on future lawsuits. As a result, the company and the plaintiffs’ lawyers are reworking a new proposal, which Bayer hopes could simultaneously address both the current and potential future suits.

Meanwhile, talks over a potential settlement around suits claiming that Bayer’s Essure contraception device caused personal injuries “recently intensified and have made good progress in recent weeks,” Bayer said Tuesday. Bayer’s pharma unit has set aside €1.25 billion in litigation charges, primarily for Essure.

Overall, Bayer’s Q2 group sales sank 2.5% to €10.05 billion ($11.80 billion). During the company’s Q1 earnings release in April, Bayer declined to provide a full-year guidance, citing major uncertainties around COVID-19. While acknowledging some questions remain, it’s now projecting sales to check in at €43 billion to €44 billion for 2020, €1 billion lower on both ends than its original expectations.