Hot Bayer meds cook up a Q1 beat even as Covestro sales slump

Bayer neon sign

It’s a good thing Bayer has Eylea and Xarelto. The fast-growing duo helped make up for sales slippage elsewhere in the company during the first quarter, delivering an earnings beat despite less-than-stellar revenue levels. 

The clot-fighter Xarelto and eye injection Eylea are now Bayer’s biggest meds, with €617 million and €372 million in sales for the quarter, respectively. Sales for Xarelto jumped by 28% year-over-year and Eylea took an even bigger leap at 47%.

Together, they helped fuel first-quarter pharma growth of 12.2% to €3.9 billion. Consumer health managed a 2.2% increase in sales, the Crop Science unit eked out 1.2% growth, and the much smaller animal health business grew by 8.8%. All of this growth on the life sciences side held up the overall results as Covestro, the plastics spinoff, slid by 4.7%.

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Bayer’s overall sales, including Covestro, came in at €11.9 billion, up 3.2% on a currency-adjusted basis.

The company is in a state of flux now as longtime CEO Marijn Dekkers, credited with remaking Bayer since he took the helm in 2002, hands the reins to current strategy chief Werner Baumann. Dekkers refocused the company toward life sciences with the spinoff of Covestro last year, stoked big growth in Bayer’s pharma business with the launches of Xarelto and Eylea in partnership with Johnson & Johnson ($JNJ) and Regeneron ($REGN), and staked a new claim in consumer health by laying out $14 billion for Merck & Co.’s ($MRK) unit in 2014.

Dekkers also tried to make a big animal health deal, but lost out to Eli Lilly in a run at Novartis’ ($NVS) animal health business; rumors of a bid for Pfizer’s ($PFE) former vet-drug unit Zoetis never became reality.

Baumann is expected to continue the build-up-or-ship-out strategy when he takes over May 1. He’s echoed Dekkers’ desire to build scale in animal health, but has also said he might sell the unit if Bayer doesn’t manage to take a leadership role in the field.

Bayer’s outlook for 2016 disappointed analysts and investors, but the company may have lowballed expectations to avoid burdening Baumann with “too ambitious a target,” Commerzbank analyst Daniel Wendorff said earlier this year.

- see the release from Bayer

Related Articles:
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Bayer's 2016 outlook falls short, but maybe that's a favor to incoming CEO Baumann

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