With Bayer predicting slowdowns for Xarelto and Eylea, what will fill the gap?

bayer
Bayer's pharma sales of €4.3 billion in the fourth quarter came in slightly below analysts' expectations. (Bayer)

Bayer’s Xarelto and Eylea are still the top performers within the company’s pharma business. But both drugs are looking at a bumpy road ahead.

For blood thinner Xarelto, the company expects growth in the low teens for 2019 after recording a 12.8% sales expansion last year. That forecast comes despite the drug beating its rivals, including Pfizer and Bristol-Myers Squibb’s Eliquis, to become the first novel oral anticoagulant approved in patients with coronary or peripheral artery disease (CAD/PAD) on the back of strong CV outcomes showing.

On the German pharma's fourth-quarter earnings call, Bayer pharma chief Stefan Oelrich said the company still stands by its $5 billion-plus peak sales estimate for the drug. But in comparing it to Novartis heart failure drug Entresto, which suffered a slow start, Oelrich asked for “a little bit more runway” for the drug’s launch in artery disease as it requires “a real different way of practicing cardiology.”

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RELATED: Johnson & Johnson one-ups Eliquis as Xarelto nabs $1.5B FDA nod in artery disease

And Bayer is tuning down its optimism on eye blockbuster Eylea, too, guiding to mere high-single-digit growth for 2019 after about 20% growth in 2018.

“We’re seeing a little bit of a softening of the growth trend on Eylea,” Oelrich said. “We’re getting some headwinds in a few markets in terms of use of alternatives [or] dilute use of our product.” The FDA previously rejected Bayer partner Regeneron’s application for a pre-filled syringe of Eylea, asking for a usability study. Once the pair works that out, as they now expect to in mid-2019, Eylea could get a boost, “but that’s a little later,” Oelrich said.

There is also the potential launch of Novartis’ next-generation VEGF inhibitor brolucizumab. The drug previously showed it could match Eylea in visual gains in age-related macular degeneration and even showed superiority in some key secondary endpoints. The Novartis drug also has the additional benefit of less frequent dosing.

The Swiss drugmaker has just completed the new drug application submissions in the EU and U.S., and CEO Vas Narasimhan on the company’s own fourth-quarter earnings call said the company used a priority review voucher to ensure a launch in 2019. In its report in January, pharma intelligence shop EvaluatePharma estimated brolucizumab could reach $1.38 billion by 2024 sales.

RELATED: Bayer to cut loose animal health, consumer brands and 12,000 jobs in huge shakeup

But Bayer is working on a plan to amp up its pharma sales, even as its top players slow down. Amid concerns that its big Monsanto bulk-up in crop science could hurt its pharma ambitions, Bayer is currently implementing a huge company-wide overhaul that aims to drive down cost and channel resources to secure a brighter future for the drug business. As part of that shakeup, the German conglomerate is cutting about 10% of its entire workforce, or 12,000 jobs, and looks to cast off its animal health unit along with a few consumer health brands, among others.

Early work on that process resulted in Bayer registering an impairment loss of €3.3 billion, which led to a net loss of €3.9 billion in the fourth quarter.

As CEO Werner Baumann said on Wednesday’s call, the divestiture process of its 60% interest in German site services provider Currenta is the most advanced of its cast-off initiatives. The company plans to announce an update on the intended sale of sun care line Coppertone in the first half of this year, and on foot care products Dr. Scholl’s in the second half. It will also reveal what it plans to do with the animal health business alongside its first-quarter earnings, Baumann said.

In the fourth quarter, Bayer’s consumer business missed analysts’ expectations by 3%, with sales of €1.3 billion, impacted by weaker sales in the U.S. and supply constraints. But Bernstein analysts saw a margin improvement versus the third quarter.

“The division is never going to drive a change in momentum for Bayer but stability is all we need,” the team wrote in a Wednesday note to clients.

As Bayer is busy cutting around different parts of the group, growing litigation over its Roundup weedkillers is still a major headache. According to the company, lawsuits that claim the crop drug causes cancer have swelled to 11,200 as of Jan. 28 from 9,300 as of Oct. 30.

While this is an increase, Baumann said it “is by no means a reflection of the merits of the litigation,” insisting that “we are convinced of Glyphosate’s safety profile.”

All told, in what Bernstein analysts called “a lower-quality beat against lowered expectations,” Bayer saw its group's top line turnout beat analysts’ consensus by 9% in the fourth quarter. But the beat was mainly driven by the crop business; as for pharma, segment sales of €4.3 billion came in slightly below estimates, according to Bernstein.

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