Bayer 2021: Overcoming obstacles

While sales declined slightly in 2020 because of the pandemic and net income was seriously affected by litigation costs over Roundup, the company is recovering in 2021, relying on what management says are good fundamentals for long-term growth.

 

Bayer

51368 Leverkusen, Germany

Telephone: +49 214 30-1

Website: bayer.com

 

OUTCOMES CREATIVITY INDEX SCORE: 10

Manny Awards — 2

Cannes Lions — N/A

Clio Health — 1

Creative Floor Awards — N/A 

MM+M Awards — 7 

One Show — N/A

 

Financial Performance

(All figures except EPS are in millions of dollars and were translated using the Federal Reserve Board’s average rate of exchange in 2020: €1.141.)

2020  

Revenue $47,237  

Net income $(11,975)  

Diluted EPS $(12.19)  

R&D expense $8,131  

1H 2021  

Revenue $26,451  

Net income $(272)  

Diluted EPS $(0.29) 

R&D expense $3,236  

 

Best-Selling Pharma Products

(All sales are in millions of dollars and were translated using the Federal Reserve Board’s average rate of exchange in 2020: €1.141.)

2020  

Xarelto $5,152  

Eylea $2,816  

Mirena, Kyleena, Jaydess $1,233  

Kogenate, Kovaltry, Jivi $971

Yaz, Yasmin, Yasminelle $764 

Nexavar $729  

Aspirin Cardio $729  

Adempas $717  

Adalat $699  

Stivarga $542  

1H 2021 

Xarelto $2,627    

Eylea $1,577   

Mirena, Kyleena, Jaydess $698  

Kogenate, Kovaltry, Jivi $452 

Yaz, Yasmin, Yasminelle  $429  

Adalat  $398  

Aspirin Cardio $391   

Adempas $306  

Stivarga $266 

Nexavar $264   

 

Though COVID-19 ravaged the world in 2020, and Bayer was challenged, the company managed to come through it in “good shape” and has laid the foundations for future growth, says Chairman Werner Baumann.

“We achieved a great deal in the face of adverse conditions, bringing new products to market for our customers, driving forward Bayer’s transformation, and taking our sustainability commitment to the next level,” Baumann stated. “We invested substantially in innovation and future growth. And we did this despite the upheavals we experienced in many of our markets due to COVID-19.”

Company Performance

Financially, the company had a tough time in 2020. Sales were €41.4 billion, ($47.24 billion), 5 percent less than in 2019. Bayer executives attributed this to a decreased demand for certain medicines due to people avoiding going to the doctor or having treatments postponed.

The company posted a loss of €10.5 billion ($11.98 billion) in 2020 compared with a profit of €4.09 billion ($4.67 billion) in the previous year. There was a loss of €10.68 ($12.19) per share compared with 2019’s €4.17 ($4.76). This was due to impairment charges of €9.1 billion ($10.38 billion) because of Roundup-related litigation.

The impact of these lawsuits continued to affect the company in the first half of 2021, but the worst seems to be behind. While sales increased to €23.18 billion ($26.45 billion), net loss was €238 million ($272 million) compared with €8.05 billion ($9.19 billion) in the same period last year. Loss per share in first-half 2021 was €0.25 (29 cents) versus €8.20 ($9.36).

Bayer has a much brighter outlook for full-year 2021, as executives expect the positive sales momentum in the first half to continue in all its businesses. The company has upgraded its full-year guidance. 

In presenting the company’s half-year financial report, Baumann highlighted how “we have achieved major successes in developing and launching drugs, some of which have blockbuster potential. We have successfully expanded the launch of our cancer drug Nubeqa and are continuously surpassing our own expectations. We have continued to advance the launch of Verquvo for the treatment of symptomatic chronic heart failure, with approvals gained in the European Union and Japan, and we’re now in the process of launching Kerendia in the United States.” Kerendia was approved in July by the U.S. Food and Drug Administration for the treatment of adult patients with chronic kidney disease and type 2 diabetes. 

After adjusting for currency effects (i.e. based on the average monthly exchange rates in 2020), the company expected to post sales of approximately €44 billion for 2021, up from €42 billion to €43 billion, with core earnings per share expected to come in at approximately €6.40 to €6.60 on a currency-adjusted basis (previously: €6.10 to €6.30). 

Roundup Litigation Continues 

As of Feb. 3, 2021, lawsuits from approximately 61,800 plaintiffs claiming to have been exposed to glyphosate-based products manufactured by Bayer’s subsidiary Monsanto had been served upon Monsanto in the United States. Plaintiffs allege personal injuries resulting from exposure to those products, including non-Hodgkin lymphoma (NHL) and multiple myeloma, and seek compensatory and punitive damages. Plaintiffs claim that the glyphosate-based herbicide products are defective and that Monsanto knew, or should have known, of the risks allegedly associated with such products and failed to adequately warn its users. Additional lawsuits are anticipated.

The majority of plaintiffs have brought actions in state courts in Missouri and California. In June 2020, Monsanto reached an agreement in principle with plaintiffs, without admission of liability, to settle most of the current Roundup litigation, involving most of the total approximately 125,000 then known filed and unfiled claims, and to put in place a mechanism to resolve potential future claims. The total costs of the executed and additional inventory settlements for all outstanding claims are currently expected to be up to $9.6 billion. 

In May 2021, a U.S. federal appeals court upheld a $25 million verdict against the company in the only case that has gone to trial. The 9th U.S. Circuit Court of Appeals in San Francisco rejected Bayer’s argument that lawsuits like Edwin Hardeman’s never should go to trial because federal pesticide laws barred allegations that the company failed to warn of Roundup’s cancer risks. 

After the verdict, Bayer announced a series of measures to resolve potential future glyphosate litigation, combining both legal and commercial actions. In July, Bayer provided an update. 

“We have developed two scenarios based on a potential ruling by the Supreme Court of the United States in the Hardeman case,” Bayer executives say. “If the Supreme Court accepts the petition, which we plan to file in August, for review and rules in our favor, it would effectively end potential future litigation.

Bayer did file the petition in August, asking the Supreme Court to hear the case in the next six months. Company executives say if the Supreme Court either refuses to hear the Hardeman case or issues a ruling in favor of the plaintiff, Bayer would activate its own claims administration program. 

“We have implemented corresponding accounting measures for this scenario, resulting in a discounted allocation to provisions for litigations of €3.5 billion in the second quarter of 2021 on top of the existing provisions,” management says. “We are confident that this provides an effective path to manage and address any risks from potential future Roundup litigation, while simultaneously giving Bayer more control going forward.” 

The company continues to assert that there are no safety concerns associated with Roundup products.

Pharmaceuticals: Recovering from COVID

Bayer’s Pharmaceuticals division posted sales of €17.24 billion ($19.67 billion) in 2020, a decline of 4 percent. Executives attributed the reduction to the lockdowns, particularly in the first half of the year as elective treatments were canceled or put on hold. This was especially apparent in the company’s ophthalmology and women’s health businesses. When the lockdowns ended, sales began to pick up again. Additionally, radiology business sales were down as stricter hygiene measures slowed down patient processing throughout the year. And management says the implementation of new tender procedures in China for the diabetes drug Glucobay and the antibiotic Avelox weighed heavily on sales.

In the first half of 2021, Pharmaceutical sales were €8.86 billion ($10.11 billion), up 3.8 percent from the same period last year. Sales particularly picked up in the second quarter of 2021, driven by ophthalmology, women’s healthcare, and products such as Xarelto and the launch of the cancer drug Nubeqa.

Ten of Bayer’s product lines each generated more than $500 million in 2020. Xarelto was the company’s top-selling drug, generating €4.52 billion ($5.15 billion), 9.4 percent more than in 2019. Sales of the blood thinner in first-half 2021 were €2.3 billion ($2.63 billion) 6 percent more than in first-half 2020. Executives say sales were driven largely as a result of significantly expanded volumes in China and Russia.

Second in sales was the opthalmology drug Eylea, which recorded €2.47 billion ($2.82 billion), 1 percent less than in 2019. Like Xarelto, first-half 2021 sales of Eylea rebounded after the lockdowns, to €1.38 billion ($1.58 billion), 19 percent more than in the same period in 2020. Management says this was due to high demand in Europe.

No. 3 in sales were the birth control products Mirena, Kyleena and Jaydess. Combined sales declined 11.6 percent to €1.08 billion ($1.23 billion), 11.6 percent less than in 2019. Sales were also impeded by the effects of the pandemic. First-half sales in 2021 were €612 million ($698 million), 21.4 percent more compared with the same period in 2020.

The fourth best-selling product line in 2020 were the hemophilia medicines Kogenate, Kovaltry and Jivi at €851 million ($971 million), representing a decline of 3.5 percent. Sales in the first half of 2021 totaled €396 million ($452 million), 10.4 percent less than in first-half 2020. 

The birth control product family Yaz, Yasmin and Yasminelle was No. 5 in 2020 sales at €670 million ($764 million), 1.3 percent less than in 2019. First-half 2021 sales totaled €376 million ($429 million), 12.2 percent more than in first-half 2020, owing to the expansion of sales activities in China and strong growth in volumes in Japan.

No. 6 in sales was the cancer drug Nexavar at €639 million ($729 million), a decrease of 9.5 percent. First-half 2021 sales were €231 million ($264 million), 30.4 percent less than in the same period last year. Executives say sales volumes in the United States are decreasing because of strong competition.

Apirin Cardio was the seventh best-selling product in 2020. The product generated €639 million ($729 million), 10.4 percent more than in 2019. In the first half of 2021, the drug generated €343 million ($391 million), 8.5 percent more than in first-half 2020.

Adempas was No. 8 in sales in 2020 for Bayer. The pulmonary hypertension drug posted sales of €628 million ($717 million) compared with €418 million ($477 million) in 2019. Sales in the first half of 2021 amounted to €268 million ($306 million), 8.1 percent more than in the same period last year.

At No. 9 is the cardiac drug Adalat, at €613 million ($699 million), 7.7 percent less than in 2019. First-half 2021 sales reached €349 million ($398 million), 10.4 percent more than in first-half 2020. 

The 10th best seller for the company in 2020 was the cancer drug Stivarga, at €475 million ($542 million), 15,6 percent more than the previous year. Sales during the first half of 2021 came to €233 million ($266 million), a decrease of 6.8 percent compared with the first half of last year. 

Consumer Health

Bayer’s Consumer Health business generated sales of €5.05 billion ($5.77 billion) in 2020 compared with €5.46 billion ($6.23 billion) for the previous year. “While overall market growth remained stable, we saw a sharp rise in products that help support people’s immune systems leading to high growth in the nutritionals category,” Bayer executives say. “On the other hand, the social distancing and hygiene measures led to a sharp decline in the incidence of flu around the world which led to a decline in the sales of cough and cold products.”

In North America, sales in the Nutritionals category showed double-digit percentage growth that was driven by continued strong demand, particularly for One A Day vitamins. There was also growth in the Digestive Health and Pain & Cardio categories, and in the Allergy business, sales of Claritin grew. 

The Nutritionals category also drove 2020 sales in Europe/Middle East/Africa, Asia/Pacific, and Latin America. All regions experienced a decrease in the sales of cough and cold products. 

In the first half of 2021, Consumer Health sales amounted to €2.54 billion ($2.9 billion), 2.2 percent less than in first-half 2020.

Crop Science

Sales for the Crop Science business declined 5 percent from the previous year to €18.84 billion ($21.5 billion). Sales in the first half of 2021 were €11.67 billion ($13.3 billion) compared with €11.64 billion ($13.28 billion) during the 2020 first half. 

In May, Bayer announced that Brett Begemann, chief operating officer, Crop Science, was retiring from his role after 38 years with the company.

Rodrigo Santos, head of Crop Science Commercial Operations, Latin America, succeeded Begemann and assumed global responsibility for the division’s commercial organization, reporting to Liam Condon, president Crop Science and board of management member at Bayer AG.

Santos’ replacement as head of Commercial Operations, Crop Science, Latin America, is Mauricio Rodrigues, who was head of Finance, Crop Science, Latin America.

Pipeline Progress & Acquisitions

Bayer announced several research successes in 2020 and the first half of 2021. In November 2020, Bayer announced that the Phase III CHRONOS-3 study evaluating copanlisib in combination with rituximab in patients with relapsed indolent non-Hodgkin lymphoma (iNHL) had met its primary endpoint of significantly prolonging progression-free survival (PFS). 

In February 2021 the company announced that Nubeqa would be investigated in the Phase III ARANOTE trial to evaluate the efficacy and safety of darolutamide plus androgen deprivation therapy (ADT) in comparison to placebo plus ADT in men with metastatic hormone-sensitive prostate cancer. The primary endpoint of this study is radiological progression-free survival (rPFS). Bayer anticipated that the first patients would be enrolled to the study in first-quarter 2021. 

In January 2021, FDA granted regulatory approval for vericiguat for the treatment of patients with symptomatic chronic heart failure and reduced ejection fraction of less than 45 percent who have had a previous worsening heart failure event in combination with available heart failure therapies, under the brand name Verquvo. Vericiguat is being developed by Bayer in collaboration with MSD (the trade name of Merck & Co. outside of North America).

Verquvo also received approval in June 2021 from the Japanese Ministry of Health, Labour, and Welfare for the treatment of patients with chronic heart failure who are receiving standard treatment for chronic heart failure.

In July, Verqovo was granted marketing authorization from the European Commission for the treatment of symptomatic chronic heart failure in adult patients with reduced ejection fraction who are stabilized after a recent decompensation event requiring intravenous therapy.

Also in July, the U.S. FDA approved finerenone under the brand name Kerendia to reduce the risk of sustained estimated glomerular filtration rate decline, end-stage kidney disease, cardiovascular death, nonfatal myocardial infarction, and heart failure hospitalization in adult patients with chronic kidney disease and type 2 diabetes. The approval is based on the positive results of the pivotal Phase III FIDELIO-DKD study, presented at the American Society of Nephrology’s (ASN) Kidney Week Reimagined 2020 and simultaneously published in the New England Journal of Medicine in October 2020, and follows Priority Review designation granted by the FDA in January 2021.

In September 2021, Bayer announced the initiation of the FIND-CKD study, a multicenter, randomized, double-blind, placebo-controlled Phase III study to investigate the efficacy and safety of finerenone in addition to guideline-directed therapy, on the progression of chronic kidney disease (CKD) in patients with non-diabetic CKD. The primary objective of the study is to demonstrate superiority of finerenone over placebo in delaying the progression of kidney disease in these patients. The primary outcome measure is the mean rate of change in kidney function over time (estimated glomerular filtration rate, eGFR slope) from baseline to month.

In March, the Japanese Ministry of Health, Labor and Welfare granted marketing authorization for the precision oncology drug Vitrakvi for the treatment of neurotrophic tyrosine receptor kinase (NTRK) fusion-positive advanced or recurrent solid tumors. The drug is a highly selective TRK inhibitor exclusively designed to treat tumors that have developed an NTRK gene fusion.

In August, FDA approved an expansion of the peripheral artery disease (PAD) indication for the Xarelto vascular dose (2.5 mg twice daily plus aspirin 100 mg once daily) to include patients following recent lower-extremity revascularization (LER) due to symptomatic PAD. The approval is based on data from the Phase III VOYAGER PAD trial. In the EU, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) adopted a positive opinion to include the data from the Phase III study in the label of Xarelto in July 2021.

Bayer during August announced the acquisition of Vividion Therapeutics Inc. “Vividion’s unique technologies and special expertise will significantly strengthen our drug discovery capabilities,” Baumann says. 

Vividion is a U.S.-based biopharma company using novel discovery technologies to unlock high value, traditionally undruggable targets with precision therapeutics. Management says Vividion’s platform is able to produce a variety of small-molecule therapies across indications, with initial focus on targets relevant to oncology and immunology. Vividion’s lead programs include multiple precision oncology targets and precision immunology targets, with ongoing efforts on a transcription factor NRF2 antagonist for the potential treatment of NRF2 mutant cancers, as well as NRF2 activators for various inflammatory diseases such as irritable bowel disease – among other pre-clinical programs.

“This acquisition is a cornerstone of our strategy to fuel our pipeline with breakthrough innovation,” says Stefan Oelrich, member of the board of management at Bayer AG and president of Bayer’s Pharmaceuticals Division. “Vividion’s technology is the most advanced in the industry, and it has demonstrated its ability to identify drug candidates that can target challenging proteins. Together with Bayer’s existing know-how, we will be able to develop first-in-class drug candidates, increasing the value of our pipeline. We want to provide innovative therapies for patients whose medical needs are not yet met by today’s treatment options.”

To preserve Vividion’s entrepreneurial culture as an essential pillar for nurturing successful innovation, executives say the company will continue to operate as an independent organization on an arm’s length basis. “Vividion will remain accountable to advance its technology and portfolio while benefiting from the experience, infrastructure, and reach of Bayer as a global pharmaceutical company,” management says.

Bayer recently formed its own cell and gene therapy platform as part of the company’s transformation strategy for the Pharmaceuticals division. Executives say the platform already has potentially groundbreaking medical innovations in clinical development, such as a therapy for the treatment of Parkinson’s.

In June 2021, Bayer announced a deal to acquire Noria Therapeutics Inc. and PSMA Therapeutics Inc. Executives say through this acquisition, Bayer will obtain exclusive rights to a differentiated alpha radionuclide therapy based on actinium-225 and a small-molecule targeting prostate-specific membrane antigen (PSMA). The acquisition broadens Bayer’s existing oncology portfolio of targeted alpha therapies (TAT), which includes Xofigo and the proprietary platform of investigational TATs based on thorium-227. The pre-IND program focuses on the treatment of prostate cancer, the second most commonly diagnosed cancer in men. 

Executives believe that based on its unique design, this therapy could provide a differentiated efficacy and safety profile and offer significant potential to address a high unmet medical need for men with prostate cancer.

“Bayer is focused on addressing the various medical needs of cancer patients, providing treatments that improve patient outcomes throughout the different stages of the disease,” says Robert LaCaze, member of the executive committee of the Pharmaceuticals Division and head of the Oncology Strategic Business Unit at Bayer. “This acquisition is another important milestone in enhancing Bayer’s oncology portfolio through both in-house expertise and strategic collaborations and agreements.” 

To continue to drive its oncology research, in August Bayer appointed Prof. Dr. Dominik Ruettinger as the new head of Research and Early Development for Oncology. He started at the company on October 1. 

Ruettinger joins Bayer from Roche where he headed Early Clinical and Biomarker Development in Pharma Research and Early Development. Before he joined Roche in 2011, Dominik Ruettinger was at Micromet Inc. (now Amgen Inc.) where he led all solid tumor development programs and supported the development of Blinatumumab (Blincyto), eventually resulting in the approval of this first CD19-directed T-cell bispecific in 2014.

Ruettinger spent 12 years in academia in Germany and the United States, is board certified in surgical oncology, and holds a Ph.D. in tumor immunology from the University of Munich, where he served as principal investigator on multiple Phase I-III clincial trials in the area of oncology.