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Lower drug sales potential at Bayer underscores need for deals

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12/05/2018 | 06:58am EST
FILE PHOTO: The logo of Bayer AG is pictured at the Bayer Healthcare subgroup production plant in Wuppertal

FRANKFURT (Reuters) - Germany's Bayer, which acquired seed company Monsanto this year, reduced its combined sales estimate for its most promising experimental drugs, acknowledging it needs to do more to replenish the development pipeline.

At its capital markets day in London on Wednesday, it said the tally of peak sales potential of its five most promising drugs was more than 3.75 billion euros (3.34 billion pounds), compared with a target of more than 6 billion euros for the top six drugs reiterated as recently as June.

Bayer last week announced the sale of a number of businesses, around 12,000 job cuts and 3.3 billion euros in impairments.

Bayer faces a threat to revenues in 2024 when the patent on blockbuster heart drug Xarelto runs out. Sales from eye drug Eylea, its second-best selling drug, are expected to suffer from competing drugs before that.

Bayer said it halted trials testing its experimental uterine fibroids treatment vilaprisan, which it previously expected to generate peak annual sales of more than 1 billion euros, citing the risk of side effects.

It also no longer included a peak sales estimate for anetumab ravtansine, a drug for asbestos-linked cancer type mesothelioma, previously seen generating more than 2 billion euros in annual revenues.

The group's former head of pharmaceuticals, Dieter Weinand, said a year ago there was still hope for anetumab despite a setback in a Phase II trial in 2017, but Weinand quit and was replaced by Sanofi executive Stefan Oelrich last month.

Bayer added to the tally an annual peak sales potential of more than 750 million euros for larotrectinib against a variety of cancers driven by a rare genetic mutation. The drug, co-developed with Loxo Oncology, won U.S. market approval last week.

Bayer said in presentation slides that it plans to supplement its existing pipeline with in-licensing and bolt-on takeover deals.

"We need to fill our mid-term pipeline furthermore" over the next few years, Oelrich told investors at the event, adding that the early- and late-stage pipeline was strong.

Bayer also said it aimed to increase adjusted group core earnings to 16 billion euros (14.24 billion pounds) in 2022, up from an expected 12.2 billion euros this year, but that target does not yet take into account the planned divestment of its animal health unit or the effect of currency swings.

(Editing by Thomas Seythal and Keith Weir)

By Ludwig Burger

Stocks mentioned in the article
ChangeLast1st jan.
BAYER 4.00% 68.17 Delayed Quote.12.57%
LOXO ONCOLOGY INC -0.03% 234.66 Delayed Quote.0.00%
SANOFI 2.52% 75.24 Real-time Quote.-0.56%
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Financials (€)
Sales 2018 39 254 M
EBIT 2018 7 429 M
Net income 2018 4 936 M
Debt 2018 38 407 M
Yield 2018 4,12%
P/E ratio 2018 12,70
P/E ratio 2019 14,66
EV / Sales 2018 2,60x
EV / Sales 2019 2,15x
Capitalization 63 572 M
Duration : Period :
Bayer Technical Analysis Chart | MarketScreener
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Technical analysis trends BAYER
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 26
Average target price 90,7 €
Spread / Average Target 33%
EPS Revisions
Werner Baumann Chairman-Management Board
Werner Wenning Chairman-Supervisory Board
Wolfgang U. Nickl Chief Financial Officer
Katharina Jansen Head-Science & Research
Hartmut Klusik Head-Human Resources, Technology & Sustainability
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