FRANKFURT/SAN FRANCISCO (dpa-AFX) - Bayer continues to rely on new drugs to boost the pharmaceutical division's growth in the medium term. However, in view of declining sales of the blockbuster Xarelto due to patent losses, the initial focus is on stabilizing sales before growth is expected again from 2027. Due to the high level of corporate debt, no further major acquisitions to strengthen the pharmaceutical pipeline are planned for the time being. According to Stefan Oelrich, head of the pharmaceutical division, the division will have achieved its self-imposed goals by 2024.
"We will deliver at the upper end of our guidance for 2024," the manager told the financial news agency dpa-AFX on Monday evening at the JPMorgan Annual Healthcare Conference. For its pharmaceutical business, Bayer expects constant-currency sales growth of 0 to 3 percent in 2024, following 18.1 billion euros in 2023. The underlying earnings margin before interest, taxes, depreciation and amortization (EBITDA margin) is expected to reach 26 to 29 percent when adjusted for currency effects.
Bayer's specific targets for 2025 will be announced in early March when the company reports its 2024 results. JPMorgan analyst Richard Vosser expects the pharmaceutical business to report negative or zero sales growth at constant exchange rates due to pressure on the anticoagulant Xarelto. The operating margin is also likely to suffer.
Xarelto sales are increasingly being weighed down by patent losses and competition from cheaper generics. In addition to the established blockbuster Eylea - an ophthalmic drug - young drugs such as Nubeqa (prostate cancer) and Kerendia (chronic kidney disease in diabetics) should continue to cushion the blow.
In the first nine months of 2024, the two relatively new drugs had together more than offset the loss of sales of Xarelto. However, new drugs are less profitable than established ones, since a comparatively large amount of money still has to be invested in sales and marketing. In addition, the decline in Xarelto sales accelerated significantly in the third quarter: it fell by almost a quarter year-on-year. This is an indication of what can be expected in 2025, Oelrich said.
Marketing authorization applications for Kerendia for the treatment of a specific form of heart failure are currently still pending in the USA and China. Oelrich hopes to see revenues in the second half of the year, particularly in the US. The same applies to Elinzanetant for menopausal symptoms, which is being reviewed by the US and EU authorities for approval.
In the long term, innovative cell and gene therapy treatments are expected to invigorate business. For the first half of 2025, Bayer subsidiary Bluerock Therapeutics plans to start a phase III study of the cell therapy treatment Bemdaneprocel for Parkinson's disease. At the same time, subsidiary AskBio will conduct a phase II study of gene therapy for Parkinson's.
The goal is to bring a drug for Parkinson's to market before the end of the decade, according to Oelrich. Nevertheless, the development of new drugs also entails risks. Bayer only realized this at the end of 2023. At that time, an important study on the anticoagulant Asundexian in patients with atrial fibrillation and stroke risk flopped. The share price plummeted, dashing investors' high hopes for a successor to Xarelto.
In recent years, Bayer has expanded its pharmaceutical pipeline with smaller acquisitions such as Bluerock in 2019 and AskBio in 2020, despite a lack of funds. The money for larger acquisitions is lacking because the US lawsuits surrounding the alleged cancer risks of glyphosate-based weed killers have already swallowed up billions.
In view of the high level of corporate debt, there are likely to be fewer smaller deals for the time being. "Acquisitions will probably take a back seat over the next two years as we try to improve our debt situation," Oelrich told Bloomberg News in San Francisco on Monday. He said the company would continue to seek deals, but that the focus would be less on buying entire companies.