Bayer to Increase Pharmaceutical R&D Spend

Bayer have announced additional details on the future of their pharmaceutical research and development business following the announcement earlier this week that they will be concentrating on their healthcare and crop science businesses going forward.

The announcement confirmed Bayer plans to float their material science division on the stock market and focus on life sciences, after years of speculation.

The organisation announced that the flotation will take place within 12 to 18 months.  A major reason behind the decision is to give material science “direct access to capital [which] can no longer be adequately ensured within the Bayer group.”  This is as a result of “the substantial investment needs of the life science businesses for both organic and external growth.”

The company noted that in recent years, its “centre of gravity has greatly shifted toward its life science activities” with multiple successful drug launches and the pending acquisition of Merck & Co’s over-the-counter business.

Bayer’s life sciences business currently contributes to around 70% of the company’s sales and 88% of earnings before tax and special items.

Marijn Dekkers, Bayer’s chief executive, confirmed that Bayer will raise their R&D spending and “selectively strengthen early research at the interface between health care and crop science.”

Dekkers reiterated a forecast made early this year that five key new drugs – the eye drug Eylea and the new cancer treatments Xofigo and Stivarga, the anticoagulant Xarelto, plus the pulmonary hypertension treatment Adempas – will have total peak sales of at least 7.5 billion euros.

After the flotation, the material science unit will be Europe’s fourth-largest chemical company, with 11 billion euros of global sales last year.  The unit will also have a workforce of about 16,800, including about 6,500 in Germany and be headquartered in Leverkusen.

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