European Pharmaceutical Industry is Key to Helping Eu Become the Most Competitive and Dynamic Knowledge-based Society in the World

Bayer HealthCare assumes role as leading global healthcare company following Schering take-over
 
 
BERLIN, December 12, 2007 – Arthur J. Higgins, Chairman of the Executive Committee of Bayer HealthCare and Chairman of the Board of Management of Bayer Schering Pharma AG, today met with European journalists in Berlin, where he underlined the need for a fair reward for medical innovation to ensure that the European pharmaceutical industry remains competitive with the U.S. and emerging markets such as China and India.

“The European pharmaceutical industry is key to helping Europe spearhead medical innovation,” said Arthur Higgins, who is also President of the European Federation of Pharmaceutical Industries and Associations (EFPIA). In 2006 alone, the EU pharmaceutical industry invested more than EUR 22 billion in research and development, making up 18% of total industrial R&D investment in Europe. Higgins however added: “Soaring R&D costs due to longer regulatory processes, combined with a downward pressure on prices, are making it harder for many pharmaceutical companies to recoup their R&D expenditure before patents expire.”

EFPIA’s political program entitled AIMS (Access, Innovation, Mobilization and Security) is designed to achieve an environment which better supports the pharmaceutical industry in Europe and to find a new spirit of cooperation between the industry and its stakeholders.

Access refers to the need to continue to work towards speeding up regulatory approval and reimbursement processes for new medicines. Innovation focuses on efforts towards creating a strong science base in Europe. Mobilization is about how the industry joins forces with key stakeholders with the aim of identifying better ways to address the challenges of an ageing population. Security refers to the need to strengthen the integrity and transparency of the drug supply chain.

To boost medical innovation in Europe, a program called the Innovative Medicines Initiative (IMI) is to be launched in the coming weeks. The initiative will bring together public authorities, patients, academia, and industry to address key bottlenecks in drug discovery and development. “IMI is a bold and innovative initiative between the industry and the EU to really challenge the status quo of drug discovery,” said Arthur Higgins. IMI is to receive EUR 2 billion over a six-year period. This funding will be split between the EU and the pharmaceutical industry, and is intended to support research projects such as predicting drug safety and efficacy and to bridge gaps in education and training.

Significant transformations enable Bayer HealthCare to grow with or above market

Arthur Higgins also presented Bayer HealthCare’s significant transformation into a top global healthcare company over the past three years, raising the company’s international rank from 17th to a Top 10 position in 2007.

Each of the Bayer HealthCare’s four divisions – Consumer Care, Diabetes Care, Animal Health and Bayer Schering Pharma – now performs at or above market level. The EUR 17 billion acquisition of Schering – the biggest acquisition in the history of the Bayer Group – has greatly strengthened the company’s pharma portfolio. The integration is running faster than planned and creating more synergies than anticipated. As a result, Bayer has raised the synergy targets for Bayer Schering Pharma from EUR 700 to more than 800 million and expects to realize 80% of this target by the end of 2008.

In addition, the strategic realignment of Bayer Schering Pharma’s development portfolio is enabling the business to achieve a healthy balance between Lifecycle Management and New Molecular Entities. Drug discovery research will in the future focus on four growth areas: Oncology, Cardiology, Women’s Healthcare and Diagnostic Imaging.

“A key strategy for Bayer Schering Pharma is to maximize our transformational pipeline,” explained Arthur Higgins. “Two examples here are our promising thrombosis treatment in development, rivaroxaban, and our oncology success story, Nexavar®.”

In November 2007, the U.S. Food and Drug Administration (FDA) approved a supplemental New Drug Application for Nexavar® (sorafenib) tablets for the treatment of patients with unresectable hepatocellular carcinoma (HCC), or liver cancer. Nexavar®, an oral anti-cancer drug, is the only drug therapy shown to significantly improve overall survival in patients with the disease. In Europe, Nexavar® was approved for the treatment of HCC in October of this year. In 2005, Nexavar® became the first new treatment since more than a decade to treat advanced kidney cancer, and is currently approved in more than 60 countries for this indication.

The submission of a Marketing Authorization Application to the European Agency for the Evaluation of Medicinal Products (EMEA) for approval to market rivaroxaban for the prevention of venous thromboembolism (VTE) after major orthopedic surgery of the lower limbs was announced in October 2007. Rivaroxaban is being jointly developed by Bayer HealthCare AG and Johnson & Johnson Pharmaceutical Research & Development, L.L.C. The trade name of rivaroxaban is expected to be Xarelto®, pending health authority approval. Upon regulatory approval, rivaroxaban will be commercialized in Europe by Bayer Schering Pharma. A filing for rivaroxaban for a similar indication in the U.S. is planned in 2008, where upon approval, it will be commercialized by Scios Inc. and Ortho-McNeil, Inc., both of which are wholly-owned subsidiaries of Johnson & Johnson.To date, rivaroxaban is the most studied oral direct Factor Xa inhibitor in development.

Arthur Higgins emphasized the strong year-to-date performance at Bayer HealthCare, with currency-adjusted sales exceeding EUR 11 billion, up 7% on a pro-forma basis compared with the first nine months of 2006. Sales in the pharmaceuticals segment – Bayer Schering Pharma – increased year-on-year by 6 % on a pro-forma basis between January and September 2007, while sales in the Diabetes Care division rose 21 %. During the period, sales in the Animal Health and Consumer Care divisions increased by 10 % and 7 % respectively. “All three Consumer Health divisions – Consumer Care, Diabetes Care and Animal Health – are significant engines of growth that also help to balance the volatility of the pharmaceutical business,” said Arthur Higgins.

He concluded: “For the full year, we remain optimistic for the HealthCare business and expect an EBITDA margin before special items of more than 25 percent.”

About Bayer HealthCare
The Bayer Group is a global enterprise with core competencies in the fields of health care, nutrition and high-tech materials. Bayer HealthCare, a subsidiary of Bayer AG, is one of the world’s leading, innovative companies in the healthcare and medical products industry and is based in Leverkusen, Germany. The company combines the global activities of the Animal Health, Consumer Care, Diabetes Care and Pharmaceuticals divisions. The pharmaceuticals business operates under the name Bayer Schering Pharma AG. Bayer HealthCare’s aim is to discover and manufacture products that will improve human and animal health worldwide. Find more information at www.bayerhealthcare.com.

About Bayer Schering Pharma
Bayer Schering Pharma is a worldwide leading specialty pharmaceutical company. Its research and business activities are focused on the following areas: Diagnostic Imaging, Hematology/Cardiology, Oncology, Primary Care, Specialized Therapeutics and Women's Healthcare. With innovative products, Bayer Schering Pharma aims for leading positions in specialized markets worldwide. Using new ideas, Bayer Schering Pharma aims to make a contribution to medical progress and strives to improve the quality of life. Find more information at www.bayerscheringpharma.de.


Forward-Looking Statements
This news release contains forward-looking statements based on current assumptions and forecasts made by Bayer Group management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in our annual and interim reports to the Frankfurt Stock Exchange and in our reports filed with the U.S. Securities and Exchange Commission (including our Form 20-F). The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.

Posted: December 2007


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