Bayer steps up focus on research and development

Date:12-05-2014

•    Budget reaches EUR 3.2 billion in 2014 – R&D-to-sales ratio to continue rising
•    Over 50 projects currently in the pharmaceuticals pipeline
•    Bayer applied for nearly 500 patents in the life sciences in 2013

The Bayer Group plans in the future to sharpen its focus on innovation in its life science businesses, HealthCare and CropScience. “Overall, we expect the R&D-to-sales ratio to increase in the coming years,” said Management Board Chairman Dr. Marijn Dekkers on Tuesday, addressing some 140 journalists at Bayer’s Perspective on Innovation 2014 press forum in Leverkusen,Germany. The research and development budget in the life science businesses this year amounts to EUR 3.2 billion. Of this amount, Bayer HealthCare accounts for 70 percent and Bayer CropScience for 30 percent. Dekkers said that as a world-class life science company, Bayer will continue to target attractive markets with high growth rates, and in following this course, it has very good prospects for the future.

He explained that the company has a more than 13,000 employees in research and development, 61 percent of them in HealthCare and 39 percent in CropScience, and that it has made major progress in both businesses. In the pharmaceuticals segment, Bayer has successfully completed 25 Phase III clinical studies since 2010, and at CropScience introduced 30 new active ingredients to the market between 2000 and 2013. Last year alone, Bayer applied for 500 patents in the life sciences.

Dekkers remarked that developing new products is critical to the success of the life science businesses. Equally as important, however, is the ability to market products and gain market shares. In the pharmaceuticals business, Bayer is one of the fastest-growing global companies, with leading positions in key indications. In the over-the-counter (OTC) products business, the company is ranked number two in the world. Bayer is also strong in the agriculture business. “We are one of the fastest-growing crop science companies,” said Dekkers. CropScience occupies second place worldwide in crop protection. The seed business currently is ranked 7th globally, and is to be further expanded in the future.

“Our business models, whether in HealthCare or CropScience, have many similarities,” Dekkers said. These include an excellent research organization, strong growth and innovative marketing. Bayer is a trendsetter in research-intensive fields. “Our processes begin in the lab and the benefits end up with the customer. We enable doctors to help patients, we enable farmers to help feed the world, we enable veterinarians to help animals. This is all in line with our mission: Bayer: Science For A Better Life,” said the Board Chairman.

HealthCare offers new treatment options

Dekkers listed a number of important pharmaceutical products as examples. With the anticoagulant Xarelto™, for instance, an estimated two out of every three strokes could be prevented compared with patients who take no anticoagulant medication. “This not only impacts the patient’s life, but that of his or her family,” Dekkers said. New therapies made possible by Bayer products also include improving the failing vision that accompanies some eye diseases with Eylea™, inhibiting tumor growth in certain types of cancer with Stivarga™ and Xofigo™, and improving the lives of people with certain lung diseases with Adempas™. These five products alone have an annual peak sales potential of at least EUR 7.5 billion.

“The success of our recent product introductions has created great growth momentum for us,” Dekkers added. The pharmaceuticals pipeline currently contains 57 projects, of which 20 are in Phase I clinical testing, 19 in Phase II and 18 in Phase III. Among these projects are five, new, promising active ingredient candidates, which should be ready by 2015 for a decision on advancement to Phase III. Three of these projects are in the fields of cardiology and hematology, their objective being to improve treatment options for renal anemia and heart disease. Another project in oncology is showing a promising effect in patients with non-Hodgkin's lymphoma. And in gynecology, Bayer is expecting a new treatment option for symptomatic uterine fibroids. “All these active ingredient candidates have one thing in common: they are developed from new molecules with a specific active profile,” Dekkers explained.

New in Phase III is an active ingredient for treating patients with prostate cancer. Bayer entered into an agreement with Orion Corporation, a pharmaceuticals company in Espoo, Finland, concerning the global development and marketing of the development candidate ODM-201. This novel androgen receptor modulator in tablet form is currently in clinical development. In September 2014, a clinical Phase III study was initiated in men with non-metastatic, castration-resistant, high-risk prostate cancer, who display a rapid rise in prostate-specific antigen (PSA), but as yet no detectable metastases.

Bayer likewise is making good progress with its development products containing recombinant factor VIII (rFVIII) for treating hemophilia. For these products, the company wants to invest over EUR 500 million in expanded production capacities at its German sites in Wuppertal and Leverkusen. With regard to the new drug BAY 81-8973, the company plans to submit the documentation required for the approval process before the year is out. Another long-acting rFVIII (BAY 94-9027) currently is in Phase III clinical testing.

Bayer wants to become a leader in over-the-counter products, which it recently strengthened by acquiring the Consumer Care business of Merck & Co., Inc., United States, and Dihon Pharmaceuticals in China. Dekkers pointed out that this segment has been growing more strongly than the market for many years. Bayer has been very successful in this area with its long-term brand development strategies. The aim over the next two years is to launch innovative products on the market, further expand business in growth markets and fully exploit potential synergies arising from acquisitions.

New methods for increasing crop yields

Dekkers continued by saying that products from CropScience also help to make people's lives easier. “We all know that the world’s population is increasing all the time. We need new and better ways to boost agricultural yields if we are to have an adequate food supply in the future.” For instance, the fungicide Luna™ supports the safe control of fungal infections in various fruit and vegetable varieties, such as powdery mildew and storage rot. Adengo™, an herbicide for corn, controls numerous grasses and weeds. Corn is not only indispensable as animal feed, it also is found in many foods on our tables every day. Innovative herbicides like Adengo™ are therefore important for feeding the growing global population.

“Like in the pharmaceutical business, new products are also very important in the agricultural business,” Dekkers said. Over the next few years, the research and development pipeline for Crop Protection and Seeds & Traits should produce new market innovations. Depending on approvals from the regulatory authorities, Dekkers estimated the annual peak sales potential at a minimum of EUR 4 billion for products introduced to the market between 2011 and 2016.

Major similarities in human, animal and plant research

In the future, Bayer wants to comprehensively exploit the synergies in the fields of human, animal and plant health, explained Kemal Malik, Bayer Management Board Member responsible for Innovation. In the course of evolution, the processes inside living organisms have remained surprisingly similar. One aspect shared by all organisms is that their genetic information is stored in the form of DNA. While people, animals and plants differ considerably in appearance, the differences in their underlying 'blueprints' are not all that dramatic. In the human population, 99.5 to 100 percent of all genes are identical. Only minimal sequence differences exist, which make people unique.

Humans even share over 90 percent of their DNA with cats, and as much as half with fruit flies. And even the almost 20 percent of genes that humans have in common with plants offer new starting points for research projects, which are developed in interdisciplinary collaborations within the Bayer Group in the areas of common mechanisms of action and platform technologies.

One research project dealing with energy production in cells already has shown initial success. It originated with three new product families for treating fungal infections in plants (fungicides). A team of researchers used them as a basis for developing the new nematicide Velum™/Verango™, which protects crops against nematodes in the soil and was launched on the market in 2014. Because infection with a wide variety of worm species also is a problem in livestock and house pets, animal health researchers now are trying to identify potential active ingredients with the same mechanism of action. In the meantime, it also was discovered that this method of energy production in cells may also be relevant in the growth of cancer cells. Bayer researchers succeeded in demonstrating in vitro that specific types of melanoma react sensitively to the inhibition of the mitochondrial energy supply. “This is a perfect example of the synergies among the life sciences,” Malik said.

Another building block of Bayer's innovation activities is external partnerships. “In recent years, many innovative research projects began as partnerships with institutes, universities and start-up companies,” Malik explained. “It is no longer possible today for a company to manage all areas of innovation itself. Strategic cooperation agreements and alliances therefore are an integral part of the innovation chain of all successful, research-based companies.”

Malik said it is fundamentally important for these partnerships to be intelligently structured from the outset. This way, each partner can optimally contribute its own special expertise to help reach the common goal faster and more efficiently. He pointed out that HealthCare and CropScience currently maintain some 850 partnerships. Two more were added in 2014 for advancing 'big data' in the life sciences sector: a cooperation with the Broad Institute – a joint research facility of Harvard University and the Massachusetts Institute of Technology (MIT) in Boston, Massachusetts, United States – aims to improve the lives of cancer patients. The Broad Institute is a leader in the fields of genome analysis, oncogenomics and high-throughput biology. The collaboration between Bayer CropScience and Targenomix aims to identify new concepts for controlling weeds and improving plant quality. Targenomix is a spin-off of the Max Planck Institute of Molecular Plant Physiology in Golm, Germany, one of the world's leading institutes in the field of plant systems biology.

Innovations are based on an open culture and way of thinking. Examples of open innovation at Bayer include the successful Grants4Targets, Grants4Leads and Grants4Apps initiatives at Bayer HealthCare, and the CoLaborator concept in San Francisco, United States, and Berlin, Germany. New strategic venture capital investments provide access to start-ups and future-oriented technologies, while at the same time promoting Bayer's culture of innovation and entrepreneurial spirit. Through an investment in the health care fund of Versant Ventures, Bayer HealthCare is participating in pioneering biopharmaceuticals, medical products and other young enterprises in the life sciences. In addition, together with the German Federal Ministry for Economic Affairs and Energy, the KfW bank group and the private sector, Bayer Health Care is contributing to the German Hightech Gruenderfonds II, which finances promising young start-ups in the life science and health care sectors.

Bayer: Science For A Better Life

Bayer is a global enterprise with core competencies in the fields of health care, agriculture and high-tech polymer materials. As an innovation company, it sets trends in research-intensive areas. Bayer’s products and services are designed to benefit people and improve their quality of life. At the same time, the Group aims to create value through innovation, growth and high earning power. Bayer is committed to the principles of sustainable development and to its social and ethical responsibilities as a corporate citizen. In fiscal 2013, the Group employed 113,200 people and had sales of EUR 40.2 billion. Capital expenditures amounted to EUR 2.2 billion, R&D expenses to EUR 3.2 billion.