Bayer Sees New Products Lifting Sales, Earnings Through 2024

Bayer Sees New Products Lifting Sales, Earnings Through 2024

Bayer AG is targeting sales and earnings growth through 2024 as the German drugs and agriculture giant looks past its legal troubles and grapples with patent expirations for two blockbuster medicines.

Core earnings per share will rise to between 7 euros and 7.50 euros by 2024, Bayer said ahead of its two-day capital markets event. Sales will reach 43 billion euros to 45 billion euros ($53 billion), the company said.

The shares rose as much as 4.2% in German trading after the announcement, though they’re down about 40% since the company’s acquisition of Monsanto in June 2018.

”This is a realistic, cautious assessment,” Ulrich Huwald, a Hamburg-based analyst with Warburg Research GmbH, said of Bayer’s forecast, adding that it matches investor expectations. “This is a good starting point. Then we’ll look this afternoon to see how the road map looks, how the single divisions will grow.”

Chief Executive Officer Werner Baumann has been trying to convince investors that his strategy of keeping pharmaceutical, crop science and consumer health units under one roof makes sense. He’s struggled to do so amid the avalanche of lawsuits claiming that the weedkiller Roundup, which Bayer inherited in its Monsanto takeover, causes cancer. Bayer insists the product is safe.

Bayer has been negotiating for 2.5 years with U.S. plaintiff attorneys over Roundup lawsuits, which the company estimates could cost nearly $10 billion to fully resolve. Those and other Monsanto-related legal costs have only added to the frustration of investors, many of whom never supported the $63 billion mega-deal.

The company’s other major challenge is drawing increasingly near. Its pharmaceuticals unit will be dealt a major blow when top-selling blood thinner Xarelto loses patent protection in Europe in 2023 and in the U.S. a year later. Blockbuster eye treatment Eylea is next, with its European patent running out in 2025. Those two products combined accounted for about 7 billion euros in sales last year, 40% of the pharma division’s revenue.

Short on firepower for major acquisitions after Monsanto, Bayer has partly focused on building up a franchise of cell and gene therapies that probably won’t start compensating for lost sales from Xarelto and Eylea until later this decade. Bayer also expects three experimental drugs to garner annual revenue of 1 billion euros or more each.

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