You could get a headache trying to name all of Bayer's products. The company, which created aspirin in 1897, makes pharmaceuticals, OTC drugs, and animal health care products through Bayer HealthCare, plastics and high-performance specialty materials via Covestro, and crop protection and home garden care items through Bayer CropScience. Aside from Bayer Aspirin, the company's best-known consumer brands include Aleve, Alka-Seltzer, and One-A-Day vitamins. Its top selling pharmaceuticals include multiple sclerosis treatment Betaseron and birth control pill YAZ. Also known as Bayer Group, the firm has some 300 operating subsidiaries worldwide; it operates in the US through Bayer Corporation.
The global HealthCare segment comprises pharmaceuticals and consumer health. Pharmaceuticals focuses on prescription products, especially for women's health care and cardiology, and on specialty therapeutics in the area of oncology, hematology, and opthamology. The consumer health business includes consumer care, medical care, and animal health (both livestock and pets). Consumer health focuses primarily on non-prescription medicines, supplements, and dermatology products, while medical care includes the diabetes care and radiology business units. HealthCare accounted for about half of Bayer's revenue in 2014.
The CropScience segment does business in seeds, crop protection, and non-agricultural pest control. Its two segments, crop protection/seeds and environmental science, together accounted for 22% of revenue in 2014.
Covestro (formerly MaterialScience) develops, makes, and markets high-tech polymer materials and specialty chemicals; it also makes inorganic base chemicals. Its operating units are polyurethanes, polycarbonates, and coatings, adhesives, and specialties. It accounted for 30% of revenue in 2014.
The majority of Bayer's sales come from European countries (roughly 40% of revenues) and North America (about 25% of sales), and most of the company's core manufacturing facilities are in Germany and the US. The company also has operations Latin America, Africa, and the Middle East.
The Bayer Group comprises about 300 consolidated companies operating in 75 countries around the world.
Sales and Marketing
Bayer markets over 5,000 products through a global sales and distribution network. Offerings from its largest division, the HealthCare segment, are distributed primarily through wholesalers, hospitals, and pharmacy chains, while CropScience products are sold through wholesalers and regional distributors.
The company has generally seen steady growth due to organic measures. Revenue increased 5% to €42.3 billion in 2014 due to growth across all segments. Pharmaceuticals grew 28% that year with the help of launches of products including Xarelto, Eylea, Stivarga, Xofigo, and Adempas. CropScience sales rose 11.2% due to increased sales of Crop Protection products.
Net income also rose in 2014, growing 7% to €3.4 billion thanks to the higher revenue. Higher profits led to a 12% increase in operating cash flow to €5.8 billion.
Bayer is growing all three of its core businesses by enhancing its strong positions in key markets, as well as by expanding into emerging geographic areas and investing in innovative technologies. Within its HealthCare division, which accounts for just about half of its annual sales, the company's growth strategy includes making targeted acquisitions, entering into licensing and development deals with other pharmaceutical companies, and performing in-house research and development. To counteract the effect of weakened sales in Europe and North America, the HealthCare Pharmaceuticals segment is working to expand drug marketing efforts in China, Brazil, Mexico, Russia, and other high-growth markets.
The company received European approval for its Eylea solution to treat patients with visual impairments in 2014.
As revenue from the company's health care business has grown, it has made moves to focus its efforts there. To that end, in 2014 Bayer announced it would spin off Bayer MaterialScience (now operating as Covestro) in an IPO. It also sold the interventional device business to Boston Scientific and, in 2013, sold its global powder polyester resins business Stepan Company for €45 million.
In 2015 Bayer announced plans to sell its diabetes devices unit to Panasonic Healthcare for about €1 billion; the sale marks its exit from the business, which has been lagging due to aging products and price pressures.
Mergers and Acquisitions
Acquisitions in the health arena include the company's 2014 purchase of Merck's consumer care business, which brought well-known brands including Claritin, MiraLAX, Coppertone, and Dr. Scholl's under the Bayer umbrella. The company paid about $14.2 billion for the deal and moved into second place globally among OTC companies, between a Novartis- GlaxoSmithKline joint venture and Johnson & Johnson.
Bayer also bought dermatology product specialist Dihon Pharmaceutical Group in China and former cancer drug Xofigo partner Algeta in Norway. CropScience purchases included Argentina's Biagro group (organic seed treatments and crop protection products) and the seed business of Paraguayan firm Granar. Altogether, the company spent €13.5 billion on acquisitions during 2014.