Bayer Pharmaceutical Company SWOT Analysis Report
Summary
- Bayer generated $1.4bn sales to capture a consolidated market share of 2.4% in the BRIC countries in 2009.
- China with $487m sales and a sales share of 35.2% was Bayer’s largest market in 2009. Bayer had 23.7% year-on-year growth and a CAGR of 33.5% during 2005–09 in China.
- The genitourinary system and the sex hormones drug class was the largest therapeutic category for Bayer in the BRIC markets accounting for 25.5% of sales equivalent to $353m in 2009.
- Glucobay (anti-diabetic) and Avelox (anti-infective) were the leading brands for the company in the BRIC countries generating $112m and $104m sales respectively in 2009.
- The launch of Betaferon in China and the company’s alliance with People’s liberation Army General Hospital in China will promote the growth of its operations in the country.
Company overview
Bayer
was established in 1863 in Germany as a dye factory and soon diversified into
other areas including healthcare. Bayer’s business operations are divided into
three divisions – Bayer Healthcare, CropScience and MaterialScience and three
service areas – Business Service, Technology Service and Currenta. Bayer
Healthcare is the largest business unit of the company and its position was
further boosted by the acquisition of Schering Pharma AG in 2006. Bayer Healthcare
is further categorized into Animal Health, Consumer Care (OTC and dietary
supplements), Medical Care and Bayer Schering Pharma (prescription products).
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Table 32: Overview of Bayer
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Headquarters
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Germany
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Global sales
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$15.7bn
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BRIC sales
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$1.4bn
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Market share (% of total global sales in BRIC)
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8.8
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Major therapeutic focus
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Genitourinary system & sex hormones
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Source: IMS Health, copyright ©, reprinted with permission
Therapeutic focus
Genitourinary
products and sex hormones were the largest therapeutic category in Bayer’s
pharmaceutical portfolio in 2009. The acquisition of Schering has boosted its
position in these markets. However, Yaz and Yasmin sales have declined due to
presence of generics in the market. Alimentary tract & metabolism was the
next top selling drug class with 18.2% of Bayer’s BRIC sales. The segment
reported 8% year-on-year growth with Glucobay being the highest selling drug
for Bayer in the BRIC market.
Geographic focus
China
was Bayer’s largest BRIC market. Bayer’s business in China has been reporting
strong growth over the past five years at a CAGR of 33.5% during 2005–09. In
Brazil, drugs for the genitourinary system and sex hormones were the largest
drug class for Bayer accounting for 49.6% of the company’s sales. Bayer had
sales of $404m in Russia in 2009 which was a 17.5% year-on-year decline.
However, Bayer’s Russian sales increased by 5.8% year-on-year Rubles, the
difference being entirely down to the depreciation of the Russian currency
against the US$.
Table 33: Bayer’s sales distribution across BRIC countries, 2009
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Country
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Sales 2009 ($m)
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Sales growth, 2008–09 (%)
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Sales share, 2009 (%)
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CAGR, 2005–09 (%)
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China
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487
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23.7
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35.2
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33.5
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Brazil
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477
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-4.7
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34.5
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7.8
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Russia
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404
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-17.5
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29.2
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24.8
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India
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14
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5.1
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1.0
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1.6
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Total
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1,383
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-1.1
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100.0
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19.1
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Source: IMS Health, copyright ©, reprinted with permission
Marketed products
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Table 34: Leading brands of Bayer in the BRIC market, 2009
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Brands
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Sales 2009 ($m)
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Sales growth, 2008–09 (%)
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Sales share, 2009 (%)
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CAGR, 2005–09 (%)
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Glucobay
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112
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22.8
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8.1
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23.4
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Avelox
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104
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22.0
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7.5
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57.5
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Yasmin
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86
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-12.7
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6.2
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16.6
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Adalat
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85
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13.3
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6.2
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24.4
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Betaferon
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84
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-22.8
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6.1
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44.4
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Ultravist
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60
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9.2
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4.3
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25.2
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Diane
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59
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-8.4
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4.3
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9.7
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Aspirin
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57
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4.3
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4.1
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18.2
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Yaz
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37
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28.3
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2.7
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n/a
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Levitra
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33
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-4.7
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2.4
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6.5
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Top 10
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717
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3.0
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51.8
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25.7
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Others
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666
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-5.1
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48.2
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13.6
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Total
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1,383
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-1.1
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100.0
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19.1
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Source: IMS Health, copyright ©, reprinted with permission
R&D
Bayer
spends about $2.2m every year on R&D and has three primary research centers
spread across Germany and the US. Bayer’s primary research focus is in the
cardiovascular, women’s health and oncology therapy areas and in diagnostic
imaging. Examples of new active ingredients developed by Bayer’s pharmaceutical
division are cinaciguat, a soluble guanylate cyclase (sCG) activator which
activates guanylate cyclase enzyme even during its impaired functioning. This
helps in the detection of cardiovascular diseases and the drug is being studied
for the management of acute decompensated heart failure (ADHF). Florbetaben is
another promising molecule under development. The drug when tagged with
radioactive fluorine can bind to amyloid beta in the brain and help in early
detection of Alzheimer’s disease. The drug has currently entered Phase III
development.
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Table 35: Bayer’s late stage R&D pipeline
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Molecule
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Indication
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Florbetaben
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Alzheimer PET Imaging
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Gadovist
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Magnetic Resonance Imaging
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Riociguat
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Pulmonary Arterial Hypertension
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Xarelto
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Venous thromboembolism prevention
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Alemtuzumab
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Multiple Sclerosis
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Alpharadin
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Bone Metastases in Hormone-Refractory Prostate Cancer (HRPC)
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Bonefos
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Prevention of Bone Metastases in Breast Cancer Patients
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Nexavar
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Non-Small Cell Lung Cancer (NSCLC)
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VEGF Trap-Eye
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Wet Age-Related Macular Degeneration (wet AMD)
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Source: Company reports
Growth strategy
Bayer
launched Betaferon (interferon beta 1b) indicated for the treatment of multiple
sclerosis, in China in September 2010. Betaferon is used to treat
relapsing-remitting and secondary progressive forms of multiple sclerosis.
Clinical studies have indicated that interferon beta 1b maintains the integrity
of the blood brain barrier (BBB) which breaks down in multiple sclerosis
patients.
Bayer’s
Beyaz, a combination of its flagship oral contraceptive brand Yaz with folate,
has been approved by the FDA. Women on oral contraceptive pills demonstrate
deficiency in folate levels the body and are thus prescribed artificial
nutrient supplements to overcome adverse effects including neural tube defects.
Business Insights expects Beyaz to be launched in the BRIC markets during
2011–12
Mergers and acquisitions
Acquisition
of Schering expanded Bayer’s therapeutic portfolios including genitourinary,
nervous system and immunology/inflammation. Bayer has especially gained from
Schering’s strengths in the genitourinary therapy area. The multiple sclerosis
drug Betaferon was acquired through the Schering merger and has been one of the
major growth drivers for the company after consolidation.
Partnerships and alliances
Bayer
acquired a strong women’s health profile after merger with Schering. Bayer has
teamed up with the People’s Liberation Army General Hospital in China to
research drugs for women’s health. The research, to be funded by Bayer will
primarily concentrate on analyzing and understanding the local disease models in
China. This will provide the initial clinical data for drug development and the
market dynamics pertaining to the country leading to focused research.
Bayer
is also capitalizing on opportunities in the oncology therapy area and has an
R&D alliance with OncoMed Pharmaceuticals regarding anti-cancer stem cell
targeting antibody and protein therapeutics. Antagonizing the Wnt pathway that
stimulates cancer cells is the conceptualized mechanism of action. According to
the agreement, Bayer will hold optional licensing rights of the newly developed
drugs till Phase I studies. Bayer has made a payment of $40m, OncoMed is
entitled to receive further payments dependent on progress. This will give
Bayer the exclusive right to license the new biotherapeutic or small molecules
that are developed.
SWOT
Table 36: SWOT analysis – Bayer
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Strengths
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Weaknesses
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Strong hormonal contraceptive franchise with blockbuster brands
including Mirena, Yaz and Yasmin.
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Decline in the sales of the cardiovascular portfolio due to
withdrawal of Trasylol.
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Strong R&D pipeline with key products including cinaciguat,
riociguat, florbetaben.
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Opportunities
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Threats
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Business Insights visualizes the approval of erectile dysfunction
brand Levitra as an OTC product in the US as a forerunner to similar events
in the BRIC.
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Xarelto to compete with Boehringer Ingelheim's Pradaxa for market
space.
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Flagship brand Nexavar under development in Asian countries for
use in indications including hepatocellular carcinoma (HCC).
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Appeal in Indian court against generic Nexavar rejected.
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Impending approval of products including Beyaz, Xarelto and
Gadovist.
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Bayer flagship product Betaferon approved in China.
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