Tuesday, September 14, 2004

SCHERING-PLOUGH ACQUIRES U.S. RIGHTS TO MARKET BAYER'S PRIMARY CARE PRODUCTS; 1,800 BAYER POSITIONS MAY BE AFFECTED

Schering-Plough Corp. acquired exclusive rights to market, sell and distribute Bayer AG's primary care pharmaceutical products in the United States and Puerto Rico as part of a strategic alliance intended to enable Bayer to refocus its U.S. organization on high-profit specialty and biotechnology brand products.

Bayer said it expects approximately 1,800 primary care sales and marketing positions will either be eliminated or transferred to Schering-Plough as a result of the transaction. According to Dow Jones, "industry observers" expect Schering-Plough will take on fewer than 900 of those positions.

The agreement, expected to be effective Oct. 1, includes Bayer's antibiotics Cipro (ciprofloxacin hydrochloride) and Avelox (moxifloxacin hydrochloride), its cardiovascular drug Adalat (nifedipine) and other established primary healthcare brands. Schering-Plough will pay royalties to Bayer based on net sales of these products.

In addition, Schering-Plough will commercialize the erectile dysfunction drug Levitra (vardenafil hydrochloride), which is marketed under a co-promotion agreement between Bayer and GlaxoSmithKline Plc. Bayer and Schering-Plough will share Bayer's portion of the profits on U.S. sales of Levitra.

Bayer's worldwide sales of Levitra totaled only $49 million in the second quarter of 2004, down from approximately $80.9 million in the first quarter of this year. Global Cipro sales totaled $247.5 million in the second quarter, reflecting a 54.4 percent drop year-over-year due to generic competition in the United States. Second-quarter sales of Avelox and Adalat totaled $210.7 million (down 6.5 percent year-over-year) and $67.4 million (up 77.4 percent), respectively. According to Bayer spokeswoman Christina Sehnert, Bayer's primary care products generated approximately $430 million in U.S. sales during the first half of 2004, The Associated Press reported.

The partnership will reduce Bayer's U.S. drug marketing costs by 75 percent, according to Dow Jones, thereby enabling Bayer to establish a new oncology business unit and create an oncology field force.

"The alliance with Schering-Plough will strengthen the performance of our primary care portfolio in this important market and improve the cost structure and profitability of our pharma organization," said Arthur Higgins, chairman of Bayer HealthCare. "This in turn increases our capacity to invest in the future of our pharma brand division by building our global oncology unit and laying the foundation for a successful presence in this important therapeutic segment."

Also, as part of the transaction, Bayer will support the promotion of certain Schering-Plough oncology products in the United States and Europe and will co-market Schering-Plough Pharmaceuticals' cholesterol drug Zetia (ezetimibe) in Japan, if approved. Zetia is currently under review by Japanese regulators.

Bayer expects to incur one-time charges in the approximate range of $60 million to $85 million as a result of the transaction. Most of the charges will occur in 2004.

Bayer noted that the collaboration with Schering-Plough should not be interpreted as a prelude to a broader partnership or a future divestiture of its pharmaceuticals business.

Thursday, May 20, 2004

FDA APPROVES SNDA FOR BAYER'S AVELOX

The Food and Drug Administration approved Bayer AG's supplemental New Drug Application for Avelox (moxifloxacin hydrochloride) as a treatment for community-acquired pneumonia (CAP) caused by multi-drug resistant Streptococcus pneumoniae.

The therapy is the first antibiotic approved in both tablet and intravenous forms to treat CAP caused by such strains, which are resistant to the most commonly prescribed antibiotics for pneumonia treatment, Bayer said.

"Antibiotic failure due to resistance can result in prolonged suffering for patients, time lost from work, increased health care costs and serious illness that can lead to increased mortality," noted Dr. Paul MacCarthy, vice president of medical science at Bayer Pharmaceuticals Corp.

"With approval to treat [multi-drug resistant S. pneumoniae] in tablet and [intravenous] forms, Avelox will be an important treatment option for CAP, especially during this time of emerging resistance to conventional therapies," he added.

Between 2 million and 3 million cases of CAP are reported annually in the United States, accounting for 10 million physician visits, 500,000 hospitalizations and 45,000 deaths per year. CAP is currently the sixth leading cause of death in the United States, Bayer noted.

Thursday, May 8, 2003

BAYER RELEASES Q1 RESULTS; SHARES RISE

Shares of Germany-based Bayer AG rose 5.4 percent after the company announced an increase in first-quarter operating profit pushed by cost reductions and the expansion of its agrochemicals division.

The drug and chemical maker earned $1.22 billion, or $0.90 per share, in the first quarter of 2003 compared with $953 million, or $0.82 per share, in the same quarter of last year. According to Reuters, analysts had predicted operating profit for the company would be $972 million.

First-quarter revenue rose five percent to $8.3 billion, up from $8.2 billion one year ago.

However, Bayer's sales in pharmaceutical and biological brand products dropped 10 percent, from $1.43 billion in the first quarter of 2002 to $1.28 billion this year. The company attributed the decrease largely to negative currency effects.

Bayer's antibiotic Avelox (moxifloxacin) and its Factor VIII product Kogenate, which is used for the treatment of hemophilia, both posted significant gains, with increases of 59 percent and 30 percent to $122 million and $123 million, respectively.

Shares of Bayer closed at $19.79, up $1.10, in heavy trading on the New York Stock Exchange.