In a bid to further strengthen its product portfolio, the
MaterialScience segment of
) recently purchased the remaining shares from French company
EXIMIUM SAS (formerly Michel Baulé SA) and other stockholders
pertaining to its 50:50 systems house joint venture, Baulé SAS. The
financial terms of the deal were not revealed. The joint
venture had its origin in 2008.
The move to gain full control over the joint venture, which is a
market leader in developing, formulating and processing
polyurethane cast elastomers, is a smart move by Bayer's Material
Science division - one of the world's largest polymer
manufacturers. We remind investors that in 2011, the
MaterialScience segment recorded sales of €10,832 million, up 8.2%.
The encouraging performance of the segment was attributable to the
increase in selling price across all divisions and markets
primarily in Europe.
All the sub-units namely Industrial Operations (up 21.9%),
Polyurethanes (up 9.5%), Polycarbonates (up 5.6%) and Coatings,
Adhesives, Specialties (up 4.5%) performed well in 2011.
We note that Bayer is on an acquisition/deal signing spree to
expand its business. In September 2011, Bayer purchased Kirkland,
Washington based Pathway Medical Technologies, Inc. to strengthen
its HealthCare segment. Moreover, in July 2011, Bayer joined hands
with Trius Therapeutics to gain exclusive rights to antibiotic
tedizolid phosphate in Asia (apart from North and South Korea),
Africa, Latin America and the Middle East. Furthermore, in early
2011, Bayer inked a deal with Zydus Cadila to strengthen its
pharmaceutical operations in one of the most sought after markets -
We believe that investor focus will be more on blood thinner
Xarelto going forward, rather than on deals/acquisitions. The
HealthCare unit of Bayer has co-developed Xarelto with the Janssen
Research and Development unit of
Johnson & Johnson
Xarelto is already approved for multiple indications including
the lucrative stroke prevention in non-valvular atrial fibrillation
(SPAF) indication. Apart from SPAF, Xarelto is also approved for
the treatment of deep vein thrombosis (DVT) in the EU (December
2011). DVT refers to the obstruction of a blood vessel, courtesy a
blood clot. Furthermore, in July 2011, the FDA cleared Xarelto for
the prevention of DVT, which may cause pulmonary embolism in
patients undergoing knee or hip replacement surgery.
Bayer/ Johnson & Johnson are looking to expand Xarelto's
label further. The partners are looking to get Xarelto approved to
reduce the risk of cardiovascular events in patients suffering from
acute coronary syndrome (ACS). ACS refers to a heart disease, which
results in the blockage of a coronary artery via a blood clot.
Successful label expansion of Xarelto, which offers significant
commercial opportunity, would further boost the top lines of the
Neutral on Bayer, Johnson & Johnson
Currently, we are Neutral on both Bayer and Johnson &
Johnson. In the short-run, while Bayer carries a carries a Zacks #3
Rank (Hold rating), Johnson & Johnson carries a Zacks #4 Rank
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