) earnings per share during the fourth quarter of 2011 came in at
€0.97 (approx $1.31) compared to €0.95 (approx. $1.29) in the
year-ago period. Higher revenues boosted earnings. The Zacks
Consensus Estimate hinted at earnings of $1.26.
The emerging markets performed well during the quarter. Prior
year quarter earnings were hurt by net special charges of €954
million, while Bayer incurred net special charges of only €215
millionin the final quarter of 2011.
The company recorded a 2.0% growth in revenues, which amounted
to €9,191 million. The improvement was primarily driven by the
Consumer Health sub-division of the Healthcare segment and
CropScience segment at Bayer.
The three major segments: Healthcare, Material Science and Crop
Science accounted for approximately 50.0%, 28.2% and 18.2%,
respectively, of total revenues during the reported quarter. The
Healthcare segment recorded revenues of €4,595 million in the
fourth quarter of 2011, up 2.8%.
The HealthCare segment is further divided into two subgroups:
Pharmaceuticals and Consumer Health. Sales in the Pharmaceutical
segment increased 1%, driven by impressive sales in emerging
markets and Japan. However, sales were weak in Europe and the US.
The Consumer Health sub-segment also performed well with sales
The CropScience segment performed well in the final quarter of
2011 with sales climbing 1.4%. The improvement was driven by higher
volumes primarily at Crop Protection in Latin America.
The Material Science segment, which manufactures high-tech
materials, exited 2011 on a disappointing note and delivered flat
year-over-year sales of €2,596 million. Performance of the segment
was impacted by high raw material costs.
For full year 2011, Bayer earned €4.83 (approx $6.70) compared
to €4.19 (approx. $5.56) in 2010. The Zacks Consensus Estimate
hinted at earnings of $6.42. 2011 revenues climbed 4.1% to €36,528
million. The Healthcare, Material Science and Crop Science segments
accounted for approximately 47.0%, 29.7% and 19.9%, respectively,
of total revenues in 2011.
Apart from releasing 2011 financial results, Bayer also provided
guidance for 2012. Sales in 2012 are expected to come in at
€37 billion. While the Healthcare and CropScience segments are
expected to perform well, the MaterialScience segment is likely to
be impacted by adverse market conditions. Earnings at Bayer are
expected to improve slightly over 2011 levels.
Priority Review for Xarelto
In a separate development, Bayer and partner the Janssen
Research and Development unit of
Johnson & Johnson
), announced that the US Food and Drug Administration (FDA) will
review the marketing application of their blood thinner Xarelto for
an additional indication on a priority basis.
The partners are looking to get Xarelto approved to reduce the
risk of cardiovascular events in patients suffering from acute
coronary syndrome (ACS). The supplemental new drug application was
filed late last year. ACS refers to a heart disease, which results
in the blockage of a coronary artery via a blood clot. Xarelto is
already approved for some other indications including the lucrative
stroke prevention in non-valvular atrial fibrillation (SPAF)
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.
We note that the US regulatory authority generally reviews those
drugs on a priority basis which offer major advances in treating
diseases that do not have adequate therapy. Applications for
priority review designated drugs are reviewed by the FDA within six
months of submission as against the usual ten months.
Currently, we have a long-term Neutral recommendation on Bayer,
while in the short-run the stock carries a Zacks #4 Rank (Sell
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