Bayer Upbeat, Plans Chemicals IPO by 2016

By Natascha Divac 

FRANKFURT--Germany's Bayer AG is forecasting strong sales and earnings growth at its health-care division in the next three years, pegging the yearly sales potential of its top drugs at EUR7.5 billion ($8 billion).

The Leverkusen-based company, which is preparing to spin off its high-tech plastics business, said on Wednesday that combined sales of its top drugs--the anticoagulant Xarelto, the eye medicine Eylea, the cancer drugs Stivarga and Xofigo, and the pulmonary hypertension drug Adempas--should rise toward EUR4 billion in this year

Bayer said it aims to increase health-care revenue by an average of about 6% a year through 2017 to more than EUR25 billion.

At the same time, Bayer said it expects profitability to improve. Earnings before interest, taxes, depreciation and amortization, before special items, should rise to between 29% and 31% of revenue from 27.5% in 2014.

"The outlook for our health care business is particularly positive thanks to the five pharmaceutical products we recently launched," said Chief Executive Marijn Dekkers.

Under Mr. Dekkers, Bayer is refocusing on its core health-care and crop-science activities. The company said it plans to float the material-sciences division on the stock market by mid-2016 at the latest.

As part of the new focus, Bayer acquired Merck & Co.'s over-the-counter business for $14.2 billion last last year. That acquisition, along with Bayer's purchase last year of China's Dihon Pharmaceutical Group Ltd., allowed it to surpass U.S.-based Johnson & Johnson as the second place leader in the global OTC market, the company has said.

With the Merck acquisition, Bayer, perhaps best known for its trademark Aspirin, has added popular OTC brands like Claritin and Coppertone to its portfolio.

Last month, Bayer reported a 51% drop in net profit for the fourth quarter of 2014, weighed down by higher research and development and selling costs.

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