Tags: Bayer | Asia | China | BAY

Bayer: Eye On Asia, Heart in China

By Meghan Sapp   |   Wednesday, 30 Nov 2011 05:42 PM

Looking toward emerging markets rather than the debt-ridden United States and Europe is a key strategy in nearly any industry these days. Pharmaceutical giant Bayer (BAY) is no different. Asia and China represent $15 billion in sales by 2015, the company expects.

That recent announcement means sales in the region would grow by more than half, up from today’s $9.49 billion in Asia, with hopes of $3.9 billion in greater China alone.

By 2015, Bayer anticipates sales of more than $8 billion in China, led by diabetes and high-blood pressure drugs, while it expects the $1.37 billion in sales in India to be led by crop protection products such as fertilizers and seeds.

Bayer’s shift to a heavier focus in Asia wasn’t entirely unexpected, however. Earlier in the year the company announced it would layoff 2,000 people in 2012 to finance the investment. Last year, Bayer had 23,700 employees in Asia but that figure is expected to jump to 30,000 by 2015.

For Asia as with developed markets, Bayer remains steadfast in its three-industry focus on pharmaceuticals, plastics and crop science.

Competition

Bayer’s blood-thinner Xarelto, which it developed with Johnson & Johnson (JNJ), recently received approval from the FDA and is set to enter the lucrative $1 billion market for treating acute coronary syndrome (ACS), if it gains another round of approvals. In studies, the drug reduced heart attacks, strokes, and cardiovascular deaths by 16 percent.

But Xarelto is far from the only one pushing to make its mark in this market. Competitors include AstraZeneca (AZN) and Eli Lilly & Co. (LLY). The current player in the market, not as successful as the newcomers, is Plavix, a drug made by Bristol-Myers Squibb (BMY) and Sanofi (SNY), which would likely be prescribed together with Xarelto.

"The initial commercial potential looks limited, given the increased bleeding risks seen with Xarelto in the trial," Deutsche Bank analysts said in a research note.

"We expect use in ACS to be limited, given the availability of newer, more potent anti-platelet regimes such as AstraZeneca's Brilinta that improve outcomes with less increased bleeding," the note said.

Morgan Stanley currently has an underweight rating on BAY with a price target of $78.30.

Bayer will release its annual report on Feb. 28.

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Looking toward emerging markets rather than the debt-ridden United States and Europe is a key strategy in nearly any industry these days. Pharmaceutical giant Bayer (BAY) is no different. Asia and China represent $15 billion in sales by 2015, the company expects. That...
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