PITTSBURGH, March 31 /PRNewswire/ -- Bayer announced an expanded U.S.
investment strategy today that will exceed the $15 billion mark in the year
2004, expanding its capital and research and development initiatives.
At a news conference here today, Helge H. Wehmeier, president and CEO of
Bayer Corporation, said that Bayer continues to be very bullish on the U.S.
marketplace.
"In 1995, our first year as Bayer Corporation, we began an investment
strategy, investing some $9 billion through the year 2000 in major capital
projects and research and development programs," Wehmeier said. "Today, two-
thirds of the way through our first commitment, I can report to you that we
are, in fact, ahead of schedule in fulfilling that commitment. I am also
delighted to announce that Bayer Group, our parent company, supports a
significant expansion of its investments in Bayer Corporation -- extending our
U.S. strategy, taking us through the year 2004 and taking its U.S. investments
to the $15 billion mark," he said.
By the end of this 10-year period, Bayer Corporation will have expended
more than $6.7 billion in capital projects and $8.3 billion in research and
development, Wehmeier said.
"Our annual capital investments will remain strong and are on par with
what we've spent over the past four years," Wehmeier said. "However, going
forward we are also escalating our R&D investments."
To date, Bayer Corporation has expended roughly $5.7 billion under its
previous strategy, leaving more than $9 billion in investments remaining
through the year 2004.
Of the remaining $9 billion -- $6 billion, or 66 percent -- will be
directed toward R&D across all of its businesses. Of total R&D spending,
$5.1 billion, or 85 percent, will be directed to life sciences R&D.
Capital projects across all of Bayer's businesses will receive $3 billion
or 33 percent of the more than $9 billion in new investments.
"As stated by Dr. Manfred Schneider, chairman of the board of management
of our parent company, the message is that Bayer is committed to the U.S.
market," Wehmeier said. "By investing in the future, Bayer is creating
tangible, beneficial results for individual consumers, corporate customers,
employees and our parent company's investors."
Beginning in 1999, the biggest portion of investment dollars is being
directed toward Bayer's health care businesses, with most going into research
and development. Combined investments in Bayer's pharmaceuticals, consumer
care and diagnostics businesses will total nearly $1 billion a year. Our
chemicals and agricultural businesses will continue to receive major
investments.
A Year of Record-Breaking Investments
During the wide-ranging briefing, which included the presidents of Bayer
Corporation's three health care divisions, Wehmeier also reported the
Pittsburgh-based company's 1998 financial performance. In 1998, Bayer had
sales of $8.1 billion compared to sales of $8.1 billion in 1997. Net income
rose 8.3 percent to $208 million, compared to net income of $192 million in
1997. Bayer ended 1998 preparing to launch the global Agfa imaging
technologies business through an initial public offering (IPO) in 1999. The
Agfa business has been presented as discontinued operations in 1998, and
accordingly, the 1997 amounts have been restated.
Based on its 1998 sales performance, Bayer Corporation contributed 26
percent to the worldwide sales of its parent, the Bayer Group. Based in
Leverkusen, Germany, and one of the world's 100 largest industrial concerns,
the Bayer Group posted 1998 sales of $31 billion and a net income of
$1.8 billion.
Wehmeier noted that the U.S. markets remained relatively strong in 1998,
in spite of the financial turmoil in Asia and Latin America. Consumer
confidence, low unemployment, low interest rates and nominal inflation all
helped to bolster important Bayer market segments, including agriculture,
consumer care, automotive, construction, housing and electronics.
In 1998, Bayer's U.S. capital expenditures and R&D investments reached an
all-time high of $1.6 billion. Highlights of Bayer's 1998 investment strategy
featured the dedication of a $1.3 billion expansion of its Baytown, Texas,
chemical plant, "catapulting the Baytown site from a premier supplier of
chemicals to the North American market to a premier supplier of chemicals to
the world," Wehmeier said.
Bayer's 1998 investments in the future also supported growth and
innovation in the company's animal health and crop protection segments of the
Agricultural Division. In 1998, Bayer opened a $45 million facility to
manufacture the active ingredient in Axiom, a new corn herbicide, and broke
ground on a $30 million facility to manufacture herbicide formulations, both
in Kansas City, Mo. Additionally, the company dedicated a new $60 million
facility to manufacture animal pharmaceuticals in Shawnee, Kan., and invested
$140 million in a joint venture with Gustafson to serve the seed treatment
business.
Accelerating the Pace in Health Care
In its health care businesses, Bayer experienced market growth with its
consumer care products in 1998, while developing world-class alliances in its
pharmaceutical and diagnostics divisions.
A review and forecast were presented by the presidents of Bayer's Consumer
Care, Diagnostics and Pharmaceutical divisions, respectively: Gary Balkema,
Rolf Classon and David Ebsworth.
In 1998, Bayer continued to outpace the over-the-counter market, making
significant progress against its long-term goal of being a top player in the
industry. Balkema reported that since 1994, Bayer has moved from the Number
12 spot to Number 5 through acquisitions, joint ventures and the "tremendous
turnaround" and growth of its flagship brands, including Aleve, One-A-Day,
Alka-Seltzer and Bayer Aspirin.
In fact, the Bayer Aspirin business has grown by 30 percent over the past
several years, Balkema noted. "Bayer Aspirin continues to lead the aspirin
segment of the analgesics category, even with increased competition. With new
aspirin indications approved by the Food and Drug Administration concerning
heart attack and stroke prevention, we expect that growth to continue."
Capitalizing on consumer interest in herbals, Bayer also broadened its
line of One-A-Day products, adding seven herbal blends in 1998, making it the
first major consumer brand in the growing herbals segment. "The new line is
unique in that it combines herbal ingredients with vitamins and minerals to
address specific health needs, and it is backed by the One-A-Day brand's
heritage of trust. We are selling benefits, not ingredients, making it easier
for consumers to understand," Balkema explained. One-A-Day Specialized Blends
are selling ahead of early expectations, he added.
Balkema sees continued growth due to Bayer's Worldwide Consumer Care
Group's plans to invest $350 million on R&D that will ultimately result in
line extensions and new indications for existing products.
"In addition, we will continue to seek external growth opportunities in
the form of prescription-to-OTC switches, partnerships, alliances and
acquisitions," he said.
A Healthy Prognosis for Diagnostics
Four months after Bayer's Diagnostics unit acquired Chiron Diagnostics,
Rolf Classon, president of the global diagnostics business and EVP for Bayer
Corporation, noted that the merging of the units is well on track to deliver
global synergies and cost savings of more than $120 million a year by 2001.
Diagnostics, with global headquarters in Tarrytown, N.Y., is the only business
group within Bayer to be located outside of Germany.
The $1.1 billion Chiron Diagnostics acquisition was the largest in Bayer's
history. As previously reported, Bayer will consolidate the number of
manufacturing and R&D activities and locations to increase efficiency and cut
the cost of its manufactured products.
Classon noted that the combination of the two diagnostics companies places
Bayer at the number four ranking in terms of global diagnostics market share.
Chiron brought capabilities and expertise, including critical care,
immunodiagnostics, nucleic acid and clinical chemistry businesses,
complementing Bayer's strengths in supporting large laboratories, point-of-
care and self-testing. "The R&D pipelines of both organizations are brimming
as never before," Classon said.
1998 was also a year of strong performance for Diagnostics, with global
sales up 10 percent to $1.2 billion. The new organization is also positioned
well to deliver $120 million of annual savings starting in 2001 and is
committing approximately $200 million in one-time costs from the end of 1998
through 2001.
A Year of Transition for Pharmaceuticals
In an industry-wide environment of rising demand for products and limits
on product availability, Bayer was able to increase availability of its life-
saving Kogenate product for hemophilia patients by over 40 percent in 1998.
This was achieved in a year of transition for Bayer's pharmaceutical
division, according to David Ebsworth, who called 1998 "a year of making
alliances to secure our future and making changes to strengthen our
foundation."
"Changes we've made to our organization over the past year will position
us to launch products that will ensure a healthy pipeline and meet our core
objective of improving health for our patients around the world," Ebsworth
added, citing the alliance with the genome research company Millennium
Pharmaceuticals as the highlight of the year.
Bayer Group's alliance with Millennium gives it access to more than 225
drug targets through 2004. "To put this in context, in the 100 years since
Bayer began the modern era of pharmaceuticals with the introduction of
aspirin, a total of only 400 drug targets have been identified."
In 1998, Bayer opened a Flexible Chemistry Laboratory in West Haven,
Conn., which will serve as the international research center for the
development of new products in the area of osteoarthritis, cancer, obesity and
central nervous system diseases. A much larger facility is planned for 2001,
and the division plans to increase its scientific research capability by two-
thirds. Bayer also consolidated the headquarters of its Biological Products
business in Clayton, N.C., in 1998.
Ebsworth noted that over the next 10 to 24 months, new product launches
will include the next generation of Kogenate and Avelox, the next generation
of Bayer's fluoroquinolone-based antibiotics. Additionally, an agreement with
Scios Inc. will give Bayer rights to the worldwide marketing of Natrecor for
the short-term management of acute congestive heart failure.
Caring for Communities
In 1998, Bayer made progress in reaching its ambitious goal of achieving
33 percent waste reduction by 2001. With the help of a $193 million
expenditure, including new environmental technology in 1998, Bayer is "well on
track" to fulfill those commitments, Wehmeier said. In addition, Bayer
Corporation achieved its best employee safety record to date with a Total
Recordable Injury Rate of 1.36, a 14 percent improvement over 1997
performance.
Earlier this month, Bayer also announced its advanced commitment to
voluntarily test 68 high-production-volume chemicals in cooperation with the
Chemical Manufacturers Association, the Environmental Protection Agency and
the Environmental Defense Fund. "This effort speaks to our belief in the
value and importance of open, scientifically credible dialog with the public
about the risks and benefits of the chemicals we produce," Wehmeier said.
Bayer Corporation is a research-based company with major businesses in
health care and life sciences and chemicals. The company had 1998 sales of
$8.1 billion and employs more than 23,000 people. Bayer Corporation is
investing $15 billion in capital expenditures and research and development
from 1995 through the year 2004. 1999 capital investment and R&D expenditures
are projected to total $1.6 billion. Bayer Corporation, with headquarters in
Pittsburgh, is a member of the worldwide Bayer Group, a $31 billion chemicals
and health care group based in Leverkusen, Germany.
SOURCE Bayer Corporation
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