History

Bayer AG was founded in Barmen (today a part of Wuppertal), Germany in 1863 by Friedrich

Bayer and his partner, Johann Friedrich Weskott.

1853 - Bayer's first major product was acetylsalicylic acid (originally discovered by French

chemist Charles Frederic Gerhardt in 1853), a modification of salicylic acid or salicin, a folk

remedy found in the bark of the willow plant.

1899 - Bayer's trademark Aspirin was registered worldwide for Bayer's brand of acetylsalicylic

acid, It is now widely used in the US, UK, and France for all brands of the drug.

1904 - Bayer company introduced the Bayer cross as its corporate logo.

1956 - The Bayer company then became part of IG Farben, a conglomerate of German

chemical industries that formed a part of the financial core of the German Nazi regime.

1978 - Bayer purchased Miles Laboratories and its subsidiaries Miles Canada and Cutter

Laboratories (along with a product line including Alka-Seltzer, Flintstones Vitamins .

1994 - Bayer AG purchased Sterling Winthrop's over the counter drug business

from SmithKline Beecham and merged it with Miles Laboratories.

2010 - Bayer AG signed an agreement to buy Auckland-based animal health company Bomac

Group. Due to confidentiality obligations, no financial information was disclosed.

The Bayer Board of Management

Dr. Marjin Dekkers Werner Baumann Dr. Wolfgana Plischke Dr. Richard Pott

Chairman Finance Innovation, Technology Strategy and Human

and Environment Resources

(Labor Director )

Mission Statement

Working to Create Value through Innovation and GrowthBayer is a global enterprise with core competencies in the fields of health care, nutrition

and high-tech materials. Our products and services are designed to benefit people and

improve their quality of life. At the same time we aim to create value through innovation,

growth and high earning power.

Group Structure or organization

Bayer AG defines common values, goals and strategies for the entire Group. The three subgroups and three service companies operate independently, led by the management holding company. The Corporate Center supports the Group Management Board in its task of strategic leadership.

Business operations are the responsibility of the subgroups:

Bayer HealthCare AG  researches, develops, manufactures and markets innovative products for disease prevention, diagnosis and treatment.

Bayer CropScience AG  is a global leader in crop protection and non-agricultural pest control.

Bayer MaterialScience AG  is a renowned supplier of high-performance materials and innovative system solutions used in a wide range of products for everyday life.

Central service functions are combined into three service companies:

Bayer Business Services GmbH  is the Bayer Group's international competence center for IT-based services.

Bayer Technology Services GmbH , the technological backbone of the Bayer Group, is engaged in process development and in process and plant engineering, construction and optimization.

Currenta GmbH & Co. OHG  is a joint venture of Bayer AG and Lanxess AG and operator of the three Chempark sites at Leverkusen, Dormagen and Krefeld-Uerdingen.

Research & Innovation

Innovation plays an important role in overcoming global challenges and is a key driver of future

growth at Bayer. 

In 2009 Bayer spent €2,746 million on research and development (r&d), which was equivalent to

8.8 percent of sales. Special importance is placed on developing new products that strengthen

the core businesses. Mindful of its corporate growth objectives, Bayer works to continuously

rejuvenate and expand its product portfolio and optimize its production processes. Its r&d is

closely aligned to market requirements and therefore subject to a continuous process of

adjustment. It is supplemented by an international network of collaborations with leading

universities, publicsector research institutes and partner companies. Through this pooling of

expertise, Bayer aims to rapidly translate new ideas into successful products. These activities

are also supported by systematic employee development in the company’s r&d units.

Innovation Areas of the Bayer Group

Research in the three subgroupsOf the Group’s entire R&D expenditures, Bayer HealthCare accounted for 67.3 percent, Bayer

CropScience for 23.8 percent and Bayer MaterialScience for 7.5 percent. Further information on

each subgroup’s R&D activities is provided in Bayer HealthCare, Bayer CropScience und Bayer

MaterialScience.

Responsibility for the development of innovative products and completely new fields of business

outside of the subgroups’ core activities lies with Bayer Innovation GmbH, headquartered in

Düsseldorf, Germany. The goal of this company is to add to Bayer’s business portfolio and

facilitate access to new growth markets. The current focus is on medical and security

technology and the use of plants to develop and manufacture new pharmaceutical products.

More than 3,000 suggestions have already been submitted in response to the innovation

initiative launched by Bayer AG in 2007, entitled “Triple-i: Inspiration, Ideas, Innovation.” Many

of these proposals are currently undergoing further evaluation by our subgroups. The initiative is

designed to motivate employees throughout the Group to submit ideas for new products and

thus help to strengthen Bayer’s innovation capability.

BUSINESS OVERVIEW

Subgroups and Service Companies

Health care

Bayer HealthCareHeadquartered in Leverkusen, Bayer HealthCare researches, develops, manufactures and

markets innovative products for the prevention, diagnosis and treatment of diseases. The

company thus plays an important part in improving the health of people and animals. This

subgroup comprises four global divisions: Animal Health, Consumer Care, Medical Care

(Diabetes Care and MEDRAD) and Bayer Schering Pharma AG, Germany*. Bayer HealthCare

has 53,400 employees worldwide and generated sales of EUR 15,988 million in 2009. The

divisions Animal Health and Bayer Schering Pharma AG, Germany* are headquartered in

Germany, while Consumer Care and Medical Care (Diabetes Care and MEDRAD) are based in

the United States. Bayer HealthCare’s Animal Health and Consumer Care divisions occupy

leading positions worldwide.

DIVISION AND TOP PRODUCT

Principal products and brands Animal health

products for farm animals (e.g. Baytril®)

Products for companion animals (e.g. Advantage®/Advantix®, Baytril®)

Consumer care

Non-prescription medicines  (e.g. Aspirin®, Aleve®/Naproxen, Canesten®, Lefax®, Talcid®,Alka-Seltzer®, Bepanthen®, Aktren®, Priorin®, Rennie®)

Vitamins (e.g. One-A-Day®, Supradyn®)

Medical care

Diabetes Care: blood glucose monitoring systems (e.g. Contour®/Breeze® 2) MEDRAD: contrast injection systems

Bayer schering pharma

Prescription medicines 

Diagnostic Imaging (X-ray contrast media, contrast agents for magnetic resonance imaging, application technologies for contrast agents), e.g. Magnevist®

Hematology/Cardiology (blood-clotting agents, thromboembolic diseases), e.g.Kogenate®,Adalat®, Trasylol®, Xarelto®

Oncology (products for treating leukemias and lymphomas, drugs for solid-tumor therapy),e.g. Viadur®, Nexavar®

Primary Care (anti-infectives, men’s healthcare, cardiovascular and metabolic diseases),e.g. Ciprobay®/Cipro®, Avalox®/Avelox®, Glucobay®, Levitra®, Nimotop®

Specialized Therapeutics (drugs for treating diseases of the central nervous system),e.g. Betaferon®/Betaseron®

Women’s Healthcare (contraception, menopause management, gynecological therapies),e.g. Yasmin®.

Nutrition

Bayer Crop Science

Headquartered in Monheim, Germany, Bayer CropScience is a global leader in crop protection

and non-agricultural pest control. This company, with its highly effective products, pioneering

innovations and keen customer focus, is aiming for further growth in the future. Its activities

cover the areas of crop protection, environmental science and bioscience. The subgroup had

about 18,700 employees and achieved sales of EUR 6,510 million in 2009. Bayer CropScience

is counting on its powerful portfolio of new products and an outstanding research pipeline to

provide profitable growth in the future. Our research and development expertise is the key to

expanding our position as an innovation leader in our sector. New active ingredients and

formulations, modern application methods and innovative agricultural technologies offer

solutions for tomorrow’s agriculture.

BUSINESS AREAS AND TOP PRODUCT

Principal products and brands

Crop protection

Insecticides (Confidor®/ Admire®, Calypso®, Decis®, Temik®, Oberon®)

Fungicides  (Antracol®, Fandango®, Flint®/Stratego®/Sphere®/Twist®, Folicur®,

Previcur Energy®)

Herbicides  (Atlantis®, Basta®, Betanal®, Fenikan®, Hoestar®, Husar®, MaisTer®,

Puma®)

Seed treatment  (Bariton®, Gaucho®, Lamarador®, Poncho®, Raxil®)

Environmental science

Professional products (K-Othrine®, Merit®, Premise®, Racumin®) Consumer products (Bayer Advanced™, Bayer Garden)

Bio science

Agricultural seed (Arize®, InVigor®, FiberMax®) Vegetable seed (Nunhems®)

High-tech materials

Bayer MaterialScienceBayer MaterialScience is a renowned supplier of high-performance materials and innovative

system solutions used in a wide range of products for everyday life. Products with leading

positions on the world market account for a major share of sales. Principal customers are the

automotive and construction industries, the electrical/electronics sector and manufacturers of

sports and leisure articles, packaging and medical equipment. Operations comprise four

business units: Polycarbonates; Polyurethanes; Coatings, Adhesives, Specialties

and Thermoplastic Polyurethanes. Bayer MaterialScience had about 14,300 employees at 30

production sites worldwide and posted sales of EUR 7,520 million in 2009.

Principal products and brands

Bayer MaterialScience, in India, is made up of three key Business Units (BUs):

Polycarbonates (BU PCS)

Polyurethanes (BU PUR)

Coatings, Adhesives, Specialties (BU CAS)

Coatings, Adhesives, Specialties  (e.g. Desmodur®, Bayhydur®, Dispercoll®) Polycarbonates  (e.g. Makrolon®, Makrofol® / Bayfol®, Fantasia™, Bayblend®) Polyurethanes  (e.g. Multitec®, Baydur®, Bayflex®, Baypreg®, Vulkollan®) Thermoplastic Polyurethanes  (e.g. Desmopan® / Texin®)

IT-based services

Bayer Business Services

Bayer Business Services is the global competence center of the Bayer Group for IT and

business services. The focus is on services in the core areas of IT infrastructure and

applications, procurement and logistics, human resources and management services, and

finance and accounting. Stages of value creation range from consulting through the

development and implementation of system solutions to business process outsourcing, the

handling of entire business processes. In fiscal 2009 Bayer Business Services employed a

worldwide workforce of 5,582 people and achieved sales of EUR 995.5 million. Bayer Business

Services has its head office in Leverkusen, Germany. Its chief international offices are located in

Pittsburgh, São Paulo, Hong Kong, Newbury, Mumbai, Barcelona, Singapore and Berlin.

The activities of Bayer Business Services comprise: Portfolio

IT Infrastructure and Applications

Procurement and Logistics

Human Resources and Management Services

Finance and Accounting

Technology solutions

Bayer Technology Services

Bayer Technology Services, the technological backbone of the Bayer Group, is engaged in

process development and in process and plant engineering, construction and optimization. This

company also develops innovative technology platforms that contribute substantially to the

efficiency of Bayer’s operating units. 

Bayer Technology Services offers integrated solutions along the life cycles of facilities,

processes and products.

Bayer Technology Services is active in the following areas:

Innovation

process Design and Evaluation Reaction and Polymer Technology  Processing Technology Applied Sciences / Biotechnology Materials Technology   

Engineering

Civil, Structural & Architectural Engineering Environmental Protection & Infrastructure Technologies Engineering Chemical Processes Engineering Polymer Processes Engineering Healthcare Biomass-Conversion   Chlorine / Electrolysis

Optimization

Process Control Technology Process Analyser Technology Advanced Manufacturing Solutions Supply Chain and Logistics

The Marketing EnvironmentThe marketing environment surrounds and impacts upon the organization. There are three key perspectives on the marketing environment, namely the 'macro-environment,' the 'micro-environment' and the 'internal environment'.

The micro-environment

This environment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be misleading. In this context, micro describes the relationship between firms and the driving forces that control this relationship. It is a more local relationship, and the firm may exercise a degree of influence.

The macro-environment

This includes all factors that can influence and organization, but that are out of their direct control. A company does not generally influence any laws (although it is accepted that they could lobby or be part of a trade organization). It is continuously changing, and the company needs to be flexible to adapt. There may be aggressive competition and rivalry in a market.

Globalization means that there is always the threat of substitute products and new entrants. The wider environment is also ever changing, and the marketer needs to compensate for changes in culture, politics, economics and technology.

SWOT ANALYSIS

The internal environment.

In SWOT, strengths and weaknesses are internal factors.

Strength Specialist marketing expertise.

A new, innovative product or service.

Location of your business.

Quality processes and procedures.

Any other aspect of your business that adds value to your product or service.

Weakness Lack of marketing expertise.

Undifferentiated products or services (i.e. in relation to your competitors).

Location of your business.

Poor quality goods or services.

Damaged reputation.

In SWOT, opportunities and threats are external factors.

 Opportunity  A developing market such as the Internet.

Mergers, joint ventures or strategic alliances.

Moving into new market segments that offer improved profits.

A new international market.

A market vacated by an ineffective competitor.

Threats A new competitor in your home market.

Price wars with competitors.

A competitor has a new, innovative product or service.

Competitors have superior access to channels of distribution.

Taxation is introduced on your product or service.

PESTEL ANALYSISThe macro-environment

There are many factors in the macro-environment that will effect the decisions of the

managers of any organisation. Tax changes, new laws, trade barriers, demographic change

and government policy changes are all examples of macro change. To help analyse these

factors managers can categorise them using the PESTEL model. This classification

distinguishes between:

Political factors. These refer to government policy such as the degree of intervention

in the economy. What goods and services does a government want to provide? To

what extent does it believe in subsidising firms? What are its priorities in terms of

business support? Political decisions can impact on many vital areas for business

such as the education of the workforce, the health of the nation and the quality of the

infrastructure of the economy such as the road and rail system.

Economic factors. These include interest rates, taxation changes, economic growth,

inflation and exchange rates. As you will see throughout the "Foundations of

Economics" book economic change can have a major impact on a firm's behaviour.

For example:

               - higher interest rates may deter investment because it costs more to borrow

               - a strong currency may make exporting more difficult because it may raise the

price in terms of foreign currency

               - inflation may provoke higher wage demands from employees and raise costs

               - higher national income growth may boost demand for a firm's products

Social factors. Changes in social trends can impact on the demand for a firm's

products and the availability and willingness of individuals to work. In the UK, for

example, the population has been ageing. This has increased the costs for firms who

are committed to pension payments for their employees because their staff are living

longer. It also means some firms such as Asda have started to recruit older

employees to tap into this growing labour pool. The ageing population also has

impact on demand: for example, demand for sheltered accommodation and

medicines has increased whereas demand for toys is falling.

Technological factors: new technologies create new products and new processes.

MP3 players, computer games, online gambling and high definition TVs are all new

markets created by technological advances. Online shopping, bar coding and

computer aided design are all improvements to the way we do business as a result of

better technology. Technology can reduce costs, improve quality and lead to

innovation. These developments can benefit consumers as well as the organisations

providing the products.

Environmental factors: environmental factors include the weather and climate

change. Changes in temperature can impact on many industries including farming,

tourism and insurance. With major climate changes occurring due to global warming

and with greater environmental awareness this external factor is becoming a

significant issue for firms to consider. The growing desire to protect the environment

is having an impact on many industries such as the travel and transportation

industries (for example, more taxes being placed on air travel and the success of

hybrid cars) and the general move towards more environmentally friendly products

and processes is affecting demand patterns and creating business opportunities.

Legal factors: these are related to the legal environment in which firms operate. In

recent years in the UK there have been many significant legal changes that have

affected firms' behaviour. The introduction of age discrimination and disability

discrimination legislation, an increase in the minimum wage and greater

requirements for firms to recycle are examples of relatively recent laws that affect an

organisation's actions. Legal changes can affect a firm's costs (e.g. if new systems

and procedures have to be developed) and demand (e.g. if the law affects the

likelihood of customers buying the good or using the service).

Typical PESTEL factors to consider include:

Factor Could include:

Political e.g. EU enlargement, the euro, international trade, taxation policy

Economic e.g. interest rates, exchange rates, national income, inflation, unemployment, Stock Market

Social e.g. ageing population, attitudes to work, income distribution

Technological e.g. innovation, new product development, rate of technological obsolescence

Environmental e.g. global warming, environmental issues

Legal e.g. competition law, health and safety, employment law

ANNUAL REPORT

Revenue - €31.168 billion (2009)

Operating income -  €3.006 billion (2009)

R&D Expenditure - EUR 2.75 Billion(2009)

Profit -  €1.359 billion (2009)

Employs - 108,400 (2009)

Research spending

Research and Development expenses 2008by subgroup in %Research and Development expenses 2008by subgroup in EUR million

Key Data  2008 2009 Change

  € million € million %

Bayer Group      

Sales 32,918 31,168 -5.3

EBITDA1 6,266 5,815 -7.2

EBITDA before special items 6,931 6,472 -6.6

EBITDA margin before special items 21.1% 20.8%  

EBIT2 3,544 3,006 -15.2

EBIT before special items 4,342 3,772 -13.1

Income before income taxes 2,356 1,870 -20.6

Net income 1,719 1,359 -20.9

Earnings per share (€)3 2.22 1.70 -23.4

Core earnings per share (€)4 4.17 3.64 -12.7

Gross cash flow5 5,295 4,658 -12.0

Net cash flow6 3,608 5,375 +49.0

Net financial debt 14,152 9,691 -31.5

Capital expenditures as per segment table 1,982 1,669 -15.8

Research and development expenses 2,653 2,746 +3.5

Dividend per Bayer AG share (€) 1.40 1.40 0.0

Number of employees at end of period 108,600 108,400 0.2

Strategy

Our sustainability strategyBayer is committed to the concept of sustainable development. Our overriding goal is to operate

both successfully and sustainably. For us that means achieving commercial success on the

basis of solid business models in a way that is compatible with meeting the needs of our

employees and society and protecting the environment and natural resources. In this we are

committed to the tenets of sustainable development and to the 10 principles of the UN Global

Compact.

Our sustainability strategyIt is the overriding goal of Bayer’s sustainability strategy to allow the company to be guided by

long-term values. We want to balance successful, sustainable development with social needs

and goals.

The concept behind our sustainability strategy

Bayer is committed to sustainable development. We want to meet this commitment on three

levels:

1. Through our products and innovations, which are the heart of our business. These are

designed to benefit people and improve their quality of life.

 

2. Through our business activities, i.e. how we run our business. We want to act responsibly

across the entire valueadded chain – toward all our stakeholders, especially our employees,

customers, suppliers and stockholders.

3. Through our social commitment: our foundations and voluntary social activities. We also want

to meet our responsibility to society by becoming socially involved as a good corporate citizen.

 

REFRENCE

1. www.Bayer.com2. www.wikipedia.com3. www.investor.com4. www.bayercropscience.com5. www.bayermaterialscience.com6. www.annual report.com