Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Executives

Alexander Rosar - Head of Investor Relations

Marijn E. Dekkers - Chairman of Management Board and Chief Executive Officer

Werner Baumann - Chief Financial Officer and Member of Management Board

Jorg Reinhardt - Former Chairman of the Board of Management and Chief Executive Officer

Liam Condon - Chairman of the Board of Management and Chief Executive Officer

Patrick W. Thomas - Chairman of Bayer Materialscience and Chief Executive of Bayer Materialscience AG

Analysts

Tim Race - Deutsche Bank AG, Research Division

Richard Vosser - JP Morgan Chase & Co, Research Division

Sachin Jain - BofA Merrill Lynch, Research Division

Lutz Grueten - Commerzbank AG, Research Division

Thomas Gilbert - UBS Investment Bank, Research Division

Michael Leuchten - Barclays Capital, Research Division

Fabian Wenner - Kepler Capital Markets, Research Division

Jo Walton - Crédit Suisse AG, Research Division

Peter Spengler - DZ Bank AG, Research Division

Florent Cespedes - Exane BNP Paribas, Research Division

Amy L. Walker - Morgan Stanley, Research Division

Daniel Wendorff - Commerzbank AG, Research Division

Bayer AG (OTCPK:BAYRY) Q4 2012 Earnings Call February 28, 2013 8:30 AM ET

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Bayer's investor and analyst conference call on the full year and fourth quarter 2012 results. [Operator Instructions] I would now like to turn over the conference to Mr. Alexander Rosar, Head of Investor Relations of Bayer AG. Please go ahead, sir.

Alexander Rosar

Yes. Thank you, Cleo. Ladies and gentlemen, good afternoon and welcome, also on behalf of my colleagues, to our conference call, during which we will review our 2012 results with you. We will also provide you with our 2013 outlook and our aspirations for the year 2015.

With me on the call are Marijn Dekkers, our CEO; Werner Baumann, our CFO; and from the subgroups, this time we have from HealthCare, Jorg Reinhardt; CropScience is represented by Liam Condon; and MaterialScience by Patrick Thomas. Marijn will start off with a short overview of the highlights in 2012, a brief summary of the developments in the fourth quarter and will then elaborate on the 2013 outlook and our new midterm aspirations in more detail. As always, we assume that you have received and reviewed the briefing documents and the presentation slides, so we will just run you through the main points.

Before handing over to Marijn, I'd like to draw your attention to the Safe Harbor statement. Thank you. Marijn?

Marijn E. Dekkers

Thank you, Alexander, and good afternoon, ladies and gentlemen. Thank you for calling in today. 2012 was a very successful year for Bayer. We increased our sales organically by 5% to almost EUR 40 billion, and this is the highest level in our 150-year history. All of our subgroups, particularly our Life Sciences businesses, contributed to the business expansion. We are now generating some 70% of our sales and 85% of our underlying earnings in these Life Sciences businesses. Reported EBITDA was level with the prior year largely due to EUR 1.7 billion in special charges, mainly related to additional provisions concerning legal claims around Yasmin/YAZ in the U.S. Adjusted EBITDA growth of 9% to EUR 8.3 billion was driven by strong execution and currency tailwind, while at the same time funding investments for growth. Core earnings per share rose by nearly 11%, and we thus achieved the targets we had set for ourselves.

Against this background, we are proposing a dividend of EUR 1.90, representing a year-over-year increase of 15%. We are optimistic for future developments. This optimism is, above all, driven by the tremendous progress achieved in our innovation pipeline, both in Pharma and CropScience. This optimism is also reflected in our 2013 outlook, which projects continuing record performance in Bayer's anniversary year, as well as in our new 2015 aspirational targets, which I will discuss in more detail later.

But let me first elaborate on some key figures for the fourth quarter. When talking about sales, I will concentrate on portfolio and currency adjusted data. Q4 was a strong quarter with good growth momentum. Group sales rose by 6% to EUR 9.9 billion, with all 3 subgroups contributing to the increase. Despite the mostly litigation-related special charges of EUR 424 million, reported EBIT climbed by 70% to EUR 735 million. Adjusted EBITDA increased by 18% in the fourth quarter, driven by higher earnings in all subgroups. Due to higher income tax expenses compared to the prior year quarter, core EPS grew only moderately to EUR 1, up 3%.

Now how does this development break down by segment? First, on this chart you see HealthCare advanced by 5% in both segments. Sales growth at Pharma was driven by business expansion in North America and the emerging economies, especially China. We are particularly pleased that our product innovations, Xarelto, Stivarga and EYLEA, already contributed significantly. Collectively, they added almost EUR 180 million to the top line sales in the quarter.

Q4 sales of Xarelto came in at EUR 131 million, giving us EUR 322 million for fiscal 2012, and we thus clearly exceeded our own 2012 sales target for Xarelto.

We are also receiving good initial feedback from the fourth quarter launches of Stivarga and EYLEA. Stivarga achieved sales of EUR 32 million in the quarter and EYLEA of EUR 14 million in their first markets. Sales of Betaseron were up 15%, mainly driven by higher prices in the U.S. As expected, sales for YAZ were down, largely due to generic competition. Mirena, down 17% in the quarter, was hampered by expected lower copayments from the beginning of January 2013. We thus expect again a normalization of demand for Mirena in the course of this year.

Business in the Consumer Health segment moved ahead by 5%, driven by higher sales of our OTC products, where business moved ahead 9%.

CropScience sales increased by 9% in the fourth quarter, driven by volume increases. CropScience sales expanded in all regions, particularly in Latin America, where sales moved ahead 20%. Crop Protection sales advanced by 11%. We generated particularly strong growth in insecticides, fungicides and SeedGrowth. Revenues in our Seeds business were negatively affected by the timing of royalty income.

Sales of MaterialScience rose by 5% against the prior year fourth quarter thanks to volume and price increases. Sales of Polyurethanes moved ahead by 9%, mainly driven by higher prices in all regions and all product groups. Polycarbonates declined 3% due to lower prices. Volumes were up 4%, driven by business uptake in North America.

Adjusted EBITDA growth in the quarter, as you can see on the chart, was mainly driven by HealthCare and MaterialScience. HealthCare contributed EUR 160 million and MaterialScience EUR 150 million to the increase. However, adjusted EBITDA growth of MaterialScience must be viewed against the weak prior year quarter. In addition, scheduled maintenance work at our Baytown plant in the U.S. was delayed to the first quarter of 2013. At CropScience, adjusted EBITDA growth of 6% was held back by royalty timing as well as higher sales-related expenses.

On a regional basis, we benefited from the fact that we generated 40% of our Q4 sales in the emerging economies, which grew by 9%. Latin America and Eastern Europe came in at double-digit growth rates, followed by emerging Asia with 7%, where sales were driven by the strong performance of our Life Sciences businesses in China. This could more than offset the slight decline we experienced in Africa and the Middle East region. While sales in Western Europe were only slightly up, the U.S.A. was again a strong contributor to our overall expansion with 5% higher sales, driven by Pharma and MaterialScience.

So how does this performance compare against our objectives? You will remember that we raised our original Bayer Group targets for sales, adjusted EBITDA and core EPS, together with our Q2 disclosures, following the good operating performance in the first half of 2012. The upgraded targets were achieved as follows: Group sales came in at the upper end of our EUR 39 billion to EUR 40 billion target range. With the 9% increase, adjusted EBITDA clearly grew high-single digits, and with core EPS up 11%, we overachieved the target of a 10% improvement.

In 2012, both the execution of our strategy and the strong operating performance have laid a good foundation for the future. We see good prospectives for our businesses in 2013 and in the medium term and are therefore rolling over our 2014 targets, which we communicated last year at our Meet Management Conference in March, to 2015 aspirations.

Please note that our planning assumptions, both for 2013 targets and 2015 aspirations, are based on an exchange rate of USD 1.29 to the euro. HealthCare exhibits strong growth momentum thanks to our product innovations and the excellent emerging markets position. The HealthCare plans for 2013 through 2015 reflect the confidence we have for future developments at HealthCare. We expect sales to advance by a mid-single digit percentage on a currency and portfolio adjusted basis to approximately EUR 19 billion in 2013, and then with a CAGR of 6% towards EUR 22 billion by 2015.

Earnings growth in 2013 in the HealthCare business is likely to be restrained by negative currency effects and higher marketing expenses for the launch of our products. Nevertheless, we aim to slightly improve the adjusted EBITDA margin in 2013 and aspire to move the margin towards 29% by 2015.

In 2013, we expect sales in the Pharmaceuticals segment to move ahead by a mid-single digit percentage on a currency and portfolio adjusted basis to about EUR 11 billion, and with a CAGR of around 7% towards EUR 13 billion by 2015. We aim to slightly improve the underlying EBITDA margin in 2013 and to move it to 31% or more in 2015.

In Consumer Health, our goal is to become the world market leader in the OTC business. We expect sales of this segment to grow by a mid-single digit percentage on a currency and portfolio adjusted basis to around EUR 8 billion in 2013 and towards EUR 9 billion by 2015. We expect to maintain the adjusted EBITDA margin in 2013 at prior year levels. In 2015, we aim to move the Consumer Health margin to about 25%, also contributing to the overall profitability improvement of HealthCare.

Let me now elaborate on new Pharma products in the emerging markets in a little bit more detail. First, the Pharma pipeline. You see here on the chart, Xarelto sales ascend strongly in all regions, particularly in Germany and the United States, following further product launches and indication expansions, particularly in SPAF. In addition, we received already encouraging early launch feedback on Stivarga and EYLEA. More product introductions lie ahead. We file for marketing authorization for radium dichloride to treat bone metastases in prostate cancer in December last year, and recently for Riociguat, in 2 different forms of pulmonary hypertension. Collectively, new products are forecast to contribute around EUR 1 billion of sales in 2013 and more than EUR 2.5 billion by 2015, with the peak sales potential exceeding EUR 5.5 billion.

Besides the promising launches, we continue to realize emerging market opportunities in Pharma. Our highlights in 2012 were the double-digit sales growth in China of 23%, followed by Russia with 11%, and also very good growth rates in countries like Venezuela and Argentina. We expanded the Women's Health business in emerging countries by 8%. These results show that the continuous investments in emerging countries are paying off.

In the emerging markets as a whole, Pharmaceuticals sales are expected to continue their promising growth path and to further increase by high-single digit percentages on a currency adjusted basis in 2013, as well as through 2015.

Let me now come to a further asset in our HealthCare portfolio, and that is Consumer Care. We can look back on a track record of yearly sales increases, as you can see here on the chart. The success of our Consumer Care business is driven by our highly recognized brands and our ability to further develop them through their life cycles. We believe that we can continue to develop that business, both organically as well as through selective bolt-on acquisitions, and are aspiring to become the market leader in the OTC segment.

Let's now move on to CropScience. At CropScience, we executed strongly against our new strategy. In both Crop Protection and seed technology, we have developed strong innovation pipelines. We therefore aim to grow our business above market growth rates, forecasting high-single digit growth towards EUR 9 billion in 2013 and growth towards EUR 10 billion by 2015. CropScience is expected to maintain its industry-leading profitability level. In 2013, the underlying EBITDA margin is expected around the excellent peak cycle level of 24% or slightly above. We believe that an underlying margin of 24% is achievable by 2015 as normalized off-peak margin. We are confident that our innovative differentiated solutions for farmers in the entire food chain position, position us well to achieve these targets.

Let's look at our new Crop Protection products and our Seed business in a little bit more detail. First, this chart with our new Crop Protection products. In 2012, we generated EUR 1.1 billion of sales from new Crop Protection products launched since 2006, and that's an increase of 60% year-over-year. We see good prospects at CropScience for our innovative product range and our positioning in the markets. We estimate that sales of new products launched since 2006 will come in at approximately EUR 1.4 billion in 2013 and about EUR 1.9 billion by 2015. As you know, Seeds are another focus of our investments. With 14%, we posted strong growth in our Seeds business in 2012. The Seeds footprint is expected to continue showing double-digit growth rates on an annual basis until 2015. We are committed to further invest in our Seeds business. Two recent examples were the acquisition of a melon seed business in the U.S. and the acquisition of the soy germplasm asset of U.S.-based ProSoy Genetics.

Now after more than 2 years of 10% annual volume growth, we are, in CropScience, significantly increasing the CapEx budget by around EUR 200 million in order to meet the growing demand for our products. Major projects in this complex are the expansion of our seeds breeding and processing facilities, including the establishment of a global wheat breeding network and soybean breeding facilities in the Americas, as well as the investments in Crop Protection production capacity for Liberty Basta herbicide and innovative fungicide. I'm sure you will agree that we made good progress in 2012 to strengthen both our Life Sciences businesses and that we've laid a strong foundation for future growth in these businesses.

Let's now move to MaterialScience. MaterialScience is a clear leader in its markets. These markets are attractive from a growth point of view, but are also very cyclical. We invested significantly in the expansion and optimization of our production capabilities. However, during the last years, global market growth has been lagging industry capacity expansions. Combined with high feedstock costs, we were faced with margin pressure in our business. Nevertheless, we grew sales and EBITDA in 2012, but could not yet cover our full cost of capital and reproduction. The CFROI in 2012 came in at 5.6%, 1.5 percentage points below cost of capital. We are cautiously optimistic for our MaterialScience business in 2013 and are focusing on improving our capital returns in the midterm. We based our 2013 budget on a modest global GDP growth, driven by the ongoing recovery in the U.S. and robust development in the emerging markets. The European economy is expected to remain weak. For all our key customer groups, we see a positive development year-over-year.

In this macroeconomic context, we are planning a slight increase in sales on a currency and portfolio adjusted basis to about EUR 12 billion and intend to further improve adjusted EBITDA in 2013. For the first quarter of 2013, we anticipate a currency and portfolio adjusted sales increase compared to the preceding quarters, so compared to the fourth quarter. EBITDA pre-special items will be burdened by higher feedstock costs and the already-mentioned shift of scheduled maintenance activities, and thus is expected to come in at about the same level as the fourth quarter 2012.

We expect that by 2015, we will again be in a position to earn a premium over cost of capital. This progress will be driven by 2 important dynamics. Firstly, we anticipate that the global demand-supply balance in our industry will improve, as we see only limited capacity additions during the next 3 years. And then secondly, we've launched a new efficiency initiative with a target to improve margins by 150 basis points through 2015. In addition, we're optimizing our assets structure, especially in Germany. These measures should allow MaterialScience to deliver against these aspirations.

Now this leads me to the outlook 2013 for the whole Bayer Group. On this chart, you see our investments in R&D and CapEx, and they will both grow further. We have planned capital expenditures of around EUR 1.9 billion for property, plants and equipment and EUR 0.4 billion for intangible assets. We will increase the relative CapEx share of CropScience to 25%. And as I mentioned before, this is largely driven by capacity expansions to address the increasing demand for our products. Then we expect our research and development expenses to rise to approximately EUR 3.2 billion, of which more than 90% will be spent for R&D in our Life Sciences businesses.

For the group, we are targeting a currency and portfolio adjusted sales increase of 4% to 5% to a level of approximately EUR 41 billion in 2013. We're planning a mid-single digit increase in adjusted EBITDA and a high-single digit increase in core EPS versus 2012.

So ladies and gentlemen, I'm sure you agree that Bayer is on a successful growth path. Since 2009, we have consistently increased sales and underlying earnings, with 2012 reaching, again, new record highs. We expect that to also continue through 2013.

This now concludes my remarks, and we are happy to take your questions. Thank you.

Question-and-Answer Session

Operator

[Operator Instructions] The first question is from Mr. Tim Race.

Tim Race - Deutsche Bank AG, Research Division

It's Tim Race here from Deutsche Bank. First of all, thank you for the very clear guidance that we got this year for both '13 and '15. Next, a question for Marijn. Clearly, it's a case of execution now on the rolling out the HealthCare business. Looking forward, what are you going to do with your time? What are your strategic priorities? And are you now just going to be focused on execution driving cost savings, or are you going to be looking sort of where to expand the business, perhaps with M&A? Then maybe a question for Werner. What is the optimal debt level for Bayer, and what is your sort of intended use of cash as the priorities between paying down the pension deficit, acquisitions and potentially increasing the payout ratio? And then maybe just a third question, if I may. Just commenting on the Xarelto market dynamics that we've seen and when you've been up against apixaban in certain markets, what are you seeing so far?

Werner Baumann

Okay, Tim, I'll take the first question and you'll take the second question. You'll take the Xarelto question, Jorg. And what am I going to do with my time? No, we are, I think, in a very good position to have a bright outlook for organic revenue growth. And I think our guidance for 2013 and '15 reflect that HealthCare and CropScience CAGRs of 6% through 2015 for organic growth. And then MaterialScience with a better utilization of capacity in our industries, we should also be able there to grow profitably above GDP. So that's a wonderful position to be in because in the end, the company is -- the company's success often is reflected in how it does grow organically. But as we've also said, we are interested in strengthening our portfolio with selected bolt-on acquisitions, and we've done a number of them also in 2013. I think AgraQuest and Teva Animal Health are too good sort of examples of that, where we either tried to acquire new technology capabilities or new products or a new strength in a geography. So a combination of really driving organic growth, and a lot of that is execution, obviously, with some selective bolt-on acquisitions in the strategy. Thirdly, emerging countries are super important for us. And there, the challenge is not so much having the products to sell because we have the products to sell. There, the challenge is, do we have the very best talent in our industry? And that requires a lot of dedication to build up the talent capability in emerging countries as well. So you want to talk about debt level, Werner? Go ahead, I'm sorry.

Werner Baumann

Yes, I can do that. Thanks for the question. First of all, our financial policy defines that we want to maintain, in terms of rating, our current A- rating, so debt conditions, also the leverage we would take under these circumstances. Secondly, if you look at the EUR 7 billion net debt level we have, you might easily jump to the conclusion that we are on the levers already, yet the picture is only complete if you take our pension obligations on top of that into the equation. And looking at a more than EUR 9 billion unfunded pension obligation, our overall debt position is actually a little bit more than EUR 16 billion. And if you now take it back to the EBIT to net debt ratio, we have to hit on the rating conditions for Standard & Poor's of somewhere in the area of 35%. We are in a fund [ph] where we just barely made it, as a matter of fact, looking at the significant run-up of our pension obligations. It was not as good as expected in terms of meeting these rating KPIs for 2012. In terms of -- we have thus our cash generation capability, CAGR, going forward. We will certainly commonsensically look at all the potential funds -- application opportunities for our funds. You have seen that we have raised our dividends by 15% to EUR 1.90, so we are certainly very, very -- we also think that we do want to hit an okay dividend yield. I think we will continue to do that. To the extent that it makes sense, we will also continue to fund our pension obligations because, rather than having a negative cost of carry for the liquidity at hand, it makes much more sense to invest it into some of our unfunded pension obligations where we have a broader universe of asset classes we can invest into. And it will, of course, also still be available for some of the select M&A, as Marijn mentioned, which first and foremost also looking at potential size of these acquisitions, we will do our existing liquidity or, as the case may be, also debt finance.

Marijn E. Dekkers

Okay, Jorg, the Xarelto question?

Jorg Reinhardt

Yes. So, Tim, I think I can say that we continue to be pleased with the rollout of Xarelto, and I can give you some color regarding some of the major countries here. So obviously, the main contributor is still Germany, where we do continue to gain market share. At the moment, we are at market share level of about 25%. We see in the German market, apixaban is a few weeks in the market. However, their share is still very, very low. So maybe it's too early to really come to any conclusions there. We look also at markets like Brazil, Mexico or Switzerland, where we do have market shares of about 30%. And even there, their share is still growing, so we are quite pleased with the rollout in those countries. Then there's a range of countries where actually we're a little bit behind. So for example, in Canada, we still grow share, but are at the level of 10%. Even there -- also there, we have apixaban in the market, deliver a market share of below 1%, so maybe it's also too early to really come to any conclusion there. In Spain and in France, we are at shares between 10% -- 7%, 8% to 10%. Shares are growing there. We are getting closer to the bigger trends, so we are quite happy with the rollout in those countries as well. And then we have the U.K., where the market doesn't seem to move at all, neither for us nor for anybody else. We are still at shares of 4% or so, and that doesn't seem to grow significantly. Whereas in Japan, we are obviously waiting for the lifting of the restriction of the 2 weeks prescription limitation, which will happen in April. We see gaining in share already now, but we hope, obviously, that starting in April, we will see significant share gains based on the fact that doctors can prescribe Xarelto for a longer period of time. And then last but not least, the U.S., where our colleagues from J&J do an excellent job of growing share. We are now overall at the level of 17%, growing. As you know, in the U.S., apixaban is in the market since only a few weeks, so again, very early days and too early to make a comment. We do see growing [indiscernible] shares still with cardiologists and with PCPs. On [indiscernible], we are, with cardiologists, at a level of 37% and growing, and with PCPs, where we have a relatively low -- or slow start, we are now at market shares, [indiscernible] was 22%. So also there, we are gaining significantly. And that seems to be a very stable trend. So overall, great uptake and still going strong.

Operator

The next question is from Mr. Richard Vosser.

Richard Vosser - JP Morgan Chase & Co, Research Division

It's Richard Vosser from JPMorgan. A couple of Pharma questions, please. Just your perspective on the longer-acting Factor VIII, both in terms of an update of where yours is, how the recruitment into the Phase III trial is going and when we can expect data there. But really, also how you see the market developing with other longer-acting treatments. Now we're seeing Biogen's product working, how do you see the market developing in the next few years with that coming to the market, potentially? Second question, just on Alpharadin. I wondered if you could give us some insight into the number of patients that are being treated in your expanded access program and when we can expect the new trials that you've alluded to, starting in 2013? And finally, another Pharma question. Just to ask since Eliquis on Xarelto, 2 things: one, the proportion, if you can, if your growth in the U.S. is -- or in other markets is being driven by the pulmonary embolism treatment indication or the SPAF indication. And also, how your conversations with both cardiologists and PCPs have changed. What's their feedback to you being like since Eliquis has been in the market? Just a bit more detail there would be useful as well.

Marijn E. Dekkers

Okay, Jorg, do you want to answer those 3 questions?

Jorg Reinhardt

Yes, sure. So regarding the Factor VIII, yes, we have seen the first long-acting product being -- data being shared. And, I mean, I would say it's pretty much according to expectations. However, with an expected treatment period of 3.5 days, not a significant change as compared to what's current practice anyway in the market. Now as you know, people are very conservative, doctors are conservative, patients are conservative. They stick to their medication when they are happy with it. So I would expect that there is not a significant changing over of patients from existing medications to any long-acting, especially if the long-acting doesn't provide a significantly prolonged interval of treatment. So from that perspective, I would think that the short-term impact is really modest. From our own perspective, obviously, we have started our own Phase III program. Recruitment goes fine. We would expect data around the end of the year or early next year, just depends a little bit on how the final recruitment goes. But we are there, and we will come with a product that I think will be very competitive. Regarding Alpharadin, yes, I can give you an update on the early access program. We do have, in Europe and in the U.S., more than 100 patients each under treatment at the moment, and the tendency is it's growing. As you know, the NICE has given a recommendation for the U.S., so we are now picking up there a little bit faster than this was the case early on. But at the moment, it's more than 100 in each of the 2 geographies. Regarding the new trials, we will come with a more complete description as to what exactly we will do in the not-too-distant future. As you know, we will go into patients in earlier stages of disease, we will do combination trials and we will look into additional tumors, like breast and osteosarcoma. I think that we will be able to give you more details later this year. And we will intend to start studies around year end, and we'll see how fast this will go. Regarding Xarelto, yes, we have seen, especially in the U.S., a significant pickup on the pulmonary embolism treatment claim. I mean, in the rest of the world, as you know, that indication is available since a longer period of time. Overall, it's still fair to say that the main contributions comes from the SPAF indication, which is not a surprise. But I believe that, especially in the U.S., people do have increased confidence in the product given the broad range of indications that we have with Xarelto that nobody else has, as you know. And at least that, that also will speak as a very, very positive feature on the product, even now after the launch of apixaban. We also believe that the once-a-day application is a significant advantage for Xarelto as compared to both competitors. So as I said before, at the moment, we don't see much of an impact from any of the competitors, and we'll simply have to look at the situation 6 months from now again.

Operator

The next question is from Mr. Sachin Jain.

Sachin Jain - BofA Merrill Lynch, Research Division

It's Sachin Jain from Bank of America. A couple of questions, please. Firstly, back on the net debt. The guidance for '13 is below EUR 7 billion, which is fairly open-ended consensus, I think, is it around EUR 4.5 billion. So I just wondered if you can comment as to how appropriate you think that consensus net debt figure for full year '13 is. And secondly on Crop, the guidance assumes no margin leverage out to 2015. You've commented to some extent on the CapEx. So I wondered if you could just provide some more color on SG&A and R&D trends over time and what's capping potential leverage despite good top line growth? Thirdly, on Xarelto, I think the full year '13 pipeline EUR 1 billion target assumes roughly EUR 600 million of Xarelto. Just wondered if that included any material sales from ACS, and your level of confidence in approvals in U.S. and Europe, which are due shortly. And then my final question is on YAZ. Given the litigation charges keep coming, just wonder if you could update us on the run rate of new claims coming in?

Marijn E. Dekkers

Okay. Thanks, Sachin. We start with the debt levels. EUR 4.5 billion is less than EUR 7 billion, so...

Werner Baumann

Yes. Thanks, Sachin, for the question. First of all, our guidance for '12 includes, with below EUR 7 billion, a level of EUR 4.5 billion even though I don't think that we will get there in 2013. Based on where we are with our planning, the below EUR 7 billion is also acknowledged. They're quite open. We will update you on where we think we can get our net debt position as we move into the year. And as the case may be, we will update you then during our quarterly updates.

Marijn E. Dekkers

Okay, then CropSciences, no margin leverage in spite of the growth by 2015. Liam?

Liam Condon

Yes. Thanks for the question, Sachin. Basically, what we are saying for 2015 is that we're looking at a normal year in the cycle. And what we're seeing in 2012 is basically we believe we're at the peak of the cycle and we achieved 24% margin. So if we assume in 2015 that we also have around about 24% in a normal cycle, that implies really that we would be improving somehow on our margin in a normal year. And for us, it's really all about getting the balance right between investments and competitive growth. So we have a very clear strategy that we want to grow above the market, but we also need to invest significantly to do this. And we believe we're getting the balance right now with a relatively high or a very high margin compared with our competitors, and at the same time, very, very competitive growth. So for us, it's about keeping that balance right as we move forward.

Marijn E. Dekkers

Okay. And then Xarelto, is ACS included in our projections?

Jorg Reinhardt

So first of all, let me say that I think we are very confident with -- or feel confident with the EUR 600 million forecast for Xarelto. There is very, very little sales of ACS included. It's actually not relevant. From an overall perspective, as you know, the PDUFA date for ACS is in March. I can also tell you that we are in discussions with the European regulators in March, as well. And that's the only update I can give you. We will have to see what the decision is, and then we'll deal with it.

Marijn E. Dekkers

Okay. And then the YAZ case, Werner?

Werner Baumann

Yes. Sachin, I cannot give an exact number on where our new cases trend. I will come back to what we've done and what we've provided for to give you some color of where we are in terms of provisioning as of the end of the year. As of the end of the year and with the provision we have taken in quarter 4, we have covered all known cases for venous thromboembolism as well all future expected cases for that condition. Yes, so that includes, by definition, cases we have expected with the calculations and the model we have for provisioning, which would occur in 2013.

Operator

The next question comes from Mr. Lutz Grueten.

Lutz Grueten - Commerzbank AG, Research Division

Lutz Grueten, Commerzbank. 2 questions, one follow-up on CropScience. Restructuring, are you expecting further restructuring benefits coming through after the quite successful program which was launched more than 2 years ago? Is there more to come in 2013? And the second question, regarding MaterialScience, you have indicated that you have started the so-called efficiency initiative, adding 150 basis points, what would be your focus? Are you focusing on fixed costs, variable costs? How should we take that one?

Marijn E. Dekkers

Okay. We'll start with restructuring benefits in CropSciences. Liam?

Liam Condon

Okay. In the past 2 years, we've been basically averaging around about EUR 140 million in savings due to restructuring programs. And for 2013 now, as we move ahead, we're basically moving away from onetime restructurings, going into a continuous improvement mindset. And our clear goal here is to try and balance or compensate for inflation as far as possible. So we do clearly expect to continue to see a very significant level of savings moving ahead which -- where we are trying to basically compensate for inflation.

Marijn E. Dekkers

Okay. And then MaterialScience, adding 150 basis points as a goal for 2015, what kind of activities does that entail?

Patrick W. Thomas

Yes, with probably more than 100 different measures we have in our plan, which cover most parts of the value chain, everything from looking at consolidation of some of our smaller manufacturing sites where we've now achieved market development, so therefore our fixed cost reduction, through to improving our geographical footprint and improving our efficiencies and resource around the world by clustering certain countries into regional platforms. In the production area, improving reliability of assets, particularly with reliability engineering, maintenance schedules, and then particularly an improvement around logistics. There's a lot of room now with our new geographical footprint to improve our logistic capabilities, though in that case, turning up elsewhere. But generally, also an improvement in our SAP [ph] costs by using what we now have, which is a single global ERP system, one global system, one set of global processes now leveraging that system.

Lutz Grueten - Commerzbank AG, Research Division

Yes. Does that number already include also the additional TDI capacity and the benefits coming from that?

Patrick W. Thomas

No. No, it doesn't include that.

Operator

The next question comes from Mr. Thomas Gilbert.

Thomas Gilbert - UBS Investment Bank, Research Division

It's UBS in Zurich. A couple of questions. I'll try to be quick. Coming back to Sachin's question on the net debt. I was wondering whether you could qualitatively, at least, talk around what items other than cash tax interest that you see in 2013 that weigh on the cash flow? So can you give a guidance on cash out for litigation settlements, restructuring, environmental charges? And can you also say whether you have to invest more in CropScience and working capital as you expand in emerging markets? That's the first question. Then a couple of questions on CropScience. Looking through the annual report, it seems like in Crop Protection, the mix, so herbicides versus fungicides, it was pretty evenly spread. Just wondering whether that is the picture you're seeing going into 2013, so evenly spread growth between what are products with very different margin profile. Second question, that you say in the annual report, again, that you grew nicely in Japan, India and Australia. That's exactly the countries that everyone else has pointed weakness out there. Can you explain the difference to your competitors in Asia, and whether the channel inventories in Asia are such that you're comfortable? And then finally, could you just talk around the royalty payment? Is that FiberMax royalty, is that Liberty royalty, is that lump-sum payments, is that ongoing royalties and when are they coming? And maybe, Patrick, just a word on Chinese trading in MaterialScience around the lunar year would be helpful.

Marijn E. Dekkers

Okay. So Werner is going to start with the net debt question.

Werner Baumann

Yes. First of all, the interest provision that it follows the [indiscernible] impact on next year, but we will, of course, as we settle and as we see the flow out of our litigation provisions, that is certainly going to be burdening our cash out. On top of that, and there is also a little bit of replay of 2012, the fastest growing business we currently have happens to be Crop Science. That is also the business which has the highest capital tie up in terms of working capital. It is roughly 50% of sales incrementally. This is being tied up in working capital and debt [indiscernible]. Of course, those are our ability or inability, if you want so, to significantly deliver and do that very quickly. It is part of the business that's a highly profitable growth, but it does come with a higher tie up in working capital. That's essentially it.

Marijn E. Dekkers

Okay, then CropSciences, we have a number of questions. Liam?

Liam Condon

Yes, I mean, moving forward, let's say, we've had very, very strong growth both in herbicides and fungicides in 2012. In 2013, moving forward, we do see, let's say, similarly high levels of growth, particularly on the herbicides side. What we're seeing is increasing wheat resistance. And this is an area where, of course, we offer very clear solutions. And on the fungicide side, what we're seeing is, particularly in Latin America, our business is being driven very, very strongly there. So I would say it's hard to break it down in detail, but we do expect continued strong growth from both, relatively balanced. And related to Asia, we have by far our highest, let's say, our growth expectations moving forward. If you look where we are coming from, Australia in 2012 had a fantastic year, and we've also had a very strong start into 2013. And this is, at the moment, primarily related to a pre-margin tweet where we have, let's say, a very, very strong start to the year. India, last year, we grew by 10%. Again, we expect double-digit growth this year. This is heavily related to our insecticides portfolio, where we are growing strongly. And Japan is, let's say, is growing, but at a much slower rate than the other 2. So of the 3 countries that you mentioned, it's basically Australia and India that are really driving the growth. The third question, related to the royalties, I assume that's the question related to 2012, the royalties, the change in recognition, timing of these royalties. These were trace royalties for corn and for soybean, which were originally booked in 2012 in the second half of the year. And this year, they were booked -- in 2012, they were booked in the first half of the year.

Marijn E. Dekkers

And then, Patrick?

Patrick W. Thomas

Yes, Thomas. Yes, we saw the usual slowdown around the Lunar New Year. But we are pretty comfortable looking forward. And I think there's probably 3 reasons for that. Now there is some semblance of stability in the government, we're seeing the stimulus programs kicking back into the food chain, and that supports our business on the cold chain in general, from domestic appliances through refills through to the lorry -- refrigerated lorries. Secondly, seeing a boost in the infrastructure restarts on some -- several of the projects which were stopped during last year's uncertainty. And I guess the third is more of a hope, that the Chinese automotive industry will start to pick up again and we'll start to see more growth in that area.

Operator

Your next question comes from Mr. Michael Leuchten.

Michael Leuchten - Barclays Capital, Research Division

It's Michael Leuchten from Barclays. A couple on HealthCare. On Betaseron, can you help me understand how big the provision release was in Q4? And then a quick one on Stivarga. It's very strong first quarter revenues here in the U.S. How much of that is stocking? Do you have any feel for that? Staying with HealthCare, if I look at your guidance in Consumer Health, there appears to be an acceleration, both on the top line and in the margin performance, after 2013. Just wondering whether you could give any color where that's coming from? And then lastly, an accounting question. Looking at your annual, it appears you've changed the way you calculate CFROI, and you're now looking at WACC as a hurdle. I just wondered what the thinking behind that is?

Marijn E. Dekkers

Okay, so Jorg?

Jorg Reinhardt

Yes, let me start with Betaseron. Betaseron is really an interesting case, since, obviously, the full year results and also the fourth quarter were significantly better than what we would have expected beginning of the year. That's mainly driven by the U.S. When we look in the other parts of the world, Betaseron developed as projected, with significant declines in volume and also on overall turnover. When we look at the U.S., we had releases beginning of the year, in the first quarter and also in the fourth quarter. That number in the fourth quarter was low-single digits, so it's not really significant. However, what did contribute significantly in the U.S. were 3 price increases that we did have during the year. We had one price increase in January, another one in July and another one in December, which were pretty much in line with what happened in the MS market overall. So our pricing is still absolutely competitive and in line with the other competitors. But overall, that contributed, obviously, significantly to overall sales increases in the U.S. despite the fact that the volume in the U.S. is still declining. Regarding overall good performance in the U.S., that was certainly a significant contributor to the good performance. We also had reasonable Kogenate sales, and YAZ/Yasmin held up well. So overall, we don't have a significant starting effect in the fourth quarter results of the U.S.

Marijn E. Dekkers

Stivarga was a particular -- Stivarga [indiscernible]...

Jorg Reinhardt

Correct. We had also, as you could see, we had the early launch of Stivarga at the end of September, which gave us a full quarter of Stivarga, which was not necessarily in the plan, so that contributed to the overall good performance as well. Regarding the years to come, and especially '13, regarding sales and margin improvement, obviously, the new product will contribute significantly. Our existing portfolio keeps up well. And from a margin perspective, as we have pointed out in the past, certainly there is the need to invest in the launches. On the other hand, as you could see also in the '12 numbers, we have some leverage in R&D. We have somewhat lower cost overall in R&D, which had to do with the fact that some of the major studies have been completed. We also have some leverage in G&A, and also in cost of goods there.

Marijn E. Dekkers

Good. And Werner, CFROI?

Werner Baumann

Yes, on the CFROI, Michael, we did not change our calculation, we just changed how you look at it. The CFROI after the deduction of reproduction costs is then the rate of return, you can directly compare to the weighted average cost of capital. That is the only difference. No underlying changes in any of the metrics which drive our overall return calculations in terms of do we earn or do we not earn our cost of capital.

Operator

The next question is from Mr. Fabian Wenner.

Fabian Wenner - Kepler Capital Markets, Research Division

It's Fabian Wenner from Kepler. 2 questions on MaterialScience, please, and one on Pharma. Firstly, I noticed that on Page 3 of the investor briefing, you set yourself a goal of earning a premium on the cost of capital in MaterialScience for 2014. For 2013, that box on the table is left blank. Is that a blank as in we can't make it, or we will see how it goes? And secondly, MaterialScience has now, for the third year after '09 and '11, failed to cover the cost of capital, and it has done so despite investing only in line with depreciation. Still, you're now raising CapEx to expand Dormagen and Caojing. So what structural improvements are you seeing in PUR and PC markets that makes us spend more money on a currently valued destructive asset? And then thirdly, there's a headline on Bloomberg saying you'd be interested in complementary products in MS. This seems to be out of context a little bit. Can you elaborate what you exactly meant?

Marijn E. Dekkers

In MS, you said?

Fabian Wenner - Kepler Capital Markets, Research Division

Yes. In multiple sclerosis, apparently. I'm not sure if that's correctly quoted.

Marijn E. Dekkers

Let me just -- no, that's not. We had a press conference this morning, and the only question we got about complementary products was Seeds, so somebody must be mixing up Seeds with MS. That's the only comment we made this morning in the press conference. Okay. So Patrick, on our aspirations in terms of CFROI for 2013.

Patrick W. Thomas

Yes, Fabian, there is indeed a blank in the target box. I can see that. This is primarily because I think 2013 is a bit of a transition year. So it's not we know we're not going to meet it or we know we are going to meet it. It's transitioning towards achieving these results in 2015. As you know, we've invested heavily over the last 4 or 5 years in China. That was just before we went into the recession. We continued through the recession sensibly to complete those projects. And now we have to grow into the suit that we have cut the cloth for. And that becomes our challenge. How we're doing that and what is the state of the market? Well, the markets are growing at reasonably good rates again now. We saw a market growth rate in India, higher about 6% last year; of TDI, above 6%; and in Polycarbonates, around about 6%. So these are recovery growth rates which will rapidly start to close-in the supply-demand gap. So the intrinsic utilization rates of these assets are now rising, and therefore, we are beginning to cover the costs of what we have invested. One point is we are investing at the rate of depreciation over the next 2 to 3 years and no more than that, even though within that investment, there are a number of capacity expansions and replacement assets.

Marijn E. Dekkers

Okay. Thank you, Patrick. For the second question.

Werner Baumann

It's been answered.

Marijn E. Dekkers

Okay, we answered it. Okay, good.

Operator

The next question is from Jo Walton.

Jo Walton - Crédit Suisse AG, Research Division

Jo Walton from Crédit Suisse. A few Pharma questions, if I may, please. In the Trade Press, they're talking about AMNOG considering reviewing some of the older products, such as the Xarelto-type products, which managed to sneak through before the more aggressive pricing environment came in. I wonder if you could tell us what you think might happen to Xarelto and, presumably, your competitors? And whether that has far-reaching implications for reference pricing from your whole market elsewhere? Diane is still one of your top 15 products, and there does seem to be a lot of press speculation, in France in particular, about potential safety concerns. I just wonder if you could give us some perspective on that? And also within Pharma, you've got some very early sales of EYLEA. I wonder if you can tell us a little bit about how quickly you're expecting to be able to get that product priced and commercially available through Europe? So really, effectively, what the sort of ramp-up rate is that we could look for that? Obviously, I'm not expecting the same as the fabulous ramp we saw in the U.S. And finally, I wonder if you could update us on the Jorg replacement hunt. Is it likely to be internal, external, and do you have a timeline for it?

Marijn E. Dekkers

Jorg?

Jorg Reinhardt

Yes. Jo, I mean, as you've probably noticed, there's an ongoing debate in the German context as to whether -- as to the quality of so-called done sport [ph] of demeaning products that are in the market already since a number of years should be revisited and looked at or not. And I believe it is prudent to assume that in some shape, way or form, that's going to happen. Now I believe that it's not necessarily bad news because, publicly, there is a significant number of older products in the market currently being reimbursed by the system, where a challenge will probably not necessarily do traumatic harm to a patient population. So from that perspective, I believe it's a mixed bag. Xarelto is likely to be looked at in the foreseeable future. We don't have any significant concerns there. We believe that Xarelto in its current pricing and with the current benefits that it delivers, also as compared to competitive products, that we have a good chance to end up with a very positive perspective there.

Regarding Diane, it's correct that it is among the top 15 products. However, when you look at France, where we currently have the major concerns, sales are at the level of EUR 4 million, so that is not really significant. Significant sales come from Asian markets, where the current concerns regarding safety are not really a concern. As you also know, Diane is a product primarily prescribed for acne. In some countries, also in combination with an oral contraceptive activity, but only in some. So overall, we are pretty confident that the overall long history, long good history that we have as to safety of Diane will prevail in the majority of countries, and that from a more midterm perspective, we don't see a significant impact there. Regarding EYLEA, I mean, it's very early days. We are now -- end of February, we have launched in more than 15 countries, so we are really picking up speed here. I mean, I can only tell you that so far, we are happy with the pickup in important countries like Japan and Australia. But I think that's all I can say at the moment.

Marijn E. Dekkers

Okay. And let me comment on Jorg's replacement. It's Jorg's last day today with Bayer, and then he will start at Novartis the 1st of August. First of all, we're very grateful for all the contributions that Jorg has made over the last 3 years. We'll miss him. And we have, as the interim leader of HealthCare, Wolfgang Plischke. And you guys know Wolfgang. Wolfgang has been with the company a long time. Before he became a member of the Vorstand 6, 7 years ago, he was working for 25 years in the HealthCare organization. And his last assignment was there as the leader of Pharma, so he knows the HealthCare organization very well, and has also, as part of the board, of course, has supported HealthCare and its strategy development. So in that sense, we expect a very smooth transition between Jorg and Wolfgang. But that is an interim assignment for Wolfgang. Longer term, we are looking for a permanent replacement for Jorg and are evaluating there both internal and external candidates.

Operator

Your next question is from Mr. Peter Spengler.

Peter Spengler - DZ Bank AG, Research Division

Peter Spengler with DZ Bank. Thank you for taking my questions. Two are left, actually. First, you mentioned that you expect sales of EUR 1 billion from the new drugs in 2013. Can you elaborate on potential EBITDA contribution and whether it's already visible in the first quarter or in the full year at all? And my second question is on your IAS 19 and IFRS 11 consideration. On Page 7 of the analyst briefing, you provided a detailed overview of the 2012 effects. What can we expect for 2013 for EBIT, financial income and net income?

Marijn E. Dekkers

Okay. Jorg, all the money we're going to make on the new products in 2013.

Jorg Reinhardt

Yes, I think it's a little bit early to really expect significant contributions from these products early on. As you know, in the pharmaceutical sector, normally, you will have a timed range from 4 to 6 years till you breakeven. And in some products, that's a little bit early, but to expect it to happen in the first or second quarter is not likely, so we will not see a positive EBITDA impact.

Marijn E. Dekkers

Can I just give one anecdote on this? In Xarelto, we sold EUR 320 million and we have incremental marketing cost of EUR 320 million. That's a coincidence, the same number. But it cost a lot of money to introduce a broad-based product in multiple applications in over 120 countries. This is not for the faint of heart to do this. Okay, Werner?

Werner Baumann

Yes, okay. Peter, if you look at both regulations we covered, IAS 19 and 11, the real important one in terms of financial impact is really IAS 19. We have bridged and restated so that you know what the baseline 2012 over the quarters will look like after application and making it comparable. For 2013 over 2012, it's a little bit less than EUR 100 million coming out of that effect in IAS 19 that is an interest effect, so it does affect the financial result negatively. In terms of tax, if you file a tax rate, it will then, after tax, be somewhere in the area of EUR 70 million, EUR 75 million.

Operator

The next question is from Mr. Florent Cespedes.

Florent Cespedes - Exane BNP Paribas, Research Division

Florent Cespedes from Exane BNP Paribas. A few quick ones. First of all, on EYLEA, could we have some color on the feedback from doctors on the launch of the product, and could you remind us what is your marketing message? And do you see measured difference by countries on the perception by doctors of the product? Second question, on OTC. What would you need to become the #1 company in OTC? Would it be more local brands or another big one, and is organic growth sufficient? And the last one on the guidance. Usually you're quite cautious when you release your full year guidance at the beginning of the year. Could you share with us in which area do you see the main swing factors, as CropScience environment is quite a variance right now? Is it fair to assume that we may see some positive surprise more on HealthCare or on MaterialScience?

Jorg Reinhardt

So let me take the EYLEA question to start with. As you know, the EYLEA message has always been and still is, and that seems to resonate well with doctors, is that there may be -- this may be a product which shows less frequent dosing necessity as compared to competitors. Obviously, it's too early to conclude whether that really will fly to a significant extent in all the countries. But so far, all we can say is that the uptake has been very positive, but it's really, really very early days. Regarding OTC with regard to the #1, yes, we are missing a few hundred millions in sales in order to get to the #1 position. The expectation is that we will have to go for internal and external, so organic and inorganic growth, to achieve the #1 position. As you may know, we have significantly invested in 2012 in markets like Russia, China and Brazil, investments which we have not made in the years before. So we have -- we really think that we have significant potential in these markets, and we see growth rates of significant double digits here. So we will have additional internal contributions, but in order to really get to the #1 position, we might also have to add some inorganic growth.

Marijn E. Dekkers

Yes, I'll take your comment on cautious guidance. I would describe our guidance as realistic given the data that we have today.

Operator

The next question is from Amy Walker.

Amy L. Walker - Morgan Stanley, Research Division

It's Amy Walker at Morgan Stanley. A couple of questions remaining, please, the first on CropScience. Some of your close geographic peers have talked about a CAGR to 2015 of 9% or above, and you mentioned to Mr. Jain's question earlier that you think that we're at peak already in 2012. Just wondered if you could give some more color as to why you think 2012 is a peak year in CropScience, please? And the second question, if possible, could you run us through your major MaterialScience expansion projects, just what the capacities are individually, roughly the investment amounts and when they come on stream?

Marijn E. Dekkers

Okay, Liam.

Liam Condon

Yes. I mean, the reason we're stating that 2012 is at the peak of the cycle is simply we've never seen double-digit growth for 2 years in a row, and so we're coming off the back of a year, an exceptionally strong cycle. We don't really think it's prudent, and we would hope that this will continue forever, and we would hope there's a paradigm change and that this industry will no longer be cyclical but will continue to grow. But in all honesty, we think it's unlikely, just given the history of the cycle in the industry. And so that's why we're basically being prudent and saying, at some stage, there will be a slowdown. And we're forecasting for 2015, let's say, going back to more normal patterns. So that's basically maybe the difference between what we are forecasting and other companies. For CapEx expenditures, we basically already announced that we will be making very significant CapEx investments up until 2016. And this is in the region of -- in total, this would be at EUR 1 billion, basically, up until 2016 and basically spread out fairly evenly throughout the various years. So that was something that is already been announced as a ballpark number.

Marijn E. Dekkers

Amy, you're also interested in capacity expansions in MaterialScience?

Amy L. Walker - Morgan Stanley, Research Division

Yes, please, if possible.

Marijn E. Dekkers

Okay, Patrick?

Patrick W. Thomas

Okay. Amy, let's start with TDI and dual market in Germany. We announced a 300,000 ton expansion that will be offset by closure of 225,000 tons of existing capacity, all to advance. And the aim is that, that will be achieved late '14, early '15. So that project is primarily related to cost efficiency rather than capacity. That's using our new technology from China in Europe. And that gives us a significant cost benefit. Another project that is in the immediate term is the debottleneck of the MDI plant in China by 150,000 tons up to 500,000 tons with a time of completion of 2014 late, probably early in 2015. There is, in the permit applications in China, a further doubling up of that capacity. But we have unclear timing on that and have no specific timing given that's most of the polyurethane plant. On Polycarbonates, we are currently engaged in a 100,000-ton expansion in China with a start-up date around about 2014, '15.

Operator

The next question is from Mr. Daniel Wendorff.

Daniel Wendorff - Commerzbank AG, Research Division

Daniel Wendorff, Commerzbank. Thanks for taking my questions, 2 remaining. One is related to the issue of provisions. And you mentioned that all known cases of VTE, as well as expected case of VTE, are included in the provisions taken. And my follow-on question would be from the current point of view and also looking back to where you have actually billed provisions for last year. Are there any other important litigations where you would need to consider billing provisions going forward, and from your current point of view, obviously? And then a follow-up question on Betaseron. You mentioned the level of price increases -- or the number of price increases which happened during the course of 2012. And is there already a certain visibility on the U.S. markets where that might lead to in this fiscal year? And related to that, what are your expectations for the whole Betaseron franchise for 2013?

Marijn E. Dekkers

Okay, provisions for VTE, Werner.

Werner Baumann

Yes, and you stated the provision on -- provisions for all VTE cases correctly. All known today, all expected going forward, with the assumptions we have taken on the total universe of total cases we might see in the Yasmin/YAZ litigations in VTE plus all legal and defense costs, which are also included in our provisions. As far as other legal complexes are concerned, you have the legal report in the annual report. Each of the cases we have is made appropriately and fully described to the extent that we can disclose. Secondly, also very importantly, to the extent that an exposure in terms of financial exposure on all of these cases needs to be provisioned, it has been provisioned as of the end of the year, as we would normally expect.

Marijn E. Dekkers

Okay. And then Betaseron?

Jorg Reinhardt

Yes. So what I can say is that there are currently no plans to increase price in 2013 again. Based on that and given the decline in volume that we see across the world, our expectation for Betaseron going forward is a high-single digit decline for 2013 and further decline after that.

Operator

Mr. Rosar, you may continue with any other points you wish to raise.

Alexander Rosar

Okay. Thank you, Cleo. Ladies and gentlemen, also on behalf of my colleagues, thank you for being with us on the call and your questions. We are now saying goodbye, and we all hope to meeting you during our Meet Management Conference on March 18 and 19 here in Leverkusen. Auf Wiedersehen.

Operator

Ladies and gentlemen, this concludes the Full Year and Fourth Quarter 2012 Results Investor and Analyst Conference Call of Bayer AG. Thank you for participating. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Bayer AG Management Discusses Q4 2012 Results - Earnings Call Transcript
This Transcript
All Transcripts