Bayer AG Q2 2010 Earnings Call Transcript

Aug. 2.10 | About: Bayer A.G. (BAYRY)

Bayer AG (OTCPK:BAYRY) Q2 2010 Earnings Call Transcript July 29, 2010 4:30 PM ET

Executives

Alexander Rosar – IR

Werner Wenning – Chairman

Kemal Malik – Chief Medical Officer

Marijn Dekkers – CEO

Werner Baumann – CFO

Friedrich Berschauer – Chairman, Bayer CropScience

Patrick Thomas – CEO, Bayer MaterialScience

Analysts

Jo Walton – Credit Suisse

Sachin Jain – BofA Merrill Lynch

Jean de Watteville – Nomura

Fabian Wenner – UBS

Mike Leuchten – Barclays Capital

Peter Hellman – Robert W. Baird

Richard Vosser – JPMorgan

Cornelia Thomas – WestLB

Christian Faitz – Macquarie

Florent Cespedes – Exane BNP Paribas

Rim Bennani – Exane BNP Paribas

Daniel Wendorff – Commerzbank

Ron Koehler – MainFirst Bank

Andreas Heine – UniCredit

Alexander Rosar

Thank you Jason. Ladies and gentlemen I would like to welcome you also on behalf of my colleagues to our conference call through which we will review our second quarter figures with you.

With me on the call are Werner Wenning, Marijn Dekkers and Werner Baumann from the group management board. Marijn Dekkers today will also represent the HealthCare subgroup. It is being supported by Kemal Malik, the Chief Medical Officer of our pharma business. CropScience today will be represented by Friedrich Berschauer and MaterialScience by Patrick Thomas. As always Mr. Wenning will start off our conference call with a brief summary of the developments in the quarter. We assume that you have all received and reviewed our corporate newsletter, the briefing document and the slides so we will just run you through the main points.

Before handing over to Mr. Wenning I would like to draw of your attention to the Safe Harbor statement. Thank you. Mr. Wenning.

Werner Wenning

Yes, good afternoon ladies and gentlemen. It is also my pleasure to welcome you to our conference call. Let's start off with the overview. In the second quarter, we further grew our sales and profits. This growth was mainly driven by our HealthCare business, by our MaterialScience business, HealthCare expanded slightly, CropScience, after adjusting for currency movements, reported declining sales.

Good working capital management resulted in a double-digit increase in net cash flow. We are increasing this year's R&D budget by 200 million to EUR3.1 billion. The significantly higher investment in R&D underscores the confidence we have in our innovation pipeline. Based on the development so far and our expectations for the remainder of the year, the group financial outlook remains intact. We continue to target adjusted sales growth of more than 5% and underlying EBITDA of more than EUR7 billion.

Let us now briefly look at the key data from the second quarter. In my comments, I will focus on the portfolio and currency adjusted sales figures. Group sales advanced 9% in the quarter. This growth was mainly driven by higher volumes. Higher volumes added 8% and higher selling prices 1% to the topline expansion.

Underlying EBITDA at EUR1.9 billion also gained 9% due to the positive business trends primarily at MaterialScience and Consumer Health as well as to positive currency effects.

Currency effects improved the underlying EBITDA a 160 million. Positive currency effects were, however, more than compensated by 80 million higher R&D expenses, 50 million of idle costs at CropScience and 150 million impact from higher raw material and energy prices at MaterialScience. Core earnings per share at 1.15 were up 10% against the prior year quarter. Our measures to further optimize working capital management were successful. We are thus able to report a 10% increase in net cash flow.

Ladies and gentlemen, a closer look at the performance shows that the business expansion was broad-based. The majority of our portfolio performed quite well in the quarter. MaterialScience appeared to have emerged from the crisis. Volumes of key products are again above pre-crisis levels. Health group achieved a record EUR2.7 billion in sales in the second quarter of 2010.

Consumer Health demonstrated business strengths in the quarter. We made significant gains at Environmental Science and at – at BioScience. We expanded our pharmaceuticals business outside the United States. Declining sales on the other side were reported from the US pharma business. Furthermore, our Crop Protection business failed to meet expectations of a significant catch up growth in the second quarter. Business declined particularly in North America.

From a regional perspective, the strongest growth was achieved in the emerging economies. Business in Western Europe gained 8% while business in the United States was down by 2%. The emerging countries on this slide basically defined as world minus North America, Western Europe, Japan, Australia and New Zealand accounted for more than the third of group sales.

In these markets we expanded our sales by 18%, with the strongest growth achieved in the emerging Asian economies. Driven by higher sales in all business groups sales in these countries increased by an impressive 33%. I believe these figures clearly demonstrate that we're well-positioned in the emerging markets and that our significant investments in there are really paying off.

Now let's look more closely at the trend of our individual businesses, starting with HealthCare.

Driven by the Consumer Health segment, sales of healthcare grew by 2%. Business in the pharmaceutical segment barely remains level year-on-year due to considerably lower sales in the United States. The weakness of the US business resulted mainly from lower sales of Yasmin, YAZ, Mirena and Betaferon.

Outside the United States, pharmaceuticals business trended positively, with sales growth of almost 6%.

Business with Yasmin and YAZ receded by a 44% in the United States due to the debate surrounding the risk of thrombosis and the market entry of a generic version of YAZ.

Outside of the United States, however, sales of that product group rose by 6% yielding a decline of 15% overall.

Sales of Betaferon fell by 11%. In view of the strong prior year quarter, however, this decline was within our expectations. The decrease in sales of Mirena resulted from pre-buying ahead of a considerable selling price increase in the first quarter.

By contrast, we have a gratifying improvements from Nexavar, Kogenate and Avelox. Nexavar gained 20% driven by the liver cancer indication. Kogenate at plus 25% benefited from higher shipments to our distribution partner. Avelox was up 21% on the increased stocking by Japanese dealers and sales gains in China.

The Consumer Health business trended positively with sales up by 4%. Consumer Care registered a 6% increase in sales. Business – our most important product, expanded significantly. Aspirin grew by 6%, Aleve by 14% and the One-A-Day line of vitamin products by 15%. This was attributable primarily to the recovery and consumption in the United States.

Medical Care suffered from a weak US market for blood glucose meters. Sales in that division moved back by 4%. By contrast, Animal Health saw its business expand by 10% thanks to sales growth in all regions.

In North America we benefited from initial stocking of a new distribution set channel for our Advantage product line in the US. Underlying EBITDA of HealthCare almost matched last year's levels. Earnings were negatively impacted by a variety of factors including the launch of a generic US – generic YAZ in the United States and lower sales of Betaseron, higher R&D as well as marketing and sales expenses. And the portfolio effects from selling the hematological oncology activities to Genzyme.

These negative factors were nearly offset by positive effects resulting from business expansion in Consumer Health and favorable currency change rates. Following the unexpected market entry of a generic competitor to YAZ in the United States, we had to adjust our 2010 HealthCare outlook. We now expect sales in the pharmaceutical segment to remain level year-on-year on a currency and portfolio adjusted basis.

In Consumer Health however, we still expect to expand faster than the market. We thus anticipate only a slight increase in adjusted sales at HealthCare and believe that underlying EBITDA of HealthCare will at least reach the prior year level.

Ladies and gentlemen, following the delayed start to the planting season in North America and many parts of Europe due to the cold and prolonged winter, we anticipated that the second quarter would generate strong cash up sales. These expectations were not met. On the contrary, unfavorable weather conditions persisted through the second quarter particularly in North America and Europe and have contributed to poor demand for Crop Protection products. Additionally, unusually high inventory levels in the distribution channels and strong competition resulted in price and margin pressure in key markets. As a result, our Crop Protection sales declined by almost 9%.

We saw the steepest decline in sales in North America at 30%. Intensified competition resulted in price erosion and thus in lower sales of our herbicides and fungicides. Generic competition and lower insect infestation pressure led to a market decline in sales of our insecticide business. In Canada cultivation acreages for canola and wheat declined as a result of having precipitation.

In Europe, we succeeded in limiting the decline in sales to 3% despite unfavorable weather conditions in the key growing regions.

Sales in Asia Pacific grew by 7%. Gratifying business trends in Australia and China played a particularly important role here. Sales in Latin America were a little short versus the prior year. A decline of 2% was attributable to a somewhat weaker seed treatment business in Brazil.

By contrast, there was a gratifying expansion of business with products of professional users in non-agricultural applications. Sales of the Environmental Science business unit rose by 9%. We also saw a substantial 11% increase in sales in the BioScience business unit. Underlying EBITDA of CropScience fell by 20% due to a considerable decline in profitability in the Crop Protection segment. Lower selling prices and a drop in volumes diminished earnings significantly.

Second quarter earnings were also diminished by a lack of fixed cost absorption as we continued to under produce while selling down inventories. This was reflected in 66% higher net cash flow.

Earnings in Environmental Science, BioScience segment improved due to the expansion of business. However, the figure contained one-time income of EUR19 million in connection with the license agreement signed in the second quarter of 2010.

Against the background of unfavorable weather and market conditions in the first half of the year we're lowering our sales and earnings forecast for 2010 at CropScience. Provided market conditions return to normal in the second half of the year, we anticipate that sales in 2010 overall will be slightly lower than the prior-year level on the currency and portfolio adjusted basis. We expect underlying EBITDA to decline significantly.

Without doubt, performance of our CropScience business during the first half is disappointing. Corrective actions including further efficiency improvements are now underway. The improvement of the business performance of our MaterialScience subgroup continued in the second quarter. Sales came in at nearly EUR2.7 billion, which was not only a 41% improvement year-on-year, but also the highest quarterly sales figure ever achieved at MaterialScience. Expansion of business was due above all do to a considerable increase in demand in our key customer industries. This enabled us to significantly raise volumes in all product groups and regions.

The richest and the largest absolute volume gains in Europe and North America which were hardest hit in the previous year by the economic downswing. There was also an increase in selling prices particularly in Asia and Europe. MaterialScience significantly expanded sales compared to the first quarter of 2010, too, posting an increase of almost 16%. Here, too, all product groups contributed with substantial volume expansion and a slight increase in selling prices overall. The improved business situation was also reflected in earnings. EBITDA before special items at MaterialScience rose markedly in the second quarter of 2010 to EUR371 million.

We are also optimistic about the second half of the year as regards our BMS business. We anticipate a continuing positive business trend in the subgroup. From today's viewpoint, we now consider as conservative our previous target of increasing sales by more than 20% and more than doubling underlying EBITDA. We expect to exceed these targets. In the third quarter we anticipate that sales and underlying EBITDA will be in line with those of the previous quarter. We're also pleased to report a substantial improvement in net cash flow in the second quarter. The significant reduction in cash tied up in working capital resulted in a 10% increase in net cash flow and 15% growth in the free operating cash flow.

Net debt at the end of the quarter was EUR10.7 billion, up 1 billion compared with the end of the first quarter. This result must be viewed against a high seasonal payout in the second quarter for dividends, interests and bonuses and negative currency effects. In total, currency changes increased net debt by more than EUR600 million.

So, ladies and gentlemen we remain confident for 2010 and anticipate that the slower pace of growth at HealthCare and CropScience will be offset by the dynamic business expansion at MaterialScience. Change rates have so far trended more favorably as well. We continue to target currency and portfolio adjusted sales growth of more than 5% and to increased EBITDA before special items to more than EUR7 billion. Core earnings per share are expected to improve by more than 15%. Our estimates are based on exchange rates at the end of the second quarter.

Before opening the Q&A session, please allow me to summarize the key points. The majority of our businesses performed well in the quarter. Group sales and underlying EBITDA were both up 9%. Good working capital management resulted in a 10% increase in net cash flow. Our confidence in the innovation pipeline remains strong. This is reflected in significantly higher R&D spending. We're looking forward to share our new data on Xarelto with you during the next weeks and months. And as just mentioned, we confirm our group full year 2010 financial outlook.

That concludes my remarks. We will now be happy to answer your questions.

Question-and-Answer Session

Operator

Thank you. (Operator instructions) The first question comes from Mr. Walton, Credit Suisse. Please state your name, company name followed by your question.

Jo Walton – Credit Suisse

Jo Walton from Credit Suisse. A few questions, please, firstly on the R&D increase. What's happened since the beginning of the year to think that you can make a good return or increase R&D? And is the majority of that extra spending in the pharmaceutical division? And have we already started to see it? And is that one of the elements to the margin squeeze in the division?

Looking at the blood glucose monitors, you talk about a weak market. But having seen the Roche results, their blood glucose monitors, it looks as if it's not a weak market but a loss of market share. What could you do to address that?

And can you also tell us a little bit about the impact of foreign exchange on profits for the group as a whole? If you had a 5.6% benefit from exchange to sales can you help us on what that was at the profit level? Many thanks.

Werner Wenning

Okay, I would like to give a first comment on our additional R&D expenditure. Approximately 90% of the additional 200 million directed to pharma and Kemal Malik will develop it little bit more in detail and around 10% to Crop BioScience. Kemal would you please continue to – more details?

Kemal Malik

Sure, it's Kemal. I think the increased spends on our late stage pipeline is really a confirmation of our confidence in the strength of that late stage pipeline. As I've often said, we feel that we have one of the strongest late stage pipelines of any company of our size in the industry. And a demonstration of our commitment to that pipeline is the increased spend. We want to maximize the value of those late stage assets, such as Xarelto, the VEGF trap and so forth, and our increase spend is reflection of that.

Werner Wenning

Okay, and about our market share in glucose meters and the marketing gains of our competition in glucose meters, Marijn would you please?

Marijn Dekkers

Yes, hello. Just a quick comment on that situation. As you know the market environment for diabetes monitoring in the United States is challenging at the moment, both from a price and a demand point of view. We had an particularly challenging quarter after a somewhat better first quarter. I would not go so far as to say – as to conclude market share gains or losses based on this quarter because the complexity and the timing of the product flow in that market is such that I would not at this point come to that conclusion. But we're definitely monitoring it.

Alexander Rosar

And the impact of currency, Werner Baumann.

Werner Baumann

Yes, this is Werner Baumann speaking. To mention the topline about a little bit more than 5% roughly 0.5 billion in sales from a translation perspective and on clean EBITDA the effect was roughly 160 million. That is about 8% of quarterly earnings.

Jo Walton – Credit Suisse

Thank you very much.

Werner Baumann

Thank you.

Operator

The next question comes from Mr. Jain, Merrill Lynch. Please go ahead. Please state your name, company name followed by your question.

Sachin Jain – Bank of America/'Merrill Lynch

Hi, this is Sachin Jain from Merrill Lynch, thanks for taking my questions. Just a couple on the pharma margins to start off with. I think you have had the lowest pharma margin this quarter for roughly 2 years, flagging an increase in SG&A and R&D. I just wanted a little bit more color as to how we should think about this from here. Are there any particular factors this quarter you would focus on outside of YAZ? Or is it just rebasing to a new level? And related, I'm just wondering if you could update comments from the first quarter call where I think you alluded to pharma margins being broadly flat for the year. Is that still the case? And if it is, what is the FX uplift that's helping you maintain that?

Secondly just on the Crop, if you could just comment on your components for volume and pricing for the full-year outlook. And then finally a quick question for Kemal, on ROCKET AF if he's willing to comment. Based on the event rates you're seeing within that study, are you still on track for year-end filing? Or is there any risk of slippage into next year as seems to be being suggested by some in the medical community? Thank you very much.

Alexander Rosar

Yes, let's start Sachin with the pharma related questions. Marijn?

Marijn Dekkers

Yes, in terms of the margins in pharma, clearly under pressure at the moment in this particular quarter. I think there are a few contributing factors here. First of all, there's a product mix issue at the moment. You're aware of the YAZ generic introduction in the United States, so that is a negative mix effect. I would also say that from a geographic mix with more and more sales coming from Asia where the margins tend to be somewhat lower; that challenges the margins as well. And particularly sequentially Q1 to Q2 that is a contributor. Healthcare reform doesn't help margins of course either, it came also more to a head in the second quarter than in the first quarter.

And then as Mr. Wenning commented on the increased investments in the second quarter in R&D and commercial capability to support late stage pipeline, we think this is a terrific investment and – but of course from a margin point of view in the quarter, negative. So these factors came together, all came to a head the in second quarter.

Going forward we think that in the mid-to-long-term we will definitely be able to deliver on the committed margins, because there is enough good news in the pipeline. And not just in the longer-term pipeline but also in the shorter-term pipeline in women's health, for instance, where we have plans with YAZ Plus and Natazia to regain market share that I'm confident that we can get back to the margins that we have committed to earlier.

Sachin Jain – Bank of America/'Merrill Lynch

Can I just clarify; what margins have you committed to?

Marijn Dekkers

In HealthCare we basically set our guidance of margins from 28 to 30% Clean EBITDA margins.

Sachin Jain – Bank of America/'Merrill Lynch

And that was over what time frame?

Marijn Dekkers

You know, it is hard to say with precision quarter-by-quarter, but I would say over the next 2011 and 2012 timeframe.

Alexander Rosar

Okay then in the Crop –?

Friedrich Berschauer

In CropScience we recorded in Q2 a volume decline of 2.8% and a price decline of 2.7%. In the first half, volume was down by 6.6% and price was down by 1.3%. For the second half, we're expecting an increase in volumes; we're expecting a price decline also in the second half that I mentioned is not, of course, clear. It depends on commodity prices. It depends on the weather situation, of course, specifically in Latin America. But I believe that the price pressure in Crop Protection will continue in the second half. This is the best what I can say from today's perspective.

Alexander Rosar

Update on ROCKET, Kemal?

Kemal Malik

Hi Sachin, let me tell you a little bit about Xarelto. I'm pleased to confirm that our Xarelto program remains totally on track. We had previously announced that we're presenting results of the EINSTEIN-DVT treatment study at the European Society of Cardiology meeting at the end of August. The results of the Rocket study in stroke prevention, atrial fibrillation are expected in the second half of this year, and we can confirm our intention to file the submissions in stroke prevention in atrial fibrillation and DVT treatment by year-end.

Sachin Jain – Bank of America/'Merrill Lynch

Perfect. Thank you very much.

Operator

The next question comes from Mr. de Watteville. Please state your name, company name followed by your question.

Jean de Watteville – Nomura

Yes, hi, I am Jean de Watteville from Nomura speaking, couple of questions on Crop Protection please. First of all on prices, the price decline you have on this quarter that you have published for CropScience for this quarter is much lower than what your competitors disclosed. (inaudible) they disclosed more than 8% price pressure. BASF this morning, 4%. So can you probably – one element is because you had achieved crops price increases in Environment Science/BioScience. So can you please give the price decline in Crop Protection alone without Environmental Science/BioScience? Maybe that could help us to understand the margin pressure that you experienced in the second quarter.

Second point also tell about to understand the dynamics of profitability in the second quarter. Can you develop on the mix effect? We know that the sea treatment are very much down, fungicide is slightly down. I understand these businesses are above average margins. Can you elaborate on that?

Third question, still on Crop Protection, is for the second half outlook. Should we, given the lower prices in Crop Protection, expect a similar range of margin pressure than you have experienced in the first half? Or you expect some elements to offset price pressure in your margin basically to be closer to what you're achieving in the second half of last year.

And if I can, a fourth pay question in MaterialScience, most of your competitors on the last days and particularly today in plastics and in polymers have mentioned evidence that volumes in Q2 were driven by very strong restocking in downstream demand. I haven't picked that up in your comments. Can you just elaborate on whether you believe that the current strength of volumes in MaterialScience is driven by restocking, particularly in the Xarelto sector? Thank you.

Alexander Rosar

Thank you. And let's start with Crop Protection, Berschauer.

Friedrich Berschauer

Coming back to your question in terms of pricing, I need to make an important comment. You talked about Environmental Science which is a agrochemical business. And if you have a look on our major competitors, which also have ES business, so we brought these numbers under agrochemicals or Crop Protection. So basically you need to include the ES affect on the agrochemicals. It is an important note. But still in ES, in professional as well as in consumers, we had no significant price increase with prices reflected in BioScience we had a small price increase but not (inaudible). So the main impact is really coming from Crop Protection.

Your second question in terms of portfolio and profitability of the portfolio, in the first half this year we had a significant negative impact on our portfolio, we have been affected significantly in our herbicides in Europe. And this portfolio has a significantly higher margin compared to our overall portfolio. In the second half, if that was your question we do not expect major changes in the portfolio compared to 2009 second half. That has answered now all your questions?

Oh, I think for the second half of the year, so we recorded a price decline in the first half of 1.3%, basically zero in the first quarter and then a stronger pace in the second quarter. I believe that in the third and fourth quarters this price pressure, as indicated before, will continue to some degree so I'm expecting in the second quarter some higher price decline compared – in the second half compared to the first half. But we expect, as indicated, volume increase, why? Because it is obvious, very obvious that there is a significant reduction in terms of inventories on the distribution level, so there are a bit much better options now for the second half in terms of our sales to distribution.

And also on the positive side, what we have seen in the past weeks that commodity price, some of the important commodity prices increased. If we look on the development of wheat prices, it was a significant increase in the past weeks of 20%[ph] or even more and this very weak wheat price. It was one of the major reasons why we had our rather poor performance in the first half of this year. So let's wait and see how commodity prices will perform or develop. I am rather optimistic that we will see a positive trend. Why? Because – and this also was the reason for our weak business, we had this extremely hot May and June which was important for the development of cereals.

And there are now a lot of reports around the wheat production in Europe and for example also in Russia and Ukraine will be significantly down. So logically this should result in increased wheat prices. We've seen the effect already in the past week.

Alexander Rosar

And Patrick on the MaterialScience with the outlook?

Patrick Thomas

Yes, on the restocking point, I think that's a really good question. What we're seeing is, particularly in the automotive industry, a very strong demand from fleet car sales. So for example, in the US growth in fleet car is around about 25% whereas private is probably up about 6%. That reflects last year's reduction in orders caused by people delaying and extending leases.

Now, the good news about fleet cars is that clearly they drive the more luxury end of the market, particularly in Europe, and you see much higher levels of polyurethane and polycarbonate in the high end of the market compared to the cash for clunkers growth, which was very much at the smaller vehicle end. So, I think that is a positive effect. As I talk to car companies in Europe and the States, inventory levels for them are still low and typically we are currently discussing order entry and difficulties with meeting demand in October for this year. So I don't just see this as a quarter to short-term effect. I think we will see demand sustained throughout quarter three and a slight drop in quarter four as we see the Christmas effect kick in.

The other area which is of course, a big driver of our business which is the information technology computing arena where we still see sustained demand, particularly with new electronic devices, for example tablet and small notebook devices. And that really is sustained. And of course most of those products are pretty much made to order and there is very, very little stocking. So for our type of portfolio I think the restocking effect is not as pronounced as to some of the other companies.

Jean de Watteville – Nomura

Interesting, thank you.

Operator

The next question comes from Mr. Wenner. Please state your name, company name followed by your question.

Fabian Wenner – UBS

Hey good afternoon. It is Fabian Wenner from UBS. Two questions quickly. First one, could you elaborate a little but about the changing landscape of the MS market and the fundamentals of the next two years? And specifically, as a strategy with regard to your pricing of Betaferon, with regard to that more intense competition from Extavia but also from new orals[ph] that would be very interesting. Thank you very much. Then the second question, can you just confirm that you have not made any provisions for the losses regarding US YAZ or Yasmin? And can you remind us whether there's any major multidistrict litigation hearings scheduled yet? Thank you very much.

Werner Wenning

Let's start, Marijn, with the MS market question on Betaferon.

Marijn Dekkers

Yes, Betaferon, we have communicated in the past I believe that we are expecting some erosion in our Betaferon sales in 2010 as a result of new products being introduced by competitors. That erosion is indeed happening. It was 11% in the second quarter. For the full year, we expect it to be in the high single digits according to our originally communicated plans. I'm not really prepared to talk about competitive pricing scenarios at the moment quite honestly, so I'm going to take a rain check on that. But I would say this though, that of course you understand in MS the new products are unproven in terms of their long-term effects. And I think this is why the French isolate Betaferon as a high level of sustainability as the patients are happy and are reacting well to a product like that, there is a certain risk in changing medication and I think that it is serving us well in maintaining the Betaferon franchise.

Fabian Wenner – UBS

Should we derive from that that you will try to further increase prices going forward?

Marijn Dekkers

No, I don't really want to comment on competitive pricing situation right now. But maybe later when we're actually doing it we will communicate it.

Alexander Rosar:

And about the legal provision – legal cost provisions, Werner Baumann.

Werner Baumann

So Fabian, this is Werner Baumann just answering your question on the YAZ/Yasmin complex. As we have already done in quarter one, we have continued to take provisions on the defense of – for the YAZ/Yasmin litigation. We have not provided for any type of damages or what have you coming out of the verdict. You should also know that we do have for the YAZ/Yasmin complex customary coverage from a product liability perspective, insurance perspective.

Fabian Wenner – UBS

And with regard to any hearing, can you update us on that?

Werner Baumann

Yes, currently no hearings planned.

Fabian Wenner – UBS

Thank you.

Operator

The next question comes from Mr. Leuchten. Please state your name, company name followed by your question.

Mike Leuchten – Barclays Capital

Hey it's Mike Leuchten at Barclays Capital. Three questions please. One, I just wanted to go back to the HealthCare margin. If I read your full-year guidance correctly for HealthCare, that does actually imply a nice recovery in pharmaceuticals for the second half. I just wondered whether that is really down to phasing of the R&D and marketing and sales investment that you have just mentioned earlier, or whether you're actually looking at efficiency programs that are going to kick in again already on the back of the YAZ generic launch?

Second question please on Crop Science, just the implications of the pricing environment, I think people had been looking at this industry now as one where there was pricing pressure. Is that gone now? Are we back to a state where the industry can protect its margin but it's going to be difficult to expand it as you're constantly trying to work against the pricing pressure?

And a third question for Kemal on VEGF Trap and DME, Kem, are any plans of going into the DME indication with a higher dose than what is being used in AMD? Or is it flat in terms of dosing?

Alexander Rosar

Let's start with your question about HealthCare margins, Marijn.

Marijn Dekkers

Pharma margin was the question, I think, and a conviction on your part it seems that it is going to be going up for the second half of the year. You know, I think it will depend on the development in some of our key products, the ones that had some issues in the second quarter, and also on how much really do we need to continue to spend on R&D and commercial resources at this level for the remainder of the year. And that is hard to say going all the way into the fourth quarter because, quite honestly, it also depends of course on the results of the various Phase III trials we are getting. So, I don't – I would not conclude from this call that we expect for the remainder of the year a significant pickup in pharma margins. But certainly for next year there would be a reasonable expectation.

Alexander Rosar

CropScience pricing environment, Berschauer.

Friedrich Berschauer

Let me make a general comment on prices. As you really know, we always tend to avoid competing on prices because we're innovation leader in Crop Protection. And – so we offer really good, excellent solutions to our customers. That is the first comment. And if you have a look on a reported price declines, three companies reported pricing. You can see and realize that we really have not been the most aggressive one, to put it in simple words.

You also need to reflect the regional differentiation. In the first half we were able to keep pricing in Europe stable. We were able to increase prices in Asia Pacific slightly in Crop Protection. In US there was a strong pressure on pricing, mainly driven by destocking as discussed. And in Latin America so far we feel rather comfortable but there might be – and I just of course don't know it – but there might be increased pressure on prices in the second half of the year. So again we need to see it differently and based on different situations and regions, and we will continue to fight to get the return on our innovation.

Alexander Rosar

Update on VEGF Trap, Kemal.

Kemal Malik

Yes, hi Mike, Kemal. As you may know we presented the 24-week data from our Phase II study of diabetic macular edema at the Angiogenesis meeting in Miami earlier this year. I'm pleased to say in that study that we showed that all four dosing groups showed a statistical significantly improved increase in visual acuity compared to patients receiving laser therapy. We're going to get the one-year results later this year from that study, and at that stage we'll decide what dose we're going to take forward into Phase III. So just bear with us until about that time and then we will let you know.

Mike Leuchten – Barclays Capital

Thank you.

Operator

The next question comes from Mr. Hellman. Please state your name, company name followed by your question.

Peter Hellman – Robert W. Baird

Hi Peter Hellman from Robert Baird thanks for taking my question. I was wondering if you could provide the region by region results for Nexavar for this quarter.

Marijn Dekkers

We were expecting this question. I've been prepared. Let me find it. Only 2 seconds.

Peter Hellman – Robert W. Baird

Okay, no problem.

Marijn Dekkers

So, year-over-year FX adjusted Nexavar in the US up 11%, Europe 16%, A-Pac 105% of which Japan was 63%, China 17% for a total global increase in Nexavar sales of 19% to EUR186 million.

Peter Hellman – Robert W. Baird

Okay, so 11% in the US, 16% in Europe, Asia-Pacific 105%? And then Japan was 63% you said, and China 17?

Marijn Dekkers

Yes.

Peter Hellman – Robert W. Baird

Okay, thank you very much.

Operator

The next question comes from Mr. Vosser. Please state your name, company name followed by your question.

Richard Vosser – JPMorgan

Hi, it is Richard Vosser from JP Morgan. Firstly a question on CropScience. It seems that your products could be underperforming to competitors as the market beyond weather and acreage it doesn't seem to explain the volume loss that you have seen in – especially in North America in the second quarter. Could you comment on how you can turn that around and whether you think you are losing market share to competitors?

Second question on the Animal Health business, beyond the filling of the new distribution center, this seems to be growing substantially. I was just wondering whether you're seeing any effects that you can exploit, the industry consolidation as I suppose your competitors take their eye off the ball. And wondering, going forward whether there any signs that that is a competitive environment in Animal Health is getting more intense again? Secondly on Animal Health, I just wanted to check whether you're still looking to access external opportunities to complement this business and your search for those and how the search for those is going.

And then finally, just to follow up on Sachin's question on EINSTEIN and ROCKET. Just wondering whether I could confirm that you expect to release headline results for both of those data points for Xarelto ahead of the data presentation at medical meetings? We obviously know one in August that’s for EINSTEIN. Thanks very much for taking my questions.

Alexander Rosar

Let's start with CropScience.

Friedrich Berschauer

CropScience, I really would disagree that our products would underperform; it's really not the case. It's correct that our invoices to the distribution in the US was down, as announced today. We have independent data in terms of the application of our products on the farm level not to the distribution and this data demonstrates so far that we did not lose market share. So this makes me rather optimistic both in terms of our opportunities we will have in the second half in US.

Werner Wenning

Animal Health. Marijn.

Marijn Dekkers

Yes, just a few general comments on Animal Health to address your questions. First of all, Animal Health had a terrific quarter as you can see. Part of that is the year-over-year improvement as a result of the strengthening economy, obviously pet owners are spending more money on their pets than they did in the same quarter last year. Then in addition to that, as you mentioned, we have introduced an additional incremental marketing channel which had specialty pet stores in the United States. And that is leading to some longtime stocking upside that isn't going to continue forever but maybe still spill over a little bit in the third quarter but then it will be done. So we cannot continue to count on a contribution like that.

With respect to external opportunities, we like our Animal Health business and if there are external opportunities, we'll certainly take a look at them. It's too early to comment at this point on whether or not there are opportunities for us to gain market share while other competitors will be distracted with integration. I don't think we would even be able to monitor it that closely given the significant increase in sales year-over-year as a result of the economy plus then our additional channel. So there is too many moving parts to really, with precision, figure out how competitively we are gaining share or not.

Alexander Rosar

Our EINSTEIN and ROCKET study.

Kemal Malik

Hi Richard, it is Kemal. Yes, I can confirm that as we have previously communicated we will be releasing topline results for those studies within the confines of the data release regulations of the meetings at which we want to present the full results, obviously, but we will be releasing the topline results of those studies.

Richard Vosser – JPMorgan

Okay. Thank you very much.

Operator

The next question comes from the line of Ms. Thomas. Please state your name, company name followed by your question.

Cornelia Thomas – WestLB

Hi, good afternoon it is Cornelia Thomas from WestLB. I have actually only got one question left concerning YAZ. This is not on the generic but sort of on the issues you are having in the US with claims that YAZ some lead active compound is increasing thrombosis. I'm just wondering because it keeps on coming up in the press in Europe as well. Are you not seeing any, well, pressure on YAZ in Europe? And/or are we to expect any going forward?

Marijn Dekkers

This is Marijn. Thanks for the question. It's an important question. The YAZ franchise is growing 6% outside of the US so I think you can come to the conclusion from that that there is no pressure on that franchise at the moment in Europe.

Cornelia Thomas – WestLB

And you're not expecting any either?

Marijn Dekkers

Well, I don’t, no.

Cornelia Thomas – WestLB

Okay, thank you.

Operator

The next question comes from Mr. Faitz. Please state your name, company name followed by your question.

Christian Faitz – Macquarie

Yes, thanks. Christian Faitz from Macquarie. I just have a clarification question on Crop Protection pricing Dr. Berschauer. Do you expect a year-on-year pricing pressure in the second half which I can understand? Or do you expect even further pricing pressure from here on onwards in Latin America? Thank you.

Friedrich Berschauer

Faitz, what I assume, to the best of my knowledge and how I would have a look when I have a look on the market and all the dynamics, as you know and I think the whole industry has demonstrated increasing price pressure. So basically being able more or less keeping prices in the first quarter as well a price decline in the second quarter. What I would expect that there will be at least the same price pressure in North America and Latin America in the second half. I don't believe there will be further price pressure in Europe as well as in Asia Pacific. So depending really on the regions.

Christian Faitz – Macquarie

Is that mainly – or if I may ask is that mainly a (inaudible) price issue?

Friedrich Berschauer

Of course there is effect as you know on herbicides in general based to the very low lifescience prices and we had to adapt our (inaudible) prices as well. So this is stable I do not expect it further to change.

Christian Faitz – Macquarie

Okay, great. Thank you. And before I forget it, all the best for your retirement.

Friedrich Berschauer

Thanks a lot. You're very kind.

Operator

The next question comes from Mr. Cespedes. Please state your name, company name followed by your question.

Florent Cespedes – Exane BNP Paribas

Good afternoon gentlemen, Florent Cespedes from Exane BNP Paribas. A few quick questions on HealthCare. First of all on Xeralto, on MAGELLAN clinical trial, the medically ill patients. Is it possible to have the at least headline results by end of this year? Could you also provide an update on the recruitment of the EINSTEIN-P trial? And last one on the research beyond Xeralto, what are the meaningful publications that we should monitor in the coming months? Another one on the margin, we understand that 2010 Healthcare margins will be under pressure due to pharma. Do you confirm that the consumer margin will continue to improve?

And regarding the pharma margin, will you put into place some specific measure to preserve the margins? For example, what you are going to do in the US on the marketing expenses? On the contraceptive pill for example, will you decrease the budget or will you keep the same budget as you need to support the launch of new drugs? Could you elaborate on that please?

Alexander Rosar

Okay, let's start with Xeralto, Kemal.

Kemal Malik

Hey Florent. Your first question with relation to MAGELLAN, no, we won't see the results this year. We expect the results next year. Your second was question related to the recruitment in the EINSTEIN-P study. This is slightly behind in terms of the EINSTEIN DVT treatment and this will complete recruitment next year.

Marijn Dekkers

Margins, yes the Consumer margin you asked do we expect a continuation of margin improvements in Consumer. As you know, we had 110 basis points of margin improvement, and clean EBITDA percent to 22.4% in Consumer. And we expect with continued topline growth above market, which is what we're expecting, we expect that we will get the corresponding margin expansion as a result of that as topline growth and margin expansion in Consumer are very well-balanced. So we expect to bring topline growth there, very good to the bottom line.

With respect to the resources in the US on YAZ, we're not sitting on our laurels and we're leveraging our resources in women's health there very aggressively in a few areas. I think the first one is the introduction of another birth control pill which is Natazia, which was introduced a few months ago. And the sales forces is promoting and selling that product and introducing it aggressively. So that is one. Secondly, as you know, we're expecting to get approval from the FDA this year before the end of the year for our product called the YAZ Plus which is a foliated combined YAZ. And we are obviously counting on our sales force to introduce the product as soon as we are ready after the official approval. So those resources remain very actively in place and are very important to rebuild our women's health capability in the US.

Florent Cespedes – Exane BNP Paribas

So if I understand correctly, you do not get the marketing force behind contraceptive pills in the US?

Marijn Dekkers

No.

Florent Cespedes – Exane BNP Paribas

And just came out, could you may be comment on the behind Xeralto programs which are the meaningful publications that we should carefully monitor in the coming quarters please?

Kemal Malik

And I think I've said we felt really strongly at this stage of pipeline the one thing that I would point out is that the VEGF track, where we'll be getting the one year results from the (inaudible) study, the two pivotal studies at the second half of this year. And I think this will be an important data set because this will then lead hopefully to a submission in the first half of the following year. So that would be something I would look out for.

Florent Cespedes – Exane BNP Paribas

Thank you very much.

Operator

The next question is from Mr. Bennani. Please state your name, company name followed by your question.

Rim Bennani – Exane BNP Paribas

Good afternoon gentlemen, Rim Bennani from Exane as well. I Have four questions fairly quick. First, coming back on the pricing in Q2 versus peers, I was wondering if the right way to look at it is the fact that you raised prices by only 4% last quarter.

Alexander Rosar

I am sorry on which business you and I are speaking?

Rim Bennani – Exane BNP Paribas

I'm sorry?

Werner Wenning

Where? In which unit?

Rim Bennani – Exane BNP Paribas

In Crop Protection, sorry. Just coming back to pricing in Q2 and looking at prices – increases you implemented last year, and last quarter you came out with 4% only while peers were up 7%. So, on your comment, I assume with 3% to 4% price declines in the quarter, so you raised price, raises that were implemented in 2009 like the rest of the industry, or is there anything else that differentiates your pricing strategy in Q2? A second question is you mentioned lower utilization rates in Crop Protection as affecting margins in the quarter. I was wondering where – if utilization rates in H2 would be lower. To follow-up on that, you commented on inventories are down versus start of the year. I was wondering if you had a clearer view now on – are inventories back to normal, below normal? And if you have any help on a per region that would be great.

And the last and final question is just if there is still product standing in the US, are you or do competitors ship products from the US to Latin America usually? Or it's something that you do not do? Thank you very much.

Marijn Dekkers

Your question in terms of pricing is a very difficult one. If you compare pricing, or price increases last year versus price declines this year and so on, it's a much more complicated because we have already created closed loop portfolio and I made a comment on herbicides where we have significantly higher margins. So I think it is very difficult to give you several and honest and correct answer.

Rim Bennani – Exane BNP Paribas

But do you consider that with the price decline that you have in Q2 you have erased price rises in last year across the portfolio or not necessarily?

Marijn Dekkers

No, of course; we increased prices last year and now we have the price declines this year.

Rim Bennani – Exane BNP Paribas

But you're back to before 2009 level in terms of pricing if you were to take an index for the portfolio or not necessarily?

Marijn Dekkers

It would be more or less kind of a compensation. But again, it is very difficult. We would need to elaborate product by product and region by region. And then you would have seen the activity of our competitors. Of course we increased prices or keep the prices based on our innovation potential of our portfolio. But of course we need to watch carefully what our competitors are doing and certainly if we watch it and we need to react, we will do it accordingly.

Rim Bennani – Exane BNP Paribas

Okay.

Marijn Dekkers

Your second question was in terms of idle costs or utilization of our (inaudible) . We had a significant negative impact in the (inaudible) as Mr. Wenning pointed out in the second quarter. We are claiming no significant further idle costs for the second half of the year. Why? Because we believe that this agrochemical market will come back next year and we need to prepare, of course, our production for the year 2011. That's the best answer I can give you in this respect.

Your other question was inventories at the distribution level. We have rather every year a rather good picture after the second quarter in Europe as well as in North America. In Europe, the inventory at the distribution levels are, normal or even below normal, but at least normal. And in the US they are clearly behind the level of last year. This is very obvious.

Rim Bennani – Exane BNP Paribas

But not necessarily normalized in the US or–?

Marijn Dekkers

In the US they are now on a very low level.

Rim Bennani – Exane BNP Paribas

Okay.

Marijn Dekkers

Significantly lower compared to last year. This is very, very clear. And the last question you had shipping products from one region to other regions and so on, we are not shipping products from one region to the other. We have our production network. We are producing for example fungicides in United States and these fungicides are shipped of course because they are produced and distributed to Latin America, not regions of the world. It just depends on our worldwide

global production network.

Rim Bennani – Exane BNP Paribas

Just on the inventory question, in Latin America how do you see inventories ahead of the sort of high season?

Marijn Dekkers

I talked again today to my regional head and country head of Brazil. The answer is that the inventories at the distribution level are more or less normal. That's the best what we can say from today’s perspective.

Rim Bennani – Exane BNP Paribas

Thank you very much.

Operator

The next question comes from Mr. Wendorff. Please state your name, company name followed by your question.

Daniel Wendorff – Commerzbank

Three I have, regarding divisions and also regarding the financial side. Starting off with HealthCare. And there on the pharma side I was wondering whether you could provide an update regarding the approval and launch status of Qlaira. How do we stand there? Then one question regarding the MaterialScience division. Your prices have increased quite nicely in Q2 with regards to the full-year guidance for 2010. How do you see prices or how have you affected price's development going forward and if it is possible if you can split that out also according to the different regions?

And regarding the financial side, I saw that Mr. Wenning you already collaborated on the financial debt, that this increased. I was wondering how do you see the net financial debt situation. And what is the end of the year? Do we have to expect a further increase and – further decrease? And I also saw that your net pension liabilities have increased quite substantially not only quarter on quarter but year to date. What was the reason for that? And is that at a sustainable level for the remainder of the year? That would be helpful. Thank you very much.

Alexander Rosar

Thank you. Let’s start with Qlaira and the status of Qlaira.

Kemal Malik

Okay. Thanks for the question. Qlaira has been launched in Europe and was launched in May 2009. In the United States it goes under a different name. It goes under the name Natazia and it was launched during summer, so it has already been launched there as well. And Marijn referred to that when he was talking about the deployment of our women's health force in the United States.

Werner Wenning

MaterialScience prices going forward, Patrick.

Patrick Thomas

Yes, Daniel. The price situation, you're correct in quarter two has been a positive one and has pretty much covered all of the raw material increases and some more. Looking forward it depends very strongly on which product line we are talking about in the supply and demand balance.

I would say at the moment in NDI we're talking about relatively high utilization rates, much higher in TDI and in polycarbonate. And pricing will follow accordingly.

Alexander Rosar

On net debt and sanctions, Werner Baumann.

Werner Baumann

Yes. On net debt, first of all we're actually very pleased with the net debt development even though it might not be all that visible from quarter one into quarter two. As Mr. Wenning already elaborated on, we have improved our operational performance mainly driven by very good working capital management, and with it generated a free cash flow of roughly 0.5 billion of costs (inaudible) through dividend payment and then roughly a 600 million impact quarter over quarter on negative FX [ph] translation. If you look at it for the first half year, the negative FX amounts to just about a billion. So you can really say that besides dividend payments and a few other payments we traditionally have in the second quarter, our net debt – our operation net debt position vis-a-vis end of last year has not deteriorated. To the contrary, we are on track towards an operation improvement towards the end of the year.

So, looking at what we expect for the remainder of the year, first of all we continue to execute against the improvement of our working capital program so we will bring down our operational working capital in line with business activity. It goes on two sides. On one side of course where we have business expansion primarily in mostly in BMS we have a higher working capital (inaudible). This goes along with the business expansion. But other than that in the Material and HealthCare and in CropScience we only expect minor increases if any for the remainder of the year. So on the operational side, we expect an improvement of our net debt position. That always goes before any changes in the cost portfolio or further exchange variances. And please understand that you can't very much comment on that in detail because of the high volatility we see on the FX market.

When it comes to pension, our pension position and the volatility rate is very much a function of the changed interest rate we have seen, a significant change of the interest rates primarily in the US, a 70 basis point reduction from quarter one to quarter two. We have had 20 basis points in reduction from quarter one to quarter two in the UK and in Europe and in Germany. Those three are the main countries of our pension liabilities we have on the balance sheet and this has been driving this increase in our net pension position in the balance sheet.

Daniel Wendorff – Commerzbank

Okay, thank you.

Operator

The next question comes from Mr. Koehler, MainFirst Bank. Please state your name, company name followed by your question.

Ron Koehler – MainFirst Bank

Yes, hell thanks. This is Ron Koehler from MainFirst. First question is actually on guidance. Obviously you slightly downward adjusted your guidance in HealthCare. You significantly downward adjusted your guidance in CropScience, but you didn't touch your Group guidance. You've clearly had some questions before, I believe, but just can you a little bit elaborate on the Group guidance which I usually understand as a commitment? And I believe now, put it that way, the cushions are used if something now would pop up that would risk the Group guidance or how is your feeling on that?

Second question is regarding on under utilization costs in CropScience. Actually, Mr. Berschauer you were so kind and gave us a figure in Q1 on that under that utilization cost. Could you also name that perhaps for the half-year please? And the third question is in Bayer MaterialScience. Thomas you elaborated on order books now going up to October. Is it the right understanding? Because the visibility is up to October? And meaning – what is the impact let's say of the summer dip? Is there a lower volume expected in Q3 or is volume sequentially relatively stable?

Werner Wenning

I would like to start, Werner Wenning speaking, with the Group guidance. You are – you know that we try to be as transparent as possible in our mid and long-term and short-term guidances. And I feel and we feel very comfortable with the Group science – guidance for 2010 also recognizing the circumstances of our business actually. So, here we feel very comfortable. About the under utilization in Crop, Herr Berschauer.

Friedrich Berschauer

Hi Koehler, thanks for your question. As Mr. Wenning pointed out, we had idle costs in Q2 50 million, in Q1 of 28, which adds to 78 in half-year.

Alexander Rosar

And order book in BMS?

Patrick Thomas

Yes Ronald, the sector I was referring to earlier in terms of the visibility out to October and the automotive sector, where certainly in the major high-end brands people are suffering delivery times of three months or more. So we get very clear visibility in terms of order pipeline in the automotive industry. Clearly it is less visible in other sectors. In terms of your question about seasonality, I think in some areas it is going to be a little strange this year. Certainly in the construction industry there will be the normal summer breaks. We don't see any difference from the normal seasonal effectiveness in the construction industry.

However, in certain sectors and with certain car producers they have canceled their normal summer breaks and now are actually running right away through summer. So that suggests and supports the statement I made earlier about the strength of the automotive industry order book.

Ron Koehler – MainFirst Bank

Good. And an additional question if I may. Yantai in my view will start up their MDI facility somewhere in Q3, end of Q3 300,000 kilotons. Would you see any impact on that in the MDE pricing?

Patrick Thomas

I have no idea when Yantai will successfully start up their facility. But clearly when they start up their capacity that's targeted primarily the domestic Chinese market, our unit in China is completely sold out and is actually just setting a production record in June. So I suspect the demand levels in China are extremely high. And looking at the growth rate in China, the new capacity will be absorbed fairly quickly.

Ron Koehler – MainFirst Bank

Okay, thank you.

Operator

The next question comes from Mr. Heine. Please state your name, company name followed by your question.

Andreas Heine – UniCredit

Andreas Heine from UniCredit. I would like to follow up on MaterialScience and the TDI prices are rather weak in Asia. And I have heard that also some softer prices in polycarbonate come from Asia. Could you elaborate a little bit more on what is going on in Asia? You said already something on MDA which was pretty tight, but how it is with these to other products? And then one question again on the CropScience area or more Crop Protection. There is now a huge margin difference between what the BASF reported and Bayer. That cannot only be explained by Environmental Science which is put into a different reporting line. What do you think are the reasons that there is this big difference? Is it that you are more affected by generic competition, have a higher cost base, not that successful with new products? Have you got that difference is too high to just put it on market trends? Thanks.

Alexander Rosar

Okay pricing in Asia, BMS, Patrick.

Patrick Thomas

Okay, Andreas you're correct on the TDI pricing in Asia. We have seen some volatility, albeit at a relatively high level in terms of absolute pricing. If you look at what is going on, there is quite a lot of disruption in the supply chain in Asia, particularly in China because of the Chinese Expo. TDI is classified as a product that cannot be transported during daylight time or during Expo time in Shanghai. As all the TDI facilities are pretty much in the region of Shanghai, that is imposing quite difficult logistics on people's operations.

Our TDI facility in China is on track with mechanical completion towards the end of this year and will start up during the first half of next year. And clearly then we will have got beyond this problem with the Expo which has been – meaning there has been a transportation ban. So what you're seeing in TDI pricing is a high level of volatility rather than any particular trend. When you talk about polycarbonate you mentioned again some softening in price. I just don't see that. Looking toward quarter one, quarter two toward expectations in quarter three at worse the prices are flat and my expectation is they will increase further.

Alexander Rosar

On CropScience, Berschauer.

Friedrich Berschauer

Answering your questions in terms of Crop Protection comparing our margin with our major competitors, your observation is right, but we would like to make two important comments. The first one is, as discussed, we had significant idle costs, under utilization of our capacity of 78 million in the first half. Of course I don't know the positions of our major competitors but this impacted clearly.

Secondly, and you know our data, last year – of course we are comparing with last year. Last year we in CropScience as well as in Crop Protection we had the best topline in Q1 and Q2 as well as the highest profitability in our history, even higher numbers compared to our record year in 2008. Last year we added in the second half of the year only 30 million in EBIT to our EBIT numbers of the first half. So we had a rather weak performance last year for the full-year in the first full year – in the second half. We performed all the years at least with our major competitors. So I firmly believe that we can close the gap in fact we can catch up in the second half based on the activities we discussed before.

Alexander Rosar

Jason?

Operator

Excuse me Mr. Rosar, this was the last question.

Alexander Rosar

I believe the only item – or the only question I think I got in e-mail meanwhile which we have not answered sufficiently about on the regional performance of Nexavar. Maybe if we answer that again.

Marijn Dekkers

I really did my best to answer it. But I'll give the absolute numbers. 47 million in the US, 75 million, 46 million in A-Pac of which Japan is 26, China 12, for a total global revenue of 186 million.

Alexander Rosar

Okay Wenning, maybe closing remarks.

Werner Wenning

So, we are coming to an end ladies and gentlemen and also my career comes to an end. So that was my last conference call as CEO of Bayer. At the end of September I will hand all the responsibility for the company to my successor Marijn Dekkers.

I've been holding these calls with you for almost 14 years, the last 8.5 as CEO. I have always greatly valued our constructive debates from which I have gained many ideas for my work. I would like to take this opportunity to thank you particularly for the confidence you have shown in me and this company and to wish you all the best for the future. Thank you very much.

Marijn Dekkers

And goodbye from all of us.

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