Bayer Sees Boost in Earnings
Bayer, a pharmaceutical industry giant, has gotten a boost in their earnings for this year, despite the economic shifts that the company is dealing with regarding the highly unfavorable exchange rate being a German based company. The third quarter has become particularly favorable to them with stronger profits on the books.
Bayer’s Acquisition with Monsanto
Even with the loss of the Diabetes Care business in the second quarter, Bayer’s earnings continued to climb higher. The cause for this is the partnership between Bayer and Monsanto regarding the overseas trading agreements with China. Since securing the $57 billion loan to finance the deal, the company has seen a significant increase in their earnings. This acquisition was meant to cut costs of materials and labor down a large percentage, while increasing their growth for the following years.
Werner Bauman, the chief executive for Bayer stated that this acquisition of their rival is going to reinforce their “leadership position as a life science company”. Bayer also released a statement showing the group’s earnings before the taxes, interest and depreciation which shows a 6% increase in just three months. Additionally, the revenues for the company grew 2.3% more, much more than the predicted outcome.
Raising their growth forecast in core earnings for each share in 2016 from a mid single-digit percentage to a high single-digit percentage, they’ve continued to see growth happen pushing their goals higher.
Bauman also stated that they’re working in a “persistently difficult market environment”. This came after the 1.2% decrease in the crop science department. However, the pharma division, ebitda increased by 13% during the third quarter due to the increase of sales on prescription medications raising to 7.3%. A lot of these medications were singled out as increasing their profitability, such as Xarelto, Xofigo and Stiyarga which are used to treat cancer and a pulmonary hypertension drug, Adempas.
With the rising cost and need for these prescription medications, Bayer will continue to see growth in their market. Along with the acquisition of another medication producing company, their rival, they will also gain a large portion of the pharmaceutical market, essentially ridding it of the main competitor and owning all of the shares. This will not only boost their earnings, but also provide the company with more medications to market. Due to this, the increase is expected to follow into the first quarter of 2017.
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