Business Development
HealthCare

Key Data – HealthCare

Sales of the HealthCare subgroup increased by 8.3% (Fx & portfolio adj.) to €5,651 million (reported: +19.2%) in the third quarter of 2015. This positive business development continued to be driven to a significant extent by our recently launched pharmaceutical products. Business expanded in all divisions of the Consumer Health segment. The substantial reported increase in sales at Consumer Health was mainly attributable to sales of products acquired from Merck & Co., Inc., United States, and to currency effects.

EBIT of HealthCare improved by 14.8% in the third quarter of 2015 to €1,219 million (Q3 2014: €1,062 million), reflecting special charges of €46 million (Q3 2014: special gains of €54 million). EBIT before special items increased by a substantial 25.5% to €1,265 million (Q3 2014: €1,008 million). EBITDA before special items improved by 22.6% to €1,677 million (Q3 2014: €1,368 million). This increase resulted mainly from the continuing favorable development of business at Pharmaceuticals and Consumer Health – at Consumer Care especially due to the contributions from the acquired businesses – and from positive currency effects of about €70 million. Earnings were held back by an increase in research and development investment at Pharmaceuticals.

Pharmaceuticals

Key Data – Pharmaceuticals

Sales of our Pharmaceuticals segment rose by a substantial 11.7% (Fx & portfolio adj.) to €3,482 million in the third quarter of 2015. This is largely attributable to the good development of our recently launched products. Xarelto™, Eylea™, Stivarga™, Xofigo™ and Adempas™ continued to experience gratifying growth, posting combined sales of €1,082 million (Q3 2014: €750 million). The Pharmaceuticals business grew in all regions on a currency-adjusted basis.

Best-Selling Pharmaceuticals Products

Xarelto™ registered strong sales gains and thus further cemented its leading position among the non-vitamin K-dependent oral anticoagulants. This was attributable to substantial volume increases in Europe and Japan. Business with Xarelto™ also developed positively in the United States, where it is marketed by a subsidiary of Johnson & Johnson. Sales of our eye medicine Eylea™ also rose significantly, mainly as a result of very good business in Europe and Japan after marketing authorization was granted in further indications. Business with our cancer drug Stivarga™ improved against the weak prior-year quarter, due in part to positive development in the United States. The sales gains for our cancer drug Xofigo™ resulted mainly from good business development in Europe and the United States. Sales of Adempas™ to treat pulmonary hypertension amounted to €49 million (Q3 2014: €26 million) and reflected the proportionate recognition of the one-time payment resulting from the sGC collaboration with Merck & Co., United States.

Business with the hormone-releasing intrauterine devices of the Mirena™ product family – Mirena™ and Jaydess™ / Skyla™ – benefited especially from expanded volumes in the United States. We achieved substantial sales gains for our cancer drug Nexavar™, particularly in Germany and the United States. Sales increases for Adalat™ for the treatment of hypertension and coronary heart disease, Aspirin™ Cardio for secondary prevention of heart attacks and our oral diabetes treatment Glucobay™ resulted mainly from gains in China.

Sales of our blood-clotting drug Kogenate™ were level year on year as expected. Business with our multiple sclerosis drug Betaferon™ / Betaseron™ was down overall, due partly to increased competition in the United States and Europe. Sales of our YAZ™ / Yasmin™ / Yasminelle™ line of oral contraceptives receded slightly against the prior-year quarter as the result of lower demand in Europe. Despite positive development in the United States, sales of the erectile dysfunction treatment Levitra™ declined overall, particularly in China.

EBIT of the Pharmaceuticals segment advanced by a substantial 22.9% in the third quarter of 2015 to €859 million, including special charges of €7 million for efficiency improvement measures (Q3 2014: €0 million). EBIT before special items rose by 23.9% to €866 million. We raised EBITDA before special items by 18.6% to €1,139 million. The pleasing growth in earnings was mainly attributable to the very good business development – particularly for our recently launched products – and to positive currency effects of around €50 million, while higher investments in research and development had a diminishing effect as anticipated.

In the first nine months of 2015, we raised sales in our Pharmaceuticals segment by a robust 10.0% (Fx & portfolio adj.) to €10,174 million. This growth was driven especially by our recently launched products Xarelto™, Eylea™, Stivarga™, Xofigo™ and Adempas™, which generated combined sales of €3,031 million (9M 2014: €2,050 million). Sales moved ahead in all regions.

EBIT for the first nine months of 2015 advanced by 13.0% to €2,256 million after special charges of €105 million (9M 2014: special gains of €4 million). These mainly comprised €54 million from the revaluation of other receivables and €35 million in charges for efficiency improvement measures. EBIT before special items increased by 18.5% to €2,361 million. EBITDA before special items improved by 16.1% to €3,204 million after positive currency effects of about €150 million.

Consumer Health

Key Data – Consumer Health

Sales of the Consumer Health segment increased by 2.2% (Fx & portfolio adj.) in the third quarter of 2015 to €2,169 million, with all divisions contributing to this growth. The significant reported increase in sales in the Consumer Care Division resulted from the products added through the recent acquisitions.

Best-Selling Consumer Health Products

Sales of the Consumer Care Division improved by 1.7% (Fx & portfolio adj.) to €1,424 million. This increase was driven especially by gratifying gains in sales of our Bepanthen™ / Bepanthol™ line of skincare products and our antifungal Canesten™, particularly in the Emerging Markets. Business with our analgesic Aspirin™ was down, however, as gains in Latin America / Africa / Middle East only partly offset declines in Europe. Business with our analgesic Aleve™ declined against the strong prior-year quarter, due particularly to changes in sales phasing in the United States.

We posted sales of €366 million with the products acquired from Merck & Co., Inc., United States, in the third quarter of 2015.

Sales of the Animal Health Division rose by 1.8% (Fx & portfolio adj.) to €357 million. We registered encouraging growth for our Seresto™ flea and tick collar, primarily in the United States. However, sales of our Advantage™ family of flea, tick and worm control products declined slightly.

Sales of the Medical Care Division improved by 4.1% (Fx & portfolio adj.) to €388 million, mainly as a result of continuing positive development in the United States. Business with our MRI contrast agent Gadovist™ / Gadavist™ expanded substantially in all regions.

EBIT of the Consumer Health segment in the third quarter of 2015 was level year on year (–0.8%) at €360 million. Special charges amounted to €39 million (Q3 2014: special gains of €54 million). They included charges of €31 million for the integration of acquired businesses and €8 million for efficiency improvement measures. EBIT before special items increased by 29.1% to €399 million (Q3 2014: €309 million). EBITDA before special items improved by a substantial 31.9% to €538 million (Q3 2014: €408 million). All divisions supported this growth, with Consumer Care in particular making earnings contributions from the acquired businesses. Currency effects of around €20 million also had a positive impact.

Sales of our Consumer Health segment in the first nine months of 2015 increased by 4.3% (Fx & portfolio adj.) to €6,889 million. We registered higher sales in all divisions. Our Consumer Care business posted the strongest absolute growth on a currency- and portfolio-adjusted basis, particularly in Latin America and Europe.

EBIT for the first nine months of 2015 rose by 10.1% to €1,017 million, reflecting special charges of €231 million (9M 2014: special gains of €41 million). These mainly comprised integration costs of €175 million and efficiency improvement measures of €53 million. EBIT before special items improved by 41.3% to €1,248 million (9M 2014: €883 million). EBITDA before special items advanced by a substantial 43.4% to €1,704 million (9M 2014: €1,188 million) after positive currency effects of about €80 million.