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Edited Transcript of BAYN.DE earnings conference call or presentation 30-Jul-19 12:00pm GMT

Q2 2019 Bayer AG Earnings Call

Leverkusen Aug 1, 2019 (Thomson StreetEvents) -- Edited Transcript of Bayer AG earnings conference call or presentation Tuesday, July 30, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Heiko Schipper

Bayer Aktiengesellschaft - Head of Consumer Health Division & Member of Management Board

* Liam Condon

Bayer Aktiengesellschaft - President of Bayer Crop Science Division & Member of Management Board

* O. Maier

Bayer Aktiengesellschaft - Head of IR

* Stefan Oelrich

Bayer Aktiengesellschaft - Head of the Pharmaceuticals Division & Member of the Board of Management

* Werner Baumann

Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO

* Wolfgang U. Nickl

Bayer Aktiengesellschaft - CFO & Member of Management Board

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Conference Call Participants

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* Emmanuel Douglas Papadakis

Barclays Bank PLC, Research Division - MD & Head of European Pharmaceuticals Research

* Florent Cespedes

Societe Generale Cross Asset Research - Senior Equity Analyst

* Jeffrey John Zekauskas

JP Morgan Chase & Co, Research Division - Senior Analyst

* Jo Walton

Crédit Suisse AG, Research Division - MD

* Joseph W Lockey

Morgan Stanley, Research Division - Equity Analyst

* Keyur Parekh

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Michael Leuchten

UBS Investment Bank, Research Division - Co-Head of Pharmaceuticals Research of Equity Research

* Peter Verdult

Citigroup Inc, Research Division - Director

* Richard Vosser

JP Morgan Chase & Co, Research Division - Senior Analyst

* Vincent Stephen Andrews

Morgan Stanley, Research Division - MD

* Wimal Kapadia

Sanford C. Bernstein & Co., LLC., Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by. Welcome to Bayer's Investor and Analyst Conference Call on the Second Quarter 2019 Results. (Operator Instructions)

And I would now like to turn the conference over to Mr. Oliver Maier, Head of Investor Relations at Bayer. Please go ahead, sir.

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O. Maier, Bayer Aktiengesellschaft - Head of IR [2]

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Great. Thank you, Emma. Good afternoon, and thanks for joining us today. I'd like to welcome all of you to our second quarter and first half year conference call.

With me on the call today are Werner Baumann, our CEO; and Wolfgang Nickl, our CFO. The businesses are represented as usual by the responsible management Board members. For pharma, we have Stefan Oelrich. For Consumer Health, we have Heiko Schipper. And for Crop Science and Animal Health, we have Liam Condon.

Werner will begin today's call with an overview of the key developments and performance of the various divisions, and Wolfgang will then cover the financials for the second quarter and the outlook as well as our key focus areas for 2019 before we open the Q&A session. (Operator Instructions) I'd like to start the call today by drawing your attention to the cautionary language that is included in our safe harbor statement as well as in all the materials that we have distributed today.

With that, Werner, with no further ado, I hand it over to you.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [3]

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All right. So thanks, Oliver. And good afternoon to everybody, and welcome to our conference call also from my side.

I'd like to open with a discussion of our performance in quarter 2 2019, which, quite frankly, varied by segment. Pharma continued its profitable growth path, and Consumer Health returned both to top and bottom line growth. Crop Science was, of course, heavily impacted by bad weather in the Midwestern United States and weather overall. Our Animal Health business showed solid performance, especially in light of strong prior year quarter.

Overall, we are on track from an operational point of view. Sales grew by 21% to EUR 11.5 billion mainly driven by the acquisition. And EBITDA before special items increased by 25% to EUR 2.9 billion. Our core EPS reached EUR 1.62, up 6% year-over-year. Finally, our free cash flow reached EUR 751 million. The decline of about EUR 1.2 billion versus prior year was related to the timing of the acquisition and reflects the seasonality of the underlying business. Wolfgang will share some more light on this later on during his talk.

With these results as a backdrop, I would like to give you an update on our 2019 focus areas, and I want to begin with target delivery. Given our overall solid performance in the first half, we confirm our guidance for the full year 2019 even though achieving it is becoming increasingly ambitious.

In Crop Science, I can reaffirm -- confirm that the integration is well underway. We have secured business momentum and continuity in a very challenging quarter 2 environment characterized by really extreme weather conditions. Our pharma business had continued its sales and profit growth, and we have seen several positive pipeline developments.

Consumer Health has delivered good sales and earnings growth, demonstrating that Heiko and his team are clearly making progress in turning around our business. At the end of 2018 November, we announced a comprehensive set of efficiency and structural measures from which we expect annual contributions of about EUR 2.6 billion gross as of 2022, including around EUR 1 billion from Crop Science. We have successfully finished the detailing phase and are on track with the overall implementation.

Finally, I'm pleased that we could sign the agreement to sell Coppertone and Dr. Scholl's in May and July, respectively, and our goal is to sign the remaining 2 transactions by the end of this year. The divestiture process for Currenta is, despite small delay, the most advanced. For the exit of Animal Health, our primary focus is on a sale while we continue to consider all value-maximizing options going forward. The separation, carve-out and preparation work is ongoing, and we see strong interest from [a number of] potential acquirers.

Let me now come to the performance of Crop Science. Overall, we reported a significant year-over-year increase in both reported sales and EBITDA driven by the acquisition. Currency- and portfolio-adjusted sales were down by 3%, cycling over a prior year quarter which included Monsanto legacy sales from June 7 onwards. The shortfall was caused by severe adverse weather conditions in the U.S. market. Extreme weather in North America with heavy spring rains and flooding in the Midwestern United States resulted in missed herbicide applications ahead of planting and reduced overall acres planted for both corn and soybeans. Looking at several external sources, we expect corn acres to be down by about 2% to 3% versus 2018 and corn acres to decline between 7% and 10% in comparison to last year.

Soybean sales were, in addition, impacted by continued competitive dynamics in the U.S. and trade conflicts, which affected both price and also volume. When comparing the quarter on a pro forma basis with 2018, the 10% decline was driven by the same external factors. On a positive note, Climate View (sic) [Climate FieldView] is on track for 90 million paid acres with good uptake in the Seed Advisor trials, and insecticide sales rose sharply in the Europe, Middle East, Africa and Latin America regions as a result of higher prices and volumes.

The latter also benefited from volume increases in herbicides and fungicides.

From an earnings perspective, Crop Science increased its EBITDA before special items by 67% to EUR 1.1 billion driven by the acquired business. Regarding the synergies, we remain well on track to deliver around 25% for 2019 of the total targeted EUR 870 million of cost synergies by 2022.

Now we have included this next chart to give you a flavor and a visual of how heavily the U.S. crop planting in the U.S. was impacted by the severe rains in spring 2019. The picture on the right shows flooded fields, and the chart on the left demonstrates that precipitation in May 2019 in many U.S. states was well above average or record wettest since 1895. The higher the number, the wetter the region in May 2019, meaning the 125 that you see in some of the states indicates that May 2019 was the wettest period for that region in the last 125 years, so since 1895.

Lastly, let me briefly update you on the glyphosate litigation, a topic that, of course, stays top of mind for many of us. First of all, we, of course, remain convinced of the safety profile of glyphosate. Overall, as of July 11, there are now several lawsuits -- there are now served lawsuits from 18,400 plaintiffs. While this is an increase since our last reporting, it is by no means a reflection of the merits of the litigation, and despite this, we are making progress on many fronts.

First, in the Hardeman case, the court reduced the overall damage award from USD 80 million to USD 25 million and -- in the post-trial motion, and we now have initiated the appeals process. Second, in the Pilliod case, the Superior Court of the State of California for the County of Alameda strongly reduced the overall damage award from more than USD 2 billion to around USD 87 million in the post-trial motion. Also in this case, we plan to file an appeal. Meanwhile, the appeals process for the Johnson case continues.

In parallel, with the continued litigation of further cases, we are constructively engaging in the mediation process and welcome the appointment of Ken Feinberg as mediator. In general, we would, of course, only consider a settlement if financially reasonable and if we can achieve finality of the overall litigation.

I do hope that you understand that I cannot be more specific with regard to the mediation process as we as an involved party needs to maintain confidentiality about the details of our discussions. We believe that we will ultimately prevail in this litigation on the strength of sound science and remain committed to rigorously defending ourselves for the benefit of our customers, employees and our shareholders while, of course, at the same time, actively and constructively engaging in the mediation process.

Moving on to pharma. Sales of Pharmaceuticals rose by 4% to EUR 4.4 billion in quarter 2 2019. Our best-selling products Xarelto and Eylea have continued their strong performance. Also, our business in China remained robust, which compensated for weaker sales in the U.S. Xarelto, our oral anticoagulant, grew by 12% driven by higher volumes in China, Russia and France. Our licensing revenues recognized as sales in the U.S. decreased year-on-year. Eylea also posted considerable growth of 11% mainly as a result of volume increases across all regions.

The business developed particularly well in Europe, which is primarily in the U.K., and in Canada. Going forward, we expect both products to continue growing. This year, we continue to expect for Xarelto an increase in the low-teens percentage range. Given the strong performance of Eylea in the first half 2019, we now upgrade our guidance and expect also an increase in the low-teens percentage range.

We also saw some encouraging product and other news in the quarter. Given strong efficacy and safety data for darolutamide, the FDA accepted our new drug application and granted priority review. As a reminder, darolutamide significantly extends metastasis-free survival in patients with nonmetastatic castration-resistant prostate cancer while, at the same time, demonstrating a very favorable safety profile.

For larotrectinib, a new analysis from clinical trials in patients with TRK fusion cancer and brain metastasis or primary tumors of the central nervous system confirm the strong activity of the product in both adults and children. In TRK fusion cancer patients with intracranial disease, the compound achieved responses and durable disease control across age and tumor histology. Just a few days ago, the Committee for Medicinal Products for Human Use of the European Agency has recommended larotrectinib for marketing authorization in the European Union.

On the investment side, Leaps by Bayer signed an up to USD 250 million investment in stem cell-based cancer therapies through Century Therapeutics. Century's foundational technology is built on induced pluripotent stem cells that has unlimited self-renewing capacity. This enables multiple rounds of cellular engineering to produce master cell banks of modified cells that can be expanded and differentiated in immune effector cells to supply vast amounts of allogeneic homogeneous immune effector cells -- therapeutic products. This platform differentiates Century from competitors that are developing cell therapies made from nonrenewable donor-derived cells.

Finally, due to the robust volume growth, lower cost of goods sold and reduced R&D expenses, EBITDA before special items was up 10% to EUR 1.5 billion. Last year's R&D spend was relatively high driven by efforts to accelerate products in our late-stage pipeline such as finerenone.

Let's move to Consumer Health next to close out the divisional updates. The performance of Consumer Health in quarter 2 was characterized by return to sales and profit growth. We have seen a positive development in EMEA, Asia Pacific and Latin America. Particularly in the later (sic) [latter], their sales grew by 14%. North America sales are in line with our expectations, and the region is deemed in early stages of recovery. We are optimistic to see a gradual improvement over the remainder of this year.

EBITDA before special items increased by 5% driven by positive pricing and the successful implementation of the announced performance improvement measures. We anticipate a continuation of the solid Q2 performance in the coming quarters and confirm our full year guidance.

With that, let me now hand it over to Wolfgang.

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Wolfgang U. Nickl, Bayer Aktiengesellschaft - CFO & Member of Management Board [4]

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Thanks much, Werner. Ladies and gentlemen, also a very warm welcome from this end. I will now walk you through some more financial detail for Q2, and afterwards, I will discuss our outlook for the full year.

Reported sales for Q2 increased by 21% to EUR 11.5 billion, including a substantial contribution from our newly acquired business. The underlying overall business performance was positive when adjusting for currency and portfolio effect, which is an organic sales growth at the group level of about 1%. EBITDA before special items for the group came in at EUR 2.9 billion, up 25% year-on-year, also including a meaningful contribution from the acquired business. Our EBITDA margin increased by 70 basis points to 25.5%.

Foreign exchange effect had a positive year-on-year impact on sales of EUR 113 million and a negative year-on-year impact on EBITDA of EUR 59 million. The negative impact on earnings result from the year-over-year hedging balance. In the second quarter of last year, we had a gain of about EUR 20 million from hedges against a loss of approximately EUR 40 million in this year's Q2.

Core earnings per share in the second quarter were up 6% year-on-year to EUR 1.62. Significantly increased interest expenses related to the debt financing of the acquisition and the share count which increased from 916 million to 982 million year-on-year impacted growth here. The increased share count alone had a negative effect of EUR 0.12 per share.

Finally, compared to prior year, free cash flow declined from EUR 1.9 billion to EUR 751 million. Last year, free cash flow was extraordinarily high due to the timing of the acquisition at the beginning of June, and it also reflects the seasonality of the acquired business. This year shows a more normalized level, and we expect the majority of the cash inflow in the second half of the year. In other words, we confirm our free cash flow guidance of EUR 3 billion to EUR 4 billion for the full year.

Last year's acquisition, our portfolio measures and the comprehensive Bayer 2022 program came with a number of extraordinary effects, which had a significant impact on our reported earnings. In order to give you full transparency, we have again added a bridge in our presentation to show you how our core EPS of EUR 1.62 translates back into the reported EPS of EUR 0.41. The first column describing changes shows minus EUR 1.10 per share, which summarizes acquisition-related amortization of intangible assets as well as impairment losses in connection with the divestment of our Dr. Scholl's foot care portfolio. The latter accounted for around minus EUR 0.43.

On the special items side, we had a negative impact of EUR 0.45. The 2 main adjustments are related to integration cost of the acquisition, which accounted for about minus EUR 0.11; and the Bayer 2022 restructuring cost accounting for about minus EUR 0.25. The negative impact on special items and the financial result of EUR 0.06 is mainly driven by the changes in the market value of the Covestro shares we are holding. And finally, last column shows the offsetting tax effect on the sum of the items I just explained.

Let's now move on to our balance sheet. Our net financial debt of EUR 38.8 billion is around EUR 2 billion higher than at the end of Q1. This increase is related to our dividend payment of about EUR 2.6 billion in April. During Q2, we repaid a EUR 100 million Japanese yen bond. For the remainder of 2019, we have 2 bond maturities left: EUR 400 million in July and EUR 1.8 billion in October, both U.S. dollar-denominated. We intend to redeem these bonds by a combination of cash on hand and future free cash flow generation. The July bond actually was redeemed a few days ago after quarter-end close.

We continue to expect our net financial debt to be around EUR 36 billion by the end of December of this year. This estimate is based on constant 2018 currency rate and does not take any divestment proceeds from Coppertone and Dr. Scholl's in account. Please also keep in mind that at the end of Q2, almost 60% of our financial debt was denominated in U.S. dollars. The impact of exchange rate changes to our net financial debt is quite significant as every percentage point appreciation of the U.S. dollar against the euro would increase our net financial debt by about EUR 200 million and vice versa.

Before we come to the guidance, let me share some business drivers for the second half of the year. For Crop Science, we expect strong market growth in Latin America and Asia Pacific for the second half of the year. Furthermore, we expect the next season in North America to be strong with early deliveries starting in Q4. This year's production of both corn and soybean is expected to be down in the U.S. driven by lower overall planted acres and lower-than-average yields. This is driving commodity prices up and will likely lead to more acres planted in all of the Americas going forward.

Our growth in Asia Pacific is expected to be driven mostly by Crop Protection volumes, particularly in China and India. Overall, we are forecasting currency- and portfolio-adjusted sales growth in Crop Science in the mid-single-digit percentage range for the second half. Moreover, we are well on track with regard to the integration of the acquired business, thus confirming our guidance of expected cost savings of more than EUR 200 million for 2019.

For Pharmaceuticals, we expect a continuation of the very good performance in the first half in the second half of the year. The main drivers remain the strong development of both Xarelto and Eylea as well as our growth in our China business.

Consumer Health is fully on track with regard to its turnaround and should see further top and bottom line improvement in the months to follow. For the year, we see top line growth of at least 1 percentage point as well as margin expansion by 1 percentage point when compared with the last year. Finally, we are confident with regard to our Bayer 2022 synergy and efficiency programs and expect gross savings of at least EUR 500 million across all programs to strengthen the bottom line in 2019.

With this information as a backdrop, let's move on and look at our guidance for the year. Following a strong first quarter, we have seen a second quarter that was heavily impacted by weather conditions in the United States in our Crop Science segment, as outlined by Werner. All other segments performed very well against the plans. Therefore, even though we have become increasingly ambitious, we are confirming our group guidance for the full fiscal year, supported by the business drivers we have just discussed.

I would also like to remind you that our group guidance is based on constant currencies and a going concern. Specifically, this means that the effects of the outstanding portfolio measures are not yet included. Our assumption is that we have to account for Animal Health and Currenta as discontinued operations once we sign these deals.

Against this backdrop, we expect Bayer Group sales still of around EUR 46 billion, an increase of around 16% year-on-year, of which about 12% attributable to portfolio effects. We anticipate EBITDA to increase by almost 30% to around EUR 12.2 billion while core earnings per share are estimated to come in at around EUR 6.80, up 14% on the prior year figures, reflecting higher interest payments and an increased share count.

The core financial result for the year is included as an expense of approximately EUR 1.8 billion, and for our core tax rate, we continue to model about 23%. Finally, we expect free cash flow to be in the range of between EUR 3 billion and EUR 4 billion. The decline compared to 2018 is a result of expected restructuring-related cash-outs as well as the historically negative free cash flow in the first half of the year from the acquired business.

Before we start the Q&A, let me wrap up, summarizing our focused areas for the year. First and foremost, we are committed to deliver on our operational targets as reiterated today given they have become increasingly ambitious. Second, we are focused on the smooth integration of the acquired business in order to shape the future of agriculture. We look forward to seeing many of you at our inaugural crop science technology showcase later this week in St. Louis when you can see this firsthand. Of course, we will continue to vigorously defend glyphosate while also constructively engaging in mediation talks.

Third, we expect to further strengthen our internal pipeline in Pharmaceuticals and intensify the external sourcing of innovation. Fourth, we strive for improvement of the operational performance of our Consumer Health business as discussed. Fifth, we are delivering against our targets for the Bayer 2022 program, both related to synergy realization and efficiency improvements. This is foundational for delivering on the 2019 and 2022 targets, which we outlined at the Capital Markets Day last December. And lastly, we are making very good progress on executing all announced portfolio measures to further shapen our business focus -- sharpen our business focus.

With that, I will hand it back over to Oliver to kick off the Q&A session.

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O. Maier, Bayer Aktiengesellschaft - Head of IR [5]

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Yes. Great. Thank you very much, Wolfgang. Thank you very much, Werner, for your presentation and for the comments.

Emma, I think we are now ready to open up the lines for Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) First question comes from the line of the Mr. Zekauskas.

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Jeffrey John Zekauskas, JP Morgan Chase & Co, Research Division - Senior Analyst [2]

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Jeff Zekauskas from JPMorgan. I was hoping you could compare the performance of the soybean seed business in the United States and in South America. How did those changes compare for the second quarter and for the first half?

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [3]

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Okay.

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Liam Condon, Bayer Aktiengesellschaft - President of Bayer Crop Science Division & Member of Management Board [4]

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Okay. Thanks a lot, Jeff, for the questions. So soybean decline in the U.S. is very significant as you've seen from the reported numbers. This is primarily, of course, due to the weather situation, less acreage, but there's also a price effect in here related to a very intense competition simply due to the overall situation. The demand for soybeans is relatively low given the U.S.-China trade conflict.

On the LatAm side, this is, of course, a very small part of the season now for us for soybeans. Here, the main effect -- so there was a decline in soybeans. Here, the main effect was purely related to an accounting issue. This was related to IFRS. And we had a gain in Q3 2018 because according to IFRS, we book when we have the sales to distributors as opposed to when they're with customers, and we had a corresponding hit in the subsequent quarters when you do the like-for-like comparison. So that was more a pure technicality. Going forward, we would, of course, expect that there will be a significant increase in LatAm in soybeans from an overall market point of view and, of course, from our own sales point of view.

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Jeffrey John Zekauskas, JP Morgan Chase & Co, Research Division - Senior Analyst [5]

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In corn seeds, are farmers trading up where they want higher-quality corn seed and paying more? Or in general, in the United States, are they trading down and they want a simpler, lower-cost solution?

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Liam Condon, Bayer Aktiengesellschaft - President of Bayer Crop Science Division & Member of Management Board [6]

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Well, the biggest issue for us right now was simply with the pretty disastrous weather situation. For a long time, we didn't know how much was actually going to be planted, and farmers weren't sure how much they were going to plant and were looking for shorter maturity corn. And I think in this type of situation, many farmers are trying to hedge a bit. Some are rather trading down as opposed to trading up. This is particularly relevant in areas where there's corn rootworm pressure. Where there was less corn rootworm pressure, they would then trade down to -- in our portfolio. And that's more in areas -- I would say around the fringes with corn rootworm pressure.

But so far this year, there was rather some degree of trading down as opposed to trading up given the overall market situation. Going forward, looking at where commodity prices are going, I would personally expect that would rather be a tendency to be trading up in the future, but that, we'll see in the future quarters.

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Operator [7]

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The next question comes from Mr. Kapadia.

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Wimal Kapadia, Sanford C. Bernstein & Co., LLC., Research Division - Research Analyst [8]

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Wimal Kapadia from Bernstein. Just a couple on Xarelto actually. So first, clearly, the U.S. is suffering, so I'd be interested to hear more about the role CAD and PAD indications are having on the growth trajectory outside the U.S.

And then secondly, I know it's several years away, but it's a question I get from investors quite often. Is -- and I'd love to hear your thoughts on what sort of tail revenues Bayer expects for Xarelto post the patent expiry. And then tied to that, could you give us any comments on the anti-Factor XIa and Factor XI itself in terms of being able to maintain some level of franchise for the anticoagulant franchise post the Xarelto patent loss?

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [9]

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Stefan?

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Stefan Oelrich, Bayer Aktiengesellschaft - Head of the Pharmaceuticals Division & Member of the Board of Management [10]

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Okay. Wimal, thanks for your questions. So on CAD, good question. The uptake is -- as we had already guided before, continues to be slow, but that is expected, which is linked to the fact that we're really breaking ground here and it's a paradigm shift in the treatment of CAD/PAD for Xarelto. So we continue to be positive about this indication as we move forward, putting significant efforts behind it to educate physicians. So this is going according to plan for now even though it still remains small for the time being. So I think we will have some better view on that towards the end of the year and early next year.

The tail revenue on Xarelto, that's not something we would disclose at this point in time. So I would not have a number here readily available for you.

And on Factor XI, this is indeed something that we're currently in the process of discussing as we haven't fully made up our mind about the development profile of this. We're obviously looking at some of the indications where currently other anticoagulants like our own are indicated, but we're also looking at extending the indication spectrum potentially here to areas where Factor Xa inhibition is not warranted for use. So that gives you a little bit of a picture. We have both an injectable and an oral in our early-stage portfolio here, which would allow us to cover a broad range of the spectrum, but it's a little bit too early to give you more color on this because we haven't fully decided this yet.

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Operator [11]

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Next question comes from the line of Mr. Andrews.

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Vincent Stephen Andrews, Morgan Stanley, Research Division - MD [12]

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Vincent Andrews from Morgan Stanley. Liam, if I could just ask you about seed production. Yields are probably going to be lower than expected this year. It sounds like there's going to be more demand in Latin America and then maybe a pull forward of demand from North America in the fourth quarter. What do you think -- your ability is to serve that demand with existing inventory plus whatever is produced this year, are you at all worried there's going to be a bit of a shortfall in seed production out of the U.S. that might force you to do some winter nursery in South America?

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Liam Condon, Bayer Aktiengesellschaft - President of Bayer Crop Science Division & Member of Management Board [13]

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Yes. Thanks, Vincent. So hopefully, there will be an increase in demand and an early start to the season in Q4 already for corn in North America, and then we are expecting a strong season in LatAm. But from a seed production point of view, we feel pretty good about where we are right now. So we, of course, have a highly distributed field production -- or seed production setup, so we weren't as affected, for example, as the overall market situation is now in the U.S. And given our forecast that we are expecting growth going forward, we feel we will be able to deliver and meet the demand that's there. So we feel good about that. We don't see that as any kind of a significant risk on our side.

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Vincent Stephen Andrews, Morgan Stanley, Research Division - MD [14]

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Okay. And then just as a follow-up on soybean. Can you talk about the Xtend penetration this year? Did you reach your targets? And is your price per acre still at your target? Or was that competed away a bit?

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Liam Condon, Bayer Aktiengesellschaft - President of Bayer Crop Science Division & Member of Management Board [15]

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Yes. So Xtend penetration was strong and as strong as we expected. So we've moved up to -- or expecting to be up to 60 million acres for corn and soybeans. So basically, 50 million in beans and 10 million -- sorry, for soybeans and cotton, so basically, 50 million acres for soybeans and approximately 10 million for cotton. So that's -- particularly given the overall market situation, that's been a very strong penetration.

From pricing point of view, of course, given the overall weakness in the market, that hasn't, let's say, been as positive as the overall market penetration itself. So we have dropped a bit on the price side.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [16]

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Okay. Thanks, Liam.

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Operator [17]

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The next question comes from the line of Mr. Papadakis.

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Emmanuel Douglas Papadakis, Barclays Bank PLC, Research Division - MD & Head of European Pharmaceuticals Research [18]

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It's Emmanuel Papadakis from Barclays. Maybe a couple on pharma. Eylea, obviously running a bit ahead of expectations for 2019, but maybe give us some thoughts on evolution beyond that given competitor development and likely arrivals.

And then Vitrakvi, you've neglected to tell us anything about how the launch is going. Any color on patient numbers, penetration, the diagnostic, how the uptake of that is going would be very helpful.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [19]

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Okay.

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Stefan Oelrich, Bayer Aktiengesellschaft - Head of the Pharmaceuticals Division & Member of the Board of Management [20]

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Yes. Thanks, Emmanuel. So Eylea, yes, we're very pleased. I mean you guys were challenging me on being too pessimistic in the beginning of the year, so I guess you were right. And so we're upping this a little bit. We still remain cautious because the market conditions are such that we expect in certain key markets potential pressure on price and also volumes by using some substitutes where -- that we're fighting in some areas where we have some legal decisions going against us, which are not in line with our regulatory status as we believe. So those are still there, but they haven't materialized yet. So we remain more optimistic for the second half of the year.

And with regards to Vitrakvi, we're progressing fine. This is going according to our plans. We're not disclosing the number of patients that we have on product for the time being, but the uptake is exactly according -- going according to plan. And we're happy to -- I think this is new news. Today, Canada is actually approving Vitrakvi for use, so that should give us some additional room. And then you've heard the positive CHMP decision here on Vitrakvi. So we think that will compound further a positive situation plus very nice data we've got in other indications that, again, support our claim that this is really a pan-tumor treatment for people that are affected by NTRK fusion anomaly. So all in all, it's on track, in line with expectations, and we're getting very positive feedback across the board from all stakeholders. So we're quite pleased.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [21]

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Okay. Thanks, Stefan.

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Operator [22]

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Next question comes from Mr. Vosser.

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Richard Vosser, JP Morgan Chase & Co, Research Division - Senior Analyst [23]

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It's Richard Vosser here from JPMorgan. Just a question on the synergies. I think you said that the synergy number would be EUR 500 million for this year. I think back at the Capital Markets Day, you were targeting EUR 300 million. So could you just confirm that you have brought forward an extra EUR 200 million of savings into this year and perhaps confirm that the overall synergy target should still remain at EUR 2.6 billion by 2022?

And then a second question just on Crop Science. And I think you obviously pointed to mid-single-digit growth in the second half. Obviously, you've had a decline in the first half, which looks like sales growth may be 1% for the end of year. Obviously, a little bit lighter on the sales for Crop Science. Are you planning on trying to make those sales up at the group level in other areas? And maybe give us some idea of how you're making that up.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [24]

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Okay. Wolfgang is taking this question.

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Wolfgang U. Nickl, Bayer Aktiengesellschaft - CFO & Member of Management Board [25]

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Richard, thanks for your question. On the synergies, yes, the EUR 2.6 billion is intact. That remains our target. As you recall, that includes the contribution from the post-merger integration but also included our growth in terms of platforms in Consumer Health and in pharma. Again, this target -- like I mentioned in my prepared remarks, for the year, we are delivering more than EUR 500 million altogether, so -- which is above 20%. What we said -- we didn't give a guidance for 2019, but we gave a guidance that we would achieve about 30% of that number in 2020. So you can imagine as we ramp through the year, we will likely come in higher for next year than we have guided. So this is a pretty positive development in my mind. Just for everybody's clarity, those EUR 500 million include more than EUR 200 million from the cost synergy targets from the post-merger integration. I think we outlined that also at the call.

I'll take a crack at the second part of your question. Yes, we're not a one-business business, and Liam has to achieve some pretty significant growth rates in the second half of the year, which we have a plan on delivering on but it's not completely in our hand. But we have the other 2 businesses doing very well, as we outlined. What I just said, we are doing well on cost. And we are obviously managing also on the ongoing run rate cost to counter potential weaker markets, and that's what puts us in a position that we could confirm the EUR 6.80 EPS guidance for the year. But of course, we had to outline that it's a bit more ambitious because there's a big growth rate in Crop Science in the second half. I hope this answers your questions, Richard.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [26]

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Thanks, Wolfgang.

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Operator [27]

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Next question comes from the line of Mr. Leuchten.

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Michael Leuchten, UBS Investment Bank, Research Division - Co-Head of Pharmaceuticals Research of Equity Research [28]

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It's Michael Leuchten at UBS. One question for Liam and one for pharma, please. Liam, the margin in Q2 above 22% was pretty respectable despite all the headwinds. I think in the past, you've demonstrated that the division really is able to deliver a good margin through the cycle. This year, has been there anything that you've been doing beyond the normal course of business to deliver this? And has it allowed you to do anything quicker than maybe you would have done thinking about 2020 and '21?

And the question for pharma is on China. At the Capital Markets Day, you outlined how you see that region going to EUR 3 billion. Now that we're halfway through this year, with the tenders fighting or not fighting in China, is that region delivering according to plan? Or is it actually going better than you had anticipated?

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [29]

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Okay. So Liam first and then Stefan. Thanks, Michael, for the question.

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Liam Condon, Bayer Aktiengesellschaft - President of Bayer Crop Science Division & Member of Management Board [30]

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Yes. Thanks, Michael. So as you say, the margin has been holding up very well given the overall weakness in the market. This is actually also due to very significant cost discipline in our organization. I think we've been going through a couple of weak years, and we've gotten the organization to a point where it's pretty agile and able to deal more flexibly with weaker market situations. And so we have been able, I think, to compensate on the cost side.

And of course, as we look at our synergies now, they're starting to kick in. Wolfgang already outlined that we're targeting for this year for the full year over EUR 200 million in cumulative synergies going forward. And so that's starting to benefit us as well. So I think that's something that you'll continue to see going forward, a very strong cost discipline in the organization that will help, at least on the bottom line side, to balance out any market headwinds that we're facing as far as possible.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [31]

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Okay. Thanks, Liam. Stefan?

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Stefan Oelrich, Bayer Aktiengesellschaft - Head of the Pharmaceuticals Division & Member of the Board of Management [32]

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Yes. Michael, so yes, we're very pleased with our China performance. And it's -- compared to what we presented last year at the Capital Markets Day, we're even slightly ahead despite of our already very strong growth. So this quarter, again, 25% growth, which is really, really strong. Now as we go about the guidance that we gave at the Capital Markets Day on -- where we said we target EUR 3 billion and more in China, that is still within reach.

I think the market conditions, however, are slightly changing as we move forward with some uncertainty for China with the volume-based purchasing exercise now in the 4+7 metropolitan areas, which is about, I think, 40% of national. We'll have to see how quickly this continues. The first batch has been released, of products. We were not concerned with that first round. We expect that this will not continue to go on without our products being part of this. So Glucobay could well be -- as we had already announced, you could be concerned. But for now, overall target that we stipulated last year for China, I think, is still in play.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [33]

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Thanks, Stefan.

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Operator [34]

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Next question comes from the line of Mr. Cespedes.

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Florent Cespedes, Societe Generale Cross Asset Research - Senior Equity Analyst [35]

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Florent Cespedes from Societe Generale. Two quick ones on pharma for Stefan. First, on Kogenate, this quarter was a bit better than usual when some competitors are suffering. Could you maybe give us a little bit more color on the performance of this product this quarter?

And my second question is on Eylea. Again, pretty strong performance with this product. But do you intend to strengthen your sales force organization in Europe ahead of the launch of some competitors?

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [36]

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Okay. Stefan?

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Stefan Oelrich, Bayer Aktiengesellschaft - Head of the Pharmaceuticals Division & Member of the Board of Management [37]

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Florent, so on Kogenate, yes, we're equally pleased because what we're seeing is, compared to market, we seem to be much less affected for now by the Hemlibra advance in the market. So that comes to show the strong ties we have with our patients and the degree of satisfaction that they have with our products. We believe that Jivi is helping here also. We see a good uptake with Jivi, which is hopefully going to develop into a really strong backbone of our hemophilia franchise. So, so far, so good for this year also when I look at this market overall.

And then on Eylea, that's a good question you're asking. We feel actually that we're pretty well resourced here in terms of our promotional capabilities. And the success of Eylea has been pretty much riding on the product itself, less so than on its promotion. This is a product which has an unmatched profile, scientific profile in the marketplace, and we believe that this continues to be the case as some of these new products are entering the market. We have some very, very strong data that we intend to continue to educate our prescribers about, which doesn't have to hide at all, I would say to the contrary, behind what we're seeing at least in the clinical trials from some of the incoming products. So we feel quite strong. I would say that increased promotion may even benefit market leaders when the market expands. So I hope that answers your question.

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Operator [38]

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Next question comes from the line of Mr. Lockey.

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Joseph W Lockey, Morgan Stanley, Research Division - Equity Analyst [39]

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Joe Lockey from Morgan Stanley. Stefan, back to the Factor XI antibody. As far as we can see, the Phase 2 FOXTROT trial completed in January but has not yet being reported. So do you definitely intend to progress that asset into Phase III? And if so, have you entered into any partnership discussions? Or do you intend to develop it yourself and perhaps take on the U.S. opportunity alone?

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [40]

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Stefan?

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Stefan Oelrich, Bayer Aktiengesellschaft - Head of the Pharmaceuticals Division & Member of the Board of Management [41]

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So Joe, as I said before, it's a little early to go about this. So all those points are still in play. We're considering options on both partnering and as well as the -- how we're going to go about our Phase III. So this is something that I hope to give you more clarity, probably somewhen next year around this, and then you'll have the detail you need.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [42]

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Thanks, Stefan.

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Operator [43]

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Next question comes from the line of Mr. Verdult.

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Peter Verdult, Citigroup Inc, Research Division - Director [44]

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Pete Verdult, Citi. Apologies for any background noise. Two questions. Firstly, Wolfgang, thanks for your comment about levers you have to maintain guidance. But on crop specifically, maybe Liam, could you talk about what you're expecting in H2 to happen to be able to meet -- or maintain the revenue guidance you've given of 4%? Just trying to understand better what needs to happen for that target to be achieved.

Secondly, just, Werner, we've seen a number of transactions from your pharma peers with respect to their consumer businesses. If your Fit to Win strategy plays out as you expect and you get Consumer back on track for 2020, are you and the Board open to explore options for Consumer to create value given current the share price?

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [45]

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Okay. Thanks, Peter. So first on the revenue guidance.

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Liam Condon, Bayer Aktiengesellschaft - President of Bayer Crop Science Division & Member of Management Board [46]

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Yes. I'll start with the crop. So thanks a lot, Pete, for the question. So maybe I'll give you a bit of color around what we see as growth drivers for the second half of the year for Crop Science. And I think it's really important to flag upfront that, of course, the second half is literally a new game. And the first half of the year is dominated by the Northern Hemisphere, North America and Europe, and the second half is dominated by LatAm and by APAC. So it is really a completely different game. I think that's just important to bear in mind.

We see the primary growth coming clearly from Latin America. And if you think about factors that were negative in the Northern Hemisphere, it was primarily once-in-125-year bad weather event and U.S.-China trade conflict. For LatAm, we're not expecting this -- let's say, this once-in-a-lifetime weather event. And Brazil and Argentina are probably beneficiaries of the U.S.-China trade conflict. So we see strong growth potential going forward. We were forecasting an increase in acreage both for soy and for corn going forward in LatAm and both in Brazil and in Argentina.

So we're expecting a higher Intacta penetration, which will, of course, benefit us. We also have the launch of a new fungicide, a 3-way fungicide, Fox Xpro, which we believe is going to be a blockbuster. That will really take off in the market this year. So kind of with that combination, with Crop Protection, with the inventories at completely normal level, there's great opportunity for growth given that we expect simply very robust organic market growth in LatAm.

In APAC, we expect growth to be driven by India and China. If you recall, last year, India had a relatively low growth. So we're trading off -- we're kind of basing against -- we've got a low base here to trade off against. So we are expecting good growth out of those 2 major countries where we have a very strong Crop Protection portfolio. That will be another big growth driver for us.

And the third growth driver, and this is the one that is lesser than the first 2, we're sure there will be growth, but it's a question of how much. It will be a question in North America of how much do we regain of what we lost from the first half. So there will be some phasing we could expect of fungicides and herbicides, for example, into Q3. How much now depends on weather situation and depending on how robust demand is for corn, which we're expecting, and we believe that the market is seriously underestimating what the negative yield impact is going to be in the U.S. from not only lower acreage but also a lower yield from that lower acreage given the quality of crop that's been planted. We expect corn prices to be increasing, and that will probably drive an early demand pattern for corn seed already in Q4 North America.

So that's an additional possible growth driver for us, LatAm and APAC. I think I'm fairly certain North America is the one that depends then on what's happening in the market. So that's on the sales side. And then on the bottom line side, of course, we've got our cost discipline and our mix of cost synergies kicking in to help us protect and drive the bottom line as well going forward.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [47]

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Okay. Thanks, Liam. So Peter, let me frame the answer to your question with a few comments before I hand it over to Heiko who can talk a little bit more and give -- shed some more light on how Fit To Win is going.

I spent almost 2 days with Heiko and his team about 2 weeks ago and was really deeply impressed on how far we've come with not only Fit To Win but also the overall organization and how strongly the team has grown together. So for me, there's no question that Heiko and his team are up to the challenge. You see that we've been actually coming up nicely also in terms of performance also if you look at our peers, and we see good, strong underlying momentum. We see the cost base that has been reset. And so there are no second thoughts at all, yes, for our Consumer Health business, actually to the contrary.

And with that, let me hand it over to Heiko.

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Heiko Schipper, Bayer Aktiengesellschaft - Head of Consumer Health Division & Member of Management Board [48]

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Okay. Well, thank you, Werner, and thanks for the comments. I can just give a little bit of color on the quarter. Obviously, we should not call this a turnaround yet with one positive quarter after, clearly, not a very impressive performance before. So I -- we need a few more of these, but definitely, this was a good start. And maybe more so than just some of the growth numbers or the bottom line, I think more importantly is what we presented to you in December during the Capital Markets Day, is a rather comprehensive list of activities that needs to be done to turn around this business. So you've seen the closure of personal portfolio. I mean frankly, we've moved pretty fast. We've been able to sell Coppertone, Scholl. We have closed Rx Derm by now. So before the end of the year, we will have kind of reachieved the kind of focus around the businesses that we think that we can really win.

If you look on the operational side also, maybe first on the top line, good developments particularly in Q2 with EMEA getting back to healthy growth, our supply situation improving, but also we had good growth across many of the geographies there. LatAm, very strong double digit. And also, APAC retaining growth. North America, still not where we want them to be. They are still negative. But the gap is closing, and sort of brand by brand, we are fixing that. And also there, we just see good progress everywhere, so I think that's what's encouraging.

Werner commented on the resetting of the cost base. I think this is also always something where you can have a high sense of urgency. This is something that is directly under your control. And where things like innovation sometimes take a little bit longer, cost is something that you can act on much faster. And if we basically compare the first half of last year versus this year, we are basically operating with an organization that is more than 1,000 people less and an SG&A base that is 200 to 300 basis points lower. So that's really giving us, the -- I would say, the fuel to reinvest in growth because that is -- remains our best lever of performance. But we just have to make money for that available, and at the same time, of course, also improving our margins so that we are able to deliver not only top but also higher bottom line.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [49]

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Thanks, Heiko.

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Operator [50]

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Next question comes from the line of Ms. Walton.

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Jo Walton, Crédit Suisse AG, Research Division - MD [51]

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Jo Walton from Crédit Suisse. Two questions, please. Firstly, on the pharma side, we've now all seen the data on darolutamide. I wonder if you could comment as to whether you feel that the characteristics of the drug should mean that it would have a faster ramp-up than the other relatively new drug in the category leader, so whether that would be a good early trajectory for us to look for.

And then on the ag side, I wonder, Liam, the amazingly tough conditions, has that given you any longer-term competitive advantage? Have any of the smaller perhaps more troublesome players been shaken out by this? Or has everybody weathered it and effectively, you're all coming out essentially the same at the other end?

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [52]

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So Stefan and then Liam.

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Stefan Oelrich, Bayer Aktiengesellschaft - Head of the Pharmaceuticals Division & Member of the Board of Management [53]

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Jo, yes, we're -- obviously, we're as pleased as you state with the clinical profile. We think our darolutamide is really nicely differentiated against the comparative competition here. We believe that FDA has recognized that by giving us fast track designation as well. I mean we've stated our peak potential at above EUR 1 billion. We obviously stand by that for the time being. Really, in a product that we haven't even introduced yet, I hesitate to give you some more guidance on how fast the uptake is going to happen. But let's put it that way. We're optimistic about this product, and we believe that we're differentiated.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [54]

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Okay. Thanks, Stefan. Liam?

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Liam Condon, Bayer Aktiengesellschaft - President of Bayer Crop Science Division & Member of Management Board [55]

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Yes. Thanks, Jo. A very interesting question. I hadn't thought about it in the short-term context. And to be very honest, we're not seeing any shakeout in the market based on the current short-term difficulties that are particularly driven by the U.S. market situation. So that isn't visible yet. Whether this turns out to be a longer-term advantage, very honest -- I mean, our whole deal was -- is built on a vision that we can generate more innovation and get rewarded for that better than anybody else.

And if I look at where we're going, I'm still targeting this year a margin of 25%. We have our goal out there for '22, and we're saying north of 30% margin. And this, we believe, still is absolutely realistic and something that we're clearly holding on to. And I think that will be ultimately our competitive advantage, is that we will be able to grow and grow more profitably than all of our competitors, and that's simply going to be based on innovation.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [56]

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Okay. Thanks, Liam.

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Operator [57]

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Next question comes from the line of Mr. Parekh.

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Keyur Parekh, Goldman Sachs Group Inc., Research Division - Equity Analyst [58]

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It's Keyur Parekh from Goldman Sachs. Three, please, if I may. First one, on the increased number of cases for Roundup from 13,400 in April to 18,000-odd at the end -- in July, how should we think about the rate of that increase? Was it linear across the quarter? Or was there a particular incident that led to a bolus of new kind of plaintiff joining? And I mean by that kind of was it the mediation that led to a step change? And how should we think of that number going forward? That's number one.

Number two for Liam. Liam, you mentioned kind of the potential or the opportunity for the corn seeds to come back in North America in the fourth quarter. Should we think of that being required to get to your 4% kind of crop guidance? Or if that were to happen, that would be upside kind of to your 4% guidance for the year?

And then thirdly, going back to China. Beyond kind of the 4+7, on a longer-term view, do you feel like you have the right portfolio for that market? Or do you think there are things that you could do from a portfolio adjustment perspective in that market to drive longer-term growth?

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [59]

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Okay. Maybe before we go into the answer of the question, your portfolio question, does it relate -- which business does it relate, pharma, crop or both?

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Keyur Parekh, Goldman Sachs Group Inc., Research Division - Equity Analyst [60]

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Both, please.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [61]

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Both, okay. So then maybe I'm going to start on the cases. Yes, we have seen a significant increase. There's no singular event that would have driven that increase. There's also actually, quite frankly, very little merit in looking at it on a weekly basis because a lot of the cases that are being filed are sitting in the drawers of the law firms, yes, and they elect to submit based on their liking. It may -- but this would be purely speculative, quite frankly. It may be related to some of the activities that are underway with the mediation discussions, but we don't have any visibility relative to the reasoning of the plaintiff lawyers submitting more or less of the cases that they have in their inventory, yes?

Now then let me give it now to Liam on corn quarter 4 and growth and, on the same taken -- token, China and portfolio before -- it's then going to be Stefan who is going to conclude with China portfolio for pharma.

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Liam Condon, Bayer Aktiengesellschaft - President of Bayer Crop Science Division & Member of Management Board [62]

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Yes. Thank you. So we have included -- a small part of our growth in Q4 is predicated on an increase in corn shipments in North America, and I emphasize a small part because the vast majority of growth is coming from somewhere else. But because the question was very specific, I want to be specific in answering it.

To give you a sense of how we think about this as well, in different parts of the world, there's always going to be upsides and downsides. If you recall, last year, we took a big hit in Australia in cotton, which is a very significant market for us in the Southern Hemisphere, and this was due to drought. We could build in an assumption this year that the market will come back, there would be normal weather pattern and that would be an upside. We haven't built that in this year. So just to give you a sense, that could be an upside, for example, if the upside in -- if corn didn't come in North America, possibly cotton in Australia would balance that out. We haven't factored that in. So we have a variety of elements in our plan that try and ensure that we have the most reasonable estimate possible going forward for our growth estimates. So just to give you a sense about that.

For China, we have a very strong Crop Protection business, and that's growing very nicely. And we do foresee significant additional growth. The weaknesses in China is, of course, from a portfolio point of view, that none of the multinationals are allowed to have an owned seeds business -- seeds and trades business due to the closed nature of the market. So we have a JV, and you have to have a Chinese partner. And we have Sinochem where we have a certain amount of corn sales.

So if there was one area where I would flag strategically would we like to improve things, it would clearly be on the seeds and trade side in China, but that requires a change in Chinese regulations to be more open for competition and to allow us to compete on an equal field. And I think that's also part of the ongoing China -- U.S.-China trade negotiations. So we'll see how that goes. But that's an area where we, for sure, would like to increase our presence in the market.

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Werner Baumann, Bayer Aktiengesellschaft - Chairman of the Board of Management & CEO [63]

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Stefan? Thank you, Liam.

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Stefan Oelrich, Bayer Aktiengesellschaft - Head of the Pharmaceuticals Division & Member of the Board of Management [64]

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And from the pharma side, I think it's a really good question that a number of companies are having to answer right now given some of the ongoing changes in China. I think you will have to and we will all have to look at China, if you like, from 2 angles going forward. One is going to be much more the volume business that we participate in already today, but that's probably going to be even more important from a volume side while prices are somewhat going to come down within the VBP initiative by the government.

And then you have, on the other side, an innovative portfolio. We believe we cater to both ends with our portfolio today and going forward. We still have a number of launches to come into China that are currently not in the reimbursement list. So that's something that we're looking forward to, and that should help us continue some dynamic evolution in China despite of being exposed to the VBP players with some of our brands. So I think this is how we're going to look at this from those 2 angles.

On top of that, we believe that we're also an excellent partner for China for other companies because we're one of the largest multinational companies in China. We're significantly above our average share in other parts of the world here in China. So we continue to be quite optimistic despite some of the headwinds that we can see coming in China.

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Operator [65]

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Ladies and gentlemen, we kindly ask you for your understanding that we have to close this call due to time constraints. Excuse me, Mr. Maier, please continue with any other points you wish to raise.

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O. Maier, Bayer Aktiengesellschaft - Head of IR [66]

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Thank you very much, Emma. Thank you very much, everybody, for participating today. Thanks to the Management Board for being available, answering all the questions.

Looking forward to seeing many of you in our inaugural event actually on Thursday and Friday in St. Louis. And other than that, we will talk soon going forward. Thank you very much for participating.

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Operator [67]

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Ladies and gentlemen, this concludes the second quarter 2019 results investor and analyst call of Bayer. Thank you for participating. You may now disconnect.