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Bayer’s pharma business feels the pain from Xarelto generics in China

A win in patent court in Europe last October was a pleasant surprise for Bayer, giving its heart drug Xarelto an additional two years of exclusivity—all the way to 2026.

But the generics ship already has sailed for Xarelto in China and its effects are telling.

On Tuesday, when Bayer reported  first-quarter results, the company said global sales of Xarelto slid 5% from the same period in 2021, falling from €1.14 billion to €1.09 billion.

“We’ve seen positive growth in all of our regions in Xarelto in the first quarter except for China,” Bayer pharma chief Stefan Olerich said during a conference call. “China was basically a 50% reduction of our sales, which was a combination of price and volume.”

Bayer had been bracing for a decline as sales growth slowed last year for its cash cow. All told in 2021, the drug pulled in €4.7 billion ($5.0 billion), a 6% increase from the previous year.

Overall in 2021 for Bayer and its United States marketing partner Johnson & Johnson, Xarelto sales came in at $8 billion after a $6.8 billion showing in 2020. So, seeing an actual decline is uncharted territory for the blood thinner.

In addition to the fall in China, Bayer said that license revenue off sales in the U.S. were down versus the first quarter of 2021.

Xarelto’s decline contributed to rough quarter for Bayer’s pharma outfit, which generated €4.62 billion ($4.88 billion) for an increase of just 2.6%. When currency effects were accounted for, Bayer’s pharma sales dropped by 4%, the company said. Earnings before interest, taxes, depreciation and amortization came in at €1.389 billion, a 7% decline from the same quarter last year despite the presence of more pandemic effects a year ago.

Pharma sales will be depressed over the next few years as Xarelto and another of Bayer’s mega-blockbusters, Eylea, age out, execs have warned. The macular degeneration drug is still going strong with sales of €774 million in the quarter, an increase of 15% from the same period in 2021.

Looking forward, Bayer is banking on its newly developed drugs such as heart and kidney disease drug Kerendia to deliver growth. In addition, new prostate cancer treatment Nubeqa made the cut for Bayer’s top 15 sellers list for the first time, racking up €76 million in sales.

Now Bayer anxiously anticipates an FDA approval for that medicine in metastatic prostate cancer.

“We feel this will boost our already positive launch trajectory,” Olerich said.

In all, Bayer edged analyst expectations with an overall revenue figure of €14.64 billion ($15.45 billion). Its agricultural business was up 22% to €8.45 billion, while its consumer health unit was up 17% to €1.51 billion.

Bayer didn’t adjust its annual revenue guidance as CEO Werner Baumann said a variety of factors could affect its 2022 performance, including the pandemic, supply disruptions, security concerns and the Ukraine War.