History

Bayer AG was founded in Barmen (today a part of Wuppertal), Germany in 1863 by Friedrich

Bayer and his partner, Johann Friedrich Weskott.

1853 - Bayer's first major product was acetylsalicylic acid (originally discovered by French

chemist Charles Frederic Gerhardt in 1853), a modification of salicylic acid or salicin, a folk
remedy found in the bark of the willow plant.

1899 - Bayer's trademark Aspirin was registered worldwide for Bayer's brand of acetylsalicylic

acid, It is now widely used in the US, UK, and France for all brands of the drug.

1904 - Bayer company introduced the Bayer cross as its corporate logo.

1956 - The Bayer company then became part of IG Farben, a conglomerate of German
chemical industries that formed a part of the financial core of the German Nazi regime.

1978 - Bayer purchased Miles Laboratories and its subsidiaries Miles Canada and Cutter

Laboratories (along with a product line including Alka-Seltzer, Flintstones Vitamins .

1994 - Bayer AG purchased Sterling Winthrop's over the counter drug business

from SmithKline Beecham and merged it with Miles Laboratories.

2010 - Bayer AG signed an agreement to buy Auckland-based animal health company Bomac

Group. Due to confidentiality obligations, no financial information was disclosed.

The Bayer Board of Management

Dr. Marjin Dekkers Werner Baumann Dr. Wolfgana Plischke Dr. Richard Pott

Chairman Finance Innovation, Technology Strategy and Human

and Environment Resources

(Labor Director )
 Mission Statement

Working to Create Value through Innovation and Growth

Bayer is a global enterprise with core competencies in the fields of health care, nutrition
and high-tech materials. Our products and services are designed to benefit people and
improve their quality of life. At the same time we aim to create value through innovation,
growth and high earning power.

Group Structure or organization

Bayer AG defines common values, goals and strategies for the entire Group. The three
subgroups and three service companies operate independently, led by the management holding
company. The Corporate Center supports the Group Management Board in its task of strategic
leadership.
 Business operations are the responsibility of the subgroups:
 Bayer HealthCare AG researches, develops, manufactures and markets innovative
products for disease prevention, diagnosis and treatment.
 Bayer CropScience AG is a global leader in crop protection and non-agricultural pest
control.
 Bayer MaterialScience AG is a renowned supplier of high-performance materials and
innovative system solutions used in a wide range of products for everyday life.

Central service functions are combined into three service companies:

 Bayer Business Services GmbH is the Bayer Group's international competence center
for IT-based services.
 Bayer Technology Services GmbH, the technological backbone of the Bayer Group, is
engaged in process development and in process and plant engineering, construction and
optimization.
 Currenta GmbH & Co. OHG is a joint venture of Bayer AG and Lanxess AG and
operator of the three Chempark sites at Leverkusen, Dormagen and Krefeld-Uerdingen.

Research & Innovation

Innovation plays an important role in overcoming global challenges and is a key driver of future
growth at Bayer. 
In 2009 Bayer spent €2,746 million on research and development (r&d), which was equivalent to
8.8 percent of sales. Special importance is placed on developing new products that strengthen
the core businesses. Mindful of its corporate growth objectives, Bayer works to continuously
rejuvenate and expand its product portfolio and optimize its production processes. Its r&d is
closely aligned to market requirements and therefore subject to a continuous process of
adjustment. It is supplemented by an international network of collaborations with leading
universities, publicsector research institutes and partner companies. Through this pooling of
expertise, Bayer aims to rapidly translate new ideas into successful products. These activities
are also supported by systematic employee development in the company’s r&d units.

Innovation Areas of the Bayer Group

Research in the three subgroups

Of the Group’s entire R&D expenditures, Bayer HealthCare accounted for 67.3 percent, Bayer
CropScience for 23.8 percent and Bayer MaterialScience for 7.5 percent. Further information on
each subgroup’s R&D activities is provided in Bayer HealthCare, Bayer CropScience und Bayer
MaterialScience.

Responsibility for the development of innovative products and completely new fields of business
outside of the subgroups’ core activities lies with Bayer Innovation GmbH, headquartered in
Düsseldorf, Germany. The goal of this company is to add to Bayer’s business portfolio and
facilitate access to new growth markets. The current focus is on medical and security
technology and the use of plants to develop and manufacture new pharmaceutical products.

More than 3,000 suggestions have already been submitted in response to the innovation
initiative launched by Bayer AG in 2007, entitled “Triple-i: Inspiration, Ideas, Innovation.” Many
of these proposals are currently undergoing further evaluation by our subgroups. The initiative is
designed to motivate employees throughout the Group to submit ideas for new products and
thus help to strengthen Bayer’s innovation capability.
 BUSINESS OVERVIEW

Subgroups and Service Companies

Health care
Bayer HealthCare
Headquartered in Leverkusen, Bayer HealthCare researches, develops, manufactures and
markets innovative products for the prevention, diagnosis and treatment of diseases. The
company thus plays an important part in improving the health of people and animals. This
subgroup comprises four global divisions: Animal Health, Consumer Care, Medical Care
(Diabetes Care and MEDRAD) and Bayer Schering Pharma AG, Germany*. Bayer HealthCare
has 53,400 employees worldwide and generated sales of EUR 15,988 million in 2009. The
divisions Animal Health and Bayer Schering Pharma AG, Germany* are headquartered in
Germany, while Consumer Care and Medical Care (Diabetes Care and MEDRAD) are based in
the United States. Bayer HealthCare’s Animal Health and Consumer Care divisions occupy
leading positions worldwide.

DIVISION AND TOP PRODUCT

Principal products and brands

Animal health

 products for farm animals (e.g. Baytril®)

 Products for companion animals (e.g. Advantage®/Advantix®, Baytril®)

Consumer care

 Non-prescription medicines  (e.g. Aspirin®, Aleve®/Naproxen, Canesten®, Lefax®,

Talcid®,Alka-Seltzer®, Bepanthen®, Aktren®, Priorin®, Rennie®)
 Vitamins (e.g. One-A-Day®, Supradyn®)

Medical care
  Diabetes Care: blood glucose monitoring systems (e.g. Contour®/Breeze® 2)
 MEDRAD: contrast injection systems

Bayer schering pharma

Prescription medicines
 

 Diagnostic Imaging (X-ray contrast media, contrast agents for magnetic resonance
imaging, application technologies for contrast agents), e.g. Magnevist®
 Hematology/Cardiology (blood-clotting agents, thromboembolic diseases),
e.g.Kogenate®,Adalat®, Trasylol®, Xarelto®
 Oncology (products for treating leukemias and lymphomas, drugs for solid-tumor
therapy),
e.g. Viadur®, Nexavar®
 Primary Care (anti-infectives, men’s healthcare, cardiovascular and metabolic diseases),
e.g. Ciprobay®/Cipro®, Avalox®/Avelox®, Glucobay®, Levitra®, Nimotop®
 Specialized Therapeutics (drugs for treating diseases of the central nervous system),
e.g. Betaferon®/Betaseron®
 Women’s Healthcare (contraception, menopause management, gynecological
therapies),
e.g. Yasmin®.

Nutrition

Bayer Crop Science

Headquartered in Monheim, Germany, Bayer CropScience is a global leader in crop protection
and non-agricultural pest control. This company, with its highly effective products, pioneering
innovations and keen customer focus, is aiming for further growth in the future. Its activities
cover the areas of crop protection, environmental science and bioscience. The subgroup had
about 18,700 employees and achieved sales of EUR 6,510 million in 2009. Bayer CropScience
is counting on its powerful portfolio of new products and an outstanding research pipeline to
provide profitable growth in the future. Our research and development expertise is the key to
expanding our position as an innovation leader in our sector. New active ingredients and
formulations, modern application methods and innovative agricultural technologies offer
solutions for tomorrow’s agriculture.
 BUSINESS AREAS AND TOP PRODUCT
Principal products and brands

Crop protection

 Insecticides (Confidor®/ Admire®, Calypso®, Decis®, Temik®, Oberon®)

 Fungicides (Antracol®, Fandango®, Flint®/Stratego®/Sphere®/Twist®, Folicur®,
Previcur Energy®)
 Herbicides (Atlantis®, Basta®, Betanal®, Fenikan®, Hoestar®, Husar®, MaisTer®,
Puma®)
 Seed treatment (Bariton®, Gaucho®, Lamarador®, Poncho®, Raxil®)

Environmental science

 Professional products (K-Othrine®, Merit®, Premise®, Racumin®)

 Consumer products (Bayer Advanced™, Bayer Garden)

Bio science

 Agricultural seed (Arize®, InVigor®, FiberMax®)

 Vegetable seed (Nunhems®)

High-tech materials
Bayer MaterialScience
Bayer MaterialScience is a renowned supplier of high-performance materials and innovative
system solutions used in a wide range of products for everyday life. Products with leading
positions on the world market account for a major share of sales. Principal customers are the
automotive and construction industries, the electrical/electronics sector and manufacturers of
sports and leisure articles, packaging and medical equipment. Operations comprise four
business units: Polycarbonates; Polyurethanes; Coatings, Adhesives, Specialties
and Thermoplastic Polyurethanes. Bayer MaterialScience had about 14,300 employees at 30
production sites worldwide and posted sales of EUR 7,520 million in 2009.

Principal products and brands

Bayer MaterialScience, in India, is made up of three key Business Units (BUs):

Polycarbonates (BU PCS)

Polyurethanes (BU PUR)
Coatings, Adhesives, Specialties (BU CAS)

 Coatings, Adhesives, Specialties (e.g. Desmodur®, Bayhydur®, Dispercoll®)

 Polycarbonates (e.g. Makrolon®, Makrofol® / Bayfol®, Fantasia™, Bayblend®)
 Polyurethanes (e.g. Multitec®, Baydur®, Bayflex®, Baypreg®, Vulkollan®)
 Thermoplastic Polyurethanes (e.g. Desmopan® / Texin®)

IT-based services
Bayer Business Services

Bayer Business Services is the global competence center of the Bayer Group for IT and
business services. The focus is on services in the core areas of IT infrastructure and
applications, procurement and logistics, human resources and management services, and
finance and accounting. Stages of value creation range from consulting through the
development and implementation of system solutions to business process outsourcing, the
handling of entire business processes. In fiscal 2009 Bayer Business Services employed a
worldwide workforce of 5,582 people and achieved sales of EUR 995.5 million. Bayer Business
Services has its head office in Leverkusen, Germany. Its chief international offices are located in
Pittsburgh, São Paulo, Hong Kong, Newbury, Mumbai, Barcelona, Singapore and Berlin.

The activities of Bayer Business Services comprise:

Portfolio

IT Infrastructure and Applications

 Procurement and Logistics

 Human Resources and Management Services

 Finance and Accounting

Technology solutions
Bayer Technology Services

Bayer Technology Services, the technological backbone of the Bayer Group, is engaged in
process development and in process and plant engineering, construction and optimization. This
company also develops innovative technology platforms that contribute substantially to the
efficiency of Bayer’s operating units. 

Bayer Technology Services offers integrated solutions along the life cycles of facilities,
processes and products.

Bayer Technology Services is active in the following areas:

Innovation
 process Design and Evaluation
 Reaction and Polymer Technology 
 Processing Technology
 Applied Sciences / Biotechnology
 Materials Technology   

Engineering
 Civil, Structural & Architectural Engineering
 Environmental Protection & Infrastructure Technologies
 Engineering Chemical Processes
 Engineering Polymer Processes
 Engineering Healthcare
 Biomass-Conversion  
 Chlorine / Electrolysis

Optimization
 Process Control Technology
 Process Analyser Technology
  Advanced Manufacturing Solutions
 Supply Chain and Logistics

The Marketing Environment

The marketing environment surrounds and impacts upon the organization. There are three key
perspectives on the marketing environment, namely the 'macro-environment,' the 'micro-
environment' and the 'internal environment'.

The micro-environment
This environment influences the organization directly. It includes suppliers that deal directly or
indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest
small, but this can be misleading. In this context, micro describes the relationship between firms
and the driving forces that control this relationship. It is a more local relationship, and the firm
may exercise a degree of influence.

The macro-environment
This includes all factors that can influence and organization, but that are out of their direct
control. A company does not generally influence any laws (although it is accepted that they
 could lobby or be part of a trade organization). It is continuously changing, and the company
needs to be flexible to adapt. There may be aggressive competition and rivalry in a market.

Globalization means that there is always the threat of substitute products and new entrants. The
wider environment is also ever changing, and the marketer needs to compensate for changes in
culture, politics, economics and technology.

SWOT ANALYSIS

The internal environment.

In SWOT, strengths and weaknesses are internal factors.

Strength
 Specialist marketing expertise.
 A new, innovative product or service.
 Location of your business.
 Quality processes and procedures.
 Any other aspect of your business that adds value to your product or service.

Weakness
 Lack of marketing expertise.
 Undifferentiated products or services (i.e. in relation to your competitors).
 Location of your business.
 Poor quality goods or services.
 Damaged reputation.
In SWOT, opportunities and threats are external factors.

 Opportunity 
 A developing market such as the Internet.
 Mergers, joint ventures or strategic alliances.
 Moving into new market segments that offer improved profits.
 A new international market.
 A market vacated by an ineffective competitor.


Threats
 A new competitor in your home market.
 Price wars with competitors.
 A competitor has a new, innovative product or service.
 Competitors have superior access to channels of distribution.
 Taxation is introduced on your product or service.
 PESTEL ANALYSIS
The macro-environment

There are many factors in the macro-environment that will effect the decisions of the
managers of any organisation. Tax changes, new laws, trade barriers, demographic change
and government policy changes are all examples of macro change. To help analyse these
factors managers can categorise them using the PESTEL model. This classification
distinguishes between:

 Political factors. These refer to government policy such as the degree of intervention
in the economy. What goods and services does a government want to provide? To
what extent does it believe in subsidising firms? What are its priorities in terms of
business support? Political decisions can impact on many vital areas for business
such as the education of the workforce, the health of the nation and the quality of
the infrastructure of the economy such as the road and rail system.

 Economic factors. These include interest rates, taxation changes, economic growth,

inflation and exchange rates. As you will see throughout the "Foundations of
Economics" book economic change can have a major impact on a firm's behaviour.
For example:

               - higher interest rates may deter investment because it costs more to borrow
               - a strong currency may make exporting more difficult because it may raise the
price in terms of foreign currency
               - inflation may provoke higher wage demands from employees and raise costs
               - higher national income growth may boost demand for a firm's products

 Social factors. Changes in social trends can impact on the demand for a firm's
products and the availability and willingness of individuals to work. In the UK, for
example, the population has been ageing. This has increased the costs for firms who
are committed to pension payments for their employees because their staff are living
longer. It also means some firms such as Asda have started to recruit older
employees to tap into this growing labour pool. The ageing population also has
 impact on demand: for example, demand for sheltered accommodation and
medicines has increased whereas demand for toys is falling.

 Technological factors: new technologies create new products and new processes.

MP3 players, computer games, online gambling and high definition TVs are all new
markets created by technological advances. Online shopping, bar coding and
computer aided design are all improvements to the way we do business as a result of
better technology. Technology can reduce costs, improve quality and lead to
innovation. These developments can benefit consumers as well as the organisations
providing the products.

 Environmental factors: environmental factors include the weather and climate

change. Changes in temperature can impact on many industries including farming,
tourism and insurance. With major climate changes occurring due to global warming
and with greater environmental awareness this external factor is becoming a
significant issue for firms to consider. The growing desire to protect the environment
is having an impact on many industries such as the travel and transportation
industries (for example, more taxes being placed on air travel and the success of
hybrid cars) and the general move towards more environmentally friendly products
and processes is affecting demand patterns and creating business opportunities.

 Legal factors: these are related to the legal environment in which firms operate. In
recent years in the UK there have been many significant legal changes that have
affected firms' behaviour. The introduction of age discrimination and disability
discrimination legislation, an increase in the minimum wage and greater
requirements for firms to recycle are examples of relatively recent laws that affect an
organisation's actions. Legal changes can affect a firm's costs (e.g. if new systems
and procedures have to be developed) and demand (e.g. if the law affects the
likelihood of customers buying the good or using the service).

Typical PESTEL factors to consider include:

Factor Could include:

Political e.g. EU enlargement, the euro, international trade, taxation policy
Economic e.g. interest rates, exchange rates, national income, inflation,
unemployment, Stock Market
Social e.g. ageing population, attitudes to work, income distribution
Technological e.g. innovation, new product development, rate of technological
obsolescence
Environmental e.g. global warming, environmental issues
Legal e.g. competition law, health and safety, employment law

ANNUAL REPORT

Revenue - €31.168 billion (2009)

Operating income -  €3.006 billion (2009)

R&D Expenditure - EUR 2.75 Billion(2009)

Profit -  €1.359 billion (2009)

Employs - 108,400 (2009)

Research spending
Research and Development expenses 2008
by subgroup in %
Research and Development expenses 2008
by subgroup in EUR million

Key Data
  2008 2009 Change

  € million € million %

Bayer Group      

Sales 32,918 31,168 -5.3

EBITDA1 6,266 5,815 -7.2

EBITDA before special items 6,931 6,472 -6.6

EBITDA margin before special items 21.1% 20.8%  

EBIT2 3,544 3,006 -15.2

EBIT before special items 4,342 3,772 -13.1

Income before income taxes 2,356 1,870 -20.6

Net income 1,719 1,359 -20.9

Earnings per share (€)3 2.22 1.70 -23.4

Core earnings per share (€)4 4.17 3.64 -12.7

Gross cash flow5 5,295 4,658 -12.0

Net cash flow6 3,608 5,375 +49.0

Net financial debt 14,152 9,691 -31.5

Capital expenditures as per segment table 1,982 1,669 -15.8

Research and development expenses 2,653 2,746 +3.5

Dividend per Bayer AG share (€) 1.40 1.40 0.0

Number of employees at end of period 108,600 108,400 0.2

 Strategy
Our sustainability strategy
Bayer is committed to the concept of sustainable development. Our overriding goal is to operate
both successfully and sustainably. For us that means achieving commercial success on the
basis of solid business models in a way that is compatible with meeting the needs of our
employees and society and protecting the environment and natural resources. In this we are
committed to the tenets of sustainable development and to the 10 principles of the UN Global
Compact.

Our sustainability strategy

It is the overriding goal of Bayer’s sustainability strategy to allow the company to be guided by
long-term values. We want to balance successful, sustainable development with social needs
and goals.

The concept behind our sustainability strategy

Bayer is committed to sustainable development. We want to meet this commitment on three

levels:
1. Through our products and innovations, which are the heart of our business. These are
designed to benefit people and improve their quality of life.
 
2. Through our business activities, i.e. how we run our business. We want to act responsibly
across the entire valueadded chain – toward all our stakeholders, especially our employees,
customers, suppliers and stockholders.

3. Through our social commitment: our foundations and voluntary social activities. We also want
to meet our responsibility to society by becoming socially involved as a good corporate citizen.
 

REFRENCE
1. www.Bayer.com
2. www.wikipedia.com
3. www.investor.com
4. www.bayercropscience.com
5. www.bayermaterialscience.com
6. www.annual report.com