q2 2011 investor handout u.s. west coast roadshow

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Werner Baumann, CFO Second quarter 2011 - Bayer continues positive momentum 08/30 – 09/01/11 – U.S. West Coast Roadshow

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Page 1: Q2 2011 Investor Handout U.S. West Coast Roadshow

Werner Baumann, CFO

Second quarter 2011 -Bayer continues positive momentum

08/30 – 09/01/11 – U.S. West Coast Roadshow

Page 2: Q2 2011 Investor Handout U.S. West Coast Roadshow

DisclaimerThis presentation may contain forward-looking statements based on currentassumptions and forecasts made by Bayer Group or subgroup management.

Various known and unknown risks, uncertainties and other factors could lead tomaterial differences between the actual future results, financial situation,development or performance of the company and the estimates given here.These factors include those discussed in Bayer’s public reports which areavailable on the Bayer website at www.bayer.com.

The company assumes no liability whatsoever to update these forward-lookingstatements or to conform them to future events or developments.

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 2

Page 3: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 3

2nd quarter 2011 – Bayer continues positive momentum

Group outlook 2011 projects higher sales and adjusted EBITDA

€15bn investment plan through 2013 to maximize value of new product pipeline strength and to realize emerging markets opportunity

Two-year group restructuring plan to generate €800m efficiency improvements underway

Page 4: Q2 2011 Investor Handout U.S. West Coast Roadshow

2nd Quarter 2011 –Bayer Continues Positive Momentum

Q2‘11 ∆%

€ million € million

Sales 9,252 +1 (+5)

EBITDA

- reported 1,906 +6

- adjusted 2,035 +6

EBIT

- reported 1,273 +26

- adjusted 1,417 +12

Net income 747 +41

Net cash flow 1,530 -1

Free operating cash flow 1,232 +4

EPS

- reported 0.90€ +41

- core 1.29€ +11

( ) = Fx & portfolio adjusted

Highlights

Solid business expansion

Adjusted EBITDA improved, goodseason for CropScience, slightexpansion at HealthCare, MaterialScience remained levelyoy

Reported EBIT impacted by net special charges of €144m

2011 Group financial outlook reiterated

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 4

Page 5: Q2 2011 Investor Handout U.S. West Coast Roadshow

2nd Quarter 2011 –Breakdown By Segment

Sales adj. EBITDA

2010 2011 ∆% (adj.) 2010 2011 ∆%

HealthCare 4,305 4,208 -2 (+2) 1,122 1,156 +3

Pharma 2,748 2,666 -3 (+0.5) 772 807 +5

Consumer Health 1,557 1,542 -1 (+4) 350 349 0

CropScience 1,884 1,943 +3 (+9) 380 471 +24

MaterialScience 2,689 2,782 +3 (+8) 373 372 0In € million, ( ) = Fx & portfolio adjusted

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 5

Page 6: Q2 2011 Investor Handout U.S. West Coast Roadshow

LatinAmerica

Eastern Europe

Africa & Middle East

Emerging Asia³

2nd Quarter 2011 –Emerging Markets Leading The Growth

Emerging Economies

EmergingEconomies¹

+7%

Others²+2%

USA+4%

36%20%

Western Europe+6%

Q2 2011 Group sales by region

Group €9,252m; +5%

~1,300

+5%

~900

+4%

~600

+9%

~500

+14%

¹ Emerging economies include: Latin America, Asia w/o Japan, Australia,New Zealand, Africa and Middle East incl. Turkey, Eastern Europe

² Others = Japan, Australia, New Zealand, Canada³ Emerging Asia = Asia w/o Japan, Australia, New Zealand

In € million, ∆% yoy Fx adjusted

36%

10%

34%

20%

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 6

Page 7: Q2 2011 Investor Handout U.S. West Coast Roadshow

+0.3

2nd Quarter 2011 –Cash Flow And Net Debt Development

Q2 2011 Cash Flow Net Debt DevelopmentIn € billion

7.1 7.4

In € million

GCF oFCF

1,532

Invest-ments

298 1,232

∆ %y-o-y +19% +4%

NCFcont.

1,530

-1% -18%Q1´11 Q2´11

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 7

Page 8: Q2 2011 Investor Handout U.S. West Coast Roadshow

Fiscal 2010 –Operating Performance On Track

FY‘10 ∆%

€ million € million

Sales 35,088 +13 (+8)

EBITDA

- reported 6,286 +8

- adjusted 7,101 +10

EBIT

- reported 2,730 -9

- adjusted 4,452 +18

Net income 1,301 -4

Net cash flow 5,773 +7

Free operating cash flow 4,152 +12

EPS

- reported 1.57 -8

- core 4.19 +15

( ) = Fx & portfolio adjusted

Highlights

Achieved group financial targets in 2010

Strong year at MaterialScience –HealthCare and CropSciencebelow

Net income diminished by high special charges

Strong operating cash flow – netfinancial debt reduced

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 8

Page 9: Q2 2011 Investor Handout U.S. West Coast Roadshow

Selected Indicators 2006-2010 -Track Record of Performance

3.9 4.3 3.65.4

Net cash flow* (€ billion)

2006 2007 2008 2009

5.8

2010

02

3

4

5

2.993.80 4.17

3.64

Core earnings per share* (€)

2006 2007 2008 2009

4.19

2010

04

8

12

16

20 17.5

12.214.2

9.7

Net financial debt*, ** (€ billion)

2006 2007 2008 2009 2010

7.9

* 2006 - 2008 from continuing operations ** year-end data

2006 2007 2008

19.3% 20.9% 21.1% 20.8%

2009

EBITDA before special items and margin* (€ billion)

20.2%

2010

5.66.8 6.9 6.5

7.1

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 9

Page 10: Q2 2011 Investor Handout U.S. West Coast Roadshow

Building A World-Class

Innovation Company

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 10

Page 11: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 11

Building A World-Class Innovation Company

Build on leading industry position in all 3 subgroups

Enhance competitive position

Portfolio Growth Productivity

Target is to deliver mid-single digit organic sales growth in 2011and to invest €15bn in growth during 2011 - 2013

Invest in innovation capabilities

Maximize value of new product pipeline strength

Realize emerging market opportunity

Decomplex structures and processes

Implement two-year group restructuring plan

Page 12: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 12

Break-down excluding reconciliation

Sales 2010: €35.1bn

CropScienceAgrochemicals and seeds & traits, global #2 in agrochemicals

€6.8bn

MaterialSciencePolyurethanes and polycarbonates,global #1/2

€10.2bn

HealthCarePharmaceuticals €10.9bn,leading positions in key categories

Consumer Health €6.0bn,OTC pharmaceuticals, blood glucose meters and veterinary medicines, global #2-4

€16.9bn

30%50%

20%

Bayer –A Leader in Its Markets

Page 13: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 13

What it does Status

Xarelto inhibits blood clot formation 1st indication launched/ filed; phase III

Riociguat lowers blood pressure in the lung phase III

Nexavar inhibits enzymes important for tumor growth

launched, additional indications in phase II/III

Regorafenib inhibits enzymes important for tumor growth phase III

Alpharadin targeted treatment of bone metastases in prostate cancer

Alsympca trial (phase III) stopped early on success

VEGF Trap-Eye inhibits formation of new blood vessels

1st indication filed; phase III

Car

diol

ogy

Onc

olog

yEy

eD

isea

ses

HealthCare-Pharma Pipeline Maturing

Page 14: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 14

Thromboembolism is the single largest cause of morbidity and mortality in the western world.

Anticoagulant drugs inhibit the coagulation cascade and are the mainstay of antithrombotic therapy.

Current treatment options have limitations:

Heparin parenteral administration Vitamin K antagonists (e.g. Warfarin) narrow therapeutic window, slow onset of action, unpredictable pharmacology

Xarelto

The blood coagulation cascade

Xarelto Inhibits the Blood-clottingProcess at a Pivotal Stage

Page 15: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011

Sec. Prevention in ACS

Stroke Prevention in Atrial Fibrillation (AF)

VTE-Treatment

VTE-Prevention in Medically Ill Patients

1-4

Indication Phase III Program Status

Filed in US, EU

Filed in EU / US-filing early 2012e

Data late 2011e / early 2012e

Data reported; further analysis underway

LaunchedVTE-Prevention after elective hip and knee replacement Surgery

Xarelto: Addressing Medical Needs Across a Wide Range of Patients

Page 15

Page 16: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 16

Xarelto Demonstrated an Excellent Clinical Profile in Key Indications

VTE prevention after orthopedic surgery(RECORD 1- 4 trials)

Superior efficacy: 52% relative risk reduction* Rates of major bleeding low. No statistically significant difference Comparator: enoxaparin

EINSTEIN-DVT Non-inferior efficacy - significantly improved net clinical benefit ** Composite of major and clinically relevant non major bleeding similar

with numerically lower major bleedings Comparator: enoxaparin followed by vitamin K antagonistEINSTEIN-Extension Superior efficacy: 82% reduction of recurrent VTE Low incidence of major bleeding. No stat. significant difference Comparator: placebo

DVT treatment and Extended secondary prevention of VTE(EINSTEIN-DVT and EINSTEIN-Extension trial)

Stroke prevention in atrial fibrillation(ROCKET-AF trial)

Non-inferiority vs. warfarin in ITT and per-protocol population. Active treatment superior to warfarin in reducing the risk of stroke and non-CNS embolism in the safety population.Composite of major and clinically relevant non major bleeding similarComparator: vitamin K antagonist

VTE: Venous thromboembolism; DVT: Deep veinthrombosis; ITT: Intention to treat

Selection of clinical trial results. For full data see publications: VTE prevention after orthopedic surgery (RECORD) data published in NEJM (RECORD 1: Vol 358 2008; RECORD 3: Vol 358 2008) and Lancet (RECORD 2: Vol 372 2008; RECORD 4: Vol 373 2009), extended sec. prevention of VTE (EINSTEIN-Ext.) and DVT treatment(EINSTEIN-DVT) data publiashed in NEJM Vol 363 2010; stroke prevention (ROCKET-AF) data published in NEJM (online August 10, 2010)*) Symptomatic VTE + all-cause mortality in pooled analysis of RECORD 1-4; **) Secondary outcome defined as composite of primary efficacy endpoint plus major bleeding

1-4

Page 17: Q2 2011 Investor Handout U.S. West Coast Roadshow

VEGF Trap-Eye –Addressing Major Eye Diseases

Obstruction of central retinal vein may lead to vision loss and other serious complications.

> 100,000 people in the US and > 66,000 people in key EU countries are estimated to suffer from CRVO.

In myopic patients, the eyeball is too long –this situation puts strain on retina and may lead to pathological changes (e.g. irregular vessel growth) in the back of the eye.

Severe myopia is common in Asia; in Japan, mCNV is the second most common cause of blindness.

Diabetic Macular Edema (DME) Wet AMD is due to abnormal blood vessel

growth in the eye; the disease accounts for approx. 90% of AMD-related blindness.

Wet AMD is the leading cause of acquired blindness in the elderly.

Approx. 1.5 million patients annually in the US.

wet AMD

Central Retinal Vein Occlusion (CRVO) myopic CNV

AMD: Age-related macular degenerationCNV: Choroidal neovascularization

Most prevalent cause of vision loss in patients with diabetes.

Clinically significant DME is a leading cause of acquired blindness in the adults aged <50years.

Approx. 370,000 patients suffer from clinically significant DME in the US, with 95,000 new cases / year.

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 17

Page 18: Q2 2011 Investor Handout U.S. West Coast Roadshow

VEGF Trap-Eye – Key Data from Clinical Studies Suggest a Competitive Profile

Wet Age-Related Macular Degeneration (wet AMD)

Phase III program incl. 2,457 patients (VIEW 1, VIEW 2) Primary efficacy endpoint met, non-inferiority compared to Lucentis

demonstrated One year data demonstrated potential for less frequent dosing with

comparable vision maintenance

Central Retinal Vein Occlusion (CRVO)

Phase III program incl. 354 patients (COPERNICUS, GALILEO) Primary efficacy endpoint met, demonstrating significant

improvement in vision after six months of treatment compared to sham-injections

Diabetic Macular Edema (DME)

Phase II study incl. 219 patients (DaVinci) VEGF Trap-Eye vs. laser treatment:

Primary endpoint met: Visual acuity gains over 24 weeks were maintained or numerically improved up to completion of the study at week 52

Phase III trial initiated

VEGF Trap-Eye was generally well tolerated and the most common adverse events were those typically associated with intravitreal injections or the underlying disease.

Selection of clinical data. For further details see Bayer press releases from November 22, 2010, December 20, 2010 and April 27, 2011. Further data presented at Angiogenesis Conference, Miami, Florida, February 12, 2011.

Page 19: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 19

VEGF Trap-Eye –Status of Clinical Program

Diabetic macular edema (DME)

Wet age-related maculardegeneration (AMD)

Central retinal vein occlusion (CRVO)

Myopic choroidal neovascularizytion (CNV)

Indication Phase III Program Status

Filed

Filing 2012e

Phase III ongoing

Phase III ongoing

Page 20: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 20

Alpharadin – New Opportunities toTreat Bone Metastases Alpha-pharmaceutical (based on 223Radium, delivering highly energetic, short ranging

radiation) - in-licensed from Algeta

Radium as natural bone seeker targeting bone metastases

Phase III in hormone-resistant prostate cancer (HRPC)

ALSYMPCA (phase III) in patients with smptomatic HRPC with sceletal metastases stopped early - Alpharadin demonstrated significant improvement in overall survival vs. placebo

Filing targeted mid 2012e

Fast track status granted by FDA Tumor cells

Newly formed bone

Radium-223 deposition Radium-223: highly localized tumor cell killing

HRPC: Hormone-refractory prostate cancer

Bone metastases

Page 21: Q2 2011 Investor Handout U.S. West Coast Roadshow

Expected 2011 Major Pipeline Newsflow

Project / Study When expected?

Xarelto ATLAS TIMI 51; phase III in secondaryprevention of acute coronary syndrome (ACS)

Data end 2011e / early 2012

Xarelto EINSTEIN PE; phase III in treatment of PE andsecondary VTE prevention

Data end 2011e / early 2012

Xarelto Potential newsflow on submissions 2011e

Nexavar Phase III in NSCLC and phase III in thyroid cancer

Completion end 2011e / 2012e

VEGF Trap-Eye Two-year data from wet AMD phase III VIEW program 2011e

Page 21 • Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011

Page 22: Q2 2011 Investor Handout U.S. West Coast Roadshow

2000 - 200923 new agrochemical active ingredients launched, generated sales of €2bn in 2009

2010 - 2012ESix new agrochemical substances with sales potential of more than €1bn to be launched

Numerous early-stage research and early development projects in Crop Protection and BioScience

CropScience - Innovation Leadership in AgChemicals, Promising BioScience Pipeline

Expect 18 new BioScience products to be launched 2010 - 2016E

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 22

Page 23: Q2 2011 Investor Handout U.S. West Coast Roadshow

2002* 2009 2010 2015 E 2018 E

240

503

687

>1,000

~1,400

*2002 sales pro-forma Bayer + Aventis CropScience

Planned sales development Key growth driversin € million

Planned: CAGR 12%

+37%

Fast growing established business in cotton, canola, rice and vegetables

Regional expansion and introduction of new varieties

Exploit traits potential through licensing agreements

Extension of our crop-portfolio to soybean and cereals

Increase of BioScience’s share of CropScience R&D expenditures

R&D capacities strengthened through acquisition of Athenix (2009)

Growth Platform Ag BioScience -Strongly Expanded in 2010

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 23

Page 24: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 24

Realign company activities with a stronger customer focus

Restructure and further invest in global marketing to enable improved commercial execution

Extend use of state-of-the-art customer relationship management tools

Broaden food chain partnership business model

Focus on global flagship brands and deliver packaged solutions to differentiated customer segments

CropScience – Translate R&D More Effectively Into Sales

Page 25: Q2 2011 Investor Handout U.S. West Coast Roadshow

MaterialScience –World-Class Applications Research

Makrofol®ID Film for ID cards providing scratch resistance and protecting against counterfeit

DurFlex®

Improving noise reduction and economics of rail track operations

Bayfol Reflex ®

Actuators out of polymers give tactile feedback precisely adjusted to requirements

Bayblend® FRA new safety concept for car batteries to make housings flame retardant

Baycusan®

Solvent-free polyurethane based polymers for cosmetic applications

Makrolon®

Forming lightweight exterior car body parts from polycarbonate

Baytherm®

Combines high mechanical strength with high insulating capacity and low weight

Bayseal ®

Creates a seamless air barrier system working like a building envelope

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 25

Page 26: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011

Opportunity

Emerging Markets

Page 26

Page 27: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 27

2010 Group Sales break down; ∆% yoy Fx adjusted

36%64%

Developed markets Emerging markets1

+3%

+18%

¹ Emerging markets include: Latin America, Asia w/o Japan, Australia,New Zealand, Africa and Middle East incl. Turkey, Eastern Europe

Emerging Markets –Significant Growth Momentum

Page 28: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 28

1.6bn

0

1

2

3>2bn

2010 2015

Sales in € bn6

0.5bn~0.8bn

2010 2015

0.5bn

~1.0bn

2010 2015

2.9bn

~6.0bn

2010 2015

BRIC - Countries Can Collectively Become a 10bn Euro Business in 2015

Page 29: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 29

Strong growth Driven by Pharmaceuticals (+17% yoy)

Pharma portfolio includes established branded products as well as innovative products like Nexavar, Scilin Insulin and Xarelto

Significant investment commitment Approx. 5,300 employees (2010)

€100m over 5 years to set-up a global R&D center in China

Beijing manufacturing site expansion (~€45m through 2015)

Partnership with Tsinghua University (joint drug discovery, student support)

HealthCare 2010 €823m +15% y-o-y (Fx-adj.)*

Adalat

Avelox

Top products growth in 2010*

All growth rates y-o-y Fx-adj.* People‘s Republic of China

Aspirin CardioUltravist

Glucobay +22%

+10%

+15%

+14%

+16%

Bayer is One of The Leading International HealthCare Companies in China

Page 30: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 30

CropScience sales (in €m)CAGR+19%

421

2006

493

2007

724

2009

676

2008

847

2010

CropScience in Brazil – Gained Share in One of the World’s Largest Ag Markets

Brazil is the 2nd largest market for CropScience

Bayer is one of the leading suppliers and growing strongly

Bayer gained market share in each ofthe past 3 years

2010 Crop Protection performancedriven by strong sales increase in insecticides and herbicides, especiallywith new products

BioScience growth driven by cottonseed

Risk management systems in place to limit the potential impact of reduced credit availability; established barter business

Page 31: Q2 2011 Investor Handout U.S. West Coast Roadshow

€1bn New Investment Planat MaterialScience in China

€2.1bn investment program in integrated polymer site in Shanghai, China until 2012

New investment of approx. €1bn in Shanghai by 2016 to

Increase MDI capacity to 1,000kt/year

More than double PCS capacity to 500kt/year

Increase HDI capacity, new 50kt/year line planned

Transfer of PCS Headquarters from Leverkusen to Shanghai

Increasing downstream presence (investment of €110m by 2012)

China already is the world’s largest PCS market

China is set to become the world’s largest PURmarket by 2015

Commitment to growth in ChinaAsia/Pacific is leading the recovery

PCS = PolycarbonatesPUR = Polyurethanes

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 31

Page 32: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011

More Innovation

Less Administration

Page 32

Page 33: Q2 2011 Investor Handout U.S. West Coast Roadshow

CropScience

Restructuring Program Initiated

Contribution by Subgroup

HealthCareHolding & Admin.

Savings and efficiency initiative at HealthCare, CropScience andcorporate level

Annual cost savings of €800mstarting 2013, reinvestment of ~50%

One-time-charges of around €1bn by end of 2012

Plans include reductions of 4,500 people

2,500 new hires in growth and innovation, particularly in emerging markets

Savings Initiative

~54%~34%

~12%

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 33

Page 34: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011

CapEx budget 2011: €1.5bn for PPE

Funding organic growth

Focus is on organic growth, complemented by bolt-on acquisitions

Compliant with single A credit rating category

Deleveraging balance sheet

Cash return to shareholders

Acquisitions

Efficient Use of Cash

Page 34

Dividend policy: Pay out 30-40% of Core EPS Share buyback: No priority

Page 35: Q2 2011 Investor Handout U.S. West Coast Roadshow

2010 ∆ 2011EOriginal

2011EUpdate

Sales(Fx & portf. adjusted)

€35.1bn +8% 4-6%€35-36bn

5-7% to €36-37bn

adj. EBITDA €7.1bn +10% Improve toward

€7.5bn > €7.5bn

Core EPS €4.19 +15% ~10% ∽15%

Sales ∆ Fx and portfolio adjusted, EBITDA pre-special items

Full Year 2011 –Group Outlook

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 35

Outlook depends on specific planning assumptionsas detailed in the Annual/ Quarterly Report

Page 36: Q2 2011 Investor Handout U.S. West Coast Roadshow

HealthCareUnchanged:Low- to mid-single digit increase of sales and small increase of adj. EBITDA

PharmaUnchanged:Low- to mid-single digit increase of sales and improvement of adj. EBITDA-margin

Consumer Health

Unchanged:Mid-single digit growth of sales and adj. EBITDA

CropScienceUnchanged:High-single-digit percentage higher sales and growth of adj. EBITDA by about 20% - or more if the season progresses well in 2nd half

MaterialScience

Updated: High-single-digit percentage raise of sales. Adj. EBITDA still expected to increase at a higher rate than sales, although we regard this target as increasingly ambitious. Q3’11: Sales and adj. EBITDA in line with prior-year level

Full Year 2011 –Guidance By Subgroup – Q2 Update

Outlook based on Fx and portfolio adj. sales and EBITDA pre-special itemsOutlook depends on specific planning assumptions

as detailed in the Annual/ Quarterly Report• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 36

Page 37: Q2 2011 Investor Handout U.S. West Coast Roadshow

Appendix

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 37

Page 38: Q2 2011 Investor Handout U.S. West Coast Roadshow

1%

2011 – R&D and CapEx Budgets

MaterialScience0.2bn

HealthCare2.1bnthereof Pharma1.8bn

MaterialScience0.6bn

HealthCare0.4bn

Reconciliation0.05bn

67%

24%

8%

Reconciliation0.2bn

CropScience0.7bn

CropScience0.3bn

CapEx (PPE) 2011E: ~€1.5bnR&D 2011E: ~€3.1bn

€15bn R&D and Capital Investment Plan until 2013

24%

67%

8%44%

18%

26%

12%

€15bn R&D and Capital Investment Program until 2013

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 38

Page 39: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 39

HealthCare –Business Set-up

Consumer Care Medical CarePharmaceuticals

• Blood glucose monitoring systems and accessories

• Medical devices (imaging and therapeutic procedures)

• Non-prescriptiondrugs

• Vitamins and nutritional supplements

• Specialty Medicine

• General Medicine

Leading positions in certain therapeutic categories

Animal Health

• Food animalproducts

• Companion animal products

Global # 4Global # 2 A leader in medical devices

Page 40: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 40

EUR million2nd Quarter

20102nd Quarter

2011Change

%FY

2009FY

2010Change

%

Sales 4,305 4,208 -2.3 15,988 16,913 +5.8

Pharmaceuticals 2,748 2,666 -3.0 10,467 10,908 +4.2

Consumer Health 1,557 1,542 -1.0 5,521 6,005 +8.8

EBIT 595 786 +32.1 2,640 1,861 -29.5

Special items (189) (51) (372) (1,169)

EBIT before special items 784 837 +6.8 3,012 3,030 +0.6

EBITDA 1,065 1,105 +3.8 4,148 4,116 -0.8

Special items (57) (51) (320) (289)

EBITDA before special items 1,122 1,156 +3.0 4,468 4,405 -1.4

EBITDA margin before special items 26.1% 27.5% 27.9% 26.0%

Gross cash flow 759 760 +0.1 3,153 2,948 -6.5

Net cash flow 666 636 -4.5 3,431 3,320 -3.2

HealthCare –Key Data

Page 41: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 41

Crop Science –Business Set-up

• Insecticides

• Fungicides

• Herbicides

• Seed Treatment

• Professional Products

• Consumer Products

• Seeds & Traits

Crop Protection Environmental Science BioScience

Global # 2 The leader in this area Committed emerging player –access to technologies

Page 42: Q2 2011 Investor Handout U.S. West Coast Roadshow

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 42

EUR million2nd Quarter

20102nd Quarter

2011Change

%FY

2009FY

2010Change

%

Sales 1,884 1,943 +3.1 6,510 6,830 +4.9

Crop Protection / BioScience 1,685 1,757 +4.3 5,927 6,180 +4.3

Environmental Science 199 186 -6.5 583 650 +11.5

EBIT 187 272 +45.5 798 261 -67.3

Special items (66) (81) (219) (526)

EBIT before special items 253 353 +39.5 1,017 787 -22.6

EBITDA 314 405 +29.0 1,311 767 -41.5

Special items (66) (66) (197) (526)

EBITDA before special items 380 471 +23.9 1,508 1,293 -14.3

EBITDA margin before special items 20.2% 24.2% 23.2% 19.0%

Gross cash flow 224 304 +35.7 1,043 546 -47.7

Net cash flow 782 823 +5.2 745 1,399 87.8

CropScience –Key Data

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• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 43

Material Science –Business Set-up

• Application in automotive (i.e. for weight reduction)

• Construction(i.e. integrated heat and light management)

• Electronics & IT

• CD/DVD/Blu-ray

• Rigid foams are used for insulation in construction, logistics and the cold chain

• Elastic foams are used for comfort applications for furniture, car and other vehicle seats and mattresses

• Further applications include equipment housing or structural parts in automotive (i.e. fenders)

• Input materials for coatings, adhesives

• Coatings for vehicles, industrialcoatings, corrosion protection

• Adhesives for various applications

• Functional films and developmentbusinesses

* VOC = volatile organic compounds

Polycarbonates Coatings, Adhesives,SpecialtiesPolyurethanesPolycarbonates Coatings, Adhesives,SpecialtiesPolyurethanes

Industry-leading position Industry-leading position Industry-leading position

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• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 44

EUR million2nd Quarter

20102nd Quarter

2011Change

%FY

2009FY

2010Change

%

Sales 2,689 2,782 +3.5 7,520 10,154 +35.0

EBIT 228 236 +3.5 (266) 780 •

Special items 0 0 (140) 0

EBIT before special items 228 236 +3.5 (126) 780 •

EBITDA 373 372 -0.3 341 1,356 •

Special items 0 0 (105) 0

EBITDA before special items 373 372 -0.3 446 1,356 •

EBITDA margin before special items 13.9% 13.4% 5.9% 13.4%

Gross cash flow 293 288 -1.7 319 1,058 •

Net cash flow 62 (15) • 849 763 -10.1

MaterialScience –Key Data

Page 45: Q2 2011 Investor Handout U.S. West Coast Roadshow

Reporting Events and AGMDate Event Publication

Thursday,October 27, 2011 Investor Conference Call 3rd Quarter 2011 Results

Stockholders’ Newsletter

November 16-18, 2011 China Conference 2011, Shanghai

Tuesday,February 28, 2012 Investor Conference Call 2011 Annual Report

Thursday,April 26, 2012 Investor Conference Call 1st Quarter 2012 Results

Stockholders’ NewsletterFriday,April 27, 2012 Annual General Meeting

Tuesday, July 31, 2012 Investor Conference Call 2nd Quarter 2012 Results

Stockholders’ Newsletter Tuesday, October 30, 2012 Investor Conference Call 3rd Quarter 2012 Results

Stockholders’ Newsletter

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 45

Page 46: Q2 2011 Investor Handout U.S. West Coast Roadshow

Investor Relations ContactsDr. Alexander RosarHead of Investor RelationsPhone: +49-214-30-81013E-mail: [email protected]

Dr. Jürgen BeuninkPhone: +49-214-30-65742E-mail: [email protected]

Ute MenkePhone: +49-214-30-33021E-mail: [email protected]

Peter DahlhoffPhone: +49-214-30-33022E-mail: [email protected]

Judith NestmannPhone: +49-214-30-66836E-mail: [email protected]

Fabian KlingenPhone: +49-214-30-35426E-mail: [email protected]

Dr. Olaf WeberPhone: +49-214-30-33567E-mail: [email protected]

• Bayer Investor Presentation • US West Coast Roadshow • Werner Baumann, CFO • Aug/Sep 2011Page 46