q1 2012 investor handout

Q1 2012April 2012 I Leverkusen

Investor Handout

Disclaimer

This 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 noliability whatsoever to update these forward-looking statements or to conformthem to future events or developments.

• Investor Handout • Q1 2012

Bayer –Science For A Better Life


Mid-term targets show significant further value generation potential

Market leading positions in vast majority of portfolio

New product pipeline strength in Pharma, CropProtection & BioScience

Strong and profitable growth in emerging markets, especially China

Unique opportunity at the interfaces of human, animal and plant health

Group wide excellence initiatives to further boost earnings and free-up growth resources

Incentive systems aligned to business specific challenges

1st Quarter 2012 –Encouraging Start To The Year


EBITin € million

+43%

1,637

1,148

Salesin € million% currency & portfolio adj.

+5%

10,0569,415

EBITDAadjusted*in € million

+9%

2,4422,232

Core EPSin €

+16%

1.681.45

*before special items

Q1’12Q1’11 Q1’12Q1’11 Q1’12Q1’11 Q1’12Q1’11

2007 – 2011A Period of Significant Progress

• Investor Handout • Q1 2012* 2007 - 2008 from continuing operations

6.8 6.96.5

7.1

2007 2008 2009 2010 2011

7.6

Sales (€ billion)

3.804.17

3.644.19

3

4

5

6

2007 2008 2009 2010 2011

4.83

EBITDA before special items* (€ billion) Core earnings per share* (€)

20.921.1

20.8

20.2

20

21

22

2007 2008 2009 2010 2011

20.832.4 32.9

31.2

35.1

2007 2008 2009 2010 2011

36.5

EBITDA before special items margin* (%)

2007 – 2011Consistent Strong Cash Generation


Trade working capital to sales ratio (%)

Net financial debt** (€ billion)

*2007 - 2008 from continuing operations ** year-end data

4.33.6

5.4 5.8

2007 2008 2009 2010 2011

5.1

29.631.2 30.4

26.4

20

25

30

35

40

2007 2008 2009 2010 2011

26.4

4.8

5.3

4.74.8

2007 2008 2009 2010 2011

5.2

Gross Cash Flow* (€ billion)

12.214.2

9.7 7.9

0

4

8

12

16

20

2007 2008 2009 2010 2011

7.0

Net Cash Flow* (€ billion)


2012 –

Financial Outlook

Outlook 2012 –Planning Assumptions


Expected 2012 Global Market Development

5% Electro/electronicRobust growth

27% Rx-pharmaMid-single digit growth, driven by emerging markets

10% OTC-pharmaLow- to mid-single digit growth 3% Diabetes care

low-single digit growth

3% Animal HealthModerate growth

20% Agrochemicals/SeedsPositive development

6% AutomotiveRobust growth

6 % ConstructionOngoing recovery

5% Furniture/woodOngoing recovery,small growth

15% Others

2011 Group sales break-down in %, growth estimates in %

Fiscal 2012 Outlook Projects Further Growth And Higher Earnings


2011 ∆ vs. 2010 2012E

Sales €36.5bn +6% +~3% or~€37bn*

Adj. EBITDA €7.6bn +7% Slightly improve

Core EPS €4.83 +15% Slightly improve

Sales ∆ Fx and portfolio adjusted, EBITDA before special items

*Assuming Fx rate of $1.40 per €Outlook depends on specific planning assumptions as detailed in the Annual Report

Fiscal 2012 –Guidance By Subgroup

• Investor Handout • Q1 2012Sales ∆ Fx and portfolio adjusted, EBITDA before special items

Outlook depends on specific planning assumptions as detailed in the Annual Report

HealthCare Expect sales to increase by low- to mid-single-digit percentage. Plan to slightly improve adj. EBITDA .

Pharma Expect sales to remain stable or move slightly higher, and adj. EBITDA to approx. match prior year level.

Consumer Health

Anticipate mid-single-digit percentage growth of sales and adj. EBITDA.

CropSciencePlan to grow above market. Guidance (issued in February) projects an increase of sales and adj. EBITDA by mid-single-digit percentages. Up-date with publication of Q2 results –depending on future business development.

MaterialScienceExpect sales and adj. EBITDA to remain level with prior year.

Q2’12: Expect an improvement in sales and significantly higher adj. EBITDA compared to Q1’12.


Strategic Priorities

Building A World-Class Innovation Company


Portfolio ProductivityGrowth

Enhance competitive position

Strengthen LifeSciences

Intensify cooperation & licensing activities

Exploit synergy potential of human, animal and plant health

Invest in innovation capabilities

Maximize value of new product pipeline strength

Leverage competitive advantage of new TDI gas phase technology

Realize emerging market opportunity

Decomplexstructures and processes

Implement two-year group restructuring plan

Further adjust business processes at MaterialScience to ongoing commoditization

Two Distinct Business Models


LifeSciences Product innovation,

R&D-ratio ~11% of sales

COGS relatively low,selling & distribution relatively high

High profitability,adj. EBITDA-margins23-27%*

Increasing generic competition & government intervention

Structural risk: approvals, meta-analysis, product liability

MaterialScience

Breakdown excl. Reconciliation*EBITDA before special items in % of sales, 2011

**Selling, administration and R&D

Sales2011

Process innovation,capital intensive

COGS high (~79%) marketing & selling relatively low (SAARE** ~11%)

Lower profitability, adj. EBITDA margins ~11%*

Few competitors, new entrants from Asia, Middle East

Cyclical risk: demand and supply fluctuationsAdj. EBITDA

2011

31%

69%

16%

84%


Mid-term Targets

HealthCare –Building Growth Momentum


Priority Target 2014

Accelerate growth HealthCare sales of ~€20bn

Pharma: Successfully commercialize late-stage pipeline and realize emerging markets (EM) opportunity

Sales of ~€11.5bn High-single to low-double-digit % EM

growth

Consumer Health: Aspire to become world-leading OTC company Sales of ~€8.5bn

Improve profitability HealthCare margin* of ≥28% Pharma margin* of >30% Consumer Health margin* of ~25%

*EBITDA before special items to sales in %

CropScience –Propelling Future Growth


Priority Target 2014 (normal market conditions)

Above market growth >€8bn sales

Translate R&D effectively into sales New crop protection product sales (=launched since 2006) of ~ €1.5bn

Extend BioScience footprint Aspiration to grow business in-line with

average of last 3 years, i.e. CAGR ~20% p.a.

Improve profitability Generate adj. EBITDA* margin of ~24%

*EBITDA before special items to sales in %

MaterialScience –Earn A Premium Over Cost of Capital


Priority Performance Targets

Growth Grow business (volume) above global GDP

Leadership Defend #1 market positions in polycarbonates and MDI

Leverage competitive advantage of TDI gas-phase technology

Increase market share of TDI business (2011: 23-24%*)

Closely monitor timing and necessity of capital investments

CapEx (PPE) budget of €1.5-2bn until 2014

Expand Caojing, China site Establish world-scale facilities in Germany

Earn a premium over cost of capital CFRoI after reproduction > WACC

*by volume

New Incentive Scheme Reflects Business Specific Challenges


Group

Performance

Subgroup

Performance

Individual

Performance

IndividualBusinessTargets

HealthCare Sales growth & adj.

EBITDA* margin, innovation

CropScience Sales growth & adj.

EBITDA* margin; relative performance vs. peers, innovation

MaterialScience CFRoI vs. cost of capital,

process innovation

Core EPS

++



Innovation

Pharma Pipeline –Significant Progress Achieved Since 2011


Project Indication Peak Sales Potential

Status & Targets

Xarelto Cardiology / Anticoagulation

> €2bn SPAF: launched (US, EU, J, others) DVT treatment and sec. prevention: launched VTE prev. ORS: launched in US Sec. prev. ACS: filed PE treatment and sec. VTE prevention: filed (EU)

VEGF Trap-Eye

Ophthalmology / Inhibition of blood vessel growth

≥ €1bn Filed for wet AMD in EU and Japan Phase III for DME and wet AMD (China) initiated Positive phase III data in CRVO

Alpharadin Oncology / Targeting of bone metastases

≥ €1bn CR prostate cancer: 44% improvement of OS Fast track designation by FDA Filing target: mid 2012

Regorafenib Oncology / Oral multi-kinase inhibition

≥ €1bn Metastatic colorectal cancer: 29% improvement of OS

Fast track designation by FDA Filing target: 1H 2012 Phase III study in mGIST met primary efficacy

endopointACS: acute coronary syndrome; AMD: age-related macular degeneration; CR: castration refractory; CRVO:

central retina vein occlusion; DME: diabetic macular edema; DVT: deep vein thrombosis; mGIST: metastaticgastrointestinal stromal tumor; ORS: orthopedic surgery; OS: overall survival; PE: pulmonary embolism; SPAF:

stroke prevention in atrial fibrillation; VTE: venous thromboembolism

Crop Protection –Pipeline with €2bn Sales Potential


Launches 2011–2015e*

2011 Peak salespotential

Insecticide

Fungicide

Fungicide

Herbicide

SeedTreatment

Herbicide

Seed Treatment

Triafamone

Sivanto~ 0.2

~ 2.0

* subject to regulatory approval

Sales in €bn from launches 2011-2015e

New LifeSciences’ Technologies Allow For A Stronger Cross-Fertilization


Paradigm: Mammals and crops differ substantially from each

other► Strong silo mentality in research

Paradigm: There is more common ground between mammals and

crops than assumed before► Growing interest of researchers in different species

(„cross fertilization“)

New Technologies

New Perspectives

… to a multi-species research approachFrom a species-oriented research …

Animal Health Plant Health Animal Health Plant HealthHuman HealthHuman Health


OpportunityEmerging Markets

Emerging Markets –Sales Growth Well Above Global Average


Africa & Middle East

EasternEurope

Emerging Economies

EmergingEconomies¹

+9%

Others²+4%

USA+3%

Western Europe+4%

FY2011 Group Sales by Region

Group €36,528m; +6%

~4,300

+12%~5,100

+5%

~1,800

+9%~2,100

+12%

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%

11%34%

19%

Latin America

Emerging Asia³

Emerging Markets –All Subgroups Have Strong Foothold


= Developed Markets

HealthCare CropScience MaterialScience

+10% +11% +7%= Emerging Markets1

FY 2011 Group sales breakdown; ∆% yoy Fx adjusted

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

43%32% 42%

All BRIC-Countries in Our Most Important Country Portfolio

• Investor Handout • Q1 2012* Greater China includes PR China, Hong Kong, Macau and Taiwan

FY 2011 sales in € billion; ∆% yoy Fx adjusted

*

+3%+5%

+4%

+3%

+13%

+5%+5%

2.0

1.0+10%

+11% +14%+15%

3.0

4.0

+2%

-2%

+1%

Bayer in Greater China – Key Facts


Sales Bayer FY 2011In € million

€2,957m58%BMS

5%BCS

37%BHC

€36,528m

8%China: €2,957m

EmployeesBayer Greater China (FTE)

Sales DevelopmentBayer Greater China (in € billion)

2009 2010

10,0018,350

10,924

2011 2006

1.5

20102009

2.1

2008

1.9

2007

1.8

3.0

2011

2.9

Greater China: PR China, Hongkong, Macao, Taiwan


Efficiency

Restructuring Program Fully On Track


Contribution by Subgroup Target: €800m annual cost savings by 2013

Reinvestment of ~50%

One-time-charges of approx. €1bn of which €842m booked until end Q1’12

Plans include staff reductions of 4,500

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

Measures with €649m annualized savings already implemented

until end Q1’12

CropScience

HealthCareHolding & Admin.

~54%

~34%

~12%

€800m€800m

Full Year 2012 –R&D And CapEx Budgets


1%

MaterialScience0.2bn

HealthCare2.0bnthereof Pharma 1.5bn

MaterialScience0.5bn

HealthCare0.5bn

Reconciliation0.05bn

67%

24%

8%

Reconciliation0.2bn

CropScience0.8bn

CropScience0.3bn

CapEx (PPE) 2012e: ~€1.5bnR&D 2012e: ~€3.0bn

25%

66%

8% 34%

20%

33%

13%


Appendix


Financial Performance –

Q1 2012

1st Quarter 2012 –Encouraging Start To The Year


Q1‘11 Q1‘12 ∆%€ million € million

Sales 9,415 10,056 +7 (+5)

EBITDA- reported 1,866 2,377 +27

- adjusted* 2,232 2,442 +9

EBIT- reported 1,148 1,637 +43

- adjusted* 1,590 1,806 +14

Net income 684 1,050 +54

NCF 801 271 -66

oFCF 563 15 -97

EPS- reported 0.83 1.27 +53

- core 1.45 1.68 +16

Highlights of Financial Results

Organic sales growth of +5%, reported EBIT up 43%, Core EPS +16%

Strong start to the season at CropScience, increases at HealthCare, continuing margin pressure at MaterialScience

Continued innovation pipeline progress

Outlook for 2012 reiterated

( ) = Fx & portfolio adjusted


1st Quarter 2012 –HealthCare: Increase In All Divisions

• Investor Handout • Q1 2012*before special items

Pharma+4% (+2%)

ConsumerHealth

+4% (+3%)36%

Q1’12 Sales

HealthCare €4,342m; +4% (+2%)

2,5171,825

Price0%

Volume+2%

Fx+2%

Portfolio0%

In € million, ∆% yoy, () = Fx & portf. adjusted

Earnings

Q1‘11 Q1‘12 Q1‘11 Q1‘12

724 740

416 441

+2%

+6%

1,1401,181 +4%

313 +9%

806 861 +7%

493 520 +5%

341

Adj.EBITDA*

Adj.EBIT*

1st Quarter 2012 –CropScience: Good Start To The Season


Crop Protection+16% (+15%)

EnvironmentalScience

+5% (+3%)36%

CropScience €2,610m; +16% (+14%)

1,937187

745

981 +32%

Q1‘11 Q1‘12 Q1‘11 Q1‘12Price+1%

Volume+14%

Fx+2%

Portfolio-1%

624

861

Adj.EBITDA*

Adj.EBIT*

+38%

Q1’12 Sales In € million, ∆% yoy, () = Fx & portf. adjusted

Earnings


486

BioScience+21% (+17%)

1st Quarter 2012 –MaterialScience: Continuing Margin Pressure


36%

MaterialScience €2,788m; +4% (+3%)

1,443706

462

177

**CAS: Coatings, Adhesives, Specialties*** IO: Industrial Operations

Polyurethanes+7% (+5%)

Polycarbonates-1% (-4%)

CAS**0% (+4%)

Price0%

Volume+3%

Fx+2%

Portfolio-1%

IO***+13% (+9%)

Q1’12 Sales In € million, ∆% yoy, () = Fx & portf. adjusted

Earnings


345278 -19%

Q1‘11 Q1‘12 Q1‘11 Q1‘12

205

127

Adj.EBITDA*

Adj.EBIT*

-38%

1st Quarter 2012 –Cash Flow And Net Debt Development


-€162m

Q1’12 Cash Flow Net Debt Development

6.9

GCF oFCF

1,595

Invest-ments

256 15

∆ %y-o-y +22 -97

NCFcont.

271

-66 +8Q4´11 Q1´12

7.0

Cash Flow in € million, Net Debt in € billion,

q1 2012 investor handout

Economy & Finance