Bayer plots China growth

24 June 2011

BEIJING: Bayer, the healthcare giant, is putting innovation at the heart of attempts to double its Chinese revenues by 2015.

The company, which makes products like vitamin C supplement Redoxon and cold and flu remedy White & Black, first entered China back in 1882, and displayed considerable optimism about its current prospects.

"China is the largest market in the Asia Pacific region and the third largest single market for Bayer globally," Martin Dekkers, chairman of Bayer's management board, told the China Daily.

"China and Asia are central to our global strategy."

Bayer's three main arms, CropScience, HealthCare and MaterialScience, generated €2.9bn in Chinese sales last year, an improvement nearing 40% on an annual basis.

More broadly, such a figure constitutes 8.3% of the pharma group's worldwide revenues, a total anticipated to rise further going forward.

"We have very ambitious growth targets for China," Dekkers said. "Overall, Bayer aims to double its sales in the country from less than €3bn to €6bn by 2015."

Urbanisation is likely to be one driver supporting this process, given 13 cities across the world's most populous nation should house at least 10m people by 2025.

The resulting knock-on trends may include greater demand for, and access to, over-the-counter and prescription medicines, a requirement for new technologies and rising interest in Bayer's agricultural offerings.

"Bayer specialises in healthcare, high-tech materials and innovative crop-protection solutions," said Dekkers. "We are ready to help provide solutions to these issues."

The organisation allocated €3.1bn to R&D worldwide last year, a new peak, and it expects expenditure to match or surpass such a level in 2011.

"Research is really part of our DNA," said Dekkers. "It is in our blood and it is a key factor of Bayer's success."

"Central to this strategy is creating a closer proximity with our customers, ensuring that we are positioned to quickly respond to their needs."

Within this shift, the firm is extending its Shanghai R&D hub, work set to be completed by the second half of next year, with a focus on mobility, renewable energy and construction.

Such a model forms one element of a planned €1bn investment in the country announced late last year, and a projected €3bn due to be spent in China by 2016.

"This expansion of our R&D facility is an important part of our large and continuous investment here in Shanghai," said Dekkers.

"The expansion of our Center again underscores our company's strong commitment to innovation as a foundation for our future growth."

Bayer also hopes to hire 2,000 sales staff in China over the course of 2011, increasing its on-the-ground expertise and understanding of the marketplace.

"In China it's extremely hard for people not living and working there to truly judge what the customer needs," said Dekkers.

Data sourced from China Daily, Financial Times; additional content by Warc staff