assured 2011
Performance Report

Innovation & Product Stewardship

Innovation is the key to mastering the global challenges related to sustainable development. Through novel solutions in the fields of health care, nutrition and climate protection, we are exploiting new growth areas and thus safeguarding Bayer’s future viability. The highest priorities in connection with all our products are the health and safety of those who use them and the protection of the environment.
A danger to the lungs High blood pressure in the lungs (pulmonary hypertension) can have life-threatening consequences. Bayer research scientists Professor Johannes-Peter Stasch, Dr. Stephan Vettel and Dr. Dieter Neuser (from right to left) are working on new and innovative therapies.
At Bayer, sustainability is directly linked to innovative capability. After all, only sustainable innovations ensure commercial success and society’s future viability. We adapt our research and development activities to current and future market needs on an ongoing basis. We also continuously expand our product portfolio and optimize our production processes. This gives us an important competitive advantage. We distinguish ourselves from our competitors in the world market through innovative products and excellent research and technology. We focus constantly on the safety and compatibility of our products and the protection of the environment. Product innovations are steered by the subgroups. In this way we ensure that research activities are aligned closely to our businesses and the respective market needs. The subgroups are supported by our service companies – Bayer Technology Services as a technological center of expertise for processes and facilities, and Bayer Business Services and Currenta.

Targets 2015

Research & development

  • Maintain or increase R&D spending in relation to sales

Product stewardship

  • Roll out Global Product Strategy in another 10 countries with different languages

Research & development

The inventor company Bayer focuses on research and development, on which the company spent €2.9 billion in 2011. This was equivalent to 8.0 percent (2010: 8.7 percent) of sales. Of the Bayer Group’s entire R&D expenditures in 2011, Bayer HealthCare accounted for 66.4 percent, Bayer CropScience for 24.7 percent and Bayer MaterialScience for 8.1 percent. The number of employees working in research and development worldwide was 13,300.
7 Research and development expenses * (€ million)
of which Bayer HealthCare1,7001,7421,8472,0661,948
of which Bayer CropScience637649653722723
of which Bayer MaterialScience**209221207231237
of which reconciliation ***3241393424

* Figures for 2007-2010 as last reported

** Not included: R&D in collaboration with customers

*** Not directly allocated to the subgroups; mainly expenditures of the service companies

Bayer HealthCare has a well-stocked pharmaceutical pipeline. There were 43 innovative projects in Phase I to Phase III of clinical development as of February 2012. Bayer CropScience too is focusing on growth through innovation. Four new crop protection products are scheduled to be introduced to the market between 2012 and 2015. Future growth in BioScience, too, is supported by the introduction of new varieties and plant traits. In total, more than 1,400 people around the world work in the area of innovation at Bayer MaterialScience. In 2011 Bayer MaterialScience invested some €237 million in research and development, corresponding to more than 2 percent of total sales. These investments pay off: 256 patent applications were filed in 2011 alone.

Excellence through networks

The complex nature of global challenges demands an integrated approach and the pooling of various competencies provided by internal and external know-how so that business ideas can be rapidly converted into successful products. For Bayer, global networking with the scientific community and various partners along the value chain is an important element in ensuring successful research activities. Joint research projects based on the open innovation approach are a key component of our innovation strategy. In this context, we also rely on an international network of leading universities, public research institutes and partner companies. We are continuously expanding this network to include, among other facilities, innovation centers known as “science hubs” in emerging regions such as Asia. Such research collaborations are partly supported through public funding. This makes it easier for the company to decide in favor of future-oriented, high-risk research. Overall, Bayer was involved in around 114 projects in Europe in 2011, for which it received total public funding of around €18 million. This corresponded to about 0.6 percent of the company’s research and development expenses. An overview of Bayer’s global research activities can be found in our Annual Report 2011.
We also implement various measures internally to ensure a lively and open culture of innovation. For example, the “Expert Club” – which is headed up by the member of the Board of Management responsible for Technology, Innovation and Sustainability – promotes the exchange of best practices by scientific experts from all the subgroups. Regular meetings involving up to 100 participants are held to discuss current research issues and best-practice examples from the specialist units. The “Expert Career” initiative offers leading employees from research and development targeted career development opportunities. With the global “Triple-i” [ 66 ] (inspiration, ideas, innovation) initiative, we motivate all employees in all countries to actively share their own business ideas and contribute to innovation at Bayer. Some 13,000 ideas have been submitted overall since 2006.
Innovative proposals – particularly as regards process improvements – are also submitted through the company’s suggestion system, the Bayer Ideas Pool [ 67 ].

Biotechnology and nanotechnology: drivers of innovation

Future research and production viability in the area of pharmaceuticals and plant technology would be difficult to imagine without the application of biotechnology. Plant biotechnology can help to improve the yield and stress resistance of plants through both genetic engineering and modern non-genetic engineering methods. This in turn enables the efficiency and yield security of agricultural production to be improved without increasing the input of resources. In pharmaceutical research and production as well, biotechnology has become increasingly important in recent years.
We manufacture two of our best-selling products – the multiple sclerosis drug Betaferon™/Betaseron™ and the hemophilia treatment Kogenate™ – using biotechnological processes. The applied process technologies include bacterial fermentation, yeast fermentation and mammal cell cultures. Our development candidate VEGF Trap-Eye, an active ingredient for the treatment of wet age-related macular degeneration developed together with our partner Regeneron, is also produced in a biotechnological process. For a number of years now, Bayer has been continuously expanding its activities in the area of biologicals research and has also increased its production capacities for new biologicals so as to produce sufficient material for the required clinical studies. In Wuppertal the framework of the cell biology pilot plant was completed in 2011; the interior of the building, including laboratories and production facilities, will be completed in September 2012. The capital expenditure volume for this project will total €35 million.
New technologies always require transparent action and stringent risk management. Safety is our top priority in the use of biotechnology. Bayer addresses the concerns of consumers who are worried about health risks for people and negative effects on indigenous plants and animals as a result of genetically modified organisms. We explicitly respect consumers’ desire for more information and the freedom to make their own purchasing decisions. Beyond the observance of all relevant legal provisions, we have formulated our own Position on the Responsible Use of Gene Technology [ 68 ], a Position on Plant Biotechnology for Sustainable and Responsible Agriculture, and specific regulations for the subgroups and service companies. Before any product reaches market maturity, we subject it to a stringent approval process to determine whether it is safe for people, animals and the environment. In accordance with our new company-wide Responsible Marketing & Sales Policy [ 69 ] (see also the Management & Corporate Governance chapter) and the Directive on Integrity & Responsibility in Communications and Marketing, [ 70 ] we provide our stakeholders with comprehensive, transparent and reliable information about our products and services.
In 2011 Bayer CropScience continued its activities in the context of the “Excellence Through Stewardship” program, a voluntary initiative by industry to implement product stewardship and quality management processes in connection with plant biotechnology. As a member of the German biotechnology industry association BIO Deutschland [ 71 ], Bayer CropScience works – in accordance with BIO Deutschland’s product launch policy – to reduce the risk of trade disruptions. These can occur in the commercial cultivation of genetically modified plants owing to varying registration systems worldwide. Bayer HealthCare has established strict production safety measures in its Directive on Biological Safety and its “Requirements for the safe handling of biological agents” procedure.
Alongside biotechnology, nanotechnology is regarded as an innovation engine of the 21st century. This technology offers significant innovation potential for a wide spectrum of industries and forms of application. It enables us to develop new materials and components with improved properties, functions and levels of performance for which many applications are conceivable. As nanotechnology is a relatively new technology, it is particularly important to conduct a sound, scientific risk analysis of the manufactured nanomaterials that focuses on protecting human health and the environment. We have summarized our principles for the handling of nanotechnology in the Group-wide Position on Nanotechnology [ 75 ].

Patents: protecting intellectual property worldwide

As an inventor company, Bayer is dependent on reliable global protection of its intellectual property. At the end of 2011 there were 77,000 valid patent registrations and patents, as well as 12,000 protected inventions at Bayer worldwide. The funding for important innovations must be secured reliably and over the long term. A patent usually remains valid for 20 years. As a new pharmaceutical takes 12 years to develop on average, this generally leaves eight years of patent protection for a drug product following its registration. Without patent protection, there is no way to cover the substantial costs incurred in the search for new solutions. Ongoing patent costs amount to 2 percent of Bayer’s annual research and development expenditure. Patented products and technologies account for around 40 percent of the sales generated by each of our three subgroups. We are therefore actively committed to promoting patent protection and protecting our own intellectual property around the world.
To support the development of industrial property rights and trademark rights in China, Bayer funds a professorship for industrial property rights (“IPR Chair”) at Tongji University in Shanghai and an annual IPR forum on current issues surrounding the protection of intellectual property rights.


Patent dispute concerning Nexavar in India

The Indian patent authorities in March 2012 granted Indian generics producer Natco a compulsory license for the Bayer cancer drug Nexavar™. Bayer does not consider that the requirements are in place for the granting of a compulsory license and will appeal the decision by the patent authorities in order to defend its patent rights.

The Indian health system indisputably faces particular challenges as regards medical care for the country’s population. However, these challenges are hardly connected with pharmaceutical product patents, as none of the drug products on the Indian list of essential pharmaceuticals is patented.

The granting of compulsory licenses alone therefore cannot solve the problems facing the Indian health system. Instead, the decision is harmful to the international patent system and thus threatens pharmaceutical research in the long term. After all, investment in the research and development of both innovative drug products and future therapies can only be financed through patent rights.

There should therefore be a closer focus on allowing patients direct access to innovative drug products. Since introducing Nexavar™ in India, for example, Bayer has offered a patient assistance program that is regularly expanded. As part of this program, needy patients are currently supplied with Nexavar™ at approximately 10 percent of the pharmacy price. Patients receive advice from their attending physicians based on their therapeutic response to the drug and their financial situation.

Product stewardship at Bayer

The comprehensive assessment of risks to health and the environment along the entire value chain of a product – from research and development through production, marketing and use by consumers to disposal – is a cornerstone of our sustainability strategy. The safe handling and use of our products lie at the focus of our activities, which also include transparent communication and distribution of our product safety information. Our sustainable actions include not just compliance with statutory requirements, but also our voluntary efforts. Here we also take into account the precautionary principle [ 72 ] as defined by the United Nations and the European Commission.
In 2006 the international United Nations Conference on Chemicals Management (SAICM) [ 73 ] agreed to minimize the negative impact of chemicals on human health and the environment by 2020. The chemical industry committed to a voluntary obligation to support this process. An important part of these activities is our support for the Global Product Strategy (GPS) [ 74 ], which is aimed at the safe handling of chemical products. Bayer has a tradition of commitment. Since 1994 we have been committed to the voluntary Responsible Care® [ 76 ] initiative of the chemical industry, which was globalized in 2006 with the Responsible Care Global Charter [ 77 ].
Since 2007 we have operated in accordance with the new European chemicals regulation REACH [ 78 ] (Registration, Evaluation, Authorization and Restriction of Chemicals). At the same time, we are implementing the Globally Harmonized System (GHS) [ 79 ] for the classification and labeling of chemicals, which came into effect in the E.U. in 2009.
We also participate in the further development of scientific risk assessment through associations and political initiatives. More information on our international product safety activities [ 80 ] is available on the internet.
Our activities as regards process, plant, occupational and transport safety are described in the Employees and Ecology chapters.

Fulfilling our obligations

The European chemicals regulation REACH applies irrespective of the marketing activities involved for all substances that we produce or import in quantities of more than one metric ton. REACH affects all activities by Bayer as a manufacturer, importer and user. To adequately address the scope and complexity of the REACH regulation, we have formulated Group-wide and subgroup-specific directives. In 2010 we met the first deadline by completing the registration phase for substances we produce or import in volumes of more than 1,000 metric tons annually or that are particularly hazardous. In 2011 we began compiling the dossiers for the second registration phase, in which all substances we produce or import in a volume greater than 100 metric tons annually must be registered by June 1, 2013. REACH also involves an authorization procedure that could lead to the replacement or prohibition of hazardous substances. Bayer is not yet affected by this authorization process, which was introduced in 2011. The substances from the first registration phase are now being evaluated by the regulatory authorities. In the future this could result, for example, in additional testing requirements, new risk management measures or the inclusion in the authorization procedure. Furthermore, the European Chemicals Agency (ECHA) organizes REACH inspections each year that are carried out by the respective national agencies (e.g. trade inspection agencies). In 2011 REACH inspections took place at two Bayer HealthCare sites but did not result in any complaints. As Bayer also uses products from other manufacturers, we maintain close contacts with our suppliers and ensure that they confirm compliance with REACH for these products.
Alongside REACH, the introduction of the GHS regulation is the second major change to take place in European chemicals law in recent years. The aim is to implement a globally standardized system for classifying chemicals and labeling them appropriately on packaging and in material safety data sheets. All substances marketed and sold in the European Union that require classification according to the GHS must be notified to the European Chemicals Agency (ECHA). In 2010 we notified within the deadline more than 1,000 substances marketed by us at that time. Since then, all new substances have been notified through the normal processes. Parallel to the changes in Europe, we also observe regulatory changes in the countries where our trading partners are based and make available corresponding material safety data sheets and labels there as well.

Target 2015

The Global Product Strategy (GPS) is a voluntary commitment by the chemical industry. It was initiated by the International Council of Chemical Associations (ICCA) to improve knowledge about chemical products, especially in emerging and developing markets, and thus increase safety in the handling of these products. The ICCA has established an information portal through which summarized details on products – so-called “GPS Safety Summaries” – are made available. In 2011 Bayer began entering product safety summaries [ 81 ] in the information portal. The Global Product Strategy is very important to us, the focus being on the activities of Bayer MaterialScience. The specific goal for 2015 is to roll out the GPS in 10 additional countries via our BayCare platform.

Group-wide registration of product data

The implementation of REACH and the GHS is closely interlinked with that of the Global Product Strategy and the Responsible Care Global Charter. Group-wide working groups coordinate their implementation at Bayer. All subgroups compile product information enabling them to meet the respective product safety and information obligations for raw materials, intermediates or end products. This data compilation is updated accordingly whenever new legal requirements are established. We address all major elements of the Responsible Care Global Charter with our HSEQ management systems and activities. More information on this can be found in our online report [ 82 ].

Animal welfare – an important goal

As a research-based company, we investigate the effects of our products on people, nature and the environment. In this connection, animal studies are legally prescribed and scientifically necessary. Animal studies are only replaceable to a certain extent in the research of new active pharmaceutical ingredients. In our handling of animals, we respect all legal requirements pertaining to animal welfare. Wherever animal studies may be required to evaluate our innovative substances, Bayer adheres to the so-called 3R (replace, reduce, refine) principles. Animal studies should be replaced by alternative methods wherever possible. We first ask ourselves whether a recognized method is available that does not rely on animal studies. In the event that no alternative method exists, only as many animals are used as are needed to achieve scientifically meaningful results based on statutory requirements. We make sure animal studies are performed in a way that is as gentle on the animals as possible. These principles also apply to both the research institutes contracted to us and our suppliers, whose compliance with our animal welfare requirements we regularly monitor. The most recent figures and further information on animal welfare and animal studies [ 84 ] can be found on the internet.
The Global Animal Welfare Committee established in 2010 monitors the observance of our “Bayer principles on animal welfare and animal studies” within the Bayer Group and in external studies. To this end, the committee – which is comprised of the animal welfare officers at our research sites and further Bayer experts – in 2011 began defining key performance indicators with which we aim to measurably communicate our efforts on behalf of animal welfare. We also plan to establish an internal database in which we will compile all information about our cooperation partners worldwide for access throughout the entire company. Bayer HealthCare participates in several European consortia that aim to reduce or improve the validity of animal studies: we are active, for example, in the European Partnership for Alternative Approaches to Animal Testing (EPAA) [ 87 ] and are involved in the leadership of the eTOX project and the MARCAR project of the Innovative Medicines Initiative (IMI). We also support the Foundation for the Promotion of Alternate and Complementary Methods to Reduce Animal Testing (SET) [ 90 ].

Protection against counterfeit products

Bayer is active in the fight against the illegal trade with counterfeit pharmaceuticals and crop protection products. Such products can present considerable dangers to people and the environment due to deficient properties such as their uncontrolled composition. In close cooperation with regulatory authorities, Bayer actively works to minimize the possible negative effects on the health of patients, customers and users. The focus is on education and information, as well as on legal steps aimed at minimizing illegal trade and ensuring the reliable identification of our original products.
Through the internet platform “Beware of Counterfeits” [ 83 ], Bayer HealthCare informs patients about the risks of counterfeit pharmaceuticals and provides important tips on how patients can protect themselves. The site is regularly updated and is being expanded worldwide. By providing extensive resources, furthermore, Bayer HealthCare supports the establishment of a pan-European system for the verification of pharmaceutical packaging in accordance with the proposal of the EFPIA [ 85 ] (European Federation of Pharmaceutical Industries and Associations), as well as its implementation in Germany through the “SecurPharm” [ 86 ] project. Substantial investments have already been made to implement the corresponding systems worldwide.
The proportion of counterfeit products in the crop protection market lies between about 5 and 7 percent. Bayer CropScience therefore fights illegal crop protection products both with its Product Defense Network and by supporting regional and global association committees such as the Anti Counterfeiting Expert Group of the European Crop Protection Association (ECPA) [ 88 ] and the Anti-Counterfeiting Steering Committee of CropLife International (CLI) [ 89 ]. Our Product Defense Team cooperates intensively with national and international authorities, which regularly leads to numerous confiscations of counterfeit products and the prosecution of the counterfeiters in a number of countries. In connection with CLI’s “Know Your Customer” campaign, Bayer CropScience since 2010 has maintained an initiative, in collaboration with shipping companies, aimed at preventing the transport of counterfeit products by more closely inspecting freight and customers, among other measures.
Bayer CropScience also works not only to strengthen existing legislation, but also to expand laws and provisions dealing with the identification and confiscation of illegal crop protection products.
Here the company supports initiatives of the ECPA and CLI aimed at providing information and training for dealers, farmers and governmental agencies through anti-counterfeiting training materials (manuals, workshops).
In 2011 Bayer CropScience began replacing its generic industry packaging with Bayer-specific, more counterfeit-proof packaging developed by the Packaging Technology Department. Furthermore, communication of the potential risks and dangers of illegal crop protection products in the media was further intensified in the reporting period.

Innovation for health – Bayer HealthCare

Bayer HealthCare is a health care company with global research activities that develops products in the areas of Pharmaceuticals, Consumer Care, Medical Care and Animal Health. These four areas account for two thirds of Bayer’s R&D expenses. Three current examples of our innovations are described in the inset below. We pursue a long-term research strategy by developing therapeutic options for currently unmet medical needs. To create additional value for physicians and patients, we aim in the future to think beyond individual products and focus more closely on the development of integrated solutions combining products and services. Such solutions could range, for example, from the prevention through the diagnosis and treatment to the secondary prevention of cardiovascular disease.
We intend to further strengthen our global network through external research partnerships in science and industry to supplement our research infrastructure and safeguard our product pipeline.


Cooperation to treat heart failure

Bayer research scientists Diana Dutcher and Mark Hilse (from right) looking at a model of vessels of the cardiovascular systemZoom image
Bayer research scientists Diana Dutcher and Mark Hilse (from right) looking at a model of vessels of the cardiovascular system
New methods for the early diagnosis and causal treatment of heart failure (myocardial insufficiency) are at the focus of a new partnership between Bayer HealthCare Pharmaceuticals and the Ludwig Boltzmann Institute for Translational Heart Failure Research in Graz, Austria. Heart failure currently affects more than 23 million people worldwide. The five-year mortality rate for patients with heart failure is greater than 50 percent, which is higher than that of many cancers. The collaboration ideally complements Bayer’s research activities in the field of cardiology. The focused collaboration between basic researchers, application-oriented scientists and experienced heart specialists enables internationally competitive research that centers on improving the provision of medical care and the quality of life of the patient.
In the development of our products, we are committed to the responsible use of innovative technologies. Some of our product pipeline candidates are being further developed for the treatment of serious and at the same time very rare diseases – also known as orphan diseases. The active ingredient regorafenib was granted orphan drug status by the U.S. Food and Drug Administration (FDA) [ 91 ] for the treatment of patients with gastrointestinal stromal tumors (GIST). In the United States, substances qualify for orphan drug status if they help to diagnose, treat or prevent a disease from which fewer than 200,000 people throughout the country suffer.
Advances in the field of biomedical research open up completely new opportunities for us. At the same time, however, they raise questions about the responsible use of new technologies. This applies, for example, to pharmacogenetics, stem cell research and regenerative medicine. We address concerns and suggestions, and undertake to act ethically. Stem cells provide a beacon of hope in medicine, as they can be transformed into various cell and tissue types. Bayer HealthCare is not currently conducting research projects with embryonic stem cells and has not done so in the past. However, we remain convinced that research – particularly with adult stem cells – in the field of regenerative medicine should be promoted. Scientific discoveries in this area could lead to new therapeutic solutions for serious and life-threatening diseases.

Sustainable innovation at Bayer HealthCare

We conducted clinical studies with several drug candidates from our research and development pipeline during 2011 to drive the development of new substances to treat diseases with a high unmet medical need. Drug discovery is concentrated in the areas of cardiology and oncology, along with gynecological treatments and hematology. Other areas of focus are inflammatory processes and ophthalmology.
  •  In the field of cardiology, for example, an oral anticoagulant could help to reduce the risk of stroke and embolism. In addition to stroke prophylaxis in adults with non-valvular atrial fibrillation the drug can also be used for prophylaxis of venous thromboembolism following elective hip or knee-joint replacement surgery or for the treatment of deep vein thrombosis.
  •  In the field of oncology a novel oral active ingredient for the treatment of metastatic colorectal carcinomas (mCRC) and gastrointestinal stromal tumors (GIST) is in clinical development.
  •  Together with a cooperation partner we are working in the field of opthalmology on the development of an active ingredient for the treatment of wet age-related macular degeneration. This eye disease is among the most frequent causes of irreversible loss of vision in elderly patients.
Further information on our highly promising development candidates can be found in the Annual Report 2011.

Safety risk management processes for medicinal products and devices

Bayer HealthCare continuously assesses the medical benefit-risk ratio of all its pharmaceutical and medical products over their entire life cycle. Within the framework of the safety risk management process at Bayer HealthCare, experts from various disciplines form cross-functional Safety Management Teams (SMTs). These teams jointly evaluate the available data on the product and other relevant information in order to identify possible safety risks at an early stage. This also involves evaluating external databases to ensure the available data are on the broadest possible footing, thereby enabling an even more reliable determination and understanding of existing risks and their features. Should significant risks be identified, Bayer HealthCare immediately takes measures to minimize them, such as updating the product information for patients and physicians. Further tools include targeted information, e.g. patient educational brochures, patient alert cards and training measures for physicians and patients, among others. SMTs compile all information and produce detailed safety risk management plans. These plans are intended as “dynamic” documents that are immediately updated as soon as relevant new safety data become available.
The Global Pharmacovigilance unit of Bayer HealthCare, which is also in charge of the cross-functional SMTs, pools all safety-relevant information on our products on an ongoing basis. This information is continuously updated and evaluated by experts. Bayer works closely with the responsible regulatory and oversight authorities at an international, national and regional level. These include the U.S. Food and Drug Administration (FDA), the European Medicines Agency (EMA) [ 93 ] and Germany’s Federal Institute for Drugs and Medical Devices (BfArM) [ 94 ].
The Bayer HealthCare quality processes also play a key role in added safety. They describe Bayer HealthCare-wide measures aimed at permanently and continuously satisfying external and internal requirements for quality assurance in Bayer HealthCare products. The observation of technical compliance standards is verified through systematic internal inspection both for research and development and for production. These audits also cover contracted institutes and suppliers. With the help of a safety risk management system, drug product risks are systematically identified and assessed and the necessary steps initiated. Countries and regions receive continuous support in observing pharmaceutical compliance. The results of our risk management processes and the activities derived from them help to ensure the safety of our patients and the correct use of our products, thus ensuring an optimal medical benefit-risk ratio.
Bayer HealthCare undertakes with its Good Publication Policy to observe recognized international standards in scientific publications. We base the implementation of all clinical studies on the Good Clinical Practices of the World Health Organization (WHO) and on the guidelines of the International Conference on Harmonization (ICH). We transparently disclose the methods and results of clinical trials. We publish an overview of ongoing clinical studies[ 92 ] on the internet.

Possible product risks present special challenges

As a global company with a diverse business portfolio, the Bayer Group is exposed to numerous legal risks, especially in the area of product liability. Bayer is insured against product liability risks to the extent customary in the industry.
More detailed information on the special challenges we face – for example in connection with our oral contraceptives Yasmin™ and Yaz™, or with Magnevist™ or Trasylol™ – is found in our Annual Report 2011 and in the respective current Stockholders’ Newsletter.

Analysis of pharmaceuticals in the environment

The product stewardship of Bayer HealthCare also involves carrying out studies on the environmental behavior and impact of active ingredients from various product groups so that we can assess the possible environmental reactions of trace amounts of our pharmaceutical products.
Following the use of human pharmaceuticals by patients, trace amounts or degradation products in many cases are excreted and can thus enter wastewater. Wastewater treatment facilities reduce or degrade these substances. However, some substances are not completely removed and can thus enter natural bodies of water. A special working group at Bayer HealthCare conducts tests on ecotoxicity and on the dispersal and degradation behavior of our pharmaceuticals so as to keep trace elements in the soil and groundwater as low as possible and enable risks to be assessed. These assessments have been documented in the dossiers for the European regulatory authorities since 2006. We are not currently aware of any trace amounts of human pharmaceuticals in drinking water that present a risk to people. This is confirmed by the 2011 WHO Report on Pharmaceuticals in Drinking Water [ 95 ]. In addition to the aforementioned studies, Bayer HealthCare is currently developing a more comprehensive strategic approach to this issue. Supplementary stakeholder dialogues or the development of internal Bayer wastewater standards are among the elements of a future strategy that are being discussed.
For a number of years now, Bayer HealthCare has participated as an industrial stakeholder in important research projects dealing with pharmaceuticals in the environment. One activity being undertaken with various cooperation partners, including from the water resources industry, is the European PILLS (Pharmaceutical Input and Elimination from Local Sources) project. The PILLS partnership [ 96 ] focuses on the development of local wastewater treatment facilities for hospitals and nursing homes. Initiated in 2007, the project has been extended until 2012. The planned pilot treatment facilities were completed and commissioned in 2011, and the analyses at these plants are currently ongoing. The results will be incorporated into a comprehensive comparative evaluation of the treatment technologies. Bayer HealthCare is represented on the scientific advisory committee of PILLS and is contributing its expertise in the assessment of the ecological risks of pharmaceutical trace amounts.
With regard to animal health products, it must be demonstrated to the regulatory authorities during the registration process that no significant risk exists for the environment when the products are used correctly. Bayer HealthCare has conducted and submitted to the responsible agencies the studies and environmental analyses required for this.

Protecting the health of animals

Bayer HealthCare has marketed products for livestock and companion animals for more than 100 years. The company today offers over 100 different products that are used in animal health and parasite control. These products not only benefit the animals, but also minimize the risk of transmission of possible pathogens to humans.
Stringent safety and quality standards – comparable with those in human medicine – apply at Animal Health for our conventional pharmaceutical products, such as antibiotics or injection solutions. In line with the statutory requirements, strict quality standards also apply to all other product classes. Here we focus particularly on the environmental compatibility of our products. Within the scope of the registration processes, Bayer HealthCare carries out studies and environmental analyses in order to rule out possible environmental risks through the use of our products. We actively contribute our experiences to the Environment and Safety expert groups of the German Association for Animal Health (BfT) and the International Federation for Animal Health (IFAH).
We train veterinarians and private users in the responsible use of our products and provide them with relevant information materials. In this context, we support the European Platform for the Responsible Use of Medicines in Animals (EPRUMA) [ 102 ] initiative, which brings together various partner organizations from politics, industry and society. We provide assistance here in minimizing the risk of infectious disease among animals and thus reducing the consumption of antibiotics.

Responsibility in the marketing of medicines

Bayer HealthCare also complies with stringent provisions for the marketing of our pharmaceuticals and observes international, regional and national industry codes.
Bayer HealthCare is a member of the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) [ 97 ] and regional associations such as the European Federation of Pharmaceutical Industries and Associations (EFPIA), and is committed to observing the corresponding codes. These codes contain provisions governing, among other issues, advertising material standards, the distribution of samples, cooperation with members of medical and pharmaceutical specialist groups in connection with speaker and consultancy contracts, and scientific studies.
For Bayer HealthCare, the global minimum standard for the advertising of pharmaceutical products comprises the Ethical Criteria for Medicinal Drug Promotion [ 98 ] of the World Health Organization (WHO).
National ethical standards also apply and are generally specified in local industry codes such as that of the association “Voluntary Self-Monitoring by the Pharmaceutical Industry (FSA) [ 99 ]” in Germany. These local codes refine the provisions of global or regional codes based on the respective applicable local laws.
Wherever there are discrepancies between the provisions we have undertaken to observe, the more stringent requirement principally applies.
Also applicable are the provisions of our company-wide Corporate Compliance Policy, the new Bayerwide Responsible Marketing & Sales Policy [ 100 ] and the Integrity & Responsibility in Communications and Marketing Directive [ 101 ]. In 2011 Bayer HealthCare began compiling all requirements for compliant and ethical conduct in a comprehensive, globally applicable compliance manual. A global training campaign for all Bayer HealthCare employees will be launched in 2012 on the basis of this manual.

Innovation in many fields – Bayer CropScience

With its global research activities, Bayer CropScience contributes to the development of innovative solutions in the areas of modern crop protection, seed and plant traits, and non-agricultural pest and weed control. This includes, for example, the development of innovative fungicides for use in cereals, potatoes and other large-area crops, as well as in fruit and vegetables. These products control diseases caused by fungal infestation. Further benefits are better storability and longer shelf life of harvested produce. Bayer CropScience will continue to rely on its innovation potential in crop protection in the future: the subgroup plans to launch four new products onto the market between 2012 and 2015, supported by the introduction of new varieties and plant traits in BioScience.
CropScience is refocusing its research and development activities so that it can better respond to the future development of global markets. Bayer CropScience is thus more closely concentrating its activities on the BioScience Business Unit, with its seeds and traits, and on new growth areas in agrochemical research, such as plant health and stress tolerance. BioScience is currently researching optimized plant traits and improved seed in about 60 projects. Here, Bayer CropScience is also relying on research partnerships and collaborations – with currently around 90 ongoing research agreements with public and private partners such as the Australian research institute CSIRO – in order to pool a wide range of expertise. This broad research approach also served as the foundation for last year’s new innovations. Three examples are detailed in the inset below.
We strive to help improve people’s quality of life with innovative products. Thus it is all the more important that they reach the customer efficiently. With the help of new concepts, Bayer CropScience aims to strengthen and improve its distribution and marketing activities along the entire value chain – from seed to shelf.

Focusing on product safety

The safety of our products is very important to us. This applies to both crop protection and to pest, weed and disease control in non-agricultural applications, as well as in plant biotechnology. Bayer CropScience ensures already at the research stage that its activities are compatible with our sustainability approach. As the products are further developed, we subject them to stringent and extensive testing that in turn is regulated by governmental agencies. Our toxicologists evaluate the toxicological properties of the active ingredient and its formulation, while our residue analysts determine how much product residue remains on the plants following proper application and how these amounts can be reduced through washing or processing. Before a product is ultimately introduced to the market, experts conduct numerous further safety tests with regard to its use and environmental behavior, depending on the product area.

Sustainable innovation at Bayer CropScience

GlyTol™: protecting cotton

GlyTol™ technology makes cotton plants resistant to glyphosate herbicides. In addition, we offer two products for the cotton industry that combine different herbicide tolerance technologies for the first time. These contain both GlyTol™ and the LibertyLink™ technologies.

Emesto™: higher yields for potatoes

The new fungicidal seed treatment product Emesto™ (active ingredient: penflufen) is used in potato growing. It features outstanding efficacy against black scurf, a plant disease that impairs the yield and quality of potato harvests. Emesto™ ensures improved quality in potatoes and increases the marketable yield. In August 2011 Bayer CropScience was granted marketing authorization for this product in the United Kingdom – the first registration worldwide. Emesto™ is expected to be registered in a total of more than 30 countries around the world.

Luna™ ensures healthy plants

The Luna™ product family (active ingredient: fluopyram) was developed specifically to combat plant diseases caused by fungal pathogens. It is used in more than 70 different crops, including fruit and vegetables, potatoes and flowers. Luna™ improves the long-term health of plants, as well as the quality and storage suitability of the produce. The product has been available in the United States since February 2012. Bayer CropScience received marketing authorization for Luna™ in Germany in April 2012. Further authorizations are to follow in 2012.
Bayer CropScience observes the International Code of Conduct on the Distribution and Use of Pesticides of the United Nations Food and Agriculture Organization (FAO) [ 103 ]. The principles of this code cover the entire life cycle of a product, from its development to its application and beyond. Bayer CropScience implements all major aspects of responsible product handling in its Product Stewardship Program. This program adheres to the basic principles of our Product Stewardship Policy [104], which we have spelled out in a brochure.
With its commitment to the FAO Code and its Product Stewardship Policy, Bayer CropScience also meets the requirements of the responsible marketing approach described in our new Group position.
Even beyond its core business, Bayer CropScience participates in projects targeted at added product stewardship. We are a member of the Better Sugarcane Initiative (BSI) [ 105 ] and the International Sustainability & Carbon Certification system (ISCC) [ 106 ], which work on behalf of sustainable sugarcane cultivation in Brazil. We also take part in the Round Table for Responsible Soy (RTRS) [ 107 ] in the context of our efforts to bring about sustainable soybean production.

Responsibility for customers and partners

A central aspect of product stewardship at Bayer CropScience is the support we provide to our customers and partners – such as farmers, dealers and medical personnel – in the proper and safe use of our products. Crop protection products in particular must be used extremely carefully. We organize targeted training programs to help ensure that our products are applied in a way that is effective and safe for users, the environment and consumers. Furthermore, we provide our customers with handbooks explaining the safe use, storage and disposal of all of our products.
We train farmers around the world in the proper use of Bayer products and the correct way to wear protective clothing and practice sustainable waste disposal. For example, in 2011 we organized training and information events in India at which we demonstrated the safe use of crop protection products to more than 1.2 million participants. Bayer CropScience also continued its AgroVida program in South and Central America. Since the 1990s we have implemented various initiatives in this region to increase farmers’ safety awareness and specialist expertise. In Colombia we again trained some 13,000 farmers in 2011. As part of the AgroVida (Agro Vida Banao) program, Bayer CropScience instructed farmers in the Sancti Spiritus region of Cuba in new methods for the integrated cultivation of onions. In all we trained about 13,500 farmers in the Central America and Caribbean region (excluding Mexico) in 2011.
We are also active in the improvement of technical solutions: in Europe, we drove forward the optimization and implementation of sowing machines to provide better protection for users and the environment. The company’s range of educational programs for product stewardship is rounded out by internal employee training measures. Bayer CropScience provides information on how to deal with herbicide resistances through its integrated weed management brochure [ 110 ]. This approach includes important tools and strategies for farmers such as crop rotation, crop practices and field hygiene, and the use of herbicides with different principles of action.

Gradual replacement of WHO Class I pesticides

In streamlining its portfolio, Bayer CropScience continually launches onto the market crop protection solutions with better environmental properties – for example by introducing new active ingredients, formulations, products, application technologies and types of packaging. We discontinued the sale of crop protection products containing endosulfan worldwide at the end of 2010. In the course of our portfolio streamlining process, we discontinued the marketing of nematicidal end products based on fenamiphos and ethoprophos, and of aldicarb-based products.
By the end of 2012, Bayer CropScience will allow the sale of all remaining WHO Class I insecticide formulations for leaf and soil applications and seed treatments to expire. Information on E.U.-wide requirements for crop protection products [ 108 ] can be found in the online report.


Bayer launches global Bee Care Program

To further promote the health of bees, Bayer has started a worldwide Bee Care Program. As part of the program in 2012, two bee care centers, one in Monheim, Germany, and the other in North Carolina, United States, will be developed. These will serve as scientific and communication platforms and combine Bayer’s extensive bee health experience and expertise under one roof. This includes existing and future bee health projects carried out in collaboration with external partners such as the development of new bee drugs. We will also continue to work with research institutes around the world on matters of bee health and participate in various working groups on bee safety, such as the ICPBR Bee Protection Group.

Bee health and plant protection

Bees play a key role in the pollination of many flowering plants and are an essential component of many ecosystems. The promotion of bee health [ 109 ] worldwide is, therefore, an important task for everyone, whether they are beekeepers, farmers, politicians, businesses or gardeners. For a company like Bayer, which is involved in agriculture and animal health, the safety and health of bees is very important: many agricultural crops require the pollination services of bees and this is therefore an important component of sustainable agriculture.
Although the number of colonies worldwide has been increasing for decades, in some countries, particularly in Europe and North America, a decrease has been observed. Bayer supports scientific research into the causes of this decrease. Among the scientific literature some publications have recently appeared that link a decrease in bee populations with crop protection agents. These studies were, however, performed completely or partly under unrealistic conditions and therefore cannot be applied to real-life practice. Scientists around the world agree that bee diseases, particularly caused by the Varroa mite, extreme environmental and climatic factors and also changes in the agricultural landscape in recent years are the main factors affecting bee health. The hypothesis that pesticides play a significant role is refuted by a number of scientific studies and monitoring.


Focusing on sustainability

Scientists from renowned research institutes met in September 2011 with representatives from Bayer CropScience to exchange experiences at the German Climate-KIC Center in Berlin. In addition to the Commonwealth Scientific and Industrial Research Organisation (CSIRO), Australia’s national research organization, representatives from the Potsdam Institute for Climate Research (PIK) and the German geo-research center GEZ also participated in the event. The purpose of the meeting was to present the first results of a research collaboration between CSIRO and Bayer CropScience aimed at determining the sustainability of new plant technologies and cultivation systems. Initially scheduled to run for two years, the project will aim to develop and apply methods for predicting the environmental balance of new-generation cereals and their positive contribution to food security.
To prevent erroneous applications of pesticides, as regrettably occurred in 2008 on the Upper Rhine in Baden-Wuerttemberg, when faultily treated corn seed resulted in bee losses, we conduct extensive product stewardship measures. To ensure an excellent seed dressing quality of our products, a multi-step quality program for seed dressing was developed at our Seed Treatment Application Center in Monheim.
Bayer is also working closely with users worldwide (farmers, employees of seed treating companies) to ensure that sustainable, prudent and appropriate application practices minimize unwanted dust drift during sowing. We want to ensure that the procedures for drift reduction, developed by Bayer and the agricultural machinery industry, set the standard across Europe.
Bayer is in a unique position in our industry since, through Bayer Animal Health, we have been actively researching and promoting bee health for over 25 years. As a result, we have an excellent understanding of the environmental and biotic challenges, such as pathogens, invasive species and lack of nutrition. These are increasingly having an impact on bee health and are leading to the decline of bee populations in some parts of Europe and the United States.
One of the main causes of honey bee losses is the Varroa mite. This parasite infects both adults and the offspring and leads to a dangerous weakening of the bees. Since 2010 Bayer has underscored its commitment to combatting Varroa mites with a new product. It is currently being developed further. More recently, we have been investigating methods of ensuring that hives which are Varroa-free are not “re-infested” by parasitized bees from other hives. A thorough evaluation of these is currently under way.
Bayer is also promoting the cultivation of nectar and pollen-rich areas on farms and in urban communities. The benefits of such bee-friendly areas have been demonstrated at the Bayer site in Monheim and also at research farms, for example, in Belgium, the United Kingdom and the United States. This concept will be developed further in 2012.
Information and dialogue through the communication of bee health is also critical to raise awareness among all stakeholders, from beekeepers to farmers and from politicians to gardeners.
In 2011 we published a new bee brochure [ 111 ] and promoted bee health with politicians and officials in Brussels, Belgium, and Washington, D.C., United States, and have been conveying our approach to bee health at high-profile meetings such as the Apimondia International Congress in Buenos Aires, Argentina.

Genetically modified rice

In 2006 traces of genetically modified rice from Bayer CropScience were identified in the long-grain rice harvest in the United States. A number of countries – including particularly E.U. states – subsequently imposed import restrictions although the rice did not present a risk to food safety.
The genetically modified rice was never commercialized. Since then, rice growers and rice mills in particular have claimed economic losses in numerous lawsuits. Bayer last year initiated a settlement program with a volume of up to US$750 million to resolve claims submitted by growers. The participation rate will be in excess of 94 percent of all of the eligible rice acreage. Bayer has already paid out a large portion of the settlement volume. Bayer also settled several claims filed by rice mills or rice importers, as well as the claims negotiated so far with growers, at a total settlement value of about US$143 million.
18 cases remain pending in the United States with business entities that are not a part of the settlement program. Bayer is hopeful that many of these cases can also be settled. However, Bayer intends to continue to defend itself vigorously in all cases in which reasonable resolutions are not possible. Insurance coverage against such risks is not available. Bayer has established appropriate provisions in the balance sheet. The case was thoroughly investigated by the U.S. Department of Agriculture and no misconduct by Bayer was determined. Bayer continuously assesses and improves these processes, however, taking into account continuous scientific advances.
Further information is available in the Bayer Annual Report 2011.

Innovation layer by layer – Bayer MaterialScience

Bayer MaterialScience works closely with customers and partners to develop new products and applications, as well as energy-efficient technologies and production processes for polymer materials. Through our research and applications development, we convert scientific findings into customer-oriented business. The Innovation Community Council holds responsibility for the global steering of innovation activities at Bayer MaterialScience.
Bayer MaterialScience invested €237 million in innovation in the reporting year. The areas of application range from lighting technology through traffic engineering to the plastics production of tomorrow.
Bayer MaterialScience is testing a new, sustainable process for using the greenhouse gas carbon dioxide as an alternative feedstock for high-tech materials. The goal is to replace a portion of the conventional fossil resources and devise a use for CO2 that is more viable for the future. In this connection, Bayer MaterialScience in 2011 commissioned a pilot plant at the Chempark Leverkusen site within the scope of the “Dream Production” project that produces a CO2-based feedstock for polyurethanes. The project – in which Bayer Technology Services, RWE Power and die RWTH Aachen University are also involved – is receiving total funding of €4.5 million from the German Ministry of Education and Research (BMBF) over a period of three years.
We also support efforts to adapt to climate change through a broad range of products. For example, our high-performance materials enable the production of energy from renewable sources. Examples here range from polyurethane systems for wind turbines to polycarbonate sheet for photovoltaic modules. In addition, Bayer MaterialScience products also help to substantially reduce energy consumption and thus the emission of carbon dioxide in a variety of applications, such as automotive engineering or thermal insulation in buildings and refrigerated appliances.

Sustainable innovation at Bayer MaterialScience

ViviTouch™: a true gaming experience

ViviTouch™ enables an innovative tactile feedback for electronic games. This in turn makes game situations more vivid and interactive for users. ViviTouch™ is based on electroactive polymers that change their form through electrical current, and thus requires less energy than conventional products with vibration motors. The technology will enable numerous applications for portable electronic devices in the future.

Polyurethanes: producing foams from vegetable oils

Through a new process, Bayer MaterialScience can now produce polyols from various vegetable oils that do not require any additional processing. The polyols serve as the basic components for rigid foams, which thus contain a 10 to 15 percent share of renewable raw materials. These “green” foams – which are used in applications such as building insulation – in some cases offer better material properties than conventional products.

Polyurethanes: environmentally friendly binders

Using polyurethane chemistry, high-quality binders can be manufactured from renewable raw materials and used as components in coatings and adhesives. Bayer MaterialScience offers a wide range of binders based on renewable raw materials that are solvent-free or low-solvent and can thus be processed in an environmentally friendly way.
Moreover, Bayer MaterialScience is a technological leader in the field of electroactive polymers. In 2011 we launched a new application under the brand name ViviTouch™ that provides a special tactile feedback for electronic games. ViviTouch™ and two other examples of our innovations are presented in the inset.

Responsibility along the entire product life cycle

The safety of our products is also at the focus of product stewardship at Bayer MaterialScience. In implementing the Global Product Strategy, Bayer MaterialScience evaluates possible risks that its products could pose for the environment and human health as a result of the chemicals it uses and takes steps to reduce these risks. These product safety assessments take into account the entire life cycle of a product, from research and procurement through production and logistics to application, recycling and disposal. These assessments are based on clearly defined parameters that allow us to measure the safety of a product.
The product safety assessment takes place in four steps: prioritization of products, characterization of risks, management of risks and communication of risks. During the product prioritization stage, we identify the relevant chemicals; they are then assessed during the risk characterization phase. In relation to the scope of the identified risk potential, Bayer MaterialScience then initiates suitable steps to effectively minimize the risk. Such steps can include proposals for technical measures for the use of personal protective clothing or marketing restrictions. The final step involves the statutorily prescribed material safety data sheets, technical information sheets and labeling. In this connection, we also take into account all requirements of Bayer’s Responsible Marketing & Sales Policy.

Target 2015

The integration of customers and partners is another component of product stewardship at Bayer MaterialScience. Through the BayCare platform and the BayCare Worldwide [ 113 ] internet site, we provide customers and other stakeholders with information on our activities, as well as a detailed and transparent description of the product safety assessment. This is in line with our Global Product Strategy (GPS) [ 112 ]. Country sites with specific information are available for the United States, Canada, Mexico, Brazil and China in the respective national languages. It is planned to migrate BayCare to the new “Product Safety First” platform in 2012 and to expand the country sites to include the E.U. states (in English plus five other languages) and India (in English).

Assuming responsibility for nanotechnology

The principles for the handling of nanotechnology are summarized in Bayer’s Position on Nanotechnology [ 114 ]. We work intensively on the international harmonization of terminology and test procedures at the ISO level and on the drafting of toxicological test guidelines at OECD level. Furthermore, we foster intensive and transparent stakeholder dialogue on the topic of nanotechnology with committees, associations, industry partners, customers, authorities, universities and the public.
Bayer MaterialScience has initiated an extensive Product Stewardship Program that supports the safe handling of carbon nanotubes – from production through processing and use to disposal – in all areas in which this technology is used. We also support the carbon nanotube safety projects promoted by the German Ministry of Education and Research (BMBF) [ 115 ].
Above-average growth rates and sales in the billions are expected in the medium term for the global carbon nanotubes market. The multi-wall carbon nanotubes marketed by Bayer MaterialScience under the name Baytubes™ are characterized by their combination of outstanding properties: they are especially mechanically durable, lightweight and electrically conductive. As a result, the application possibilities for these materials are substantial. We have attained a broad base of know-how here and are focused on certain promising application areas such as energy, environmental protection, sports and mobility. Specific research and development projects in this area deal, for example, with high-performance materials for wind turbines and batteries for electric cars.
At the Chempark Leverkusen site, we operate a pilot plant and laboratory facility with a nominal capacity of 200 metric tons per year for the product and process development of carbon nanotubes. At a pilot facility in the southern German town of Laufenburg, H.C. Starck produces Baytubes™ on our behalf that are then sold to third parties in limited quantities for introduction to the market.

Substances in direct contact with food

Bayer MaterialScience is very attentively following the scientific discussion about the chemical bisphenol A (BPA), a feedstock for various plastics. Critics are concerned that health risks could result for users if BPA is released from polymers through heating. As documented by numerous scientifically validated studies that attest to the safety of BPA, we remain convinced that the safety of BPA is ensured in its existing areas of application. This assessment is consistent with evaluations by the responsible regulatory authorities in Europe, the United States, Australia, Japan and other countries.

Engines of innovation – the Bayer service companies

Bayer Business Services, Bayer Technology Services and Currenta are the three service companies of Bayer. Together, they employ more than 13,000 people and contribute to new and innovative solutions through their specialized services. Bayer Business Services focuses on integrated services in the core areas of IT infrastructure and applications, procurement and logistics, human resources and executive personnel services, and finance and accounting. Bayer Technology Services specializes in processes and in the planning, construction and further development of facilities. The service company Currenta – a joint venture between Bayer and Lanxess – provides services in the areas of utilities, waste management, infrastructure, safety & security, analytics and vocational training.
In line with Bayer’s sustainability strategy, all three companies work to make processes and technologies more efficient and environmentally friendly. This is documented by the innovation examples [ 116 ] given in the online report.

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Last updated: June 6, 2012