Bayer AG Annual Report 2014

FY2014 Annual Report · Bayer AG
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» COVER PICTURE

ABOUT THIS REPORT

This Annual Report  combines 
our financial and our sustain-
ability reporting. On page  
30-31 you can find further 
 information about this report 
and learn how to use it.

Annual Report

2014

» Bayer: Science For A Better Life
» Key Data
» Chairman’s Letter 

» FOCUS ON LIFE SCIENCE BUSINESSES  
» For a better life  
» Promoting health and well-being 
» Food for the world 
» Research at the interface 
» Optimally equipped for the future  

» TO OUR STOCKHOLDERS
» Executive Council 
» Report of the Supervisory Board 
» Investor Information 

01  »  COMBINED MANAGEMENT REPORT OF THE BAYER GROUP AND BAYER AG 

Report on Economic Position 
 » Overview of Sales, Earnings and Financial Position 
 » Business Development by Subgroup, Segment and Region 
 » Earnings; Asset and Financial Position of the Bayer Group 
 » Earnings; Asset and Financial Position of Bayer AG 

02  » CONSOLIDATED FINANCIAL STATEMENTS OF THE BAYER GROUP  

»  RESPONSIBILIT Y STATEMENT  

»  INDEPENDENT AUDITORS’ REPORT  

»   INDEPENDENT ASSURANCE REPORT  

  For direct access  

to a chapter, simply 
click on its name.

03   »  FURTHER INFORMATION 

» Financial Calendar    » Masthead, Disclaimer

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Bayer is a global enterprise with core competencies  
(cid:68)(cid:73)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:190)(cid:64)(cid:71)(cid:63)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:67)(cid:64)(cid:60)(cid:71)(cid:79)(cid:67)(cid:3)(cid:62)(cid:60)(cid:77)(cid:64)(cid:8)(cid:3)(cid:60)(cid:66)(cid:77)(cid:68)(cid:62)(cid:80)(cid:71)(cid:79)(cid:80)(cid:77)(cid:64)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:67)(cid:68)(cid:66)(cid:67)(cid:238)(cid:79)(cid:64)(cid:62)(cid:67)(cid:3)
polymer materials.

(cid:28)(cid:78)(cid:3)(cid:60)(cid:73)(cid:3)(cid:68)(cid:73)(cid:73)(cid:74)(cid:81)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:60)(cid:73)(cid:84)(cid:8)(cid:3)(cid:82)(cid:64)(cid:3)(cid:78)(cid:64)(cid:79)(cid:3)(cid:79)(cid:77)(cid:64)(cid:73)(cid:63)(cid:78)(cid:3)(cid:68)(cid:73)(cid:3)(cid:77)(cid:64)(cid:78)(cid:64)(cid:60)(cid:77)(cid:62)(cid:67)(cid:238) 
intensive areas. Our products and services are designed 
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(cid:78)(cid:60)(cid:72)(cid:64)(cid:3)(cid:79)(cid:68)(cid:72)(cid:64)(cid:3)(cid:82)(cid:64)(cid:3)(cid:60)(cid:68)(cid:72)(cid:3)(cid:79)(cid:74)(cid:3)(cid:62)(cid:77)(cid:64)(cid:60)(cid:79)(cid:64)(cid:3)(cid:81)(cid:60)(cid:71)(cid:80)(cid:64)(cid:3)(cid:79)(cid:67)(cid:77)(cid:74)(cid:80)(cid:66)(cid:67)(cid:3)(cid:68)(cid:73)(cid:73)(cid:74)(cid:81)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:8)(cid:3)
growth and high earning power.

(cid:50)(cid:64)(cid:3)(cid:60)(cid:77)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:63)(cid:3)(cid:79)(cid:74)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:75)(cid:77)(cid:68)(cid:73)(cid:62)(cid:68)(cid:75)(cid:71)(cid:64)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:78)(cid:80)(cid:78)(cid:79)(cid:60)(cid:68)(cid:73)(cid:60)(cid:61)(cid:71)(cid:64)(cid:3)
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bilities as a corporate citizen.

Cover picture 

Employees at the research and development laboratory in Memphis, Tennessee,  
are working on formulations for non-prescription products. The laboratory now 
belongs to Bayer following the acquisition of the consumer care business of U.S. 
pharmaceutical company Merck & Co., Inc. Our cover picture shows Angie Robertson 
and Patrick Williams inspecting a sample.

 You can read more about Bayer’s range of non-prescription products in the 
magazine section of this Annual Report beginning on page 10.

» TABLE OF CONTENTS 
 
» TABLE OF CONTENTS

» TABLE OF CONTENTS

Key Data 

Bayer Group 

Sales 

EBIT1  

EBIT before special items2 

EBITDA3 

EBITDA before special items2 

EBITDA margin before special items4 

Income before income taxes 

Net income 

Earnings per share (€)5 

Core earnings per share (€)6 

Gross cash flow7 

Net cash flow8 

Net financial debt 

Capital expenditures as per segment table 

Research and development expenses 

Dividend per Bayer AG share (€) 

HealthCare  

Sales 

EBIT 

EBIT before special items2 

EBITDA3 

EBITDA before special items2 

EBITDA margin before special items4 

Gross cash flow7 

Net cash flow8 

CropScience 

Sales 

EBIT 

EBIT before special items2 

EBITDA3 

EBITDA before special items2 

EBITDA margin before special items4 

Gross cash flow7 

Net cash flow8 

MaterialScience 

Sales 

EBIT 

EBIT before special items2 

EBITDA3 

EBITDA before special items2 

EBITDA margin before special items4 

Gross cash flow7 

Net cash flow8 

[Table 1.1]

2013 

2014 

Change 

€ million 

€ million 

% 

40,157 

42,239 

4,934 

5,773 

7,830 

8,401 

5,506 

5,944 

8,442 

8,812 

20.9% 

20.9% 

4,207 

3,189 

3.86 

5.61 

5,832 

5,171 

6,731 

2,155 

3,406 

2.10 

4,525 

3,426 

4.14 

6.02 

6,820 

5,810 

19,612 

2,490 

3,574 

2.25 

18,924 

19,975 

3,260 

3,973 

4,858 

5,334 

3,581 

3,912 

5,186 

5,484 

+ 5.2

+ 11.6

+ 3.0

+ 7.8

+ 4.9

+ 7.6

+ 7.4

+ 7.3

+ 7.3

+ 16.9

+ 12.4

.

+ 15.5

+ 4.9

+ 7.1

+ 5.6

+ 9.8

– 1.5

+ 6.8

+ 2.8

28.2% 

27.5% 

3,573 

2,980 

4,011 

4,444 

+ 12.3

+ 49.1

8,819 

1,729 

1,801 

2,184 

2,248 

9,494 

1,806 

1,838 

2,358 

2,360 

+ 7.7

+ 4.5

+ 2.1

+ 8.0

+ 5.0

25.5% 

24.9% 

1,590 

682 

1,835 

950 

+ 15.4

+ 39.3

11,238 

11,651 

435 

429 

1,101 

1,072 

9.5% 

887 

977 

555 

598 

1,149 

1,187 

10.2% 

961 

880 

+ 3.7

+ 27.6

+ 39.4

+ 4.4

+ 10.7

+ 8.3

– 9.9

Employees 

Number of employees9 (Dec. 31) 

Proportion of women in senior management (%) 

Number of nationalities in the Group Leadership Circle  

Proportion of employees with health insurance (%) 

Proportion of employees covered by collective agreements 
on pay and conditions (%) 

Safety10 

Recordable Incident Rate for Bayer employees (RIR) 

Lost Time Recordable Incident Rate for Bayer employees (LTRIR) 

Loss of Primary Containment Incident Rate (LoPC-IR)11 

Number of transport incidents 

Environmental Protection10 

Direct greenhouse gas emissions (CO2 equivalents in million t)12 

Indirect greenhouse gas emissions (CO2 equivalents in million t)12 

Volatile organic compounds (VOC)13 (thousand t/a) 

Ozone-depleting substances (ODS) (t/a)14 

Total organic carbon (TOC) (thousand t/a) 

Total phosphorus in wastewater (thousand t/a) 

Total nitrogen in wastewater (thousand t/a) 

Hazardous waste generated (thousand t/a) 

Hazardous waste landfilled (thousand t/a) 

Water use (million m³/a) 

Primary energy consumption (petajoules/a)15 

Secondary energy consumption (petajoules/a)15 

Energy efficiency (MWh/t)16 

[Table 1.1 (continued)]

2013 

2014 

Change 

% 

112,366

118,888 

+ 5.8

25

31

95

54

0.47

0.26

0.35

11

4.09

4.29

2.27

26 

35 

96 

52 

0.43 

0.22 

0.23 

12 

4.02 

4.70 

2.12 

15.65

14.79 

1.53

0.11

0.69

467

53

361

47.58

33.27

3.44

1.20 

0.10 

0.76 

487 

65 

350 

45.57 

39.74 

3.37 

+ 12.9

– 9.4

– 13.2

– 33.1

+ 9.1

– 1.7

+ 9.7

– 6.5

– 5.6

– 21.6

– 12.6

+ 11.3

+ 4.4

+21.4

– 3.1

– 4.2

+ 19.5

– 2.3

2013 figures restated 
1  EBIT = earnings before financial result and taxes 
2  EBIT before special items and EBITDA before special items are not defined in the International Financial Reporting Standards and should therefore be regarded 
only as supplementary information. EBITDA before special items is a more suitable indicator of operating performance since it is not affected by depreciation, 
amortization, impairment losses, impairment loss reversals or special items. By reporting this indicator, the company aims to give readers a clear picture of the 
results of operations and ensure comparability of data over time. See also Combined Management Report, Chapter 16.2 “Calculation of EBIT(DA) Before Special 
Items.” 

3  EBITDA = EBIT plus amortization and impairment losses on intangible assets, plus depreciation and impairment losses on property, plant and equipment, minus 

impairment loss reversals. See also Combined Management Report, Chapter 16.2 “Calculation of EBIT(DA) Before Special Items.” 

4  The EBITDA margin before special items is calculated by dividing EBITDA before special items by sales. 
5  Earnings per share as defined in IAS 33 = net income divided by the average number of shares. For details see Note [16] to the consolidated financial statements.
6  Core earnings per share are not defined in the International Financial Reporting Standards. By reporting this indicator, the company aims to give readers a clear 

picture of the results of operations and ensure comparability of data over time. The calculation of core earnings per share is explained in the Combined 
Management Report, Chapter 16.3 “Core Earnings Per Share.” 

7  Gross cash flow = income after income taxes, plus income taxes, plus financial result, minus income taxes paid or accrued, plus depreciation, amortization and 
impairment losses, minus impairment loss reversals, plus / minus changes in pension provisions, minus gains / plus losses on retirements of noncurrent assets, 
minus gains from the remeasurement of already held assets in step acquisitions. The change in pension provisions includes the elimination of non-cash 
components of EBIT. It also contains benefit payments during the year. For details see Combined Management Report, Chapter 16.5 “Liquidity and Capital 
Expenditures of the Bayer Group.“ 

8  Net cash flow = cash flow from operating activities according to IAS 7 
9  Full-time equivalents 
10 Percentage changes not based on rounded figures 
11 LoPC-IR: rate of incidents in which chemicals leak from their primary container, such as pipelines, pumps, tanks or drums, per 200,000 working hours in areas 

relevant to plant safety 

12 Portfolio-adjusted in accordance with the Greenhouse Gas Protocol 
13 Volatile organic compounds (VOC) excluding methane 
14 Ozone-depleting substances (ODS) in CFC-11 equivalents 
15 1 petajoule = 1015 joules 
16 Energy efficiency: quotient of total energy consumption and manufactured sales volume. For MaterialScience, only manufactured sales volumes that also form 

the basis for calculating MaterialScience-specific emissions are taken into account. 

 
 
 
 
  
  
  
  
  
  
  
 
 
  
  
  
 
  
  
 
 
  
  
  
 
  
  
 
 
  
  
  
 
  
  
 
 
  
  
  
 
     
 
  
 
  
  
  
 
 
 
 
 
  
 
 
 
 
 
  
 
 
 
 
  
 
  
 
  
 
 
Chairman’s Letter

Decisive step to create a pure 
Life Science company

In 2014, just a year after our 150 th anniversary, Bayer opened up  
a new chapter in its history: we initiated the decisive step toward  
becoming a pure Life Science company. In the future we will  
focus our entire innovative capability on designing molecules  
and solutions that improve human health or nutrition. Never has 
our mission “Bayer: Science For A Better Life” more  truly  
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While we continued to harvest the fruits of our own science and 
 research in 2014 with the global marketing of our recently 
launched pharmaceuticals as well as our crop protection products 
and seeds, we also successfully acquired the consumer care busi-
ness of Merck & Co., Inc., United States – making us the global 
number two in consumer care. This largely stable business now 
helps us to compensate volatility in other businesses.

» TABLE OF CONTENTSBayer MaterialScience also performed well in 2014, successfully 
 addressing previous challenges. Against this background, 
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(cid:74)(cid:77)(cid:66)(cid:60)(cid:73)(cid:68)(cid:62)(cid:3)(cid:66)(cid:77)(cid:74)(cid:82)(cid:79)(cid:67)(cid:3)(cid:60)(cid:71)(cid:74)(cid:73)(cid:66)(cid:3)(cid:82)(cid:68)(cid:79)(cid:67)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:67)(cid:64)(cid:60)(cid:63)(cid:77)(cid:74)(cid:74)(cid:72)(cid:3)(cid:65)(cid:74)(cid:77)(cid:3)(cid:75)(cid:74)(cid:78)(cid:78)(cid:68)(cid:61)(cid:71)(cid:64)(cid:3)(cid:65)(cid:80)(cid:79)(cid:80)(cid:77)(cid:64)(cid:3)
acquisitions. 

In recent years, however, Bayer’s strategy and strong perfor-
mance have increasingly been driven by our success in the  
Life Sciences. This has meant that MaterialScience is competing 
for resources against businesses that we believe continue to 
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demerge MaterialScience so that it will have independent  
access to the capital  market, while Bayer focuses solely on the 
Life Sciences.

This is a turning point in Bayer’s history. But our action is con-
sistent with what our founders did and what the focus of our 
 research has been for more than 150 years. The best way we can 
 innovate is by inventing new molecules that ultimately lead to 
 innovative applications. The only thing that has changed over 
(cid:79)(cid:68)(cid:72)(cid:64)(cid:3)(cid:60)(cid:77)(cid:64)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:72)(cid:60)(cid:77)(cid:70)(cid:64)(cid:79)(cid:78)(cid:3)(cid:74)(cid:77)(cid:3)(cid:190)(cid:64)(cid:71)(cid:63)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:60)(cid:75)(cid:75)(cid:71)(cid:68)(cid:62)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:68)(cid:73)(cid:3)(cid:82)(cid:67)(cid:68)(cid:62)(cid:67)(cid:3)(cid:74)(cid:80)(cid:77)(cid:3)(cid:72)(cid:74)(cid:71)(cid:64)-
cules  deliver the largest value contribution. Today, the focus is on 
the Life  Sciences. It is crucial for Bayer’s long-term success that 
we  continually  adjust our business portfolio to market require-
ments and respond to the needs of customers and society.

In September 2014, the Supervisory Board unanimously approved 
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on the stock market by mid-2016. We are all convinced that this  
(cid:78)(cid:79)(cid:77)(cid:60)(cid:79)(cid:64)(cid:66)(cid:68)(cid:62)(cid:3)(cid:63)(cid:64)(cid:62)(cid:68)(cid:78)(cid:68)(cid:74)(cid:73)(cid:3)(cid:82)(cid:68)(cid:71)(cid:71)(cid:3)(cid:61)(cid:77)(cid:68)(cid:73)(cid:66)(cid:3)(cid:66)(cid:77)(cid:64)(cid:60)(cid:79)(cid:3)(cid:61)(cid:64)(cid:73)(cid:64)(cid:190)(cid:79)(cid:78)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:74)(cid:75)(cid:75)(cid:74)(cid:77)(cid:79)(cid:80)(cid:73)(cid:68)(cid:79)(cid:68)(cid:64)(cid:78)(cid:3)(cid:240)(cid:3) 
for Bayer and for Material Science. The new, independent  
company is set to retain leadership positions in all of its business 
areas. We strongly believe in its future success. 

2

» TABLE OF CONTENTSDialogue with physicians: Bayer ceo Dr. Marijn Dekkers and Associate Professor Dr. Jürgen Zumbé, Director of the 
Urology Department at Leverkusen Hospital

As a pure Life Science company, Bayer will have a unique research 
focus on the health of humans, animals and plants. And this re-
search shows us today that the similarities between the different 

3

» TABLE OF CONTENTSspecies are far greater than was generally assumed just a few 
 decades ago. This is especially true at the cellular biochemical 
 level at which our active ingredients operate. While we are still at 
an early stage, we are in the best position to potentially leverage 
many synergies from species’ common characteristics. 

To continue innovating and help physicians to care for their 
 patients, veterinarians to look after animals and farmers to feed the 
growing world population, we must increasingly invest in  research 
and  development (r&d). Our r&d budget for the Life  Sciences in 
2014 was €3.2 billion. Overall we expect the r&d-to-sales ratio to 
continue increasing in the coming years.

The success of our pharmaceutical products, in particular, has great 
(cid:78)(cid:68)(cid:66)(cid:73)(cid:68)(cid:190)(cid:62)(cid:60)(cid:73)(cid:62)(cid:64)(cid:3)(cid:68)(cid:73)(cid:3)(cid:79)(cid:67)(cid:68)(cid:78)(cid:3)(cid:77)(cid:64)(cid:66)(cid:60)(cid:77)(cid:63)(cid:9)(cid:3)(cid:50)(cid:64)(cid:3)(cid:60)(cid:77)(cid:64)(cid:3)(cid:60)(cid:72)(cid:74)(cid:73)(cid:66)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:65)(cid:60)(cid:78)(cid:79)(cid:64)(cid:78)(cid:79)(cid:238)(cid:66)(cid:77)(cid:74)(cid:82)(cid:68)(cid:73)(cid:66)(cid:3)(cid:74)(cid:65)(cid:3) 
the world’s major pharmaceutical companies. Last year we lifted 
Pharmaceuticals sales by 11.2 percent on a currency- and portfo-
lio-adjusted basis. The increase was driven by our recently launched 
products Xarelto™, Eylea™, Stivarga™(cid:8)(cid:3)(cid:51)(cid:74)(cid:190)(cid:66)(cid:74)™ and Adempas™.

CropScience, too, achieved a sales improvement of 11.2 percent  
on a currency- and portfolio-adjusted basis, gaining market share 
especially with the new products we brought to market in the past 
few years. 

(cid:46)(cid:75)(cid:80)(cid:77)(cid:77)(cid:64)(cid:63)(cid:3)(cid:61)(cid:84)(cid:3)(cid:79)(cid:67)(cid:64)(cid:78)(cid:64)(cid:3)(cid:78)(cid:80)(cid:62)(cid:62)(cid:64)(cid:78)(cid:78)(cid:64)(cid:78)(cid:8)(cid:3)(cid:74)(cid:80)(cid:77)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:60)(cid:73)(cid:84)(cid:101)(cid:78)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:63)(cid:64)(cid:81)(cid:64)(cid:71)(cid:74)(cid:75)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)
has also been outstanding. We can look back at another record  
year for Bayer. Revenues increased in 2014 to over €42 billion, 
which means we saw more than 7 percent growth after adjusting  
for currency and portfolio effects. Our clean ebitda amounted to 
€8.8 billion, up by nearly 5 percent compared with the prior year. 
Core earnings per share rose by 7.3 percent to €6.02. 

4

» TABLE OF CONTENTSThanks to this successful development and the appreciation it  
(cid:67)(cid:60)(cid:78)(cid:3)(cid:61)(cid:77)(cid:74)(cid:80)(cid:66)(cid:67)(cid:79)(cid:3)(cid:65)(cid:77)(cid:74)(cid:72)(cid:3)(cid:68)(cid:73)(cid:81)(cid:64)(cid:78)(cid:79)(cid:74)(cid:77)(cid:78)(cid:8)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:65)(cid:74)(cid:77)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:190)(cid:77)(cid:78)(cid:79)(cid:3)(cid:79)(cid:68)(cid:72)(cid:64)(cid:3)(cid:61)(cid:64)(cid:62)(cid:60)(cid:72)(cid:64)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)
company with the highest market capitalization in the German 
share index dax.

To continue strengthening our Life Science businesses, we  
need not only organic growth but also bolt-on acquisitions. These 
improve our regional positioning, round out our product portfolio 
and can give us access to major new technologies. In 2014 we 
spent a total of €13.5 billion for acquisitions. 

The largest among these was Merck & Co., Inc.’s consumer care 
(cid:61)(cid:80)(cid:78)(cid:68)(cid:73)(cid:64)(cid:78)(cid:78)(cid:9)(cid:3)(cid:47)(cid:67)(cid:68)(cid:78)(cid:3)(cid:78)(cid:68)(cid:66)(cid:73)(cid:68)(cid:190)(cid:62)(cid:60)(cid:73)(cid:79)(cid:71)(cid:84)(cid:3)(cid:78)(cid:79)(cid:77)(cid:64)(cid:73)(cid:66)(cid:79)(cid:67)(cid:64)(cid:73)(cid:78)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:101)(cid:78)(cid:3)(cid:61)(cid:80)(cid:78)(cid:68)(cid:73)(cid:64)(cid:78)(cid:78)(cid:3)(cid:82)(cid:68)(cid:79)(cid:67)(cid:3)
non-prescription products across multiple therapeutic categories 
and geographies. We also acquired Dihon Pharmaceutical Group 
Co. Ltd., China, a consumer care company specializing in derma-
tology products. And we successfully completed the acquisition 
of Algeta asa, Norway, with which we had already collaborated on 
the development and commercialization of the cancer drug  
(cid:51)(cid:74)(cid:190)(cid:66)(cid:74)™ since 2009.

Acquisitions in CropScience include the Biagro group in 
 Argentina. Biagro’s portfolio comprises organic seed treatments 
as well as crop protection products based on bacterial and fungal 
strains. In addition, we acquired the seed business of Paraguayan 
company Granar, which specializes in the breeding, production 
and marketing of improved seeds, especially for soybeans. 

5

» TABLE OF CONTENTSI would like to emphasize at this point that our excellent   
employees are our core business asset. Our corporate values of 
(cid:39)(cid:64)(cid:60)(cid:63)(cid:64)(cid:77)(cid:78)(cid:67)(cid:68)(cid:75)(cid:8)(cid:3)(cid:36)(cid:73)(cid:79)(cid:64)(cid:66)(cid:77)(cid:68)(cid:79)(cid:84)(cid:8)(cid:3)(cid:33)(cid:71)(cid:64)(cid:83)(cid:68)(cid:61)(cid:68)(cid:71)(cid:68)(cid:79)(cid:84)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:32)(cid:65)(cid:190)(cid:62)(cid:68)(cid:64)(cid:73)(cid:62)(cid:84)(cid:3)(cid:240)(cid:3)(cid:77)(cid:64)(cid:75)(cid:77)(cid:64)(cid:78)(cid:64)(cid:73)(cid:79)(cid:64)(cid:63)(cid:3) 
by the acronym life – remain the cornerstones of our behavior. 
 Continuous learning is a fundamental part of our organizational 
(cid:60)(cid:73)(cid:63)(cid:3)(cid:79)(cid:60)(cid:71)(cid:64)(cid:73)(cid:79)(cid:3)(cid:63)(cid:64)(cid:81)(cid:64)(cid:71)(cid:74)(cid:75)(cid:72)(cid:64)(cid:73)(cid:79)(cid:9)(cid:3)(cid:29)(cid:80)(cid:68)(cid:71)(cid:63)(cid:68)(cid:73)(cid:66)(cid:3)(cid:78)(cid:75)(cid:64)(cid:62)(cid:68)(cid:190)(cid:62)(cid:3)(cid:78)(cid:70)(cid:68)(cid:71)(cid:71)(cid:78)(cid:8)(cid:3)(cid:77)(cid:64)(cid:72)(cid:74)(cid:81)(cid:68)(cid:73)(cid:66)(cid:3)
 organizational obstacles and  making improvements every day 
 remain important elements of Bayer’s culture. 

In the future we also intend to intensify the dialogue with our  
various stakeholders. We are convinced of what we do and of the 
value of our products. We will communicate even more effectively 
to customers, society and politicians how our products improve  
the lives of millions of people across the globe. 

I am concerned by the growing number of critical stakeholders 
whose claims and demands are based on emotions and beliefs  
(cid:77)(cid:60)(cid:79)(cid:67)(cid:64)(cid:77)(cid:3)(cid:79)(cid:67)(cid:60)(cid:73)(cid:3)(cid:74)(cid:73)(cid:3)(cid:78)(cid:62)(cid:68)(cid:64)(cid:73)(cid:79)(cid:68)(cid:190)(cid:62)(cid:3)(cid:65)(cid:60)(cid:62)(cid:79)(cid:78)(cid:9)(cid:3)(cid:36)(cid:79)(cid:3)(cid:68)(cid:78)(cid:3)(cid:80)(cid:75)(cid:3)(cid:79)(cid:74)(cid:3)(cid:60)(cid:71)(cid:71)(cid:3)(cid:74)(cid:65)(cid:3)(cid:80)(cid:78)(cid:3)(cid:79)(cid:74)(cid:3)(cid:64)(cid:73)(cid:78)(cid:80)(cid:77)(cid:64)(cid:3)(cid:79)(cid:67)(cid:60)(cid:79)(cid:3) 
society creates the right framework for future innovations. In  
this context it is also important to us that economic growth be 
achieved in harmony with environmental and social responsibility. 
We adhere to the fundamentals of sustainable development and  
the ten principles of the Global Compact of the United Nations.

On behalf of the entire Bayer Group management team, I would  
like to thank our employees for their dedication, motivation and  
ingenuity. Bayer would not be the great company it is today  
without them.

6

» TABLE OF CONTENTSWe enter 2015 with continued optimism. Bayer’s innovations  
have helped millions of people around the world and, in doing so, 
have strengthened our leadership position. In 2014 we added more 
(cid:68)(cid:73)(cid:73)(cid:74)(cid:81)(cid:60)(cid:79)(cid:68)(cid:81)(cid:64)(cid:3)(cid:75)(cid:77)(cid:74)(cid:63)(cid:80)(cid:62)(cid:79)(cid:78)(cid:3)(cid:79)(cid:74)(cid:3)(cid:74)(cid:80)(cid:77)(cid:3)(cid:75)(cid:74)(cid:77)(cid:79)(cid:65)(cid:74)(cid:71)(cid:68)(cid:74)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:75)(cid:74)(cid:78)(cid:79)(cid:64)(cid:63)(cid:3)(cid:77)(cid:64)(cid:62)(cid:74)(cid:77)(cid:63)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3) 
results. We are committed to continue with this approach in 2015 
(cid:60)(cid:73)(cid:63)(cid:3)(cid:61)(cid:64)(cid:84)(cid:74)(cid:73)(cid:63)(cid:3)(cid:60)(cid:78)(cid:3)(cid:82)(cid:64)(cid:3)(cid:190)(cid:73)(cid:60)(cid:71)(cid:68)(cid:85)(cid:64)(cid:3)(cid:74)(cid:80)(cid:77)(cid:3)(cid:79)(cid:77)(cid:60)(cid:73)(cid:78)(cid:65)(cid:74)(cid:77)(cid:72)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:68)(cid:73)(cid:79)(cid:74)(cid:3)(cid:60)(cid:3)(cid:75)(cid:80)(cid:77)(cid:64)(cid:3)(cid:39)(cid:68)(cid:65)(cid:64)(cid:3) 
Science company and work to further improve people’s lives.

Finally, I would like to thank you, our stockholders, for your ongo-
ing support for our strategy and appreciation of our performance. 

Sincerely,

Dr. Marijn Dekkers
Chairman of the Board of Management of Bayer AG

7

» TABLE OF CONTENTSmagazi ne

Focus on  
Life Science businesses

» TABLE OF CONTENTS» TABLE OF CONTENTS

» TABLE OF CONTENTS

li fe  s cie nce

humans

plants

animals

Bayer plans to focus entirely on  the Life Science businesses –  HealthCare and CropScience – in the future and to float MaterialScience  on the stock market as a separate  company. This will create a global  leader in the Life Sciences with  extensive experience in science and  innovation and the ability to use  this expertise to improve human,  animal and plant health.» TABLE OF CONTENTS

» TABLE OF CONTENTS

In recent years the Bayer Group’s  
focus has increasingly shifted towards  
the Life Science businesses. With our  
products, doctors can help patients,  
farmers can contribute to feeding people,  
and veterinarians can treat animals.

e
e

r
r

h c a
h c a

l t
l t

a
a

e
e

h
h

phar m aceuti cals

Our Pharmaceuticals activities focus  
on the areas of cardiology, oncology, 
gynecology and hematology.

consumer   
healt h

In Consumer Health, we combine the  
activities of the Consumer Care (including  
non-prescription medicines), Medical Care  
and Animal Health divisions. 

crop protection / 
seeds

In the area of Crop Protection / Seeds,  
we research and develop chemical and  
biological crop protection agents and seeds  
for wheat, soybeans, oilseed rape / canola,  
rice, cotton and vegetables.

environmental   
science

At Environmental Science, we offer 
consumers and professional users a  
broad portfolio of products and services  
for controlling pests and weeds.

e
e
c
c

n
n

o p s cie
o p s cie

r
r

c
c

material   
science

MaterialScience will continue  
to develop its competitive position  
as a stand-alone company.  
The business has an outstanding 
starting position and is a market 
leader in many areas. 

12

Magazine // Focus on Life Science businesses

» TABLE OF CONTENTS

Bayer Annual Report 2014

Bayer Annual Report 2014

» TABLE OF CONTENTS

Focus on Life Science businesses  // Magazine

13

For a  
better life

Sabine Hoffmann, technical assistant at Cologne University Hospital, 

performs a lung function test on patient Christian Müller.

  
  
14

Magazine // Focus on Life Science businesses

Bayer Annual Report 2014

Pharmaceuticals // Across the globe, people continue to 
 suffer from severe illnesses for which very few effective, 
well tolerated treatments are available. Research-driven 
pharmaceutical companies like Bayer are working on inno-
(cid:81)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:78)(cid:3)(cid:3)(cid:68)(cid:73)(cid:79)(cid:64)(cid:73)(cid:63)(cid:64)(cid:63)(cid:3)(cid:79)(cid:74)(cid:3)(cid:61)(cid:64)(cid:73)(cid:64)(cid:190)(cid:79)(cid:3)(cid:79)(cid:67)(cid:64)(cid:78)(cid:64)(cid:3)(cid:75)(cid:60)(cid:79)(cid:68)(cid:64)(cid:73)(cid:79)(cid:78)(cid:9)(cid:3)(cid:47)(cid:60)(cid:70)(cid:64)(cid:3)(cid:75)(cid:80)(cid:71)(cid:72)(cid:74)(cid:73)(cid:60)(cid:77)(cid:84)(cid:3)
hypertension, for example. The treatment options for this 
(cid:62)(cid:74)(cid:73)(cid:63)(cid:68)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:67)(cid:60)(cid:81)(cid:64)(cid:3)(cid:77)(cid:64)(cid:62)(cid:64)(cid:73)(cid:79)(cid:71)(cid:84)(cid:3)(cid:68)(cid:72)(cid:75)(cid:77)(cid:74)(cid:81)(cid:64)(cid:63)(cid:3)(cid:79)(cid:74)(cid:3)(cid:60)(cid:3)(cid:78)(cid:68)(cid:66)(cid:73)(cid:68)(cid:190)(cid:62)(cid:60)(cid:73)(cid:79)(cid:3)(cid:63)(cid:64)(cid:66)(cid:77)(cid:64)(cid:64)(cid:9)(cid:3)(cid:3)

Exercise is out of the question for Noémi Baert. Even a 
 staircase with 20 steps pushes her to the limit. A walk of 
just a few hundred meters is more than she can manage. 
The 13-year-old from Destelbergen in Belgium isn’t even 
able to carry her own schoolbag. Since the age of six, 
Noémi has suffered from pulmonary hypertension. This 
life-threatening illness can affect people of any age. 

It usually begins gradually. The patient tires more easily 
than before, and any exertion leads to shortness of 
(cid:61)(cid:77)(cid:64)(cid:60)(cid:79)(cid:67)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:78)(cid:84)(cid:72)(cid:75)(cid:79)(cid:74)(cid:72)(cid:78)(cid:3)(cid:77)(cid:64)(cid:72)(cid:60)(cid:68)(cid:73)(cid:3)(cid:73)(cid:74)(cid:73)(cid:238)(cid:78)(cid:75)(cid:64)(cid:62)(cid:68)(cid:190)(cid:62)(cid:3)(cid:60)(cid:78)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:73)(cid:63)(cid:68)-
tion progresses. They can include increasing shortness 
of breath, a decline in physical strength, chest pains, 
 water retention in the legs, blue lips and fainting. These 
symptoms are caused by a narrowing of the pulmonary 
arteries, which can happen for a variety of reasons. As 
other, comparatively common conditions involve similar 
symptoms, it may be several years before a patient is 
 diagnosed with pulmonary hypertension. This is the  
term physicians use to group together the various forms  
of the disease. Noémi was lucky in one respect, as a 
 cardiologist quickly reached the correct diagnosis. “That 
helped my daughter to get the right treatment,” says 
Noémi’s mother, Danielle Verbrugghen.

However, Christian Müller from Arnsberg had to wait many 
years. His ordeal began in 2004 with a severe pulmonary 
embolism caused by a vein thrombosis. Müller, who was 36 
at the time, spent several months in critical condition in the 
hospital. Even during his subsequent rehabilitation, he just 
wasn’t recovering properly. “I wasn’t able to do the exer-
cise section of the program,” recalls Müller, who is trained 
in wholesale and export trade. The doctors couldn’t pin-
point the cause and, to alleviate the symptoms, they pre-
scribed oxygen treatment. For the next three years, an oxy-
gen machine was Müller’s constant companion. “I couldn’t 
work anymore and it was impossible to live an indepen-
dent life,” he says. His parents helped him with day-to-day 
tasks, but eventually he had to use a wheelchair. When 
Müller was admitted to the hospital in the spring of 2007 

Dr. Olivier Brandicourt,  
Chairman of the Bayer HealthCare  
Executive Committee, on the subgroup’s strategy

“Fueling growth through 
(cid:71)(cid:76)(cid:89)(cid:72)(cid:85)(cid:86)(cid:76)(cid:362)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:86)(cid:72)(cid:68)(cid:85)(cid:70)(cid:75)(cid:333)

The acquisition of Merck & Co., Inc.’s non-prescription 
business marked an important milestone for Bayer  
HealthCare. Alongside strengthening our Consumer  
(cid:30)(cid:60)(cid:77)(cid:64)(cid:3)(cid:3)(cid:63)(cid:68)(cid:81)(cid:68)(cid:78)(cid:68)(cid:74)(cid:73)(cid:8)(cid:3)(cid:79)(cid:67)(cid:68)(cid:78)(cid:3)(cid:60)(cid:62)(cid:76)(cid:80)(cid:68)(cid:78)(cid:68)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:60)(cid:71)(cid:78)(cid:74)(cid:3)(cid:77)(cid:64)(cid:191)(cid:64)(cid:62)(cid:79)(cid:78)(cid:3)(cid:74)(cid:80)(cid:77)(cid:3)(cid:62)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)-
(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:79)(cid:74)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:35)(cid:64)(cid:60)(cid:71)(cid:79)(cid:67)(cid:30)(cid:60)(cid:77)(cid:64)(cid:101)(cid:78)(cid:3)(cid:63)(cid:68)(cid:81)(cid:64)(cid:77)(cid:78)(cid:68)(cid:190)(cid:62)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:78)(cid:79)(cid:77)(cid:60)(cid:79)(cid:64)(cid:66)(cid:84)(cid:9)(cid:3)
Whether it is human or animal health, innovative pharma-
ceutical products or self-medication, the breadth of our 
business and portfolio enables us to respond to a rapidly 
evolving environment. For example, the boundaries 
 between “patients” and “consumers” are increasingly 
fading, with  prevention and well-being becoming almost 
as important as the treatment of diseases. The know- 
how and expertise within and across our four divisions 
enable us to  capture our customers’ needs in what we 
think is the best possible way.

One of the key pillars of our long-term strategy is research 
and development (r&d) across our businesses, aimed at 
driving innovation beyond 2020. Some of our current and 
recently launched products will run out of patent between 
2023 and 2025. It is therefore essential that the next  
wave of innovation follow seamlessly to safeguard growth.  
Our r&d efforts in this regard focus on the areas in which 
we excel and have a proven track record of success, for 
example in cardiology, women’s health and some areas of 
oncology.

(cid:42)(cid:80)(cid:77)(cid:3)(cid:78)(cid:79)(cid:77)(cid:64)(cid:73)(cid:66)(cid:79)(cid:67)(cid:78)(cid:3)(cid:79)(cid:67)(cid:77)(cid:74)(cid:80)(cid:66)(cid:67)(cid:74)(cid:80)(cid:79)(cid:3)(cid:74)(cid:80)(cid:77)(cid:3)(cid:63)(cid:68)(cid:81)(cid:64)(cid:77)(cid:78)(cid:68)(cid:190)(cid:64)(cid:63)(cid:3)(cid:61)(cid:80)(cid:78)(cid:68)(cid:73)(cid:64)(cid:78)(cid:78)(cid:64)(cid:78)(cid:3)
 coupled with the required investments will elevate our r&d 
activities to the next level and ultimately enable us to intro-
duce customer-centric, innovative products to the market.

» TABLE OF CONTENTS  
Bayer Annual Report 2014

Focus on Life Science businesses  // Magazine

15

An operation at Cologne 

 University Hospital: Professor 

Stephan Rosenkranz and  

surgical nurse Nina Küpper

13-year-old Noémi suffers from pulmonary hypertension. Here in the Wupper-

tal laboratory, Bayer researcher Professor Johannes-Peter Stasch talks to 

Noémi and her mother, Danielle Verbrugghen, about the disease.

Cardiologist Professor Stephan Rosenkranz and his 

 colleague Dr. Joana Jesus during the morning rounds

following yet another pulmonary hemorrhage, a doctor 
there suspected he was suffering from pulmonary hyper-
tension. “He sent me to the cardiac center at Cologne Uni-
versity Hospital for further tests,” Müller explains.

The center is home to cardiologist Professor Stephan 
Rosen kranz, one of the few experts on pulmonary hyper-
tension in Germany. He is in charge of the center’s pul-
monary  hypertension outpatient clinic and knows from 
experience that it can still take a long time before a pa-
tient with the condition gets to see a specialist. “Early di-
agnosis is very important for treating this condition – and 
the treatment options have greatly increased over the past 
few years,” he says. A complex diagnostic program has to 

(cid:61)(cid:64)(cid:3)(cid:75)(cid:64)(cid:77)(cid:65)(cid:74)(cid:77)(cid:72)(cid:64)(cid:63)(cid:3)(cid:61)(cid:64)(cid:65)(cid:74)(cid:77)(cid:64)(cid:3)(cid:79)(cid:77)(cid:64)(cid:60)(cid:79)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:62)(cid:60)(cid:73)(cid:3)(cid:61)(cid:64)(cid:66)(cid:68)(cid:73)(cid:9)(cid:3)(cid:47)(cid:74)(cid:3)(cid:62)(cid:74)(cid:73)(cid:190)(cid:77)(cid:72)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)
diagnosis, it is essential to measure the blood pressure in 
the pulmonary arteries and examine the right ventricle of 
the heart using a catheter. Further tests are needed to de-
termine the type of pulmonary hypertension affecting the 
patient. In Müller’s case, it turned out that his illness was 
caused by the pulmonary embolism he had suffered back 
in 2004. In this form of the disease, known as chronic 
thromboembolic pulmonary  hypertension (cteph), tiny 
blood clots in the small pulmonary arteries are responsi-
ble for the increased pressure and associated symptoms. 
cteph can occur as a rare complication of acute pulmo-
nary embolism, but the pathogenesis is not completely 
understood. “In many  cases, this form of pulmonary hy-

» TABLE OF CONTENTS  
16

Magazine // Focus on Life Science businesses

Bayer Annual Report 2014

80%

of people with pulmonary  

hypertension are not correctly  

diagnosed until the disease has  

reached an advanced stage.

The blood vessels in the lung  
are constricted, so the heart has 
to work harder to pump blood 
through them.

This progressively weakens the 
heart, thus reducing the body’s 
 oxygen supply.

PULMONARY HYPERTENSION // 
There are several types of pulmonary hyperten-
sion (ph), in which the blood pressure in the 
 vessels of the lung is chronically elevated. Early 
(cid:71)(cid:76)(cid:68)(cid:74)(cid:81)(cid:82)(cid:86)(cid:76)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:79)(cid:72)(cid:68)(cid:85)(cid:3)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:287)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:80)(cid:3)(cid:82)(cid:73)(cid:3)
the disease are essential to ensure the patient 
 receives the best possible treatment at an early 
stage. A delay in starting treatment may greatly 
reduce life expectancy.

pertension is potentially curable with special surgery,” 
says Rosenkranz. That was true for Müller, too. Although 
he still very much feels the effects of his disease, he can 
now live without an oxygen machine again.

This type of surgery is not possible for young Noémi, as 
she suffers from a different form of pulmonary hyperten-
sion called pulmonary arterial hypertension. She is 
helped by various medications that lower the pressure by 
expanding the pulmonary arteries and relieving the strain 
on her heart. “There are now several drugs that have  
(cid:79)(cid:67)(cid:68)(cid:78)(cid:3)(cid:64)(cid:65)(cid:65)(cid:64)(cid:62)(cid:79)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:190)(cid:77)(cid:78)(cid:79)(cid:3)(cid:72)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:3)(cid:74)(cid:65)(cid:3)(cid:60)(cid:3)(cid:63)(cid:68)(cid:78)(cid:79)(cid:68)(cid:73)(cid:62)(cid:79)(cid:3)(cid:78)(cid:80)(cid:61)(cid:78)(cid:79)(cid:60)(cid:73)(cid:62)(cid:64)(cid:3)(cid:62)(cid:71)(cid:60)(cid:78)(cid:78)(cid:3)
(cid:67)(cid:60)(cid:78)(cid:3)(cid:61)(cid:64)(cid:62)(cid:74)(cid:72)(cid:64)(cid:3)(cid:60)(cid:81)(cid:60)(cid:68)(cid:71)(cid:60)(cid:61)(cid:71)(cid:64)(cid:3)(cid:68)(cid:73)(cid:3)(cid:60)(cid:63)(cid:63)(cid:68)(cid:79)(cid:68)(cid:74)(cid:73)(cid:9)(cid:3)(cid:36)(cid:79)(cid:3)(cid:68)(cid:78)(cid:3)(cid:60)(cid:71)(cid:78)(cid:74)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:190)(cid:77)(cid:78)(cid:79)(cid:3)(cid:60)(cid:62)(cid:79)(cid:68)(cid:81)(cid:64)(cid:3)
(cid:3)(cid:68)(cid:73)(cid:66)(cid:77)(cid:64)(cid:63)(cid:68)(cid:64)(cid:73)(cid:79)(cid:3)(cid:79)(cid:67)(cid:60)(cid:79)(cid:3)(cid:62)(cid:60)(cid:73)(cid:3)(cid:78)(cid:68)(cid:66)(cid:73)(cid:68)(cid:190)(cid:62)(cid:60)(cid:73)(cid:79)(cid:71)(cid:84)(cid:3)(cid:68)(cid:72)(cid:75)(cid:77)(cid:74)(cid:81)(cid:64)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:73)(cid:63)(cid:68)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3) 
of patients with inoperable cteph or persistent or recur-
rent cteph after surgery,” Rosenkranz reports. Yet there 
 remains a great need for further research. “We haven’t 
achieved our goal yet,” he points out, adding that univer-
sities and the research-driven pharmaceutical industry 
still have much work to do. “On the one hand, we must 
continue to improve existing treatment options. On the 
other, we need to identify new targets for active ingredi-
ents in order to develop new drugs that inhibit excessive 
cell growth. This cell growth is partly responsible for  
the narrowing of the pulmonary arteries.” 

Developing drugs that can dilate arteries or  address the 
remodeling or increased formation of tissue in the inner 
lining of the arteries is a core area of research at Bayer 
HealthCare. Under a co-development and co-commer-
cialization agreement concluded last year, Bayer Health-
Care is collaborating with u.s. pharmaceutical company 
Merck & Co., Inc. (known as msd outside the u.s. and 
(cid:30)(cid:60)(cid:73)(cid:60)(cid:63)(cid:60)(cid:5)(cid:3)(cid:68)(cid:73)(cid:3)(cid:79)(cid:67)(cid:68)(cid:78)(cid:3)(cid:190)(cid:64)(cid:71)(cid:63)(cid:9)

Bayer scientists are also working on other important 
 approaches to therapy. These include active ingredients 
(cid:65)(cid:74)(cid:77)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:78)(cid:75)(cid:64)(cid:62)(cid:68)(cid:190)(cid:62)(cid:3)(cid:79)(cid:77)(cid:64)(cid:60)(cid:79)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:74)(cid:65)(cid:3)(cid:81)(cid:60)(cid:77)(cid:68)(cid:74)(cid:80)(cid:78)(cid:3)(cid:62)(cid:60)(cid:73)(cid:62)(cid:64)(cid:77)(cid:78)(cid:8)(cid:3)(cid:78)(cid:64)(cid:77)(cid:68)(cid:74)(cid:80)(cid:78)(cid:3)(cid:62)(cid:60)(cid:77)-
diovascular conditions such as stroke and heart failure, 
and certain renal function disorders. A further focus is on 
the development of novel medicines to treat gynecologi-
cal diseases. “We are concentrating on innovative active 
ingredients that represent real breakthroughs in the 
treatment of a range of illnesses and that address high 
unmet medical needs. The needs of patients who urgent-
ly require new treatment options are always at the fore-
front of our work. The successful launch of numerous 
products over the past few years is the result of this long-
term focus on innovation,” says Dr. Jörg Möller, head of 
Global Development at Bayer HealthCare.  

The Bayer scientists are currently working to seamlessly 
(cid:72)(cid:60)(cid:68)(cid:73)(cid:79)(cid:60)(cid:68)(cid:73)(cid:3)(cid:79)(cid:67)(cid:68)(cid:78)(cid:3)(cid:68)(cid:73)(cid:73)(cid:74)(cid:81)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:191)(cid:74)(cid:82)(cid:9)(cid:3)(cid:47)(cid:67)(cid:68)(cid:78)(cid:3)(cid:84)(cid:64)(cid:60)(cid:77)(cid:8)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:63)(cid:64)(cid:62)(cid:68)(cid:78)(cid:68)(cid:74)(cid:73)(cid:3)
(cid:62)(cid:74)(cid:80)(cid:71)(cid:63)(cid:3)(cid:61)(cid:64)(cid:3)(cid:72)(cid:60)(cid:63)(cid:64)(cid:3)(cid:79)(cid:74)(cid:3)(cid:79)(cid:77)(cid:60)(cid:73)(cid:78)(cid:68)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:190)(cid:81)(cid:64)(cid:3)(cid:65)(cid:80)(cid:77)(cid:79)(cid:67)(cid:64)(cid:77)(cid:3)(cid:62)(cid:60)(cid:73)(cid:63)(cid:68)(cid:63)(cid:60)(cid:79)(cid:64)(cid:78)(cid:3)(cid:79)(cid:74)(cid:3)
Phase iii of clinical development. These active ingredi-
ents are intended to expand treatment options for various 
(cid:78)(cid:64)(cid:77)(cid:68)(cid:74)(cid:80)(cid:78)(cid:3)(cid:68)(cid:71)(cid:71)(cid:73)(cid:64)(cid:78)(cid:78)(cid:64)(cid:78)(cid:8)(cid:3)(cid:68)(cid:73)(cid:62)(cid:71)(cid:80)(cid:63)(cid:68)(cid:73)(cid:66)(cid:3)(cid:60)(cid:3)(cid:78)(cid:75)(cid:64)(cid:62)(cid:68)(cid:190)(cid:62)(cid:3)(cid:65)(cid:74)(cid:77)(cid:72)(cid:3)(cid:74)(cid:65)(cid:3)(cid:71)(cid:84)(cid:72)(cid:75)(cid:67)(cid:74)(cid:72)(cid:60)(cid:22)(cid:3)
(cid:60)(cid:73)(cid:64)(cid:72)(cid:68)(cid:60)(cid:3)(cid:62)(cid:60)(cid:80)(cid:78)(cid:64)(cid:63)(cid:3)(cid:61)(cid:84)(cid:3)(cid:62)(cid:64)(cid:77)(cid:79)(cid:60)(cid:68)(cid:73)(cid:3)(cid:77)(cid:64)(cid:73)(cid:60)(cid:71)(cid:3)(cid:63)(cid:68)(cid:78)(cid:74)(cid:77)(cid:63)(cid:64)(cid:77)(cid:78)(cid:22)(cid:3)(cid:63)(cid:68)(cid:65)(cid:65)(cid:64)(cid:77)(cid:64)(cid:73)(cid:79)(cid:3)(cid:65)(cid:74)(cid:77)(cid:72)(cid:78)(cid:3)
(cid:74)(cid:65)(cid:3)(cid:78)(cid:64)(cid:81)(cid:64)(cid:77)(cid:64)(cid:3)(cid:67)(cid:64)(cid:60)(cid:77)(cid:79)(cid:3)(cid:65)(cid:60)(cid:68)(cid:71)(cid:80)(cid:77)(cid:64)(cid:22)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:61)(cid:64)(cid:73)(cid:68)(cid:66)(cid:73)(cid:3)(cid:79)(cid:80)(cid:72)(cid:74)(cid:77)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:80)(cid:79)(cid:64)(cid:77)(cid:80)(cid:78)(cid:3)
(myomas). A number of early-stage research projects  
(cid:60)(cid:77)(cid:64)(cid:3)(cid:75)(cid:77)(cid:74)(cid:62)(cid:64)(cid:64)(cid:63)(cid:68)(cid:73)(cid:66)(cid:3)(cid:68)(cid:73)(cid:3)(cid:75)(cid:60)(cid:77)(cid:60)(cid:71)(cid:71)(cid:64)(cid:71)(cid:9)(cid:3)(cid:102)(cid:42)(cid:80)(cid:77)(cid:3)(cid:82)(cid:74)(cid:77)(cid:70)(cid:3)(cid:68)(cid:73)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:190)(cid:64)(cid:71)(cid:63)(cid:3)(cid:74)(cid:65)(cid:3)(cid:62)(cid:60)(cid:77)(cid:63)(cid:68)-
ology, for example, includes new approaches to treating 
the causes of various vascular diseases, such as pulmo-
nary hypertension,” Bayer scientist Professor Johannes- 
Peter Stasch reports. In carrying out this work, he and his 
(cid:3)(cid:62)(cid:74)(cid:71)(cid:71)(cid:64)(cid:60)(cid:66)(cid:80)(cid:64)(cid:78)(cid:3)(cid:60)(cid:77)(cid:64)(cid:3)(cid:65)(cid:80)(cid:71)(cid:190)(cid:71)(cid:71)(cid:68)(cid:73)(cid:66)(cid:3)(cid:74)(cid:73)(cid:64)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:66)(cid:77)(cid:64)(cid:60)(cid:79)(cid:64)(cid:78)(cid:79)(cid:3)(cid:63)(cid:64)(cid:78)(cid:68)(cid:77)(cid:64)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)
Noémi and her mother: “We very much hope that the 
 researchers will continue looking for treatments that will 
help to stabilize Noémi’s condition.” //

» TABLE OF CONTENTS  
Bayer Annual Report 2014

Focus on Life Science businesses  // Magazine

17

Promoting 
health and 
well-being 

Shamim Al-Mamoon at the laboratory in Memphis, Tennessee, which now belongs to Bayer following the 
 acquisition of the consumer care business of u.s. pharmaceuticals company Merck & Co., Inc.

» TABLE OF CONTENTS  
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Magazine // Focus on Life Science businesses

Bayer Annual Report 2014

Consumer Care // With its range of non-prescription  
and nutritional products, Bayer aims to help people do 
more for their health and well-being. This not only  
increases personal quality of life but can also greatly 
 reduce health care costs.

Human life expectancy is increasing. At the same time,  
more and more people are making their own choice of 
medicines for the prevention or treatment of day-to-day 
 ailments. And many people get information from the 
 internet. “It has never been easier – or so important –  
to actively improve your own health,” says Erica Mann, 
spokesperson for the World Self-Medication Industry 
(wsmi) and Head of the Consumer Care Division of Bayer 
HealthCare.

According to forecasts by the u.s. Department of Health 
and Human Services‘ National Institute on Aging, the 

over-65s are the fastest-growing section of the popula-
tion. That is causing health care costs to rise, and the 
strain on physicians and care givers is growing. Compa-
nies in the health care industry have an important contri-
bution to make: “We need a new, innovative approach to 
health care,” says Mann. “Instead of waiting until people 
become ill before we treat them, we should be giving 
them the products and the information they need to help 
them stay healthy.” Non-prescription medicines – also 
known as over-the-counter (otc) products – and nutri-
tional supplements play a key role in this, as do opportu-
(cid:73)(cid:68)(cid:79)(cid:68)(cid:64)(cid:78)(cid:3)(cid:79)(cid:74)(cid:3)(cid:190)(cid:73)(cid:63)(cid:3)(cid:74)(cid:80)(cid:79)(cid:3)(cid:60)(cid:61)(cid:74)(cid:80)(cid:79)(cid:3)(cid:81)(cid:60)(cid:77)(cid:68)(cid:74)(cid:80)(cid:78)(cid:3)(cid:67)(cid:64)(cid:60)(cid:71)(cid:79)(cid:67)(cid:238)(cid:77)(cid:64)(cid:71)(cid:60)(cid:79)(cid:64)(cid:63)(cid:3)(cid:79)(cid:74)(cid:75)(cid:68)(cid:62)(cid:78)(cid:9)

Microbiologist Aldia Wims-Jones carries out a test in Bayer’s new research and development laboratory in Memphis, Tennessee.

» TABLE OF CONTENTS  
 
Bayer Annual Report 2014

Focus on Life Science businesses  // Magazine

19

No. 2

Bayer is the second-leading supplier 

of non-prescription products world-

wide – and the number one in the 

United States, the world’s largest 
otc market.

Pollen dispersal can be simulated in the allergy 

room at the Consumer Center in Memphis, 

 Tennessee. Venkat Venkatakrishnan (right) 

 monitors the pollen concentration in the room, 

which is designed for up to 12 people.

As a global leader in the otc and nutritionals sector, 
 Bayer is in a good position to provide access to non-pre-
scription products worldwide. After all, the company 
(cid:62)(cid:60)(cid:73)(cid:373)(cid:71)(cid:74)(cid:74)(cid:70)(cid:3)(cid:61)(cid:60)(cid:62)(cid:70)(cid:3)(cid:74)(cid:73)(cid:3)(cid:60)(cid:3)(cid:79)(cid:77)(cid:60)(cid:63)(cid:68)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:64)(cid:83)(cid:79)(cid:64)(cid:73)(cid:63)(cid:68)(cid:73)(cid:66)(cid:3)(cid:74)(cid:81)(cid:64)(cid:77)(cid:3)(cid:74)(cid:73)(cid:64)(cid:3)(cid:67)(cid:80)(cid:73)(cid:63)(cid:77)(cid:64)(cid:63)(cid:3)
years, starting with probably the best-known painkiller of 
them all – AspirinTM. Over the decades, the otc portfolio 
has been expanded to include everything from products 
to treat skin problems, gastrointestinal conditions or 
colds to nutritional supplements.

The company’s recent purchase of the consumer care 
business of u.s. pharmaceuticals group Merck & Co., Inc. 
– the second largest acquisition in Bayer’s history – has 
added numerous leading products to this list, mostly in 
the cold, allergy, sinus &(cid:3)(cid:191)(cid:80)(cid:8)(cid:3)(cid:63)(cid:64)(cid:77)(cid:72)(cid:60)(cid:79)(cid:74)(cid:71)(cid:74)(cid:66)(cid:84)(cid:3)(cid:4)(cid:68)(cid:73)(cid:62)(cid:71)(cid:80)(cid:63)(cid:68)(cid:73)(cid:66)(cid:3)(cid:78)(cid:80)(cid:73)(cid:3)
care), foot health and gastrointestinal categories. “The 
expansion of our portfolio makes us an even better part-
ner for consumers worldwide,” comments Bayer Health-
Care ceo Dr. Olivier Brandicourt. 

Bayer is now the second-leading supplier of non-pre-
scription products globally and has risen to number one 
in the u.s., the largest otc market in the world. Following 
the takeover of Steigerwald Arzneimittelwerk GmbH in 
Germany, Bayer is now active in the area of herbal medi-
cines as well, while the acquisition of Dihon Pharma-

ceutical, a leading company in the manufacture and mar-
keting of otc products in China, opens the door to the 
(cid:190)(cid:64)(cid:71)(cid:63)(cid:3)(cid:74)(cid:65)(cid:3)(cid:3)(cid:79)(cid:77)(cid:60)(cid:63)(cid:68)(cid:79)(cid:68)(cid:74)(cid:73)(cid:60)(cid:71)(cid:3)(cid:30)(cid:67)(cid:68)(cid:73)(cid:64)(cid:78)(cid:64)(cid:3)(cid:72)(cid:64)(cid:63)(cid:68)(cid:62)(cid:68)(cid:73)(cid:64)(cid:9)

KNOWLEDGE IMPROVES HEALTH
Bayer HealthCare doesn’t only help people through its 
products, but offers extensive information on improv- 
ing and maintaining health. “As standards of living im-
prove around the world, health awareness is growing 
along with people’s desire to boost their knowledge of 
health issues,” explains Dr. Felix Reiff, a member of  
Consumer Care’s global management team. 

Bayer supports consumers with a wide range of services. 
For example, the company works with the American 
Heart Association to provide online information about 
how people can lower their blood pressure by changing 
their habits. Another website gives professional advice 
(cid:74)(cid:73)(cid:373)(cid:82)(cid:74)(cid:80)(cid:73)(cid:63)(cid:3)(cid:67)(cid:64)(cid:60)(cid:71)(cid:68)(cid:73)(cid:66)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:61)(cid:60)(cid:61)(cid:84)(cid:3)(cid:62)(cid:60)(cid:77)(cid:64)(cid:8)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:102)(cid:46)(cid:70)(cid:68)(cid:73)(cid:3)(cid:43)(cid:64)(cid:60)(cid:62)(cid:64)(cid:103)(cid:3)
app helps people to calculate appropriate topical medi-
cine doses. Bayer is also actively involved in local, re-
gional and global industry associations to help ensure 
(cid:79)(cid:67)(cid:64)(cid:373)(cid:62)(cid:77)(cid:64)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:74)(cid:65)(cid:3)(cid:60)(cid:3)(cid:78)(cid:64)(cid:62)(cid:80)(cid:77)(cid:64)(cid:8)(cid:3)(cid:77)(cid:64)(cid:71)(cid:68)(cid:60)(cid:61)(cid:71)(cid:64)(cid:3)(cid:71)(cid:64)(cid:66)(cid:60)(cid:71)(cid:3)(cid:65)(cid:77)(cid:60)(cid:72)(cid:64)(cid:82)(cid:74)(cid:77)(cid:70)(cid:3)(cid:65)(cid:74)(cid:77)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)
non-prescription sector. Says division head Mann: “Cred-
ible information is the foundation for building consumer 
trust in personal health care.” //

» TABLE OF CONTENTS  
20

Magazine // Focus on Life Science businesses

» TABLE OF CONTENTS

Bayer Annual Report 2014

Bayer Annual Report 2014

» TABLE OF CONTENTS

Focus on Life Science businesses  // Magazine

21

Food for 
the world

Bayer researchers Céline Zimmerli (left) and Dr. Catherine Baillon check on the progress of 

young wheat plants at Bayer’s wheat breeding station in Milly-la-Forêt, south of Paris.

  
  
22

Magazine // Focus on Life Science businesses

Bayer Annual Report 2014

CropScience // Bayer CropScience has an ambitious goal: 
(cid:79)(cid:74)(cid:3)(cid:190)(cid:73)(cid:63)(cid:3)(cid:68)(cid:73)(cid:73)(cid:74)(cid:81)(cid:60)(cid:79)(cid:68)(cid:81)(cid:64)(cid:3)(cid:60)(cid:73)(cid:78)(cid:82)(cid:64)(cid:77)(cid:78)(cid:3)(cid:79)(cid:74)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:67)(cid:60)(cid:71)(cid:71)(cid:64)(cid:73)(cid:66)(cid:64)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:65)(cid:80)(cid:79)(cid:80)(cid:77)(cid:64)(cid:9)(cid:3)
In pursuit of that aim, the company spends some €1 billion 
(cid:60)(cid:3)(cid:84)(cid:64)(cid:60)(cid:77)(cid:3)(cid:74)(cid:73)(cid:3)(cid:60)(cid:66)(cid:77)(cid:68)(cid:62)(cid:80)(cid:71)(cid:79)(cid:80)(cid:77)(cid:60)(cid:71)(cid:3)(cid:77)(cid:64)(cid:78)(cid:64)(cid:60)(cid:77)(cid:62)(cid:67)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:63)(cid:64)(cid:81)(cid:64)(cid:71)(cid:74)(cid:75)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:63)(cid:64)(cid:78)(cid:68)(cid:66)(cid:73)(cid:64)(cid:63)(cid:3)
(cid:79)(cid:74)(cid:3)(cid:67)(cid:64)(cid:71)(cid:75)(cid:3)(cid:65)(cid:64)(cid:64)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:66)(cid:77)(cid:74)(cid:82)(cid:68)(cid:73)(cid:66)(cid:3)(cid:66)(cid:71)(cid:74)(cid:61)(cid:60)(cid:71)(cid:3)(cid:75)(cid:74)(cid:75)(cid:80)(cid:71)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:9)

(cid:28)(cid:79)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:82)(cid:67)(cid:64)(cid:60)(cid:79)(cid:3)(cid:61)(cid:77)(cid:64)(cid:64)(cid:63)(cid:68)(cid:73)(cid:66)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:68)(cid:73)(cid:3)(cid:40)(cid:68)(cid:71)(cid:71)(cid:84)(cid:238)(cid:71)(cid:60)(cid:238)(cid:33)(cid:74)(cid:77)(cid:171)(cid:79)(cid:8)(cid:3)(cid:33)(cid:77)(cid:60)(cid:73)(cid:62)(cid:64)(cid:8)(cid:3)
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ing of her charges – hundreds of tiny seedlings, which 
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potential to help shape the future of farming,” Baillon 
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(cid:79)(cid:68)(cid:74)(cid:73)(cid:8)(cid:3)(cid:63)(cid:68)(cid:78)(cid:64)(cid:60)(cid:78)(cid:64)(cid:78)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:75)(cid:64)(cid:78)(cid:79)(cid:78)(cid:9)

“Today, wheat provides 

about 20 percent of human  

calorie requirements.”

Bayer CropScience ceo 
Liam Condon

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(cid:29)(cid:60)(cid:68)(cid:71)(cid:71)(cid:74)(cid:73)(cid:3)(cid:78)(cid:60)(cid:84)(cid:78)(cid:9)(cid:3)(cid:102)(cid:35)(cid:64)(cid:77)(cid:64)(cid:3)(cid:68)(cid:73)(cid:3)(cid:40)(cid:68)(cid:71)(cid:71)(cid:84)(cid:238)(cid:71)(cid:60)(cid:238)(cid:33)(cid:74)(cid:77)(cid:171)(cid:79)(cid:8)(cid:3)(cid:82)(cid:64)(cid:3)(cid:80)(cid:78)(cid:64)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:71)(cid:60)(cid:79)(cid:64)(cid:78)(cid:79)(cid:3)
methods to speed it up, such as molecular markers that 
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possesses the target gene; or a new technology that helps 
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And their work is of critical importance because wheat 
has a major role to play in feeding the more than 9 bil-
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by 2050(cid:9)(cid:3)(cid:102)(cid:47)(cid:74)(cid:63)(cid:60)(cid:84)(cid:8)(cid:3)(cid:82)(cid:67)(cid:64)(cid:60)(cid:79)(cid:3)(cid:75)(cid:77)(cid:74)(cid:81)(cid:68)(cid:63)(cid:64)(cid:78)(cid:3)(cid:60)(cid:61)(cid:74)(cid:80)(cid:79)(cid:3)20 percent of 
 human calorie requirements: from New York to São 
 Paulo, from Paris to Johannesburg,” says Bayer Crop-
Science ceo(cid:3)(cid:39)(cid:68)(cid:60)(cid:72)(cid:3)(cid:30)(cid:74)(cid:73)(cid:63)(cid:74)(cid:73)(cid:9)(cid:3)(cid:32)(cid:81)(cid:64)(cid:73)(cid:3)(cid:68)(cid:73)(cid:3)(cid:79)(cid:77)(cid:60)(cid:63)(cid:68)(cid:79)(cid:68)(cid:74)(cid:73)(cid:60)(cid:71)(cid:3)(cid:77)(cid:68)(cid:62)(cid:64)(cid:238)(cid:3)
eating countries like China and India, this grain is an 
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trends currently indicate a widening gap between de-
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(cid:73)(cid:64)(cid:83)(cid:79)(cid:3)(cid:65)(cid:64)(cid:82)(cid:3)(cid:63)(cid:64)(cid:62)(cid:60)(cid:63)(cid:64)(cid:78)(cid:8)(cid:3)(cid:84)(cid:68)(cid:64)(cid:71)(cid:63)(cid:78)(cid:3)(cid:82)(cid:68)(cid:71)(cid:71)(cid:3)(cid:65)(cid:60)(cid:71)(cid:71)(cid:3)(cid:61)(cid:64)(cid:71)(cid:74)(cid:82)(cid:3)(cid:79)(cid:74)(cid:63)(cid:60)(cid:84)(cid:101)(cid:78)(cid:3)(cid:71)(cid:64)(cid:81)(cid:64)(cid:71)(cid:3)(cid:74)(cid:65)(cid:3)
three tons per hectare, while the Food and Agriculture 
Organization of the United Nations (fao) estimates that 
the  demand will rise to 5(cid:9)5 tons per hectare by 2050,” 
(cid:3)(cid:30)(cid:74)(cid:73)(cid:63)(cid:74)(cid:73)(cid:3)(cid:64)(cid:83)(cid:75)(cid:71)(cid:60)(cid:68)(cid:73)(cid:78)(cid:9)

(cid:47)(cid:74)(cid:3)(cid:62)(cid:71)(cid:74)(cid:78)(cid:64)(cid:3)(cid:79)(cid:67)(cid:68)(cid:78)(cid:3)(cid:66)(cid:60)(cid:75)(cid:8)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:30)(cid:77)(cid:74)(cid:75)(cid:46)(cid:62)(cid:68)(cid:64)(cid:73)(cid:62)(cid:64)(cid:3)(cid:74)(cid:75)(cid:64)(cid:77)(cid:60)(cid:79)(cid:64)(cid:78)(cid:3)(cid:82)(cid:67)(cid:64)(cid:60)(cid:79)(cid:3)
breeding stations in France and the major wheat-growing 
areas of Australia, Canada, Germany, Ukraine and the 
(cid:48)(cid:73)(cid:68)(cid:79)(cid:64)(cid:63)(cid:3)(cid:46)(cid:79)(cid:60)(cid:79)(cid:64)(cid:78)(cid:9)(cid:3)(cid:102)(cid:42)(cid:80)(cid:77)(cid:3)(cid:66)(cid:74)(cid:60)(cid:71)(cid:3)(cid:68)(cid:78)(cid:3)(cid:79)(cid:74)(cid:3)(cid:61)(cid:80)(cid:68)(cid:71)(cid:63)(cid:3)(cid:60)(cid:3)(cid:82)(cid:74)(cid:77)(cid:71)(cid:63)(cid:238)(cid:71)(cid:64)(cid:60)(cid:63)(cid:68)(cid:73)(cid:66)(cid:3)(cid:82)(cid:67)(cid:64)(cid:60)(cid:79)(cid:3)
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(cid:78)(cid:60)(cid:84)(cid:78)(cid:3)(cid:46)(cid:79)(cid:64)(cid:81)(cid:64)(cid:3)(cid:43)(cid:60)(cid:79)(cid:79)(cid:64)(cid:77)(cid:78)(cid:74)(cid:73)(cid:8)(cid:3)(cid:30)(cid:64)(cid:77)(cid:64)(cid:60)(cid:71)(cid:78)(cid:3)(cid:30)(cid:77)(cid:74)(cid:75)(cid:3)(cid:40)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:77)(cid:3)(cid:60)(cid:79)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)
(cid:30)(cid:77)(cid:74)(cid:75)(cid:3)(cid:46)(cid:62)(cid:68)(cid:64)(cid:73)(cid:62)(cid:64)(cid:9)(cid:3)(cid:102)(cid:42)(cid:80)(cid:77)(cid:3)(cid:78)(cid:79)(cid:77)(cid:60)(cid:79)(cid:64)(cid:66)(cid:68)(cid:62)(cid:60)(cid:71)(cid:71)(cid:84)(cid:3)(cid:71)(cid:74)(cid:62)(cid:60)(cid:79)(cid:64)(cid:63)(cid:3)(cid:61)(cid:77)(cid:64)(cid:64)(cid:63)(cid:68)(cid:73)(cid:66)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:78)(cid:3)
(cid:60)(cid:63)(cid:60)(cid:75)(cid:79)(cid:3)(cid:67)(cid:68)(cid:66)(cid:67)(cid:71)(cid:84)(cid:3)(cid:64)(cid:65)(cid:190)(cid:62)(cid:68)(cid:64)(cid:73)(cid:79)(cid:3)(cid:82)(cid:67)(cid:64)(cid:60)(cid:79)(cid:3)(cid:81)(cid:60)(cid:77)(cid:68)(cid:64)(cid:79)(cid:68)(cid:64)(cid:78)(cid:3)(cid:79)(cid:74)(cid:3)(cid:71)(cid:74)(cid:62)(cid:60)(cid:71)(cid:3)(cid:66)(cid:77)(cid:74)(cid:82)(cid:68)(cid:73)(cid:66)(cid:3)
(cid:60)(cid:73)(cid:63)(cid:3)(cid:64)(cid:73)(cid:81)(cid:68)(cid:77)(cid:74)(cid:73)(cid:72)(cid:64)(cid:73)(cid:79)(cid:60)(cid:71)(cid:3)(cid:62)(cid:74)(cid:73)(cid:63)(cid:68)(cid:79)(cid:68)(cid:74)(cid:73)(cid:78)(cid:3)(cid:82)(cid:67)(cid:68)(cid:71)(cid:64)(cid:3)(cid:60)(cid:71)(cid:78)(cid:74)(cid:3)(cid:65)(cid:80)(cid:71)(cid:190)(cid:71)(cid:71)(cid:68)(cid:73)(cid:66)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:77)(cid:64)-
(cid:66)(cid:68)(cid:74)(cid:73)(cid:60)(cid:71)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:66)(cid:71)(cid:74)(cid:61)(cid:60)(cid:71)(cid:3)(cid:73)(cid:64)(cid:64)(cid:63)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:72)(cid:68)(cid:71)(cid:71)(cid:78)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:61)(cid:60)(cid:70)(cid:64)(cid:77)(cid:68)(cid:64)(cid:78)(cid:9)(cid:103)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:190)(cid:77)(cid:78)(cid:79)(cid:3)
Bayer wheat seed is scheduled for commercialization in 
(cid:32)(cid:60)(cid:78)(cid:79)(cid:64)(cid:77)(cid:73)(cid:3)(cid:32)(cid:80)(cid:77)(cid:74)(cid:75)(cid:64)(cid:3)(cid:60)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)2015(cid:9)

(cid:47)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:60)(cid:73)(cid:84)(cid:3)(cid:67)(cid:60)(cid:78)(cid:3)(cid:61)(cid:64)(cid:64)(cid:73)(cid:3)(cid:60)(cid:3)(cid:72)(cid:60)(cid:77)(cid:70)(cid:64)(cid:79)(cid:3)(cid:71)(cid:64)(cid:60)(cid:63)(cid:64)(cid:77)(cid:3)(cid:68)(cid:73)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:66)(cid:71)(cid:74)(cid:61)(cid:60)(cid:71)(cid:3)
 cereals business for decades, supplying know-how and 
(cid:68)(cid:73)(cid:79)(cid:64)(cid:66)(cid:77)(cid:60)(cid:79)(cid:64)(cid:63)(cid:3)(cid:65)(cid:60)(cid:77)(cid:72)(cid:68)(cid:73)(cid:66)(cid:3)(cid:78)(cid:74)(cid:71)(cid:80)(cid:79)(cid:68)(cid:74)(cid:73)(cid:78)(cid:3)(cid:79)(cid:60)(cid:68)(cid:71)(cid:74)(cid:77)(cid:64)(cid:63)(cid:3)(cid:79)(cid:74)(cid:3)(cid:71)(cid:74)(cid:62)(cid:60)(cid:71)(cid:3)(cid:73)(cid:64)(cid:64)(cid:63)(cid:78)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)
crop protection portfolio for wheat includes herbicides, 
(cid:78)(cid:64)(cid:64)(cid:63)(cid:3)(cid:79)(cid:77)(cid:64)(cid:60)(cid:79)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:8)(cid:3)(cid:68)(cid:73)(cid:78)(cid:64)(cid:62)(cid:79)(cid:68)(cid:62)(cid:68)(cid:63)(cid:64)(cid:78)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:65)(cid:80)(cid:73)(cid:66)(cid:68)(cid:62)(cid:68)(cid:63)(cid:64)(cid:78)(cid:9)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)
Crop Science’s products also protect wheat immediately 
(cid:75)(cid:74)(cid:78)(cid:79)(cid:238)(cid:67)(cid:60)(cid:77)(cid:81)(cid:64)(cid:78)(cid:79)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:63)(cid:80)(cid:77)(cid:68)(cid:73)(cid:66)(cid:3)(cid:78)(cid:79)(cid:74)(cid:77)(cid:60)(cid:66)(cid:64)(cid:3)(cid:68)(cid:73)(cid:3)(cid:66)(cid:77)(cid:60)(cid:68)(cid:73)(cid:3)(cid:78)(cid:68)(cid:71)(cid:74)(cid:78)(cid:3)(cid:60)(cid:66)(cid:60)(cid:68)(cid:73)(cid:78)(cid:79)(cid:3)
(cid:3)(cid:71)(cid:74)(cid:78)(cid:78)(cid:64)(cid:78)(cid:3)(cid:63)(cid:80)(cid:64)(cid:3)(cid:79)(cid:74)(cid:3)(cid:63)(cid:68)(cid:78)(cid:64)(cid:60)(cid:78)(cid:64)(cid:78)(cid:3)(cid:74)(cid:77)(cid:3)(cid:75)(cid:64)(cid:78)(cid:79)(cid:78)(cid:9)(cid:3)

» TABLE OF CONTENTS  
Bayer Annual Report 2014

Focus on Life Science businesses  // Magazine

23

Bayer researchers Dr. Catherine Baillon (left) and Ombeline Gouhier 

inspect new seedlings at the wheat breeding station in Milly-la-Forêt 

before they are planted out.

3t/ha

Increasing stress factors, such as heat,  

affecting plants worldwide will push crop 

yields down below today’s average of 3 tons 

per  hectare, whereas the Food and  

Agriculture  Organization of the United  
Nations (fao) estimates that yields  
of 5.5 tons per hectare will be  

needed by 2050.

Inspection of a wheat plant in the Bayer laboratory

» TABLE OF CONTENTS  
24

Magazine // Focus on Life Science businesses

Bayer Annual Report 2014

CITRUS GREENING // Citrus greening, also known 
(cid:68)(cid:86)(cid:3)(cid:43)(cid:88)(cid:68)(cid:81)(cid:74)(cid:79)(cid:82)(cid:81)(cid:74)(cid:69)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:85)(cid:3)(cid:92)(cid:72)(cid:79)(cid:79)(cid:82)(cid:90)(cid:3)(cid:71)(cid:85)(cid:68)(cid:74)(cid:82)(cid:81)(cid:3)(cid:71)(cid:76)(cid:86)(cid:72)(cid:68)(cid:86)(cid:72)(cid:15)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:287)(cid:85)(cid:86)(cid:87)(cid:3)
 observed in China and has since spread to the two main 

growing areas for juice oranges, Brazil and Florida. When 

a citrus grove is infected, the quality of the fruit declines 

(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:85)(cid:72)(cid:72)(cid:86)(cid:3)(cid:71)(cid:76)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:85)(cid:72)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:287)(cid:89)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:17)

This tiny insect can cause tremendous 
 damage: psyllids feed off orange trees 
and in doing so spread the bacterium 
responsible for citrus greening.

Citrus grower David Evans (left) inspects the damage to a grove in Florida together with Dr. Dennis Warkentin from Bayer CropScience.

NEW DISEASES CALL FOR NEW METHODS
When new challenges arise in farming, ready solutions 
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(cid:60)(cid:3)(cid:61)(cid:60)(cid:62)(cid:79)(cid:64)(cid:77)(cid:68)(cid:60)(cid:71)(cid:3)(cid:63)(cid:68)(cid:78)(cid:64)(cid:60)(cid:78)(cid:64)(cid:3)(cid:79)(cid:67)(cid:60)(cid:79)(cid:3)(cid:75)(cid:77)(cid:64)(cid:81)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:62)(cid:68)(cid:79)(cid:77)(cid:80)(cid:78)(cid:3)(cid:65)(cid:77)(cid:80)(cid:68)(cid:79)(cid:78)(cid:3)(cid:65)(cid:77)(cid:74)(cid:72)(cid:3)(cid:77)(cid:68)(cid:75)(cid:64)(cid:73)-
(cid:68)(cid:73)(cid:66)(cid:9)(cid:3)(cid:102)(cid:36)(cid:65)(cid:3)(cid:60)(cid:3)(cid:72)(cid:60)(cid:79)(cid:80)(cid:77)(cid:64)(cid:3)(cid:74)(cid:77)(cid:60)(cid:73)(cid:66)(cid:64)(cid:3)(cid:66)(cid:77)(cid:74)(cid:81)(cid:64)(cid:3)(cid:68)(cid:78)(cid:3)(cid:68)(cid:73)(cid:65)(cid:64)(cid:62)(cid:79)(cid:64)(cid:63)(cid:8)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:79)(cid:77)(cid:64)(cid:64)(cid:78)(cid:3)(cid:63)(cid:64)-
(cid:62)(cid:71)(cid:68)(cid:73)(cid:64)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:71)(cid:74)(cid:78)(cid:64)(cid:3)(cid:75)(cid:77)(cid:74)(cid:63)(cid:80)(cid:62)(cid:79)(cid:68)(cid:81)(cid:68)(cid:79)(cid:84)(cid:9)(cid:3)(cid:52)(cid:74)(cid:80)(cid:73)(cid:66)(cid:64)(cid:77)(cid:3)(cid:68)(cid:73)(cid:65)(cid:64)(cid:62)(cid:79)(cid:64)(cid:63)(cid:3)(cid:79)(cid:77)(cid:64)(cid:64)(cid:78)(cid:3)(cid:73)(cid:64)(cid:81)(cid:64)(cid:77)(cid:3)
reach full production and may die within a few years,” 
(cid:78)(cid:60)(cid:84)(cid:78)(cid:3)(cid:31)(cid:77)(cid:9)(cid:3)(cid:31)(cid:64)(cid:73)(cid:73)(cid:68)(cid:78)(cid:3)(cid:50)(cid:60)(cid:77)(cid:70)(cid:64)(cid:73)(cid:79)(cid:68)(cid:73)(cid:8)(cid:3)(cid:60)(cid:3)(cid:47)(cid:64)(cid:62)(cid:67)(cid:73)(cid:68)(cid:62)(cid:60)(cid:71)(cid:3)(cid:46)(cid:64)(cid:77)(cid:81)(cid:68)(cid:62)(cid:64)(cid:3)(cid:45)(cid:64)(cid:75)(cid:77)(cid:64)(cid:78)(cid:64)(cid:73)-

(cid:79)(cid:60)(cid:79)(cid:68)(cid:81)(cid:64)(cid:3)(cid:65)(cid:74)(cid:77)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:30)(cid:77)(cid:74)(cid:75)(cid:46)(cid:62)(cid:68)(cid:64)(cid:73)(cid:62)(cid:64)(cid:3)(cid:68)(cid:73)(cid:3)(cid:33)(cid:71)(cid:74)(cid:77)(cid:68)(cid:63)(cid:60)(cid:9)(cid:3)(cid:30)(cid:68)(cid:79)(cid:77)(cid:80)(cid:78)(cid:3)(cid:66)(cid:77)(cid:64)(cid:64)(cid:73)(cid:68)(cid:73)(cid:66)(cid:8)(cid:3)
(cid:74)(cid:77)(cid:3)(cid:35)(cid:80)(cid:60)(cid:73)(cid:66)(cid:71)(cid:74)(cid:73)(cid:66)(cid:61)(cid:68)(cid:73)(cid:66)(cid:3)(cid:4)hlb(cid:3)(cid:74)(cid:77)(cid:3)(cid:102)(cid:84)(cid:64)(cid:71)(cid:71)(cid:74)(cid:82)(cid:3)(cid:63)(cid:77)(cid:60)(cid:66)(cid:74)(cid:73)(cid:3)(cid:63)(cid:68)(cid:78)(cid:64)(cid:60)(cid:78)(cid:64)(cid:103)(cid:5)(cid:8)(cid:3)(cid:74)(cid:77)(cid:68)(cid:66)-
inated in China but has now spread to the two largest 
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Florida, 80 percent of all citrus trees are already infected, 
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» TABLE OF CONTENTS  
Bayer Annual Report 2014

Focus on Life Science businesses  // Magazine

25

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Bayer – with their global commitment to research – will 
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are implementing different approaches, such as con-
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we also plan to introduce purely biological solutions,” 
 explains Kai Wirtz, who is responsible for the global fruit 
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(cid:75)(cid:71)(cid:60)(cid:73)(cid:79)(cid:68)(cid:73)(cid:66)(cid:3)(cid:73)(cid:64)(cid:82)(cid:3)(cid:62)(cid:68)(cid:79)(cid:77)(cid:80)(cid:78)(cid:3)(cid:66)(cid:77)(cid:74)(cid:81)(cid:64)(cid:78)(cid:9)(cid:3)(cid:102)(cid:36)(cid:73)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:75)(cid:60)(cid:78)(cid:79)(cid:8)(cid:3)(cid:82)(cid:64)(cid:101)(cid:81)(cid:64)(cid:3)(cid:67)(cid:60)(cid:63)(cid:3)(cid:60)(cid:73)(cid:73)(cid:80)-
(cid:60)(cid:71)(cid:3)(cid:74)(cid:77)(cid:60)(cid:73)(cid:66)(cid:64)(cid:3)(cid:67)(cid:60)(cid:77)(cid:81)(cid:64)(cid:78)(cid:79)(cid:78)(cid:3)(cid:79)(cid:74)(cid:79)(cid:60)(cid:71)(cid:68)(cid:73)(cid:66)(cid:3)(cid:78)(cid:74)(cid:72)(cid:64)(cid:3)240 million boxes here 
(cid:68)(cid:73)(cid:3)(cid:33)(cid:71)(cid:74)(cid:77)(cid:68)(cid:63)(cid:60)(cid:9)(cid:3)(cid:47)(cid:74)(cid:63)(cid:60)(cid:84)(cid:3)(cid:82)(cid:64)(cid:100)(cid:77)(cid:64)(cid:3)(cid:63)(cid:74)(cid:82)(cid:73)(cid:3)(cid:79)(cid:74)(cid:3)(cid:69)(cid:80)(cid:78)(cid:79)(cid:3)105(cid:3)(cid:72)(cid:68)(cid:71)(cid:71)(cid:68)(cid:74)(cid:73)(cid:9)(cid:3)(cid:29)(cid:80)(cid:79)(cid:3)(cid:82)(cid:68)(cid:79)(cid:67)(cid:3)
the help of companies like Bayer, we intend to restore the 
Florida citrus industry to its former health and size,”  
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DIGITAL TECHNOLOGY IN AGRICULTURE
Bayer CropScience’s commitment to shaping the future 
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(cid:60)(cid:73)(cid:63)(cid:3)(cid:75)(cid:77)(cid:74)(cid:79)(cid:64)(cid:62)(cid:79)(cid:68)(cid:73)(cid:66)(cid:3)(cid:62)(cid:77)(cid:74)(cid:75)(cid:78)(cid:9)(cid:3)(cid:47)(cid:74)(cid:66)(cid:64)(cid:79)(cid:67)(cid:64)(cid:77)(cid:3)(cid:82)(cid:68)(cid:79)(cid:67)(cid:3)(cid:75)(cid:60)(cid:77)(cid:79)(cid:73)(cid:64)(cid:77)(cid:78)(cid:8)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:60)-
ny is promoting the use of new digital technologies such 
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crops, for example, can be monitored with high precision 
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(cid:102)(cid:47)(cid:67)(cid:64)(cid:3)(cid:79)(cid:64)(cid:62)(cid:67)(cid:73)(cid:74)(cid:71)(cid:74)(cid:66)(cid:84)(cid:3)(cid:82)(cid:60)(cid:78)(cid:3)(cid:80)(cid:78)(cid:64)(cid:63)(cid:3)(cid:68)(cid:73)(cid:3)2014(cid:3)(cid:68)(cid:73)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:28)(cid:72)(cid:64)(cid:77)(cid:68)(cid:62)(cid:60)(cid:73)(cid:3)(cid:40)(cid:68)(cid:63)-
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(cid:40)(cid:64)(cid:73)(cid:73)(cid:64)(cid:8)(cid:3)(cid:82)(cid:67)(cid:74)(cid:3)(cid:68)(cid:78)(cid:3)(cid:82)(cid:74)(cid:77)(cid:70)(cid:68)(cid:73)(cid:66)(cid:3)(cid:79)(cid:74)(cid:3)(cid:60)(cid:63)(cid:81)(cid:60)(cid:73)(cid:62)(cid:64)(cid:3)(cid:79)(cid:67)(cid:68)(cid:78)(cid:3)(cid:73)(cid:64)(cid:82)(cid:3)(cid:60)(cid:77)(cid:64)(cid:60)(cid:3)(cid:74)(cid:65)(cid:3)(cid:60)(cid:62)(cid:79)(cid:68)(cid:81)-
(cid:68)(cid:79)(cid:84)(cid:3)(cid:60)(cid:79)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:30)(cid:77)(cid:74)(cid:75)(cid:46)(cid:62)(cid:68)(cid:64)(cid:73)(cid:62)(cid:64)(cid:9)(cid:3)(cid:102)(cid:28)(cid:79)(cid:3)(cid:60)(cid:73)(cid:84)(cid:3)(cid:66)(cid:68)(cid:81)(cid:64)(cid:73)(cid:3)(cid:72)(cid:74)(cid:72)(cid:64)(cid:73)(cid:79)(cid:8)(cid:3)(cid:65)(cid:60)(cid:77)(cid:72)(cid:64)(cid:77)(cid:78)(cid:3)
would know where remedial action was needed without 
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optimize the application of crop protection products and 
fertilizers in industrialized nations – and can also bring 
highly specialized expertise to the world’s poorest coun-
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(cid:30)(cid:77)(cid:74)(cid:75)(cid:46)(cid:62)(cid:68)(cid:64)(cid:73)(cid:62)(cid:64)(cid:3)(cid:68)(cid:78)(cid:3)(cid:78)(cid:67)(cid:60)(cid:75)(cid:68)(cid:73)(cid:66)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:65)(cid:80)(cid:79)(cid:80)(cid:77)(cid:64)(cid:3)(cid:74)(cid:65)(cid:3)(cid:65)(cid:60)(cid:77)(cid:72)(cid:68)(cid:73)(cid:66)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:60)-
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for the millions of small-holders around the globe, to help 
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Liam Condon, Chairman of the  
Executive Committee of Bayer CropScience,  
on the future of crop protection

“Committing to research to ensure  
abundant harvests”

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companies like Bayer CropScience are committed to the 
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try and academia, we search for new, groundbreaking 
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» TABLE OF CONTENTS  
 
26

Magazine // Focus on Life Science businesses

Bayer Annual Report 2014

HEALTHCARE

CROPSCIENCE

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memory in the form of a chemical marking of dna(cid:9)(cid:3)(cid:47)(cid:67)(cid:68)(cid:78)(cid:3)
memory effect is referred to as epigenetics,” explains 
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ing stress resistance in plants by stimulating or blocking 
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(cid:74)(cid:77)(cid:3)(cid:74)(cid:65)(cid:65)(cid:3)(cid:61)(cid:84)(cid:3)(cid:64)(cid:75)(cid:68)(cid:66)(cid:64)(cid:73)(cid:64)(cid:79)(cid:68)(cid:62)(cid:3)(cid:79)(cid:77)(cid:60)(cid:68)(cid:79)(cid:78)(cid:9)(cid:3)(cid:36)(cid:65)(cid:3)(cid:67)(cid:64)(cid:60)(cid:71)(cid:79)(cid:67)(cid:84)(cid:3)(cid:62)(cid:64)(cid:71)(cid:71)(cid:78)(cid:3)(cid:71)(cid:60)(cid:79)(cid:64)(cid:77)(cid:3)(cid:71)(cid:74)(cid:78)(cid:64)(cid:3)(cid:60)(cid:71)(cid:71)(cid:3)(cid:74)(cid:77)(cid:3)
part of this epigenetic marking, they no longer form part 
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(cid:79)(cid:67)(cid:80)(cid:78)(cid:3)(cid:75)(cid:77)(cid:64)(cid:81)(cid:64)(cid:73)(cid:79)(cid:3)(cid:62)(cid:60)(cid:73)(cid:62)(cid:64)(cid:77)(cid:3)(cid:62)(cid:64)(cid:71)(cid:71)(cid:3)(cid:63)(cid:68)(cid:81)(cid:68)(cid:78)(cid:68)(cid:74)(cid:73)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:79)(cid:64)(cid:60)(cid:72)(cid:3)(cid:3)(cid:67)(cid:64)(cid:60)(cid:63)(cid:64)(cid:63)(cid:3)(cid:61)(cid:84)(cid:3)
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(cid:65)(cid:74)(cid:77)(cid:3)(cid:75)(cid:77)(cid:64)(cid:62)(cid:71)(cid:68)(cid:73)(cid:68)(cid:62)(cid:60)(cid:71)(cid:3)(cid:63)(cid:64)(cid:81)(cid:64)(cid:71)(cid:74)(cid:75)(cid:72)(cid:64)(cid:73)(cid:79)(cid:9)

(cid:46)(cid:62)(cid:68)(cid:64)(cid:73)(cid:79)(cid:68)(cid:78)(cid:79)(cid:78)(cid:3)(cid:60)(cid:79)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:35)(cid:64)(cid:60)(cid:71)(cid:79)(cid:67)(cid:30)(cid:60)(cid:77)(cid:64)(cid:3)(cid:60)(cid:68)(cid:72)(cid:3)(cid:79)(cid:74)(cid:3)(cid:80)(cid:78)(cid:64)(cid:3)(cid:79)(cid:67)(cid:64)(cid:78)(cid:64)(cid:3)(cid:64)(cid:75)(cid:68)(cid:66)(cid:64)(cid:73)(cid:64)(cid:79)(cid:68)(cid:62)(cid:3)
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(cid:190)(cid:66)(cid:67)(cid:79)(cid:3)(cid:60)(cid:66)(cid:60)(cid:68)(cid:73)(cid:78)(cid:79)(cid:3)(cid:62)(cid:60)(cid:73)(cid:62)(cid:64)(cid:77)(cid:9)(cid:3)(cid:46)(cid:60)(cid:84)(cid:78)(cid:3)(cid:75)(cid:77)(cid:74)(cid:69)(cid:64)(cid:62)(cid:79)(cid:3)(cid:72)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:77)(cid:3)(cid:31)(cid:77)(cid:9)(cid:3)(cid:3)(cid:29)(cid:64)(cid:77)(cid:73)(cid:60)(cid:77)(cid:63)(cid:3)
(cid:35)(cid:60)(cid:64)(cid:73)(cid:63)(cid:71)(cid:64)(cid:77)(cid:21)(cid:3)(cid:102)(cid:30)(cid:64)(cid:71)(cid:71)(cid:78)(cid:3)(cid:60)(cid:77)(cid:64)(cid:3)(cid:75)(cid:77)(cid:74)(cid:66)(cid:77)(cid:60)(cid:72)(cid:72)(cid:64)(cid:63)(cid:3)(cid:65)(cid:74)(cid:77)(cid:3)(cid:60)(cid:3)(cid:78)(cid:75)(cid:64)(cid:62)(cid:68)(cid:190)(cid:62)(cid:3)(cid:79)(cid:60)(cid:78)(cid:70)(cid:3)(cid:82)(cid:67)(cid:64)(cid:73)(cid:3)

(cid:46)(cid:62)(cid:68)(cid:64)(cid:73)(cid:79)(cid:68)(cid:78)(cid:79)(cid:78)(cid:3)(cid:60)(cid:79)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:30)(cid:77)(cid:74)(cid:75)(cid:46)(cid:62)(cid:68)(cid:64)(cid:73)(cid:62)(cid:64)(cid:3)(cid:60)(cid:77)(cid:64)(cid:3)(cid:82)(cid:74)(cid:77)(cid:70)(cid:68)(cid:73)(cid:66)(cid:3)(cid:74)(cid:73)(cid:3)(cid:68)(cid:73)(cid:191)(cid:80)(cid:64)(cid:73)(cid:62)-
(cid:68)(cid:73)(cid:66)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:78)(cid:68)(cid:66)(cid:73)(cid:60)(cid:71)(cid:68)(cid:73)(cid:66)(cid:3)(cid:75)(cid:60)(cid:79)(cid:67)(cid:82)(cid:60)(cid:84)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:62)(cid:64)(cid:71)(cid:71)(cid:78)(cid:3)(cid:68)(cid:73)(cid:3)(cid:60)(cid:3)(cid:63)(cid:68)(cid:65)(cid:65)(cid:64)(cid:77)(cid:64)(cid:73)(cid:79)(cid:3)(cid:82)(cid:60)(cid:84)(cid:9)(cid:3)
(cid:47)(cid:67)(cid:64)(cid:68)(cid:77)(cid:3)(cid:75)(cid:77)(cid:74)(cid:69)(cid:64)(cid:62)(cid:79)(cid:3)(cid:68)(cid:78)(cid:3)(cid:60)(cid:68)(cid:72)(cid:64)(cid:63)(cid:3)(cid:60)(cid:79)(cid:3)(cid:190)(cid:73)(cid:63)(cid:68)(cid:73)(cid:66)(cid:3)(cid:64)(cid:75)(cid:68)(cid:66)(cid:64)(cid:73)(cid:64)(cid:79)(cid:68)(cid:62)(cid:3)(cid:72)(cid:64)(cid:62)(cid:67)(cid:60)(cid:73)(cid:68)(cid:78)(cid:72)(cid:78)(cid:3)
(cid:79)(cid:67)(cid:60)(cid:79)(cid:3)(cid:62)(cid:74)(cid:80)(cid:71)(cid:63)(cid:3)(cid:64)(cid:73)(cid:67)(cid:60)(cid:73)(cid:62)(cid:64)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:78)(cid:79)(cid:77)(cid:64)(cid:78)(cid:78)(cid:3)(cid:77)(cid:64)(cid:78)(cid:68)(cid:78)(cid:79)(cid:60)(cid:73)(cid:62)(cid:64)(cid:3)(cid:74)(cid:65)(cid:3)(cid:75)(cid:71)(cid:60)(cid:73)(cid:79)(cid:78)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:84)(cid:3)

» TABLE OF CONTENTS  
Bayer Annual Report 2014

Focus on Life Science businesses  // Magazine

27

Bayer’s scientists are working in interdisciplinary teams across subgroup 

boundaries: for example, molecular biologist Dr. Wayne Coco (above) and his 

team are working to design therapeutic antibodies for use in the treatment of 

diseases such as cancer. Meanwhile, Dr. Bernard Haendler from Bayer 

HealthCare in Berlin and Catherine Sirven from Bayer CropScience in Lyon 

are conducting joint research into gene regulation (left).

(cid:60)(cid:77)(cid:64)(cid:3)(cid:75)(cid:80)(cid:77)(cid:78)(cid:80)(cid:68)(cid:73)(cid:66)(cid:3)(cid:79)(cid:82)(cid:74)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:71)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:60)(cid:77)(cid:84)(cid:3)(cid:60)(cid:75)(cid:75)(cid:77)(cid:74)(cid:60)(cid:62)(cid:67)(cid:64)(cid:78)(cid:9)(cid:3)(cid:33)(cid:68)(cid:77)(cid:78)(cid:79)(cid:8)(cid:3)
teams of scientists are looking for substances that 
strengthen the immune system of the cells and thus 
 increase the plant’s resistance to cold, heat, insects, 
(cid:3)(cid:63)(cid:68)(cid:78)(cid:64)(cid:60)(cid:78)(cid:64)(cid:78)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:63)(cid:77)(cid:74)(cid:80)(cid:66)(cid:67)(cid:79)(cid:9)(cid:3)(cid:46)(cid:64)(cid:62)(cid:74)(cid:73)(cid:63)(cid:8)(cid:3)(cid:64)(cid:75)(cid:68)(cid:66)(cid:64)(cid:73)(cid:64)(cid:79)(cid:68)(cid:62)(cid:78)(cid:3)(cid:74)(cid:65)(cid:65)(cid:64)(cid:77)(cid:78)(cid:3)(cid:73)(cid:64)(cid:82)(cid:3)
(cid:60)(cid:75)(cid:75)(cid:77)(cid:74)(cid:60)(cid:62)(cid:67)(cid:64)(cid:78)(cid:3)(cid:79)(cid:74)(cid:3)(cid:75)(cid:71)(cid:60)(cid:73)(cid:79)(cid:3)(cid:61)(cid:77)(cid:64)(cid:64)(cid:63)(cid:68)(cid:73)(cid:66)(cid:9)

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(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:30)(cid:77)(cid:74)(cid:75)(cid:46)(cid:62)(cid:68)(cid:64)(cid:73)(cid:62)(cid:64)(cid:3)(cid:78)(cid:64)(cid:77)(cid:81)(cid:64)(cid:3)(cid:60)(cid:78)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:61)(cid:60)(cid:78)(cid:68)(cid:78)(cid:3)(cid:65)(cid:74)(cid:77)(cid:3)(cid:79)(cid:67)(cid:64)(cid:78)(cid:64)(cid:3)(cid:64)(cid:83)(cid:75)(cid:64)(cid:77)(cid:68)-
(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:67)(cid:80)(cid:66)(cid:64)(cid:3)(cid:81)(cid:74)(cid:71)(cid:80)(cid:72)(cid:64)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:63)(cid:60)(cid:79)(cid:60)(cid:3)(cid:66)(cid:64)(cid:73)(cid:64)(cid:77)(cid:60)(cid:79)(cid:64)(cid:63)(cid:3)(cid:61)(cid:84)(cid:3)(cid:78)(cid:80)(cid:62)(cid:67)(cid:3)(cid:79)(cid:64)(cid:78)(cid:79)(cid:78)(cid:3)
today can only be managed using computer analysis, 
which is why the epigenetics team now also  includes 
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» TABLE OF CONTENTS  
 
28

Magazine // Focus on Life Science businesses

Bayer Annual Report 2014

Optimally 
equipped for 
the future

Achim Symannek (left) and process engineer Dirk Steinmeister  

inspect a district-heating pipe at the polyurethanes technical center  

of Bayer MaterialScience in Leverkusen.

» TABLE OF CONTENTS  
Bayer Annual Report 2014

Focus on Life Science businesses  // Magazine

29

MaterialScience // Innovative materials such as those pro-
duced and constantly improved by Bayer MaterialScience 
are the driving force behind technological progress. The 
planned demerger from the Bayer Group is  expected to 
make MaterialScience the fourth-leading chemical company 
in Europe – and enable it to apply its strengths even more 
effectively.

His eyes scrutinize it closely as he taps it a few times and 
runs his hand over the gleaming black surface – Hans-Jörg 
Dahmen nods in satisfaction. “A perfect sample,” he says, 
putting the freshly pressed rectangle down in front of the 
injection molding machine. Here at the technical center in 
Leverkusen, the engineer from Application Development 
at Bayer MaterialScience has just examined a new pan-
oramic roof for a car. The sample product is made from 
high-performance polycarbonate and was produced in a 
single process. And it’s 50 percent lighter than conven-
tional glass roofs. “Automotive manufacturers are grateful 
for such developments because the less a vehicle weighs, 
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bility,” Dahmen explains.

The automotive sector is just one of many key industries 
for which Bayer MaterialScience produces and develops 
materials, and polycarbonate is one of its main products. 
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ly versatile class of plastics used in many everyday items 
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holstered furniture. And in the form of rigid foam, they 
serve primarily as insulation for buildings and refrigera-
tion equipment. Polyurethane chemistry is also the basis 
for precursors used in coatings, adhesives and sealants, 
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folio. The company holds leading positions on the world 
market in all of these segments. 

Whether protective coatings, insulating foam or lightweight 
polycarbonate: products like these can help to master the 
challenges posed by climate change, increasing mobility 
and the growth of cities. “With this in mind, we develop 
sustainable solutions that contribute to preserving the en-
vironment, improve our quality of life and create value,” 
says ceo Patrick Thomas. The foundations underlying all 
this are a culture steeped in innovation and our proximity 
to customers all over the world. 

Added to these factors are a strategy aligned to technolog-
ical and cost leadership, along with highly modern, com-
petitive large-scale facilities in which the company contin-
ues to invest. In late 2014, for example, MaterialScience 
(cid:62)(cid:74)(cid:72)(cid:72)(cid:68)(cid:78)(cid:78)(cid:68)(cid:74)(cid:73)(cid:64)(cid:63)(cid:3)(cid:60)(cid:3)(cid:75)(cid:60)(cid:77)(cid:79)(cid:68)(cid:62)(cid:80)(cid:71)(cid:60)(cid:77)(cid:71)(cid:84)(cid:3)(cid:64)(cid:65)(cid:190)(cid:62)(cid:68)(cid:64)(cid:73)(cid:79)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:64)(cid:73)(cid:81)(cid:68)(cid:77)(cid:74)(cid:73)(cid:72)(cid:64)(cid:73)(cid:79)(cid:60)(cid:71)(cid:71)(cid:84)(cid:3)
friendly plant at its site in Dormagen, Germany, for the 

production of the polyurethane component tdi. Total in-
vestment in the plant came to €250 million. 

Independence is intended to put the company in a position 
to apply its strengths even more effectively, rapidly and 
(cid:191)(cid:64)(cid:83)(cid:68)(cid:61)(cid:71)(cid:84)(cid:3)(cid:60)(cid:66)(cid:60)(cid:68)(cid:73)(cid:78)(cid:79)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:66)(cid:71)(cid:74)(cid:61)(cid:60)(cid:71)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:64)(cid:79)(cid:68)(cid:79)(cid:68)(cid:74)(cid:73)(cid:9)(cid:3)(cid:40)(cid:74)(cid:78)(cid:79)(cid:3)(cid:68)(cid:72)(cid:75)(cid:74)(cid:77)(cid:79)(cid:60)(cid:73)(cid:79)(cid:71)(cid:84)(cid:8)(cid:3)
it will then be easier for MaterialScience to raise the capi-
tal it needs to continue developing its business and align 
its organization, processes and corporate culture solely to-
ward its own industrial environment and business model.
The plans call for MaterialScience to be a stand-alone 
company with a new name by mid-2016 at the latest – 
 likely as the fourth-largest chemical company in Europe, 
with approximately 16,800 highly skilled employees who 
have every reason to be optimistic for the future. //

Patrick Thomas, Chairman of the  
Executive Committee of Bayer MaterialScience,  
on the subgroup’s strategy

“Our company combines  
many advantages”

(cid:33)(cid:74)(cid:71)(cid:71)(cid:74)(cid:82)(cid:68)(cid:73)(cid:66)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:60)(cid:73)(cid:73)(cid:74)(cid:80)(cid:73)(cid:62)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:75)(cid:71)(cid:60)(cid:73)(cid:73)(cid:64)(cid:63)(cid:3)(cid:191)(cid:74)(cid:79)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:8)(cid:3) 
all eyes are now on Bayer MaterialScience and there are 
high expectations – among employees, customers and 
 potential investors. I am convinced that we are optimally 
equipped for the future. We know this because our com-
pany has many advantages: a consistent focus on innovati-
on and sustainability, outstanding employees, market- 
leading  positions, and locations close to its customers. 
Then there are our advanced technologies and safe plants, 
(cid:82)(cid:67)(cid:68)(cid:62)(cid:67)(cid:3)(cid:3)(cid:64)(cid:73)(cid:78)(cid:80)(cid:77)(cid:64)(cid:3)(cid:67)(cid:68)(cid:66)(cid:67)(cid:71)(cid:84)(cid:3)(cid:64)(cid:65)(cid:190)(cid:62)(cid:68)(cid:64)(cid:73)(cid:79)(cid:8)(cid:3)(cid:62)(cid:74)(cid:78)(cid:79)(cid:238)(cid:64)(cid:65)(cid:65)(cid:64)(cid:62)(cid:79)(cid:68)(cid:81)(cid:64)(cid:3)(cid:75)(cid:77)(cid:74)(cid:63)(cid:80)(cid:62)(cid:79)(cid:68)(cid:74)(cid:73)(cid:9)(cid:3)
(cid:47)(cid:67)(cid:64)(cid:3)(cid:72)(cid:60)(cid:79)(cid:64)(cid:77)(cid:68)(cid:60)(cid:71)(cid:78)(cid:3)(cid:82)(cid:64)(cid:3)(cid:74)(cid:65)(cid:65)(cid:64)(cid:77)(cid:3)(cid:82)(cid:74)(cid:77)(cid:71)(cid:63)(cid:82)(cid:68)(cid:63)(cid:64)(cid:3)(cid:60)(cid:77)(cid:64)(cid:3)(cid:190)(cid:77)(cid:78)(cid:79)(cid:238)(cid:62)(cid:71)(cid:60)(cid:78)(cid:78)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:67)(cid:64)(cid:71)(cid:75)(cid:3)
people to overcome formidable challenges. I am looking 
(cid:60)(cid:67)(cid:64)(cid:60)(cid:63)(cid:3)(cid:82)(cid:68)(cid:79)(cid:67)(cid:3)(cid:62)(cid:74)(cid:73)(cid:190)(cid:63)(cid:64)(cid:73)(cid:62)(cid:64)(cid:8)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:36)(cid:3)(cid:67)(cid:74)(cid:75)(cid:64)(cid:3)(cid:84)(cid:74)(cid:80)(cid:3)(cid:78)(cid:67)(cid:60)(cid:77)(cid:64)(cid:3)(cid:72)(cid:84)(cid:3)(cid:64)(cid:73)(cid:79)(cid:67)(cid:80)(cid:238)
siasm as we set out on the road to independence.

» TABLE OF CONTENTS  
30

About this Report

Bayer Annual Report 2014

About this Report

Integrated Annual Report

This integrated Annual Report combines our financial and our sustainability reporting. In this way  
we make clear the interactions between financial, ecological and societal factors and underline their  
influence on our company’s long-term development.  

How to use this report

(cid:55)(cid:75)(cid:72)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:15)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:71)(cid:68)(cid:87)(cid:68)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:68)(cid:92)(cid:72)(cid:85)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:70)(cid:68)(cid:81)(cid:3)(cid:69)(cid:72)(cid:3)(cid:73)(cid:82)(cid:88)(cid:81)(cid:71)(cid:98)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3) 
Economic Position, which is color-coded in the table of contents on the back flap. 

Our integrated report for 2014 is available in a print version, the “Annual Report 2014,” and an online 
version containing additional information, the “Annual Report 2014 – Augmented Version.” The print 
version refers the reader to numbered “Online annexes” in the Augmented Version. You can enter the 
numbers in a search mask on any page of the online Annual Report to directly access the annexes. 

pdf files of the print version and the Augmented Version are available for download from the  
Bayer website.

  Online annexes 

  Cross-references within the Annual Report 

  References to internet sites

Annual Report

2014

The Annual Report 2014 –  
Augmented Version can be found 
at www.bayer.com/ar14.

The “Annual Report 2014” (print version)  
is also available as an app from the appstore  
under “Bayer Annual Report.”

» TABLE OF CONTENTS  
 
 
31

About this Report

Reporting principles

Reporting principles

This Annual Report provides comprehensive and 
transparent information on all the topics we believe 
are important for the company and its stakeholders.

The consolidated financial statements of the Bayer 
Group were prepared according to the Internation-
al Financial Reporting Standards (ifrs) and the 
 applicable provisions of the German Commercial 
Code. The combined management report complies 
with the German Commercial Code and German 
 financial reporting standards.

The financial statements of Bayer AG were prepared 
according to the requirements of the German Com-
mercial Code and Stock Corporation Act. The Com-
pensation Report for the Board of Management and 
the Supervisory Board complies with the recommen-
dations of the German Corporate Governance Code. 
The consolidated financial statements and the com-
bined management report are published in line with 
statutory disclosure  requirements.

The Bayer Group’s sustainability reporting is aligned 
to the g3.1 guidelines of the Global Reporting Initia-
tive (gri) and the ten principles of the un Global 
Compact (ungc). The gri has checked and confirmed 
that level a+ has been maintained. The logo and a 
gri index listing the corresponding ungc principles 
can be found in the “Further Information” section 
under “gri Index and un Global Compact Principles.” 
A comprehensive overview of the gri indicators  
and an outline of our progress in implementing the 
10 ungc principles (corresponding to the Advanced 
Level) are available online. Our  reporting is also 
aligned to international guidelines and recommenda-
tions, including those on the  definition and selection 
of non-financial indicators and on reporting.

We follow the oecd guidelines and comply with the 
iso 26000 standard. In selecting and measuring our 
key data we also take into account the recommenda-
tions of the European Federation of Financial Ana-
lysts Societies (effas) in the case of non- financial 
indicators, and those of the Greenhouse Gas Proto-
col regarding greenhouse gas emissions. We also 
consider the recommendations of the World Busi-
ness Council for Sustainable Development (wbcsd) 
and the European Chemical Industry Council (cefic). 
This year we will again submit a declaration of 
 conformity with the German Sustainability Code.

DATA COLLECTION FOR FINANCIAL AND  

NON-FINANCIAL INDICATORS
Credible reporting is based on transparency and data 
validity. We collect the data of all relevant organiza-
tional units and companies worldwide that fall within 
the scope of the Bayer Group’s consolidated financial 
statements.

All hse (health, safety and environmental protection) 
performance indicators for the Group are collated  
in our Group-wide site information system (BaySIS). 
The hse data cover all fully consolidated companies 
in which Bayer owns at least 50% of the shares.  
The performance indicators of these companies are 
fully consolidated regardless of the exact proportion 
of the shares held by Bayer. Data on occupational 
 injuries, transport accidents and environmental inci-
dents are collected at all sites worldwide. Environ-
mentally relevant indicators are measured at all pro-
duction sites.

We mainly use sap systems to collect financial data 
worldwide. We use the global sap hr information 
 system and the associated reporting application – the 
Sustainability Management Annual Reporting Tool 
(smart) – to collect hr indicators and social data.

As the indicators in this report are stated in accor-
dance with commercial rounding principles, totals 
and percentages may not always be exact.

EX TERNAL VERIFICATION
PricewaterhouseCoopers Aktiengesellschaft 
Wirtschafts prüfungsgesellschaft has audited the 
 consolidated financial statements of Bayer AG, 
Leverkusen, and the combined management report 
for the fiscal year from January 1 to December 31, 
2014, and has issued an unqualified opinion.

All of the online annexes that supplement the 
 management report in the augmented online ver-
sion of the Bayer Annual Report 2014 (“Annual 
 Report 2014 – Augmented Version”) for the fiscal 
year from January 1 to December 31, 2014, and the 
parts of the Annual Report 2014 entitled “Investor 
Infor mation” and “Reporting Principles” have been 
 reviewed by PricewaterhouseCoopers Aktienge-
sellschaft Wirtschaftsprüfungsgesellschaft on a 
 limited assurance basis.

» TABLE OF CONTENTS 
32

To our Stockholders

Executive Council

» TABLE OF CONTENTS

» TABLE OF CONTENTS

Bayer Annual Report 2014

Bayer Annual Report 2014

33

To our Stockholders

 Executive Council

Executive Council

The Executive Council, chaired by the Group CEO 
and comprising the members of the Bayer AG 
Board of Management and the CEOs of the three 
subgroups Bayer HealthCare, Bayer CropScience 
and Bayer MaterialScience

DR. OLIVIER BR ANDICOURT¹

JOHANNES DIETSCH

DR. MARIJN DEKKERS

WERNER BAUMANN¹

PATRICK THOMAS

KEMAL MALIK

LIAM CONDON

MICHAEL KÖNIG *

Chief Executive Officer,  
 Bayer HealthCare 

Chief Financial Officer  
of Bayer 

Chief Executive Officer  
of Bayer 

Strategy and Portfolio  
Management · Europe region

Chief Executive Officer, 
Bayer MaterialScience 

Innovation · North and Latin 
 America regions

Chief Executive Officer, 
Bayer CropScience 

Olivier Brandicourt studied medicine 
and biology in Paris and has worked 
as a practicing physician. Having 
 begun his industrial career in 1987 
at Parke-Davis / Warner-Lambert, he 
subsequently joined Pfizer, where he 
held positions of increasing respon-
sibility, becoming a member of its 
Executive Leadership Team in 2010. 
Brandicourt took over as Chief Exec-
utive Officer of Bayer HealthCare in 
November 2013.

Johannes Dietsch completed his train-
ing with Bayer as a commercial assis-
tant and business administrator in 1984. 
He subsequently held various manage-
rial positions within the company, in-
cluding one in Japan. In 2002 Dietsch 
took over as Head of the Finance De-
partment in the Corporate Center, and 
in 2011 he became Senior Bayer Repre-
sentative and CFO of Bayer in China.  
He was appointed to the Bayer Board  
of Management in September 2014.

Marijn Dekkers studied chemistry 
and chemical engineering in 
 Nijmegen and Eindhoven. After 
gaining a Ph.D., he began a career 
in research with General Electric 
in the United States. Having held 
various positions in the United 
States, latterly as Chief Executive 
Officer and President of Thermo 
Fisher Scientific Inc., Dekkers 
took over as Chief Executive Offi-
cer of Bayer in October 2010.

Werner Baumann studied econom- 
ics in Aachen and Cologne, joining 
 Bayer AG in 1988. After holding 
 positions of increasing responsibility 
in Spain and the United States, he 
became a member of the Board of 
Management of Bayer HealthCare 
and its Labor Director. He was ap-
pointed to the Board of Management 
in 2010, first as Chief Financial Offi-
cer and from October 2014 as Chief 
Strategy and Portfolio Officer.

¹  Dr. Olivier Brandicourt will leave the company on March 31, 2015. Werner Baumann will become Chairman of Bayer HealthCare 

effective April 1, 2015 in addition to his function as a member of the Bayer Board of Management.

Patrick Thomas studied engi-
neering at Oxford University.  
He began his career with Impe-
rial Chemical Industries (ICI). 
Positions held by Thomas in-
clude that of CEO of ICI Polyure-
thanes and Corporate Executive 
Vice President of Huntsman 
Matlin Patterson. Thomas took 
over as Chief Executive Officer 
of Bayer MaterialScience in 
 January 2007.

Kemal Malik studied medicine  
and worked in a London hospital. 
After holding different positions of 
increasing responsibility at Bristol -
Myers Squibb, he joined Bayer  
in 1995. In 2007 Malik became a 
member of the Executive Commit-
tee, Head of Global Development 
and Chief Medical Officer of Bayer 
HealthCare. He was appointed to 
the Bayer Board of Management in 
February 2014.

Liam Condon studied International 
Business at Dublin City University and 
the Technical University of Berlin. He 
held various positions of increasing re-
sponsibility with the former Schering 
AG, Berlin, Germany, and with Bayer 
HealthCare in Europe and Asia, in-
cluding Managing Director of Bayer 
HealthCare China and Head of Bayer 
HealthCare in Germany. Condon took 
over as Chief Executive Officer of 
 Bayer CropScience in December 2012.

Human Resources · Technology 
and Sustainability · Asia / Pacific, 
Africa and Middle East regions

Michael König studied chemical 
 process engineering in Dortmund, 
joining Bayer in 1990. After holding 
positions of increasing responsi bility, 
he transferred to China in 2000 as  
a General Manager. In 2007 König 
 became Senior Bayer Representa- 
tive, and from 2011 he headed up  
the Polycarbonates Business Unit of 
 Bayer MaterialScience in Shanghai. 
He was appointed to the Bayer  
Board of Management in April 2013. 

*  Labor Director

        34

To our Stockholders

Report of the Supervisory Board

Bayer Annual Report 2014

Report of the Supervisory Board

During 2014 the Supervisory Board monitored the conduct of the company’s business by the Board of 
Management on a regular basis with the aid of detailed written and oral reports received from the Board 
(cid:74)(cid:65)(cid:3)(cid:40)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:8)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:60)(cid:71)(cid:78)(cid:74)(cid:3)(cid:60)(cid:62)(cid:79)(cid:64)(cid:63)(cid:3)(cid:68)(cid:73)(cid:3)(cid:60)(cid:73)(cid:3)(cid:60)(cid:63)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:62)(cid:60)(cid:75)(cid:60)(cid:62)(cid:68)(cid:79)(cid:84)(cid:9)(cid:3)(cid:36)(cid:73)(cid:373)(cid:60)(cid:63)(cid:63)(cid:68)(cid:79)(cid:68)(cid:74)(cid:73)(cid:8)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:30)(cid:67)(cid:60)(cid:68)(cid:77)(cid:72)(cid:60)(cid:73)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:46)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)
(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:30)(cid:67)(cid:60)(cid:68)(cid:77)(cid:72)(cid:60)(cid:73)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:74)(cid:65)(cid:3)(cid:40)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:72)(cid:60)(cid:68)(cid:73)(cid:79)(cid:60)(cid:68)(cid:73)(cid:64)(cid:63)(cid:3)(cid:60)(cid:3)(cid:62)(cid:74)(cid:73)(cid:78)(cid:79)(cid:60)(cid:73)(cid:79)(cid:3)(cid:64)(cid:83)(cid:62)(cid:67)(cid:60)(cid:73)(cid:66)(cid:64)(cid:3)(cid:74)(cid:65)(cid:3)(cid:68)(cid:73)(cid:65)(cid:74)(cid:77)(cid:72)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:9)(cid:3)
(cid:36)(cid:73)(cid:373)(cid:79)(cid:67)(cid:68)(cid:78)(cid:3)(cid:82)(cid:60)(cid:84)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:46)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:82)(cid:60)(cid:78)(cid:3)(cid:70)(cid:64)(cid:75)(cid:79)(cid:3)(cid:62)(cid:74)(cid:73)(cid:79)(cid:68)(cid:73)(cid:80)(cid:74)(cid:80)(cid:78)(cid:71)(cid:84)(cid:3)(cid:68)(cid:73)(cid:65)(cid:74)(cid:77)(cid:72)(cid:64)(cid:63)(cid:3)(cid:60)(cid:61)(cid:74)(cid:80)(cid:79)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:60)(cid:73)(cid:84)(cid:101)(cid:78)(cid:3)(cid:68)(cid:73)(cid:79)(cid:64)(cid:73)(cid:63)(cid:64)(cid:63)(cid:3)(cid:61)(cid:80)(cid:78)(cid:68)-
(cid:73)(cid:64)(cid:78)(cid:78)(cid:3)(cid:78)(cid:79)(cid:77)(cid:60)(cid:79)(cid:64)(cid:66)(cid:84)(cid:8)(cid:3)(cid:62)(cid:74)(cid:77)(cid:75)(cid:74)(cid:77)(cid:60)(cid:79)(cid:64)(cid:3)(cid:75)(cid:71)(cid:60)(cid:73)(cid:73)(cid:68)(cid:73)(cid:66)(cid:3)(cid:4)(cid:68)(cid:73)(cid:62)(cid:71)(cid:80)(cid:63)(cid:68)(cid:73)(cid:66)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:8)(cid:3)(cid:68)(cid:73)(cid:81)(cid:64)(cid:78)(cid:79)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:67)(cid:80)(cid:72)(cid:60)(cid:73)(cid:3)(cid:77)(cid:64)(cid:78)(cid:74)(cid:80)(cid:77)(cid:62)(cid:64)(cid:78)(cid:3)(cid:75)(cid:71)(cid:60)(cid:73)(cid:73)(cid:68)(cid:73)(cid:66)(cid:5)(cid:8)(cid:3)(cid:64)(cid:60)(cid:77)-
nings performance, the state of the business and the situation in the company and the Group as a whole. 

Where Board of Management decisions or actions required the approval of the Supervisory Board, 
whether by law or under the Articles of Incorporation or the rules of procedure, the draft resolutions 
were inspected by the members at the meetings of the full Supervisory Board, sometimes after prepa-
(cid:77)(cid:60)(cid:79)(cid:74)(cid:77)(cid:84)(cid:3)(cid:82)(cid:74)(cid:77)(cid:70)(cid:3)(cid:61)(cid:84)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:78)(cid:8)(cid:3)(cid:74)(cid:77)(cid:3)(cid:60)(cid:75)(cid:75)(cid:77)(cid:74)(cid:81)(cid:64)(cid:63)(cid:3)(cid:74)(cid:73)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:61)(cid:60)(cid:78)(cid:68)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:63)(cid:74)(cid:62)(cid:80)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:62)(cid:68)(cid:77)(cid:62)(cid:80)(cid:71)(cid:60)(cid:79)(cid:64)(cid:63)(cid:3)(cid:79)(cid:74)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:72)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:78)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)
Supervisory Board was involved in decisions of material importance to the company. We discussed at 
length the business trends described in the reports from the Board of Management and the prospects 
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from the Supervisory Board effective September 30, 2014(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:39)(cid:74)(cid:62)(cid:60)(cid:71)(cid:3)(cid:30)(cid:74)(cid:80)(cid:77)(cid:79)(cid:3)(cid:74)(cid:65)(cid:3)(cid:30)(cid:74)(cid:71)(cid:74)(cid:66)(cid:73)(cid:64)(cid:3)(cid:60)(cid:75)(cid:75)(cid:74)(cid:68)(cid:73)(cid:79)(cid:64)(cid:63)(cid:3)(cid:43)(cid:77)(cid:74)(cid:65)(cid:64)(cid:78)-
sor Otmar Wiestler as his successor. 

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resolutions by way of a written vote, one on a planned acquisition and one on a divestment of part of a 
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attendance rate by Supervisory Board members at the meetings of the full Supervisory Board and of its 
committees held in 2014(cid:3)(cid:82)(cid:60)(cid:78)(cid:3)(cid:60)(cid:75)(cid:75)(cid:77)(cid:74)(cid:83)(cid:68)(cid:72)(cid:60)(cid:79)(cid:64)(cid:71)(cid:84)(cid:3)90 percent. 

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» TABLE OF CONTENTSBayer Annual Report 2014

To our Stockholders

Report of the Supervisory Board

35

Werner Wenning, Chairman of the Supervisory Board of Bayer AG

PRINCIPAL TOPICS DISCUSSED BY THE SUPERVISORY BOARD
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discussions at the respective meetings in 2014 centered on various topics. At the February meeting, 
the Supervisory Board discussed the 2013 Annual Report and the agenda for the 2014 Annual 
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Management’s compensation. 

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tion of the global consumer care business of the u.s(cid:9)(cid:3)(cid:75)(cid:67)(cid:60)(cid:77)(cid:72)(cid:60)(cid:62)(cid:64)(cid:80)(cid:79)(cid:68)(cid:62)(cid:60)(cid:71)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:60)(cid:73)(cid:84)(cid:3)(cid:40)(cid:64)(cid:77)(cid:62)(cid:70)(cid:3)&(cid:3)(cid:30)(cid:74)(cid:9)(cid:8)(cid:3)(cid:36)(cid:73)(cid:62)(cid:9)(cid:3)(cid:28)(cid:79)(cid:3) 
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ment of the Interventional device business. 

» TABLE OF CONTENTS36

To our Stockholders

Report of the Supervisory Board

Bayer Annual Report 2014

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Management until December 31, 2016(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:60)(cid:75)(cid:75)(cid:74)(cid:68)(cid:73)(cid:79)(cid:64)(cid:63)(cid:3)(cid:37)(cid:74)(cid:67)(cid:60)(cid:73)(cid:73)(cid:64)(cid:78)(cid:3)(cid:31)(cid:68)(cid:64)(cid:79)(cid:78)(cid:62)(cid:67)(cid:3)(cid:60)(cid:78)(cid:3)(cid:60)(cid:73)(cid:3)(cid:60)(cid:63)(cid:63)(cid:68)(cid:79)(cid:68)(cid:74)(cid:73)(cid:60)(cid:71)(cid:3)(cid:72)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:3)(cid:74)(cid:65)(cid:3)
the Board of Management with effect from September 1, 2014(cid:9)(cid:3)(cid:32)(cid:65)(cid:65)(cid:64)(cid:62)(cid:79)(cid:68)(cid:81)(cid:64)(cid:3)(cid:42)(cid:62)(cid:79)(cid:74)(cid:61)(cid:64)(cid:77)(cid:3)1, 2014, the Super-
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At the September meeting, the Supervisory Board focused on the future strategic alignment of the 
Bayer Group and approved the Board of Management’s proposal to demerge the MaterialScience 
 subgroup.

At its meeting in December 2014(cid:8)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:46)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:80)(cid:73)(cid:63)(cid:64)(cid:77)(cid:79)(cid:74)(cid:74)(cid:70)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:77)(cid:74)(cid:80)(cid:79)(cid:68)(cid:73)(cid:64)(cid:3)(cid:77)(cid:64)(cid:81)(cid:68)(cid:64)(cid:82)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:190)(cid:83)(cid:64)(cid:63)(cid:3)
compensation of the members of the Board of Management and the pensions of the former members 
of the Board of Management. Also at this meeting, the Board of Management presented its planning 
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years 2015 through 2017. In addition, the Supervisory Board resolved on the declaration concerning 
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COMMITTEES OF THE SUPERVISORY BOARD
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(cid:47)(cid:67)(cid:64)(cid:3)(cid:72)(cid:64)(cid:64)(cid:79)(cid:68)(cid:73)(cid:66)(cid:78)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:63)(cid:64)(cid:62)(cid:68)(cid:78)(cid:68)(cid:74)(cid:73)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:78)(cid:8)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:64)(cid:78)(cid:75)(cid:64)(cid:62)(cid:68)(cid:60)(cid:71)(cid:71)(cid:84)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:72)(cid:64)(cid:64)(cid:79)(cid:68)(cid:73)(cid:66)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:28)(cid:80)(cid:63)(cid:68)(cid:79)(cid:3)(cid:30)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:8)(cid:3)
were prepared on the basis of reports and other information provided by the Board of Management. 
Reports on the committee meetings were presented at the meetings of the full Supervisory Board. 

Presidial Committee:(cid:3)(cid:47)(cid:67)(cid:68)(cid:78)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:77)(cid:68)(cid:78)(cid:64)(cid:78)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:30)(cid:67)(cid:60)(cid:68)(cid:77)(cid:72)(cid:60)(cid:73)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:49)(cid:68)(cid:62)(cid:64)(cid:3)(cid:30)(cid:67)(cid:60)(cid:68)(cid:77)(cid:72)(cid:60)(cid:73)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:46)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)
(cid:60)(cid:71)(cid:74)(cid:73)(cid:66)(cid:3)(cid:82)(cid:68)(cid:79)(cid:67)(cid:3)(cid:60)(cid:3)(cid:65)(cid:80)(cid:77)(cid:79)(cid:67)(cid:64)(cid:77)(cid:3)(cid:78)(cid:79)(cid:74)(cid:62)(cid:70)(cid:67)(cid:74)(cid:71)(cid:63)(cid:64)(cid:77)(cid:3)(cid:77)(cid:64)(cid:75)(cid:77)(cid:64)(cid:78)(cid:64)(cid:73)(cid:79)(cid:60)(cid:79)(cid:68)(cid:81)(cid:64)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:60)(cid:3)(cid:65)(cid:80)(cid:77)(cid:79)(cid:67)(cid:64)(cid:77)(cid:3)(cid:64)(cid:72)(cid:75)(cid:71)(cid:74)(cid:84)(cid:64)(cid:64)(cid:3)(cid:77)(cid:64)(cid:75)(cid:77)(cid:64)(cid:78)(cid:64)(cid:73)(cid:79)(cid:60)(cid:79)(cid:68)(cid:81)(cid:64)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:43)(cid:77)(cid:64)(cid:78)(cid:68)(cid:63)(cid:68)(cid:60)(cid:71)(cid:3)
(cid:30)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:3)(cid:78)(cid:64)(cid:77)(cid:81)(cid:64)(cid:78)(cid:3)(cid:75)(cid:77)(cid:68)(cid:72)(cid:60)(cid:77)(cid:68)(cid:71)(cid:84)(cid:3)(cid:60)(cid:78)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:72)(cid:64)(cid:63)(cid:68)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:62)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:3)(cid:75)(cid:80)(cid:77)(cid:78)(cid:80)(cid:60)(cid:73)(cid:79)(cid:3)(cid:79)(cid:74)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:34)(cid:64)(cid:77)(cid:72)(cid:60)(cid:73)(cid:3)(cid:30)(cid:74)(cid:63)(cid:64)(cid:79)(cid:64)(cid:77)(cid:72)(cid:68)(cid:73)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:28)(cid:62)(cid:79)(cid:9)(cid:3)
(cid:36)(cid:79)(cid:3)(cid:67)(cid:60)(cid:78)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:79)(cid:60)(cid:78)(cid:70)(cid:3)(cid:74)(cid:65)(cid:3)(cid:78)(cid:80)(cid:61)(cid:72)(cid:68)(cid:79)(cid:79)(cid:68)(cid:73)(cid:66)(cid:3)(cid:75)(cid:77)(cid:74)(cid:75)(cid:74)(cid:78)(cid:60)(cid:71)(cid:78)(cid:3)(cid:79)(cid:74)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:46)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:74)(cid:73)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:60)(cid:75)(cid:75)(cid:74)(cid:68)(cid:73)(cid:79)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:74)(cid:65)(cid:3)(cid:72)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)
(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:74)(cid:65)(cid:3)(cid:40)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:68)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:73)(cid:64)(cid:62)(cid:64)(cid:78)(cid:78)(cid:60)(cid:77)(cid:84)(cid:3)(cid:79)(cid:82)(cid:74)(cid:238)(cid:79)(cid:67)(cid:68)(cid:77)(cid:63)(cid:78)(cid:3)(cid:72)(cid:60)(cid:69)(cid:74)(cid:77)(cid:68)(cid:79)(cid:84)(cid:3)(cid:68)(cid:78)(cid:3)(cid:73)(cid:74)(cid:79)(cid:3)(cid:60)(cid:62)(cid:67)(cid:68)(cid:64)(cid:81)(cid:64)(cid:63)(cid:3)(cid:68)(cid:73)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:190)(cid:77)(cid:78)(cid:79)(cid:3)(cid:81)(cid:74)(cid:79)(cid:64)(cid:3)(cid:60)(cid:79)(cid:3)(cid:60)(cid:3)(cid:75)(cid:71)(cid:64)(cid:73)(cid:60)(cid:77)(cid:84)(cid:3)
(cid:72)(cid:64)(cid:64)(cid:79)(cid:68)(cid:73)(cid:66)(cid:9)(cid:3)(cid:30)(cid:64)(cid:77)(cid:79)(cid:60)(cid:68)(cid:73)(cid:3)(cid:63)(cid:64)(cid:62)(cid:68)(cid:78)(cid:68)(cid:74)(cid:73)(cid:238)(cid:72)(cid:60)(cid:70)(cid:68)(cid:73)(cid:66)(cid:3)(cid:75)(cid:74)(cid:82)(cid:64)(cid:77)(cid:78)(cid:3)(cid:68)(cid:73)(cid:3)(cid:62)(cid:74)(cid:73)(cid:73)(cid:64)(cid:62)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:82)(cid:68)(cid:79)(cid:67)(cid:3)(cid:62)(cid:60)(cid:75)(cid:68)(cid:79)(cid:60)(cid:71)(cid:3)(cid:72)(cid:64)(cid:60)(cid:78)(cid:80)(cid:77)(cid:64)(cid:78)(cid:8)(cid:3)(cid:68)(cid:73)(cid:62)(cid:71)(cid:80)(cid:63)(cid:68)(cid:73)(cid:66)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:75)(cid:74)(cid:82)(cid:64)(cid:77)(cid:3) 
(cid:79)(cid:74)(cid:3)(cid:60)(cid:72)(cid:64)(cid:73)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:28)(cid:77)(cid:79)(cid:68)(cid:62)(cid:71)(cid:64)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:36)(cid:73)(cid:62)(cid:74)(cid:77)(cid:75)(cid:74)(cid:77)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:60)(cid:62)(cid:62)(cid:74)(cid:77)(cid:63)(cid:68)(cid:73)(cid:66)(cid:71)(cid:84)(cid:8)(cid:3)(cid:67)(cid:60)(cid:81)(cid:64)(cid:3)(cid:60)(cid:71)(cid:78)(cid:74)(cid:3)(cid:61)(cid:64)(cid:64)(cid:73)(cid:3)(cid:63)(cid:64)(cid:71)(cid:64)(cid:66)(cid:60)(cid:79)(cid:64)(cid:63)(cid:3)(cid:79)(cid:74)(cid:3)(cid:79)(cid:67)(cid:68)(cid:78)(cid:3)(cid:62)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)
(cid:43)(cid:77)(cid:64)(cid:78)(cid:68)(cid:63)(cid:68)(cid:60)(cid:71)(cid:3)(cid:30)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:3)(cid:72)(cid:60)(cid:84)(cid:3)(cid:60)(cid:71)(cid:78)(cid:74)(cid:3)(cid:80)(cid:73)(cid:63)(cid:64)(cid:77)(cid:79)(cid:60)(cid:70)(cid:64)(cid:3)(cid:75)(cid:77)(cid:64)(cid:75)(cid:60)(cid:77)(cid:60)(cid:79)(cid:74)(cid:77)(cid:84)(cid:3)(cid:82)(cid:74)(cid:77)(cid:70)(cid:3)(cid:65)(cid:74)(cid:77)(cid:3)(cid:65)(cid:80)(cid:71)(cid:71)(cid:3)(cid:72)(cid:64)(cid:64)(cid:79)(cid:68)(cid:73)(cid:66)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:46)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:9)(cid:3)

In 2014(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:43)(cid:77)(cid:64)(cid:78)(cid:68)(cid:63)(cid:68)(cid:60)(cid:71)(cid:3)(cid:30)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:3)(cid:82)(cid:60)(cid:78)(cid:3)(cid:73)(cid:74)(cid:79)(cid:3)(cid:77)(cid:64)(cid:76)(cid:80)(cid:68)(cid:77)(cid:64)(cid:63)(cid:3)(cid:79)(cid:74)(cid:3)(cid:62)(cid:74)(cid:73)(cid:81)(cid:64)(cid:73)(cid:64)(cid:3)(cid:68)(cid:73)(cid:3)(cid:68)(cid:79)(cid:78)(cid:3)(cid:62)(cid:60)(cid:75)(cid:60)(cid:62)(cid:68)(cid:79)(cid:84)(cid:3)(cid:60)(cid:78)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:72)(cid:64)(cid:63)(cid:68)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:62)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)-
(cid:79)(cid:64)(cid:64)(cid:9)(cid:3)(cid:29)(cid:60)(cid:78)(cid:64)(cid:63)(cid:3)(cid:74)(cid:73)(cid:3)(cid:60)(cid:73)(cid:3)(cid:60)(cid:80)(cid:79)(cid:67)(cid:74)(cid:77)(cid:68)(cid:85)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:66)(cid:77)(cid:60)(cid:73)(cid:79)(cid:64)(cid:63)(cid:3)(cid:61)(cid:84)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:46)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:8)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:43)(cid:77)(cid:64)(cid:78)(cid:68)(cid:63)(cid:68)(cid:60)(cid:71)(cid:3)(cid:30)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:3)(cid:60)(cid:63)(cid:74)(cid:75)(cid:79)(cid:64)(cid:63)(cid:3)
three resolutions in 2014(cid:3)(cid:74)(cid:73)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:73)(cid:66)(cid:3)(cid:72)(cid:64)(cid:60)(cid:78)(cid:80)(cid:77)(cid:64)(cid:78)(cid:3)(cid:77)(cid:64)(cid:71)(cid:60)(cid:79)(cid:64)(cid:63)(cid:3)(cid:79)(cid:74)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:60)(cid:62)(cid:76)(cid:80)(cid:68)(cid:78)(cid:68)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:73)(cid:78)(cid:80)(cid:72)(cid:64)(cid:77)(cid:3)(cid:62)(cid:60)(cid:77)(cid:64)(cid:3)(cid:61)(cid:80)(cid:78)(cid:68)-
(cid:73)(cid:64)(cid:78)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:40)(cid:64)(cid:77)(cid:62)(cid:70)(cid:3)&(cid:3)(cid:30)(cid:74)(cid:9)(cid:8)(cid:3)(cid:36)(cid:73)(cid:62)(cid:9)(cid:3)

Audit Committee:(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:28)(cid:80)(cid:63)(cid:68)(cid:79)(cid:3)(cid:30)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:77)(cid:68)(cid:78)(cid:64)(cid:78)(cid:3)(cid:79)(cid:67)(cid:77)(cid:64)(cid:64)(cid:3)(cid:78)(cid:79)(cid:74)(cid:62)(cid:70)(cid:67)(cid:74)(cid:71)(cid:63)(cid:64)(cid:77)(cid:3)(cid:77)(cid:64)(cid:75)(cid:77)(cid:64)(cid:78)(cid:64)(cid:73)(cid:79)(cid:60)(cid:79)(cid:68)(cid:81)(cid:64)(cid:78)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:79)(cid:67)(cid:77)(cid:64)(cid:64)(cid:3)(cid:64)(cid:72)-
(cid:75)(cid:71)(cid:74)(cid:84)(cid:64)(cid:64)(cid:3)(cid:77)(cid:64)(cid:75)(cid:77)(cid:64)(cid:78)(cid:64)(cid:73)(cid:79)(cid:60)(cid:79)(cid:68)(cid:81)(cid:64)(cid:78)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:30)(cid:67)(cid:60)(cid:68)(cid:77)(cid:72)(cid:60)(cid:73)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:28)(cid:80)(cid:63)(cid:68)(cid:79)(cid:3)(cid:30)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:3)(cid:68)(cid:73)(cid:3)2014(cid:8)(cid:3)(cid:31)(cid:77)(cid:9)(cid:3)(cid:38)(cid:71)(cid:60)(cid:80)(cid:78)(cid:3)(cid:46)(cid:79)(cid:80)(cid:77)(cid:60)(cid:73)(cid:84)(cid:8)(cid:3)(cid:78)(cid:60)(cid:79)(cid:68)(cid:78)(cid:190)(cid:64)(cid:78)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)
(cid:78)(cid:79)(cid:60)(cid:79)(cid:80)(cid:79)(cid:74)(cid:77)(cid:84)(cid:3)(cid:77)(cid:64)(cid:76)(cid:80)(cid:68)(cid:77)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:62)(cid:74)(cid:73)(cid:62)(cid:64)(cid:77)(cid:73)(cid:68)(cid:73)(cid:66)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:68)(cid:73)(cid:63)(cid:64)(cid:75)(cid:64)(cid:73)(cid:63)(cid:64)(cid:73)(cid:62)(cid:64)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:64)(cid:83)(cid:75)(cid:64)(cid:77)(cid:79)(cid:68)(cid:78)(cid:64)(cid:3)(cid:68)(cid:73)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:190)(cid:64)(cid:71)(cid:63)(cid:3)(cid:74)(cid:65)(cid:3)(cid:60)(cid:62)(cid:62)(cid:74)(cid:80)(cid:73)(cid:79)(cid:68)(cid:73)(cid:66)(cid:3)(cid:74)(cid:77)(cid:3)
(cid:60)(cid:80)(cid:63)(cid:68)(cid:79)(cid:68)(cid:73)(cid:66)(cid:3)(cid:79)(cid:67)(cid:60)(cid:79)(cid:3)(cid:60)(cid:3)(cid:72)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:46)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:28)(cid:80)(cid:63)(cid:68)(cid:79)(cid:3)(cid:30)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:3)(cid:68)(cid:78)(cid:3)(cid:77)(cid:64)(cid:76)(cid:80)(cid:68)(cid:77)(cid:64)(cid:63)(cid:3)(cid:79)(cid:74)(cid:3)(cid:75)(cid:74)(cid:78)(cid:78)(cid:64)(cid:78)(cid:78)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)
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(cid:36)(cid:79)(cid:78)(cid:3)(cid:79)(cid:60)(cid:78)(cid:70)(cid:78)(cid:3)(cid:68)(cid:73)(cid:62)(cid:71)(cid:80)(cid:63)(cid:64)(cid:3)(cid:64)(cid:83)(cid:60)(cid:72)(cid:68)(cid:73)(cid:68)(cid:73)(cid:66)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:60)(cid:73)(cid:84)(cid:101)(cid:78)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:77)(cid:64)(cid:75)(cid:74)(cid:77)(cid:79)(cid:68)(cid:73)(cid:66)(cid:3)(cid:60)(cid:71)(cid:74)(cid:73)(cid:66)(cid:3)(cid:82)(cid:68)(cid:79)(cid:67)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3) 
of Bayer AG(cid:8)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:73)(cid:78)(cid:74)(cid:71)(cid:68)(cid:63)(cid:60)(cid:79)(cid:64)(cid:63)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:34)(cid:77)(cid:74)(cid:80)(cid:75)(cid:8)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:61)(cid:68)(cid:73)(cid:64)(cid:63)(cid:3)(cid:72)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)
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 statements and management reports of the Bayer Group, all of which are prepared by the Board of 
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» TABLE OF CONTENTSBayer Annual Report 2014

To our Stockholders

Report of the Supervisory Board

37

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corporate compliance issues and discusses developments in this area at each of its meetings. 

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discussed it security and submitted a recommendation to the full Supervisory Board concerning the 
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 determining the main areas of focus for the audit of the 2014(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:9)(cid:3)(cid:28)(cid:79)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:37)(cid:80)(cid:71)(cid:84)(cid:3)(cid:72)(cid:64)(cid:64)(cid:79)(cid:68)(cid:73)(cid:66)(cid:8)(cid:3)
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Human Resources Committee: On this committee, too, there is parity of representation between 
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resolve on the total compensation of the individual members of the Board of Management and the 
 respective compensation components, as well as to regularly review the compensation system on the 
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Nominations Committee: (cid:47)(cid:67)(cid:68)(cid:78)(cid:3)(cid:62)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:3)(cid:62)(cid:60)(cid:77)(cid:77)(cid:68)(cid:64)(cid:78)(cid:3)(cid:74)(cid:80)(cid:79)(cid:3)(cid:75)(cid:77)(cid:64)(cid:75)(cid:60)(cid:77)(cid:60)(cid:79)(cid:74)(cid:77)(cid:84)(cid:3)(cid:82)(cid:74)(cid:77)(cid:70)(cid:3)(cid:82)(cid:67)(cid:64)(cid:73)(cid:3)(cid:60)(cid:73)(cid:3)(cid:64)(cid:71)(cid:64)(cid:62)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:74)(cid:65)(cid:3)(cid:78)(cid:79)(cid:74)(cid:62)(cid:70)(cid:238)
holder representatives to the Supervisory Board is to be held. It suggests suitable candidates for the 
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At one meeting and on several other occasions in 2014(cid:8)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:41)(cid:74)(cid:72)(cid:68)(cid:73)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:78)(cid:3)(cid:30)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:3)(cid:63)(cid:68)(cid:78)(cid:62)(cid:80)(cid:78)(cid:78)(cid:64)(cid:63)(cid:3)
 candidates for the Supervisory Board elections that were necessary in 2014 as well as the mid-term 
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» TABLE OF CONTENTS38

To our Stockholders

Report of the Supervisory Board

Bayer Annual Report 2014

CORPOR ATE GOVERNANCE
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(cid:68)(cid:73)(cid:79)(cid:74)(cid:3)(cid:60)(cid:62)(cid:62)(cid:74)(cid:80)(cid:73)(cid:79)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:37)(cid:80)(cid:73)(cid:64)(cid:3)24, 2014(cid:3)(cid:81)(cid:64)(cid:77)(cid:78)(cid:68)(cid:74)(cid:73)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:34)(cid:64)(cid:77)(cid:72)(cid:60)(cid:73)(cid:3)(cid:30)(cid:74)(cid:77)(cid:75)(cid:74)(cid:77)(cid:60)(cid:79)(cid:64)(cid:3)(cid:34)(cid:74)(cid:81)(cid:64)(cid:77)(cid:73)(cid:60)(cid:73)(cid:62)(cid:64)(cid:3)(cid:30)(cid:74)(cid:63)(cid:64)(cid:9)(cid:3)(cid:36)(cid:73)(cid:3)(cid:31)(cid:64)(cid:62)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)
Board of Management and the Supervisory Board issued a new declaration concerning the German 
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FINANCIAL STATEMENTS AND AUDITS
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(cid:3)(cid:30)(cid:74)(cid:72)(cid:72)(cid:64)(cid:77)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:30)(cid:74)(cid:63)(cid:64)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:46)(cid:79)(cid:74)(cid:62)(cid:70)(cid:3)(cid:30)(cid:74)(cid:77)(cid:75)(cid:74)(cid:77)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:28)(cid:62)(cid:79)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:73)(cid:78)(cid:74)(cid:71)(cid:68)(cid:63)(cid:60)(cid:79)(cid:64)(cid:63)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:34)(cid:77)(cid:74)(cid:80)(cid:75)(cid:3)
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Standards (ifrs)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:61)(cid:68)(cid:73)(cid:64)(cid:63)(cid:3)(cid:72)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:77)(cid:64)(cid:75)(cid:74)(cid:77)(cid:79)(cid:3)(cid:82)(cid:60)(cid:78)(cid:3)(cid:75)(cid:77)(cid:64)(cid:75)(cid:60)(cid:77)(cid:64)(cid:63)(cid:3)(cid:60)(cid:62)(cid:62)(cid:74)(cid:77)(cid:63)(cid:68)(cid:73)(cid:66)(cid:3)(cid:79)(cid:74)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:34)(cid:64)(cid:77)(cid:72)(cid:60)(cid:73)(cid:3)(cid:30)(cid:74)(cid:72)(cid:72)(cid:64)(cid:77)-
(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:30)(cid:74)(cid:63)(cid:64)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:60)(cid:80)(cid:63)(cid:68)(cid:79)(cid:74)(cid:77)(cid:8)(cid:3)(cid:43)(cid:77)(cid:68)(cid:62)(cid:64)(cid:82)(cid:60)(cid:79)(cid:64)(cid:77)(cid:67)(cid:74)(cid:80)(cid:78)(cid:64)(cid:30)(cid:74)(cid:74)(cid:75)(cid:64)(cid:77)(cid:78)(cid:3)(cid:28)(cid:70)(cid:79)(cid:68)(cid:64)(cid:73)(cid:66)(cid:64)(cid:78)(cid:64)(cid:71)(cid:71)(cid:78)(cid:62)(cid:67)(cid:60)(cid:65)(cid:79)(cid:8)(cid:3)(cid:50)(cid:68)(cid:77)(cid:79)(cid:78)(cid:62)(cid:67)(cid:60)(cid:65)(cid:79)(cid:78)(cid:75)(cid:77)(cid:188)(cid:65)(cid:80)(cid:73)(cid:66)(cid:78)(cid:3)(cid:66)(cid:64)(cid:78)(cid:64)(cid:71)(cid:71)(cid:78)(cid:62)(cid:67)(cid:60)(cid:65)(cid:79)(cid:8)(cid:3)
(cid:32)(cid:78)(cid:78)(cid:64)(cid:73)(cid:8)(cid:3)(cid:67)(cid:60)(cid:78)(cid:3)(cid:60)(cid:80)(cid:63)(cid:68)(cid:79)(cid:64)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)AG(cid:8)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:73)(cid:78)(cid:74)(cid:71)(cid:68)(cid:63)(cid:60)(cid:79)(cid:64)(cid:63)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3) 
(cid:79)(cid:67)(cid:64)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:34)(cid:77)(cid:74)(cid:80)(cid:75)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:61)(cid:68)(cid:73)(cid:64)(cid:63)(cid:3)(cid:72)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:77)(cid:64)(cid:75)(cid:74)(cid:77)(cid:79)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:73)(cid:63)(cid:80)(cid:62)(cid:79)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:60)(cid:80)(cid:63)(cid:68)(cid:79)(cid:3)(cid:68)(cid:78)(cid:3)(cid:3)(cid:64)(cid:83)(cid:75)(cid:71)(cid:60)(cid:68)(cid:73)(cid:64)(cid:63)(cid:3)(cid:68)(cid:73)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)
(cid:60)(cid:80)(cid:63)(cid:68)(cid:79)(cid:74)(cid:77)(cid:101)(cid:78)(cid:3)(cid:77)(cid:64)(cid:75)(cid:74)(cid:77)(cid:79)(cid:78)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:60)(cid:80)(cid:63)(cid:68)(cid:79)(cid:74)(cid:77)(cid:3)(cid:190)(cid:73)(cid:63)(cid:78)(cid:3)(cid:79)(cid:67)(cid:60)(cid:79)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:67)(cid:60)(cid:78)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:71)(cid:68)(cid:64)(cid:63)(cid:8)(cid:3)(cid:60)(cid:78)(cid:3)(cid:60)(cid:75)(cid:75)(cid:77)(cid:74)(cid:75)(cid:77)(cid:68)(cid:60)(cid:79)(cid:64)(cid:8)(cid:3)(cid:82)(cid:68)(cid:79)(cid:67)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:34)(cid:64)(cid:77)(cid:72)(cid:60)(cid:73)(cid:3)(cid:30)(cid:74)(cid:72)(cid:72)(cid:64)(cid:77)-
(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:30)(cid:74)(cid:63)(cid:64)(cid:8)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:34)(cid:64)(cid:77)(cid:72)(cid:60)(cid:73)(cid:3)(cid:46)(cid:79)(cid:74)(cid:62)(cid:70)(cid:3)(cid:30)(cid:74)(cid:77)(cid:75)(cid:74)(cid:77)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:28)(cid:62)(cid:79)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:10)(cid:3)(cid:74)(cid:77)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:36)(cid:73)(cid:79)(cid:64)(cid:77)(cid:73)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:60)(cid:71)(cid:3)(cid:33)(cid:68)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:45)(cid:64)(cid:75)(cid:74)(cid:77)(cid:79)(cid:68)(cid:73)(cid:66)(cid:3)(cid:46)(cid:79)(cid:60)(cid:73)(cid:63)(cid:60)(cid:77)(cid:63)(cid:78)(cid:3)
(cid:64)(cid:73)(cid:63)(cid:74)(cid:77)(cid:78)(cid:64)(cid:63)(cid:3)(cid:61)(cid:84)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:32)(cid:80)(cid:77)(cid:74)(cid:75)(cid:64)(cid:60)(cid:73)(cid:3)(cid:48)(cid:73)(cid:68)(cid:74)(cid:73)(cid:8)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:68)(cid:78)(cid:78)(cid:80)(cid:64)(cid:78)(cid:3)(cid:60)(cid:73)(cid:3)(cid:80)(cid:73)(cid:76)(cid:80)(cid:60)(cid:71)(cid:68)(cid:190)(cid:64)(cid:63)(cid:3)(cid:74)(cid:75)(cid:68)(cid:73)(cid:68)(cid:74)(cid:73)(cid:3)(cid:74)(cid:73)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)
 Bayer AG(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:73)(cid:78)(cid:74)(cid:71)(cid:68)(cid:63)(cid:60)(cid:79)(cid:64)(cid:63)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:34)(cid:77)(cid:74)(cid:80)(cid:75)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)
Bayer AG(cid:8)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:73)(cid:78)(cid:74)(cid:71)(cid:68)(cid:63)(cid:60)(cid:79)(cid:64)(cid:63)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:34)(cid:77)(cid:74)(cid:80)(cid:75)(cid:8)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:61)(cid:68)(cid:73)(cid:64)(cid:63)(cid:3)(cid:3)(cid:72)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:77)(cid:64)(cid:75)(cid:74)(cid:77)(cid:79)(cid:3)
(cid:60)(cid:73)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:60)(cid:80)(cid:63)(cid:68)(cid:79)(cid:3)(cid:77)(cid:64)(cid:75)(cid:74)(cid:77)(cid:79)(cid:78)(cid:3)(cid:82)(cid:64)(cid:77)(cid:64)(cid:3)(cid:78)(cid:80)(cid:61)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:63)(cid:3)(cid:79)(cid:74)(cid:3)(cid:60)(cid:71)(cid:71)(cid:3)(cid:72)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:46)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:84)(cid:3)(cid:82)(cid:64)(cid:77)(cid:64)(cid:3)(cid:63)(cid:68)(cid:78)(cid:62)(cid:80)(cid:78)(cid:78)(cid:64)(cid:63)(cid:3) 
(cid:68)(cid:73)(cid:3)(cid:63)(cid:64)(cid:79)(cid:60)(cid:68)(cid:71)(cid:3)(cid:61)(cid:84)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:28)(cid:80)(cid:63)(cid:68)(cid:79)(cid:3)(cid:30)(cid:74)(cid:72)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:64)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:60)(cid:79)(cid:3)(cid:60)(cid:3)(cid:72)(cid:64)(cid:64)(cid:79)(cid:68)(cid:73)(cid:66)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:65)(cid:80)(cid:71)(cid:71)(cid:3)(cid:46)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:60)(cid:80)(cid:63)(cid:68)(cid:79)(cid:74)(cid:77)(cid:3)(cid:78)(cid:80)(cid:61)(cid:72)(cid:68)(cid:79)(cid:79)(cid:64)(cid:63)(cid:3)
a report on both occasions and was present during the discussions. 

(cid:50)(cid:64)(cid:3)(cid:64)(cid:83)(cid:60)(cid:72)(cid:68)(cid:73)(cid:64)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)AG, the proposal for the use of the distributable  
(cid:75)(cid:77)(cid:74)(cid:190)(cid:79)(cid:8)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:73)(cid:78)(cid:74)(cid:71)(cid:68)(cid:63)(cid:60)(cid:79)(cid:64)(cid:63)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:34)(cid:77)(cid:74)(cid:80)(cid:75)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:61)(cid:68)(cid:73)(cid:64)(cid:63)(cid:3)(cid:72)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)
(cid:3)(cid:77)(cid:64)(cid:75)(cid:74)(cid:77)(cid:79)(cid:9)(cid:3)(cid:50)(cid:64)(cid:3)(cid:67)(cid:60)(cid:81)(cid:64)(cid:3)(cid:73)(cid:74)(cid:3)(cid:74)(cid:61)(cid:69)(cid:64)(cid:62)(cid:79)(cid:68)(cid:74)(cid:73)(cid:78)(cid:8)(cid:3)(cid:79)(cid:67)(cid:80)(cid:78)(cid:3)(cid:82)(cid:64)(cid:3)(cid:62)(cid:74)(cid:73)(cid:62)(cid:80)(cid:77)(cid:3)(cid:82)(cid:68)(cid:79)(cid:67)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:77)(cid:64)(cid:78)(cid:80)(cid:71)(cid:79)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:60)(cid:80)(cid:63)(cid:68)(cid:79)(cid:9)

(cid:50)(cid:64)(cid:3)(cid:67)(cid:60)(cid:81)(cid:64)(cid:3)(cid:60)(cid:75)(cid:75)(cid:77)(cid:74)(cid:81)(cid:64)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)AG(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:73)(cid:78)(cid:74)(cid:71)(cid:68)(cid:63)(cid:60)(cid:79)(cid:64)(cid:63)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)
(cid:79)(cid:67)(cid:64)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)(cid:34)(cid:77)(cid:74)(cid:80)(cid:75)(cid:3)(cid:75)(cid:77)(cid:64)(cid:75)(cid:60)(cid:77)(cid:64)(cid:63)(cid:3)(cid:61)(cid:84)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:74)(cid:65)(cid:3)(cid:40)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:9)(cid:3)(cid:47)(cid:67)(cid:64)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:78)(cid:79)(cid:60)(cid:79)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:74)(cid:65)(cid:373)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)AG are 
(cid:79)(cid:67)(cid:80)(cid:78)(cid:3)(cid:62)(cid:74)(cid:73)(cid:190)(cid:77)(cid:72)(cid:64)(cid:63)(cid:9)(cid:3)(cid:50)(cid:64)(cid:3)(cid:60)(cid:77)(cid:64)(cid:3)(cid:68)(cid:73)(cid:3)(cid:60)(cid:66)(cid:77)(cid:64)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:82)(cid:68)(cid:79)(cid:67)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:61)(cid:68)(cid:73)(cid:64)(cid:63)(cid:3)(cid:72)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:77)(cid:64)(cid:75)(cid:74)(cid:77)(cid:79)(cid:3)(cid:60)(cid:73)(cid:63)(cid:8)(cid:3)(cid:68)(cid:73)(cid:3)(cid:75)(cid:60)(cid:77)(cid:79)(cid:68)(cid:62)(cid:80)(cid:71)(cid:60)(cid:77)(cid:8)(cid:3)(cid:82)(cid:68)(cid:79)(cid:67)(cid:3)
the assessment of the future development of the enterprise. We also concur with the dividend policy 
and the decisions concerning earnings retention by the company. We assent to the proposal for 
(cid:3)(cid:63)(cid:68)(cid:78)(cid:79)(cid:77)(cid:68)(cid:61)(cid:80)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:75)(cid:77)(cid:74)(cid:190)(cid:79)(cid:8)(cid:3)(cid:82)(cid:67)(cid:68)(cid:62)(cid:67)(cid:3)(cid:75)(cid:77)(cid:74)(cid:81)(cid:68)(cid:63)(cid:64)(cid:78)(cid:3)(cid:65)(cid:74)(cid:77)(cid:3)(cid:75)(cid:60)(cid:84)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:74)(cid:65)(cid:3)(cid:60)(cid:3)(cid:63)(cid:68)(cid:81)(cid:68)(cid:63)(cid:64)(cid:73)(cid:63)(cid:3)(cid:74)(cid:65)(cid:3)€2.25 per share.

(cid:47)(cid:67)(cid:64)(cid:3)(cid:46)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:82)(cid:74)(cid:80)(cid:71)(cid:63)(cid:3)(cid:71)(cid:68)(cid:70)(cid:64)(cid:3)(cid:79)(cid:74)(cid:3)(cid:79)(cid:67)(cid:60)(cid:73)(cid:70)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:74)(cid:65)(cid:3)(cid:40)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:60)(cid:71)(cid:71)(cid:3)(cid:64)(cid:72)(cid:75)(cid:71)(cid:74)(cid:84)(cid:64)(cid:64)(cid:78)(cid:3)(cid:65)(cid:74)(cid:77)(cid:3)(cid:79)(cid:67)(cid:64)(cid:68)(cid:77)(cid:3)
(cid:3)(cid:63)(cid:64)(cid:63)(cid:68)(cid:62)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:67)(cid:60)(cid:77)(cid:63)(cid:3)(cid:82)(cid:74)(cid:77)(cid:70)(cid:3)(cid:68)(cid:73)(cid:3)2014.

(cid:39)(cid:64)(cid:81)(cid:64)(cid:77)(cid:70)(cid:80)(cid:78)(cid:64)(cid:73)(cid:8)(cid:3)(cid:33)(cid:64)(cid:61)(cid:77)(cid:80)(cid:60)(cid:77)(cid:84)(cid:3)25, 2015
For the Supervisory Board:

WERNER WENNING 

Chairman

» TABLE OF CONTENTSBayer Annual Report 2014

3939

To our stockholders

Investor Information

Investor Information

Performance of Bayer Stock in 2014

[Graphic 2.1]

(indexed; 100 = Xetra closing price on December 31, 2013; source: Bloomberg)

130

120

110

100

90

80

Jan

Feb

Mar

Apr

May

June

July

Aug

Sept

Oct

Nov

Dec

Bayer +13.2%

dax +2.7%

dj euro stoxx 50 +4.0%

//  Bayer stock clearly outperforms the  

overall market in 2014 with a yield of around 
13 percent

//  Board of Management and Supervisory Board 
propose dividend increase to €2.25 per share 
for 2014

» TABLE OF CONTENTS 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40 

Combined Management Report 

Investor Information 

Bayer Annual Report 2014

The stock market in 2014 

STOCK MARKETS END THE YEAR WITH GAINS FOLLOWING A VOLATILE PERFORMANCE 
2014 was dominated by stock market gains, interspersed with considerable volatility. Sentiment was 
held back by emerging economic concerns in Europe, the Ukraine crisis and the related sanctions, and 
conflicts in the Middle East. By contrast, low capital market rates and the economic upturn in the United 
States were sources of optimism. The dax topped 10,000 points several times in the first half of the year,  
dropping back to below 8,600 in mid-October. It then rallied strongly to a new high for the year, reach-
ing 10,087 at the start of December, and ended the year up 2.7 percent at around 9,800 points. 

The European equities index euro stoxx 50 (performance index) rose 4 percent, ending the  
year at 5,851 points. Share prices also rose in the United States and Japan. The s&p 500 index gained 
11.4 percent, while the Nikkei 225 rose by 7.1 percent. 

RETURN ON BAYER SHARES WELL ABOVE MARKET   
Including the dividend of €2.10 per share paid at the end of April, the return on Bayer stock was 
13.2 percent in 2014, a far better performance than most of the benchmark indices. The share price 
performance in the second half of the year was particularly encouraging. Bayer stock ended the year at 
€113.00, having reached a high for the year and an all-time high of €120.95 in late November and early 
December. 

The euro stoxx Health Care Index (performance index) rose by 8 percent in 2014, while the  
euro stoxx Chemicals Index (performance index) advanced by 3 percent.  

More than 95 percent of the roughly 30 equity analysts who regularly rate our company had a buy or 
hold recommendation on our stock at the end of last year. 

Bayer Stock Data 

Earnings per share 

Core earnings per share1 

Gross cash flow per share 

Equity per share 

Dividend per share 

Year-end price² 

High for the year² 

Low for the year² 

Total dividend payment 

Number of shares entitled to the dividend (Dec. 31) 

Market capitalization (Dec. 31) 

Average daily share turnover on German stock exchanges 

Price / EPS² 

Price / core EPS² 

Price / cash flow² 

Dividend yield 

[Table 2.1]

2014 

4.14

6.02

8.25

24.45

2.25

113.00

120.95

91.51

1,861

826.95

93.4

2.1

27.3

18.8

13.7

2.0

2013 

3.86 

5.61 

7.05 

25.16 

2.10 

101.95 

103.05 

69.01 

1,737 

826.95 

84.3 

2.1 

26.4 

18.2 

14.5 

2.1 

 € 

 € 

 € 

 € 

 € 

 € 

 € 

 € 

€ million 

million shares 

€ billion 

million shares 

% 

1 For details on the calculation of core earnings per share, see Combined Management Report, Chapter 16.3. 
2 Xetra closing prices (source: Bloomberg) 

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Bayer Annual Report 2014 

Combined Management Report

Investor Information

41 

FAVORABLE FINANCING CONDITIONS FACILITATE EXTENSIVE BOND ISSUANCE BY BAYER 
Issue volume on the corporate bond market was significant in 2014, with interest coupons at a historic 
low, and demand from investors consistently high. Supply was mainly driven by increasing mergers and 
acquisitions activity. Investors were interested in both short and medium-term maturities, depending on 
how they expected interest rates to develop. At the same time, demand for subordinated debt remained 
high throughout the year thanks to higher returns. 

The development of risk premiums is apparent from the trend in credit default swaps (cds) shown in 
Graphic 2.2. On the derivatives market, the price of these tradable insurance contracts, which are used 
to hedge against default of a borrower, show how market participants rate a company’s credit standing. 
As can be seen from the graphic, 2014 was characterized by little volatility and low rate levels. Looking 
at the overall cost, there was a further drop in refinancing costs for companies compared with 2013 
because credit premiums were relatively stable and the risk-free interest rate declined significantly 
during the year. 

Bayer used this attractive environment for strategic refinancing and issued several emtns with a total 
nominal volume of €3.0 billion, two hybrid bonds with a total nominal volume of €3.25 billion and, for 
the first time since 1998, 144a/RegS bonds denominated in u.s. dollars with a total nominal volume of 
us$7.0 billion. The issues comprised a total of eleven tranches with maturities of between two and ten 
years and 60 or 61 years for the hybrids. Most were issued with fixed-rate coupons, although some of 
the shorter maturities have floating-rate coupons based on the 3-month euribor or 3-month usdlibor. 
A €1.3 billion bond issued in 2009 matured in 2014 and was repaid. Further details of outstanding 
bonds are given in Note [27] to the consolidated financial statements. 

  Note 27 to the 
consolidated 
financial statements 
of the Bayer Group 

Rates for Five-Year Credit Default Swaps (CDS) 2014

[Graphic 2.2]

in basis points 1

100

80

60

40

20

Jan

Feb

Mar

Apr

May

June

July

Aug

Sept

Oct

Nov

Dec

1 source: Bloomberg
2  iTraxx Europe is a CDS index comprising the CDS of 125 companies (including ﬁ nancial institutions) with investment-grade ratings.

iTraxx Europe2

Bayer CDS

» TABLE OF CONTENTS 
 
 
 
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
42 

Combined Management Report 

Investor Information 

Bayer Annual Report 2014

LONG-TERM RETURN ON BAYER STOCK WELL AHEAD OF THE MARKET   
A long-term investor who purchased Bayer shares for €10,000 five years ago and reinvested all divi-
dends would have seen the value of the position grow to €22,991 as of December 31, 2014, giving an 
average annual return of 18.1 percent. This was well above the return on the dax and the euro stoxx 
50 (performance index) in the same period. Bayer stock also outperformed these indices on a three-year 
view and in 2014. 

Long-Term Returns on Bayer Stock in % p. a. (Dividends Reinvested) 

[Table 2.2]

Annual returns 

1 year 2014 

3 years 2012 – 2014 

5 years 2010 – 2014 

Bayer 

DAX 

EURO STOXX 50 

 % 

13.2

2.7

4

 % 

35.1 

18.5 

13.4 

 % 

18.1

10.5

4.5

DIVIDEND INCREASE TO €2.25 PER SHARE 
The Board of Management and the Supervisory Board will propose to the Annual Stockholders’ 
Meeting that the dividend be increased by €0.15 to €2.25 per share. Thus we once again intend that 
our stockholders should participate in last year’s positive business performance. The resulting payout 
ratio of 37.4 percent calculated on core earnings per share is within our target corridor of 30 to 
40 percent (for details of the calculation of core earnings per share, see Chapter 16.3 of the Combined 
Management Report). 

The dividend yield calculated on the share price of €113.00 at year end 2014 amounts to 2.0 percent 
and the total dividend payment to €1,861 million. 

Dividends Per Share and Total Dividend Payments

[Graphic 2.3]

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

€1.35

€1.40

€1.40

€1.50

€0.95

€1.00

€2.10

€2.25

€1.90

€1.65

2.5

2.0

1.5

1.0

0.5

0.0

 €694 million

 €764 million  €1,032 million  €1,070 million  €1,158 million  €1,240 million  €1,364 million €1,571 million €1,737 million €1,861 million

 Dividend per share (€)        

  Total dividend payment (€ million)

  www.bayer.com/ 
en/awards.aspx 

A SUSTAINABLE INVESTMENT 
In 2014 Bayer again qualified for inclusion in major sustainability indices that assess companies on the 
basis of environmental, social and governance (esg) criteria: Dow Jones Sustainability World Index, 
ftse4Good Europe and ftse4Good Global, msci Low Carbon Target Index, nyse Euronext Low Carbon 
100 Europe Index, stoxx® Global esg Leaders, Access to Medicine Index (not a tradable index) and the 
cdp Climate Performance Leadership Index (not a tradable index). 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
       
 
  
  
 
  
  
  
  
 
Bayer Annual Report 2014 

Combined Management Report

Investor Information

43 

We have a strong interest in a transparent and understandable assessment of our sustainability perfor-
mance. To enhance the efficiency of the work involved, we actively support initiatives to harmonize 
sustainability ratings such as the Global Initiative for Sustainability Ratings (gisr). In 2014 we continued 
our dialogue with current and potential investors who base their investment decisions on sustainability 
criteria, for example, through special conference calls. 

INTERNATIONAL OWNERSHIP STRUCTURE 
An analysis of our ownership structure carried out in the fourth quarter of 2014 shows the international 
distribution of our capital stock. The highest proportion of our outstanding shares, almost 30 percent, is 
held by investors in the United States and Canada, followed by Germany with nearly 20 percent. Bayer 
has a stable ownership structure that has altered only slightly in recent years. 

Ownership Structure by Country

[Graphic 2.4]

Not covered by survey 7.3%

Denmark, Finland, 
Norway, Sweden 3.3%

Benelux 3.2%

Austria, Switzerland,
Liechtenstein 3.9%

Other countries 4.8%

France, Spain,
Italy, Portugal 10.2%

U.K., Ireland 18.5%

source: IPREO

U.S.A., Canada 29.1% 

Germany 19.7%

At the end of 2014, approximately 260,000 stockholders were listed in our share register. Bayer has a 
100 percent free float as defined by Deutsche Börse, the operator of the Frankfurt Stock Exchange.  

ACCOLADES FOR EXCELLENT CAPITAL MARKET COMMUNICATION 
Bayer’s investor relations activities in 2014 were dominated by structural and strategic decisions. 
Investor interest focused on portfolio adjustments already undertaken or announced, such as the 
decision on the planned stock market flotation of MaterialScience and the acquisitions of Algeta asa, 
Norway, and the consumer care business of Merck & Co., Inc., United States.  

Our “Meet Management” conferences in Leverkusen, New York and London gave investors and analysts 
an opportunity for direct dialogue with our top management. We were present at 18 brokers’ confer-
ences and conducted 30 roadshows. These activities took place in a total of 22 financial centers. As in 
previous years, private investors also had an opportunity to find out about our company at various 
stockholder forums at which the Investor Relations team was present. 

We received a number of awards for our ir work in 2014. For example, in the Thomson Reuters Extel 
Survey 2014 we were awarded three first prizes in the chemicals sector: for the best cfo, the best ir 
professional and the best ir work in the sector. We were also ranked third among dax 30 companies in  
a report by the German Investor Relations Association (dirk) and the German business magazine 
Wirtschaftswoche. 

» TABLE OF CONTENTS 
 
 
 
   
 
 
 
 
» TABLE OF CONTENTS

Combined Management Report

45

Bayer Annual Report 2014

01 

Combined Management Report

of the Bayer Group and Bayer AG as of December 31, 2014

Bayer at a Glance 
Corporate	Profile	
Group Strategy 
Targets and Performance Indicators 
Internal Management System 
Value Creation 
Corporate Environment 
Corporate Structure 
Strategies of the Subgroups 
Economic Environments of the Subgroups 
Research, Development, Innovation 
Sustainability Management and Governance 
Employees 
Procurement and Production 
Products, Distribution and Markets 
Product Stewardship 
Safety 
Environmental Protection 
Energy Consumption 

Fundamental Information About the Group
1. 
1.1	
1.2 
1.3 
1.4 
1.5 
1.6 
2. 
3. 
4. 
5. 
6. 
7. 
8. 
9. 
10. 
11. 
12. 
12.1 
12.2  Air Emissions 
12.3  Use of Water and Emissions into Water 
12.4  Waste and Recycling  
12.5  Biodiversity 
12.6 
12.7	
13. 

Environmental and Transport Incidents 
International	Standards	and	Certifications	
Social Commitment 

46
46
48
49
52
52
53
55
57
61
63
79
87
101
108
114
123
127
128
129
134
137
139
141
144
145

  For direct access to a chapter, simply click on its name.

Report on Economic Position
14. 

 Overview of Sales, Earnings and  
Financial Position  
 Business Development by Subgroup,  
Segment and Region 

15. 

15.1  HealthCare 
15.2  CropScience 
15.3  MaterialScience 
15.4  Business Development by Region 
15.5 

 Business Development in the  
Emerging Markets 
 Earnings; Asset and Financial Position  
of the Bayer Group  

16. 

16.1  Earnings Performance of the Bayer Group 
16.2 

 Calculation of EBIT(DA)  
Before Special Items 

16.3  Core Earnings Per Share 
16.4  Value Management 
16.5 

 Liquidity and Capital Expenditures  
of the Bayer Group 
 Asset and Capital Structure  
of the Bayer Group 

16.6 

16.7  Financial Management of the Group 
17. 

 Earnings; Asset and Financial Position  
of Bayer AG 

17.1  Earnings Performance of Bayer AG 
17.2  Asset and Financial Position of Bayer AG 

150

154
154
160
163
166

166

169
169

170
171
172

174

177
179

180
180
182

Report on Corporate Governance 
18. 
18.1 

Corporate Governance Report 
 Declaration Concerning the  
German Corporate Governance Code 

18.2  Governance 
18.3  Compliance 
18.4  Compensation Report 
18.4.1  Compensation of the Board of Management 
18.4.2   Disclosures Pursuant to the Recommendations  

of the German Corporate Governance Code 

18.4.3  Compensation of the Supervisory Board 
18.4.4  Further Information 

184

184
185
190
192
192

202
204
207

Events After the End of the Reporting Period
19. 

Events After the End of the Reporting Period 

207

Report on Future Perspectives and on Opportunities and Risks
Future Perspectives 
208
20. 
208
Economic Outlook 
20.1 
20.2 
210
Forecast for Key Data 
213
20.3  Opportunities and Risks Report 
20.3.1  Group-wide Risk Management System 
213
216
20.3.2   Opportunities and Risks 
21. 
224

Takeover-Relevant Information 

46 

Combined Management Report 

1. Bayer at a Glance 

Bayer Annual Report 2014

Fundamental Information  
About the Group 

1. Bayer at a Glance 

1.1 Corporate Profile 

The Bayer Group

 [Graphic 3.1.1]

riculture

g
A

cienc e

S
p
o
r
C

H

e

a

l

t

h

H

e

a

l
t

c

a

r

e

h

C

a

r

e

MaterialS c i e n
High-tech p o l y m e r

e

c

s

Bayer is a global enterprise with core competencies in the areas of health care, agriculture and high-
tech polymer materials.  

Bayer AG, Leverkusen, Germany, acts as a strategic management holding company. It defines the 
values, goals and strategies of the entire Group. It is also responsible for resource allocation and mana-
gerial appointments. Led by Bayer AG, the HealthCare, CropScience and MaterialScience subgroups 
independently manage their business operations in line with preset objectives. 

Bayer HealthCare is a world-leading innovation company in the area of prescription medicines 
and consumer products. This subgroup researches, develops, manufactures and markets products to 
improve the health of people and animals. 

Bayer CropScience is one of the world’s leading research-intensive companies in the agricultural in-
dustry, offering a broad range of innovative chemical and biological products for improving plant health, 
along with high-value seeds. It also provides extensive customer service to support modern, sustainable 
agriculture. A further focus is on non-agricultural applications. 

Bayer MaterialScience is a renowned supplier of high-tech polymers and develops innovative product 
solutions for a wide variety of everyday uses. Products holding leading positions on the world market 
account for a large proportion of its sales. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
  
 
 
 
Bayer Annual Report 2014 

Combined Management Report

1. Bayer at a Glance

47 

For more information on the planned stock market flotation of Bayer MaterialScience, see Chapter 1.2 
“Group Strategy.” 

The holding company and subgroups are supported in their activities by the three service companies 
Bayer Business Services, Bayer Technology Services and Currenta.  

The Bayer Group in 2014

[Graphic 3.1.2]

Total

 Sales

Employees

R&D expenditures

 Bayer AG and no. of fully consolidated companies

42,239 (40,157)(cid:2)(€ million)

118,900 (112,400)1

3,574 (3,406)1(cid:2)(€ million)

302 (289) 

North America

10,248 (9,680) (€ million)

16,300 (15,200) 

876 (968)1 (€ million)

43 (40) 

Latin America / Africa / Middle East

7,066 (6,768) (€ million)

16,900 (16,200)1 

59 (51) (€ million)

44 (44) 

2013 ﬁ gures in parentheses
1 2013 ﬁ gures restated

Europe

15,806 (15,086) (€ million)

55,200 (53,300)1 

2,444 (2,209)1 (€ million)

156 (150) 

Asia / Paciﬁ c

9,119 (8,623) (€ million)

30,500 (27,700)1 

195 (178)1 (€ million)

59 (55) 

Today, the Bayer Group comprises around 300 consolidated companies in 75 countries throughout the 
world. We have corporate locations in close proximity to our customers and markets worldwide, invest 
locally and offer attractive jobs.   

Mission and Values 

OUR MISSION: “BAYER: SCIENCE FOR A BETTER LIFE” 
Bayer is a world-class innovation company with a 150-year history. Our scientific successes are intend-
ed to help improve people’s lives. At the same time, our innovations form the basis for sustainable and 
profitable business activity and are the key to maintaining or achieving leadership positions in all of our 
markets.  

Our products are helping to address some of today’s biggest challenges, including global population 
growth, an aging society and the need to make efficient – and, wherever possible, sustainable – use of 
natural resources. 

•  We are improving people’s quality of life by preventing, alleviating or curing diseases.  
•  We are helping to provide an adequate supply of high-quality food, feed and renewable plant-based 

raw materials. 

•  Our high-tech polymer materials are making significant contributions in areas such as energy and 

resource efficiency for mobility, construction and home living. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
    
 
 
 
 
  
  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
48 

Combined Management Report 

1. Bayer at a Glance 

Bayer Annual Report 2014

OUR VALUES 
Bayer’s values play a central role in our daily work and are intended to guide us in fulfilling our mission. 
These values are represented by the word life: Leadership, Integrity, Flexibility, Efficiency. 

These values apply to everyone at Bayer and are firmly integrated into our global performance man-
agement system for managerial employees. Our value culture ensures a common identity within the 
enterprise across national boundaries, management hierarchies and cultural differences.  

We have also adopted a clearer position as we compete to attract the best talent, using the slogan:  
“Passion to Innovate, Power to Change.” Further details can be found in the Chapter “Employees.” 

1.2 Group Strategy 

In line with our mission “Bayer: Science For A Better Life,” we aim to improve people’s quality of life. 
For this endeavor, we focus on our core competency of developing and successfully commercializing 
innovative products and solutions based on scientific knowledge.  

ENTIRE FOCUS ON LIFE SCIENCE BUSINESSES 
Bayer in future will focus entirely on the Life Science businesses – HealthCare and CropScience – and 
intends to float MaterialScience on the stock market as a separate company by mid-2016 at the latest. 
This move is designed to give MaterialScience direct access to the capital market for the continued 
development of its business. MaterialScience will align its organizational and process structures and 
corporate culture with its own industrial environment and business model in order to become a leading 
polymers company.  

 OUR OBJECTIVE: PROFITABLE GROWTH 

Our corporate strategy is aligned toward profitable growth that will increase corporate value in the long 
term. We place special importance on developing new products and solutions that create significant 
value for customers and patients, and on serving the Emerging Markets, particularly those of Asia and 
Latin America. In this way we are giving more and more customers access to our products and estab-
lishing a solid basis for further growth. 

 THE FOUNDATION FOR OUR SUCCESS: INNOVATION 

Bayer is steadily opening up new, attractive market segments in fast-growing and research-driven  
areas of the Life Sciences. Our success is based on the development of new molecules, technologies, 
processes and business models. In the long term we expect additional growth impetus to come from 
interdisciplinary and interspecies research as we build on successful first steps in these areas. We aim 
to drive growth in our established business areas through investment in research and development as 
well as through acquisitions and collaborations. We are investing heavily to deliver organic growth in  
all areas of activity. Bayer plans to invest a total of over €6 billion in research and development and  
in property, plant and equipment in 2015. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
    
Bayer Annual Report 2014 

Combined Management Report

1. Bayer at a Glance

49 

 OUR ACTIONS: SUSTAINABLE 

Sustainable business practices are essential to the Group’s future viability. We therefore endeavor to 
balance our economic objectives with social and ecological requirements in the development, manufac-
turing and marketing of our products. We aim to ensure broad social acceptance for our business 
through responsible practices in the areas of compliance (e.g. anti-corruption and responsible market-
ing), human resources policy, product stewardship, health, environmental protection, safety and sup-
plier management and by taking into account the expectations of important stakeholders. 

 OUR MOST CRUCIAL RESOURCE: THE EMPLOYEES 

Motivated employees are especially important for the successful development of our business. Bayer 
embraces a performance- and development-oriented corporate culture, coupled with a pronounced 
sense of social responsibility. We encourage human and cultural diversity within the company, placing 
special importance on pleasant work environments, flexible working conditions and excellent vocational 
and advanced training opportunities. We offer excellent career prospects and aim to continue attracting 
the most talented people to support our company’s successful and sustainable development. 

1.3 Targets and Performance Indicators 

To consistently implement our strategy, we have set ourselves ambitious Group targets and measure 
their attainment annually in terms of selected performance indicators. This program encompasses not 
only financial targets and innovation goals, but also sustainability objectives that are aligned to im-
portant areas along the value chain. Our aim is to make clear the challenges we have identified in our 
core business in the context of sustainable development, and at the same time to highlight the continu-
ous improvements we are committed to making throughout the Group. The current status of our pro-
gress in these areas is documented in the following table and the respective chapters. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
 
     
 
 
   
 
 
 
 
Bayer Annual Report 2014

[Graphic 3.1.3]

Target 
year

Target attainment 
in 2014

New target 
for 2015

Explanations of target

50 

Combined Management Report 

1. Bayer at a Glance 

Bayer Group Targets

Deﬁ nition of target

//  Proﬁ table Growth

Increase in Group sales 
(Fx & portfolio adj.); forecast 
issued in February 2014: 
approx. 5% increase to approx. 
€41 billion – €42 billion

Increase in ebitda before special 
items; forecast issued in February 
2014: low- to mid-single-digit per-
centage increase

Increase in core earnings per 
share; forecast issued in February 
2014: mid-single-digit percentage 
increase

  //  Innovation

2014

7.2% increase to 
€42.2 billion

2014

4.9% increase

2014

7.3% increase

Group: Increase in r&d invest-
ment to approx. €3.5 billion

2014

€3.6 billion

HealthCare: Transition of more 
than 10 new molecular entities 
(nmes) into development 

2014

12 new molecular 
entities (nmes) were 
transferred into 
development

CropScience: Transfer of at least 
6 new molecular entities (nmes) 
or plant traits into conﬁ rmatory 
technical proof-of-concept ﬁ eld 
studies

2014

5 new molecular 
entities or plant traits 

MaterialScience: Improvement 
in production process technology 
to achieve better energy 
efﬁ ciency

Contin-
uous

Improved production 
technologies intro-
duced (e.g. Dream 
Production, new tdi 
facility)

Low-single-
digit percent-
age increase 
(Fx & portfolio 
adj.) to approx. 
€46 billion

Low- to mid-
teens percent-
age increase

Low-teens 
percentage 
increase

Increase in 
r&d investment 
to over
€4.0 billion

Transition of 
more than 10 
new molecular 
entities (nmes) 
into develop-
ment

Transfer of 2 
new molecular 
entities (nmes) 
or plant traits 
into conﬁ rma-
tory technical 
proof-of-
concept ﬁ eld 
studies

Unchanged

A new molecular entity is a chemical or biological  
substance that has not yet been developed at Bayer for a 
speciﬁ c indication.

A new plant trait is a speciﬁ c characteristic that has not 
yet been available or offered at Bayer for the crop plant in 
 question. The target was not fully achieved in 2014 due to 
changes in the legal framework in early selection. 

This innovation target supports the achievement of the  
resource efﬁ ciency targets. More information on “efﬁ cient 
production” in Chapter 12.2 (Climate Program).

  //  Sustainability

Supplier Management

Evaluation of all strategically 
important suppliers 

Evaluation of all potentially 
high-risk suppliers with signiﬁ -
cant Bayer spend 

Development and establishment 
of a new sustainability standard 
for our  supply base

2017

2020

66%. A total of 253 
strategically impor-
tant suppliers were 
evaluated by the end 
of 2014.

61%. A total of 157 
potentially high-risk 
suppliers were 
evaluated by the 
end of 2014. 

Unchanged

Strategically important suppliers are those with a major 
 inﬂ uence on business, including in terms of procurement 
spend and long-term collaboration prospects (3 – 5 years). 
Sustainability performance is evaluated in  
assessments and audits. 

Unchanged

Risk deﬁ nition is based on a country- and material-based 
 approach. We deﬁ ne signiﬁ cant procurement spend as 
> €1 million p.a.

2020

In implementation 

Unchanged

The sustainability standard for our suppliers is to be driven for-
ward in tandem with relevant industry initiatives. We are cur-
rently working with the “Together for Sustainability” initiative 
and the Pharmaceutical Supply Chain Initiative. The goals in-
clude standardizing and sharing sustainability assessments and 
audits of suppliers in the same industry and describing clear 
expectations regarding sustainability so as to establish appro-
priate sustainability practices among our suppliers.

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Bayer Group Targets

Deﬁ nition of target

Resource Efﬁ ciency

Combined Management Report

1. Bayer at a Glance

51 

[Graphic 3.1.3 (continued)]

Target 
year

Target attainment 
in 2014

New target 
for 2015

Explanations of target

Improvement of 10% in Group-
wide energy efﬁ ciency. Reference 
year 2012: 3.50 MWh/t

2020

3.37 MWh/t 
(3.8% improvement)

Unchanged

Energy efﬁ ciency is deﬁ ned as the quotient of energy 
 consumption in MWh per t manufactured sales volume.

Reduction of 20% in Group-wide 
speciﬁ c greenhouse gas 
emissions. Reference year 2012: 
0.98(cid:2)t co2/t

2020

1.02(cid:2)t co2/t (+ 4.3%)

Unchanged

Establishment of water 
management at all sites in 
water-scarce areas (35 sites)

2017

Unchanged

In the ﬁ rst stage, 80% 
of the identiﬁ ed sites 
were inspected to 
determine whether  
water management 
is in place, and if so, 
in what form. 

Safety

Reduction of 35% in occupa-
tional safety incident rate. 
Reference year 2012: rir 0.49

Reduction of 30% in transport 
incidents. Reference year 2012: 
6 incidents

Reduction of 30% in process and 
plant safety incidents. Reference 
year 2012: LoPC-IR 0.38

Product Stewardship

Conclusion of assessment 
of hazard potential of all 
substances (> 99%) used in 
quantities exceeding one 
metric ton per annum 

Compliance

Conducting of precautionary 
risk assessments in all three 
subgroups 

2020

rir 0.43 (– 12.1%)

Unchanged

2020

12 (+ 100%)

Unchanged

2020

LoPC-IR 0.23 (– 38%)

Unchanged

2020

55%. Approx. 32,000 
substances had been 
assessed by the end of 
2014.

Unchanged

2015

In implementation 

Unchanged

Speciﬁ c greenhouse gas emissions: measured in co
equivalents per t manufactured sales volume; special factor in 
2014: inclusion for the ﬁ rst time of the energy-intensive site in 
Maasvlakte in our environmental reporting. This exclusively 
produces intermediates that according to our deﬁ nition are not 
included in the manufactured sales volume. 

2 

The deﬁ nition of water management is based, among other 
standards, on iso 14001; identiﬁ cation of water-scarce  areas 
according to wbcsd Global WaterTool™. As part of our analysis, 
we examined, for example, whether water-relevant strategies, 
targets and initiatives and an appropriate risk management 
system were already in place, for example. Based on this exam-
ination, speciﬁ c steps to improve water management at the 
individual sites will be agreed beginning in 2015.

rir (Recordable Incident Rate): number of reportable 
 occupational injuries affecting Bayer employees with and 
without lost workdays per 200,000 working hours. Until the end 
of 2015, we will continue reporting on our success in achieving 
our ltrir (Lost Time Recordable Incident Rate) target, which 
covers only occupational injuries with lost workdays per 
200,000 working hours. The 2015 target is an ltrir of 0.21. 
The level in 2014 was 0.22.

Transport incidents relate to both our own chemical transport 
movements and those we commission and pay third parties to 
perform on our behalf. 

LoPC-IR (Loss of Primary Containment Incident Rate): number of 
incidents in which chemicals leak from their primary container, 
such as pipelines, pumps, tanks or drums, per 200,000 working 
hours in areas relevant to plant safety. 

This globally harmonized Bayer standard also covers assessment 
of such substances that are not subject to the reach Regulation 
(No. 1907/2006). 
If no relevant datasets are generated within the scope of reach, 
substance information and the ability to provide data on key sub-
stance properties are to be determined to ensure and document 
responsible handling of the substances (including in terms of sub-
stance characteristics, purity, intended use, toxicological data). 

Risk assessments are based on the integrated compliance man-
agement method developed by Ernst & Young. Integrated Com-
pliance Management@Bayer (icm@Bayer) preventively assesses 
and addresses risks in the following compliance areas: fairness 
in competition, integrity in business dealings, product-related 
communication at bhc, bhc price reporting, insider trading, 
 foreign trade law, separation of corporate and private interests, 
fair and respectful working conditions, and data protection.

From 2015 annual compliance 
training for all Bayer managerial 
staff (> 99%) 

Annu-
ally

In preparation

Unchanged

Managers will participate in speciﬁ c training courses depending 
on the risk area.

  //  Employees

Improvement in employee 
engagement (established using 
an employee survey conducted 
every two years; reference year 
2012: 85%)

Increase in the proportion of 
women in senior management to 
30%; reference year 2010: 21%

Increase in the proportion of 
senior managers from outside 
the European Union, the United 
States or Canada to 25%; 
reference year 2013: 18%

Contin-
uous

87%

2015

26%

2015

20%

Unchanged

We measure employee engagement in line with the Towers 
Watson engagement system. Engagement looks at how strongly 
an employee identiﬁ es with/feels attached to his/her company 
by supporting corporate values and objectives, for example.

Unchanged

Senior managers are managers in the ﬁ ve highest management 
grade levels. 

Unchanged

Senior managers are managers in the ﬁ ve highest management 
grade levels.

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
 
 
52 

Combined Management Report 

1. Bayer at a Glance 

Bayer Annual Report 2014

  See Chapter 16.4 

  See Chapter 16.2 

Details of further key financial data are found in Chapter 20 “Future Perspectives.”  

Information on our Group targets is also provided in the relevant chapters. This is indicated by the 
reference to “Group target” in the margin.  

1.4 Internal Management System 

The economic planning and steering for the business units is carried out within a framework laid down 
by the Group Management Board that is refined during the strategic planning process. Operational 
planning then translates this framework into specific, measurable targets. Continuous monitoring of 
business developments complements the planning and management process, and key management and 
performance indicators are regularly updated. This process also involves tracking the implementation of 
the strategic objectives and adopting countermeasures in the event of deviations from the budget. 

KEY INDICATORS 
One of the prime objectives of the Bayer Group is to steadily increase enterprise value. We use the 
following steering parameters to plan, steer and monitor the development of our business:  

The key performance indicators at the strategic level are cash value added (cva), which is a value-based 
steering parameter, and cash flow return on investment (cfroi). These indicators support management 
in its decision-making, especially in the areas of strategic portfolio optimization and the allocation of 
resources for acquisitions and capital expenditures. (See Chapter 16.4 “Value Management” for further 
details.) 

The principal economic steering parameters within the Bayer Group at the operational level are sales 
and earnings figures. With regard to earnings, special attention is paid to ebitda (earnings before finan-
cial result, taxes, depreciation and amortization) before special items. The ebitda margin before special 
items, which is the ratio of ebitda before special items to sales, serves as a relative indicator for the 
internal and external comparison of operational earning power. (See Chapter 16.2 “Calculation of 
ebit(da) Before Special Items” for further details.) 

Targets and performance indicators are defined and established in areas such as innovation, supplier 
management, safety and product stewardship to align the Group toward sustainability. Bayer AG, as the 
strategic management holding company, has implemented management systems in close coordination 
with the subgroups to steer the Group’s sustainable development. 

1.5 Value Creation 

The value added statement shows Bayer’s contribution to public and private incomes and is a measure 
of the value the company’s business activities create for its stakeholders. We define value added as the 
company’s total operating performance in the previous fiscal year less the costs of procured and con-
sumed goods and services, depreciation and amortization. 

The total operating performance of the Bayer Group in 2014 was €43.3 billion. Value added increased 
by 5% to €15.3 billion. Of the value added, €9.8 billion (64%) was distributed to employees, €1.9 billion 
(12%) to stockholders, €0.7 billion (5%) to lenders and €1.3 billion (9%) to governments. The remain-
der was allocated to reserves.  

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
Bayer Annual Report 2014 

Combined Management Report

1. Bayer at a Glance

53 

In addition to direct cash flows, the company creates value for its stakeholders in various ways, in par-
ticular by focusing on innovative products and solutions in our core businesses. We operate production 
sites throughout the world, invest locally in research and development, work with international and local 
suppliers and contribute to the economic development of our target markets. As an employer, we pro-
vide jobs in industrialized, emerging and developing economies and create purchasing power through 
the salaries we pay. We also support public infrastructure through payments of regional taxes. 

Bayer Group Value Added 2014

[Graphic 3.1.4]

€2.9 billion
Depreciation, 
amortization, 
impairments

€25.1 billion
Material costs /
Other expenses

€43.3 billion
Total operating 
performance 2

€15.3 billion
Value added

€9.8 billion (64%)
Employees

€1.9 billion (12%) 
Stockholders 1  

€0.7 billion (5%) 
Lenders

€1.3 billion (9%) 
Taxes

€1.6 billion (10%) 
Reserves /Other

1 Bayer AG dividend proposal for 2014
2  total operating performance = sales + other operating income + ﬁ nancial income / equity-method income (loss)

1.6 Corporate Environment 

Bayer’s business activities are impacted by economic and social conditions. At the same time, Bayer 
contributes to shaping these conditions.  

ECONOMIC ENVIRONMENT 
Global economic growth in 2014 was at the level of the previous year but below expectations. While  
the upswing in the United States continued, Europe’s economic recovery was hesitant. Development  
in Europe was held back by continuing high unemployment, especially in the countries of southern 
Europe. The pace of growth in the emerging markets declined. China continued to experience a high, 
though weaker, rate of growth. Positive stimuli for the world economy came mainly from the persistent-
ly expansionary monetary policy of the industrialized countries and the drop in the oil price, which 
strengthened private consumption. 

Economic Environment 

World 

European Union 

of which Germany 

United States 

Emerging markets² 

2013 figures restated 
1 real GDP growth, source: IHS Global Insight 
2 including about 50 countries defined by Global Insight as Emerging Markets in line with the World Bank.  
as of February 2015 

[Table 3.1.1]

Growth1 
2014 

+ 2.7% 

+ 1.3% 

+ 1.5% 

+ 2.4% 

+ 4.3% 

Growth1 
2013 

+ 2.6%

+ 0.1%

+ 0.2%

+ 2.2%

+ 4.8%

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
  
 
 
 
 
 
  
  
  
 
  
  
  
 
 
54 

Combined Management Report 

1. Bayer at a Glance 

Bayer Annual Report 2014

  See Chapter 4 

See Chapter 4 for more information on the economic environments of our subgroups. 

SOCIAL ENVIRONMENT 
As a commercial enterprise, Bayer is part of society, and the company’s business activity is therefore 
closely linked with the social environment. The influence of stakeholders (see Graphic 3.1.5) on our 
business activity has steadily increased in recent years. Their expectations regarding sustainable 
development affect public acceptance of the company and thus our commercial success. We take the 
wide-ranging requirements of our stakeholders seriously and consider them wherever possible in our 
business activities. Evaluating their expectations and requirements provides significant impetus for the 
continued development of our activities, our risk management and our reporting. At the same time, 
open dialogue with our stakeholders gives us an opportunity to explain the value that our products and 
services hold for society. This is of growing importance for the success of our business model. 

Stakeholder Dialogue at Bayer: Our Most Important Interest Groups

[Graphic 3.1.5]

Partners

Suppliers
Customers
Employees
Associations
Universities  / Schools

Social interest
groups 

Public
NGOs
Local community
Competitors

bayer

Financial market 
participants

Investors
Banks
Insurance companies
Rating agencies

Regulators

Lawmakers
Politicians
Authorities

  See Chapter 6 

Read more about Bayer’s commitment to its stakeholders in online annex 3-6-4 to  
Chapter 6 “Sustainability Management and Governance.” 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
    
 
 
 
Bayer Annual Report 2014 

Combined Management Report

2.  Corporate Structure

55 

2. Corporate Structure  

Bayer AG, headquartered in Leverkusen, Germany, is the strategic management holding company  
for the Bayer Group. Business operations are conducted by the HealthCare, CropScience and Material-
Science subgroups, supported by our three service companies.   

Bayer Group Structure

[Graphic 3.2.1]

bayer

Corporate Center

HealthCare

Pharma-
ceuticals

Consumer
Health

Consumer
Care

Medical
Care

Animal
Health

CropScience

MaterialScience

Crop Protection / Seeds

Polyurethanes

Environmental Science

Polycarbonates

Coatings, Adhesives, Specialties

Industrial Operations

Business
Services

Technology
Services

Currenta

The globally operating HealthCare subgroup is divided into two reporting segments: Pharmaceuticals 
and Consumer Health. The Pharmaceuticals segment focuses on prescription products, especially for 
women’s healthcare and cardiology, and also on specialty therapeutics in the areas of oncology, hema-
tology and ophthalmology. Our Consumer Health segment includes the Consumer Care, Medical Care 
and Animal Health divisions. The main focus of the Consumer Care Division is on non-prescription 
medicines, dietary supplements and dermatology products. The Medical Care Division comprises the 
Diabetes Care business unit, which markets blood glucose monitoring systems, and the Radiology busi-
ness unit, which offers contrast-enhanced diagnostic imaging equipment along with the necessary 
contrast agents. The products of the Animal Health Division are destined for use in livestock and com-
panion animals. 

CropScience has businesses in seeds, crop protection and non-agricultural pest control. It is organized 
into two operating segments: Crop Protection / Seeds and Environmental Science. Crop Protection / 
Seeds markets a portfolio of high-value seeds and traits along with chemical and biological pest man-
agement solutions, at the same time providing extensive customer service to the agriculture industry. 
Environmental Science focuses on non-agricultural applications, with a broad portfolio of pest control 
products and services for areas ranging from the home and garden sector to forestry. 

MaterialScience develops, manufactures and markets high-tech polymer materials including polyure-
thane raw materials, polycarbonates, coating and adhesive raw materials, along with specialty chemi-
cals. This subgroup also manufactures and markets selected inorganic basic chemicals. MaterialScience 
is organized into the Polyurethanes, Polycarbonates, and Coatings, Adhesives, Specialties business 
units, and the Industrial Operations area. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
   
  
 
 
56 

Combined Management Report 

2.  Corporate Structure 

Bayer Annual Report 2014

Share of Sales by Segment 2014

[Graphic 3.2.2]

3% (3%)
Reconciliation 

€42.2 billion
(€40.1 billion)

47% (47%)

HealthCare

Pharmaceuticals 28% (28%)

Consumer Health 19% (19%)

28% (28%)

MaterialScience

22% (22%)

CropScience

2013 in parentheses

The service companies Business Services, Technology Services and Currenta are reported in the  
reconciliation under “All Other Segments.” The reconciliation also includes the Corporate Center and 
consolidation effects. 

Key Data by Subgroup and Segment 

[Table 3.2.1]

HealthCare 

Pharmaceuticals 

Consumer Health 

CropScience 

MaterialScience 

Reconciliation 

Group 

2013 

Sales 

2014 

EBIT 

EBITDA before special items1

2013 

2014 

2013 

2014 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

18,924

11,188

7,736

8,819

11,238

1,176

40,157

19,975

12,052

7,923

9,494

11,651

1,119

42,239

3,260

2,031

1,229

1,729

435

(490)

4,934

3,581 

2,371 

1,210 

1,806 

555 

(436) 

5,506 

5,334 

3,490 

1,844 

2,248 

1,072 

(253) 

8,401 

5,484

3,699

1,785

2,360

1,187

(219)

8,812

1 For definition see Chapter 16.2 “Calculation of EBIT(DA) Before Special Items.” 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
  
 
 
 
  
 
  
  
 
 
 
 
  
 
  
  
  
  
  
  
  
  
  
  
  
Bayer Annual Report 2014 

Combined Management Report

3. Strategies of the Subgroups

57 

3. Strategies of the Subgroups 

HEALTHCARE  
The rise in life expectancy and the associated increase in chronic diseases are driving the demand for 
innovative medicines. Due to the need to contain costs in the health care systems of the industrialized 
regions, particularly North America, Europe and Japan, cost carriers are exerting more and more pres-
sure on drug prices and increasing their demands for the health care industry to demonstrate the value 
added by new therapies. In the emerging economies, patients and consumers are gaining improved 
access to health care and thus the opportunity to benefit from innovative medicines.  

  See Chapter 1.2 
for Bayer Group 
strategy 

In this environment, our strategy is geared toward achieving above-average, profitable and sustained 
growth by continuously developing innovative health care products with a positive cost-benefit ratio and 
strengthening our consumer health business.  

In our largest segment in terms of sales, Pharmaceuticals, we intend to step up our activities in car-
diology, oncology, gynecology, hematology and ophthalmology. To achieve our medium-term growth 
targets, we are relying particularly on our recently launched products Xarelto™, Eylea™, Stivarga™, 
Xofigo™ and Adempas™. We plan to steadily expand the indications for these medicines through com-
prehensive study programs and thus make them available to further patient groups. We also consider 
entering into partnerships with other pharmaceutical companies. 

To safeguard long-term growth, we will further increase our investment in research and development. 
Among other projects, we plan to achieve crucial progress in the development of five drug candidates in 
cardiology, oncology and gynecology. In addition, we are selectively expanding and supplementing our 
development portfolio through licensing agreements and acquisitions. In March 2014, we acquired 
Algeta asa, Norway, which specializes in the development of novel cancer therapies. We had partnered 
with Algeta in the development and marketing of Xofigo™ since 2009. In June 2014, we entered into a 
licensing agreement with Orion Corporation, Finland, concerning the global development and market-
ing of the development candidate odm-201 for the treatment of prostate cancer.  

Innovative products for 
profitable and 
sustainable growth  

This focus on certain therapeutic areas is supplemented by specific measures for key markets such as 
Japan, Germany, Brazil, China and Russia. In the medium term, we aim to strengthen our presence in 
the United States. We want to maximize the potential of our extensive portfolio of established products, 
especially in the Emerging Markets. 

We are developing concepts to facilitate access to our products, especially in developing and emerging 
countries, as part of our “Access to Medicine” (atm) activities.  

 online annex: 3-3-bhc-1:  

In the field of hormonal contraception, we partner in family planning programs with international 
development organizations such as the United States Agency for International Development (usaid), 
the United Nations Population Fund (unfpa) and the non-governmental organization International 
Planned Parenthood Federation (ippf). We support the World Health Organization (who) in the fight 
against neglected tropical diseases. In some markets where large segments of the population have no 
access to innovative medicines, we offer patient assistance programs. Detailed information on all 
events can be found on our website.  

  www.bayer.com/ 
cor-responsibility-
pharma 

TARGETED FAMILY PLANNING 
We support family planning programs by offering a broad range of hormonal contraception methods. 
In addition to oral contraceptives, these products include monthly and three-monthly injections as 
well as the Jadelle™ contraceptive implant, a reversible long-term contraceptive method used for a 
period of up to five years. In 2014 we made available 25.8 million cyps of oral contraceptives, injec-
tions and implants, an increase of 18.5% compared with the previous year. (The figures for 2011-
2013 were calculated using the msi Impact Calculator version 1.2, while the figures for 2014 were 
obtained using version 2.0. In order to compare the figures from the last two years, 2013 was recal-
culated using the most recent version. This resulted in an overall increase of 18.5%.) The indicator 

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Bayer Annual Report 2014

cyps (Couple Years of Protection) denotes the number of couples who used the contraceptives pro-
vided for a year.  

In addition to our commitment to family planning programs run by aid organizations, we are finding 
new ways to give women in developing countries secure, long-term access to our contraceptives. In 
2009, for example, we established the Contraceptive Security Initiative (csi) together with usaid and 
introduced the oral contraceptive Microgynon™ Fe to the African market at a reduced price. In addi-
tion to subsidized aid programs, csi aims to make contraceptive pills available particularly to middle-
class couples in developing countries. Since January 2013, a partnership between HealthCare and 
the Bill & Melinda Gates Foundation, United States, has expanded access to our contraceptive im-
plant Jadelle™. As part of this agreement, we reduced by more than half the price of the Jadelle™ im-
plant, which has been prequalified by the who. The agreement provides for up to 27 million women 
in the world’s poorest countries to receive access to this reversible, long-term contraceptive method 
by 2018. 

Another cornerstone of our commitment is education for youths and young adults. Together with  
the German Foundation for World Population, we have established an innovative education and 
advancement program for young people. Adolescents between the ages of 10 and 14 receive age-
appropriate information on sexuality and contraception. The Young Adolescents Project (yap) was 
launched in Uganda in 2009 and extended to Kenya in 2013.  

TACKLING NEGLECTED TROPICAL DISEASES 
Many diseases that primarily affect the poorest sections of the population can only be combated with 
a substantial international effort. In 2012 prominent stakeholders such as HealthCare established the 
biggest initiative to date in the fight against neglected tropical diseases. The goal of the London Dec-
laration on Neglected Tropical Diseases is to contain or, if possible, eliminate 10 of these tropical 
diseases by 2020. For more than 10 years now, HealthCare has supported the who by providing 
medicines to treat African sleeping sickness and Chagas’ disease free of charge. 

In the fight against river blindness, HealthCare and the non-profit organization DNDi (Drugs for 
Neglected Diseases) have entered into a new collaboration to develop emodepside, a macrofilaricidal 
drug, to treat this neglected tropical disease. Emodepside originates from the Japanese company 
Astellas and was developed by HealthCare’s Animal Health Division for use in veterinary medicine. 
This active ingredient may provide an effective way to treat river blindness by killing the thread-
worms that cause the disease in humans. 

PROGRAMS FOR IMPROVED ACCESS TO MEDICINES 
In some countries where large sections of the population have no access to innovative medicines, 
patient assistance programs are being established for selected products. These programs, which are 
carried out jointly with partners from local health systems and non-governmental organizations, help 
to satisfy unmet medical needs. This applies both to treatment with innovative products, e.g. in on-
cology, and to therapies for chronic diseases such as multiple sclerosis and hemophilia. These pro-
grams are developed locally and regionally to do maximum justice to specific patient needs. Patient 
assistance programs exist in the United States, China, India, certain south and southeast Asian coun-
tries, and a number of countries in southeastern Europe.  

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59 

Our investment in the Consumer Health segment is concentrated on fields of business in which we are 
aiming for leadership. 

The strategy of the Consumer Care Division is aimed at building on our position in the over-the- 
counter (otc) medicines business. In 2014, we expanded our Consumer Care portfolio by acquiring the 
consumer care business of Merck & Co., Inc., United States, adding leading brands such as Claritin™, 
Coppertone™ and Dr. Scholl’s™. We also acquired Dihon Pharmaceutical Group Co. Ltd., China, which 
offers self-medication products in the fields of dermatology and traditional Chinese medicine, and now 
are primarily focusing on integrating these acquired business areas. We intend to continue exploiting 
external growth opportunities through acquisitions and inlicensing as part of the global consolidation of 
the otc industry.  

To sharpen our regional focus, we are expanding our position in important markets such as the  
United States, Brazil, Russia and China. We aim to strengthen our established brands, such as Aspirin™, 
Aleve™ and Berocca™, through product line extensions and geographical expansion. We are also work-
ing to get certain prescription products transitioned to otc status. 

The Medical Care Division comprises two business units, Diabetes Care and Radiology. 

At Diabetes Care, we are focusing on our core business of innovative blood glucose meters and develop-
ing strategic partnerships for further market penetration, such as the collaboration with Medtronic in 
the United States.  

In the Radiology business unit, we aim to defend our leading position through innovative product and 
service offerings and by streamlining our portfolio. Against this background, we divested our Interven-
tional business with thrombectomy and atherectomy systems to Boston Scientific, United States, in Sep-
tember 2014.  

Our Animal Health Division aims to strengthen its position in the already heavily consolidated market 
for veterinary medicines. Here we rely not only on organic growth, such as through the increased use of 
existing distribution channels, especially specialist retail chains, but are also adding to our portfolio 
with targeted inlicensing and acquisitions. 

CROPSCIENCE 
Sustainable agriculture, higher crop yields and improved crop quality are becoming increasingly im-
portant. Global agricultural production must increase by approximately 60% by 2050 in order to ensure 
adequate nutrition for a growing world population despite the limited amount of arable land and the 
increased demand for animal feed and renewable raw materials. CropScience is aligning its corporate 
planning to these long-term trends in the agricultural markets. Our aim is to help shape the future of the 
agricultural industry, increase its productivity and thus generate profitable and sustainable growth for 
our business. CropScience’s strategy is built on four key elements:  

•  enhancing the Crop Protection and Environmental Science portfolio,  
•  increasing customer centricity along the entire value chain,  
•  leading the way in innovation,  
•  and expanding the Seeds business.  

Our activities focus on implementing these elements. 

CropScience strategy 
based on four core 
elements 

We aim to enhance our Crop Protection and Environmental Science portfolios by adding new and im-
proved products, concentrating on core brands and offering integrated solutions in major crops. Sup-
port for this endeavor is provided by our important technology platform for both chemical and biologi-
cal crop protection. We are investing heavily in the expansion of our production capacities to meet 
rising demand for our products. 

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MaterialScience  
helps to address  
global challenges 

Another major part of our strategy is to strengthen customer centricity along the entire value chain and 
continuously optimize distribution. In this context we are also steadily expanding the successful busi-
ness model of food chain partnerships in the form of collaborations with food processors and retailers. 
This furthers our objective of sustainably increasing productivity through a joint effort with our custom-
ers. In these projects, CropScience works with all participants in the food chain to safeguard and in-
crease yields, and to improve the quality of harvested produce. To strengthen customer centricity, we 
are also increasing our commitment to direct cooperation with farmers as part of the Bayer Forward 
Farming initiative. At these “ForwardFarms” we can demonstrate the advantages of our integrated 
solutions and services to interested stakeholders. 

To lead the way in innovation, we aim to build on our expertise in the integration of seed technology 
with chemical and biological crop protection in order to develop holistic solutions. New areas of innova-
tion, such as digitization in agriculture, account for a major part of this. 

Another key element in our strategy is the expansion of our Seeds business. We plan to further 
strengthen our positions in our established crops – cotton, oilseed rape / canola, rice and vegetables – 
and to build significant positions in soybeans and wheat. For example, we intend to gain long-term 
access to high-quality breeding material through acquisitions, inlicensing and partnerships and to 
steadily expand our existing breeding expertise. 

MATERIALSCIENCE 
MaterialScience, with its high-tech polymer materials and application solutions, is helping to address 
the global challenges posed by population growth, the depletion of fossil resources, climate change and 
increasing urbanization. We are steadily developing our product portfolio, which mainly comprises 
components for polyurethane foams, high-tech polycarbonate plastics and raw materials for coatings 
and adhesives. These products are supplied to key industry sectors such as automotive, construction 
and electronics. Our innovations extend not only to products, but also to the production processes, 
which we design to be as environmentally friendly and efficient as possible, always observing the high-
est levels of safety and reliability at our plants. Our activities are based on a comprehensive approach to 
sustainability: we aim to burden the environment as little as possible, benefit society and create value.  

Against this background, the strategy of MaterialScience is aimed at ensuring long-term, profitable 
growth. We aim to sustainably earn a return that exceeds our capital costs and thus helps to increase 
the company’s value. We intend to safeguard or expand our leading competitive positions in world 
markets in a challenging environment. This applies to the established core markets of Europe and the 
United States, as well as to emerging countries such as China. Our investment policy there is aligned to 
the needs of the market.  

In the Polyurethanes (pur) business unit, we intend to safeguard our strong position on the world 
market as an integrated raw material and systems supplier, mainly for rigid and flexible foams. Demand 
for these products is expected to rise further. Flexible foam ensures added comfort in everyday life 
through its use in products such as mattresses and upholstery. Rigid foam serves above all as an insulat-
ing material for buildings and refrigerated appliances, and thus helps to lower energy consumption and 
greenhouse gas emissions. In the manufacture of polyurethane components, we are focused on achiev-
ing further improvements in the efficiency of our facilities through new process technologies. At the site 
in Dormagen, Germany, for example, a large-scale, state-of-the-art facility was commissioned at the end 
of 2014 for toluene diisocyanate (tdi), a key precursor for flexible foams. In the future we plan to pro-
duce the second polyurethane component, polyol, with the help of carbon dioxide, initially in limited 
quantities. It is planned to build a production line for this purpose in Dormagen. co2 can partly replace 
the traditional raw material, oil, as the carbon base. In the rigid foam business, we further increased 
capacities for the precursor mdi (diphenylmethane diisocyanate) at the Shanghai, China, site in 2014 in 
view of the demand situation in Asia. 

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4. Economic Environments of the Subgroups

61 

The global polycarbonate market is focused on Asia. In this region, the Polycarbonates (pcs) business 
unit operates several large-scale facilities for this high-tech plastic, which boasts numerous favorable 
properties such as low weight, stability, durability and relatively high design freedom. We plan to grad-
ually raise production capacity in Shanghai to safeguard our position in the world market. We also in-
tend to further improve the efficiency of our plants worldwide. It is planned to more closely align the 
product portfolio to applications that make particularly high demands on the material – so that custom-
ers in the automotive, consumer electronics and other industries can derive maximum benefit from the 
respective products.  

The Coatings, Adhesives, Specialties business unit (cas) develops and manufactures polyurethane-
based raw materials, mainly for coatings and adhesives. The main areas of application include transpor-
tation and traffic, infrastructure and construction, and wood and furniture. Our aim is to maintain our 
leading position in our core business. The focus here continues to be on market- and customer-centric 
solutions for coating and adhesive applications that offer protection, attractive design and high func-
tionality in numerous areas. As one of the leading suppliers, we also offer a broad range of waterborne 
polyurethane dispersions. We see these products as innovative system solutions and plan to replace 
solvent-based coatings by waterborne solutions. In addition to our core business, we are working in 
further growth areas such as cosmetics, medicine and textiles. 

The Industrial Operations unit (io) supports the business units. It is responsible for ensuring a de-
pendable supply of raw materials and services, developing modern production technologies to enable 
the efficient use of resources, and for the safety and reliability of operations. It also manufactures and 
markets basic chemicals such as chlorine, sodium hydroxide solution and hydrochloric acid. 

Further information on the planned stock market listing of Bayer MaterialScience is given in  
Chapter 1.2 “Group Strategy.” 

4. Economic Environments of the Subgroups 

The economic environments in which the subgroups operate are outlined below. (The economic envi-
ronment for the Bayer Group as a whole is described in Chapter 1.6 “Corporate Environment.”) 

Economic Environments of the Subgroups 

HealthCare 

Pharmaceuticals market 

Consumer care market 

Medical care market 

Animal health market 

CropScience 

Seed and crop protection market 

MaterialScience (main customer industries)  

Automotive industry 

Construction industry  

Electrical / electronics industry 

Furniture industry 

[Table 3.4.1]

Growth1 2013 

Growth1 2014 

+ 5%

+ 5%

– 3%

+ 3%

+ 9%

+ 4%

+ 3%

+ 4%

+ 3%

+ 8% 

+ 4% 

– 3% 

+ 5% 

+ 6% 

+ 3% 

+ 4% 

+ 5% 

+ 4% 

2013 figures restated 
1 Bayer’s estimate, except pharmaceuticals. Source for pharmaceuticals market: IMS Health, IMS Market Prognosis. Copyright 2015.  

All rights reserved, currency-adjusted; 2014 data provisional 

as of February 2015 

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HEALTHCARE 
The pharmaceuticals market saw significantly higher growth in 2014 than in the previous year. In the 
United States in particular, there was a marked increase in sales of pharmaceuticals, mainly as a result 
of new product introductions and a smaller impact from patent expirations. Despite a persistently re-
strictive health policy environment, growth was stronger in a number of European countries due to the 
launch of new products. Pharmaceuticals growth in the emerging markets was comparable with the 
prior year. 

Following the high growth in the previous year due to the strong cold season, the consumer care 
market resumed a normal growth rate in 2014, which was thus slightly below the 2013 rate. The 
shrinkage in the medical care market was due to the weakening of the diabetes care market, while the 
market for contrast agents and medical equipment (Radiology business unit) nearly reached the previ-
ous year’s level. Growth in the animal health market in 2014 picked up in the second half of the year 
and showed an increase for the year as a whole. 

CROPSCIENCE 
The global seed and crop protection market continued to show dynamic development in 2014. There 
was a further tangible increase in the demand for high-value seeds. The global crop protection market 
also expanded, albeit at a slower rate than in the prior year. 

Growth in the global seed and crop protection market last year was again driven by Latin America, 
particularly Brazil and Argentina. The European market also showed strong growth in 2014 thanks to 
generally favorable weather conditions. While growth rates were moderate in the Mediterranean region, 
they were above average in Eastern Europe despite the Ukraine conflict. In Asia / Pacific, too, the gener-
ally positive market trend persisted in 2014, with the Chinese and Indian crop protection markets show-
ing the strongest momentum. Growth rates in North America, however, were below the average for the 
global market. This was mainly the result of a late start to the season in the corn- and soybean-growing 
areas caused by adverse weather conditions. 

MATERIALSCIENCE 
Global development of the principal customer industries for MaterialScience (automotive, construc-
tion, electrical / electronics and furniture) in 2014 was slower than expected overall. This was partly due 
to the continued weakening of the business environment in the eurozone. The slower growth in China 
and some other emerging economies was offset by stronger-than-expected growth in North America. 

The global automotive industry recorded moderate, albeit slightly slower, growth overall in 2014 than 
in the previous year. Strong demand across all vehicle segments led to robust growth in North America 
and Asia. Development in Western Europe was likewise positive, bolstered by a number of government 
incentive programs and continued strong demand for premium class vehicles. By contrast, Latin Ameri-
ca, particularly Brazil and Argentina, posted considerable declines. In addition, 2014 was marked by 
numerous vehicle recalls affecting all the main automakers in all geographies. 

Growth in the global construction industry improved year on year. The development was characterized 
by a sustained recovery in both Western and Eastern Europe, continuing positive development in the 
United States and a stabilizing trend in Latin America. Growth in Asia was steady overall with a slight 
weakening in China, the region’s most important market. 

The global electrical and electronics industry posted robust growth once again in 2014. While the high 
growth rates experienced in past years continued in Asia, driven mainly by China, growth in Europe and 
North America was slower than in 2013. 

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5. Research, Development, Innovation

63 

Group target 2014: 
increase in R&D 
investment to approx. 
€3.5 billion 

  See Chapter 1.3  
for Group targets  

Growth of the global furniture industry improved in 2014 compared with the previous year, with the 
industry benefiting from the progressive market recovery in North America and Europe. Growth in Latin 
America, however, slowed. Market development in Asia was satisfactory, driven by exports. Domestic 
demand in this region, however, increased only slightly. 

5. Research, Development, Innovation 

Innovation and the skills of our employees form the basis for our success as a company. We drive 
innovation by continuously developing new molecules, technologies and business models in our re-
search centers, investing in research and development projects, supporting the development of our 
employees and expanding our activities through acquisitions or collaborations with external partners. 
Strengthening our innovative capability enables us to address the challenges of our time and achieve 
profitable corporate growth.  

In 2014 we raised our research and development spend by 5.3% (Fx adj.) to €3,574 million. Adjusted 
for special items of €2 million (2013: €212 million), this represented a 12.2% increase (Fx adj.). The 
ratio of research and development expenses to sales before special items was 8.5%. Approximately 
14,000 employees worldwide work in this field. 

Research and Development Expenses Full Year 2014 

[Table 3.5.1]

Research and 
development 
 expenses 

Research and 
development expenses 
before special items 

Share of R&D
expenses 

R&D expenses before 
special items / sales 

2013 

2014 

2013 

2014 

2013 

2014 

€ million 

€ million 

€ million 

€ million 

% 

% 

HealthCare 

Pharmaceuticals 

Consumer Health 

CropScience 

MaterialScience 

Reconciliation 

2,229

1,771

458

861

231

85

2,301 

1,878 

423 

974 

210 

89 

2,039

1,653

386

858

211

86

2,297

1,876

421

974

213

88

Group 

3,406

3,574 

3,194

3,572

2013 figures restated 
1  For definition see Chapter 16.2 “Calculation of EBIT(DA) Before Special Items.” 

65.4

52.0

13.4

25.3

6.8

2.5

.

64.4

52.6

11.8

27.3

5.9

2.5

.

2013 

% 

10.8 

14.8 

5.0 

9.7 

1.9 

7.3 

8.0 

2014 

% 

11.5 

15.6 

5.3 

10.3 

1.8 

7.9 

8.5 

As well as investing in research and development, Bayer promotes an innovation culture based on 
openness to new approaches and internal interdisciplinary cooperation. We are building a national and 
international network of outstanding scientists to further increase our expertise and extending this 
network through collaborations with external partners. 

 online-annex: 3-5-1 

We offer our leading r&d experts special opportunities for professional advancement through the 
Expert Career initiative. In addition, the approximately 120-member Expert Club – headed by the 
member of the Board of Management responsible for Innovation – promotes dialogue between scien-
tific experts from different subgroups. 

We also ensure that special contributions by individuals or employee groups are announced and 
honored. For example, we bestow research awards such as the Otto Bayer Medals, which are pre-
sented every two years to teams of scientists for outstanding achievements.  

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5. Research, Development, Innovation 

Bayer Annual Report 2014

Scientists from our company are involved in constant dialogue with renowned research institutes, 
support partnership projects in the public and private sectors (e.g. in rice growing with the Interna-
tional Rice Research Institute), hold professorships at universities worldwide (e.g. in Germany and 
China) and regularly invite scientists, university students and schoolchildren to attend various events 
such as symposiums on health topics or research days for school students. We also view this com-
mitment as an investment in the future, because as a research-based company, we rely heavily on the 
availability of talented and highly trained people and on society’s acceptance of technology.  

Our global internet platform WeSolve promotes joint problem-solving by employees from all sub-
groups and service companies. Topical issues in research and development, marketing or production 
are announced via the WeSolve platform and jointly discussed to identify the best solution approach-
es. Employees use the Bayer Group’s suggestion system, known as the Bayer Ideas Pool, mainly to 
propose improvements to methods or processes. In 2014 the employees once again displayed their 
commitment to the company by submitting some 4,850 valuable suggestions to the Bayer Ideas Pool. 
Of the suggestions for which processing was completed in 2014, 49% were put into practice, result-
ing in calculable savings of more than €5.1 million in the first year of their implementation. In 2014 
we paid out a total of over €1 million in special employee bonuses for the suggestions implemented.  

Our collaborations and alliances with leading universities, public research institutes and partner com-
panies are supplemented by incubators, crowdsourcing and science hubs in Asia and the United States 
to tap into external innovative potential using the open innovation approach. Some of our collaborations 
are supported by public funding. 

 online-annex: 3-5-2 

In Germany alone, Bayer participated in more than 80 publicly funded projects in 2014, receiving a 
total of about €8 million in grants. This is equivalent to roughly 0.3% of our annual r&d expenses.  

Reliable, global protection of intellectual property rights is essential for an innovation company like 
Bayer. The Bayer Group endeavors to obtain patent protection for its products and technologies in the 
major markets. The degree of protection a patent provides varies from one country to another and de-
pends on the type and scope of the patent claim and the options available for enforcing our rights. At 
the end of 2014, we owned approximately 68,200 valid patent applications and patents worldwide relat-
ing to some 8,300 protected inventions. 

 online annex: 3-5-3 

  www.annualreport 
2014.bayer.com/ 
political-position-ip  

Patent terms vary according to the laws of the country granting the patent. In view of the high in-
vestment required for product research and development, the European Union countries, the United 
States, Japan and some other countries extend patent terms or issue supplementary protection certif-
icates to compensate for the shortening of the effective patent protection period due to regulatory 
approval processes for new drugs. We endeavor to obtain such extensions wherever possible.  

The term of a patent is normally 20 years. Since it takes an average of 12 years to develop a new 
medicine, for example, only eight years of patent protection generally remain following the product’s 
approval. In most cases it would be impossible to cover the substantial costs incurred in the research 
and development of innovative medicines or of new indications or dosage forms for existing drugs 
without patent protection. We are therefore committed to protecting both the international patent 
system and our own intellectual property worldwide. Further details are given in the political posi-
tions posted on our website. 

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5. Research, Development, Innovation

65 

STRENGTHENING RESEARCH IN THE LIFE SCIENCES 
Bayer is the only global company simultaneously researching improvements in human, animal and plant 
health. Systematic and intensive collaboration among researchers from both Life Science subgroups is 
providing new impetus. Researchers from HealthCare and CropScience are collaborating on projects 
involving central biological processes such as gene regulation or energy metabolism. Such projects are 
aimed at developing a better understanding of diseases, deciphering mechanisms of action, personaliz-
ing therapies or explaining resistance mechanisms. The joint use of technology platforms is being ex-
panded. These projects have been supported since 2012 by Bayer’s internal Life Sciences Fund and are 
mostly implemented in collaboration with external partners.  

HEALTHCARE 
Research and development expenses at HealthCare rose by 3.6% (Fx adj.) in 2014 to €2,301 million. 
Adjusted for special items of €4 million (2013: €190 million), this represented a 13.0% increase (Fx adj.) 
and was equivalent to 11.5% of HealthCare sales. At the end of the reporting period there were 8,100 
employees working in research and development at HealthCare. 

PHARMACEUTICALS 
Research areas and sites 
Drug discovery in the Pharmaceuticals segment focuses on the areas of cardiology, oncology, ophthal-
mology, hematology and gynecology. We conduct research activities at six centers. Work in Berlin and 
Wuppertal, Germany, focuses on the discovery, optimization and development of new active substances. 
Research is also carried out at these sites in the fields of drug metabolism, pharmacokinetics, toxicology 
and clinical pharmacology. On the other hand, our u.s. research and development activities in the 
Mission Bay district of San Francisco and in Berkeley, California, are focused on hematology. In Turku, 
Finland, polymer-based release systems are being developed for fertility control. At our site in Oslo, 
Norway, we are carrying out research on Thorium Conjugate for use in cancer. We also operate innova-
tion centers in Beijing, China; Singapore; and Osaka, Japan, which focus on coordinating our research 
partnerships in Asia. 

Research activities in 2014 
We conducted clinical trials with several drug candidates from our research and development pipeline 
during 2014 to drive the development of new substances for treating diseases with a high unmet medi-
cal need. At the focus of our clinical development are five active substance candidates currently in 
Phase ii trials. These are finerenone, vericiguat and molidustat in the cardiology and cardiorenal syn-
drome areas, copanlisib in oncology and vilaprisan in gynecology. We strengthen our already approved 
products, such as the anticoagulant Xarelto™ (rivaroxaban), the cancer drugs Stivarga™ (regorafenib) 
and Xofigo™ (radium-223 dichloride), the eye medicine Eylea™ (aflibercept) and Adempas™ (riociguat) 
for treatment of pulmonary hypertension, through life cycle management activities in order to further 
enhance their use and / or expand their spectrum of indications.  

Some of our development candidates are being investigated for the treatment of illnesses that are 
serious but at the same time very rare – also known as orphan diseases. For example, ciprofloxacin dpi 
(dry powder for inhalation) for therapy of non-cystic-fibrosis bronchiectasis (ncfb) was classified by the 
regulatory authorities as an orphan drug. 

  See table 3.5.3  
for more details  
on our active 
substance 
candidates 

Group target 2014: 
HealthCare – transition 
of more than 10 new 
molecular entities 
(NMEs) into 
development 

 
 
66 

Combined Management Report 

5. Research, Development, Innovation

Bayer Annual Report 2014

Clinical trials account for a major portion of the development process for medicines. They are an essen-
tial tool for determining the safety and efficacy of new developmental products before they can be used 
to treat diseases. The benefits and potential risks of new medicines must always be scientifically proven 
and well documented. All studies at Bayer satisfy strict international guidelines and quality standards, 
as well as applicable national laws and standards.  

 online annex: 3-5-bhc-1 

Bayer implements the internal processes for the planning and implementation of clinical trials using 
a globally uniform procedure. The company sets high standards in clinical trial design and ensures a 
high level of transparency. 

Consistent with these objectives, HealthCare’s “Trial Finder” database contains publicly accessible 
information on clinical trials sponsored by Bayer. This information is made available to patients, 
health care professionals and the general public in order to increase the transparency of our clinical 
research. 

In May 2014, Bayer joined the portal www.clinicalstudydatarequest.com. Upon request, Bayer now 
grants researchers access to anonymized data at the patient level for clinical trials sponsored by 
Bayer. In this way we are assisting the progress of medical science and helping to improve patient 
care.  

  www.bayer.com/ 

ethics-in-rnd 

Further information on our globally uniform standards, the monitoring of studies and the role of the 
ethics committee can be found on the internet. 

Following the completion of the required studies with several of the drug candidates, we submitted 
applications to one or multiple regulatory agencies for approvals or approval expansions.  

The most important drug candidates in the approval process are: 

Products Submitted for Approval1 

[Table 3.5.2]

Aflibercept 

Bay 81-8973 

Riociguat 

Rivaroxaban2 

Rivaroxaban 

Indication 

E.U., Japan; treatment of macular edema secondary to branch retinal vein occlusion 

E.U., U.S.A.; treatment of hemophilia A 

Japan; treatment of pulmonary arterial hypertension 

U.S.A.; secondary prophylaxis of acute coronary syndrome 

Japan; treatment of deep vein thrombosis and pulmonary embolism, prevention of 
recurrent venous thromboembolism 

1 as of February 3, 2015 
2 submitted by Janssen Research & Development, LLC 

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5. Research, Development, Innovation

67 

The following table shows our most important drug candidates currently in Phase ii or iii  
of clinical testing: 

Research and Development Projects (Phases II and III)1 

[Table 3.5.3]

Indication 

Amikacin inhale 

Treatment of pulmonary infection 

Damoctocog alfa pegol (BAY 94-9027, 
long-acting rFVIII) 

Treatment of hemophilia A 

Ciprofloxacin DPI 

LCS-16 (ULD LNG  
Contraceptive System) 

Treatment of pulmonary infection 

Intrauterine contraception, duration of use: up to 5 years 

ODM-201 (AR antagonist) 

Treatment of prostate cancer 

Radium-223 dichloride 

Combination treatment of castration-resistant prostate cancer 

Regorafenib 

Regorafenib 

Riociguat 

Rivaroxaban 

Rivaroxaban 

Rivaroxaban 

Rivaroxaban 

Rivaroxaban 

Rivaroxaban 

Sorafenib 

Tedizolid 

Treatment of refractory liver cancer 

Treatment of colorectal cancer following surgical removal  
of liver metastases 

Pulmonary arterial hypertension (PAH) in patients who do 
not sufficiently respond to PDE-5i / ERA

Prevention of major adverse cardiac events (MACE) 

Anti-coagulation in patients with chronic heart failure2

Long-term prevention of venous thromboembolism 

Prevention of venous thromboembolism in high-risk  
patients after discharge from hospital2

Embolic stroke of undetermined source (ESUS)  

Peripheral artery disease (PAD) 

Treatment of kidney cancer, adjuvant therapy  

Treatment of complicated skin infections and pneumonia 

BAY 1067197  
(partial adenosine A1 agonist) 

Heart failure 

Copanlisib (PI3k inhibitor) 

Treatment of recurrent / resistant non-Hodgkin’s lymphoma 

Finerenone (MR antagonist) 

Chronic heart failure 

Finerenone (MR antagonist) 

Diabetic nephropathy 

Molidustat (HIF-PH inhibitor) 

Anemia 

Radium-223 dichloride 

Treatment of bone metastases in cancer 

Refametinib (MEK inhibitor) 

Regorafenib

Cancer therapy 

Cancer therapy

Regorafenib (ophthalmology) 

Treatment of wet age-related macular degeneration (AMD) 

Riociguat 

Riociguat 

Riociguat 

Riociguat

Rivaroxaban 

Pulmonary hypertension (IIP) 

Raynaud‘s phenomenon 

Diffuse systemic sclerosis 

Cystic fibrosis

Secondary prevention of acute coronary syndrome (ACS)2

Roniciclib (CDK inhibitor) 

Treatment of small-cell lung cancer (SCLC) 

Sorafenib

Vericiguat  
(BAY 1021189, sGC stimulator) 

Cancer therapy

Chronic heart failure 

Vilaprisan (S-PRM) 

Treatment of uterine fibroids 

Status 

Phase III 

Phase III 

Phase III 

Phase III 

Phase III 

Phase III 

Phase III 

Phase III 

Phase III

Phase III 

Phase III

Phase III 

Phase III

Phase III 

Phase III 

Phase III 

Phase III 

Phase II 

Phase II 

Phase II 

Phase II 

Phase II 

Phase II 

Phase II 

Phase II

Phase II 

Phase II 

Phase II 

Phase II 

Phase II

Phase II

Phase II 

Phase II

Phase II 

Phase II 

1 as of February 3, 2015 
2 sponsored by Janssen Research & Development, LLC 
The nature of drug discovery and development is such that not all compounds can be expected to meet the pre-defined project goals.  
It is possible that any or all of the projects listed above may have to be discontinued due to scientific and / or commercial reasons and will not  
result in commercialized products. It is also possible that the requisite Food and Drug Administration (FDA), European Medicines Agency (EMA)  
or other regulatory approvals will not be granted for these compounds.

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We regularly evaluate our research and development pipeline in order to prioritize the most promising 
pharmaceutical projects. 

Cardiology 
Xarelto™ (active ingredient: rivaroxaban) has been approved for more indications in the area of venous 
and arterial thromboembolism than any of the other new oral anticoagulants. Xarelto™ is approved in 
more than 125 countries worldwide across all indications, its approval status varying from country to 
country. 

In February 2014, the fda issued complete response letters in connection with the u.s. approval process 
in the prevention of atherothrombotic events secondary to acute coronary syndrome (acs). A new 
Phase ii study will now investigate rivaroxaban in combination with a single platelet aggregation inhibi-
tor for long-term prevention in patients with acs. Xarelto™ is marketed in the United States by Janssen 
Pharmaceuticals, Inc., a subsidiary of Johnson & Johnson. 

In May 2014, we submitted rivaroxaban to the Japanese Ministry of Health, Labor and Welfare (mhlw) 
for marketing authorization to treat patients with deep vein thrombosis and pulmonary embolism and 
for the prevention of recurrent venous thromboembolism. 

Beyond the already approved indications, rivaroxaban is also being investigated in other cardiovascular 
disorders. Ongoing Phase iii clinical trials include compass and commander-hf. The aim of the 
compass study is to investigate the potential of rivaroxaban in the prevention of major adverse cardiac 
events. The commander-hf study is evaluating the potential additional benefit of rivaroxaban in combi-
nation with standard therapy in the prevention of cardiovascular events in patients with chronic heart 
failure and significant coronary heart disease.  

In 2014, the study program for rivaroxaban was expanded to include new trials: the einstein choice 
trial is evaluating two different doses of rivaroxaban for the long-term, secondary prevention of deep 
vein thrombosis and pulmonary embolism. The mariner trial is evaluating the efficacy and safety of 
rivaroxaban to reduce the risk of post-hospital-discharge symptomatic venous thromboembolism (vte) 
in patients who were hospitalized for acute medical illness. The esus navigate study is investigating the 
efficacy and safety of rivaroxaban in patients following embolic stroke of undetermined source. A fur-
ther Phase iii study (voyager pad) to investigate the efficacy and safety of rivaroxaban in patients with 
peripheral artery disease (pad) following surgery is in preparation.  

Rivaroxaban was invented by HealthCare and is being jointly developed with Janssen Research & Devel-
opment, llc, a subsidiary of Johnson & Johnson. 

Adempas™ (active ingredient: riociguat) is the first member of a new class of vasodilating agents known 
as soluble guanylate cyclase (sGC) modulators. Administered in tablet form, riociguat is currently being 
investigated as a new, specific approach for the treatment of various forms of pulmonary hypertension. 

Adempas™ was approved in the United States in 2013 for the treatment of inoperable chronic thrombo-
embolic pulmonary hypertension (cteph) and pulmonary arterial hypertension (pah). In March 2014, 
Adempas™ was also approved by the European Commission in both indications. In Japan, the drug was 
approved for cteph in January 2014 and was submitted for approval to treat pah in April 2014.  

In 2014 the study program for riociguat was expanded to include new trials: a Phase iiib pilot study was 
launched in March 2014 to evaluate the effect of riociguat in patients with pah who demonstrated an 
insufficient response to treatment with phosphodiesterase-5 inhibitors (pde-5i) either as a monotherapy 
or in combination with an endothelin receptor antagonist (era). In June 2014, we commenced the 
Phase iib study rise-iip to investigate the safety and efficacy of riociguat in patients with symptomatic 
pulmonary hypertension associated with idiopathic interstitial pneumonia (iip). Outside of the pulmo-
nary hypertension indication, riociguat is also in Phase ii testing for the treatment of patients with dif-
fuse systemic sclerosis. 

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Another representative of the sGC modulator class is vericiguat, currently in Phase iib clinical testing to 
treat chronic heart failure.  

Since October 2014, we have been collaborating with Merck & Co., Inc., on the development and com-
mercialization of sGC modulators. 

Finerenone is a next-generation oral non-steroidal mineralcorticoid receptor antagonist that is currently 
in Phase IIb clinical development for the treatment of worsening chronic heart failure and diabetic 
nephropathy. 

In the cardiorenal syndrome area, molidustat is being investigated for the treatment of patients with 
anemia accompanied by chronic kidney disease and / or terminal kidney failure. 

Oncology 
Stivarga™ (active ingredient: regorafenib) is an oral multikinase inhibitor. It inhibits various signal 
pathways that are responsible for tumor growth. 

Stivarga™ is approved in the United States, Europe, Japan and several other countries for the treatment 
of patients with metastatic colorectal cancer (mCRC). In 2013, Stivarga™ was also approved in the Unit-
ed States, Japan and other countries for the treatment of gastrointestinal stromal tumors (gist). In July 
2014, the European Commission granted approval for the treatment of gist. 

In February 2014, we initiated a Phase iii trial investigating the effect of regorafenib as an adjuvant 
treatment option for colorectal cancer patients following resection of liver metastases with curative 
intent and completion of all planned chemotherapy.  

Stivarga™ was developed by Bayer. In 2011, Bayer and Onyx Pharmaceuticals, Inc., a subsidiary of 
Amgen Inc., United States, agreed that Onyx would receive royalties on global sales of Stivarga™ in the 
area of cancer treatment. 

Xofigo™ (active ingredient: radium-223 dichloride) is approved in the e.u. and the United States for the 
treatment of adult patients with castration-resistant prostate cancer (crpc) with symptomatic bone me-
tastases but no known visceral metastases. 

In April 2014, a new Phase iii trial began that is evaluating radium-223 dichloride in combination with 
abiraterone acetate and prednisone / prednisolone for the treatment of asymptomatic or mildly sympto-
matic patients with bone-predominant metastatic castration-resistant prostate cancer who have not 
received chemotherapy.  

We are jointly developing and commercializing our cancer drug Nexavar™ (active ingredient: sorafenib) 
with Onyx Pharmaceuticals, Inc., United States. The active ingredient sorafenib, which targets both 
cancer cells and the vascular system of the tumor, is registered in more than 100 countries for the 
treatment of liver cancer and advanced kidney cancer. In May 2014, Nexavar™ was approved by the 
European Commission for the treatment of patients with progressive, locally advanced or metastatic, 
differentiated thyroid carcinoma refractory to radioactive iodine. In June 2014, the Japanese mhlw 
approved sorafenib for the treatment of patients with unresectable differentiated thyroid carcinoma. 

Two clinical Phase iii trials with sorafenib failed to meet their respective primary endpoints in March 
and July 2014. The trials investigated sorafenib as an adjuvant treatment for hepatocellular carcinoma 
and as a combination therapy for breast cancer. 

Copanlisib is a novel, intravenous phosphatidylinositol 3-kinase (pi3k) inhibitor currently in Phase ii 
clinical development for the treatment of non-Hodgkin’s lymphoma.  

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Ophthalmology 
Eylea™ (active ingredient: aflibercept) is our joint developmental project with Regeneron Pharmaceuti-
cals, Inc., United States. Aflibercept blocks the natural growth factor vegf (vascular endothelial growth 
factor), thus preventing the abnormal formation of new blood vessels that tend to leak blood. The medi-
cation is administered directly into the eye. Regeneron Pharmaceuticals, Inc. holds exclusive rights to 
the product in the United States, while in other countries it is marketed by Bayer.  

Eylea™ is approved in more than 80 countries for the treatment of wet age-related macular degenera-
tion (amd). In 2013, Eylea™ was also approved in Europe, Japan, the United States and further countries 
for the treatment of visual impairment due to macular edema secondary to central retinal vein occlusion 
(crvo). In August 2014, the European Commission approved Eylea™ in the treatment of diabetic macu-
lar edema (dme). The Japanese mhlw approved Eylea™ in this indication in November 2014. We also 
submitted the first applications – to the European Medicines Agency (ema) in June 2014 and to the 
Japanese mhlw in September 2014 – for marketing authorization of aflibercept in the treatment of pa-
tients with visual impairment due to macular edema secondary to branch retinal vein occlusion (brvo). 
In September 2014, the mhlw approved Eylea™ for the treatment of myopic choroidal neovasculariza-
tion (mCNV). Pathologic myopia and the associated myopic CNV is the second most common cause of 
blindness in Japan. 

Hematology 
In May 2014, the recombinant Factor viii Kogenate fs (octocog alfa) was approved in the United 
States for routine prophylaxis to prevent or reduce the frequency of bleeding episodes in adults with 
hemophilia a. 

In December 2014 we submitted applications for marketing authorization to the European Medicines 
Agency (ema) and the u.s. fda for bay 81-8973 for the treatment of hemophilia a in adults and children. 
bay 81-8973 is a full-length recombinant factor viii (rFVIII) which has demonstrated clinical evidence of 
efficacy when used for prophylaxis twice or three times per week, with standard dosages. 

In February 2014, a Phase iii study with damoctocog alfa pegol (Bay 94-9027), a long-acting recombi-
nant Factor viii, reached its primary objective of ensuring effective protection against bleeding caused 
by hemophilia a with fewer infusions. 

We consider that gene therapy holds potential to offer new long-term treatment options for hemophilia 
a. Gene therapy could transform the treatment of hemophilia by inserting a correct version of the faulty 
gene responsible for the disease. We are currently working with our partner Dimension Therapeutics on 
a treatment option of this kind. 

Gynecology 
Vilaprisan (sprm) is a novel oral progesterone receptor modulator that is currently being investigated in 
a Phase ii trial for the treatment of uterine fibroids.  

In February 2014, we successfully concluded the registration procedure in the European Union for a 
new transparent low-dose contraceptive patch (fc-Patch Low).  

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CONSUMER HEALTH 
In our Consumer Care Division, research and development activities at the product development cen-
ters in Morristown, New Jersey and Memphis, Tennessee, United States, and Gaillard, France, focus on 
developing non-prescription medicines, medical skincare products, foot care products, sunscreens and 
nutritional supplements to market maturity. Aligned to end consumers, our development strategies are 
geared toward expanding and improving our brand portfolio through new products and delivery forms. 
We also work to achieve reclassification of current prescription medicines as otc products. We intro-
duced a number of new product line expansions to various markets in 2014. They included new delivery 
forms and uses for existing brands such as Canesten™, Bepanthen™ / Bepanthol™, Coppertone™ and 
Dr. Scholl’s™. 

The research and development activities of our Medical Care Division focus on blood glucose monitor-
ing and the continuing development of contrast agents and medical equipment used in the diagnosis or 
treatment of various diseases.  

At our two u.s. research and development locations for the Diabetes Care business unit – Tarrytown, 
New York, and Mishawaka, Indiana – we are focusing on strengthening our product lines. Among the 
innovative products we launched in key markets in 2014 was the Contour™ ts platform in Europe. 

The aim of our research and development activities in the area of contrast agents and medical equip-
ment (Radiology business unit) is to steadily improve our contrast agents and our contrast injection 
systems in order to build on our leadership position. Our research and development centers are located 
near Pittsburgh, Pennsylvania, United States; in Toronto, Canada; in Berlin, Germany; and in Sydney, 
Australia. In June 2014, Gadavist™ (gadobutrol) was approved by the fda as the first contrast agent in 
magnetic resonance imaging (mri) for detection and evaluation of breast cancer. In January 2015, 
Gadavist™ was the first contrast agent to receive fda approval for use in children under two years of 
age. In 2014 we also worked to expand the capabilities of our informatics product offerings by develop-
ing new software and informatics to improve contrast agent and radiation dose management.  

In our Animal Health Division, we focus our research and development activities on antiparasitics, 
antibiotics and medicines to treat non-infectious disorders. We operate r&d centers in Germany, the 
United States, New Zealand and Brazil. Our central research activities are conducted in Monheim, Ger-
many, as part of our Life Sciences platform in conjunction with pharmaceutical research and in close 
collaboration with our researchers at CropScience. We reinforce the business by continually identifying 
further product development candidates through our existing collaborations. 

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Strategic cooperation 
in research and 
development 

OPEN INNOVATION 
We gain access to complementary technologies and external innovation potential through strategic 
collaborations with partners. Our Pharmaceuticals segment works with various partners during the 
individual development stages of a medicine. A number of examples are listed below: 

Pharmaceuticals Cooperation Partners

[Table 3.5.4]

Partner 

Cooperation objective 

Amgen Research GmbH 

Access to BiTE™ antibodies for developing novel tumor therapies 

Ardea Biosciences Inc. 

Codevelopment of oncology products based on MEK  
(mitogen-activated ERK kinase) inhibitors 

BioInvent International AB 

Access to antibody library with antibody inlicensing option 

Broad Institute 

Compugen Ltd. 

Strategic partnership in oncology to discover and develop active substances  
that specifically target tumor-specific gene mutations 

Collaboration for the research and development of new immunotherapy  
approaches in oncology 

Cubist Pharmaceuticals, Inc. 

Codevelopment of tedizolid to treat various infections 

German Cancer Research Center 

Strategic partnership for the development of new therapeutic options in oncology 
and immunotherapy 

Dimension Therapeutics, Inc. 

Development of a novel gene therapy for hemophilia A 

Dyax Corp. 

Evotec AG 

ImmunoGen Inc. 

Access to antibody library with the option to inlicense antibodies for the development 
and commercialization of novel tumor therapies 

Research collaboration to identify and validate development candidates in 
endometriosis 

Cooperation in the field of antibody-drug conjugates (ADCs) for novel tumor 
therapies 

Inception 4, Inc. 

Research into new approaches for the treatment of various eye diseases 

Janssen Research & Development, 
LLC of Johnson & Johnson 

Development of Xarelto™ (rivaroxaban) 

Ludwig Boltzmann Institute 

Research into lung vascular disease, especially pulmonary hypertension 

Merck & Co., Inc. 

Nektar Therapeutics  

Novartis AG 

Development and marketing collaboration in the field of soluble guanylate cyclase 
(sGC) modulation 

Codevelopment of a targeted antibiotic inhalation therapy for lung infections 
(amikacin inhale) 

Development of a targeted antibiotic inhalation therapy for lung infections 
(ciprofloxacin DPI) 

OncoMed Pharmaceuticals Inc.1 

Discovery and development of novel anti-cancer stem cell therapeutics 

Onyx Pharmaceuticals Inc. of 
Amgen Inc. 

Orion Corporation 

Peking University 

Codevelopment of Nexavar™ (sorafenib) for various types of cancer 

Development of ODM-201 for the treatment of patients with prostate cancer 

Research cooperation and establishment of a research center for joint projects 

Prometheus Laboratories Inc. 

Development of diagnostic in-vitro assays for personalized medicine 

Qiagen Manchester Ltd. 

Development of companion diagnostic tests in personalized oncology treatment 

Regeneron Pharmaceuticals Inc. 

Development of Eylea™ (aflibercept) to treat various eye diseases                                  
Development of a PDGFR-beta antibody for ophthalmology 

Seattle Genetics Inc. 

Tsinghua University 

University of Oxford 

Cooperation in the field of antibody-drug conjugates (ADCs) for novel tumor 
therapies 

Research cooperation and establishment of a research center for joint projects 

Strategic research alliance for the development of novel gynecological therapies 

1 Bayer is not active in the area of conventional stem cell research, which examines adult or embryonic stem cells.  

In June 2014, we signed an agreement with Orion Corporation, Espoo, Finland, for the global develop-
ment and commercialization of odm-201, an investigational novel oral androgen receptor inhibitor in 
clinical development for the treatment of patients with prostate cancer. A joint clinical Phase iii study to 
further evaluate the efficacy and tolerability of odm-201 in patients with non-metastatic castration-
resistant prostate cancer was initiated in September 2014. 

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In June 2014, we entered into an agreement with Dimension Therapeutics concerning the joint devel-
opment and commercialization of a novel gene therapy for the treatment of hemophilia a.  

In July 2014, we entered into a strategic research alliance with the University of Oxford, u.k., in the area 
of novel gynecological therapies. The collaboration focuses on innovative treatment options for women 
with endometriosis and uterine fibroids. 

In October 2014, we began our strategic pharmaceutical collaboration with Merck & Co., Inc. in the area 
of soluble guanylate cyclase (sGC) modulation. This collaboration includes Adempas™ (riociguat), which 
was developed by Bayer and is already approved for the treatment of certain forms of pulmonary hyper-
tension, and its development for additional indications. The development candidate vericiguat also 
forms part of the collaboration. 

In the area of oncology, we began collaborating in 2014 with the md Anderson Cancer Center, United 
States, for early clinical development. 

In April 2014, we announced our participation in the “High-Tech Gründerfonds ii,” in which we are the 
first investor from the pharmaceutical industry. This fund supports and finances promising start-ups in 
the life sciences and other areas in Germany. In November 2014, we also announced that we will partic-
ipate as a strategic investor in the newly established “Versant Venture Capital V” fund. In this way we 
aim to support the development of new therapies in areas with a high unmet medical need. 

Since 2009 we have been operating an internet platform called “Grants4Targets,” through which 
researchers at universities, other research institutions or start-up companies can propose biological 
targets for a collaboration with Bayer. In 2013 we added two more platforms: “Grants4Leads” for pro-
posals concerning biologically active molecules as leads, and “Grants4Apps” for proposals regarding 
it solutions with potentially multiple applications in the health care field. In August 2014 a further initia-
tive was launched: the “Grants4Apps Accelerator Program.” Five start-ups with innovative health care 
and therapy-relevant solution approaches are each receiving a start-up package under this program.  

Since 2012, we have run the CoLaborator™, a center in the Mission Bay district of San Francisco with 
laboratory facilities for bioscience startup companies. With this incubator concept, the scientists benefit 
both from the laboratory infrastructure and from the expertise of the Bayer researchers, which can 
facilitate the professional, goal-oriented design of development programs, for example. At the same 
time, we aim to be the first contact point for young companies in their search for possible cooperation 
partners. We opened a second CoLaborator™ at the Berlin site in May 2014. 

CROPSCIENCE 
Research and development expenses at CropScience rose by 13.6% (Fx adj.) in 2014 to €974 million. 
Adjusted for special items of €0 million (2013: €3 million), this represented an increase of 14.0% (Fx adj.) 
and was equivalent to 10.3% of CropScience sales.  

CropScience maintains a global network of research and development facilities employing some 5,000 
people. Our largest r&d sites for chemical and biological crop protection products are located in Mon-
heim and Frankfurt am Main, Germany; Lyon, France; and Sacramento, California, United States. The 
major research centers of the Seeds unit, which focuses on improving seed through seed technology 
and breeding, are located in Ghent, Belgium; Haelen, Netherlands; and Lubbock, Texas and Morrisville / 
Raleigh, North Carolina, United States. While research is carried out centrally at a small number of 
sites, our development and plant breeding activities take place both at these sites and at numerous field 
testing stations across the globe. This ensures that future active substances and crop varieties can be 
tested according to specific regional and local requirements. 

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In Crop Protection / Seeds, our scientists working in the areas of seed technology, agricultural chemis-
try and biologics are closely collaborating as part of our integrated research approach. This bundles the 
technical expertise acquired in chemical and biological research and field development, aligning it to 
our long-term research objectives and business strategies for the various crops. 

In the Crop Protection unit, we identify and develop innovative, safe products for use as insecticides, 
fungicides, herbicides or seed treatments in sustainable agriculture. In the fields of chemistry, biology 
and biochemistry, modern technologies such as high-throughput screening and bioinformatics play an 
important role in identifying new chemical lead structures. 

In addition, we are steadily broadening the range of uses for our active ingredients by developing 
new mixtures or innovative formulations so that they can be applied in additional crops or in different 
regions or be made easier to handle. Successful collaborations with external partners complement our 
own activities. 

In March 2014, CropScience signed an agreement to acquire Biagro Group, a producer and distributor 
of biological seed treatment solutions based in Argentina. Its portfolio of established brands includes 
biological seed treatment products, plant-growth-promoting microorganisms and other products for 
integrated pest management based on bacterial and fungal strains. 

Also in March 2014, CropScience announced plans to significantly expand its research site in Wismar, 
Germany, in order to serve the growing global demand for biological crop protection solutions. The 
planned investment includes the construction of a new manufacturing facility for biological crop protec-
tion products along with the necessary infrastructure. The production capacities will be expanded in 
stages, and work should be completed by 2016 at the latest. The planned total investment amounts to 
approximately €18 million. 

In May 2014, CropScience’s rice herbicide Council™ Complete received regulatory approval in South 
Korea – its first registration worldwide. The market launch in South Korea is scheduled for 2015, with 
other major rice-growing countries in Asia to follow. Council™ Complete is based on two innovative 
active ingredients, triafamone and tefuryltrione, which considerably improve integrated weed control. 
In 2014 Bayer CropScience also launched a new nematicide based on the active ingredient fluopyram 
and marketed under the brand names Velum™ and Verango™. In field trials, these products have shown 
a significant increase in yield and quality in a broad spectrum of crops such as fruit, vegetables and 
tobacco. We plan to launch several more new products based on chemical and biological crop protec-
tion mechanisms in the coming years. For example, in 2015 we expect to launch a further insecticide 
under the Sivanto™ brand, a new insecticide class for the control of sucking insects. 

In September 2014, we combined our u.s. research and development activities in vegetable seeds and 
biological crop protection products at a new, integrated site in West Sacramento, California. Our goal is 
to better exploit the potential of our global research and development capacities by merging and ex-
panding activities. 

Research in our Seeds unit is devoted to optimizing plant traits. We are developing new varieties in our 
existing core crops – cotton, oilseed rape / canola, rice and vegetables. We have now expanded our 
research activities to include two new core crops – wheat and soybeans. Our work focuses on improving 
the agronomic traits of these crops. Our researchers are working to increase the quality and yield poten-
tial of crop plants – for example, by improving the profile of rapeseed (canola) oil or enhancing the 
properties of cotton fibers. We are also targeting the development of plants that have high tolerance to 
external stress factors, such as drought, and can more efficiently utilize water. Further areas of focus 
include developing new herbicide tolerance technologies based on alternative modes of action, and 
improving insect resistance and disease tolerance. To do this we employ modern breeding techniques 
ranging from marker-assisted breeding to plant biotechnology methods. 

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In January 2014, CropScience signed two new agreements with Cellectis Plant Sciences, United States. 
The extended partnership aims to develop plant traits specifically for canola seed using new breeding 
methods. The collaboration also gives Bayer access to technologies that enable the direct engineering 
of plant genomes in order to develop improved crop varieties. 

We aim to jointly develop advanced hybrid rice varieties with Kaiima Bio-Agritech Ltd., Israel. The goal 
of the multi-year collaboration is to breed new high-yielding hybrid rice varieties. 

In June 2014, the first global soybean brand from CropScience – Credenz™ – was launched in the United 
States. Under this brand, the company intends to offer soybean growers innovative varieties and traits. 
hbk™ Seed, the brand of Hornbeck Seed Company, United States, which CropScience acquired in 2011, 
will also be sold under the Credenz™ name. 

At the end of September 2014, we acquired the seeds business of Granar s.a., headquartered in 
Encarnación, Paraguay, a company specializing in the breeding, production and marketing of improved 
seed, especially soybean seed. Granar has a strong presence in Paraguay and Uruguay, and an increas-
ing presence in Brazil. At the focus of the acquisition is Granar’s Igra™ Semillas brand. Granar retained 
responsibility for marketing Igra™ seed until the end of 2014. For CropScience, this acquisition repre-
sents one more step towards achieving an international platform of excellence in soybean seed. It also 
underscores the importance of the Latin American region for the soybean seed business. 

Our proprietary glyphosate herbicide tolerance technology GlyTol™ has been available in FiberMax™ 
cotton seed varieties in the United States for several years. In 2014 we launched a new combination of 
insect resistance and herbicide tolerance for cotton that for the first time contains both TwinLink™ and 
GlyTol™ technology, offering farmers integrated pest and weed control. 

In the 2014 planting season, CropScience began marketing a new canola variety in Canada under the 
InVigor™ brand. The hybrid variety features a new trait that prevents the pods from opening prema-
turely, thus enabling higher yields. 

In the coming years we plan to market numerous new hybrid rice and canola varieties with improved 
stress and insect resistance under the Arize™ and InVigor™ trademarks.  

We plan to launch the first CropScience wheat seed in 2015. In September 2014, CropScience an-
nounced plans to invest a total of €1.5 billion in the research and development of wheat seed and crop 
protection products for wheat between 2010 and 2020. 

With many crops, such as vegetables, major success can be achieved using conventional plant breeding 
methods. As vegetables are mostly intended to be marketed and eaten fresh, merchants and consumers 
have particularly strict requirements regarding their appearance, nutrient content, taste and shelf life. 
We are launching a succession of new vegetable seed varieties that satisfy these requirements. 

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Group target 2014: 
CropScience – transfer 
of at least six new 
molecular entities 
(NMEs) and traits into 
confirmatory technical 
proof-of-concept field 
studies 

  See Chapter 1.3  
for Group targets 

Our integrated product pipeline for crop protection and seed technology contains a total of 25 individual 
projects, along with numerous new seed varieties and improved products that have estimated launch 
dates between 2011 and 2016. We believe these products have a combined peak sales potential of more 
than €4 billion. In Crop Protection, we plan to have launched around 10 products by the end of this 
period. In our Seeds business, we plan to bring some 15 projects to market for the broad-acre crops of 
cotton, oilseed rape / canola, rice, wheat and soybeans, along with several hundred new vegetable varie-
ties, over the same period. 

In Environmental Science, we evolve chemically and biologically based solutions for consumers and 
professional users by tailoring substances from our Crop Protection unit or external partners for use in 
non-agricultural scenarios. Current development projects include insect gels and baits, herbicides, 
fungicides and products for the control of disease-transmitting insects. 

In 2014 Environmental Science expanded its portfolio in all business segments. We strengthened our 
range of turf care products for golf courses with the introduction of the new fungicide Mirage™ in the 
United States and the new herbicide Tribute™ in South Korea. In the area of professional pest control, 
we launched new formulations of the insecticides Maxforce™ (Maxforce™ Fusion, Maxforce™ Prime) in 
Europe. The herbicide Esplanade™ (active ingredient: indaziflam), which is already used very success-
fully in the u.s. industrial vegetation management sector, became available to customers in Canada in 
2014. We launched a number of new insecticides for private customers in Europe. In addition, we 
expanded the Natria™ range of biological solutions in the United States. 

In October 2014, CropScience announced plans to purchase certain assets of DuPont Crop Protection’s 
land management business in the United States, Canada, Mexico, Australia and New Zealand. The trans-
action was closed at the beginning of December 2014 after it received regulatory approvals. This acquisi-
tion will enable Environmental Science to offer a comprehensive portfolio of effective weed control prod-
ucts for industrial vegetation management. In addition, the company will gain access to the growing 
forestry and range and pasture business segments in North America. DuPont will continue to sell its land 
management products outside the United States, Canada, Mexico, Australia and New Zealand. 

OPEN INNOVATION 
CropScience is part of a global network of research and industry partners from diverse segments of the 
agriculture industry, chemical and biological research, and the food industry. These cross-industry 
partnerships enable us to better understand and do justice to the needs of our customers over the long 
term. An example is the partnership between CropScience and the u.k.-based Innovative Vector Control 
Consortium (ivcc). We are cooperating with ivcc to develop new substances for use against mosquitoes 
that transmit diseases such as malaria and dengue fever.  

Bayer has played an active role for over 50 years in the fight against malaria, which remains among 
the most dangerous tropical diseases. The product portfolio of CropScience enables it to offer a unique 
range of solutions. For example, CropScience – through its Environmental Science operating segment 
– is a leading producer of indoor spray insecticides to control malaria mosquitoes. Over the past three 
years, Ficam™ has played a particularly important role in controlling mosquitoes resistant to pyre-
throids. In 2014, CropScience once again made an important contribution to malaria protection by 
supplying Ficam™ in Ethiopia. After the who had already recommended our new, long-acting and thus 
more cost-effective deltamethrin-based spray insecticide K-Othrine PolyZone™ in 2013, national regis-
tration applications were submitted in 2014 in several countries of sub-Saharan Africa. 

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5. Research, Development, Innovation

77 

In April 2014, CropScience and Targenomix GmbH, Potsdam, Germany, entered into a five-year 
research collaboration to jointly develop and apply systems biology approaches to gain a better under-
standing of genetic and metabolic process regulation in plants. The aim is to use novel active sub-
stances and plant traits to develop innovative crop protection and plant health solutions. 

CropScience also continued its wheat research collaboration with the Commonwealth Scientific and 
Industrial Research Organisation (csiro) in Australia. This strategic collaboration, which began in 2009, 
is aimed at raising wheat yields and thus boosting global wheat production in the long term. 

Special mention should be made of our food chain partnerships, in which CropScience supports all the 
players in the food chain – from farmers and food processors to importers, exporters, wholesalers and 
retailers. CropScience has now been working in food chain partnerships for 10 years, helping to im-
prove the quality of crops and raise yields. It has initiated such projects for over 40 crops in more than 
30 countries, mainly in Asia, Latin America and Europe. Our experts advise farmers on sustainable 
growing methods – from seed selection and the controlled, eco-friendly use of crop protection products 
to the transparent monitoring of production. 

We also worked with certifier global g.a.p. to lay the foundation for training designed to help small 
farmers understand and meet the requirements of good agricultural practice using CropScience’s train-
ing programs. It is planned to introduce “BayGAP foundational training” throughout the world in 2015, 
enabling small farmers to supply local customers according to their needs. 

CropScience: Important Collaborations 

Partner 

Cooperation objective 

[Table 3.5.5]

Celletics Plant Sciences 

Targeted modification of certain plant genes and genomes to improve the plants 

CSIRO 

IVCC 

Kaiima 

Targenomix 

Increase in wheat yields and long-term increase in global wheat production 

Joint development of new substances to control mosquitoes that transmit diseases such as 
malaria and dengue fever 

Development of modern hybrid rice varieties 

Development and application of systems biology processes to better understand genetic and 
metabolic process regulation in plants 

MATERIALSCIENCE 
Research and development expenses at MaterialScience decreased by 8.2% in 2014 to €210 million. 
Adjusted for special items of minus €3 million (2013: €20 million), this represented an increase of 0.9% 
(Fx adj.) and was equivalent to 1.8% of MaterialScience sales. In addition, MaterialScience spent 
€79 million (2013: €97 million) on joint development projects with customers. 

A total of about 900 people were employed in research and development in 2014, many of them at ma-
jor Innovation Centers in Leverkusen, Germany; Pittsburgh, Pennsylvania, United States; and Shanghai, 
China. The strong international presence is also geared toward aligning our research and development 
to regional market trends and customer needs, especially in the emerging economies. 

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Our activities in the Polyurethanes (pur) business unit include work on products and material solutions 
to drive forward the use of environmentally friendly wind energy. The most recent developments include 
polyurethane infusion resins used in the interior of wind turbine rotor blades to bond fiber layers to a 
stable core. The resin is better distributed and cures more quickly than conventional infusion material, 
thus significantly reducing production times and saving costs. The material can also be used without 
difficulty for very long rotor blades capable of generating larger quantities of electricity. 

In the area of process development, we are progressing with the use of carbon dioxide as a new source 
of carbon for polyurethanes in order to reduce dependence on petrochemical raw materials. In 2014, for 
example, we began transitioning an existing research project (“Dream Production”) to commercial use. 
The goal is to begin marketing an innovative form of the polyol component of polyurethane with a co2 
content of around 20% in 2016. At the laboratory level, we also succeeded in producing another polyol 
type through direct and indirect integration of co2 using 40% alternative raw materials – a further con-
tribution to resource efficiency. 

Our activities in the Polycarbonates (pcs) business unit are mainly geared to the development of prod-
ucts for the automotive and electrical / electronics industries as well as the it sector. The focus here is on 
reducing weight, improving energy efficiency and safety, and enabling greater design freedom. 

In the automotive industry, our focus is partly on exterior applications. Not only add-on components 
such as spoilers, but also glazing and entire panorama roofs and their frames are increasingly being 
manufactured from polycarbonate or polycarbonate blends that weigh up to 50% less than equivalent 
glass or steel components. This supports the industry’s efforts to produce cars that are as light as possi-
ble and therefore more fuel-efficient. We are working to further improve the properties of these prod-
ucts and the respective manufacturing processes. 

Light-emitting diodes also contribute to sustainability in vehicles and in other applications, as they 
require significantly less energy and last longer than traditional light sources. We have developed spe-
cial materials for channeling, scattering and reflecting led light that feature high transparency, design 
freedom and heat resistance. Special materials can also be used in the production of thermally conduc-
tive parts, helping to make led light sources last longer.  

We are also working on the evolution of polycarbonate-based composite materials that address the 
needs of the automotive, consumer electronics and other industries. In this area we are developing 
especially lightweight, continuous-fiber-reinforced materials that can be used in the future in applica-
tions such as chassis and structural components, or as housing materials for ultra-mobile laptops, tablet 
computers and smartphones. 

In the Coatings, Adhesives, Specialties (cas) business unit, we are driving the development of raw 
materials for high-performance polyurethane coatings, colorants, adhesives and sealants. Among our 
fields of research and development are coatings for textiles and synthetic leather. For these coatings we 
have developed a new generation of purely waterborne polyurethane dispersions. This technology, 
which was launched in mid-2014 under the name Insqin™, enables all types of coated textiles and syn-
thetic leather to be manufactured without using solvents.  

Our development activities as a whole are focused on eco-friendly products that spare resources and 
can be more efficiently applied. The use of renewable raw materials is also playing an increasingly 
important role.  

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6. Sustainability Management and Governance

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OPEN INNOVATION  
In line with the open innovation approach, MaterialScience collaborates with external scientific institu-
tions and with start-up companies and academic spin-offs. These collaborations are mainly based in 
Europe, the United States, China or Japan.  

Our partners in Germany include rwth Aachen University, Germany, with which we jointly operate the 
cat Catalytic Center. In China we maintain a close alliance with Tongji University in particular, while in 
the United States we support research activities at renowned universities. 

In the scientific field, we take either a leading or an advisory role in numerous publicly funded projects. 
We also participate in industry associations and other organizations such as the German Chemical 
Society (GDCh), the dechema Society for Chemical Engineering and Biotechnology in Germany and the 
American Chemical Society. Our innovation capability is also spurred by collaborations with customers 
or other industry sectors, an example being the “future_bizz” corporate network.  

BAYER TECHNOLOGY SERVICES 
Bayer Technology Services is a major driver of innovation for the subgroups in the areas of technology 
development, engineering and production. All Bayer subgroups work closely with this service company 
worldwide on technology solutions, particularly in the fields of process technology, engineering, and 
the safe and efficient operation of production facilities. 

Technology Services – 
an important 
innovation partner for 
all subgroups 

 online annex: 3-5-4 

Together with the subgroups, Technology Services is developing process technology, biotechnology 
and systems biology platforms to support the research, development and production of new products 
and applications – with a deliberate focus on open innovation. Development activities at the invite 
research center, a collaborative venture with Dortmund Technical University, include work on new 
flexible, modular production concepts. At the Joint Research Center on Computational Biomedicine, 
a collaboration with rwth Aachen, computer-based models and methods for investigating key bio-
logical mechanisms are researched and developed for clinical use together with Aachen University 
Hospital. 

6. Sustainability Management and Governance 

To us, sustainability basically means future viability and, as part of corporate strategy, is integrated into 
everyday procedures. We underline our mission as a sustainably operating company through our com-
mitment to the u.n. Global Compact with its internationally recognized 10 principles and to the Respon-
sible Care™ initiative, and through our active global involvement in leading (industry) forums such as 
the World Business Council for Sustainable Development (wbcsd).  

Responsibility for steering and aligning our Group-wide sustainability strategy lies with the Group 
Management Board member responsible for Human Resources, Technology and Sustainability in his 
function as Chief Sustainability Officer, and with the Sustainable Development (sd) Committee chaired 
by the Group Head of Environment & Sustainability. 

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 online annex: 3-6-1 

Integration of Sustainability at Bayer

[Graphic 3.6.0-1]

Mission: “Bayer: Science For A Better Life” // LIFE Values

Group Strategy    

Sustainability in the Group

Measurement and 
documentation 
of the sustainability 
performance          

Engagement          

Targets /indicators

UN Global Compact

Sustainability reporting 
in the integrated Annual 
Report with independent 
assurance

Responsible Care

WBCSD 1

Global Reporting 
Initiative (GRI)

Steering

Relevant Group 
positions, such as on       

Member of the Group 
Management Board 
responsible for Human 
Resources, Technology 
and Sustainability

Environment & Sustain-
ability Department
in the Corporate Center

Sustainable 
Development

Human Rights

Corporate 
Compliance

Responsible 
Marketing & Sales

Supported by bodies 
such as

Responsible 
Lobbying

•  Sustainable Develop-

ment Committee

• HSEQ Committee

• Bayer Safety Council

Sustainability in the subgroups and service companies (incl. regions and countries)   

• Strategies, objectives and directives
• hseq management systems and audits

• Responsible Care programs and initiatives
• Opportunity and risk management

1 World Business Council for Sustainable Development 

  See Chapter 1.3 

  www.bayer.com/ 
sustain-
commitment 

The sd Committee, on which all subgroups are represented, sets targets, draws up initiatives, manage-
ment systems and Group regulations, and is responsible for monitoring these aspects. In order to opera-
tionalize the Group strategy and make it measurable, we have set ambitious non-financial targets and 
indicators all along the value-added chain. Further information about our target program can be found 
in Chapter 1.3 “Targets and Performance Indicators.” Internal Group regulations ensure the implemen-
tation of our sustainability principles in business operations. These principles are realized through 
corresponding management systems, regulations and processes at the subgroup level.  

 online annex: 3-6-2 

These Group regulations include the “Sustainable Development Policy,” our “Human Rights Posi-
tion,” the “Corporate Compliance Policy,” our “Supplier Code of Conduct,” the “Responsible Market-
ing & Sales Policy,” our “Directive on Process and Plant Safety,” and positions, for example, on the 
key issues of climate, water and biodiversity. Implementation in the subgroups is enacted via appro-
priate management systems, regulations and processes. 

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6. Sustainability Management and Governance

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MATERIALITY ANALYSIS 
We analyze and evaluate what the major stakeholders expect and require from the Group. This ap-
proach enables us to identify early on any opportunities and risks relevant to sustainability, along with 
key non-financial areas of activity, and to react to them.  

We updated our materiality analysis during 2014. First, relevant external stakeholder sources were ana-
lyzed to identify the main non-financial issues for Bayer. The analysis was conducted with the support of 
an international management consultancy company to ensure neutrality in the process. The relevance to 
Bayer of the most important 24 issues identified in this way was evaluated in respect of sales, costs, risk 
and reputation by selected representatives of the Bayer holding company and the three subgroups in the 
form of interviews and a global online survey. Internal and external views were then entered into the 
following matrix for discussion and confirmation by the sd Committee. The matrix was formally accepted 
by Bayer’s Chief Sustainability Officer. Next year, reporting will be structured according to the new gri 
g4 guidelines on the basis of the non-financial subject areas identified. 

Materiality Matrix

[Graphic 3.6.1]

e
c
n
a
v
e
l
e
R
r
e
d

l
o
h
e
k
a
t
S

i

h
g
H
y
r
e
V

h
g
H

i

i

d
M

• Water Scarcity

•  Sustainable Food Supply

• Supplier Management

•  Access to Medicine

• Climate Change

•  Product & Process Innovation

•  Stakeholder Engagement / 

Partnering

•  Human Capital

•  Safety

•  Business Ethics

•  Product Stewardship

• Human Rights

•  Social Shifts

•  Intellectual Property

•  Responsible  Marketing & Sales

• Environmental Protection

•  Resource Efﬁ ciency

• Life Cycle Management

•  Biodiversity / Land Use

•  Counterfeits

•  Societal Engagement

• Animal Welfare

• Job Security

•  Sustainable Governance

Mid

High

Very High

Bayer Relevance

Definitions of these areas of activity can be found below. 

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6. Sustainability Management and Governance 

 online annex: 3-6-3 

Definitions of the Major Non-Financial Areas of Activity for Bayer 

Topic 

Definition 

Bayer Annual Report 2014

[Table 3.6.0-1]

Access to Medicine 

Animal Welfare 

Biodiversity / Land Use 

Business Ethics 

Climate Change 

Counterfeits 

Facilitating greater access to medical products and health care for patients in need in underserved regions, 
e.g. through R&D, differential pricing, capacity building, IP and collaboration  

Reduced use of animals where possible, commitment to welfare of animals as part of scientific R&D process 

Preserving variety and variability among living organisms and the ecological complexes in which they occur 
and sustainable use of biophysical or ecological properties of land 

Ensuring good corporate governance and compliance; incl. anti-corruption, fair taxes, transparency, 
responsible lobbying, ethical clinical trials and ESG1-oriented executive remuneration  

Contributing to the mitigation of and adaptation to the effects of climate change 

Fighting risks to patients and consumers imposed by counterfeits in the areas of health care and nutrition 

Environmental Protection 

Reducing the environmental impact of production and processes on water, air and soil and enhancing 
innovative solutions that benefit the environment 

Human Capital  

Human Rights 

Intellectual Property 

Job Security 

Developing human resources and expanding position as attractive employer; comprising training & 
development opportunities, remuneration, benefits, recruitment and retention programs; providing work-life 
balance flexibility; ensuring a sound diversity  

Respecting and promoting human rights throughout the value chain, incl. prohibition of child labor 

Safeguarding IP while providing access to products and innovations; finding the right balance between the 
interests of innovators and the wider public 

Global commitment to job security 

Life Cycle Management 

Managing a product life cycle process to prevent harmful impact on the environment, incl. upfront 
considerations of production, use and recycling of chemical compounds 

Product & Process Innovation 

Innovations that meet customer and societal needs at the same time; incl. the adaptation to changes in 
industrial production, influenced by the rising importance of the digital value chain and related processes 

Product Stewardship 

Resource Efficiency  

Assessing and reducing possible health and environmental risks of a product along the entire value chain; 
incl. REACH, endocrine disruptors, active ingredients in the environment, bee health and the responsible 
use of new technologies (e.g. biotechnology) 

Promoting an efficient use of natural resources (e.g. water, minerals, agricultural land) and energy; switch 
to renewables where possible; reducing the consumption especially of valuable/scarce resources 

Responsible Marketing & Sales 

Committing to ethical sales & marketing practices for products and services based on international 
standards and codes of practices 

Safety 

Ensuring occupational, process, plant and transportation safety 

Societal Engagement 

Demonstrating commitment to society through social investments, donations and volunteering programs 

Societal Shifts 

Stakeholder Engagement / 
Partnering 

Supplier Management 

Adapting business models to relevant societal shifts in developed as well as emerging economies, incl. 
addressing low-income consumers, rising middle class markets, aging societies, demographic change or 
new behavior patterns 

Engaging and partnering with relevant stakeholders at the local, national and international levels 

Promoting fair and constructive relations and sustainable behavior in the supply chain, incl. performance 
assessments based on ESG1 criteria  

Sustainable Food Supply 

Contributing to sustainable food production, supply and availability; as well as to the quality of food supply 

Sustainable Governance 

Integrating environmental, social and corporate governance criteria into corporate steering, based on non-
financial indicators; communication of progress 

Water Scarcity 

Protecting water resources and promoting efficient use, especially in water-scarce regions 

1 Environment, Social, Governance 

Compared with the matrix for 2012, there are several new developments that reflect changes in 
priorities and perceptions among our external and internal stakeholders. Individual subjects such as 
water scarcity, the life cycle approach, responsible marketing and sales, stakeholder dialogue, social 
transformation and resource efficiency have become especially important and are therefore present-
ed individually. Other topics have been regrouped. 

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STAKEHOLDER DIALOGUE AT BAYER  
Bayer considers itself a part of society and of public life. Society’s acceptance and appreciation of our 
corporate activities are therefore essential to Bayer’s reputation and business success. Involving the 
different interest groups among Bayer’s stakeholders is a vital element of the company’s activities with 
the goal of creating better mutual understanding and trust in respect of our work and products.  

 online annex: 3-6-4 

We believe that systematic dialogue with the stakeholders relevant to us offers a vital key to under-
standing their viewpoints and expectations and being able to incorporate them into our business 
decision-making processes as far as possible. This procedure helps us to identify social and market 
trends early, avoid risks, assess our contribution and thereby set focus areas for our activities. 

We systematically involve our stakeholders using the Stakeholder Engagement Process. This de-
scribes how – throughout the Group and on a project-by-project basis – stakeholder groups can be 
identified, their expectations charted and dialogue with them steered. The engagement process 
requires regular review and needs to be reflected against social trends. 

Stakeholder Engagement Process

[Graphic 3.6.1-1]

Stakeholder m

ap

pin

g

Preparation

Controlling

Identiﬁ -
cation

nt
e
m
e
g
a
g
n
E

Interaction

Characteri-
zation

s
e
s
s
e
n
k
a
e
 w
s /
h
t
g
n

Strategy
development

Prioritization

Clustering

E

n

g

a

ge

ment planning

A nalysis of stre

To ensure the long-term acceptance and appreciation of our business, we seek to link the interests of 
our stakeholders even more closely to our corporate strategy. It is important to approach key social 
and political players right from the start of a new project and to canvass their support early on and 
seek open dialogue. The Group has developed a guide to engaging stakeholders in strategic deci-
sion-making processes such as investment projects and launching new products. The platform that 
emerged from this offers tools for identifying social and political trends at an early stage and suc-
cessfully incorporating them into project planning. The concept is currently being applied to various 
projects at Bayer, and the practical experience gathered hereby is being channeled back into further 
refinements.  

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Bayer’s day-to-day stakeholder activities range from targeted dialogue at the local, national and in-
ternational levels and active involvement in committees and specialist workshops, through to com-
prehensive information programs and participation in international initiatives and collaborations. Our 
stakeholder dialogue therefore includes both communication with the individual target groups and 
also issue-related multi-stakeholder events.  

The Group also divides the stakeholders with whom it mainly interacts into four groups: partners, 
regulators, financial market participants and a wide variety of social interest groups. Below are some 
examples of the commitment Bayer has shown during 2014: 

OUR PARTNERS  
Customers and suppliers 
Collaborative partnerships and a high level of customer satisfaction are vital for the long-term suc-
cess of the Group. Each subgroup communicates with the relevant customers, has specific systems in 
place for measuring customer satisfaction and operates its own management systems for recording 
complaints. More on this topic can be found in Chapter 9 “Products, Distribution and Markets.” 

Sourcing products and services in differentiated markets represents a particular challenge for the 
procurement organizations in the subgroups. Dialogue with suppliers is very important for ensuring 
smooth production processes. More information can be found in Chapter 8 “Procurement and Pro-
duction.” 

Employees 
The expertise and commitment of our employees form the basis of Bayer’s long-term business suc-
cess. To sustain this, the Bayer Group needs modern human resource and talent management of its 
human resources coupled with competitive structures and processes. This includes regularly provid-
ing the workforce with up-to-date information, as well as involving employees in active and targeted 
dialogue. More information about internal communications can be found in Chapter 7 “Employees.” 

Associations, universities, scientific institutions and schools  
Alongside our business activities, Bayer is also an active member of or holds leadership positions on 
numerous national, European and international associations and their committees, such as the 
Federation of German Industries (bdi; from 2015 Vice-Presidency), the German Chemical Industry 
Association (vci; Presidency), the German Equities Institute (dai; Presidency), the European Chemi-
cal Industry Council (cefic; membership of the Board and Executive Committee), BusinessEurope 
and the International Council of Chemical Associations (icca). Bayer also currently chairs econsense, 
German industry’s sustainable development forum. 

The subgroups are also active members of their respective industry associations. For instance, 
HealthCare is represented on the Executive Board of the International Federation of Pharmaceutical 
Manufacturers and Associations (ifpma); CropScience is a member of the Board of CropLife Interna-
tional (cli) and its European association, the European Crop Protection Association (ecpa); and the 
ceo of MaterialScience is the current President of the European plastics manufacturing association 
PlasticsEurope.  

Bayer’s research and development activities are supported by an international network of collabora-
tions with leading universities, public-sector research institutes and partner companies. More 
information can be found in Chapter 5 “Research, Development, Innovation.” 

You can find more information on Bayer’s comprehensive activities in dialogue with school and uni-
versity students in Chapter 13 “Social Commitment.” 

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REGULATORS 
Legislators, authorities and politicians 
The framework for the company’s operations is significantly determined by authorities, legislators 
and politicians in terms of statutory regulations and licensing, for example. The dialogues Bayer is 
currently pursuing with authorities and ministries at the local, national and international levels in-
clude targeted discussions with political decision-makers and active involvement in specialist work-
shops and cooperation projects. Our active participation in political decision-making processes is al-
so explicitly sought here by the key players involved. 

Lobbying 
In its Bayer Group Regulation “Code of Conduct for Responsible Lobbying,” Bayer sets out clear and 
binding rules for its involvement in political matters, aiming to ensure transparency in any collabora-
tion with the representatives of political institutions. The Group’s Public and Governmental Affairs 
Committee is responsible for the strategic planning of Bayer’s political work. This especially includes 
developing the company’s political standpoints, as well as determining the position of the Bayer 
Board of Management on important political issues. In 2014 Bayer’s political lobbying again focused 
on the acceptance of products and technologies in society, on submitting proposals for creating sus-
tainable health care systems, on chemicals and energy policy, and on climate protection. Bayer also 
actively promotes the protection of intellectual property in order to be able to continue developing 
innovative products. More information about Bayer’s political principles is available on the internet. 

  www.bayer.com/ 
en/political-
principles.aspx 

Our liaison offices in Berlin, Brussels, Washington, Moscow, Brasilia and Beijing are key points of 
contact between the Group and the political arena. Bayer actively participates in existing transparen-
cy initiatives. It publishes details of costs, employee numbers and any of the other statistics required 
in each country, e.g. in the transparency registers of the European Parliament or the u.s. Congress. 
Bayer goes way beyond the statutory requirements in doing so. For instance, the Group also publish-
es data for countries, e.g. in Germany, where there is no legislative requirement to publish such in-
formation. In 2014 the costs incurred at the liaison offices for human resources, material and proj-
ects totaled approximately: €1.2 million in Berlin, €2.5 million in Brussels, €5 million in Washington, 
€0.25 million in Moscow and €1.2 million in Brasilia. 

  www.bayer.com/ 
eu-transparency-
register 

  www.bayer.com/us-
lobbying-disclosure 

In keeping with our Group Regulation, we have committed not to make any direct donations to politi-
cal parties, politicians or candidates for political office. However, some associations to which we be-
long make donations on their own initiative, in compliance with statutory regulations.  

In the United States, a number of employees use the Bayer Corporation Political Action Committee 
(BayPac) to make private donations supporting candidates for congressional office. Political action 
committees in the United States are government-regulated, legally independent employee groups. In 
the United States, companies are legally prohibited from donating to political candidates directly. 
Consequently, such donations are not donations made by the company. The BayPac contributions are 
regularly reported to the u.s. Federal Election Commission and can be viewed on its website. 

  www.fec.gov 

FINANCIAL MARKET PARTICIPANTS 
Stockholders, capital investment companies, institutional investors, banks, insurance 
companies and rating agencies  
Intensive dialogue with the capital market is a high priority for Bayer. In its dealings with analysts, 
investors and rating agencies, the Group aims to contribute to achieving a fair share price and an 
appropriate credit rating. These efforts are focused on ensuring a comprehensive, consistent and 
prompt exchange of information between the company and the various members of the financial 
community. More information about the capital market can be found in the Chapter “Investor Infor-
mation.” 

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SOCIAL INTEREST GROUPS 
Non-governmental organizations, the public, local community, competitors 
Bayer is involved in a variety of projects, thematic initiatives and specialist conferences at a national 
and international level in order to play an active role in the common task of shaping sustainable de-
velopment. Alongside exchange and cooperation with ngos and supranational organizations, this 
primarily involves dialogue with the public. 

Among other activities, Bayer is actively engaged in the u.n. Global Compact and its initiatives, the 
ceo Water Mandate and Caring for Climate, as well as the Global Compact lead network and local 
Global Compact networks. We have also acted as an organizational stakeholder in the Global Report-
ing Initiative (gri) since 2004. 

HealthCare is an active participant in the social dialogue addressing sustainability issues and creates 
forums to encourage exchange and develop viable solutions together with partners. The subgroup 
has supported the International Dialogue on Population and Sustainable Development conference for 
10 years now in close collaboration with different governmental and non-governmental organiza-
tions. The conference is a forum for exchanging experience and formulating recommendations re-
garding the realization of the Millennium Development Goals, which are then made available to poli-
cy-makers in development. Education and access to family planning are two of the key themes of this 
dialogue.  

Together with the dsw (Deutsche Stiftung Weltbevoelkerung – the German Foundation for World 
Population), HealthCare organizes an annual parliamentary evening where experts in development 
cooperation and representatives from politics, foreign agencies, medical research, international ngos 
and think tanks discuss issues related to development policy and population growth. 

CropScience wishes to bolster social discourse addressing the advantages of science and innovation 
in agriculture and to expand discussion with the public on the potential and challenges for current-
day agriculture. One example is the new “Farming’s Future Dialogues” online discussion forum for 
agricultural issues. A new training program has the primary goal of teaching young people in par-
ticular more about food and agriculture. It includes visits to CropScience facilities so people can see 
for themselves how contemporary sustainable agriculture looks in practice, as well as offering schol-
arships and running a program for fostering the exchange of ideas about the future of agriculture. 
Further information about the program is available at www.ag-education.bayer.com. 

The communities surrounding Bayer’s sites play a key role in our stakeholder dialogue. The Group is 
working at all sites on being recognized as a reliable partner and attractive employer that is aware of 
its social responsibility. For example, the involvement of the local community plays a decisive role in 
the success of any investment projects. 

As part of a project at the Dormagen site in Germany lasting several years, MaterialScience opened 
a new world-scale plant for the production of the chemical toluene diisocyanate (tdi) at the end of 
2014. The company pursued an active information policy from the very early stages of planning at 
the end of 2008 onward. In accordance with our stakeholder guideline, MaterialScience sought 
open dialogue with relevant stakeholders, including environmental groups, politicians, residents, 
citizens’ groups and media representatives. The company issued regular progress reports for this 
project and set up its own website offering detailed information about the construction plans. 

The company has long pursued an intensive information policy regarding its planned carbon monox-
ide pipeline between its Dormagen and Krefeld-Uerdingen facilities in Germany. As well as regular 
media updates, the exchange of information and dialogue with the local community play an im-
portant role. Some residents living nearby lodged a complaint against the project, which has delayed 
the commissioning of the pipeline. In its decision of August 2014 the Higher Administrative Court in 
Münster expressed no fundamental objections to the design of the pipeline in terms of safety and 
route. The court saw the need for further clarification regarding the constitutionality of the Pipeline 
Act that the project is subject to. It therefore decided to stay the proceedings and petition the Federal 
Constitutional Court in Karlsruhe. The dialogue forum initiated by MaterialScience to discuss the 

  www.ag-education. 
bayer.com 

  www.bayer.com/ 
tdi-project 

  www.pipeline. 
bayer.de 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
Bayer Annual Report 2014 

Combined Management Report

7. Employees

87 

carbon monoxide supply line also convened on several occasions throughout 2014. Contingencies 
were drawn up, including together with medics and other experts, to better secure the basic supply 
in case of any carbon monoxide disruption in North Rhine-Westphalia.  

CropScience also regularly uses forums, print media and personal discussions with citizens’ initia-
tives, representatives of the church communities and the regional press to keep its neighbors contin-
ually informed, for instance at the Dormagen, Frankfurt-Hoechst and Knapsack sites in Germany. 
Stakeholder dialogue is also performed at sites in other countries such as in Muskegon and Institute 
in the United States and Hangzhou in China. 

Local dialogue at the Lower Rhine sites in Germany (Dormagen, Krefeld-Uerdingen and Leverkusen) 
is supported by the Currenta neighborhood offices. 

7. Employees 

Our business success is largely attributable to the knowledge, skills and commitment of our employees. 
It is their ability to innovate and their willingness to embrace continuous development that drive our 
position as a world-class innovation company. This is clearly reflected in our new employer branding: 
“Passion to innovate | Power to change,” which shows what the Bayer Group expects of its employees 
and what it can offer them. It translates Bayer’s mission statement “Science For A Better Life” into the 
world of work. Following introduction in China, Brazil, Germany and the United States, it will be in use 
worldwide by the end of 2015.  

Employees by Region and Gender 2014

[Graphic 3.7.1]

 North America

  16,300 (15,200)

9,900 men

6,400 women

Latin America / Africa / Middle East

  16,900 (16,200)

10,600 men

6,300 women

118,900

(112,400)

 Europe

 55,200 (53,300)

20,700 women

34,500 men

Asia / Paciﬁ c

 30,500 (27,700)

10,900 women

19,600 men

2013 ﬁ gures restated and in parentheses; as of 2014 interns are no longer accounted for in the data; 
values rounded to the nearest hundred

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
 
  
 
 
 
 
 
88 

Combined Management Report 

7. Employees 

Bayer Annual Report 2014

TARGETING TALENTS 
We create a working environment where everyone can utilize their full potential, drive forward innova-
tions and achieve an excellent performance. That is how Bayer attracts the most talented employees 
worldwide and retains them in the company in the long term. In total, the Bayer Group hired more than 
15,500 new employees in 2014. 

 online annex: 3-7-1 

New Hires1 by Region and Gender  

[Table 3.7.0-1]

Region 

Asia/Pacific 

Europe 

Latin 
America/Africa/Middle East 

North America 

Total  

Women 

2013 

2014² 

2013 

2,668

3,050

1,093

1,256

8,067

1,745

2,717

1,080

990

6,532

4,109

3,332

1,669

2,265

11,375

Men 

2014² 

2,758 

3,104 

1,670 

1,510 

9,042 

2013 

6,777 

6,382 

2,762 

3,521 

Total 

2014 2 

4,503

5,821

2,750

2,500

19,442 

15,574

1 converted into full-time equivalents (FTE) 
² As of 2014 interns are no longer accounted for in the new hires data. 

  www.bayer.com/ 
en/awards.aspx 

Our success in recruiting employees is attributable to our attractiveness as an employer, which was once 
again confirmed by numerous awards around the world in 2014, for example in Brazil and Germany. 

In addition, it is due to our foresighted recruitment policies in all countries where we operate. We 
maintain close contact to leading universities throughout the world to draw the opportunities offered by 
Bayer to the attention of gifted students as early as possible. In some regions, this also enables us to 
selectively cover our recruitment needs. In 2014 we expanded our activities in Taiwan, Hong Kong, Fin-
land and the Philippines. Raising our profile in this way encourages an increasing number of young peo-
ple to apply to Bayer, so we are not currently facing a significant skills shortage in Germany. Neverthe-
less, as a prudent company we are already addressing the foreseeable consequences of demographic 
change by stepping up our activities to recruit staff, especially from the younger generation, retain 
knowledge in the company and foster the health of our employees worldwide.  

We therefore give young people an opportunity to gain an insight into working for our company at an 
early age. Overall, Bayer provided around 3,100 demanding professional internships to students around 
the world in 2014. We also train young people for more than 20 different occupations. In Germany 
alone, nearly 900 young people embarked on a vocational training course at Bayer in 2014. We intend 
to step up this commitment in the coming years.  

Employees by Age Group  

[Table 3.7.1]

Age in years 

2013 

2014 

< 20 

20 – 29 

30 – 39 

0.2%

0.1%

15.7%

15.8%

29.8%

30.2%

40 – 49 

29.1% 

28.2% 

50 – 59 

22.2% 

22.3% 

> 60 

3.0%

3.4%

PRESENT EMPLOYEE DATA  
On December 31, 2014, Bayer had around 118,900 employees worldwide. This increase of just over 5% 
compared with the previous year was mainly driven by acquisitions. In Germany there were 35,800 
employees (2013: 35,300), which was 30% of the total Group workforce. 

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Bayer Annual Report 2014 

Employment Data1 

Employees by region 

Europe 

North America 

Asia / Pacific 

Latin America / Middle East / Africa 

Employees by corporate function 

Production 

Marketing and distribution 

Research and development 

General administration 

Total 

Apprentices 

Combined Management Report

7. Employees

89 

[Table 3.7.2]

Dec. 31, 
2013 

Dec. 31, 
2014 

 FTE 

FTE 

53,274

15,196

27,684

16,212

45,616

44,225

13,509

9,016

55,207 

16,317 

30,436 

16,928 

49,288 

46,417 

14,026 

9,157 

112,366

118,888 

2,538

2,566 

2013 figures restated 
1 The number of employees on either permanent or temporary contracts is stated in full-time equivalents, with part-time employees included on a 

pro-rated basis in line with their contractual working hours. As of 2014, interns are no longer accounted for in the figures. 

The breakdown by subgroup was as follows in 2014: 

Employees by Segment 2014

[Graphic 3.7.2]

14,100 (14,200)

MaterialScience

23,100 (22,200)

CropScience

21,000 (20,300)
Reconciliation 

118,900

(112,400)

60,700 (55,700)

HealthCare

Pharmaceuticals 39,100 (37,800)

Consumer Health 21,600 (17,900)

2013 ﬁ gures restated and in parentheses; as of 2014 interns are no longer accounted for in the data; 
values rounded to the nearest hundred

Of the total Group workforce, 113,700 employees had permanent contracts while 5,200 had temporary 
contracts. 

 online annex: 3-7-2   

Employees1 by Employment Status, Region and Gender 2014 

[Table 3.7.2-1]

Europe 

North America 

Asia / Pacific 

Latin America / Africa / Middle 
East 

Total 

Permanent employees 

Temporary employees 

Women 

19,600 

6,300 

10,600 

5,900 

42,400 

Men 

Total 

Women 

33,100

9,700

18,500

10,000

71,300

52,700

16,000

29,100

15,900

113,700

1,100

100

300

400

1,900

Men 

1,400

200

1,100

600

3,300

Total 

2,500 

300 

1,400 

1,000 

5,200 

1 The number of employees on either permanent or temporary contracts is stated in full-time equivalents (FTE) and rounded to the nearest 

hundred. Part-time employees are included on a pro-rated basis in line with their contractual working hours. 

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90 

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7. Employees 

Bayer Annual Report 2014

In 2014 we were again successful in retaining staff in the company for long periods. On the reporting 
date, our employees had worked for the company for an average of 12 years, the same as in the previ-
ous year. 

Group-wide, the fluctuation rate was around 11% in 2014 and thus down 3 percentage points on the 
year. The proportion of employee-driven terminations (voluntary fluctuation) in 2014 was around 5%. 

Employee Fluctuation1 

Women 

Men 

Total 

Voluntary fluctuation 

2013 

6.5%

4.8%

5.5%

2014 

5.3% 

4.6% 

4.8% 

2013 

15.4% 

13.1% 

14.0% 

[Table 3.7.3]

Total2 

2014 

11.6%

11.3%

11.4%

1 The fluctuation rate is calculated using the ratio of the headcount to the number of employees stated in full-time equivalents.  
2 includes all employer- and employee-driven terminations, retirements and deaths 

 online annex: 3-7-3 

The fluctuation rate varies between different regions and age groups. 

Employee Fluctuation1 by Regions and Gender 

 [Table 3.7.3-1]

Europe 

North America 

Asia / Pacific 

Latin America / 
Africa / Middle East 

Total 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

% 

10.7 

9.1 

9.7 

% 

8.2

23.6

8.1

4.6

4.1

18.5

6.8

32.1

6.4

3.2

2.7

15.0

7.4

% 

20.0

18.4

19.0

% 

% 

% 

14.8

31.0

14.3

12.1

11.7

19.8

15.8

40.0

14.1

13.1

10.8

24.6

15.4

21.8

16.7

18.5

15.2

17.7

15.4

9.1

14.6

85.0

16.1

21.4

15.4

12.3

10.2

54.5

15.8

% 

16.7

15.2

15.8

i% 

13.6 

23.6 

12.7 

8.7 

6.3 

39.7 

13.0 

27.4 

11.5 

8.8 

7.6 

22.2 

13.2 

 % 

15.4 

13.1 

14.0 

% 

11.6

21.5

12.0

7.0

6.6

22.4

11.3

26.8

11.5

7.3

5.2

20.7

11.4

Women 

< 302 

30 – 39 

40 – 49 

50 – 59 

> 603 

Men 

< 302 

30 – 39 

40 – 49 

50 – 59 

> 603 

Total 

1 The fluctuation rate is calculated using the ratio of the headcount to the number of employees stated in full-time equivalents.  

The data include all employer- and employee-driven terminations, retirements and deaths. 

2 The comparatively high proportion in the < 30 age group is due to the inclusion of employees on temporary contracts  

(working for 2 – 6 months of the year) and other short-term employees. It does not include apprentices. 

3 The fluctuation rates for the age group > 60  are mainly due to retirements. 

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Bayer Annual Report 2014 

Combined Management Report

7. Employees

91 

In Germany, Bayer also uses temporary personnel from staffing agencies on a small scale, based on 
stringent rules that are rooted in the life values. 

 online annex: 3-7-4 

Temporary personnel from staffing agencies are only used where this is unavoidable as a result of 
short-term personnel requirements, fluctuations in order levels, temporary projects or long-term ill-
ness. The proportion of temporary staff employed in Germany is around 1.2% of the total workforce.  

UNIFORM GROUP-WIDE PERFORMANCE MANAGEMENT  
In 2014 we started to introduce “Bayer Competencies” throughout the Group. The aim is to enhance 
development opportunities for employees and at the same time provide guidance on career paths. There 
are 16 clearly defined core and leadership competencies, which have been introduced as a reference 
base for personnel management in all areas. They are intended to ensure that in the future managers 
and employees use uniform terminology and criteria to assess professional activities in all situations, 
ranging from recruitment interviews to the Development Dialogue. The Bayer Competencies help put 
the life values into practice and ensure fair and transparent discussion. 

As part of Bayer’s global performance management system, employees agree individual objectives with 
their supervisor. These are based on corporate goals. At the end of the year, attainment of these objec-
tives is evaluated by each supervisor and discussed individually with employees. The results are docu-
mented in the employee portal so they are transparent to each employee. In 2014, this system covered 
more than 83,000 employees, i.e. about two-thirds of our total workforce. Of the participants, 41% were 
female and 59% male. The system is mandatory for all managerial employees. This ensures that they 
receive feedback on how well they have applied our corporate values in the fulfillment of their individual 
objectives. Observing the life values is as important as meeting business targets and therefore affects 
the level of their variable compensation.  

In addition, more than 26,500 Development Dialogues were held with employees in 2014 as part of the 
performance management system. They are an opportunity for employees to discuss their personal 
strengths and development needs, career expectations and professional aspirations. We aim to step up 
the Group-wide rollout of the Development Dialogue and give it a firm place in our global leadership 
culture. 

EMPLOYEE COMMUNICATION 
Our Group-wide Employee Survey is an important element in our intensive dialogue with our employ-
ees and a key feedback tool for the entire Group. It is conducted every two years and gives us compe-
tent feedback from our employees on our strategy, culture and working conditions. In 2014, a record 
79% of employees took part in the third Group-wide Employee Survey. Compared with the previous 
survey in 2012, the findings show an improvement in all areas covered. Particularly high scores were 
once again registered for employee engagement, with an overall result of 87% (+2%). This shows we 
are meeting our goal of a continuous improvement in employee satisfaction. The survey revealed im-
provements but also showed that the willingness to embrace new ideas needs further encouragement. 
For example, there is a need to improve the basis for open exchange of ideas with direct colleagues. In 
addition, Bayer would like to strengthen communication between senior management and employees.  

Group target: 
improvement in 
employee engagement 
(established using a 
Group-wide employee 
survey conducted 
every two years)  

  See Chapter 1.3  
for Group targets 

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7. Employees 

Bayer Annual Report 2014

 online annex: 3-7-5 

The results of the employee survey are used to bring about further improvements in specific aspects 
of Bayer’s corporate culture. Before the next survey, Bayer intends to step up its already strong inno-
vation culture in all areas of its business. The most recent survey showed that 77% of employees are 
of the opinion that the company is working to steadily improve the service offered to customers. 80% 
of employees feel personally encouraged to suggest innovative solutions to work-related problems.  

Activities to drive forward our innovation culture help to implement the key promises Bayer makes to 
its employees in its new employer branding “Passion to Innovate | Power to Change.” To foster indi-
vidual innovative capability, a workshop format, “Leading Innovation,” has been added to our man-
agement training. A further 138 employees took part in this program in 2014. A total of around 700 
managers from the Group Leadership Circle and selected managerial staff have therefore been 
trained in methods and strategies for effective innovation management since 2012. 

Dialogue with employees includes informing staff promptly and extensively about upcoming changes, in 
compliance with the applicable national and international regulations. 

 online annex: 3-7-6 

The human resources and communications departments work together closely to ensure timely 
communication of far-reaching changes through a wide range of carefully coordinated media. In 
Germany we combine providing timely information to the employee representatives in the Economics 
Committee of the company concerned with coordinating and jointly deciding on the proposed com-
munication measures. 

We actively involve our employees in dialogue through a range of offerings and specifically encourage 
open discussion. Particular attention is paid to explaining strategic issues, business performance, re-
search, innovation and sustainability.  

We regard providing regular, up-to-date information for our employees and involving them through 
active dialogue as an integral part of modern human resources and talent management based on com-
petitive structures and processes. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
Bayer Annual Report 2014 

 online annex: 3-7-7 

Examples of Employee Dialogue 2014 

Active employee dialogue at all levels 

Combined Management Report

7. Employees

93 

[Table 3.7.3-2]

Extensive, ongoing dialogue offerings on our strategic realignment (focus on the Life Science businesses): CEO letter to all employees, intranet 
articles and flyers, FAQs, telephone hotline, dialogue opportunities via the intranet, employee assemblies with the Board of Management and 
video broadcast on the intranet, follow-up meetings in the subgroups 

Town hall meetings: quarterly with CEO Dr. Marijn Dekkers, broadcast to all Bayer sites worldwide; meetings at the subgroups and service 
companies  

Global management conferences with workshops, at least once a year 

Forums for the exchange of information about changes in the company 

Regular information events for managerial staff at Bayer AG and all subgroups and service companies  

Regular employee assemblies, at least once a year at German sites 

European Forum: discussion between the Board of Management and employee representatives from all European countries where Bayer has 
sites; at least once a year 

Examples of issue-specific dialogues and events for different employee groups 

W11 dialogues: national and international stakeholders in discourse with Bayer’s top management 

Expert Club Meeting: network of scientific experts that provides a platform for Bayer scientists working in R&D units to discuss innovation 

Process and Plant Safety Symposium with Bayer experts from around the world and international experts 

Annual global Safety Day with safety-related offerings 

Strategic debates for managerial staff on the subject “Leading across Cultures & Genders”: workshops on the strategic significance of 
nationality and gender balance in management teams 

Regular events organized by Group HR, such as intranet webcasts in which employees’ questions are answered live, and the Meet HR series of 
face-to-face discussions  

Better Life Day: employees, their families, neighbors and friends are invited to learn more about Bayer at an open day 

Global employee events on specific issues at all subgroups and service companies   

Media for employees 

Bayer Group publications: employee magazines, intranet, various newsletters and occasion-related mailings, brochures, presentations, social 
media; internal websites on “critical issues” and “Better Life.” Special media published by the subgroups and service companies, e.g. employee 
magazines, intranet, newsletters and occasion-related mailings, social media 

ADVANCING KNOWLEDGE AND LEADERSHIP SKILLS 
Fostering employees’ individual abilities, talents and strengths is another key factor for Bayer’s future 
success. Sustained success is only possible if we create working conditions that allow all employees to 
utilize their talents optimally and therefore contribute to innovative solutions. We therefore actively 
support lifelong learning as part of our philosophy of people development and managing demographic 
change. Our aim is to empower all employees to broaden their knowledge and skills and keep up with 
the latest changes throughout their working lives. 

 online annex: 3-7-8 

We have employee training programs for both managers and non-managerial employees in all areas 
of the company. The next table contains examples of some of these programs, together with their 
aims and attendance rates. 

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94 

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7. Employees 

Bayer Annual Report 2014

Examples of Continuing Education in 2014  

[Table 3.7.3-3]

Training courses 

Key aspects / goals 

Attendances in 2014  

Global Bayer Academy 

Leadership training, general 
management training 

Systematic management development program based on the LIFE values to 
facilitate a uniform understanding of leadership worldwide  

9,536 

Bayer Finance Academy 

Bayer Human Resources 
Academy 

Modular program for systematic introductory training and continuous 
professional development for employees in finance, accounting, auditing, 
controlling and tax 

More than 1,400 

Various training formats for HR departments to enhance their 
competencies as advisors and partners for the various business units 

2,472  

Bayer Operational Excellence 
Academy 

Experience from the established Lean and Six Sigma concepts is used to 
simplify working processes. 

Bayer Procurement Academy 

Training in procurement-related topics, specifically for procurement staff 

136 employees 

Open offering of self-taught 
and coaching programs for 
all procurement staff 

Commercial Excellence programs 
at the subgroups 

Practical programs to provide market-related background knowledge and 
improve customer orientation 

More than 3,000  

Enhancing Performance & 
Feedback Culture 

Obligatory program for employees with personnel responsibilities with the 
goal of enhancing the performance and feedback culture 

1,014 employees  

Global knowledge and skills training in specific areas 

Introduction to the company 

Communication, working 
methods and project management 

Business administration and law 

Languages and intercultural skills 

Information technology and SAP 

Marketing, sales and customer 
focus 

Research, production and 
technology 

Group focus 

Innovation 

Cultural and gender balance in 
management 

Corporate compliance, 
anticorruption 

Human rights 

Supplier management/Supplier 
Code of Conduct 

Programs at the subgroups 

A wide range of training courses are offered on these subject areas for 
various employee groups from all parts of the company. 

83,087 employees with 
316,467 attendances on 
436,708 training days 

Workshops for the Group Leadership Circle and selected employees to 
improve our culture of innovation and foster individual innovative capability 

138 

Topics: economic benefit of greater diversity, differences between cultures 
and genders, examples of best practice in the Group; these are used to 
develop action plans for the individual areas of responsibility. 

625 

See Chapter 18.3 “Corporate 
Compliance” 

See Chapter 7 “Employees” 

See Chapter 8 “Procurement 
and Production” 

Occupational safety (PEGASUS) 

Web-based training courses dealing with 54 issues related to occupational 
health and safety 

31,100 

“Fit in Production” (FIP method) 
(MaterialScience) 

“BayLearn” (HealthCare) 

Qualification program for MaterialScience production employees aimed at 
achieving a comparable level of qualification at the production sites. This 
program has been running since 2010 and has been implemented at 18 
sites to date. Global curricula have been developed for 24 of the most 
important product lines, with 10 of these being compiled in 2014. 

400 trainers and FIP coaches 
have qualified to date, with 
35 of these qualifying in 
2014 

The global community BayLearn covers 87 countries. Its primary focus is to 
support operational and technical competency enhancement and to fulfill 
the regulatory compliance requirement (GxP)1 for documented evidence 
that all staff are appropriately qualified through education, experience or 
training to fulfill their job-related activities and tasks. 

More than 64,000 hours of 
web-based training and over 
60,000 hours of on-site 
training 

1 GxP : official good practice guidelines for the development and production of pharmaceuticals 

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Combined Management Report

7. Employees

95 

At the heart of our ongoing training concept is the Group-wide Bayer Academy, which bundles our 
extensive continuing education opportunities. Alongside systematic development of managerial em-
ployees, it offers continuous professional training through various functional academies. In 2014, the 
Bayer Academy was honored with the renowned Brandon Hall Group Excellence Award in bronze in the 
“Best Leadership Development Program” category.  

15,269 managers from various management levels have received training through the various programs 
offered by the Bayer Academy for managers since 2013, including 9,536 in 2014. 

Harmonization of our employee training concept has also improved reporting on participation rates. Our 
global training reporting system currently compiles data on the main training activities in 73 countries. 
Employees received an average of 22.1 hours training in these countries. 

Training Activities in Hours in 2014 by Employee Group and Gender1 

[Table 3.7.4]

Employee group 

Senior management 

Junior management 

Specialists 

Overall average 

Women 

Men 

Total 

45.3

26.9

17.3

20.4

32.5

22.6

13.6

16.7

34.2 

24.1 

15.0 

18.0 

1 Selected training activities in the 14 largest countries where distinguishable by category and gender in the system. The gender-specific averages 

do not include the United States or Japan as statutory regulations preclude differentiation by gender in these countries. 

Well-trained employees who keep up with the latest developments expect to be offered new perspec-
tives. Thanks to its wide-ranging business activities, Bayer can offer them development opportunities 
within the Group. Vacancies in the Bayer Group, from non-managerial right up to senior management 
level, are advertised via a globally accessible platform. In 2014 we posted around 11,900 vacancies in 
62 countries on this platform. 

DIVERSITY AND INTERNATIONALITY 
A diverse employee structure is vital for our company‘s future competitiveness. This is particularly true 
for our management throughout the Group. Diversity improves our understanding of changing markets 
and consumer groups, gives us access to a broader pool of talented employees, and enables us to bene-
fit from the enhanced innovative and problem-solving abilities that are demonstrably associated with a 
high cultural diversity within the company.  

A better gender and cultural balance at the management level is important for our success as a compa-
ny. Our activities in this area are bundled in “Leading Across Cultures and Genders.” At the heart of this 
program are special training sessions for managers. These provide an opportunity for them to consider 
the economic benefits of greater diversity, cultural and gender-specific differences and positive exam-
ples from within the Group in order to develop action plans for their own areas of responsibility.  

Furthermore, since November 2014 Bayer has been a member of the Gender Parity Council of the 
World Economic Forum in Davos. 

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Group target 2015: 
increase in the 
proportion of senior 
managers from outside 
the European Union, 
the United States or 
Canada to 25% 

Overall, the Bayer Group employs people from 150 different nations. Of the members of our Group 
Leadership Circle, in which 35 nationalities are currently represented, around 66% come from the 
country in which they are employed. The Group Leadership Circle comprises managers who perform 
senior functions at Bayer AG and in the subgroups and service companies. Five years ago, 23 nationali-
ties were represented in the Group Leadership Circle. At the end of 2013, 82% of senior managers in 
our five top contract levels came from Western Europe, the United States and Canada and 18% came 
from other countries. By the end of 2014, the proportion of employees in the latter group had increased 
by two percentage points.  

Group target 2015: 
increase in the 
proportion of women 
in senior management 
to 30% 

  See Chapter 1.3  
for Group targets 

At the end of 2010 we set ourselves the target of shifting the proportion of women to men in senior 
management (the five highest contract levels) from a ratio of 21% to 79% to a ratio of 30% to 70% by 
the end of 2015. At the end of 2014, the ratio was 26% to 74%. Our gender balance has therefore im-
proved by five percentage points in four years.  

In our Group Leadership Circle, the ratio had improved from 93% men and 7% women at the end of 
2010 to 87% men and 13% women by year-end 2014. 

 online annex: 3-7-9 

Bayer Group Workforce Structure1  

 [Table 3.7.4-1]

Senior management 

Junior management 

Skilled employees 

Total 

Apprentices 

Women 

Men 

Total 

2013 

2,200

9,600

29,600

41,400

800

2014 

2,800

11,000

30,600

44,400

800

2013 

6,800

15,400

49,600

71,800

1,800

2014 

7,800 

16,800 

49,900 

74,500 

1,800 

2013 

9,000 

25,000 

79,200 

2014 

10,600

27,800

80,500

113,200 

118,900

2,600 

2,600

1 number of employees converted into full-time equivalents (FTE) and rounded to the nearest hundred 

WORK-LIFE BALANCE 
Our employees’ lifestyles are as diverse as they are. Bayer therefore offers employees in all countries a 
wide range of options to help them balance employment with their personal and family lives. Today’s 
employees and prospective employees attach great importance to flexible working arrangements and to 
support in caring for children and close relatives. Bayer offers a variety of flexible working opportunities 
throughout the world. In many countries, these go well beyond the statutory requirements. In 2014 we 
continued to expand our benefits and services in this area.  

In 2014 the Bayer Group had around 9,500 part-time employees, just under 8% of the total workforce. 

 online annex: 3-7-10 

Percentage of Part-Time Employees by Region and Gender  

[Table 3.7.4-2]

Region 

Asia / Pacific 

Europe 

Latin America / Africa /  
Middle East 

North America 

Total 

Women 

Men 

Total 

2013 

% 

4.7

21.3

0.2

1.9

11.9

2014 

 % 

2.2

23.5

0.1

1.6

12.1

2013 

% 

0.8

7.5

0.0

0.2

3.8

2014 

% 

0.3 

11.2 

0.0 

0.1 

5.3 

2013 

 % 

2.2 

12.8 

0.1 

0.8 

6.8 

2014 

 % 

1.0

15.9

0.1

0.7

7.9

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7. Employees

97 

By the end of 2014, around 81% of employees in Germany who took statutory parental leave or partici-
pated in the company’s more far-reaching “Family & Career” program over the past five years had re-
turned to work. Roughly 60% of the returnees were female and 40% were male. Since national parental 
leave regulations vary widely from country to country, we only compile data for Germany. 

 online annex: 3-7-11 

The next table shows the number of employees who have returned after the standard statutory pa-
rental leave program and the Bayer “Family & Career” model since 2009. It also shows the number of 
employees who terminated their employment contracts at the end of their parental leave. It covers all 
employees in Germany who have taken parental leave since January 1, 2009. 

Employees Returning from Parental Leave using Germany as an Example    

 [Table 3.7.4-3]

Employees who have taken parental leave since 2009  

Returnees by 2014 

Women 

Still on parental leave / have a dormant employment contract 

    Returned 

within 3 months 

3 months to 1 year 

longer than 1 year 

   Terminated 

Men 

Still on parental leave / have a dormant employment contract 

    Returned 

within 3 months 

3 months to 1 year 

longer than 1 year 

   Terminated 

 % 

Absolute 

100.0

81.3

59.9

21.5

71.4

8.3

64.6

27.1

7.1

40.1

3.2

96.1

91.8

7.7

0.5

0.7

2,737 

2,226 

1,640 

352 

1,172 

97 

757 

318 

116 

1,097 

35 

1,054 

968 

81 

5 

8 

A General Works Agreement on caring for close relatives came into effect at Bayer in Germany in April 
2014. The agreement makes it easier for employees to combine working with their role as a carer. 

 online annex: 3-7-12 

Under this agreement, employees can take up to 10 days’ paid leave to provide emergency care for 
family members. For longer periods, they are entitled to work part-time. During this time, their salary 
can be topped up by drawing funds from their long-term account. Alternatively, employees who need 
to care for close relatives full-time can take unpaid leave for up to six months (or up to one year in 
exceptional cases). 

Bayer also extended the range of flexible working arrangements offered to employees in many regions 
such as in Costa Rica, Poland, Slovenia, South Korea and East Africa. In many cases, the offerings go 
well beyond statutory requirements.  

EMPLOYEE COMPENSATION AND BENEFITS 
Bayer’s compensation philosophy is rooted worldwide in the life values. A basic salary reflecting per-
formance and responsibility is combined with elements based on the company’s success, plus extensive 
additional benefits. In this way, we aim to offer our employees working conditions that give them a high 
degree of security and reliability. Raises based on continuous benchmarking are designed to ensure that 
our compensation is always internationally competitive. We also attach great importance to equal pay 
for men and women, providing fair compensation worldwide and informing our employees transparent-
ly about the overall structure of their compensation. 

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Combined Management Report 

7. Employees 

Bayer Annual Report 2014

 online annex: 3-7-13 

At Bayer, individual salaries are based on each employee’s personal and professional abilities and the 
level of responsibility assigned to them. At the managerial level, this is based on uniform evaluation 
of all positions throughout the Group using the internationally recognized Hay method. In areas of 
the Group and jobs that fall within the scope of binding collective bargaining agreements, there are 
no differences in pay based on gender either. This also applies for the compensation of trainees. 

In the Emerging Markets and developing countries, too, our compensation levels are aligned to local 
market conditions. In keeping with our Human Rights Position, our goal is to pay our employees ad-
equate salaries that ensure they and their families have an appropriate standard of living. In all 
Emerging Markets where Bayer has a significant presence, the lowest salary paid by Bayer is at least 
in line with the applicable minimum wage and in most cases higher. 

To provide a transparent overview of their compensation, including all additional benefits provided 
by the company and employer pension and social insurance contributions, more than 30,000 em-
ployees in 12 countries receive an extensive annual Total Reward Statement containing all relevant 
information. This will be rolled out progressively to many countries in the next few years. 

  Consolidated 
Financial 
Statements  
Note 26.6 

Under our Group-wide Short-Term Incentive program alone, variable one-time payments totaling 
around €900 million are earmarked for our employees for 2014. In many countries, employee stock 
programs enable our staff to purchase shares in Bayer at a discount. This offers them a further oppor-
tunity to participate in the company and its business performance. We also offer senior managers 
throughout the Group a uniform stock-based compensation program known as “Aspire” (see Note [26.6] 
to the consolidated financial statements). This is based on ambitious earnings targets and – in the case 
of the Group Leadership Circle members – requires an appropriate personal investment in Bayer stock.  

In 2014 our personnel expenses amounted to €9,845 million (2013: €9,430 million). The change was 
mainly due to an increase in employee numbers, higher employee bonuses and salary adjustments.  

Personnel Expenses and Pension Obligations 

[Table 3.7.5]

Personnel expenses 

of which pension and social security contributions 

Pension obligations1 

2010 

2011 

2012 

2013 

2014 

€ million 

€ million 

€ million 

€ million 

€ million 

8,099

1,623

8,726

1,672

9,194 

1,823 

9,430 

1,845 

9,845

1,847

17,699 

19,310 

22,588  

20,682  

27,771

1 present value of defined-benefit obligations for pensions and other post-employment benefits 

  See Chapter 8 

HUMAN RIGHTS AND SOCIAL RESPONSIBILITY 
Our social responsibility as a company and an employer is based on our corporate values and our unre-
served commitment to supporting and fostering human rights in our sphere of influence. Bayer’s Hu-
man Rights Position is set out in a binding Group-wide directive. Alongside working conditions in the 
Bayer Group, this outlines our expectation that human rights will be respected at all stages in the supply 
chain, as detailed in our Supplier Code of Conduct. In addition, our mission statement, life values and 
Corporate Compliance Policy commit all employees around the world to fair and lawful conduct toward 
staff, colleagues, business partners and customers. We are a founding member of the un Global Com-
pact and respect the United Nations’ Declaration of Human Rights and a range of globally recognized 
declarations applicable for multinational corporations. 

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Bayer Annual Report 2014 

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7. Employees

99 

 online annex: 3-7-14 

These include, in particular, the oecd Guidelines for Multinational Enterprises, the Tripartite Declara-
tion of Principles concerning Multinational Enterprises and Social Policy, and the core labor stand-
ards of the International Labour Organization (ilo). 

We also observe the u.n. Guiding Principles on Business and Human Rights, which were adopted 
in 2011. We play an active role in their implementation, one example being the consultation process 
initiated at the end of 2014 by the German government to define a national action plan. 

To enhance our employees’ awareness of the importance of human rights in their day-to-day activities, 
we organized a variety of training seminars in 2014 on the main aspects of our Human Rights Position. 
Courses totaling 240,000 hours in duration were offered and were attended by approximately 53% of 
our workforce.  

The compliance organizations at the Group and country levels monitor compliance with the relevant 
directives. If there are signs of violation, employees can contact their Compliance Officer at any time, 
anonymously if required. For further details see Chapter 18.3 “Compliance.” 

  See Chapter 18.3 

At Bayer, social responsibility includes ensuring safe working conditions and thus an environment 
where our employees can work and undertake international business travel without fear. We support 
our employees by providing training to prepare them for business trips, including training in the correct 
conduct in emergencies. 

Our social responsibility is also reflected in our approach to necessary changes and restructuring 
measures. In Germany, which remains the company’s largest operational base with 35,800 employees, 
business-related dismissals are excluded through the end of 2020 for a large proportion of employees 
under an agreement with the employee representatives.  

The reduction of around 700 positions at MaterialScience worldwide over a period of four years, which 
was announced in September 2013, will also be undertaken in a socially compatible manner wherever 
possible, such as by utilizing natural fluctuation and avoiding business-related dismissals. Approximate-
ly 350 of these positions were shed in 2014. 

In 2014 the working conditions for around 52% of our employees worldwide were governed by collec-
tive or company agreements. The contractually agreed working hours of our employees do not exceed 
48 hours a week in any country. At various country companies, the interests of the workforce are repre-
sented by elected employee representatives who have a right to be consulted on certain personnel-
related decisions.  

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100 

Combined Management Report 

7. Employees 

Bayer Annual Report 2014

Percentage of Collective Agreements by Region  

[Table 3.7.6]

Percentage of employees 
covered by collective 
agreements, especially on 
compensation and working 
conditions1 

Percentage of full-time 
employees with contractually 
agreed 48-hour work weeks 

2013 

% 

18

88

45

5

54

2014 

% 

14 

87 

45 

5 

52 

2013 

% 

100 

100 

100 

100 

100 

2014 

% 

100

100

100

100

100

Region / Area 

Asia / Pacific2 

Europe 

Latin America / Africa / Middle East 

North America 

Total2 

1 collective or company agreements 
2 2013 figures restated 

Our understanding of our role as a socially responsible company includes a commitment to helping 
disadvantaged people. Some 2,500 people with disabilities are employed in 27 countries. That is around 
2% of our total workforce. 35% are female and 65% male. Most of them work for our companies in 
Germany, where they made up 4.7% of the workforce in 2014.  

Our sustainable human resources policy also includes ensuring a high level of social protection for our 
employees. Alongside competitive compensation, we offer our employees a wide range of additional 
benefits, for example almost all employees worldwide have either statutory health insurance or can 
obtain health insurance through the company. In 2014, we once again expanded or improved the quality 
of the health benefits provided for employees in many countries. 77% of employees have access to a 
company pension plan. 

Health Insurance and Pension Plans  

[Table 3.7.7]

Region 

Asia / Pacific 

Europe 

Latin America / Africa/Middle East 

North America 

Total 

1 state or employer / employee-funded 
2 programs to supplement statutory pension plans  

Health insurance1 

Pension plans² 

2013 

 %

2014 

 % 

2013 

% 

2014 

%

92

99

94

89

95

95 

99 

94 

92 

96 

39 

87 

55 

97 

72 

57

86

59

99

77

To supplement health insurance, Bayer actively encourages awareness of healthy lifestyles, especially in 
view of the challenges facing us as a result of demographic change and the raising of the retirement age 
in many countries.  

Bayer has therefore introduced a wide range of workplace health management programs at all levels, 
which are being expanded in response to employee surveys. This is designed to provide all employees 
with access to adequate, affordable and targeted health offerings such as sports programs, regular 
medical check-ups, help in overcoming illness and on-site medical care. The type and scope of the 
health promotion programs offered by Bayer Group companies worldwide varies depending on national 
health systems and their accessibility. In many countries, preventive health care measures are a discre-
tionary benefit provided by the company, while in others they are required by law. 

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8. Procurement and Production

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Group-wide initiatives to foster employees’ health and maintain their employability in view of the rise in 
the retirement age include the 2010 General Works Agreement on lifetime working and demographic 
change in Germany. 

 online annex: 3-7-15 

This innovative agreement contains measures to reduce the workload of older shift workers and to 
ease the return to work after long-term illness as well as an extensive health screening program for 
all employees. In 2014 626 employees took part in the program to reduce the workload of older em-
ployees. This is around 98% of those who are eligible. 

8. Procurement and Production  

Our procurement function ensures the timely, global supply of goods and services at suitable market 
conditions, in the required quality and in accordance with the Group’s ethical, ecological and social 
standards. The principles of our procurement policy are defined in a directive that is binding for all 
employees throughout the Group. 

We exert considerable influence on society and the environment in many regions through our procure-
ment volume. In 2014, goods and services were procured from some 112,000 (2013: some 107,000) 
suppliers in 147 (2013: 138) countries for approximately €20.3 billion (2013: €18.7 billion) and recorded 
in the Group-wide reporting system.  

The procurement volume in Germany, the United States and Japan in 2014 accounted for nearly 66% of 
the expenditures in the countries of the oecd (Organisation for Economic Cooperation and Develop-
ment), or about 52% of the Bayer Group’s total procurement spend. Brazil, India and China together 
accounted for about 70% of the expenditures in the non-oecd countries or about 14% of the total 
spend. 

 online annex: 3-8-1 

Procurement Spend and Number of Suppliers in OECD and Non-OECD Countries in 2014 

[Table 3.8.0-1]

OECD countries  

Germany  

United States 

Japan 

Other  

Total  

Non-OECD countries  

China 

Brazil 

India  

Other 

Total  

Spend 

Suppliers 

€ billion  

% 

Number 

 % 

5.2

4.3

1.1

5.6

16.2

1.9

0.5

0.5

1.2

4.1

25.4

21.3

5.6

27.4

79.7

9.4

2.5

2.4

6.0

20.3

21,687

10,451

1,881

44,116

78,135

3,899

2,481

3,781

23,463

33,624

19.4 

9.3 

1.7 

39.5 

69.9 

3.5 

2.2 

3.4 

21.0 

30.1 

Direct and production-related procurement at Bayer is organized decentrally in the subgroups. Indirect 
and non-production-related goods and services are sourced in each case by the organizational unit that 
is their major user within the Bayer Group. Our Group-wide procurement strategy and application of the 
major-user principle enable us to realize synergy potentials in the form of standardization, volume pool-
ing and streamlining of negotiations. The activities of the various procurement organizations are coor-
dinated through the Group Procurement Committee, which reports to the Chief Financial Officer.  

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8. Procurement and Production 

Bayer Annual Report 2014

Important raw materials are procured on the basis of long-term supply agreements and an active sup-
plier management to minimize procurement risks such as supply shortages or substantial price fluctua-
tions. Regular sustainability and quality audits of our suppliers ensure compliance with internal and 
external standards. This is the case, for instance, when raw materials are procured, for which sustaina-
bility aspects are becoming increasingly important due to legal standards – an example being the pur-
chase of minerals from conflict areas. 

 online annex: 3-8-2 

International regulations such as the Dodd-Frank Act in the United States increasingly obligate com-
panies to disclose the origin of certain raw materials used in their products. “Conflict minerals” from 
the Congo region are one example. Bayer investigated whether minerals from this region – such as 
tin, tungsten and tantalum ores or gold – could have found their way into our products through the 
supply chain. We identified about 100 Bayer suppliers who could potentially be impacted by this is-
sue. One-third of these suppliers were questioned about the use of conflict minerals in 2014, includ-
ing all identified suppliers of CropScience and MaterialScience. HealthCare intends to have finished 
questioning all potentially impacted suppliers by the end of 2015. Suppliers who have already been 
questioned provided written confirmation that they do not procure potential conflict minerals from 
the Congo region. 

SUSTAINABILITY IN SUPPLIER MANAGEMENT 
Bayer regards adherence to sustainability standards within its supply chain as a crucial factor in the 
value chain. By acting responsibly in collaboration with our suppliers, we aim to minimize risks and 
create stable, long-term business relationships with our partners. This is also an important strategic 
lever for Bayer in safeguarding both its global competitiveness and the supply of materials and services. 
For this reason, we apply not just economic standards, but also environmental, social and corporate 
governance (esg) standards in choosing new suppliers or continuing our relationships with existing 
ones. These standards are defined in Bayer’s Supplier Code of Conduct, which is based on the princi-
ples of the u.n. Global Compact and our Human Rights Position. The Code forms the general basis for 
our collaboration. It is legally binding and integrated into electronic ordering systems and contracts 
throughout the Group.  

Group targets for 
supplier management 

  See Chapter 1.3  
for Group targets 

In order to continuously drive and measure sustainability in supplier management, we have set ambi-
tious targets. By 2017, we plan to evaluate all our strategic suppliers with respect to sustainability-
relevant aspects. By 2020, we also aim to evaluate all those suppliers with significant Bayer spend that 
are regarded as potential high-risk suppliers. Another objective is the development and establishment of 
a new sustainability standard for our supply base by 2020. This is to be driven forward in tandem with 
relevant industry initiatives. So far we have evaluated the sustainability performance of 66% of the 
Bayer Group’s strategic suppliers and 61% of potential high-risk suppliers with significant spend. 

For the development and introduction of new sustainability standards for our suppliers, we collaborate 
with the Pharmaceutical Supply Chain Initiative (psci) as well as with Together for Sustainability (TfS), 
an initiative co-founded by Bayer that is being established as an association under Belgian law. Bayer is 
engaged in these initiatives to successfully address the diverse challenges of a sustainable supply chain 
and to leverage synergies together with other companies. 

 online annex: 3-8-3 

In both initiatives, we focus on the standardization of sustainability aspects in the relevant industries 
in order to establish corresponding social, ethical and environmental practices among our suppliers. 
We have already developed uniform criteria that the member companies take into account in sus-
tainability assessments and audits. The exchange of supplier assessments and audits among member 
companies enables access to additional sustainability assessments of suppliers who also work for 
Bayer. In both initiatives, assessments and audits are exchanged through it platforms.  

The TfS initiative consists of the six founding members as well as six new members. psci had 
18 member companies at the end of 2014. 

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8. Procurement and Production

103

Evaluating the sustainability performance of our suppliers  
The sustainability performance of our suppliers is monitored through online supplier assessments and  
on-site audits. 

The assessments are carried out on our behalf by a leading web-based service platform for sustainabil-
ity performance monitoring (EcoVadis). They are based on a web-supported, modular questionnaire 
completed by the supplier, coupled with accompanying verification documents and 360° screening. 
Suppliers are selected for these assessments based on a combination of country and material risks as 
well as strategic importance in accordance with our Group targets.  

We conduct the on-site audits with external, independent auditors. Here, too, we apply the standard of 
the respective industry initiatives in which we participate in order to benefit from synergies. In addition, 
internal auditors perform inspections focusing on health, safety, environmental protection and sustainability.  

 online annex: 3-8-4  

Supplier Assessments and Audits for 2014 

 [Table 3.8.0-2]

Sustainability assessments1 via the EcoVadis platform 

Sustainability audits² by external auditors 

Follow-up sustainability audits by external auditors 

HSE³ / sustainability audits by Bayer auditors 

692  

44 

12 

94 

1 supplier assessments initiated by Bayer as well as assessments of suppliers working for Bayer exchanged as part of the TfS initiative 
2 supplier audits initiated by Bayer as well as audits of suppliers working for Bayer exchanged as part of the TfS and PSCI initiatives 
3 Health, Safety, Environment  

Within the TfS initiative, a total of 2,605 suppliers were assessed using EcoVadis and 93 audits con-
ducted in the course of 2014. The TfS audit program was executed in China and in additional coun-
tries (such as India and Brazil). In psci, the member companies carried out seven joint audits in four 
countries (including India, Saudi Arabia and the United States) in 2014. 

All assessment and audit results are thoroughly analyzed and documented. Wherever the results are 
unsatisfactory, we develop improvement measures together with our suppliers to ensure that they ob-
serve social, ethical and environmental standards in the future. During the reporting period 5% of the 
assessments had a critical result. In each of these cases, we initiated measures ranging from action 
plans through the improvement of defined weaknesses to the reduction of the procurement volume. In 
2014, Bayer was not prompted to end a supplier relationship due solely to sustainability performance. 

Interaction and communication on the subject of sustainability  
Procurement of products and services in differentiated markets and locations represents a particular 
challenge for our procurement organization. Dialogue with our suppliers is essential to ensure smooth 
production routines and to build up reliable relations. In particular, our goal is to make the principles of 
our procurement policy and our sustainability requirements clear to our suppliers. In return, we would 
like to know more about the suppliers’ situation in order to be able to identify and remove obstacles in 
our collaboration at an early stage. Our procurement staff plays an important intermediary role here. We 
therefore offer both our procurement colleagues and suppliers a wide range of training and exchange 
opportunities. 

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8. Procurement and Production 

Bayer Annual Report 2014

 online annex: 3-8-5 

We offer training activities to help procurement staff worldwide create awareness of sustainability 
and possible risks in dialogue with our suppliers. Training for employees in procurement in the 
Bayer Group includes attending courses on sustainability in supplier management. In 2014 we con-
tinued the Group-wide training program on our sustainability assessment process via our collabora-
tion platform EcoVadis. A further 337 employees received comprehensive training. In addition, the 
subgroups organized specific training events in 2014, such as courses for selected procurement em-
ployees on the issue of sustainability audits or sustainability roadshows for different procurement 
categories and local procurement organizations at HealthCare.  

In 2014 we organized the second Group-wide Bayer Supplier Day in Leverkusen with 300 partici-
pants, including representatives of 90 strategically important suppliers from all over the world. Sup-
pliers were honored at the event for successful partnerships in areas such as sustainability and con-
tractor safety. Our subgroups and country companies also organized local Supplier Days such as the 
events held by HealthCare in Turkey or by our Indian country company in connection with the annual 
BayBuy Award.  

The continuous development of suppliers in terms of sustainability is also a key objective of the in-
dustry initiatives TfS and psci. A joint supplier day of the TfS member companies was held for the 
first time in Shanghai, China, in 2014. The TfS initiative also offers online sustainability training 
courses on its website. psci additionally provides comprehensive information at its website, as well 
as training and information events. Webinars were offered in 2014 on the topic of sustainability in 
the supply chain, and a capability building conference was organized in Suzhou, China, for Chinese 
suppliers of active ingredients. 

Tackling child labor in the supply chain 
For Bayer, responsible corporate governance includes recognizing and respecting human rights both 
internally and within our external sphere of influence. This includes the supply chain. Our Human 
Rights Position is unequivocal and includes a strict ban on child labor. We obligate our suppliers along 
our supply chain to refrain from employing children. Particularly when working with suppliers in devel-
oping countries or emerging markets, we take care that they do not engage in child labor – which is still 
widespread in these regions.  

For many years, CropScience has taken systematic action to prevent child labor in the seed supply chain 
in India through its Child Care Program. For example, teams from Bayer visit the fields used in cotton, 
rice and vegetable seed production throughout  the season in order to raise awareness of the issue and 
the Bayer requirements and to determine the age of the workers there. Thanks to this stringent monitor-
ing system, there are now only very few instances of child labor among our contractors, and we are 
closely tracking these cases. The system has now also been introduced in those countries in Asia in 
which CropScience seed is produced, such as Bangladesh and the Philippines (both rice seed). 

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8. Procurement and Production

105

 online annex: 3-8-6 

The tables show how cotton and vegetable seed production has developed based on the results of 
field monitoring. 

Field Monitoring Results: Production of Cotton Seed in India   

Standing acres2 

Monitored acres3 

Labor details 

Kharif
2010 /
2011 

2,152

Rabi
2010 /
2011 

335

Kharif
2011 /
2012 

2,771

Rabi
2011 /
2012 

542

Kharif
2012 /
2013 

3,857

Rabi 
2012 / 
2013 

389 

Kharif 
2013 / 
2014 

3,609 

13,856

2,276

17,427

3,564

24,161

2,433 

22,579 

 [Table 3.8.0-3]

Growing season1 

Rabi
2013 /
2014 

28

187

Kharif4
2014 /
2015 

4,022

24,053

    Total laborers monitored 

43,150

7,198

52,979

12,128

82,192

9,253 

66,061 

811

70,561

    Proven child labor cases 

14

0

18

0

21

0 

18 

0

10

    Adult laborers 

Child labor incidence  
per monitored acre 

Child laborers as a percentage  
of total laborers  

43,136

7,198

52,961

12,128

82,171

9,253 

66,043 

811

70,551

0.0010

0

0.0010

0

0.0009

0 

0.0008 

0

0.0004

0.032%

0% 0.034%

0% 0.026%

0% 

0.027% 

0% 0.014%

1 Kharif growing cycle: cultivation during rainy season (summer) and harvest in fall/Rabi growing cycle: cultivation in fall and harvest in winter 
2 1 acre = 4,046.86 m² 
3 cumulated depiction of the area under cultivation monitored on the basis of control inspections performed (at least 6 per season) 
4 as of Dec. 31, 2014 

Field Monitoring Results: Production of Vegetable Seed in India  

Standing acres2 

Monitored acres3 

Labor details 

Summer 
2012 

110 

467 

Rainy
2012 

2,164

7,590

Post
rainy
2012/2013 

649

2,849

  Total laborers monitored 

1,625 

58,987

26,337

  Proven child labor cases 

0 

11

9

  Adult laborers 

1,625 

58,976

26,328

Summer
2013 

22

90

302

0

302

Rainy
2013 

1,814

6,398

Post 
rainy 
2013/2014 

634 

2,270 

40,724

23,272 

6

3 

40,718

23,269 

Child labor incidence per 
monitored acre 

Child laborers as a 
percentage of total 
laborers 

0 

0.0014

0.0032

0

0.0009

0.0013 

0% 

0.019%

0.034%

0%

0.015%

0.013% 

[Table 3.8.0-4]

Growing season1 

Summer4
2014 

–

–

–

–

–

–

–

Rainy5
2014 

2,482

8,215

41,118

1

41,117

0.0001

0.002%

For vegetables, standing and monitored acres refer to a combination of various different seed types. Each type of seed has its own monitoring intensity.  
The figures given vary according to seed combination for each season. 
1 Summer: Jan. – Apr.; rainy season: June – Oct.; post rainy: Oct. – Feb. 
2 1 acre = 4,046.86 m² 
3 cumulated depiction of the area under cultivation monitored on the basis of control inspections performed (at least 3 per season) 
4 no sowing in summer (= sowing) season 2014 due to remaining seed inventory from previous season 
5 as of Dec. 31, 2014 

Suppliers who show that they are strictly observing our ban on child labor receive a bonus from 
Bayer along with training in agricultural efficiency. Graduated sanctions are applied for non-
compliance. These range from written warnings to termination of the contract in the case of repeated 
non-compliance.  

Once a year, the audit firm Ernst & Young (India) conducts unannounced inspections of randomly se-
lected farms. The two indicators highlighted in the table are used to measure the success of our ex-
tensive package of measures.  

We regard school attendance not only as essential for children’s development but also as a tool to 
drive the elimination of child labor. We therefore also visit the parents of children we find working in 
the fields to convince them of the importance of school education. As an important part of the child 

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protection program, our “Learning for Life” initiative consists of projects aimed at ensuring that chil-
dren and young people get a proper education and covers everything from reintegrating children into 
the regular school system to vocational training measures. Between 2005 and the end of 2014, the 
“Learning for Life” educational programs benefited more than 5,800 children and young people.  

The CropScience Child Care Program has received broad public recognition. It is a multi-disciplinary 
project involving management, specialists from the Child Care Team, and staff from the seed produc-
tion team and Corporate Communications, who play a key role in raising awareness for this issue. 

PROCUREMENT AND PRODUCTION IN THE SUBGROUPS 
Both procurement and production are decentrally organized in the Bayer Group and are aligned to the 
individual requirements of the respective subgroups’ businesses. 

Benefits from the 
production network 

HEALTHCARE 
The Product Supply unit of HealthCare steers the subgroup’s entire supply chain, from raw material 
procurement to manufacturing to product shipment, utilizing a global production network consisting of 
its own sites and those of subcontractors. The manufacturing of pharmaceutical and medical products is 
subject to extraordinarily stringent quality requirements that are based on internationally recognized 
standards. Compliance with these requirements at Bayer is regularly audited by internal experts, regula-
tory authorities and external consultants. 

 online annex: 3-8-bhc-1 

Quality standards are developed according to regulatory requirements, approvals and authorizations, 
relevant standards of non-governmental organizations and industry associations, and requirements 
resulting from customer expectations. These requirements are evaluated by HealthCare and integrat-
ed into an internal quality management (qm) system that is based on international standards of the 
iso (e.g. iso 9001 and iso 13485) and the ich (International Conference on Harmonization of Tech-
nical Requirements for Registration of Pharmaceuticals for Human Use), as well as on rules for 
“good working practice” (GxP) in the development and manufacture of pharmaceuticals (e.g. “Good 
Manufacturing Practices” (gmp), Good Distribution Practices (gdp) and Good Clinical Practices 
(gcp)). With the help of our qm system, we effectively and transparently implement and manage the 
quality processes and responsibilities according to established, documented and binding processes 
and methods. The goal is to ensure the quality of our products throughout their entire life cycle and 
safeguard the value chain over the long term. 

The Pharmaceuticals segment generally procures the starting materials for the active ingredients of its 
prescription pharmaceuticals from external suppliers.  

Our active ingredients are manufactured primarily at the sites in Wuppertal and Bergkamen, Germany, 
and Berkeley, California, United States. These substances are processed into finished products and 
packaged worldwide. Our medicines come in a wide range of delivery forms including solids such as 
tablets, coated tablets or powders; semi-solids such as ointments or creams; and liquid pharmaceuticals 
such as those used in injections or infusions. Our hormonal contraceptives are supplied as sugar- or 
film-coated tablets or used in intrauterine systems (coils), for example. Among the sites where formulat-
ing and packaging take place are Berlin, Leverkusen and Weimar, Germany; Garbagnate, Italy; Beijing, 
China; São Paulo, Brazil; and Turku, Finland. Our hemophilia drug Kogenate™ is manufactured by a 
biotechnological process at Berkeley, California, United States.  

For the Consumer Care Division of the Consumer Health segment, we produce certain active sub-
stances, such as acetylsalicylic acid and clotrimazole, in La Felguera, Spain. The principal raw mater-
ials we purchase from third parties include naproxen, citric acid, ascorbic acid, other vitamins and 
paracetamol. Among the division’s production sites are the facilities in Myerstown, Pennsylvania, United 
States; Cimanggis, Indonesia; Lerma, Mexico; Bitterfeld-Wolfen, Darmstadt and Grenzach-Wyhlen, 
Germany; Madrid, Spain; and Segrate, Italy. Our production network has expanded through the acquisi-
tions of the consumer care business of Merck & Co., Inc. and Dihon Pharmaceutical Group Co. Ltd. 

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The Diabetes Care products (such as blood glucose meters) of our Medical Care Division are mainly 
procured from original equipment manufacturers. We hold strategic reserves of certain materials and 
finished products so that we can supply our customers consistently and reliably. The contrast agents for 
diagnostic imaging procedures are produced mainly in Berlin, Germany. Medical devices such as con-
trast agent injectors and sterile consumable articles are manufactured primarily at the u.s. sites near 
Pittsburgh, Pennsylvania. Most of the materials and components needed to manufacture our medical 
devices are procured from external suppliers.  

The Animal Health Division procures the pharmaceutical active ingredients for its veterinary medicines 
both from within the Bayer Group and from external suppliers throughout the world. Our animal health 
products are manufactured mainly at the sites in Kiel, Germany, and Shawnee, Kansas, United States, 
and marketed worldwide. 

CROPSCIENCE 
CropScience, too, manages procurement and production as a single organizational unit. This enables 
an integrated supply chain from raw material purchase through end-product manufacture to warehous-
ing, followed by a two- or three-step distribution system depending on local market conditions. Unitary 
management is also intended to help us steadily improve our cost structures, increase our flexibility, 
ensure a swifter response to market volatility and meet our high quality and safety standards. 

Global procurement 
and production 
network for seeds  
and crop protection 
products at 
CropScience 

Our principal procurement countries, representing the bulk of our procurement volume, are centrally 
managed. This enables us to operate efficiently in procurement markets and optimize our cost position.  

Crop Protection and Environmental Science products are mainly manufactured at our own production 
sites and formulation facilities. Among the largest are the facilities in Dormagen, Knapsack and Frank-
furt am Main, Germany; Kansas City, Missouri, United States; and Vapi, India. Our network of decentral-
ized formulation and filling sites enables us to respond rapidly to local market needs. At these sites the 
active ingredients are processed into herbicides, fungicides, insecticides, seed treatment products and 
Environmental Science products according to local requirements and application areas. Packaging of 
the products also takes place in these facilities. 

Production in the Seeds business unit takes place at locations close to our customers in Europe, Asia, 
and North and South America at our own farms or under contract. 

We invest continuously in our global production network in order to create capacities for new products 
and technologies and to improve manufacturing processes. We plan to significantly increase our capital 
investment to meet the steadily rising demand in a competitive and timely manner. We intend to invest 
approximately €2.4 billion in property, plant and equipment between 2013 and 2016. 

Our CropScience products are manufactured according to high quality standards based on din iso 9001. 
80% of CropScience production sites are certified to this standard, and the compliance of the produc-
tion processes and registered product specifications is regularly monitored by external auditors. 

MATERIALSCIENCE 
Procurement at MaterialScience is centrally steered and managed by the Procurement & Trading unit 
so as to leverage synergies globally. 

MaterialScience applies very high standards for the quality of the raw materials it uses and their further 
processing into high-tech plastics and polymer precursors. A quality management system was imple-
mented for this purpose that is certified to the international standard iso 9001. In terms of total energy 
consumption, over 99% of the reporting MaterialScience sites worldwide are certified. This is regularly 
monitored by internal and external auditors. Certification takes place not just in Procurement and Pro-
duction but also in most other organizational units. 

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Key raw materials for our MaterialScience products are petrochemical feedstocks such as benzene, 
toluene and phenol. The operation of our production facilities also requires large amounts of energy, 
mostly in the form of electricity or steam. In steam and electricity generation, we aim for close-to-
market price indexing, diversification of fuels and a mix of external procurement and captive production 
to minimize the price fluctuation risk. 

The principal production facilities of MaterialScience are at Dormagen, Krefeld and Leverkusen, 
Germany; Shanghai, China; and Baytown, Texas, United States. These supply all the subgroup’s busi-
ness units and are centrally managed by the Industrial Operations unit. Further major production sites 
are located at Antwerp, Belgium; Brunsbüttel, Germany; Map Ta Phut, Thailand; and Tarragona, Spain. 
Each of these sites is managed by the respective business unit. 

World-scale facilities 
reduce costs for 
commodities 

In the field of commodities, we endeavor to reduce costs by operating high-capacity production facilities 
that enable us to supply our markets on an international basis. We maintain a relatively large number of 
production facilities in selected countries to serve our differentiated businesses. These facilities include 
systems houses, where we formulate and supply customized polyurethane systems, and plants where 
we compound polycarbonate granules to meet specific customer requirements or manufacture semi-
finished products (polycarbonate sheets). We also operate regional production facilities for functional 
films made of polycarbonate or thermoplastic polyurethane. 

9. Products, Distribution and Markets  

Bayer markets its products globally through a market- and customer-specific distribution network. 
Responsible marketing and distribution is a top priority for Bayer, which is why we do not tolerate legal 
violations in the marketing of our products. The necessary code of conduct is established in our Group 
directive on “Responsible Marketing & Sales.” This Group directive and the respective training programs 
are implemented decentrally in the subgroups. Our distribution activities are primarily aimed at ensuring 
that our products are available on the market. A high level of customer satisfaction is essential for the 
long-term success of our business. This necessitates the systematic analysis of customer satisfaction and 
complaints, but especially partnership-based cooperation and the willingness to engage in dialogue. 

HEALTHCARE  
Our Pharmaceuticals segment supplies prescription products. Our range of cardiovascular products 
includes the anticoagulant Xarelto™, Adalat™ to treat hypertension and coronary heart disease, and 
Aspirin™ Cardio for secondary prevention of heart attacks. The product portfolio in women’s healthcare 
comprises contraceptives such as yaz™ / Yasmin™ / Yasminelle™, Mirena™ and the Essure™ procedure. 
We also offer specialty pharmaceuticals that are mainly prescribed by specialist physicians, including 
Kogenate™ for people with hemophilia a, Betaferon™ / Betaseron™ to treat multiple sclerosis, the cancer 
drugs Nexavar™, Stivarga™ and Xofigo™, the eye medicine Eylea™, and Adempas™ to treat two forms 
of pulmonary hypertension. Our pharmaceutical products are primarily distributed through wholesalers, 
pharmacies and hospitals. Co-promotion and co-marketing agreements serve to optimize our distribu-
tion network. 

Broad product portfolio 
in the Pharmaceuticals 
segment 

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Consumer Health 
segment: focus on non-
prescription products 

The portfolio of our Consumer Health segment mainly comprises non-prescription products. The 
Consumer Care Division specializes in over-the-counter (otc) medicines – those available without a 
prescription – and is the second-leading supplier in the global otc market with a portfolio covering all 
the major therapeutic areas. Our offering includes the pain relievers Aspirin™ and Aleve™ and the 
otc medical skincare products Bepanthen™ / Bepanthol™ and Canesten™. The product range also in-
cludes cough-and-cold and allergy products such as Alka-Seltzer Plus™ and Claritin™, nutritionals such 
as One A Day™, Berocca™ and Supradyn™, and products to treat gastrointestinal complaints, such as 
Miralax™ and Rennie™. Other otc products include Coppertone™ sunscreen products and Dr. Scholl’s™ 
foot care products. We also offer prescription dermatology products. The division’s sales and distribu-
tion channels are generally pharmacies, with supermarket chains and other large retailers also playing a 
significant role in certain important markets such as the United States.  

In the Medical Care Division we offer blood glucose monitoring devices such as Contour™. We also 
market the Contour™ usb meter, which features integrated diabetes management software and direct 
plug-in to computers. Outside Europe, these products are generally sold to consumers through pharma-
cies, drugstores, mass merchants, hospitals or wholesalers. In Europe, they are sold mainly through 
pharmacies. We are among the principal players in the area of blood glucose meters and are also one of 
the leading suppliers of contrast agent injection systems for diagnostic and therapeutic medical proce-
dures in X-ray, computed tomography and magnetic resonance imaging. Examples from our portfolio of 
contrast agents for diagnostic imaging are Ultravist™, Gadovist™ / Gadavist™ and Magnevist™. Our 
products are marketed to radiologists, cardiologists and other specialists in medical imaging in hospi-
tals and out-patient clinical sites through a global direct sales organization, supplemented in some cases 
by local distributors.  

The Animal Health Division offers an extensive portfolio of animal health products for farm and com-
panion animals. Depending on local regulatory frameworks, we market our products through veterinari-
ans and other distribution channels such as pharmacies or retail stores. Our Advantage™ family of 
products protects dogs and cats from parasite infestation and supports our number two position in the 
parasiticides market. The innovative Seresto™ collar provides dogs and cats with lasting protection 
against parasites through a modern system for controlled release of the active ingredients and rein-
forces our leading market position. Other important products include Baytril™ and Veraflox™ for the 
control of infectious diseases, the Drontal™ line of wormers, and Baycox™ to treat coccidiosis in live-
stock. 

Responsible business practices in marketing and distribution 
In marketing its medicines, HealthCare applies strict standards and observes the relevant international 
industry codes. This includes all codes of the International Federation of Pharmaceutical Manufacturers 
& Associations (ifpma) and of regional associations such as the European Federation of Pharmaceutical 
Industries and Associations (efpia) concerning relations with health care professionals and patient 
organizations. These codes include rules governing the distribution of advertising materials and product 
samples, cooperation with health care and pharmacy professionals under speaker and consultancy 
agreements, and scientific studies. HealthCare has also undertaken to implement the efpia transparency 
code. The codes apply to prescription medicines. There are also local laws and codes applicable to all 
medicines. 

 online annex: 3-9-bhc-1 

The ifpma code applies not only to prescription medicines but also to over-the-counter products that 
are directly advertised to health care professionals. The ifpma code, as a binding global minimum 
standard for HealthCare, also includes basic principles for cooperation with patient groups. The efpia 
Code of Conduct for cooperation with patient organizations mandates universal transparency and 
requires that these organizations’ independence not be compromised by the provision of support to 
patient organizations. Under the code, donations to health care professionals or organizations must be 
disclosed annually on a publicly accessible website. This information must be published for the first 
time by June 30, 2016, and must include the relevant donations made in the 2015 calendar year. 

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These local codes serve to bring the provisions of the global or regional codes mentioned above into 
line with local laws. In the event of discrepancies among the rules we have committed to respect, 
HealthCare always observes the more stringent requirement.  

The who’s Ethical Criteria for Medicinal Drug Promotion, together with national ethical standards, 
represent the minimum standard for the advertising of pharmaceutical products at HealthCare. National 
ethical standards are usually enshrined in industry codes at the local level, an example being that of the 
association “Voluntary Self-Regulation for the Pharmaceutical Industry” (fsa). The main principles for 
ethically and legally acceptable advertising for pharmaceuticals and medical products are also set out in 
the internal HealthCare directive “Compliance in Product-Related Communications”. This directive in 
turn is based on our “Group-wide Responsible Marketing & Sales Policy” and the “Directive on Integrity 
& Responsibility in Communications and Marketing.” 

HealthCare has summarized the key requirements for compliant and ethical conduct in the global  
“Anti-Corruption Compliance Manual”. 

 online annex: 3-9-bhc-2 

Published in 2014, this manual summarizes existing internal anti-corruption regulations at 
HealthCare within a standard document. It applies to all HealthCare divisions and therefore governs 
the marketing of prescription medicines, as well as over-the-counter, medical and animal health 
products. It establishes the minimum global standard for responsible marketing and ethically 
acceptable dealings with important stakeholders such as officials, health care professionals and 
patient organizations. 

The specific global anti-corruption training program launched a number of years ago was continued 
in 2014. The comprehensive training materials are available in 11 languages. Courses are offered 
both in the form of web-based compliance programs and face-to-face programs. The web-based pro-
grams were honored with the Brandon Hall Excellence in Learning Award, receiving the silver medal 
in the “Best in Compliance Training” category. In conjunction with all training courses, employees 
can receive further information as part of our newly launched “Integrated Compliance Management 
(icm)” project (see Chapter 18.3 Compliance) and can also request additional support. 

Any suspected violation of our responsible marketing policy is recorded and investigated as part of our 
compliance management. This applies to complaints received from inside or outside the company. 

Customer dialogue 
Bayer utilizes a broad range of measures and quantitative targets to increase the value of its commercial 
distribution activities. In addition to internal monitoring, customer satisfaction is evaluated in core 
markets. The results of these evaluations help Bayer to continuously improve its offering in line with the 
needs of its customers. 

The HealthCare divisions maintain their own active dialogue with their specific customer groups. The 
various sales organizations carry out customer satisfaction studies – for example with physicians from 
different disciplines. Different legal requirements apply for prescription medicines than for non-
prescription or medicinal products. This makes the conditions under which customer satisfaction data 
are gathered in the health sector correspondingly complex. For example, patients may not be surveyed 
directly about the effects and side effects of prescription medicines. HealthCare therefore conducts 
primary market and data research in this area. 

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 online annex: 3-9-bhc-3 

Customer groups from four therapeutic areas in the Pharmaceuticals segment have been surveyed in 
11 countries since 2012. Long-term customer relationships and the performance of the sales em-
ployees were identified as key factors in customer loyalty and positive differentiation from competi-
tors. The results of the studies are regularly integrated into brand planning. Country coverage was 
further expanded in 2014, and the studies now include 14 key markets.  

In order to improve customer orientation, Consumer Care launched pilot projects in key markets in 
2014 for the excellence program initiated in 2013. Global rollout of the program is planned for 2015. 
The initiative focuses on the identification of best practice models for distribution and trading. 

At Animal Health, the methods for measuring customer satisfaction are dependent on the market 
segment. The division also carries out market research projects on specific disease-related issues 
and measures satisfaction with its own products and the image of the company brand.  

Information on health care topics and customer services for orders, product and delivery information, 
complaints or the handling of general inquiries pertaining to HealthCare are addressed by the rele-
vant business units and country organizations, and contact information is made available online.  

As the Bayer Group is headquartered in Germany, HealthCare operates a customer service center in 
that country that since 2008 has had a quality management system certified to iso 9001:2008. 

CROPSCIENCE 
CropScience offers its customers in the Crop Protection / Seeds operating segment an outstanding range 
of products including high value seeds, innovative crop protection solutions based on chemical and 
biological modes of action as well as an extensive customer service for modern, sustainable agriculture. 
In the field of non-agricultural applications (Environmental Science operating segment), CropScience 
has a broad portfolio of pest control products and services for areas including the home and garden 
sector, professional applications for golf courses and forestry. 

Integrated product 
portfolio  
at CropScience 

CropScience markets its products in more than 120 countries. In the coming years we intend to 
continue expanding our business, particularly in the emerging markets, by deploying innovative, lead-
ing-edge technologies in order to meet the increasing global demand for high-quality food and feed.  

The marketing and distribution activities of the Crop Protection / Seeds operating segment have a 
product-specific alignment.  

The Crop Protection business is based on a broad portfolio of highly effective herbicides, fungicides, 
insecticides and seed treatment products with chemical or biological modes of action. Our innovation 
capability and long years of experience with crop protection products have placed us among the leading 
companies in the world.  

The activities of the Seeds unit are focused on the crops cotton, oilseed rape / canola, rice, soybeans and 
vegetables. We market high-value seeds based on our own research and breeding expertise. In our core 
crops, we have achieved strong market positions and are internationally represented. 

Our Crop Protection products are primarily marketed through two- or three-step distribution systems, 
either via wholesalers or directly to retailers. We also sell products directly to customers in selected 
markets where farmers and market conditions require this mode of distribution. 

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Our seeds are sold to growers, plant raisers, specialist retailers and the processing industry. Plant traits 
developed using modern breeding methods are either incorporated into our own seed varieties or li-
censed to other seed companies. 

The products of our Environmental Science operating segment are based on both proprietary and 
inlicensed active ingredients and designed for non-agricultural uses. We market pest control and plant 
care products both to private customers in the home and garden sector and to professional users in the 
green industry (including public parks and golf courses), forestry, professional pest control and public 
health (vector control to combat malaria and dengue fever). CropScience ranks among the world’s lead-
ing suppliers of crop protection products for non-agricultural uses. The Environmental Science products 
are mainly sold through wholesalers and specialist retailers. A large part of our business in the area of 
vector control is transacted in response to tendering by government agencies and non-governmental 
organizations. 

CropScience follows the International Code of Conduct on the Distribution and Use of Pesticides  
issued by the Food and Agriculture Organization of the United Nations (fao). This forms the basis for 
CropScience’s expanded Product Stewardship Policy, which satisfies the requirements of the Group’s 
position on responsible marketing and sales. Training materials to explain this Group position have 
been distributed throughout the global organization and are available on the Bayer intranet.  

 online annex: 3-9-bcs-1 

The issue of responsible marketing and sales is addressed at CropScience in compliance training 
courses and is also an integral element of marketing and sales excellence training measures. By the 
end of 2014, we had trained approximately 3,700 employees worldwide in three- and one-day 
courses, including some 1,300 employees in 2013 and 2,400 in 2014. 

Customer dialogue 
CropScience investigates the satisfaction of its customers using standardized surveys as part of its 
commercial excellence activities, among other tools. In addition, CropScience completely overhauled its 
internal customer relationship management (crm) processes in 2014 so as to establish a new under-
standing of crm. Alongside farmers, this new approach also focuses on distribution channels in all mar-
kets. A centralized, global crm platform will also standardize core processes. Furthermore, CropScience 
is intensifying its direct cooperation with farmers through the Bayer Forward Farming initiative. Our 
solutions for sustainable agriculture in practice are demonstrated at Bayer ForwardFarms.  

MATERIALSCIENCE 
One of the world’s largest polymer companies, MaterialScience is a manufacturer and supplier of pre-
cursors for rigid and flexible foams, plastic granules, and raw materials for coatings and adhesives. The 
subgroup holds leading competitive positions in these product groups. We also manufacture and market 
plastic sheets, functional films and selected inorganic basic chemicals. The latter serve as raw materials 
for the manufacture of our products. Others are generated as by-products of our production and sold to 
external customers. 

Our products are used mainly in the automotive, construction, electrical / electronics, furniture, wood, 
textile, sports and leisure goods, medical equipment and chemical industries. 

Rigid or flexible polyurethane foams based on our diphenylmethane diisocyanate (mdi), toluene diiso-
cyanate (tdi) or polyether (pet) raw materials have found a broad range of applications in a variety of 
industries. Automotive uses include the manufacture of car seats and components. They are also used in 
the construction industry and the refrigeration chain as insulating materials, and in the furniture indus-
try for cushioning and mattresses. 

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Our polycarbonates are marketed as granules (Makrolon™, apec™, Makroblend™, Bayblend™), sheet 
and films. Their uses include electrical appliance housings, cds / dvds, roof structures and automotive 
headlamps. 

The Coatings, Adhesives, Specialties business unit manufactures raw materials for car and commercial 
vehicle coatings and for footwear and textile adhesives, for example. Specialties include films used in id 
and credit cards, along with raw materials for cosmetic and medical products. 

We market our products mostly through regional and local distribution channels. Here three regional 
Supply Chain Centers serve as the central link to the customer. We make use of e-commerce platforms 
and other channels for order processing.  

 online annex: 3-9-bms-1 

This structure pools all information streams from order acceptance to dispatch planning, delivery  
and complaint acceptance in the Europe/Middle East/Africa, Latin America, nafta and Asia/Pacific 
regions. In particular, that gives us a high level of expertise in order management and in transaction, 
supply chain and logistics solutions. Our customers can check the status of their orders at any time 
through the online information platform BayerONE. 

The top quality objective targeted by MaterialScience is completely error-free operation so as to 
achieve a high level of customer satisfaction. Our supply, production and delivery processes are 
therefore certified to din iso en 9001 and are regularly audited both internally and externally.  

To systematically increase customer satisfaction and ensure optimal quality of service, we regularly 
evaluate the complaints registered in our global management system and by the individual business 
units. We also analyze in detail the evaluations performed by our customers. Through dialogue with 
internal stakeholders, corrective and preventive measures are undertaken to further increase quality 
and customer satisfaction while at the same time lowering the error rate and ultimately also the inci-
dence of complaints. In 2014, for example, a total of 4,835 complaints by around 1,990 customers 
were registered. This yields a rate of 7.18 complaints per 1,000 deliveries, about the same as in 2013 
(7.44 complaints per 1,000 deliveries). 

We also work with trading houses and local distributors who are responsible for business with small 
customers. Major customers with global operations are serviced directly by our key account managers. 

In the marketing of our products, we also take into account all the requirements of the Group’s position 
on responsible marketing and sales. The importance of observing antitrust law and preventing corrup-
tion is regularly emphasized in training programs, internal communications and discussions with man-
agement. In 2014, antitrust law was a particular focus of our training measures. Around 3,000 
MaterialScience employees took part in Group-wide, web-based courses and supplementary target 
group-oriented, on-site training sessions. 

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10. Product Stewardship 

We assess the possible health and environmental risks of a product along the entire value chain. This 
starts with research and development and continues through production, marketing and use by the 
customer through to disposal.  

At issue here are not just the safe handling and use of our products, but also the transparent communi-
cation and transfer of product safety information. Product stewardship involves both compliance with 
statutory requirements and voluntary commitment. Here, we also take into account the precautionary 
principle as explained in Principle 15 of the Rio Declaration of the United Nations and communiqué 
com (2000) 1 of the European Commission. 

 online annex: 3-10-1  

We accept the precautionary principle as a possible tool for consumer protection and/or risk man-
agement. It is applied whenever there is no final scientific certainty in a given area and evidence also 
exists that people or the environment could suffer significant or irreversible damage that must be 
rectified. However, a balance between risks and opportunities must always be ensured. The focus 
should not unilaterally be on the hazard potential. 

Bayer monitors all products that are already on the market. Furthermore, we have established pro-
cesses in all subgroups aimed at addressing inquiries on product safety or problems with our prod-
ucts. This feedback is systematically accounted for in our assessment of risks, which also covers sub-
stances that are regarded as potentially high-risk by regulatory authorities and independent institu-
tions.  

As a contribution to the safe handling of chemicals, risk assessments are carried out applying recog-
nized scientific principles such as those described by the echa (European Chemicals Agency) in its 
Guidance on Information Requirements and Chemical Safety Assessment.  

Should this assessment or new findings reveal that it is not safe to use a certain chemical, we take 
the necessary steps to mitigate risks. Such measures can range from revised application recommen-
dations through the withdrawal of support for a certain application to the substitution of a substance. 
In this case, a replacement substance must be sought that is economically and technically feasible. 
The substitution of chemicals is basically a continuous task of the chemical and pharmaceutical in-
dustry so as to obtain new or substantially improved products and processes. This is the basis of the 
reach (Registration, Evaluation, Authorization and Restriction of Chemicals) Regulation, and is also 
integral to our commitment to Responsible Care. 

Since 1994 Bayer has supported the voluntary Responsible Care™ initiative of the chemical industry, 
which was globalized in 2006 with the introduction of the Responsible Care™ Global Charter. We cover 
all main elements of the charter at all Group sites with our hseq (health, safety, environmental protec-
tion and quality) management systems and activities. We are also actively involved in the further devel-
opment of scientific risk assessment through our work in associations and initiatives. 

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 online annex: 3-10-2 

International associations such as the European and international chemical industry associations 
(cefic,(cid:3031)icca) and the oecd (Organisation for Economic Co-operation and Development), as well as ini-
tiatives such as the ecetoc (European Centre for Ecotoxicology and Toxicology of Chemicals) and the 
epaa (European Partnership for Alternative Approaches to Animal Testing), work to evolve the scien-
tific assessment of chemicals, research new test methods and monitor the implementation of statuto-
ry regulations. Bayer actively accompanies these efforts in its association activities. We are also in-
volved in the icca Long-Range Research Initiative, for example, and endorse the goals of the who 
and e.u. action plans for improving health and environmental protection, for example with the fur-
ther development of human biomonitoring through an alliance with the German Chemical Industry 
Association (vci) and the German Federal Ministry of the Environment. 

IMPLEMENTATION OF REGULATIONS AND VOLUNTARY PROGRAMS PERTAINING TO 
CHEMICALS 
Since 2007 we have operated in accordance with the European chemicals regulation reach (Registra-
tion, Evaluation, Authorization and Restriction of Chemicals). It affects all our activities as a manufac-
turer, importer and user. To adequately address the scope and complexity of the reach requirements, 
we have approved Group-wide and subgroup-specific regulations. The registration obligation under 
reach applies irrespective of marketing activities for all substances that we produce or import in quan-
tities of more than one metric ton. 

 online annex: 3-10-3 

We observe the required registration phases for existing chemicals. The final registration phase will 
end on June 1, 2018. Substances registered already during the first two phases are now being as-
sessed by the component authorities. In the future this could result, for example, in additional testing 
requirements, new risk management measures or inclusion in the authorization procedure. 

A number of Bayer substances are also affected by the reach authorization procedure, which restricts 
the use of particularly hazardous substances or can lead to their replacement or ban. 

The authorities enforce the implementation of reach through regular inspections. So far none of the 
inspections at Bayer has resulted in complaints. As we also use many products from other manufactur-
ers, we maintain close contacts with our suppliers and ensure that they confirm conformity with reach 
for these products.  

The Bayer Group’s product stewardship target is to conclude the assessment of the hazard potential of 
all substances used in quantities exceeding one metric ton per annum by 2020. In this way we exceed 
statutory requirements and are ensuring that substance assessments comparable to those established 
under reach will also be applied at Bayer sites that are not subject to this European regulation. The 
procedure for the implementation of this target is established in our Bayer Group Regulation “Sub-
stance Information and Availability.”  

At the same time, we are implementing the Globally Harmonized System (ghs) for the classification and 
labeling of chemicals, which came into force in the European Union (e.u.) in 2009. The purpose of this 
regulation is to achieve a globally standardized system for classifying chemicals and labeling them 
appropriately on packaging and in material safety data sheets.  

Group target 2020: 
assessment of the 
hazard potential of  
all substances used  
> 1 metric ton p.a. 

  See also Chapter 
1.3 for Group 
targets 

We also support the Global Product Strategy (gps), a voluntary commitment by the chemical industry 
initiated by the International Council of Chemical Associations (icca). Its objective is to improve 
knowledge about chemical products, especially in emerging and developing countries, and thus in-
crease safety in the handling of these products. The icca has established an information portal through 
which summarized details on products (gps Safety Summaries) are made available. gps is of particular 
relevance for MaterialScience. 

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In accordance with the respective product safety and information obligations, all subgroups compile 
product information, whether on raw materials, intermediates or end products. To ensure worldwide 
access to this information, our subgroups use appropriate it systems, including ones for product 
labeling. 

PRODUCT STEWARDSHIP IN THE USE OF BIOTECHNOLOGY 
The product development departments in our Pharmaceuticals and Crop Protection businesses make 
use of biotechnological methods. Biotechnology has already gained significant importance in pharma-
ceutical product development. The HealthCare products Betaferon™ / Betaseron™, Kogenate™ and 
Eylea™ are manufactured by a biotechnological process. 

Plant biotechnology can help to improve crop yields, yield security and the stress tolerance of plants 
through both genetic engineering and conventional breeding methods without the need for an in-
creased input of resources.  

Safety is Bayer’s top priority in the use of biotechnology, too. Beyond our observance of all relevant 
legal provisions, we have formulated a Bayer Group Regulation “Position on the Responsible Use of 
Gene Technology” and specific regulations for the subgroups and service companies. 

 online annex: 3-10-4 

Before any product reaches market maturity, we subject it to a stringent approval procedure to de-
termine whether it is safe for human health, animals and the environment.  

HealthCare has established strict safety measures for handling biological agents in research, devel-
opment and production in its “Biological Safety” regulation and its “Requirements for the safe han-
dling of biological agents” procedure.  

CropScience maintained its focus on product stewardship for customers both within and outside the 
company through its activities in the context of the industry’s Excellence Through Stewardship Pro-
gram. Product stewardship and quality management processes are the top priority in all activities 
connected to plant biotechnology. 

We provide our stakeholders with comprehensive, transparent and reliable information about our prod-
ucts and services in accordance with our Bayer Group Regulation “Responsible Marketing & Sales.” 

FOCUSING ON ANIMAL WELFARE 
Animal studies are legally required and essential from a scientific viewpoint to assess the effects of our 
products, especially on people, but also on nature and the environment. During research into new active 
pharmaceutical ingredients, they are only replaceable to a certain extent. In our handling of animals, we 
respect all legal requirements pertaining to animal welfare. If animal studies are required to assess our 
substances, Bayer respects the so-called 3Rs principle:  

•  replace: prior to each project, we check whether an approved method is available that does not rely 

on animal studies and then apply it.  

•  reduce: in case no alternative method exists, only as many animals are used as are needed to achieve 

scientifically meaningful results based on statutory requirements.  

•  refine: we make sure animal studies are performed in a way that minimizes suffering of animals.  

This year for the first time, we are offering an internal 3r Award that rewards and publicizes within the 
company special contributions to animal welfare. 

  www.animalstudies. 
bayer.com 

Our principles also apply to both the research institutes we commission and our suppliers, whose com-
pliance with our animal welfare requirements we regularly monitor. The information provided in suppli-
er self-evaluations is verified through on-site audits. Current figures and further information are availa-
ble at our website. 

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Bayer’s Global Animal Welfare Committee monitors compliance with our principles on animal welfare 
and animal studies within the Bayer Group and in external studies. 

 online annex: 3-10-5 

Comprised of the animal welfare officers at our research sites and further Bayer experts, this com-
mittee has defined performance indicators. Each year we analyze the development of animal num-
bers, the distribution according to species, the burden placed on our test animals and the ratio of 
regulatorily required studies to exploratory studies, and discuss possible steps in accordance with 
the 3Rs principle. We are thus able to demonstrate that since 2005 the number of study animals used 
per €1 million research budget (including animals in Bayer studies performed by contract research 
organizations) has declined from around 96 animals to around 51 animals in 2013. 

We have also established an internal database that combines all information about our own animal 
studies and the evaluation of our cooperation partners and makes it available to all employees in this 
area. All subgroups apply clear rules to ensure that animal welfare standards are comprehensively 
observed by our partners. 

Bayer also participates in several European consortia that aim to reduce the number of animal stud-
ies or improve their validity: we are active, for example, in the European Partnership for Alternative 
Approaches to Animal Testing (epaa) and our HealthCare subgroup is involved in the leadership of 
the eTOX project and the marcar project of the Innovative Medicines Initiative (imi). We participate 
in the lri (Long-Range Research Initiative), which is currently pursuing projects connected with the 
issue of “eye irritation.” In Germany, we support the Foundation for the Promotion of Alternate and 
Complementary Methods to Reduce Animal Testing (set). 

PROTECTION AGAINST PRODUCT COUNTERFEITING 
Illegal trade with counterfeit medicines and crop protection products is on the rise worldwide. Counter-
feit products harbor substantial risk for patients and consumers, and substandard quality also causes 
considerable financial damage for producers and users.  

Industry, associations, governmental agencies and non-governmental organizations must join together 
to fight product counterfeiting. Bayer continuously advocates the strengthening and expansion of exist-
ing laws and provisions aimed at the identification and confiscation of illegal products. We undertake a 
wide range of measures to inform our customers about both the danger posed by, and the insufficient 
effectiveness of, counterfeit products. 

 online annex: 3-10-6 

According to a report by the European Commission, counterfeit pharmaceuticals rank near the top of 
the e.u.’s customs statistics. For example, the authorities confiscated around 3.7 million counterfeit 
pharmaceutical products in 2013 – a five-fold increase compared with the previous year. In close co-
operation with the authorities, Bayer works to protect the health of patients, customers and users. 
The focus is on raising awareness and providing information to ensure the reliable identification of 
our original products, as well as on legal steps aimed at minimizing illegal trade.  

Through the internet platform “Beware of Counterfeits,” HealthCare informs patients about the risks 
of counterfeit pharmaceuticals and provides patients with tips on how they can protect themselves. 
Bayer participates in the Pharmaceutical Industry Initiative to Combat Crime (piicc) of Interpol to 
counteract pharmaceutical counterfeiting through global prosecution and the elimination of related 
criminal networks. 

We also support the establishment of a pan-European system for the verification of pharmaceutical 
packaging that satisfies the requirements of the e.u. Falsified Medicine Directive. We participate in 
the SecurPharm project in Germany. 

According to the most recent estimate by Europol, illegal products account for more than 10% of the 
crop protection market and 25% in some e.u. member states. CropScience provides information, 
training materials and services (manuals, workshops, chemical analysis, etc.) to dealers, farmers and 

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authorities to ensure that counterfeit products can be accurately identified and combated. In 2014 
training courses were conducted, for example, in China and in e.u. countries in which Bayer warned 
of the dangers of product counterfeiting and explained options for better combating it. In this con-
nection, we also support initiatives by global and regional association committees such as the Anti-
Counterfeiting Expert Group of the European Crop Protection Association (ecpa) and the Anti-
Counterfeiting Steering Committee of the industry association CropLife International (cli). One ex-
ample is the training of national industry associations at the European Association Network Anti-
Counterfeiting Forum. 

CropScience works together intensively with national and international authorities. This frequently 
enables the confiscation of counterfeit products, as was the case again in 2014 due to the company’s 
clear support for the European authorities in the investigation of criminal networks. CropScience 
works together with shipping companies and European ports of entry to prevent the transport of 
counterfeit products by more closely inspecting freight and customers, among other measures. Most 
counterfeit products originate in Asia and reach Europe through European cargo ports. With our 
support, substantial quantities of illegal products were confiscated by the port authorities again in 
2014. CropScience also carries out its own inspections of suspicious goods shipments. We have reg-
istered noticeable progress in our longstanding active efforts to combat illegal parallel trade (for ex-
ample in Germany). Far fewer illegal parallel trade product samples were found in 2014 than in 2013. 
Legal steps were successfully initiated here as well.  

HEALTHCARE 
BENEFIT-RISK MANAGEMENT FOR MEDICINAL PRODUCTS AND MEDICAL DEVICES 
HealthCare continuously assesses the medical benefit-risk balance of its medicinal products and medi-
cal devices throughout their entire life cycle. For this process, experts from various disciplines form 
cross-functional Safety Management Teams (smts). These teams jointly evaluate the available benefit 
and risk data along with other relevant information on the product in order to identify possible safety 
risks at an early stage and assess the medical benefit-risk balance. The evaluation also makes use of 
external databases so as to ensure as broad a base of data as possible. Should significant risks be identi-
fied, HealthCare immediately takes measures to minimize them, such as updating the product infor-
mation for patients and physicians. 

 online annex: 3-10-bhc-1 

Further tools in risk minimization programs can include targeted information, e.g. patient education 
brochures, and training measures for physicians and patients. smts compile medical benefit-risk data 
and information and produce detailed safety risk management plans. These plans are updated as 
soon as relevant new benefit-risk data become available. Implementation of risk minimization activi-
ties is coordinated by local smts in the country organizations. 

The Global Pharmacovigilance unit of HealthCare pools safety-relevant information on our products in 
the company’s own global pharmacovigilance database on an ongoing basis. This information is contin-
uously updated and evaluated by experts. In this process, Bayer works closely with the responsible 
regulatory and supervisory authorities at the international, national and regional levels. These include 
the u.s. Food and Drug Administration (fda), the European Medicines Agency (ema) and Germany’s 
Federal Institute for Drugs and Medical Devices (BfArM).  

HealthCare’s quality and risk management functions make further contributions to increased safety.  
We examine external and internal quality assurance requirements for our products through systematic 
internal inspections – not just in research and development, but also in production. These inspections 
also cover institutes sub-contracted by us and our suppliers. Through our safety risk management sys-
tem, drug product risks are systematically identified and assessed, and the necessary steps initiated. 
Countries and regions receive continuous support to help them comply with regulatory requirements for 
pharmaceuticals.  

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Scientific publications by our researchers satisfy recognized international standards that we have com-
mitted ourselves to observe in our Good Publication Policy. We base the implementation of all clinical 
studies on the Good Clinical Practice guidelines of the World Health Organization (who) and on the 
guidelines of the International Conference on Harmonization (ich). We disclose the methods and results 
of clinical trials.  

  www.bayer.com/ 
clinical-trials 

ANALYSIS OF PHARMACEUTICAL TRACE AMOUNTS IN THE ENVIRONMENT 
Active pharmaceutical ingredients can enter the environment through human excreta or livestock 
excrement, improper disposal by users or residues in wastewater from pharmaceutical production. 

Measurements carried out by authorities and scientific institutes have revealed that the concentration 
of individual active pharmaceutical ingredients from human or veterinary medicines present in drinking 
water is lower than the level that would have pharmacological effects in humans. On the basis of our 
current knowledge, the presence of individual active pharmaceutical ingredients in bodies of water or 
drinking water does not pose any risk to humans. This is also confirmed by the most recent who Report 
on Pharmaceuticals in Drinking Water. 

To assess the potential environmental impact of our pharmaceutical products, HealthCare carries out 
ecotoxicological investigations of the environmental behavior of trace amounts and degradation products. 

When submitting dossiers to European regulatory authorities for both veterinary and human pharma-
ceuticals, an environmental assessment is required that is published in the European public assessment 
reports (epar). The u.s. Food and Drug Administration (fda) also requires the submission of an envi-
ronmental compatibility assessment. It must be demonstrated during the approval procedure that no 
significant risk exists for the environment when the drug products are used correctly. 

Internal company wastewater threshold values ensure that no risk to the environment results from the 
release of traces of active ingredients in wastewater from production sites. All HealthCare production 
sites worldwide are evaluated with regard to these threshold values. Site-specific measures aimed at a 
further reduction are proposed should it not be possible to observe these standards over the long term. 
Additional active ingredient-specific retention measures are applied in addition to biological treatment 
in water treatment facilities. 

HealthCare maintains regular contact with various stakeholder groups with regard to these issues. 

 online annex: 3-10-bhc-2 

HealthCare has committed itself to continue developing its strategy for dealing with pharmaceutical 
residues in the environment. At the scientific level, HealthCare participates in projects aimed at fur-
ther researching pharmaceutical residues in the environment and introducing targeted measures. 

Bayer is represented on the Scientific Advisory Board of noPILLS, the e.u.-sponsored project to 
reduce pharmaceutical trace amounts in water. The project studies the question of whether and to 
what extent strategies can be successful that are applied at the source – in other words at the point 
where residues enter water – rather than at the wastewater treatment stage. The city of Dülmen, 
Germany, has been selected as a model for more closely studying such pathways. The preceding 
project – pills – had come to the conclusion that although the content of active ingredients in 
wastewater can be reduced through the establishment of treatment facilities in hospitals that employ 
special water purification technology, such technology would still result in substantial costs. Building 
on the pills project, noPILLS now expands the focus to pharmaceutical residues in wastewater 
overall and the change in consumer behavior in test regions, for example as regards the disposal of 
expired drug products. In 2014 HealthCare advised two of the project partners in the preparation of a 
campaign to collect iodinated X-ray contrast media in hospitals. 

In Germany, HealthCare participates in the “Risk Management of Emerging Compounds and Patho-
gens in the Water Cycle” (RiSKWa) initiative sponsored by the German Ministry for Education and 
Research. HealthCare is a member of the steering committee.  

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SAFETY AND QUALITY STANDARDS AT ANIMAL HEALTH 
In line with the statutory requirements, strict quality standards apply to all Animal Health product class-
es. Safety and quality standards comparable to those governing human medicine apply for veterinary 
pharmaceuticals such as parasiticides, dewormers (anthelmintics) or antibiotics. Within the scope of the 
approval procedures, Animal Health carries out studies in order to ensure the quality, efficacy and safety 
of its products, as well as minimize the environmental impact of the products’ use.  

We partner with veterinarians, farmers and private users to promote the responsible use of our prod-
ucts. The prudent use of antibiotics is especially important for public health. For this reason, we have 
established clear guidelines for the use of fluoroquinolones. In this context, we also support the Euro-
pean Platform for the Responsible Use of Medicines in Animals, which brings together various partner 
organizations from politics, industry and society. 

CROPSCIENCE 
Safety is also the top priority with products from CropScience. We analyze already prior to the develop-
ment of a product whether the envisaged solution is compatible with our sustainability approach.  
During the development phase, we examine the products in stringent tests that are monitored by the 
authorities. At issue here are an active ingredient’s toxicological properties on the one hand and on the 
other hand the question of how significant the remaining trace amount of a crop protection product is 
following proper application to the plants. Before a product is introduced to the market, we conduct 
numerous further safety tests with regard to its use and environmental behavior, depending on the 
product area. 

CropScience allowed the sale of all remaining who Class i insecticide formulations for leaf and soil 
applications and seed treatments to expire at the end of 2012. All insecticides affected were replaced by 
modern, targeted and more environmentally friendly formulations.  

CropScience observes the International Code of Conduct on the Distribution and Use of Pesticides of the 
United Nations Food and Agriculture Organization (fao). The principles of this code cover the entire life 
cycle of a product, from its development to its application and beyond. We implement all major aspects 
of responsible product handling in our Product Stewardship Program, which is based on the principles 
of our Product Stewardship Policy. 

 online annex: 3-10-bcs-1 

Even beyond its core business, CropScience participates specifically in projects aimed at increased 
product stewardship. We are a member of the Better Sugarcane Initiative, which works to promote 
sustainable sugarcane cultivation in Brazil, and the International Sustainability & Carbon Certification 
organization, which is working to establish a system for certifying biomass and bioenergy. We also 
take part in the Round Table for Responsible Soy, which works to promote sustainable soybean pro-
duction, as well as in the Round Table for Sustainable Palm Oil Production.  

RESPONSIBILITY FOR CUSTOMERS AND PARTNERS 
The application of crop protection products requires the greatest possible care. Supporting our custom-
ers and partners in the proper and safe handling of the products is therefore a focus of product steward-
ship at CropScience. We address farmers and dealers particularly through numerous programs world-
wide. Targeted workshops are aimed at enabling effective application of our products and ensuring the 
safety of users, the environment and consumers. Furthermore, we provide our customers with guide-
lines explaining the safe use, storage and disposal of all of our products.  

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 online annex: 3-10-bcs-2 

Our training activities focused on the Asia and Latin America regions again in 2014. In India, for ex-
ample, CropScience has trained more than 32,000 farmers in good agricultural practice. They learn 
how they can enhance the growth of their produce, use crop protection products effectively and safely, 
and thus increase the quality of the goods they produce. Furthermore, they are also shown new ways 
of marketing their products, which particularly help smallholders gain increased profit from them.  

Promoting agricultural development is often a more effective way to fight hunger and poverty than 
other forms of support. Higher incomes in turn enable farmers to improve their standard of living 
and invest more in their children’s education and their own businesses. Value is created for society 
as a result of the increased production of high-quality food. With the help of these measures, we con-
tribute to the sustainable development of agriculture.  

In Latin America, we combined all our activities dealing with product safety measures within our 
AgroVida program. This comprises various initiatives with which we have been continuously increas-
ing the farmers’ safety awareness and specialist expertise since the 1990s. Safety training offerings for 
farmers play a role here, for example. In 2014 we trained almost 25,000 farmers in the Andean region 
and approximately 24,000 farmers in the Central America and Caribbean region (excluding Mexico), 
for instance. We also carried out safety training measures in numerous African countries in 2014.  

In the area of water pollution control, we offer customers a biological purification system  
(Phytobac™). This is intended to prevent the discontinuous discharge of crop protection active ingre-
dients in the disposal of residual liquids that are generated during the filling and cleaning of spraying 
devices. In Europe, there are already approximately 3,000 Phytobac™ facilities. The system was in-
troduced in China in 2014. 

We also make the online tool “DressCode” available for determining the optimal protective clothing 
for the handling of our crop protection products – e.g. in the mixing and application of the products 
and the cleaning of spraying equipment. 

Our product stewardship measures also include internal employee training measures. Our aforemen-
tioned Product Stewardship Policy also provides information on all principles for the responsible 
handling of our products, combined with specific instructions for use for our employees and those 
who work with our products. 

BEE HEALTH AND CROP PROTECTION 
Products to protect crops and keep them healthy are necessary to safeguard harvests and thus guaran-
tee the supply of nutrition for a growing world population both now and in the future. At the same time, 
it is essential to protect pollinators of plants that contribute to a wide variety of foods. The debate sur-
rounding the use of certain neonicotinoid crop protection products and the subjective assessment of 
their impact on bee health has had an effect at the political level. As a result, the European Commission 
has suspended the use of a number of products in this active ingredient class for certain applications in 
Europe. Bayer considers the decision by the European Commission to be scientifically unjustified and 
legally flawed. The active ingredients in question were extensively examined with regard to their impact 
on bee health already during the approval procedure. Bayer has appealed the decision by the European 
Commission in order to ensure legal certainty for approval procedures. A decision is not yet available. 
Through its Bee Care Program, Bayer continues to work on behalf of bee health and the responsible use 
of crop protection products. The company invests in research to minimize the effects of crop protection 
products on honey bees.  

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 online annex: 3-10-bcs-3 

With our worldwide Bee Care Program, we aim to promote a better understanding of the many fac-
tors that can impact bee health. This program included the construction of the first Bayer Bee Care 
Center at the site of CropScience and HealthCare’s Animal Health Division in Monheim, Germany. 
CropScience’s center in Monheim combines Bayer’s extensive knowledge and expertise in bee 
health under one roof. It also serves as a platform for dialogue with stakeholders who share our in-
terest in promoting bee health worldwide. A second Bayer Bee Care Center opened in 2014 that 
deals specifically with bee health issues in North America. This center is located at the u.s. head-
quarters of CropScience at Research Triangle Park near Raleigh, North Carolina, United States, and 
brings together important technological, scientific and academic resources. 

There is broad consensus among scientists who work in the area of bee health that the difficult-to-
combat Varroa mite presents the main risk to bee health, partly because this parasite can transmit 
numerous viral diseases to bees. The Animal Health Division of HealthCare is working with numer-
ous researchers in Europe and the United States to develop the Varroa gate – an innovative way to 
control Varroa mites that is intended to keep this parasite from infesting beehives. However, another 
important factor that can impact bee health is generally more intensive agriculture in some regions, 
which limits suitable food sources for bees and wild bees and also breeding places. Bayer is active 
here as well, supporting the establishment of flowered areas and studying biodiversity promotion 
measures on agricultural land that are designed to benefit pollinators. 

Also important to us are product stewardship measures associated with the use of our crop protec-
tion products to improve their bee-friendly application. These initiatives include: a conveyor technol-
ogy in the United States for sowing machines that reduces friction and thus promotes the even flow 
of seed; the additional labeling of seed sacks; two technologies developed in Europe to treat waste 
air during sowing; and even more stringent quality control standards for seed dressing.  

We have also launched an extensive bee monitoring program that is being implemented in five Euro-
pean countries (France, the United Kingdom, Germany, Hungary and Poland). The tests are carried 
out on winter oilseed rape, a crop that is very attractive for bees and that was treated with neonico-
tinoid seed dressings until the restrictions went into effect in the e.u. Monitoring activities can be 
undertaken despite these restrictions, as Bayer has received special exemptions for the aforemen-
tioned studies. The monitoring includes a scientific study led by an independent research institute 
that will be implemented at various sites in the above countries and that began with the sowing of 
winter oilseed rape in the summer of 2014. In addition, a network of agricultural demonstration facil-
ities has been established in the same countries to illustrate these activities, which are targeted to 
last for two to three years.  

Bayer is convinced that neonicotinoids are safe for bees if they are used responsibly and properly. 
Our view is supported by the analysis of monitoring studies that were carried out by independent in-
stitutes in addition to the studies generated in extensive approval procedures. The current findings 
and many years of safe application of these products in agricultural practice confirm the results of 
the risk assessments performed by the regulatory authorities in numerous countries around the 
world on neonicotinoid seed dressings. These results state that the products are harmless to bee col-
onies provided they are used according to the product information. The above additional monitoring 
study has been initiated independently of the numerous scientific studies that confirm the safety of 
neonicotinoids. 

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MATERIALSCIENCE 
The products of MaterialScience satisfy the most stringent of safety requirements. This applies not just 
to those substances subject to standard review in accordance with the European reach Regulation. 
Within the context of the voluntary Global Product Strategy (gps) of the chemical industry, we also 
assess the substances we use and reduce potential health and environmental risks that could result from 
our chemicals. The product safety assessments apply to the entire life cycle of a product – from research 
and procurement through production and logistics to application, disposal and recycling. Our product 
stewardship does not just end with our company, but also includes suppliers, customers and partners. 
gps is accessible at MaterialScience through the “Product Safety First” internet portal, and is available  
worldwide in seven languages. Through this website, we inform customers and other interest groups 
about our activities and product safety assessments.  

 online annex: 3-10-bms-1 

A product safety assessment at MaterialScience takes place in several steps: first, chemicals that are 
subject to statutory regulations are identified and the corresponding rules compiled. We then exam-
ine their risk potential so as to provide a basis for the effective minimization of risks. Such steps can 
include proposals for technical measures such as protective clothing, or marketing restrictions. Final-
ly, we produce the legally required material safety data sheets, technical information sheets and la-
beling for the chemicals. 

For especially important products such as mdi, tdi, polycarbonate and polyether, MaterialScience addi-
tionally works with associations to draw up environmental product declarations and eco-balances certi-
fied according to iso 14040 and 14044 and based on industry averages.  

With regard to substances that come into direct contact with food, MaterialScience is 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 traces of bpa are released from polymers. As docu-
mented by numerous scientifically valid studies, we are convinced that bpa can be safely used in its 
existing areas of application. This assessment is consistent with evaluations by the authorities responsi-
ble for food safety in Europe, the United States, Australia, Japan and other countries. In cooperation 
with the PlasticsEurope association, we work to make the discussion more objective based on scientific 
analysis.   

11. Safety 

Safety management and the continuous development of safety culture are a cornerstone of corporate 
responsibility in the Bayer Group. All injuries and incidents we record are analyzed and evaluated in 
detail to enable adequate measures to be introduced to avoid them in the future. Preventing accidents 
and incidents in day-to-day work, when operating production facilities, and on work-related travel and 
transportation routes where people or the environment could suffer harm or damage has top priority  
for us. Responsibility for health, safety, environmental protection and quality (hseq) is thus directly 
assumed by the Group Board of Management. Our hseq activities are geared toward ensuring the occu-
pational health and safety of employees, contractors and suppliers on our company premises and under 
the supervision of Bayer, and the smooth and safe operation of our facilities. In this way, we also reduce 
running costs by avoiding damage as well as work and production disruptions. 

At the Group level, responsibilities and framework conditions for hseq are regulated through appropri-
ate directives. Operational responsibility lies with the boards of management / executive boards of the 
respective subgroups and service companies and the corresponding line organizations, who have their 
own management systems, committees and working groups to steer hseq. Continuous review and revi-
sion of directives and regular internal audits ensure our hseq management systems at all sites meet the 
specific requirements in each case. 

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Group target 2020: 
reduction of 35% in 
occupational safety 
incident rate 

  See also Chapter 
1.3 for Group 
targets 

OCCUPATIONAL HEALTH AND SAFETY 
The rate of occupational injuries with lost workdays at Bayer has been decreasing for several years. In 
2014 intensive training and awareness-raising once again helped enable the Bayer subgroups and ser-
vice companies to report a reduction in injury figures. 

We record all injuries to Bayer employees requiring medical treatment that goes beyond simple first aid. 
These are indicated by the Recordable Incident Rate (rir), which includes both injuries with lost work-
days and those without. In 2014 this rate dropped to 0.43 cases per 200,000 hours worked (2013: 0.47) 
throughout the Group, corresponding to 534 occupational injuries worldwide. This means that, in statis-
tical terms, one recordable incident occurred for around every 465,000 hours worked.  

The rate of recordable occupational injuries with lost workdays (ltrir, Lost Time Recordable Incident 
Rate) also fell. In 2014 it stood at 0.22 (2013: 0.26). 

Unfortunately, there were four fatalities in work-related accidents in 2014, three of which concerned 
Bayer employees and one a contractor employee. One employee was killed in switching work in Wes-
seling, Germany. In La Tupia, Colombia, a tank wagon caught fire while gasoline was being transferred. 
Four workers sustained burns of varying degrees. The Bayer employee’s burns were so severe that he 
died. A comprehensive root cause analysis was performed. Prevention and improvement measures were 
introduced. A third employee died in Brazil in a traffic accident, as did a contractor employee in San-
chor, India. 

Occupational Injuries 

              [Table 3.11.1]

Occupational injuries to Bayer employees  
with lost workdays (LTRIR1) 

Recordable occupational injuries to  
Bayer employees (RIR1) 

Fatal injuries (total) 

of which Bayer employees 

of which contractor employees2 

2010 

2011 

2012 

2013 

2014 

0.34

0.62

4

4

–

0.31

0.56

3

2

1

0.27 

0.26 

0.49 

0.47 

2 

2 

– 

2 

1 

1 

0.22

0.43

4

3

1

1 The values up to 2010 were calculated on the basis of the former MAQ values and do not include work-related illnesses. 
2 employees working for third parties whose accidents occurred on our company premises and under Bayer supervision 

The injury figures varied both within individual regions and between the various subgroups and service 
companies. 

 online annex: 3-11-1 

Recordable Occupational Injuries (RIR) by Region 

  [Table 3.11.1-1]

Europe 

North America 

Asia / Pacific 

Latin America / Middle East / Africa 

Total 

1 2012 figures restated because of a previous assignment to the wrong region  

20121 

0.56 

0.53 

0.21 

0.54 

0.49 

2013 

0.72 

0.49 

0.20 

0.40 

0.47 

2014 

0.62

0.64

0.14

0.33

0.43

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Since 2012 workplace-related illnesses have additionally been recorded separately from legally listed 
recognized occupational diseases and are included in the ltrir parameter. In 2014 there were 11 cases 
attributable to work-related factors recorded throughout the Group. We report such cases when they 
have been diagnosed and officially recognized by a medical officer. 

As in previous years, we hardly recorded any sector-typical accidents involving contact with chemicals 
in 2014. The absolute number of injuries declined further. A significant proportion of our work-related 
accidents and injuries relate to behavior-linked errors. In 2014 we therefore placed the topic at the heart 
of numerous programs and training courses under the umbrella term “Behavioral Safety.” In 2014 be-
havioral safety was therefore also the focus of our annual global Safety Day. 

 online annex: 3-11-2 

The Behavioral Safety (bs) initiative was adopted at the start of 2014 by the Bayer Safety Council 
headed up by the Chairman of the Board of Management. The initiative focuses on the human factor 
and the safety-conscious behavior of employees. Behavioral Safety involves identifying and prevent-
ing unsafe working methods and reinforcing and consolidating safe working methods at all levels. 
This approach is by no means limited to production plants, but is also intended to cover areas of 
work such as Research & Development, Marketing & Sales and Administration. In 2014 bs pilot proj-
ects were initiated by the subgroups at various locations around the world or were already being im-
plemented. HealthCare has placed emphasis on sales, while CropScience and MaterialScience focus 
more on production and administrative areas.  

Our campaigns on traffic safety and preventing accidents caused by tripping, slipping and falling 
were continued in 2014 by the subgroups with country-specific accident prevention measures. 

PROCESS AND PLANT SAFETY  
Through the Group-wide Top Performance in Process and Plant Safety (topps) initiative, Bayer is con-
tinuously working to improve the safety culture and corresponding standards in plants and laboratories 
and to optimize safety technology. The corresponding Bayer Group Regulation “Process and Plant Safe-
ty” specifies uniform procedures and standards. The methods and criteria for identifying and assessing 
the risks posed to people and the environment by plants and processes underwent further development 
and were globally standardized. 

 online annex: 3-11-3 

A key measure from the topps initiative is the intensive training of all Bayer employees who are able 
to influence process and plant safety in their work environment. This involves approximately 26,000 
production and engineering employees around the world who receive regular training in compulsory 
seminars tailored to their areas of activity. Both traditional and web-based training was devised for 
craftsmen and chemical technicians in the production facilities. To ensure the standard achieved is 
maintained in the long term, we have firmly established the process and plant safety training pro-
gram in the subgroups’ hseq management systems. 

A globally standardized kpi for plant safety incidents, Loss of Primary Containment (LoPC), applies to all 
Bayer plants and is integrated into Group-wide safety reporting. LoPC refers, for example, to chemicals 
in amounts above defined thresholds leaking from their primary container, such as pipelines, pumps, 
tanks or drums, and is thus an indicator of incidents in production facilities. We use the LoPC Incident 
Rate (LoPC-IR) to determine the number of LoPC incidents per 200,000 working hours in areas relevant 
to plant safety. In 2014 this was 0.23 (2013: 0.35). 

Group target 2020: 
reduction of 30% in 
process and plant 
safety incidents (LoPC)  

  See also Chapter 
1.3 for Group 
targets 

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11. Safety 

Bayer Annual Report 2014

Rate of Plant Safety Incidents (LoPC-IR1) 

[Table 3.11.2]

LoPC-IR 

1 LoPC-IR = Loss of Primary Containment Incident Rate 

2012 

0.38 

2013 

0.35 

2014 

0.23

 online annex: 3-11-4 

The causes of every reported incident are carefully analyzed. The results of the cause analysis are 
published Group-wide to improve employees’ safety awareness. The reporting threshold is set so low 
that even material and energy leaks that have no impact on employees, members of the surrounding 
communities or the environment are systematically recorded and reported. This approach is in line 
with our commitment to maintaining the integrity of our facilities at all times. As expected, the eval-
uations from the first few years have indicated areas where there is room for further improvement in 
the safety of existing facilities. The introduction of both this parameter and the globally established 
training program mentioned above is helping us to raise awareness of the significance of minor leaks 
and releases.  

An example of the systematic, global optimization of our safety programs is the CropScience project 
for global standardization of safety measures to prevent fire, explosions, leaks and spills. 

The Bayer Group’s competence center for process and plant safety, together with the Group hseq Plat-
form for Process and Plant Safety, is managed by Technology Services. This comprises three regional 
competence centers, which are located in Leverkusen, Germany; Shanghai, China; and a combined 
center at the Baytown and Kansas City sites in the United States. 

 online annex: 3-11-5 

We participate in international working groups of the International Council of Chemical Associations 
and the American Petroleum Institute that focus on developing a global reporting standard for key 
performance indicators in plant safety. We also are involved in an intensive sharing of experiences in 
this area at an industrial level. 

TRANSPORTATION SAFETY  
Transportation safety has a very high priority within the Bayer safety culture. The relevant Bayer Group 
directive specifies procedures that ensure all transported materials are handled in line with applicable 
regulations and their hazard potential. Logistics service providers are selected following a defined pro-
cedure, and their fulfillment of safety and quality standards is assessed regularly. Under the directive, 
people responsible for implementation are appointed in every organizational unit concerned.  

In 2014 the Group-wide Transportation Safety Platform focused, for example, on regulations manage-
ment, sustainable training tools for transportation safety, reviewing internal procedures and evaluating 
and selecting our logistics service providers. These topics are documented in appropriate hseq targets. 
In addition, as part of our Responsible Care activities, transportation safety instructions are also being 
drawn up for non-hazardous materials, and transportation risk analyses carried out for the transporta-
tion of hazardous materials that go beyond what is required under transportation legislation. To support 
knowledge sharing within the Group, a Global Transportation Safety Symposium was held for the first 
time in 2014 with 160 participants from 20 countries. 

The transportation safety management of the subgroups is part of the audit system of the Bayer Group 
specified in the Bayer Group Regulation “Health, Safety, Environment and Quality (hseq) Audits.”  

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12. Environmental Protection

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We classify critical incidents during the transportation of our products as transport incidents. These 
include accidents that cause personal injury, significant damage to property, environmental impact 
through the release of substances, or leakage of hazardous materials. We record transport incidents 
using defined criteria. Assessment is based on the leaked load, graded according to the volume and 
hazardous material class, personal injury and blocked transportation routes. We take into account both 
our own chemical transport movements and those we commission and pay third parties to perform on 
our behalf. 

Group target 2020: 
reduction of 30% in 
transport incidents 

  See also Chapter 
1.3 for Group 
targets 

In total, well over one million transport movements took place in 2014. Despite extensive safety precau-
tions and training activities, it is unfortunately impossible to prevent transport incidents from occurring 
altogether. We analyze and evaluate all incidents carefully so that adequate steps can be taken to pre-
vent a recurrence. The number of transport incidents increased from 11 to 12 in the reporting period.  

 online annex: 3-11-6 

Transport Incidents by Means of Transport 

  [Table 3.11.2-1]

2010 

2011 

2012 

2013 

Road 

Rail 

Inland waterways 

Sea  

Air 

Pipeline 

Total 

6

1

1

0

0

0

8 

6

1

0

0

0

0

7 

6

0

0

0

0

0

6 

8

0

0

3

0

0

2014 

11 

1 

0 

0 

0 

0 

11 

12 

A detailed overview of the transport incidents can be found in Chapter 12.6 “Environmental Protection” 
in online annex 3-12-6-2.  

12. Environmental Protection 

Bayer takes its responsibility to protect the environment very seriously. It is constantly working to re-
duce environmental impact and find innovative product solutions that benefit the environment. Our 
environmental standards apply worldwide. 

Eco-efficient processes help cut the costs associated with materials, energy, emissions and disposal. 
After all, an efficient approach to raw materials and energy is now more than ever an economic impera-
tive, too. Ever increasing costs oblige us to take measures to improve resource and energy efficiency 
that relieve the strain on the environment while also cutting costs. 

Our commitment to environmental protection, health and safety extends beyond the scope of legal 
requirements. It includes factoring in environmental aspects in a particular way and performing a volun-
tary ecological assessment for capital expenditure projects exceeding €10 million, for example. In the 
case of acquisitions we examine prior to the transaction whether the applicable environmental and 
occupational safety regulations and fundamental employee rights are complied with at the production 
sites in question. 

We are committed to the chemical industry’s Responsible Care™ initiative and have set out the basic 
principles of this commitment in our Bayer Sustainable Development Policy. Certified hseq manage-
ment systems control its operational implementation. 

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Combined Management Report 

12. Environmental Protection 

Bayer Annual Report 2014

12.1 Energy Consumption 

Energy and material consumption and emission levels are essentially dependent on the manufactured 
sales volume, which does not include intermediates.  

In 2014 Bayer’s manufactured sales volume rose by 2.7%. Total energy consumption in the Group also 
rose, namely by 5.5% to 85.3 petajoules. We differentiate between primary energy consumption at our 
sites – mainly of fossil fuels for our own generation of electricity and steam – and secondary energy 
consumption that reflects the purchase of electricity, steam and refrigeration energy and the use of 
process heat. Primary energy consumption fell by 4.2%, while secondary energy consumption rose by 
19.5%. Volumes of natural gas and crude oil used as energy sources were up on the previous year but 
considerably less coal, waste and other primary energy sources (e.g. hydrogen) were used in our own 
in-house energy generation processes. In the case of secondary energy sources, the use of steam has 
risen significantly. Consumption of electricity and process heat was also above the prior-year level (see 
Table 3.12.1). 

The rise in total energy consumption (primary and secondary energy sources) is mainly caused by in-
creased production activities and the resulting growth in manufactured sales volume. This development 
could be observed in particular at the Baytown site in the United States. However, the inclusion for the 
first time of the energy-intensive MaterialScience site in Maasvlakte, Netherlands, in our environmental 
reporting in 2014 also had a major effect. It was included in the scope of consolidation in 2013 and 
retroactively for 2012. This site alone is responsible for 4.8% of the Group’s energy consumption. Pro-
duction in Maasvlakte is exclusively of intermediates, which according to our definition are not included 
in the manufactured sales volume. The energy necessary for their manufacture is included in full in the 
total energy consumption, however. Without this special factor the trend away from a correlation be-
tween manufactured sales volume and energy consumption already identified in previous years would 
have still been recognizable. 

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Energy Consumption in the Bayer Group 

[Table 3.12.1]

2010 

2011 

2012 

2013 

2014 

Primary energy consumption 
for the in-house generation  
of electricity & steam (TJ) 

Natural gas 

Coal 

Liquid fuels 

Waste 

Other1 

Secondary energy consumption 
(net, TJ) 

Electricity2 

Steam 

Steam from waste heat (process heat) 

Refrigeration energy 

Total energy consumption 
(TJ) 

Manufactured sales volume3  
(million metric tons) 

Energy efficiency4  
(MWh/t) 

51,632

31,847

17,801

532

678

774

34,078

25,229

722

8,722

(595)

50,096

31,162

16,776

660

515

983

34,846

25,475

1,054

9,000

(683)

49,047

30,411

15,954

656

1,005

1,021

34,137

25,849

(121)

9,144

(735)

47,582

29,796

15,094

416

1,282

994

33,266

25,560

(801)

9,146

(639)

45,572 

31,580 

12,611 

421 

833 

127 

39,745 

27,177 

3,579 

9,639 

(650) 

85,710

84,942

83,184

80,848

85,317 

10.4

11.0

11.2

11.1

11.4 

3.77

3.63

3.50

3.44

3.37 

1 e.g. hydrogen 
2 Secondary energy consumption for electricity is based on the raw material mix of the country concerned.  
3 The manufactured sales volume comprises all products sold in the reporting year, including secondary and trade products. 
4 Energy efficency: quotient of total energy consumption and manufactured sales volume. For MaterialScience, this does not include either the 

secondary products sodium hydroxide solution and hydrochloric acid generated in production or trade products. 

Bayer utilizes primary energy as efficiently as possible and applies combined heat and power processes 
in more than 90% of its energy generation. The electricity and heat generated are used in our own 
production facilities and third-party facilities (especially of Lanxess Deutschland GmbH as the other 
shareholder of our service company Currenta). The (secondary) energy purchased via us is also used at 
third-party production facilities. Furthermore, we purchase electricity on the market – through electrici-
ty exchanges, for example. The proportion of renewable energies is determined by the energy mix of 
our energy suppliers. We comment in detail on these issues in the cdp (previously Carbon Disclosure 
Project) Report. 

  www.annual-

report2014.bayer. 
com/CDP-Climate 

12.2 Air Emissions  

At Bayer, air emissions are caused mainly by the generation and consumption of energy. Our commit-
ment to greater energy efficiency helps reduce both costs and emissions. In addition, we aim to con-
tribute to climate protection on several levels and have established a Group-wide Climate Program for 
this purpose. 

CLIMATE PROGRAM 
For some years, we have been working through our Climate Program to improve resource and energy 
efficiency, one objective being to reduce greenhouse gas emissions during production operations. We 
also offer market solutions aimed at protecting the climate and adapting to climate change. 

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12. Environmental Protection 

Bayer Annual Report 2014

Group target 2020: 
20% reduction in 
specific greenhouse 
gas emissions and 
10% improvement in 
energy efficiency  

  See also Chapter 
1.3 for Group 
targets 

Group target: 
MaterialScience –  
improvement in 
production process 
technology to achieve 
better energy 
efficiency 

As part of our package of targets for the Group, we slightly increased the existing emissions reduction 
target in 2013 and additionally formulated an energy efficiency target. According to this, between 2012 
and 2020, Bayer intends to cut its specific greenhouse gas emissions by 20% and improve its energy 
efficiency by 10%. 2012 was taken as the base year for both targets. Specific greenhouse gas emissions 
amounted to 1.02 metric tons of co2 equivalents per metric ton of sales product. Energy efficiency in 
2014 was at 3.37 MWh per metric ton. 

Alongside aiming to achieve the overall Group climate target, the Bayer Climate Program reflects a 
commitment to three specific areas: 

1. More efficient production: reducing emissions at Bayer’s own production facilities by increasing 
energy efficiency and by developing and utilizing new, innovative technologies.  

 online annex: 3-12.2-1 

The STRUCTese™ (Structured Efficiency System for Energy) energy management system has been 
installed in 58 particularly energy-intensive MaterialScience plants in Europe, Asia and North Ameri-
ca. This system, designed by Bayer itself, enables the individual energy consumption of the produc-
tion plants to be optimally controlled and reduced by an average of a tenth. In 2014 the annual ener-
gy saving amounted to around 1.5 million MWh, while co2 emissions were cut by around 428,000 
metric tons per annum. MaterialScience completed the introduction of STRUCTese™ in 2014. The 
energy management system is also set to be used in other plants, too, however, including in the new 
large-scale tdi (toluene diisocyanate) production plant in Dormagen, Germany.  

Innovative production processes help reduce electricity consumption and greenhouse gas emissions. 
The use of oxygen depolarized cathode (odc) technology in chlorine production cuts electricity re-
quirements, for example, by 30% compared with the standard process. This was revealed in a test 
run at a demonstration plant with an annual capacity of 20,000 metric tons of chlorine. The plant has 
been operating successfully at the Krefeld-Uerdingen site in Germany for almost four years. The pro-
cess is marketed globally by MaterialScience and our development partner Thyssen Krupp Electro-
lysis. If odc technology were introduced throughout Germany’s chlorine industry, for example, it 
would cut the country’s total electricity consumption by 1%.  

A further process innovation is gas phase technology in the manufacture of the polyurethane precur-
sor tdi. This technology uses up to 60% less energy and up to 80% less solvent. Among other loca-
tions, the process is used at the new tdi plant with an annual capacity of 300,000 metric tons that 
went into operation at the Dormagen site in Germany at the end of 2014, at an investment cost of 
€250 million.  

Partially replacing crude oil with co2 in the production of plastics could help conserve resources. In 
this process, polyol, another precursor required to make polyurethane, can also be manufactured 
with the help of co2. MaterialScience has developed a process for this that is now market-ready and 
is to be used commercially. In this connection, plans are in place to build a production line at the 
Dormagen site in Germany that will manufacture co2-based polyols starting in 2016. 

2. Market solutions: using Bayer products – particularly in the areas of building insulation, lightweight 
construction and agriculture – to reduce customer emissions. Our products play their part in saving 
energy and conserving resources in many different ways. They help customers reduce emissions and 
provide them with solutions for adapting to climate change. 

 online annex: 3-12.2-2 

Products and solutions from MaterialScience help conserve resources and save energy in a number 
of key industries and areas of life, thereby also cutting emissions. Prime examples include light-
weight construction in the automotive sector and the insulation of buildings and refrigeration equip-
ment. For instance, a particularly fine-pored rigid polyurethane foam has been developed that can 
bring about a further significant improvement in the insulating performance of refrigerators and 
freezers. Reducing the size of the foam pores by up to 40% compared to conventional products low-
ers the thermal conductivity of the new material by as much as 10%.  

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12. Environmental Protection

131

MaterialScience has also demonstrated potential applications for polymers in the construction indus-
try through its EcoCommercial Building Program. This Bayer-led global initiative involves numerous 
industrial partnerships with leading construction companies that develop and provide product solu-
tions for sustainable construction. Its primary goals are to reduce the energy requirements, emis-
sions and life cycle costs of buildings and to increase user comfort. Reference buildings are used to 
demonstrate the positive contribution of insulating materials to the energy balance of a building.  

The transparent, high-performance plastic polycarbonate also paves the way for energy-efficient 
market solutions supporting, for example, energy-saving led technology that can be used in the au-
tomotive industry and for innovative street lights. The latter consume up to 70% less energy than 
conventional models.  

Materials from MaterialScience also play a role in generating renewable energies. For example, in 
the area of wind power the company has developed new polyurethane infusion resins for rotor blades 
that outperform rotors based on the previously used epoxy resins in terms of production speed, 
lightness and durability.  

CropScience’s seed and crop protection strategy actively helps reduce greenhouse gas emissions per 
yield. The Tabela program in Indonesia enables a reduction in water consumption of up to 20% 
through the direct seeding of pregerminated rice. Owing to the minimization of anaerobic conditions 
it is also possible to reduce emissions of the greenhouse gas methane by up to 30%. In this initia-
tive, the subgroup is working with local partners to demonstrate just what can be achieved with the 
help of a customized package comprising seeds and crop protection products. The benefits include 
enhanced water efficiency, lower greenhouse gas emissions, higher rice yields and improved in-
comes for farmers.  

More information about combating the growing threat of malaria resulting from climate change can 
be found in Chapter 5 “Research, Development, Innovation,” in the CropScience section. 

3. Supporting activities: reducing emissions in non-production areas – such as the vehicle fleet and it – 
involving the workforce in the process.  

 online annex: 3-12.2-3 

Bayer maintains a number of initiatives to cut emissions and costs in the Group’s non-production ar-
eas by saving energy and fuel. These include improvements in the global Group fleet of over 25,000 
vehicles, and in information technology. A new reduction target was implemented in 2013 as part of 
the Bayer EcoFleet initiative. Bayer plans to reduce its specific co2 emissions for new vehicles to 
110 g/km by 2020. The average co2 emission level for the approximately 6,700 newly registered ve-
hicles in 2014 was 148 g/km. Training in energy-saving driving will be added to the driving safety 
training courses in 2015.  

In the area of communication, Bayer is increasingly using energy-efficient workstation solutions with 
integrated voice and video functions. Such it solutions reduce the number of business trips neces-
sary and thus emission levels.  

GREENHOUSE GAS EMISSIONS 
Bayer reports all Group greenhouse gas emissions in line with the requirements of the Greenhouse Gas 
Protocol (ghg Protocol). Direct emissions from our own power plants, waste incineration plants and 
production facilities (corresponding to Scope 1 of the ghg Protocol) are determined at all production 
locations and relevant administrative sites. 

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The total volume of greenhouse gas emissions Group-wide climbed in 2014 by 4.2%. While direct emis-
sions fell by 1.7%, indirect emissions rose by 9.7%. This increase is also primarily due to the inclusion 
for the first time of the MaterialScience site in Maasvlakte, Netherlands, in the environmental reporting 
of the Group. 

Group Greenhouse Gas Emissions1 

Direct greenhouse gas emissions2 

Indirect greenhouse gas emissions3 

Total greenhouse gas emissions 

Specific greenhouse gas emissions  
(metric tons of CO2 equivalents per metric ton  
of manufactured sales volume)4 

Manufactured sales volume5  
(million metric tons) 

2010 

4.80

3.70

8.50

1.09

10.4

2011 

4.23

3.92

8.15

0.95

11.0

[Table 3.12.2]

Million metric tons of CO2 equivalents 

2012 

4.24 

4.12 

8.36 

2013 

4.09 

4.29 

8.37 

0.98 

1.00 

11.2 

11.1 

2014 

4.02

4.70

8.72

1.02

11.4

1 portfolio-adjusted in accordance with the GHG Protocol 
2 In 2014 88.7% of emissions were CO2 emissions, 10.8% N2O emissions, just under 0.5% partially fluorinated hydrocarbons and 0.05% methane. 
3 Typically, CO2 in incineration processes accounts for over 99% of all greenhouse gas emissions. We therefore base our calculation of indirect 

emissions on CO2 only. 

4 Specific Group emissions are calculated from the total volume of direct and indirect emissions of the subgroups, including from the vehicle fleet, 

divided by the manufactured sales volume of the three subgroups. Quantities attributable to the supply of energy to external companies are 
deducted from the direct and indirect emissions. At MaterialScience the by-products sodium hydroxide solution and hydrochloric acid generated 
during production are not included in the production volume, nor are trade products. 

5 The manufactured sales volume includes all products sold in 2014, inclusive of secondary and trade products. 

Owing to the inclusion for the first time of the Maasvlakte site, Netherlands, in our environmental re-
porting, specific greenhouse gas emissions for 2014 were up on the 2013 level, at 1.02 metric tons of 
co2 equivalents per metric ton of sales product. 

 online annex: 3-12.2-4 

Thanks to their environmentally friendly and resource-efficient combined heat and power technolo-
gy, our power plants convert approximately 80% of the fuel energy used into electricity and heat. 
Despite this, they cause a significant proportion of the Group’s direct greenhouse gas emissions.  

It is important to note that, in line with the regulations of the ghg Protocol, we include in our energy 
figures all greenhouse gas emissions from the conversion of primary energy sources into electricity, 
steam or refrigeration energy, even though a significant proportion of direct emissions result from 
the generation of energy that is supplied to third parties (other companies). Consequently, our 
absolute figures for greenhouse gas emissions are higher than the actual emissions resulting from 
Bayer’s business activities. The level of specific greenhouse gas emissions is a more meaningful sta-
tistic. This indicates only the greenhouse gas emissions for which Bayer is responsible in relation to 
the manufactured sales volumes of the three Bayer subgroups; see Table 3.12.2-1 in the following 
online annex. 

The waste incineration plants operated by Currenta generate roughly 1 million metric tons of steam 
per annum from the incineration of approximately 280,000 metric tons of hazardous waste. Com-
pared to fossil fuel use, this reduces emissions by 200,000 metric tons of co2 per year.  

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Bayer Annual Report 2014 

 online annex: 3-12.2-5 

Combined Management Report

12. Environmental Protection

133

Greenhouse Gas Emissions by Subgroup and Service Company 

[Table 3.12.2-1]

HealthCare 

CropScience 

MaterialScience 

Others3 

Currenta4 

Specific greenhouse gas emissions for 
MaterialScience (metric tons of CO2 
equivalents per metric ton of manufactured 
sales volume)5 

Total direct and indirect emissions in million metric tons of CO2 equivalents 

2010 

0.54

1.09

5.24

0.02

1.62

2011 

0.54

1.00

4.63

0.01

1.97

2012 

0.55

0.92

4.89

–

1.88

20131 

0.52

0.95

4.98

–

1.83

20141 

0.52 

0.91 

5.672 

– 

1.52 

0.96

0.82

0.86

0.89

0.93 

1 Emissions from the Group’s vehicle fleet amounting to 0.1 million metric tons of CO2 equivalents have been recorded since 2013 but are not 

assigned to specific subgroups. Instead, they are reported in the Group emissions under direct emissions (see Table 3.12.2 “Group 
Greenhouse Gas Emissions”). 

2 The significant increase in greenhouse gas emissions at MaterialScience to 5.67 million metric tons is due to the inclusion for the first time of 

the propylene oxide production unit in Maasvlakte, Netherlands, in our environment reporting. This site alone is responsible for around 
330,000 metric tons of CO2. Without the inclusion of Maasvlakte, specific emissions did not increase in 2014 but fell. Retrospective correction 
of the yearly figures was abstained from in line with internal regulations. 

3 Total greenhouse gas emissions for Technology Services and Business Services. These companies’ production facilities were incorporated 

into other subgroups in 2012.  

4 The emissions reported for Currenta are attributable to the provision of energy to external companies at the Chempark sites. 
5 The by-products sodium hydroxide solution and hydrochloric acid generated during production are not included in the manufactured sales 

volumes, nor are trade products.  

The reporting of all relevant indirect Scope 3 emissions under the ghg Protocol is bindingly regulated 
by the Corporate Value Chain Accounting & Reporting Standard. Following a thorough examination, 
Bayer has identified nine essential Scope 3 categories, which we report on in detail in the cdp Report.  

 online annex: 3-12.2-6 

As part of the cdp, we will again be publishing a detailed report for 2014 on these emissions that re-
sult from the value-added chain. We take particular account of those emissions where there is signif-
icant potential for reduction. These include our transport-related emissions resulting from business 
trips. 

In 2014 the Bayer Group was involved in European emissions trading with 19 plants in total. The green-
house gas emissions of these plants amounted to approximately 2.29 million metric tons of co2 equiva-
lents. 

OTHER DIRECT EMISSIONS INTO THE AIR 
Emissions of ozone depleting substances (ods) fell by 5.6%. Emissions of volatile organic compounds 
excluding methane (vocs) decreased by 6.5%. The main source of both types of emissions remains the 
CropScience site in Vapi, India, which accounts for 68.2% of voc emissions and 94.9% of ods emis-
sions. The project initiated there three years ago to reduce these emissions continues to have an impact. 
voc emissions have fallen by a further 9.5%, which is equivalent to 7.2% of the Group total. ods emis-
sions there decreased by 3.4%. By 2016 at the latest, a central waste air treatment system will bring 
together the many different sources of emissions in Vapi and significantly reduce these emissions. 

Emissions of Ozone Depleting Substances (ODS)1 

[Table 3.12.3]

ODS in metric tons p.a. 

1 ozone depleting substances (ODS) in CFC-11 equivalents 

2010 

20.8

2011 

16.3

2012 

16.3

2013 

15.7

2014 

14.8 

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Emissions of Volatile Organic Compounds (VOC)1 

[Table 3.12.4]

VOC in 1,000 metric tons p.a. 

VOC in kg per metric ton  
of manufactured sales volume 

1 volatile organic compounds (VOC) without methane 

2010 

2.54

2011 

2.69

2012 

2.60 

2013 

2.27 

2014 

2.12

0.2436

0.2457

0.2316 

0.2047 

0.1864

Nearly all other direct emissions also fell in 2014.  

 online annex: 3-12.2-7 

Other Important Direct Air Emissions 

CO 

NOX 

SOX 

Particulates 

[Table 3.12.4-1]

1,000 metric tons p.a. 

2010 

2011 

2012 

2013 

2014 

1.4

3.7

2.7

0.2

1.3

3.7

2.3

0.2

1.0 

3.1 

1.9 

0.2 

0.9 

2.5 

1.3 

0.2 

0.9

2.4

1.2

0.2

12.3 Use of Water and Emissions into Water 

The continuous availability of clean water in sufficient quantities is essential for supplying our produc-
tion sites and the surrounding areas. However, this can no longer be taken for granted in many parts of 
the world. We make sure we have all the water we need while also ensuring that industrial water usage 
does not lead to local problems such as water scarcity for the people living in the area.  

  www.annual-
report2014.bayer. 
com/CDP-Water 

Bayer supports the ceo Water Mandate of the u.n. Global Compact with the goal of working with key 
stakeholders to develop sustainable strategies for water usage. Our cdp Water Disclosure reports on our 
water usage and the associated risks.  

 online annex: 3-12.3-1 

In the last few years, we have been actively involved in the ceo Water Mandate’s working group and 
in drawing up the new version of the Corporate Water Disclosure Guidelines. The updated guidelines 
were published in September 2014. We provide details of our commitment, the measures imple-
mented and the results achieved within the Group in our annual cdp Water Disclosure response, 
which represents a progress report for the ceo Water Mandate. In this survey initiated by the cdp, in-
stitutional investors call on more than 800 of the world’s biggest companies to disclose details of 
their water management, their company-specific water footprint, and the opportunities and risks they 
have identified in connection with the use of water. In addition, Bayer also took part in 2014 in a cdp 
Water Disclosure pilot project to develop a standardized assessment and comparison method for 
companies’ water stewardship. 

Based on our company’s Water Position and the analysis of environmental aspects in our existing Bayer 
environmental management systems, we have established a program for the targeted and ongoing 
improvement of our water-related operating procedures. This covers both the conservation and the 
efficient use of resources. In 2013 we used the wbcsd (World Business Council for Sustainable Devel-
opment) Global Water Tool™ to screen all of our environmentally relevant sites in terms of water  
scarcity. As a result, we identified sites whose location in water-scarce areas exposes them to particular 
risks in terms of water availability and quality. In line with our Group target, these sites are to establish 
water management with local targets by 2017 (see also Chapter 1.3 “Targets and Performance Indica-
tors”). The existing water management at over 80% of these sites have already been reviewed in 2014. 
This review examined, for example, whether water-relevant strategies, objectives and initiatives and an  

Group target 2017: 
establishment of water 
management at all 
sites in water-scarce 
areas 

  See also Chapter 
1.3 for Group 
targets  

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135

appropriate risk management system were already in place. On the basis of this review, individual steps  
to improve water management will be agreed on with the sites in question. In addition, our three sub-
groups use specific systems and standards to address their own individual challenges in handling water.  

 online annex: 3-12.3-2  

In its Water Protection Directive, HealthCare commits itself to responsible water usage. At the 
Bergkamen site in Germany – Bayer’s largest production site for active pharmaceutical ingredients – 
all wastewater produced on the site premises is treated in the central wastewater treatment plant 
(zaba). Its state-of-the-art membrane technology retains all biomass from biological wastewater 
treatment. The ultrafiltration cleans the water so effectively that it can be fed straight into the River 
Lippe. Before treatment in the zaba, water containing high levels of solvents first goes through the 
decentralized process water treatment plant. Solvent material is separated off, cleaned as far as pos-
sible and reused. Non-recyclable materials are incinerated. The facility considerably reduces the or-
ganic material content (toc load): approximately 96% of materials are filtered out in this way, before 
the water goes to the zaba for processing. In addition, a rainwater collection, treatment and usage 
project was completed in 2014 to reduce water consumption from other sources and achieve further 
benefits. 

CropScience is a member of the World Business Council for Sustainable Development’s Water Pro-
gramme Leadership Group. At the site in Quart de Poblet, Spain, we conducted a pilot project for as-
sessing the sustainable use of water and determining the potential for improvement as part of the 
European Water Stewardship (ews) Programme. This assessment formed the basis for the certifica-
tion in the ews water project achieved in 2014.  

MaterialScience regulates the resource-friendly use of water in its hseq policy. This policy includes 
a commitment to handle resources carefully. The company also feels it has a responsibility to contin-
uously improve its contribution to environmental protection and energy efficiency. As part of its envi-
ronmental management system, the Tarragona site has set itself various goals to reduce the dis-
charge of emissions into water and the total water volume. The measures initiated to this end cover 
the use of rainwater for the site cooling tower and the recycling of wastewater from the public treat-
ment plant, for example. 

WATER CONSUMPTION AND USAGE 
In 2014 total water consumption in the Group fell by 3.1% to 349.8 million cubic meters. Major reduc-
tions were observed at the Chempark Dormagen site in Germany, and at the u.s. sites in South Charles-
ton and Institute. As a result of the phased closure of the CropScience site in Institute, water consumption 
there fell by a further 2.2 million cubic meters to 15.2 million cubic meters. 

71.1% of all water used by Bayer is once-through cooling water. This water is only heated and does not 
come into contact with products. It can be returned to the water cycle without further treatment in line 
with the relevant official permits. The total volume of once-through cooling water was 248.7 million 
cubic meters in 2014. In our production activities, we endeavor to use water several times and to recy-
cle it. Water is currently recycled at 35 sites, e.g. in closed cooling cycles, or through the reuse of treat-
ed wastewater or the recirculation of steam condensates as process water. A total of around 12.8 million 
cubic meters of water was reused in 2014.  

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 online annex: 3-12.3-3 

The diagram shows the distribution of the different types of water usage within the Bayer Group. 

Water Use in the Bayer Group in 2014 (million m3)

[Graphic 3.12.0-1]

Sources of water

Water usage 1

Water discharged 1

Surface water   

224 (63%)

Cooling water 

262 (75%)

Boreholes / springs   

112 (32%)

Drinking water supplies 

9 (3%)

of which 
recycled / reused

13 (4%)

Other sources 

5 (2%)

Production2 

88 (25%)

Once-through 
cooling water

249 (76%)

Losses due to evaporation  13 (4%)
from cooling water circuits 

Process wastewater 
with subsequent treatment

50 (15%)

Process wastewater 
without subsequent treatment

16 (5%)

1  The differences between volumes of water consumed and water discharged can be explained, for example, by unquantiﬁ ed losses 

due to evaporation, leaks, quantities of water used as raw materials in products and volumes of condensate generated through the use 
of steam as a source of energy.

2 sum from production processes, sanitary wastewater and rinsing and cleaning processes in production

The water sources largely corresponded with those of 2013. 

Net Water Intake by Source  

   [Table 3.12.5]

Water consumption (million m³ p.a.) 

Proportion from surface water (%) 

Proportion from boreholes / springs (%) 

Proportion from public drinking water supplies (%) 

Proportion from other sources,  
generally rainwater (%) 

2010 

474

71

25

3

1

2011 

411

65

31

2

2

2012 

384 

64 

32 

2 

2 

2013 

361 

63 

33 

3 

2 

2014 

350

63

32

3

2

WASTEWATER AND WASTEWATER DISCHARGES 
The total volume of process wastewater rose by 6.1%. All wastewater is subject to strict monitoring and 
analysis before it is discharged into disposal channels. Some 75.5% of Bayer’s process wastewater 
worldwide was purified at wastewater treatment plants (Bayer or third-party facilities). Following careful 
analysis, the remaining 24.5% was categorized as environmentally safe. Part of it contained nutrients and 
was therefore used to water gardens and agricultural land, as in the previous year.  

Volume of Process Wastewater 

[Table 3.12.6]

Volume of process wastewater (million m³) 

2010 

69

2011 

72

2012 

65 

2013 

63 

2014 

66

Our goal is to minimize emissions into wastewater. The amount of phosphates released into wastewater 
fell by 12.6%. Total organic carbon emissions (toc) fell by 21.6%. This is primarily due to lower toc and 
phosphate discharges at the CropScience site in Kansas City, United States. Maintenance and inspection 
work at the wastewater treatment plant there was completed by the end of 2013, and a new wastewater 
laboratory also began operations. This considerably improved the cleaning performance and wastewater 
monitoring. HealthCare’s site in Berkeley, United States, was also able to reduce phosphate discharges 
into wastewater in 2014 via the elimination rate of the local wastewater treatment plant. 

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137

We recorded an increase of 11.3% in the emission of nitrogen compounds into the wastewater in 2014. 
This was primarily caused by increased production volumes at CropScience’s Dormagen site in Germa-
ny, but also by the situation at MaterialScience’s Baytown site in the United States, where the denitrifi-
cation process did not work to an optimal level of effectiveness as a result of operational disturbances. 

Emissions into Water 

[Table 3.12.7]

Phosphorus (1,000 metric tons p.a.) 

Nitrogen (1,000 metric tons p.a.) 

Nitrogen (kg per metric ton of manufactured 
sales volume) 

TOC1 (1,000 metric tons p.a.) 

TOC (kg per metric ton of manufactured sales 
volume) 

Heavy metals (1,000 metric tons p.a.) 

Inorganic salts (1,000 metric tons p.a.) 

COD2 (1,000 metric tons p.a.) 

2010 

0.09

0.49

0.0474

1.42

0.136

0.0114

866

4.26

2011 

0.08

0.53

0.0486

1.50

0.137

0.0108

926

4.51

2012 

0.15

0.70

0.0624

1.42

0.126

0.0098

1,048

4.25

2013 

0.11

0.69

0.0620

1.53

0.138

0.0091

946

4.58

2014 

0.10 

0.76 

0.0671 

1.20 

0.105 

0.0063 

845 

3.59 

1 total organic carbon 
2 chemical oxygen demand; calculated value based on TOC figures (TOC x 3 = COD) 

12.4 Waste and Recycling 

Systematic waste management minimizes material consumption and disposal volumes. Safe disposal 
channels with separation according to the type of waste and economically expedient recycling process-
es serve this purpose. Production fluctuations and building refurbishment / land remediation work also 
influence waste volumes and recycling paths. 

In 2014 the total volume of waste generated remained approximately at the prior-year level. 

Waste Generated1  

Total waste generated (1,000 metric tons p.a.) 

Hazardous waste generated2 

of which hazardous waste from production 

Specific volume of hazardous  
production waste (%) 

2010 

807

354

325

2011 

958

474

354

2012 

1,014

603

397

[Table 3.12.8]

2013 

899

467

417

2014 

896 

487 

442 

3.12

3.23

3.54

3.77

3.89 

1 waste generated by Bayer only 
2 definition of hazardous waste in accordance with the local laws in each instance 

The increase in hazardous waste generated, especially at the German sites in Dormagen, Frankfurt and 
Leverkusen, is essentially due to an increase in the production volume. 

The volume of waste disposed of fell by 1.9%. Less waste was disposed of than in the previous year at 
the HealthCare sites in Bergkamen and Kiel, both in Germany, as a result of the completion of building 
work. At the CropScience site in Institute, United States, the volume of waste disposed of again fell 
significantly in 2014 owing to progressive dismantling.  

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 online annex: 3-12.4-1 

Waste by Means of Disposal 

  [Table 3.12.8-1]

Total volume of waste disposed of1  
(1,000 metric tons p.a.) 

    Proportion removed to landfill (%) 

    Proportion incinerated (%) 

    Proportion recycled (%) 

    Others² (%) 

2010 

2011 

2012 

2013 

2014 

809

32

36

31

1

966

1,021 

915 

38

33

28

1

36 

33 

29 

2 

32 

38 

27 

2 

898

28

40

29

3

1 Bayer serves as a certified waste disposal plant operator at various sites. At these locations, Bayer disposes not only of its own waste but also 
of waste from third parties (companies not belonging to the Bayer Group). For that reason the volume of waste disposed of differs slightly 
from the volume of waste generated by Bayer.  

2 e.g. passed on to third parties (e.g. providers / waste disposal companies) 

Hazardous Waste1 Generated by Means of Disposal  

Total volume of hazardous waste 
generated2 

    Amount removed to landfill  

    Amount incinerated / recycled  

  [Table 3.12.8-2]

  1,000 metric tons p. a. 

2010 

2011 

2012 

2013 

2014 

354

56

298

474

122

352

603 

175 

428 

467 

53 

414 

487

65

422

1 waste generated by Bayer only 
2 definition of hazardous waste in accordance with the local laws in each instance 

RECYCLING 
In addition to satisfying economic and environmental criteria, the recycling and treatment of our mate-
rials also has to comply with legal requirements. This results in restrictions, in particular in the areas of 
pharmaceuticals and crop protection. Throughout the Group, we are developing opportunities for recy-
cling within the framework of legal regulations. 

In 2014 the volume of waste recycled was 260,519 metric tons. The proportion of recycled waste that 
made up the total volume of waste disposed of thus rose by two percentage points to 29% compared 
with the previous year. This resulted from the recycling of slag granules as a building material at the 
Krefeld-Uerdingen site in Germany. Examples of recycling measures provide proof of Bayer’s commit-
ment to recycling.  

 online annex: 3-12.4 2 

At the Bergkamen site in Germany, HealthCare binds iodine released during the incineration of 
waste from X-ray contrast medium production and processes it into an iodide solution that can be 
marketed. This process enabled us to recover and recycle around 281 metric tons of iodine in 2014.  

The Consumer Care site in Myerstown, United States, is continually working on achieving resource-
efficient production. In 2014, for example, 73.5% of production waste (more than 2,500 metric tons) 
was fed into the recycling process.  

CropScience supports the drawing up of guidelines on the return of crop protection product packag-
ing in collaboration with national and international industrial associations. The subgroup is also 
globally committed to establishing efficient take-back systems with the corresponding reclamation 
organizations. The international industrial organization for the crop protection industry (Crop Life  
International) has established 35 take-back systems worldwide for empty crop protection product 
packaging. In Germany, as part of the pamira system for the safe and environmentally friendly 
disposal of crop protection and liquid fertilizer packaging, approximately 3,000 metric tons of pack-
aging were accepted in 2014 for controlled, environmentally responsible, primarily mechanical  
recycling. 

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MaterialScience’s sustainability strategy also covers the end-of-life product phase. This is imple-
mented in product and plant recycling, production, and targeted involvement in initiatives.  

For example, the subgroup supports the recycling of its plastic products and articles made from 
them. In its own production operations, too, MaterialScience uses material recycled from plastic 
waste. These kinds of high-quality secondary raw materials are used to manufacture certain grades 
of engineering thermoplastics, such as a flame-retardant plastic compound for television set hous-
ings that is produced using 30% recyclate from old pet water bottles. 

In 2014 the Global Sideline Business unit at MaterialScience continued to sell plants and tools that 
are no longer in use on the open market, thus feeding them back into circulation. Approximately 135 
tangible assets were sold to third parties worldwide in 2014. Furthermore, around 2,600 metric tons 
of scrap metal were returned to the material cycle from plants in Germany alone. Metal scrap was al-
so recycled at other MaterialScience sites. 

The subgroup’s commitment to recycling also extends to intensive involvement in the committees of 
associations such as PlasticsEurope and along the entire value added chain as a shareholder of bkv 
GmbH, German industry’s competence platform for recycling plastic. 

MaterialScience also continues to support PlasticsEurope’s “Zero Pellet Loss” initiative, with the 
goal of developing measures to prevent the loss of plastic pellets on the way from production to the 
finished article. After the successful launch of two pilot projects in German production areas, the 
initiative was rolled out globally and transferred to the logistics processes. 

The process developed by Currenta for the thermal treatment of composite materials is successfully 
being used for the efficient recycling of lithium-ion batteries. Almost 1,500 metric tons of batteries 
were treated in the rotary kiln in 2014. All combustible ingredients are destroyed and the heat re-
leased is harnessed to generate steam. This leaves the precious metals, which are then sent for recy-
cling.  

Using a new process for recycling polymer residues from plastics production at the Chempark Kre-
feld-Uerdingen site, Currenta is reducing waste volumes in one plant by 30% and thus also reducing 
the volume of starting materials, since the recycled substances can be reused in production. Thanks 
to other, conventional recycling measures, Currenta was able to return around 53,000 metric tons of 
construction materials, fgd gypsum and slag, 27,800 metric tons of metals and 14,200 metric tons of 
chemicals such as sulfuric acid or solvents to the material cycle in 2014. 

12.5 Biodiversity 

The Group-wide biodiversity position takes into account influences on biodiversity along the whole 
value-added chain and the sustainable use of raw materials.  

In this position, all subgroups commit themselves to the Convention on Biological Diversity. Under this 
Convention, the industrialized nations entered into an undertaking to provide developing countries with 
greater support in implementing international biodiversity goals. 

 online annex: 3-12.5-1 

Great importance is also attached to the protection of biodiversity as part of the European Union’s re-
form of its Common Agricultural Policy in line with the Convention on Biological Diversity. Crop-
Science supports a wide variety of activities to promote biodiversity in agriculture. A key part of this 
is the optimal use of high-yield areas to cultivate food, feed and renewable raw materials. This must 
be harmonized with the preservation and protection of natural resources by transforming less high-
yield areas into habitats for animals and plants. The company’s experience shows that cutting-edge 
agriculture and the promotion of biodiversity are not mutually exclusive. For example, Bayer has for 
many years been working successfully with farmers and experts from nature conservation associa-

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tions, business and academia. Together, the experts at Bayer develop and test measures for promot-
ing biodiversity in agriculture, collect data and assess the changes in species diversity. The goal is to 
integrate the measures expediently into the operational procedures used by the farmers. 

To protect and encourage pollinating insects, several strips of flowers have been planted in front of 
and on the grounds of the CropScience site in Monheim, Germany. Under the motto “Blühende  
Wege” (Areas in bloom), CropScience also supports municipalities in Germany and Austria in turning 
unused strips of grass into feeding areas for bees. In 2014 a total of 30 sites with a total area of 
96,000 square meters were supported with special “bee meadow” seeds, and an expansion of the ini-
tiative is planned for 2015.  

HealthCare also attaches great importance to maintaining biological diversity. As a member of the 
Association of Research-Based Pharmaceutical Companies, we support the association’s position on 
the u.n. Convention on Biological Diversity. The HealthCare policy on biodiversity is implemented at 
the subgroup’s sites. Among other factors, it takes into account that the subgroup concentrates on 
the chemical synthesis of substances using state-of-the-art technologies in medicinal, combinatorial 
and computational chemistry. Research into natural substances is not a focal point of our work, ac-
counting for less than 5% of research activities. If such substances are used during research into 
new pharmaceuticals, they are first checked with respect to the Convention on Biological Diversity. 

The use of renewable raw materials still plays only a minor role at Bayer. We are using them more in-
tensively when it makes technical, economic and ecological sense to do so.  

 online annex: 3-12.5-2 

At HealthCare, some hormones are synthesized by way of certain sterols or phytosterols generated 
as by-products of the manufacture of vegetable oils from soybeans, oilseed rape or sunflowers. Palm 
oil or palm kernel oil is not used due to its low sterol content. We also purchase various steroids that 
are manufactured from diosgenin. Today, this substance is usually obtained from yam grown in coun-
tries such as China. In the fermentation process, we also use raw materials such as water, glucose, 
yeast, soybean starch, castor oil and corn steep water. Extracts of plant leaves (Centella asiatica) are 
used in some Consumer Care products. This plant is widely found in Asia and is not an endangered 
species. We also take great care with the cultivation and harvesting of the raw materials for manufac-
turing plant-based pharmaceuticals for holistic treatments. They are collected and cultivated in line 
with the requirements of the gacp (Good Agricultural and Collection Practice) guidelines of the Euro-
pean Medicines Agency.  

On the European market, CropScience offers a mild weed control product based on fatty acids de-
rived from palm oil. As the production of palm oil is often associated with social and ecological prob-
lems, Bayer has joined the Round Table for Sustainable Palm Oil (rspo). This underscores our com-
mitment to responsible materials procurement. Bayer purchases GreenPalm certificates, which sup-
port the production of sustainable palm oil. 

MaterialScience is experimenting with the replacement of crude oil-based raw materials as part of 
its innovation and cooperation projects. For example, the subgroup is testing a biotechnological pro-
cess that is based on the conversion of biomass by microorganisms and can supply material for the 
production of plastics. 

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A Group-wide directive on process and plant safety stipulates that new production sites must not be set 
up in areas that are protected by statutory requirements of the countries concerned relating to natural 
characteristics, biodiversity or other factors. 

 online annex: 3-12.5-3 

In 2013 Bayer Real Estate, the Bayer Group’s real estate service provider, used its global site register 
to compare the geographical coordinates of relevant production sites that currently apply against 
those of internationally recognized protected areas (asean Heritage, Barcelona Convention, unesco-
mab Biosphere Reserve, Wetlands and World Heritage Convention and Ramsar Convention). This 
analysis showed that three of our sites lie less than three kilometers from protected areas. These are 
Schorren van de Benenden Schelde, Belgium; the Wadden Sea of Lower Saxony, Germany; and 
Blesbokspruit, South Africa. As part of the comparison, we checked water usage and discharge at the 
company’s water-intensive sites so as to prevent significant extractions of water and wastewater dis-
charges that could adversely affect the protected areas. 

12.6 Environmental and Transport Incidents 

Bayer uses the term “environmental incidents” to define incidents in the course of our business activi-
ties that result in the release of substances into the environment. Factors that determine whether there 
is a reporting obligation include, in particular, the nature and quantity of the substance, the amount 
of damage caused or any consequences for nearby residents. In accordance with our internal voluntary 
commitment, we report any leakage of substances with a high hazard potential from a quantity of 
100 kg upward.  

Despite extensive safety precautions and training, it is unfortunately impossible to prevent environmen-
tal incidents altogether. In 2014 the number of environmental incidents fell from ten to four.   

 online annex: 3-12.6-1 

Number of Environmental Incidents 

  [Table 3.12.8-3]

Environmental incidents 

2010 

7

2011 

3

2012 

5

2013 

10

2014 

4 

Transport incidents increased from 11 to 12. Transport incidents are also classified according to clearly 
defined Bayer criteria (more information can be found in Chapter 11 “Safety”).  

 online annex: 3-12.6-2 

Of the 16 incidents reported, four were environmental incidents and 12 transport incidents. 

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Environmental and Transport Incidents  

Environment

Transport 

[Table 3.12.8-4]

Personal
 injury

MaterialScience, Brazil, January 6, 2014 
Following a traffic accident on a highway, a truck loaded 
with 14 IBCs1 filled with MDI (diphenylmethane 
diisocyanate) leaked around 1,300 kg of material. The 
incident was reported to the local environmental authority 
and a service provider specialized in dealing with chemical 
incidents. The products were transported back to our supply 
site and treated there expertly. 

MaterialScience, Germany, March 27, 2014 
A tank truck loaded with TDI from the Brunsbüttel site lost 
some product on the way to the customer on the highway 
and at a parking lot. The fire department alerted by the truck 
driver temporarily closed the highway. The truck driver was 
taken to hospital for preventive observation for 24 hours. 

MaterialScience, United States, April 10, 2014 
During a filling operation in a warehouse, the warehouse 
operator disconnected the supply hose of a tank, which was 
still under pressure. Around 100 liters of the product leaked 
onto the concrete surface of a collecting area. No one was 
harmed. 

MaterialScience, Dormagen, Germany, April 28, 2014 
During maintenance work, a small amount of phosgene 
solution leaked at a non-Bayer facility at the Chempark site. 
The monitoring system in the adjacent MaterialScience 
plant automatically triggered a vapor ammonia wall that was 
only in action for a few minutes. 140 kg ammonia were 
released. 

MaterialScience, United States, May 13, 2014 
A traffic accident involving a truck and a passenger car 
caused a slow drip of a liquid from the truck. On subsequent 
examination, this proved to be a non-hazardous container 
heating fluid. The truck driver was not injured in the crash 
but the driver of the passenger vehicle was airlifted to a 
hospital to be treated for injuries.  

Currenta, Dormagen, Germany, June 5, 2014 
Owing to an untight flange in a pipeline, around 10 m³ 18% 
hydrochloric acid leaked out. The responsible authority was 
informed and agreed to the wastewater captured being 
disposed of via a wastewater treatment plant and the 
contaminated soil being excavated and disposed of in 
accordance with the regulations. No one was harmed. 

MaterialScience, United States, July 31, 2014 
During a traffic accident the driver of a contractor's truck 
left the highway and struck a tree head on. The driver died 
from the injuries sustained in the accident. The crash 
caused the gaylords loaded with Makrolon to be thrown 
from the trailer into a ditch beside the highway spilling the 
entire contents. These were disposed of according to the 
regulations.  

X 

No

X 

No

X 

No

No

X 

Yes

No

X 

Yes

X

X

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Bayer Annual Report 2014 

Combined Management Report

12. Environmental Protection

143

Environmental and Transport Incidents  

[Table 3.12.8-4 (continued)]

Environment

Transport

Personal 
 injury 

MaterialScience, United States, August 6, 2014 
A tank truck of 36% hydrochloric acid in transit to a customer 
began to leak. The fire department alerted by the driver and a 
hazmat team diked the spill with sand and transloaded the 
remaining liquid into another tank truck. 
 This action led to the roadway being closed for several hours. 
No injuries were reported. 

MaterialScience, Australia, August 18, 2014 
In the container unloading/dock area, a drum containing  
250 liters of Desmodur fell over and rolled into the yard area. 
The drum was damaged and product leaked out. This was then 
taken up and disposed of expertly. 

MaterialScience, India, August 23, 2014 
A truck carrying 13 IBCs1 met with an accident on the way to a 
warehouse. Some 8,500 kg polyol (non-hazardous material) 
leaked out. The spill was contained with absorbent and sand. 
The specialist team for chemical incidents alerted ensured 
proper handling and disposal. 

MaterialScience, Antwerp, Belgium, September 16, 2014 
Production operators discovered a leaking gasket on the main 
flange of a heat exchanger. The gasket had partially burst, 
releasing hot process gas containing approx. 150 kg carbon 
monoxide into the atmosphere. The reformer was immediately 
flushed with nitrogen to prevent further release of process 
gas. 

MaterialScience, France, September 18, 2014 
A flexibag container filled with approx. 24 metric tons of 
polyol (non-hazardous material) was totally destroyed and 
leaked during loading operations on a vessel in the port of 
Marseille. 

MaterialScience, Switzerland, October 7, 2014 
While a container was being unloaded at a customer’s site, 
approx. 1-2 m³ bisphenol A was released. No one was injured. 

MaterialScience, United States, November 21, 2014 
While a product was being unloaded, a crack formed in the 
discharge hose from a container transporter. Approx. 190 
liters of an MDI-containing polymer leaked out, which were 
captured and disposed of. No injuries or hazards resulted. 

MaterialScience, United States, December 15, 2014 
While toluene diamine (TDA) was being unloaded from a rail 
vehicle to a storage tank, a pump seal on the tank was 
damaged. Approx. 150 liters of TDA spilled into the safety 
section of the pump. There was no environmental impact. 

MaterialScience, Dormagen, Germany, December 21, 2014 
The failure of a seal caused a leak in a site network line for 
32% sodium hydroxide solution. Approx. 3 m³ sodium 
hydroxide solution fell onto the turf below via a pipe bridge.  

1 IBC (Intermediate Bulk Container) 

X

X

X

X

X

X

X

No 

No 

No 

No 

No 

No 

No 

No 

No 

X

X

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144 

Combined Management Report 

12. Environmental Protection 

Bayer Annual Report 2014

The following incidents were registered and analyzed. Under Bayer criteria, however, they are not 
considered environmental or transport incidents.  

Further Incidents Not Considered Environmental or Transport Incidents under Bayer Criteria1 

[Table 3.12.8-5]

Location of the incident 

Description 

Comments 

MaterialScience, Belford 
Roxo, Brazil, 
March 31, 2014 

Fatal shooting at Belford Roxo site 

A security service employee (contractor) tragically lost his life. He was fatally 
hit by several shots fired from outside the site premises. 

CropScience, Korangi, 
Pakistan, April 8, 2014 

Kidnap of a Bayer employee in 
Korangi 

MaterialScience, Pittsburgh, 
United States, June 6, 2014 

Leak in propylene oxide storage at 
Pittsburgh site 

CropScience, Nigel, South 
Africa, June 24, 2014 

Currenta, Dormagen, 
Germany, September 15, 
2014 

Flash fire at a plant at the Nigel site 

Explosion at the Chempark 
Dormagen site  

CropScience, Hürth-
Knapsack, Germany, 
October 21, 2014 

Fire at Knapsack Chemical Park 

During a business trip, an employee was kidnapped at gunpoint and released in 
a street the following day. The kidnappers stole his car and personal effects. 
The employee underwent hospital examinations as a precaution and the 
incident was classified as an occupational injury with lost workdays. 

A leak occurred in propylene oxide storage. This was rectified by specialist 
personnel, and the product made safe and suitable for future use. There were 
no hazards, injuries or environmental damage. Local media visited the scene 
and reported on the incident.  

A flash fire occurred in a filter during manual transfer of a CropScience 
product. No one was injured. However, the relevant employees were examined 
at a hospital as a precaution.  

An explosion occurred on the premises of ineos at the Chempark Dormagen 
site. The Chempark fire department extinguished the resulting fire. According 
to media reports, the district authority said there was no risk to the public. 

A fire broke out in a CropScience facility at the Knapsack Chemical Park 
following a substance leak. The fire was extinguished by the company fire 
department and public fire departments from the surrounding area. 
Measurements conducted in the vicinity of the Chemical Park did not determine 
any health-endangering concentrations of the substance. The flue gases 
released by the fire led to odor problems. The responsible authorities and the 
communities around the Chemical Park were notified. The incident was 
classified as an LoPC. 

1 Standard practice at Bayer is to record every fatality reported to us relating to our business activities. A difference between the number of fatalities in Table 3.11.1 “Occupational 

Injuries” and the above Table 3.12.8-5 may occur because for occupational injuries, by definition, we show only fatalities of Bayer and contractor employees who were under 
immediate Bayer supervision. 

12.7 International Standards and Certifications 

To ensure high health, safety, environmental protection and quality (hseq) standards throughout the 
Group, Bayer has established management systems that are aligned to acknowledged international 
standards and are regularly evaluated and updated. They form an integral part of all our business pro-
cesses. Regular upkeep of the management systems and appropriate training and certification also 
demonstrate our commitment to the guidelines of the chemical industry’s Responsible Care Global 
Charter. 

With regard to the coverage of our business activities with hseq management systems based on energy 
consumption, in 2014 around 94% of all our production sites featured an hse management system 
audited by Bayer. 95% of our entire business activities were certified externally to at least one interna-
tionally recognized standard in 2014. As part of a Group-wide certification plan, it is planned to achieve 
virtually complete coverage in both environmental and occupational safety management based on ener-
gy consumption by 2017. One hundred percent coverage is not feasible owing to changes in our site 
portfolio, however. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
  
  
 
 
 
Bayer Annual Report 2014 

Combined Management Report

13. Social Commitment

145

Standards and Certifications1  

[Table 3.12.9]

Certification to external standards 

ISO 14001 certification / EMAS validation 

HSEQ management systems based on other external 
standards2 

Certified to OHSAS 18001 

Certified to ISO 500013 

Degree of coverage with certification to at least one 
international standard 

HSE management systems internally audited by Bayer 

HSE management systems audited by Bayer 

2011 

2012 

2013 

2014 

66

54 

27

–

87

99

84 

58 

30 

–

89

99 

84 

67 

30 

–

90

99 

91 

58 

34 

40 

95 

944 

1 % of business activities (based on energy consumption) 
2 e.g. RCMS (Responsible Care Management System) in the United States or Industria Limpia (Clean Industry) in Mexico 
3 Group values determined from 2014 onward 
4 The percentage reduction in the HSE management systems audited by Bayer can be explained by the inclusion for the first time of the  

Maasvlakte site in our environmental reporting. Since the workforce there to date has comprised exclusively employees of our joint venture 
partner, no internal Bayer audits are performed there. 

We began introducing iso 50001 in 2012. This standard defines the requirements for introducing, main-
taining and improving an energy management system. In this report, we are for the first time publishing 
the coverage for the Group.  

All subgroups also have industry-specific international quality management systems such as iso 9001, 
iso 17025, iso 13485 or gmp (Good Manufacturing Practice). Group-wide, its coverage by certification is 
over 98%. More information about quality management can be found in Chapter 8 “Procurement and 
Production.” 

13. Social Commitment 

Throughout the world, Bayer actively supports charitable causes in the core fields of education and 
science, health and social needs, and sports and culture. Through our corporate foundations – the Bayer 
Science & Education Foundation and the Bayer Cares Foundation – we support cutting-edge research, 
talented young people and sustainable educational and social projects. In line with our understanding of 
Bayer as an innovation company, the Group and its foundations base their social commitment as well on 
the potential that new approaches harbor to bring about change. Initiative and pioneering spirit are 
therefore overarching funding criteria. 

Bayer actively supports 
charitable causes 
worldwide 

The Group provided €49 million for non-profit investment in the future well-being of society in 2014 
(2013: €50 million).  

Expenses for Social Initiatives 

Main sponsorship areas 

Education and science 

Health and social needs 

Sports and culture 

[Table 3.13.1]

2013 

2014 

€ million 

€ million 

14 

17 

19 

13  

17  

19  

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146 

Combined Management Report 

13. Social Commitment 

Bayer Annual Report 2014

Detailed information on expenses in our main sponsorship areas can be found in  

 online annex: 3-13-1 

Expenses for Social Initiatives in 2014 

[Table 3.13.1-1]

€ million 

Share of total 
in % 

Share of 
category in % 

Education and science 

School projects, focus: natural science and technology 

Medical and clinical research 

Science and research support  
(e.g. awards, endowed chairs, research funding, symposia) 

Nature and environment, environmental education 

Scholarships for students, talent management programs 

Health and social needs 

Public health, social medicine, emergency medical care 

Social community projects 

Health education and patient groups 

Disaster aid, reconstruction 

Volunteering projects 

Sports and culture 

Bayer clubs (sports, leisure, culture) 

Culture incl. Bayer Arts & Culture 

Other sports projects & projects in the communities surrounding the sites 

Total 

12.6 

4.2 

3.0 

2.8 

0.7 

1.9 

17.5 

6.9 

2.8 

3.0 

4.1 

0.7 

19.0 

14.4 

4.3 

0.3 

49.1 

26 

35 

39 

33

24

22

6

15

40

16

17

23

4

75

23

2

The Foundation & Donations Management Department within the Corporate Office of Bayer AG is re-
sponsible for strategically aligning and coordinating our social commitment, as well as for monitoring 
and reporting activities. The country companies bear responsibility for implementing a large number of 
the initiatives. 

 online annex: 3-13-2 

All project sponsoring is subject to the provisions of a Group-wide donation directive that establishes 
a framework for its content-related and strategic alignment, as well as the proper handling of the 
funds. We steer the selection of the projects through allocation guidelines comprising, among other 
aspects, the indicators “social relevance” and “thematic proximity to the company’s fields of exper-
tise.” In all activities, we focus on countries in which Bayer is represented and on areas that are of 
relevance to the Group’s business strategy. Neither Bayer AG nor other Bayer Group companies 
make donations to political parties or associations affiliated with them. 

EDUCATION AND SCIENCE 
The Bayer foundations and the country companies offer funding at all stages of the educational path – 
from kindergarten to high-level research. 

When it comes to scientific funding, Bayer focuses on supporting outstanding research achievements, 
developing international young scientists and engaging in dialogue in Life Science fields.  

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
 
  
  
  
  
  
  
  
 
  
  
  
  
  
 
  
  
  
  
  
 
  
  
  
  
 
  
  
  
Bayer Annual Report 2014 

Combined Management Report

13. Social Commitment

147

 online annex: 3-13-3 

The Bayer Science & Education Foundation awards prizes in recognition of outstanding achievements 
among both established researchers and young scientists. Professor Frédéric Merkt from the eth 
Zurich, Switzerland, for instance, received the Otto Bayer Prize 2014 for his outstanding contribu-
tions to the field of molecular spectroscopy. The award, worth €75,000, is highly regarded in the re-
search community. An Early Excellence in Science Award – with prize money amounting to €10,000 
– went to Dr. Steven Spoel from the United Kingdom in 2014. Working at the University of Edin-
burgh’s Institute of Molecular Plant Sciences, the project manager is successfully expanding our un-
derstanding of how living cells translate signals from their environment into changes in their gene 
expression.  

Bayer also supports the scientific education of young people. We want to help awaken and promote an 
interest in science, technology and medicine through initiatives for schoolchildren and scholarship 
programs. In this way, we are helping talented young people at an early age to go on to become lead-
ing-edge researchers.  

The foundation’s scholarships enable students and trainees to carry out ambitious projects abroad. 
When it comes to supporting the talents of schoolchildren, Bayer is banking on the commitment and 
creativity of subject teachers – total funding of €500,000 was approved in 2014 for 53 projects in which 
they are exploring new, practical ways of teaching science. All kinds of schools are eligible for funding – 
from elementary school to high school, including special schools and vocational schools. 

With this funding portfolio, the Bayer foundations recognize excellence in natural science and medicine 
in particular – the very scientific fields that form the basis for Bayer’s business model as a research-
oriented Life Science company. 

HEALTH AND SOCIAL NEEDS 
In many parts of the world, our social commitment includes involvement in improving health care,  
treating neglected diseases and providing better social living conditions in the communities around our 
sites. To this end, we work together with the World Health Organization (who) and local non-
governmental organizations, for example. 

 online annex: 3-13-4 

As part of its Access to Medicine activities, Bayer provides free medication to treat neglected tropical 
diseases. In particular, the company has for over 10 years been supporting the who in the fight 
against Chagas’ disease, which is widespread in Latin America, and African sleeping sickness. In 
2014 we again provided the who with one million Lampit™ tablets (active ingredient: nifurtimox 
120 mg) to treat Chagas’ disease, as well as us$300,000 for logistics and distribution. We are also 
currently developing a smaller nifurtimox tablet with a lower active ingredient content (30 mg) to 
simplify the treatment of children with Chagas’ disease.  

We have been supporting the who in the fight against African sleeping sickness – especially in east-
ern and southern Africa – since 2002. In 2014 we again provided 10,000 ampoules of Germanin™. 
Every year since 2009, Bayer has also donated 400,000 tablets with the active ingredient nifurtimox  
to the who for use in a combination therapy with an active ingredient from another manufacturer to 
treat West African sleeping sickness, the most widespread form of the disease. 

For the fifth time, the Bayer Cares Foundation in 2014 honored innovative initiatives in social medi-
cine with its Aspirin Social Award. The first prize, worth €15,000, was awarded to the “Explain tb” 
project with its novel concept for educating people about tuberculosis: a mobile app gives patients 
extensive information on the disease in the form of fact sheets and videos in 33 different languages. 
Half a million people still become ill with tuberculosis every year in Europe. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
148 

Combined Management Report 

13. Social Commitment 

Bayer Annual Report 2014

After the international expansion of the volunteering program in the previous year, the Bayer Cares 
Foundation provided funding of around €317,000 for 92 voluntary initiatives in 2014. These projects are 
primarily put forward by Bayer employees who are committed to improving the living conditions in the 
communities around Bayer’s sites in some 40 countries worldwide.  

2014 once again saw the Bayer Cares Foundation involved in disaster aid. After the devastating destruc-
tion caused by Typhoon Haiyan on the Philippines, for example, the foundation joined forces with local 
partners to launch three reconstruction projects. They provide health care and permanent accommoda-
tion for the people affected. These measures were made possible by funding to the tune of €280,000 
financed in equal part by Bayer employees and the company itself.  

SPORTS AND CULTURE 
Bayer has been actively involved in supporting sports and culture for more than a century, thereby 
making a sustainable contribution to the cultural life and sports opportunities in the catchment areas of 
its sites in Germany. Some Bayer sports clubs offer a wide range of prophylactic exercise programs that 
health insurers have approved as preventive health measures. In 2014 the company provided funding of 
some €14 million for recreational, disabled and competitive sports activities. 

 online annex: 3-13-5 

Bayer is realigning its charitable sponsorship of sports in the communities near its Lower Rhine sites 
in Germany. These activities will be gradually concentrated at six major clubs by 2015. Bayer’s in-
volvement in professional soccer at Bayer 04 Leverkusen GmbH is not part of its social sports spon-
sorship activities because it belongs to the company’s image advertising. 

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Bayer Annual Report 2014

Combined Management Report

149

Report on Economic Position

F I S C A L 2 0 14 :

Bayer: strong business momentum continues  
and portfolio transformation underway

// Group portfolio to focus on Life Sciences

//  All subgroups contribute to record sales

and earnings

//  Continued growth momentum for recently launched

 products

//  Group sales €42.2 billion (Fx & portfolio adj. + 7.2%) 

//  ebit €5.5 billion (+ 11.6%)

//  ebitda before special items €8.8 billion (+ 4.9%) 

//  Net income €3.4 billion (+ 7.4%)

//  Core earnings per share €6.02 (+ 7.3%)

//   Forecast for 2015: further sales growth and

clear improvement in earnings

N
O

I
T
I
S
O
P

C
I

M
O
N
O
C
E

N
O

T
R
O
P
E
R

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
150 

Combined Management Report 

14. Overview of Sales, Earnings and Financial Position 

Bayer Annual Report 2014

14. Overview of Sales, Earnings 
and Financial Position 

TA R G E T AT TA I N M E N T 2 0 14

Forecast 2014 2

Adjusted forecast 2014 3

Target attainment

Group sales

Approx. 5% increase 1

Approx. 6% increase 1

7.2% increase 1

Group targets for 
profitable growth in 
2014 

  See Chapter 1.3  
for Group targets 

Approx. €41 billion to 
€42 billion

Approx. €42 billion

€42.2 billion

ebitda 
before special items

Low- to mid-single-digit 
percentage increase

Mid-single-digit 
percentage increase

4.9% increase

Core earnings 
per share

Mid-single-digit 
percentage increase

Mid- to high-single-digit 
percentage increase

7.3% increase

1 currency- and portfolio-adjusted
2 issued in February 2014
3 issued in October 2014

FULL YEAR 2014 
Bayer had a very successful year in 2014, both operationally and strategically. We set new records for 
sales and for ebitda before special items. The growth momentum in our Life Science businesses – 
HealthCare and CropScience – persisted, driven by sales of our recently launched products. Material-
Science also registered encouraging sales gains. Group ebitda before special items advanced signifi-
cantly. Tangible volume growth and a modest rise in selling prices more than offset higher selling and 
r&d expenses and negative currency effects.  

In 2014 we set the course for the Bayer Group to focus on the Life Science businesses – HealthCare and 
CropScience. MaterialScience is to be floated on the stock market as a separate company by mid-2016 
at the latest. We considerably strengthened our Consumer Health segment by acquiring the consumer 
care businesses of Merck & Co., Inc., United States, and Dihon Pharmaceutical Group Co. Ltd., China. 
Our Pharmaceuticals business benefited from the acquisition of Algeta asa, Norway, with which Bayer 
was already collaborating to develop and commercialize the cancer drug Xofigo™.  

Changes in Sales 

[Table 3.14.1]

Volume 

Price 

Currency 

Portfolio 

Total 

2013 

 % 

+ 4.3 

+ 0.8 

– 4.4 

+ 0.3 

+ 1.0 

2014 

% 

+ 6.8

+ 0.4

– 2.8

+ 0.8

+ 5.2

Group sales advanced by 7.2% on a currency- and portfolio-adjusted basis (Fx & portfolio adj.) to 
€42,239 million (reported: + 5.2%; 2013: €40,157 million). All subgroups contributed to this increase. 
Sales of HealthCare improved by 7.5% (Fx & portfolio adj.; reported: + 5.6%). CropScience sales gained 
11.2% (Fx & portfolio adj.; reported: + 7.7%) against the prior year. Sales at MaterialScience grew by 
4.8% (Fx & portfolio adj.; reported: + 3.7%). 

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Bayer Annual Report 2014 

14. Overview of Sales, Earnings and Financial Position

Combined Management Report

151

Bayer Group Quarterly Sales

[Graphic 3.14.1]

€ million

2013
2014

1,283

1,371

2013
2014

1,209
1,259

2013
2014

1,223

1,220

2013
2014

1,147

1,131

Q1

Q2

Q3

Q4

Total

2013
2014

4,862
4,981

8,983

9,184

9,151
9,199

8,420

8,967

8,741

9,908

35,295
37,258

Total

10,266
10,555

10,360
10,458

9,643
10,187

9,888
11,039

40,157
42,239

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

  Germany         

  Other countries

ebit of the Bayer Group rose by 11.6% to €5,506 million (2013: €4,934 million) after net special charg-
es of €438 million (2013: €839 million). The special charges mainly included €173 million for the derec-
ognition of goodwill as a result of the sGC collaboration agreement with Merck & Co., Inc, United States, 
€153 million in integration costs for acquired businesses, and €89 million in accounting measures for 
litigations. These amounts were partly offset by a one-time net gain of €77 million from the sale of our 
Interventional device business to Boston Scientific, United States. ebit before special items rose by 
3.0% to €5,944 million (2013: €5,773 million).  

ebitda before special items increased by 4.9% to €8,812 million (2013: €8,401 million) despite nega-
tive currency effects of approximately €410 million or 4%. The good sales development was accompa-
nied by higher selling and r&d expenses. At HealthCare, ebitda before special items improved by 2.8% 
to €5,484 million (2013: €5,334 million; currency effect approx. minus 6%). While earnings of the 
Pharmaceuticals segment improved, those of Consumer Health declined. ebitda before special items of 
CropScience rose by 5.0% to €2,360 million (2013: €2,248 million; currency effect approx. minus 2%) 
as a result of volume gains and higher selling prices. ebitda before special items of MaterialScience 
advanced by 10.7% to €1,187 million (2013: €1,072 million; currency effect 0%), mainly thanks to 
higher volumes and lower raw material and energy costs.   

Bayer Group
Quarterly EBIT

[Graphic 3.14.2]

Bayer Group
Quarterly EBITDA Before Special Items

[Graphic 3.14.3]

€ million

€ million

Q1

Q2

Q3

Q4

Total

2013
2014

2013
2014

2013
2014

2013
2014

2013
2014

1,771
2,096

1,287
1,473

1,221 
1,376

655
561

4,934
5,506

Q1

Q2

Q3

Q4

Total

2013
2014

2013
2014

2013
2014

2013
2014

2013
2014

2,453
2,738

2,195
2,217

1,984
2,011

1,769
1,846

8,401
8,812

0

500

1,000

1,500

2,000

2,500

0

500

1,000

1,500

2,000

2,500

After a financial result of minus €981 million (2013: minus €727 million), income before income taxes 
was €4,525 million (2013: €4,207 million). After tax expense of €1,082 million (2013: €1,021 million) 
and non-controlling interest, net income for 2014 came in at €3,426 million (2013: €3,189 million). 

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Bayer Annual Report 2014

Earnings per share were €4.14 (2013: €3.86). Core earnings per share advanced by 7.3% to €6.02 
(2013: €5.61), calculated as explained in Chapter 16.3 “Core Earnings Per Share.” 

Gross Cash Flow by Quarter

[Graphic 3.14.4]

Net Cash Flow by Quarter

[Graphic 3.14.5]

€ million

€ million

Q1

Q2

Q3

Q4

Total

2013
2014

2013
2014

2013
2014

2013
2014

2013
2014

1,807
2,048

1,680
1,705

1,367
1,492

978
1,575

5,832
6,820

Q1

Q2

Q3

Q4

Total

2013
2014

2013
2014

2013
2014

2013
2014

2013
2014

327
163

1,536
1,601

1,728
1,816

1,580
2,230

5,171
5,810

0

500

1,000

1,500

2,000

0

500

1,000

1,500

2,000

Gross cash flow climbed by 16.9% in 2014 to €6,820 million (2013: €5,832 million), mainly because of 
the improvement in ebit. Net cash flow moved ahead by 12.4% to €5,810 million (2013: €5,171 million) 
after a business-related increase in cash tied up in working capital and €778 million in deferred income 
from the one-time payment received in connection with the sGC collaboration with Merck & Co., Inc., 
United States. In 2014 we paid income taxes amounting to €1,835 million (2013: €1,281 million). Net 
financial debt rose by €12.9 billion against December 31, 2013, to €19.6 billion as a result of acquisi-
tions. The net defined benefit liability for post-employment benefits – the difference between benefit 
obligations and plan assets – increased from €7.3 billion to €12.2 billion over the same period, mainly 
due to a decline in long-term capital market interest rates for high-quality corporate bonds.  

Total assets increased in 2014 by 36.9% to €70.2 billion. Noncurrent assets rose by 48.7% to 
€48.0 billion, mainly as a result of acquisitions. Goodwill rose by €6.3 billion to €16.2 billion and other 
intangible assets by €6.7 billion to €15.6 billion. The carrying amount of current assets increased by 
16.8% to €22.2 billion. Equity decreased by €0.6 billion to €20.2 billion. Liabilities increased by 
€19.5 billion against December 31, 2013 to €50.0 billion, mainly due to a €12.8 billion acquisition-
related increase in financial liabilities and a €4.9 billion increase in pension provisions. 

FOURTH QUARTER OF 2014 
Group sales in the fourth quarter of 2014 rose by 6.9% (Fx & portfolio adj.) to €11,039 million  
(reported: + 11.6%). Sales of HealthCare gained 7.8% (Fx & portfolio adj.) to €5,598 million (reported: 
+ 13.3%). Business in the Pharmaceuticals segment expanded by 10.1% (Fx & portfolio adj.) to 
€3,271 million (reported: + 9.9%), driven by the encouraging development of our recently launched 
products. Sales at Consumer Health came in 4.2% ahead of the prior-year quarter at €2,327 million 
(reported: + 18.5%). CropScience sales climbed by 8.3% (Fx & portfolio adj.) in the fourth quarter to 
€2,195 million (reported: + 12.5%) as a result of higher volumes. Sales of MaterialScience rose by 
5.5% (Fx & portfolio adj.) against the prior-year period, to €2,948 million (reported: + 9.6%), thanks 
primarily to volume increases.  

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Bayer Annual Report 2014 

14. Overview of Sales, Earnings and Financial Position

Combined Management Report

153

ebit of the Bayer Group declined by 14.4% in the fourth quarter of 2014, to €561 million (q4 2013: 
€655 million). Earnings were diminished by net special charges of €442 million (q4 2013: €439 million). 
The special charges mainly included €173 million for the derecognition of goodwill as a result of the 
sGC collaboration agreement with Merck & Co., Inc, United States, €89 million in accounting measures 
for litigations and €86 million in integration costs for acquired businesses. ebit before special items fell 
by 8.3% to €1,003 million (q4 2013: €1,094 million). 

ebitda before special items rose in the fourth quarter of 2014 by 4.4% to €1,846 million (q4 2013: 
€1,769 million), mainly as a result of higher volumes in all subgroups. Earnings were held back by  
higher selling and r&d expenses. HealthCare registered a 6.7% increase in ebitda before special items 
to €1,426 million (q4 2013: €1,337 million), while CropScience posted a 15.7% gain to €369 million 
(q4 2013: €319 million). ebitda before special items of MaterialScience came in at €217 million 
(q4 2013: €248 million), down 12.5% against the prior-year quarter.  

After a financial result of minus €347 million (q4 2013: minus €84 million), income before income taxes 
fell to €214 million (q4 2013: €571 million). The financial result mainly comprised net interest expense 
of €148 million (q4 2013: €61 million), interest cost of €111 million (q4 2013: €62 million) for pension 
and other provisions, and exchange losses of €66 million (q4 2013: €29 million). After taxes and non-
controlling interest, net income amounted to €224 million (q4 2013: €455 million). Earnings per share 
declined to €0.27 (q4 2013: €0.55). However, core earnings per share rose to €1.19 (q4 2013: €1.10), 
calculated as explained in Chapter 16.3 “Core Earnings Per Share.” 

Gross cash flow of the Group advanced by 61.0% to €1,575 million (q4 2013: €978 million) and net cash 
flow by 41.1% to €2,230 million (q4 2013: €1,580 million). The sharp rise in net cash flow was largely 
attributable to the €778 million in deferred income from the one-time payment received in connection 
with the sGC collaboration with Merck & Co., Inc., United States. Net financial debt rose by €11.1 billion 
in the fourth quarter of 2014 to €19.6 billion (September 30, 2014: €8.5 billion), mainly due to higher 
borrowings for acquisitions. The net defined benefit liability for post-employment benefits increased by 
€0.9 billion against September 30, 2014, to €12.2 billion, mainly due to a decline in long-term capital 
market interest rates for high-quality corporate bonds. 

Key Data by Subgroup and Segment 

HealthCare 

Pharmaceuticals 

Consumer Health 

CropScience 

MaterialScience 

Reconciliation 

Group 

Sales 

EBIT 

[Table 3.14.2]

EBITDA 
before special items1 

4th Quarter 
2013 

4th Quarter 
2014 

4th Quarter 
2013 

4th Quarter 
2014 

4th Quarter 
2013 

4th Quarter 
2014 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

4,939 

2,975 

1,964 

1,951 

2,691 

307 

9,888 

5,598

3,271

2,327

2,195

2,948

298

11,039

631

321

310

163

70

(209)

655

562

375

187

191

43

(235)

561

1,337

1,426 

822

515

319

248

(135)

1,769

939 

487 

369 

217 

(166) 

1,846 

1  For definition see Chapter 16.2 “Calculation of EBIT(DA) Before Special Items.” 

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154

Combined Management Report

15. Business Development by Subgroup, Segment an Region

Bayer Annual Report 2014

15.   Business Development by Subgroup, 

Segment and Region

15.1 HealthCare

Key Data – HealthCare

Sales

Change in sales

Volume

Price

Currency

Portfolio

Sales 

Pharmaceuticals

Consumer Health

(cid:54)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:82)(cid:81)

Europe

North America

(cid:36)(cid:86)(cid:76)(cid:68)(cid:3)(cid:18)(cid:3)(cid:51)(cid:68)(cid:70)(cid:76)(cid:287)(cid:70)

Latin America / Africa / Middle East

(cid:40)(cid:37)(cid:44)(cid:55)

Special items

EBIT before special items1

(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36)(cid:20)

Special items

EBITDA before special items1

(cid:98)

(cid:98)

4th Quarter 
(cid:21)(cid:19)(cid:20)(cid:22)

4th Quarter 
(cid:21)(cid:19)(cid:20)(cid:23)

€ million

€ million

%

Change

Fx (& p) 
adj. %

(cid:24)(cid:15)(cid:24)(cid:28)(cid:27)

(cid:14)(cid:3)(cid:20)(cid:22)(cid:17)(cid:22)

(cid:14)(cid:3)(cid:26)(cid:17)(cid:27)

(cid:23)(cid:15)(cid:28)(cid:22)(cid:28)

(cid:98)

+ 4.7%

+ 2.5%

– 7.7%

+ 0.9%

(cid:98)

2,975

1,964

(cid:98)

1,817

1,286

1,080

756

(cid:25)(cid:22)(cid:20)

(354)

985

(cid:20)(cid:15)(cid:19)(cid:25)(cid:28)

(268)

1,337

(cid:98)

+ 5.8%

+ 2.0%

0.0%

+ 5.5%

(cid:98)

3,271

2,327

(cid:98)

1,964

1,597

1,230

807

(cid:24)(cid:25)(cid:21)

(376)

938

(cid:20)(cid:15)(cid:19)(cid:26)(cid:28)

(347)

1,426

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

+ 9.9

+ 10.1

+ 18.5

+ 4.2

(cid:98)

+ 8.1

+ 24.2

+ 13.9

+ 6.7

(cid:331)(cid:20)(cid:19)(cid:17)(cid:28)

(cid:98)

–4.8

(cid:14)(cid:3)(cid:19)(cid:17)(cid:28)

(cid:98)

+ 6.7

(cid:98)

(cid:98)

+ 10.7

+ 16.8

+ 11.5

+ 15.9

(cid:98)

Full Year  

Full Year  

(cid:21)(cid:19)(cid:20)(cid:22)

(cid:21)(cid:19)(cid:20)(cid:23)

€ million

(cid:20)(cid:27)(cid:15)(cid:28)(cid:21)(cid:23)

(cid:98)

+ 5.9%

+ 0.9%

– 5.7%

+ 0.6%

(cid:98)

11,188

7,736

(cid:98)

6,853

5,024

4,188

2,859

(cid:22)(cid:15)(cid:21)(cid:25)(cid:19)

(713)

3,973

(cid:23)(cid:15)(cid:27)(cid:24)(cid:27)

(476)

5,334

28.2%

(cid:22)(cid:15)(cid:24)(cid:26)(cid:22)

(cid:21)(cid:15)(cid:28)(cid:27)(cid:19)

€ million

(cid:20)(cid:28)(cid:15)(cid:28)(cid:26)(cid:24)

(cid:98)

+ 6.4%

+ 1.1%

– 3.7%

+ 1.8%

(cid:98)

12,052

7,923

(cid:98)

7,364

5,312

4,479

2,820

(cid:22)(cid:15)(cid:24)(cid:27)(cid:20)

(331)

3,912

(cid:24)(cid:15)(cid:20)(cid:27)(cid:25)

(298)

5,484

27.5%

(cid:23)(cid:15)(cid:19)(cid:20)(cid:20)

4,444

(cid:98)(cid:62)(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:22)(cid:17)(cid:20)(cid:24)(cid:17)(cid:20)(cid:64)

Change

Fx (& p) 
adj. %

(cid:14)(cid:3)(cid:26)(cid:17)(cid:24)

%

(cid:14)(cid:3)(cid:24)(cid:17)(cid:25)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

+ 11.2

+ 2.1

(cid:98)

+ 9.2

+ 6.3

+ 11.0

+ 12.3

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

+ 7.7

+ 2.4

(cid:98)

+ 7.5

+ 5.7

+ 6.9

–1.4

(cid:14)(cid:3)(cid:28)(cid:17)(cid:27)

(cid:98)

–1.5

(cid:14)(cid:3)(cid:25)(cid:17)(cid:27)

(cid:98)

+ 2.8

(cid:98)

(cid:14)(cid:3)(cid:20)(cid:21)(cid:17)(cid:22)

(cid:14)(cid:3)(cid:23)(cid:28)(cid:17)(cid:20)

EBITDA margin before special items1

27.1%

25.5%

(cid:42)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:288)(cid:82)(cid:90)2

(cid:49)(cid:72)(cid:87)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:288)(cid:82)(cid:90)2

(cid:27)(cid:23)(cid:19)

(cid:28)(cid:24)(cid:28)

(cid:20)(cid:15)(cid:21)(cid:22)(cid:23)

(cid:21)(cid:15)(cid:20)(cid:27)(cid:24)

(cid:14)(cid:3)(cid:23)(cid:25)(cid:17)(cid:28)

(cid:17)

Fx (& p) adj. = currency- (and portfolio-)adjusted (Fx & p adj.: Sales; Fx adj.: Sales by region)
1  (cid:41)(cid:82)(cid:85)(cid:3)(cid:71)(cid:72)(cid:287)(cid:81)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:72)(cid:72)(cid:3)(cid:38)(cid:75)(cid:68)(cid:83)(cid:87)(cid:72)(cid:85)(cid:3)(cid:20)(cid:25)(cid:17)(cid:21)(cid:3)(cid:323)(cid:38)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:37)(cid:44)(cid:55)(cid:11)(cid:39)(cid:36)(cid:12)(cid:3)(cid:37)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:54)(cid:83)(cid:72)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:44)(cid:87)(cid:72)(cid:80)(cid:86)(cid:17)(cid:324)
2  (cid:41)(cid:82)(cid:85)(cid:3)(cid:71)(cid:72)(cid:287)(cid:81)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:72)(cid:72)(cid:3)(cid:38)(cid:75)(cid:68)(cid:83)(cid:87)(cid:72)(cid:85)(cid:3)(cid:20)(cid:25)(cid:17)(cid:24)(cid:3)(cid:323)(cid:47)(cid:76)(cid:84)(cid:88)(cid:76)(cid:71)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:40)(cid:91)(cid:83)(cid:72)(cid:81)(cid:71)(cid:76)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:68)(cid:92)(cid:72)(cid:85)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:17)(cid:324)

PHOTO // The picture above, taken with a scanning electron microscope,  
(cid:78)(cid:67)(cid:74)(cid:82)(cid:78)(cid:3)(cid:60)(cid:3)(cid:61)(cid:71)(cid:74)(cid:74)(cid:63)(cid:3)(cid:62)(cid:71)(cid:74)(cid:79)(cid:3)(cid:240)(cid:3)(cid:72)(cid:60)(cid:66)(cid:73)(cid:68)(cid:190)(cid:64)(cid:63)(cid:3)(cid:60)(cid:61)(cid:74)(cid:80)(cid:79)(cid:3)7,500 times.

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

15. Business Development by Subgroup, Segment and Region

Combined Management Report

155

Sales of the HealthCare subgroup rose by 7.5% (Fx & portfolio adj.) in 2014, to €19,975 million  
(reported: + 5.6%). This encouraging growth was driven by our recently launched pharmaceutical  
products. Sales at Consumer Health came in slightly ahead of the prior year.  

The integration of the businesses acquired from Merck & Co., Inc., United States, and from Dihon 
Pharmaceutical Group Co. Ltd., China, in the fourth quarter of 2014 is progressing on schedule.  

HealthCare Quarterly Sales

Q1

Q2

Q3

Q4

2013
2014

2013
2014

2013
2014

2013
2014

[Graphic 3.15.1]

€ million

4,443
4,572

4,800
4,845

4,742
4,960

4,939
5,598

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

ebit of the HealthCare subgroup advanced significantly by 9.8% in 2014 to €3,581 million. This increase 
was largely attributable to considerably lower special charges of €331 million (2013: €713 million). ebit 
before special items declined by 1.5% to €3,912 million. By contrast, we raised ebitda before special 
items by 2.8% to €5,484 million. This increase was driven by the gratifying business development in 
Pharmaceuticals, while earnings in Consumer Health posted a slight decrease. Earnings at HealthCare 
were diminished by higher selling expenses in both segments, higher research and development spend-
ing in Pharmaceuticals and negative currency effects of approximately €360 million. 

HealthCare
Quarterly EBIT

[Graphic 3.15.2]

HealthCare
Quarterly EBITDA Before Special Items

Q1

Q2

Q3

Q4

2013
2014

2013
2014

2013
2014

2013
2014

€ million

922
962

729
966

978
1,091

631
562

Q1

Q2

Q3

Q4

2013
2014

2013
2014

2013
2014

2013
2014

[Graphic 3.15.3]

€ million

1,277
1,301

1,328
1,355

1,392
1,402

1,337
1,426

0

200

400

600

800

1,000

1,200

0

200

400

600

800

1,000

1,200

1,400

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
  
 
 
  
     
156 

Combined Management Report 

15. Business Development by Subgroup, Segment and Region 

Bayer Annual Report 2014

PHARMACEUTICALS 

Key Data – Pharmaceuticals 

Sales 

Sales by region 

Europe 

North America 

Asia / Pacific 

Latin America / Africa / Middle East 

EBIT 

Special items 

EBIT before special items1 

EBITDA1 

Special items 

EBITDA before special items1 

4th Quarter 
2013 

4th Quarter 
2014 

€ million 

€ million 

2,975 

3,271

 % 

+9.9

Change  

Fx (& p) 
adj. % 

Full Year 
2013 

Full Year 
2014 

€ million 

€ million 

+10.1

11,188

12,052 

1,049 

1,176

663 

783 

480 

321 

(259) 

580 

618 

(204) 

822 

735

884

476

375

(290)

665

678

(261)

939

+ 12.1

+ 10.9

+ 12.9

– 0.8

+ 16.8

+ 14.7

+ 9.7

+ 14.2

+ 65.3

.

+ 13.5

+ 4.2

+ 10.9

+ 9.6

3,918

2,540

3,016

1,714

2,031

(521)

2,552

3,124

(366)

3,490

4,396 

2,728 

3,278 

1,650 

2,371 

(286) 

2,657 

3,446 

(253) 

3,699 

31.2%

30.7% 

2,293

1,853

2,745 

3,266 

[Table 3.15.2]

Change  

Fx (& p) 
adj. % 

+ 11.2

+ 13.3

+ 8.2

+ 13.1

+ 10.1

% 

+ 7.7 

+ 12.2 

+ 7.4 

+ 8.7 

– 3.7 

+ 16.7 

+ 4.1 

+ 10.3 

+ 6.0 

+ 19.7 

+ 76.3 

EBITDA margin before special items1 

27.6% 

28.7%

Gross cash flow2 

Net cash flow2 

510 

625 

843

1,719

Fx (& p) adj. = currency- (and portfolio-)adjusted (Fx & p adj.: Sales; Fx adj.: Sales by region) 
1 For definition see Chapter 16.2 “Calculation of EBIT(DA) Before Special Items.” 
2 For definition see Chapter 16.5 “Liquidity and Capital Expenditures of the Bayer Group.” 

Sales of the Pharmaceuticals segment climbed by a substantial 11.2% (Fx & portfolio adj.) to 
€12,052 million. This very good performance was driven by our recently launched products Xarelto™, 
Eylea™, Stivarga™, Xofigo™ and Adempas™, which posted combined sales of €2,908 million (2013: 
€1,522 million). Our Pharmaceuticals business grew in all regions on a currency-adjusted basis, particu-
larly in China, the United States and Western Europe. 

Best-Selling Pharmaceuticals Products 

XareltoTM  

KogenateTM  

BetaferonTM / BetaseronTM  

MirenaTM product family 

NexavarTM  

YAZTM / YasminTM / YasminelleTM  

EyleaTM 

AdalatTM  

AspirinTM Cardio  

GlucobayTM 

AvaloxTM / AveloxTM  

LevitraTM  

StivargaTM 

CiproTM / CiprobayTM  

ZetiaTM 

Total 

Proportion of Pharmaceuticals sales 

Fx adj. = currency-adjusted 

4th Quarter 
2013 

4th Quarter 
2014 

€ million 

€ million 

 % 

Change 

Fx adj.  
 % 

Full Year 
2013 

Full Year 
2014 

€ million 

€ million 

316 

274 

259 

195 

194 

219 

126 

157 

120 

112 

106 

69 

59 

42 

45 

516

301

190

225

202

198

219

153

130

133

96

56

63

52

47

2,293 

77% 

2,581

79%

+ 63.3

+ 9.9

– 26.6

+ 15.4

+ 4.1

– 9.6

+ 73.8

– 2.5

+ 8.3

+ 18.8

– 9.4

– 18.8

+ 6.8

+ 23.8

+ 4.4

+ 12.6

+ 65.0

+ 7.8

– 28.5

+ 10.0

+ 2.7

– 4.4

+ 74.4

– 2.9

+ 9.1

+ 12.0

– 8.4

– 18.6

+ 4.0

+ 27.3

+ 9.4

+ 12.1

949

1,202

1,038

719

771

853

333

603

452

423

426

290

197

197

172

1,679 

1,109 

819 

819 

773 

768 

759 

588 

486 

443 

381 

245 

224 

191 

168 

8,625

77%

9,452 

78% 

[Table 3.15.3]

Change 

Fx adj.  
 % 

+ 81.6

– 5.6

– 19.6

+ 15.1

+ 3.5

– 3.3

 % 

+ 76.9 

– 7.7 

– 21.1 

+ 13.9 

+ 0.3 

– 10.0 

+ 127.9 

+ 132.8

– 2.5 

+ 7.5 

+ 4.7 

– 10.6 

– 15.5 

+ 13.7 

– 3.0 

– 2.3 

+ 9.6 

+ 2.5

+ 12.4

+ 5.6

– 6.9

– 13.1

+ 16.6

+ 1.9

+ 5.9

+ 13.1

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Bayer Annual Report 2014 

15. Business Development by Subgroup, Segment and Region

Combined Management Report

157

Our oral anticoagulant Xarelto™ maintained its growth momentum, with strong sales gains especially in 
Japan, France and Germany. Royalties received and recognized as sales in the United States, where 
Xarelto™ is marketed by a subsidiary of Johnson & Johnson, more than doubled. Following its approval 
in additional indications, sales of our eye medicine Eylea™ continued to rise substantially, particularly in 
Europe. The cancer drug Stivarga™ developed positively, and the cancer drug Xofigo™ (sales in 2014: 
€157 million; 2013: €41 million) also made a pleasing contribution to sales growth, especially in the 
United States. The market introduction of Adempas™ to treat various forms of pulmonary hypertension 
continued successfully in additional countries. Since October 2014, we have been collaborating  
with Merck & Co., Inc., United States, in the development and commercialization of Adempas™. The 
sales attributable to Bayer amounted to €89 million in 2014 (2013: €3 million). The one-time payment of 
€793 million from the sGC cooperation will be recorded as sales and earnings over a 13.5 year period. 
€15 million of this was accounted for in the fourth quarter. 

Sales of the hormone-releasing intrauterine devices of the Mirena™ product family rose mainly as a 
result of higher prices and volumes in the United States. The cancer drug Nexavar™ posted gains, main-
ly as a result of price increases in the United States. Adalat™ for the treatment of hypertension and 
coronary heart disease, Aspirin™ Cardio for secondary prevention of heart attacks and our oral diabetes 
treatment Glucobay™ benefited from further rising demand in China. 

Sales of our blood-clotting medicine Kogenate™ receded, due partly to the temporary use of production 
capacities to develop our next-generation hemophilia medicines. Sales of the multiple sclerosis drug 
Betaferon™ / Betaseron™ fell particularly in the United States due to increased competition there. Busi-
ness with our yaz™ / Yasmin™ / Yasminelle™ oral contraceptives was held back especially by generic 
competition in Western Europe and lower demand in Japan. Despite higher volumes in China, sales of 
the antibiotic Avalox™ / Avelox™ declined overall, due particularly to the expiration of the patent in 
Europe and the United States. Sales of Levitra™ for the treatment of erectile dysfunction were down 
primarily in the United States. 

ebit of the Pharmaceuticals segment rose by a substantial 16.7% in 2014 to €2,371 million. This was 
mainly due to lower special charges of €286 million (2013: €521 million), which mainly included 
€173 million for the derecognition of goodwill as a result of the sGC collaboration with Merck & Co., 
Inc., United States, and €88 million in accounting measures for litigations. ebit before special items 
increased by 4.1% to €2,657 million. We raised ebitda before special items by 6.0% to 
€3,699 million. This earnings growth was mainly attributable to the encouraging business develop-
ment and especially to the strong sales gains for our recently launched products, while earnings were 
diminished by higher selling and r&d expenses and roughly €330 million in negative currency effects. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
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15. Business Development by Subgroup, Segment and Region 

Bayer Annual Report 2014

CONSUMER HEALTH 

Key Data – Consumer Health 

[Table 3.15.4]

4th Quarter 
2013 

4th Quarter 
2014 

€ million 

€ million 

% 

Sales 

Consumer Care 

Medical Care 

Animal Health 

Sales by region 

Europe 

North America 

Asia / Pacific 

Latin America / Africa / Middle East 

EBIT 

Special items 

EBIT before special items1 

EBITDA1 

Special items 

EBITDA before special items1 

1,964 

1,015 

653 

296 

2,327

1,384

643

300

768 

623 

297 

276 

310 

(95) 

405 

451 

(64) 

515 

788

862

346

331

187

(86)

273

401

(86)

487

EBITDA margin before special items1 

26.2% 

20.9%

Gross cash flow2 

Net cash flow2 

330 

334 

391

466

+ 18.5

+ 36.4

– 1.5

+ 1.4

+ 2.6

+ 38.4

+ 16.5

+ 19.9

– 39.7

– 32.6

– 11.1

– 5.4

+ 18.5

+ 39.5

Fx (& p) adj. = currency- (and portfolio-)adjusted (Fx & p adj.: Sales; Fx adj.: Sales by region) 
1 For definition see Chapter 16.2 ”Calculation of EBIT(DA) Before Special Items.” 
2 For definition see Chapter 16.5 “Liquidity and Capital Expenditures of the Bayer Group.” 

Change  

Fx (& p) 
adj. % 

+ 2.1

+ 5.3

– 3.7

+ 4.0

+ 3.6

+ 4.4

+ 5.7

+ 15.5

Change  

Fx (& p) 
adj. % 

+ 4.2

+ 8.7

– 0.2

– 1.3

+ 6.9

+ 30.2

+ 13.1

+ 26.8

Full Year 
2013 

Full Year 
2014 

€ million 

€ million 

7,736

3,904

2,526

1,306

2,935

2,484

1,172

1,145

1,229

(192)

1,421

1,734

(110)

1,844

23.8%

1,280

1,127

7,923 

4,245 

2,360 

1,318 

2,968 

2,584 

1,201 

1,170 

1,210 

(45) 

1,255 

1,740 

(45) 

1,785 

22.5% 

1,266 

1,178 

% 

+ 2.4 

+ 8.7 

– 6.6 

+ 0.9 

+ 1.1 

+ 4.0 

+ 2.5 

+ 2.2 

– 1.5 

– 11.7 

+ 0.3 

– 3.2 

– 1.1 

+4.5 

Sales of the Consumer Health segment advanced by 2.1% (Fx & portfolio adj.) in 2014 to €7,923 million. 
The Consumer Care and Animal Health divisions achieved sales gains, especially in the Emerging Markets. 
Sales in the Medical Care Division declined particularly in the United States and Europe. 

Best-Selling Consumer Health Products 

Contour™ (Medical Care) 

Advantage™ product family  
(Animal Health) 

Aspirin™ (Consumer Care) 

Aleve™ (Consumer Care) 

Bepanthen™ / Bepanthol™  
(Consumer Care) 

Ultravist™ (Medical Care) 

Canesten™ (Consumer Care) 

Gadovist™ / Gadavist™  
(Medical Care) 

One A DayTM (Consumer Care) 

SupradynTM (Consumer Care) 

Total  

Proportion of Consumer Health sales 

4th Quarter 
2013 

4th Quarter 
2014 

€ million 

€ million 

179 

98 

120 

82 

77 

80 

61 

55 

48 

43 

180

105

125

102

85

84

60

65

55

42

843 

43% 

903

39%

Change 

Fx adj.
 % 

– 2.4

+ 2.9

+ 2.3

+ 17.3

+ 17.1

+ 5.7

– 0.1

+ 14.8

+ 6.2

+ 10.7

+ 5.8

% 

+ 0.6

+ 7.1

+ 4.2

+ 24.4

+ 10.4

+ 5.0

– 1.6

+ 18.2

+ 14.6

– 2.3

+ 7.1

Full Year 
2013 

Full Year 
2014 

€ million 

€ million 

722

487

464

321

310

322

257

205

176

158

658 

495 

441 

350 

346 

302 

253 

233 

167 

154 

3,422

44%

3,399 

43% 

[Table 3.15.5]

Change 

Fx adj. 
% 

– 8.2

+ 3.1

– 1.4

+ 10.1

 % 

– 8.9 

+ 1.6 

– 5.0 

+ 9.0 

+ 11.6 

+ 18.3

– 6.2 

– 1.6 

– 3.3

+ 3.1

+ 13.7 

+ 14.3

– 5.1 

– 2.5 

– 0.7 

– 5.3

+ 8.2

+ 2.0

Fx adj.= currency-adjusted  
Total sales of Aspirin™ (including Aspirin™ Complex), also including Aspirin™ Cardio, which is reflected in sales of the Pharmaceuticals segment, increased by  
1.2% (Fx adj. 5.4%) in 2014 to €927 million (2013: €916 million). Total sales of this product in the fourth quarter of 2014 climbed by 6.3% (Fx adj. 5.7%) to €255 million  
(Q4 2013: €240 million). 

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Bayer Annual Report 2014 

15. Business Development by Subgroup, Segment and Region

Combined Management Report

159

Sales in the Consumer Care Division rose by 5.3% (Fx & portfolio adj.) to €4,245 million. The business 
acquired from Merck & Co., Inc., United States, on October 1, 2014, accounted for €289 million of sales 
in the fourth quarter, which is traditionally weaker for seasonal reasons. We registered considerably 
higher sales of our pain reliever Aleve™ in the United States due mainly to a product line expansion. 
Our skincare product Bepanthen™ / Bepanthol™ posted considerably higher sales on a currency-
adjusted basis. Higher volumes in all regions contributed to this growth. Sales of our antifungal 
Canesten™ expanded particularly in the Emerging Markets. Driven partly by product line expansions, 
sales of our dietary supplement Supradyn™ developed positively in Europe. Business with the pain 
reliever Aspirin™ was held back mainly by a weak cold season in Europe. Business with our dietary 
supplement One A Day™ was held back mainly by lower demand in the United States. 

Sales of the Medical Care Division fell by 3.7% (Fx & portfolio adj.) to €2,360 million. Sales of the Dia-
betes Care business declined overall despite positive development in the Emerging Markets. Business 
with our Contour™ line of blood glucose meters was held back, especially in the United States, due to 
reimbursement pressure and price decreases, mainly in the first half of the year. Sales of our contrast 
agents and medical equipment in the Radiology business were flat with the prior-year period on a cur-
rency-adjusted basis.  

Business in the Animal Health Division improved by 4.0% (Fx & portfolio adj.) to €1,318 million. We 
raised sales of the Advantage™ product family of flea, tick and worm control products due to good de-
velopment in Europe. Business with the Seresto™ flea and tick collar advanced substantially in Europe 
and the United States. 

ebit of the Consumer Health segment edged down by 1.5% in 2014 to €1,210 million after net special 
charges of €45 million (2013: €192 million). Reflected here are expenses of €122 million for the integration 
of acquired businesses and a one-time net gain of €77 million from the divestiture of the Interventional 
device business to Boston Scientific, United States. ebit before special items fell by 11.7% to 
€1,255 million. ebitda before special items, at €1,785 million, was below the prior-year level (2013: €1,844 
million). This was due to lower earnings at Medical Care and Animal Health along with negative currency 
effects of around €30 million. However, there was a positive effect from earnings growth at Consumer 
Care, to which the business acquired from Merck & Co., Inc., United States, contributed €73 million. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
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Combined Management Report

15. Business Development by Subgroup, Segment and Region

Bayer Annual Report 2014

15.2 CropScience

Key Data – CropScience

[Table 3.15.6]

(cid:98)

(cid:98)

4th Quarter 
2013

4th Quarter 
2014

€ million

€ million

%

Change

Fx (& p) 
adj. %

Full Year  

Full Year  

2013

2014

€ million

€ million

%

Change

Fx (& p) 
adj. %

8,819

(cid:98)

+ 6.8%

+ 2.6%

– 4.7%

+ 0.5%

(cid:98)

8,168

651

(cid:98)

2,799

2,211

1,358

2,451

1,729

(72)

1,801

2,184

(64)

2,248

25.5%

1,590

682

9,494

+ 7.7

+ 11.2

(cid:98)

+ 9.1%

+ 2.1%

– 3.7%

+ 0.2%

(cid:98)

8,816

678

(cid:98)

2,957

2,334

1,374

2,829

1,806

(32)

1,838

2,358

(2)

2,360

24.9%

1,835

950

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

+ 7.9

+ 4.1

(cid:98)

+ 5.6

+ 5.6

+ 1.2

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

+ 11.6

+ 6.9

(cid:98)

+ 7.4

+ 10.2

+ 5.5

+ 15.4

+ 20.6

(cid:98)

(cid:98)

+ 4.5

(cid:98)

+ 2.1

+ 8.0

(cid:98)

+ 5.0

(cid:98)

+ 15.4

+ 39.3

Sales

Change in sales

Volume

Price

Currency

Portfolio

Sales 

Crop Protection / Seeds

Environmental Science

Sales by region

Europe

North America

(cid:36)(cid:86)(cid:76)(cid:68)(cid:3)(cid:18)(cid:3)(cid:51)(cid:68)(cid:70)(cid:76)(cid:287)(cid:70)

Latin America / Africa / Middle East

EBIT

Special items

EBIT before special items1

EBITDA1

Special items

EBITDA before special items1

1,951

(cid:98)

+ 11.8%

+ 1.0%

– 8.2%

+ 0.5%

(cid:98)

1,797

154

(cid:98)

411

301

329

910

163

(40)

203

282

(37)

319

2,195

+ 12.5

+ 8.3

(cid:98)

+ 7.6%

+ 0.7%

+ 3.7%

+ 0.5%

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

2,028

+ 12.9

167

(cid:98)

377

329

356

1,133

191

(32)

223

367

(2)

+ 8.4

(cid:98)

–8.3

+ 9.3

+ 8.2

+ 24.5

+ 17.2

(cid:98)

+ 9.9

+ 30.1

(cid:98)

369

+ 15.7

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

+ 8.7

+ 3.9

(cid:98)

–8.3

+ 0.3

+ 4.0

+ 21.3

(cid:98)

(cid:98)

EBITDA margin before special items1

16.4%

16.8%

(cid:42)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:288)(cid:82)(cid:90)2

(cid:49)(cid:72)(cid:87)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:288)(cid:82)(cid:90)2

228

29

382

103

(cid:98)

+ 67.5

.

Fx (& p) adj. = currency- (and portfolio-)adjusted (Fx & p adj.: Sales; Fx adj.: Sales by region)
1(cid:3) (cid:41)(cid:82)(cid:85)(cid:3)(cid:71)(cid:72)(cid:287)(cid:81)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:72)(cid:72)(cid:3)(cid:38)(cid:75)(cid:68)(cid:83)(cid:87)(cid:72)(cid:85)(cid:3)(cid:20)(cid:25)(cid:17)(cid:21)(cid:3)(cid:323)(cid:38)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:37)(cid:44)(cid:55)(cid:11)(cid:39)(cid:36)(cid:12)(cid:3)(cid:37)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:54)(cid:83)(cid:72)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:44)(cid:87)(cid:72)(cid:80)(cid:86)(cid:17)(cid:324)
2(cid:3) (cid:41)(cid:82)(cid:85)(cid:3)(cid:71)(cid:72)(cid:287)(cid:81)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:72)(cid:72)(cid:3)(cid:38)(cid:75)(cid:68)(cid:83)(cid:87)(cid:72)(cid:85)(cid:3)(cid:20)(cid:25)(cid:17)(cid:24)(cid:3)(cid:323)(cid:47)(cid:76)(cid:84)(cid:88)(cid:76)(cid:71)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:40)(cid:91)(cid:83)(cid:72)(cid:81)(cid:71)(cid:76)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:68)(cid:92)(cid:72)(cid:85)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:17)(cid:324)

PHOTO // The scanning electron micrograph above shows part of the  
(cid:78)(cid:80)(cid:77)(cid:65)(cid:60)(cid:62)(cid:64)(cid:3)(cid:74)(cid:65)(cid:3)(cid:60)(cid:3)(cid:78)(cid:74)(cid:84)(cid:61)(cid:64)(cid:60)(cid:73)(cid:3)(cid:75)(cid:71)(cid:60)(cid:73)(cid:79)(cid:3)(cid:71)(cid:64)(cid:60)(cid:65)(cid:3)(cid:240)(cid:3)(cid:72)(cid:60)(cid:66)(cid:73)(cid:68)(cid:190)(cid:64)(cid:63)(cid:3)(cid:60)(cid:61)(cid:74)(cid:80)(cid:79)(cid:3)4,500 times.

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

15. Business Development by Subgroup, Segment and Region

Combined Management Report

161

CropScience raised sales by 11.2% (Fx & portfolio adj.) in 2014, to €9,494 million (reported: 
+ 7.7%). Crop Protection / Seeds achieved double-digit growth, due to the attractive market environ-
ment and especially to an increase in sales of the new Crop Protection products (launched since 
2006) to over €1.8 billion (reported: around + 23%). The Environmental Science unit also registered 
an increase in sales. 

CropScience Quarterly Sales

Q1

Q2

Q3

Q4

2013
2014

2013
2014

2013
2014

2013
2014

[Graphic 3.15.4]

€ million

2,764
2,900

2,392
2,470

1,712
1,929

1,951
2,195

0

500

1,000

1,500

2,000

2,500

3,000

Sales in Crop Protection / Seeds climbed by 11.6% (Fx & portfolio adj.), to €8,816 million. All business 
units contributed to this pleasing increase. The largest increase at Crop Protection in percentage terms 
was achieved in Fungicides. Sales developed positively in all parts of our Seeds business, particularly 
for cotton seed. 

Sales in Environmental Science advanced by 6.9% (Fx & portfolio adj.) to €678 million. Consumer 
products posted double-digit growth. We also expanded the business with products for professional 
users. 

Sales by Business Unit 

  [Table 3.15.7]

4th Quarter 
2013 

4th Quarter 
2014 

€ million 

€ million 

% 

469 

445 

465 

247 

1,626 

171 

1,797 

154 

517

568

482

254

1,821

207

2,028

167

+ 10.2

+ 27.6

+ 3.7

+ 2.8

+ 12.0

+ 21.1

+ 12.9

+ 8.4

Change 

Fx & p 
adj. % 

+ 8.1

+ 22.2

– 0.2

– 4.0

+ 7.8

+ 17.0

+ 8.7

+ 3.9

Full Year 
2013 

Full Year 
2014 

€ million 

€ million 

% 

2,456

2,195

1,622

921

7,194

974

8,168

651

2,549 

2,490 

1,695 

978 

7,712 

1,104 

8,816 

678 

+ 3.8

+ 13.4

+ 4.5

+ 6.2

+ 7.2

+ 13.3

+ 7.9

+4.1

Change 

Fx & p 
adj. % 

+ 8.5

+ 15.9

+ 7.6

+ 8.4

+ 10.5

+ 19.5

+ 11.6

+6.9

Herbicides 

Fungicides 

Insecticides 

SeedGrowth 

Crop Protection 

Seeds 

Crop Protection / Seeds 

Environmental Science  

Fx & p adj. = currency- and portfolio-adjusted 

CropScience registered sales gains in all regions: 

Sales in Europe rose by 7.4% (Fx adj.) to €2,957 million, driven by positive development at Crop Pro-
tection/Seeds. Sales at SeedGrowth and Fungicides registered double-digit percentage increases, while 
sales at Herbicides rose moderately. Business at Insecticides declined slightly overall. Seeds registered 
growth in all units. Business at Environmental Science developed positively. A strong consumer busi-
ness more than offset the decline in sales of products for professional users. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
  
 
  
  
  
  
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
162 

Combined Management Report 

15. Business Development by Subgroup, Segment and Region 

Bayer Annual Report 2014

Sales in North America advanced by 10.2% (Fx adj.) to €2,334 million. This was primarily attributable 
to the good development in Herbicides, particularly for use in corn and cereals, and in SeedGrowth. 
Business with cotton seed expanded briskly compared with the weak prior year and the soybean seed 
business also developed very well. The Fungicides business saw positive development, while sales at 
Insecticides declined due to lower pest pressure. Sales advanced at Environmental Science. 

Sales in the Asia / Pacific region advanced by 5.5% (Fx adj.) to €1,374 million, thanks particularly to 
increased sales in Fungicides. Our Seeds business also developed well. Sales improved in the Insecti-
cides and Herbicides businesses as well, but receded at SeedGrowth. Sales at Environmental Science 
expanded substantially. The region as a whole benefited especially from a significant business im-
provement in India, while sales in Japan and Australia also developed positively.  

The strongest growth was recorded in Latin America / Africa / Middle East. Sales in that region climbed 
by a substantial 20.6% (Fx adj.) to €2,829 million. We achieved double-digit growth in Crop Protection / 
Seeds in a very positive market environment. Sales in Fungicides saw particularly robust expansion, 
especially for products used in soybeans. Herbicides also recorded strong growth. The SeedGrowth and 
Insecticides businesses also developed very well. Sales in Seeds also advanced considerably, particular-
ly for soybeans, cotton and vegetable seeds. Sales in Environmental Science also moved ahead. Brazil, 
Argentina and Mexico accounted for a major part of the region's positive sales development overall. 

CropScience
Quarterly EBIT

[Graphic 3.15.5]

CropScience
Quarterly EBITDA Before Special Items

[Graphic 3.15.6]

Q1

Q2

Q3

Q4

2013
2014

2013
2014

2013
2014

2013
2014

€ million

964
988

496 
470

106
157

163
191

Q1

Q2

Q3

Q4

2013
2014

2013
2014

2013
2014

2013
2014

€ million

1,081
1,098

624
615

224
278

319
369

0

200

400

600

800

1,000

0

200

400

600

800

1,000

ebit of CropScience advanced by 4.5% in 2014 to €1,806 million (2013: €1,729 million) after special 
charges of €32 million (2013: €72 million), which were primarily related to the planned consolidation of 
production facilities. ebit before special items rose by 2.1% to €1,838 million. ebitda before special 
items improved by 5.0% to €2,360 million. The earnings contributions from the very positive business 
development – marked by considerable volume gains and higher selling prices – were partially offset by 
higher selling and r&d expenses and negative currency effects of around €50 million. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
  
 
Bayer Annual Report 2014

15. Business Development by Subgroup, Segment and Region

Combined Management Report

163

15.3 MaterialScience

Key Data – MaterialScience

Sales

Change in sales

Volume

Price

Currency

Portfolio

Sales 

Polyurethanes

Polycarbonates

Coatings, Adhesives, Specialties

Industrial Operations

(cid:54)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:82)(cid:81)

Europe

North America

(cid:36)(cid:86)(cid:76)(cid:68)(cid:3)(cid:18)(cid:3)(cid:51)(cid:68)(cid:70)(cid:76)(cid:287)(cid:70)

Latin America / Africa / Middle East

(cid:40)(cid:37)(cid:44)(cid:55)

Special items

EBIT before special items1

(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36)(cid:20)

Special items

EBITDA before special items1

EBITDA margin before special items1

(cid:42)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:288)(cid:82)(cid:90)2

(cid:49)(cid:72)(cid:87)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:288)(cid:82)(cid:90)2

(cid:98)

(cid:98)

4th Quarter 
(cid:21)(cid:19)(cid:20)(cid:22)

4th Quarter 
(cid:21)(cid:19)(cid:20)(cid:23)

€ million

€ million

(cid:21)(cid:15)(cid:25)(cid:28)(cid:20)

(cid:98)

+ 4.1%

– 2.5%

– 3.6%

– 0.5%

(cid:98)

1,472

640

417

162

(cid:98)

(cid:21)(cid:15)(cid:28)(cid:23)(cid:27)

(cid:98)

+ 5.7%

– 0.2%

+ 4.1%

0.0%

(cid:98)

1,591

741

460

156

(cid:98)

1,040

1,036

561

762

328

(cid:26)(cid:19)

(18)

88

244

(4)

248

9.2%

(cid:21)(cid:20)(cid:26)

(cid:24)(cid:23)(cid:24)

673

885

354

(cid:23)(cid:22)

(22)

65

(cid:20)(cid:28)(cid:25)

(21)

217

7.4%

(cid:21)(cid:19)(cid:20)

(cid:24)(cid:20)(cid:26)

Change

Fx (& p) 
adj. %

(cid:14)(cid:3)(cid:24)(cid:17)(cid:24)

%

(cid:14)(cid:3)(cid:28)(cid:17)(cid:25)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

+ 4.4

+ 10.3

+ 6.7

– 6.2

(cid:98)

– 0.1

+ 10.3

+ 8.5

+ 7.9

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

+ 8.1

+ 15.8

+ 10.3

– 3.7

(cid:98)

– 0.4

+ 20.0

+ 16.1

+ 7.9

(cid:331)(cid:3)(cid:22)(cid:27)(cid:17)(cid:25)

(cid:98)

– 26.1

(cid:331)(cid:3)(cid:20)(cid:28)(cid:17)(cid:26)

(cid:98)

– 12.5

(cid:98)

(cid:331)(cid:3)(cid:26)(cid:17)(cid:23)

(cid:331)(cid:3)(cid:24)(cid:17)(cid:20)

Fx (& p) adj. = currency- (and portfolio-)adjusted (Fx & p adj.: Sales; Fx adj.: Sales by region)
1  (cid:41)(cid:82)(cid:85)(cid:3)(cid:71)(cid:72)(cid:287)(cid:81)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:72)(cid:72)(cid:3)(cid:38)(cid:75)(cid:68)(cid:83)(cid:87)(cid:72)(cid:85)(cid:3)(cid:20)(cid:25)(cid:17)(cid:21)(cid:3)(cid:323)(cid:38)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:37)(cid:44)(cid:55)(cid:11)(cid:39)(cid:36)(cid:12)(cid:3)(cid:37)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:54)(cid:83)(cid:72)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:44)(cid:87)(cid:72)(cid:80)(cid:86)(cid:17)(cid:324)
2  (cid:41)(cid:82)(cid:85)(cid:3)(cid:71)(cid:72)(cid:287)(cid:81)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:72)(cid:72)(cid:3)(cid:38)(cid:75)(cid:68)(cid:83)(cid:87)(cid:72)(cid:85)(cid:3)(cid:20)(cid:25)(cid:17)(cid:24)(cid:3)(cid:323)(cid:47)(cid:76)(cid:84)(cid:88)(cid:76)(cid:71)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:40)(cid:91)(cid:83)(cid:72)(cid:81)(cid:71)(cid:76)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:68)(cid:92)(cid:72)(cid:85)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:17)(cid:324)

PHOTO // The scanning electron micrograph above shows a cross-section  
(cid:79)(cid:67)(cid:77)(cid:74)(cid:80)(cid:66)(cid:67)(cid:3)(cid:60)(cid:3)(cid:191)(cid:64)(cid:83)(cid:68)(cid:61)(cid:71)(cid:64)(cid:3)(cid:75)(cid:74)(cid:71)(cid:84)(cid:80)(cid:77)(cid:64)(cid:79)(cid:67)(cid:60)(cid:73)(cid:64)(cid:3)(cid:65)(cid:74)(cid:60)(cid:72)(cid:3)(cid:240)(cid:3)(cid:72)(cid:60)(cid:66)(cid:73)(cid:68)(cid:190)(cid:64)(cid:63)(cid:3)(cid:60)(cid:61)(cid:74)(cid:80)(cid:79)(cid:3)85 times.

Full Year  

Full Year  

(cid:21)(cid:19)(cid:20)(cid:22)

(cid:21)(cid:19)(cid:20)(cid:23)

(cid:98)(cid:62)(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:22)(cid:17)(cid:20)(cid:24)(cid:17)(cid:27)(cid:64)

Change

Fx (& p)  
adj. %

(cid:14)(cid:3)(cid:23)(cid:17)(cid:27)

%

(cid:14)(cid:3)(cid:22)(cid:17)(cid:26)

€ million

(cid:20)(cid:20)(cid:15)(cid:21)(cid:22)(cid:27)

(cid:98)

+ 0.6%

– 0.2%

– 2.4%

– 0.2%

(cid:98)

6,054

2,640

1,863

681

(cid:98)

4,363

2,424

3,048

1,403

(cid:23)(cid:22)(cid:24)

6

429

(cid:20)(cid:15)(cid:20)(cid:19)(cid:20)

29

1,072

9.5%

(cid:27)(cid:27)(cid:26)

(cid:28)(cid:26)(cid:26)

€ million

(cid:20)(cid:20)(cid:15)(cid:25)(cid:24)(cid:20)

(cid:98)

+ 6.3%

– 1.5%

– 0.8%

– 0.3%

(cid:98)

6,285

2,820

1,915

631

(cid:98)

4,441

2,593

3,245

1,372

(cid:24)(cid:24)(cid:24)

(43)

598

(cid:20)(cid:15)(cid:20)(cid:23)(cid:28)

(38)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

+ 3.8

+ 6.8

+ 2.8

– 7.3

(cid:98)

+ 1.8

+ 7.0

+ 6.5

– 2.2

(cid:14)(cid:3)(cid:21)(cid:26)(cid:17)(cid:25)

(cid:98)

+ 39.4

(cid:14)(cid:3)(cid:23)(cid:17)(cid:23)

(cid:98)

1,187

+ 10.7

10.2%

(cid:28)(cid:25)(cid:20)

(cid:27)(cid:27)(cid:19)

(cid:98)

(cid:14)(cid:3)(cid:27)(cid:17)(cid:22)

(cid:331)(cid:3)(cid:28)(cid:17)(cid:28)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

(cid:98)

+ 4.9

+ 7.2

+ 5.5

–  7.2

(cid:98)

+ 1.9

+ 7.1

+ 7.4

+ 1.4

(cid:98)

(cid:98)

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
164 

Combined Management Report 

15. Business Development by Subgroup, Segment and Region 

Bayer Annual Report 2014

Sales of the MaterialScience subgroup advanced in 2014 by 4.8% (Fx & portfolio adj.) to €11,651 
million (reported: +3.7%). This growth was due to higher volumes for Polycarbonates; Polyurethanes; 
and Coatings, Adhesives, Specialties. Volumes increased in Europe, North America and Asia / Pacific, 
while in Latin America / Africa / Middle East they were flat with the previous year. However, selling 
prices showed a slight decline. 

MaterialScience Quarterly Sales

Q1

Q2

Q3

Q4

2013
2014

2013
2014

2013
2014

2013
2014

[Graphic 3.15.7]

€ million

2,775
2,803

2,875
2,864

2,897
3,036

2,691
2,948

0

500

1,000

1,500

2,000

2,500

3,000

The Polyurethanes business unit raised sales by 4.9% (Fx & portfolio adj.) to €6,285 million. This in-
crease was driven by higher volumes in all regions that in turn were attributable to improved demand in 
nearly all the main customer industries. Selling prices overall were below the prior-year level. Volumes 
of diphenylmethane diisocyanate (mdi) and toluene diisocyanate (tdi) improved, while selling prices 
receded. This led to an increase in overall sales of mdi and a decrease in sales of tdi. Both volumes and 
selling prices for polyether (pet) increased. 

Sales of the Polycarbonates business unit increased by 7.2% (Fx & portfolio adj.) to €2,820 million, 
with volumes up in all regions except Latin America / Africa / Middle East. This was mainly attributable to 
improved demand from customers in the automotive, electrical / electronics and construction industries. 
Selling prices were down overall compared with the prior year. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
  
Bayer Annual Report 2014 

15. Business Development by Subgroup, Segment and Region

Combined Management Report

165

Sales in the Coatings, Adhesives, Specialties business unit moved forward by 5.5% (Fx & portfolio 
adj.) to €1,915 million, the increase resulting from higher volumes in all regions. Selling prices were 
level year on year. 

Sales of Industrial Operations receded by 7.2% (Fx & portfolio adj.) to €631 million due to lower selling 
prices and volumes overall. 

EBIT
MaterialScience pro Quartal

[Graphic 3.15.8]

EBITDA vor Sondereinﬂ üssen
MaterialScience pro Quartal

Q1

Q2

Q3

Q4

2013
2014

2013
2014

2013
2014

2013
2014

€ million

42
219

143
109

180
184

70
43

Q1

Q2

Q3

Q4

2013
2014

2013
2014

2013
2014

2013
2014

[Graphic 3.15.9]

€ million

204
366

274
270

346 
334

248
217

0

50

100

150

200

250

300

0

100

200

300

400

500

ebit of MaterialScience advanced by 27.6% to €555 million in 2014 (2013: €435 million), reflecting 
special charges of €43 million for restructuring (2013: special gains of €6 million). ebit before special 
items improved by a clear 39.4% to €598 million. ebitda before special items rose by 10.7% to 
€1,187 million. This was particularly due to higher volumes, efficiency improvement measures and 
lower raw material and energy costs. However, earnings were held back by lower selling prices. 
Currency effects as a whole were neutral to earnings. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
  
 
» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT  

166 

Combined Management Report 

15. Business Development by Subgroup, Segment and Region 

Bayer Annual Report 2014

Bayer Annual Report 2014 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT  

15. Business Development by Subgroup, Segment and Region

Combined Management Report

167

15.4 Business Development by Region 

Sales by Region and Segment (by Market)                                                                                        

Europe 

North America 

Asia / Pacific 

Latin America / Africa / Middle East 

Full 
Year 
2013 

Full 
Year 
2014  

Full 
Year 
2013 

Full 
Year 
2014  

Full 
Year 
2013 

Full 
Year 
2014 

Full 
Year 
2013 

Full 
Year 
2014 

Full 
Year 
2013 

Full 
Year 
2014 

[Table 3.15.9]

Total 

€ million 

€ million 

% yoy 

HealthCare 

Pharmaceuticals 

Consumer Health 

CropScience 

MaterialScience 

6,853

3,918

2,935

2,799

4,363

7,364

4,396

2,968

2,957

4,441

Group (incl. reconciliation) 

15,086

15,806

yoy = year on year; Fx. adj. = currency-adjusted 

Fx.adj. 
% yoy 

+ 9.2

+ 7.5

+ 12.2

+ 13.3

+ 1.1

+ 5.6

+ 1.8

+ 4.8

+ 3.6

+ 7.4

+ 1.9

+ 5.9

€ million 

€ million 

% yoy 

5,024

2,540

2,484

2,211

2,424

5,312 

2,728 

2,584 

2,334 

2,593 

9,680

10,248 

+ 5.7 

+ 7.4 

+ 4.0 

+ 5.6 

+ 7.0 

+5.9 

Fx.adj.
% yoy 

+ 6.3

+ 8.2

+ 4.4

+ 10.2

+ 7.1

+7.3

€ million 

€ million 

% yoy 

Fx adj.   
% yoy  

€ million 

€ million 

% yoy 

Fx adj.   
% yoy 

€ million 

€ million 

% yoy 

4,188 

3,016 

4,479 

3,278 

1,172 

1,201 

1,358 

3,048 

1,374 

3,245 

8,623 

9,119 

+ 6.9 

+ 8.7 

+ 2.5 

+ 1.2 

+ 6.5 

+ 5.8 

+ 11.0 

2,859 

+ 13.1 

1,714 

+ 5.7 

+ 5.5 

+ 7.4 

+ 8.8 

1,145 

2,451 

1,403 

6,768 

2,820

1,650

1,170

2,829

1,372

7,066

– 1.4

– 3.7

+ 2.2

+ 15.4

– 2.2

+4.4

+ 12.3

18,924

19,975

+ 10.1

11,188

12,052

+ 15.5

+ 20.6

7,736

8,819

7,923

9,494

+ 1.4

11,238

11,651

+12.8

40,157

42,239

+ 5.6 

+ 7.7 

+ 2.4 

+ 7.7 

+ 3.7 

+5.2 

Fx adj.   
% yoy  

+ 9.3 

+ 11.6 

+ 6.0 

+ 11.4 

+ 4.5 

+8.0 

15.5 Business Development in the Emerging Markets 

The Emerging Markets again accounted for a disproportionately large share of sales growth in 2014. 
For reporting purposes we have defined the Emerging Markets as Asia (excluding Japan), Latin Ameri-
ca, Eastern Europe, Africa and the Middle East.  

Sales in these markets rose by 11.3% (Fx adj.) in 2014 to €15,919 million (2013: €15,040 million), with 
encouraging gains in Latin America, Asia and Eastern Europe. The Emerging Markets accounted for 
37.7% of sales (2013: 37.5%). 

Sales Development in 2014

[Graphic 3.15.10]

38% (Fx adj. +11%)

Emerging Markets

62% (Fx adj. +6%)

Industrialized countries

currency-adjusted changes in parentheses

HEALTHCARE 
HealthCare raised sales in the Emerging Markets by a substantial 12.9% (Fx adj.) in 2014 to 
€6,493 million (2013: €6,236 million). The strongest absolute growth was recorded in China. The Latin 
America region posted strong currency-adjusted increases, particularly in Brazil and Argentina. We 
achieved very gratifying sales growth in Russia, primarily in Consumer Care. The Emerging Markets 
accounted for 32.5% (2013: 33.0%) of total HealthCare sales.  

CROPSCIENCE 
CropScience improved sales in the Emerging Markets by 16.6% (Fx adj.) in 2014, to €4,409 million 
(2013: €3,959 million). Business developed particularly well in Latin America, especially in Brazil and 
Argentina. We posted encouraging sales gains in Eastern Europe and Africa / Middle East, where we 
also achieved double-digit (Fx adj.) growth rates. Business in Asia expanded as well. The Emerging 
Markets’ share of total CropScience sales in 2014 was 46.4% (2013: 44.9%).  

MATERIALSCIENCE 
In the Emerging Markets, MaterialScience had sales of €4,951 million in 2014 (2013: €4,761 million),  
up 5.4% (Fx. adj.) year on year. Here we achieved our strongest growth in Asia, while gains were also 
registered in Eastern Europe and Latin America. Sales in Africa and the Middle East were below the 
prior-year level. The Emerging Markets accounted for 42.5% (2013: 42.4%) of total sales at 
MaterialScience.  

We are active in the Emerging Markets in a variety of ways. Information and selected examples are 
contained in the  

 online annex: 3-15.5-1 

HealthCare is steadily expanding its activities in the Greater China region to strengthen global re-
search, development and production capacities and to incorporate the clinical profiles and medical 
needs of Asian patients into drug development activities at an early stage.  

In January 2014, Bayer HealthCare and Peking University, Beijing, China, entered into a three-year 
strategic partnership in the area of translational research and its use in drug discovery. The Innova-
tion Center China established by HealthCare in 2009 celebrated its fifth anniversary in 2014.  

 
 
 
 
 
 
 
 
 
  
  
  
 
 
 
  
  
  
  
  
 
  
 
  
  
  
  
 
 
 
 
 
  
  
 
 
  
  
 
 
 
 
 
 
  
  
  
  
  
  
 
 
 
 
     
 
 
 
 
 
  
  
  
  
  
  
  
 
 
 
 
 
  
 
 
 
 
 
 
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
 
  
  
  
  
  
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
168 

Combined Management Report 

15. Business Development by Subgroup, Segment and Region 

Bayer Annual Report 2014

We plan to expand our production facility at the Beijing site by the end of 2016. The roughly €100 
million in capital expenditures decided upon in March 2014 will nearly double the production capaci-
ty in Beijing.  

The acquisition of Dihon Pharmaceutical Group Co. Ltd., China, adds traditional Chinese medicine 
and other areas to our Consumer Care portfolio.  

To improve comprehensive health care, the subgroup is also working with the Chinese health minis-
try to organize training measures for physicians in the western part of the country. 

CropScience aims to contribute to increased agricultural productivity in regions such as Africa and 
intends to expand its presence there. The subgroup’s range of products and services is tailored to the 
needs of African farmers and includes integrated crop solutions based on improved seed varieties 
and modern crop protection technologies. We also run product safety programs and provide training 
in good agricultural practice. Furthermore, we view our involvement in public-private partnerships 
(ppps) such as the German Food Partnership project of the German Ministry for Economic Coopera-
tion and Development (bmz) as an important way to help further expand value chains in Africa and 
safeguard food supplies. We cooperate with local governments, farmers' associations and coopera-
tives, non-governmental organizations and agricultural input industries, as well as banks and insur-
ance companies.  

CropScience also aims to help raise living standards in rural areas of India by boosting value added 
and ensuring it is reinvested in the community. An example is the Model Village Project launched in 
2010. The goal of this project is to train farmers in sustainable cultivation methods and show them 
new ways of irrigating their land in order to improve productivity. Parallel measures are also being 
taken to improve general living conditions, such as the commissioning of a drinking water purifica-
tion plant and the launch of health promotion and children’s educational programs. The Bayer Prayas 
Rural Development Association coordinates the activities at the local level in the model villages in the 
state of Karnataka in southwest India. 

In cooperation with external partners, MaterialScience is evolving and implementing technical solu-
tions to help low-income people in developing countries and Emerging Markets gain improved ac-
cess to high-quality, safe and easy-to-build yet affordable housing. These activities currently focus on 
Asia. The company is mainly contributing its expertise in the field of rigid polyurethane foam for the 
construction industry.   

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
Bayer Annual Report 2014 

16. Earnings; Asset and Financial Position of the Bayer Group

Combined Management Report

169

16. Earnings; Asset and Financial Position 

of the Bayer Group 

16.1 Earnings Performance of the Bayer Group 

Bayer Group Summary Income Statements 

[Table 3.16.1]

Net sales 

Cost of goods sold 

Selling expenses 

Research and development expenses 

General administration expenses 

Other operating income (+) and expenses (–) 

EBIT1 

Financial result 

Income before income taxes 

Income taxes 

Income after income taxes 

of which attributable to non-controlling interest 

of which attributable to Bayer AG stockholders (net income) 

2013 figures restated 
1 EBIT = earnings before financial result and taxes 

2013 

2014 

Change 

€ million 

€ million 

40,157

19,516

10,312

3,406

1,712

(277)

4,934

(727)

4,207

(1,021)

3,186

(3)

3,189

42,239

20,266

11,018

3,574

1,741

(134)

5,506

(981)

4,525

(1,082)

3,443

17

3,426

% 

+5.2 

+3.8 

+6.8 

+4.9 

+1.7 

+51.6 

+11.6 

–34.9 

+7.6 

– 6.0 

+8.1 

– 

+7.4 

Sales of the Bayer Group rose to €42,239 million (+ 5.2%). The increase after adjusting for currency and 
portfolio effects was 7.2%. 

The cost of goods sold increased by 3.8% to €20,266 million, mainly due to higher volumes at 
HealthCare and MaterialScience. The ratio of the cost of goods sold to total sales was 48.0% 
(2013: 48.6%). The selling expenses of €11,018 million (+ 6.8%) amounted to 26.1% of sales 
(2013: 25.7%). Research and development (r&d) expenses rose in 2014 by 4.9% to €3,574 million,  
the increase being attributable to HealthCare and CropScience. The ratio of r&d expenses to sales 
remained level at 8.5% (2013: 8.5%). General administration expenses, at €1,741 million, were  
slightly above the prior year (+ 1.7%). The ratio of general administration expenses to total sales was 
somewhat lower at 4.1% (2013: 4.3%). The negative balance of other operating income and expenses 
was reduced considerably to minus €134 million (2013: minus €277 million), mainly because special 
charges for accounting measures related to legal claims were lower in 2014 (see also Chapter 16.2 
“Calculation of E Before Special Items”).  

ebit climbed by 11.6% in 2014 to €5,506 million.  

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
  
  
 
 
  
  
  
  
 
  
  
  
170 

Combined Management Report 

16. Earnings; Asset and Financial Position of the Bayer Group 

Bayer Annual Report 2014

The financial result fell by 34.9% to minus €981 million. It comprised €356 million (2013: €355 million) 
in net interest expense, €322 million (2013: €297 million) in interest cost for pension and other provi-
sions, and a €248 million (2013: €120 million) net exchange loss. The year-on-year increase in the net 
exchange loss was mainly due to exchange rate effects in Venezuela, Ukraine and Argentina, higher 
exchange hedging costs and the fact that the prior year’s financial result included a one-time gain of 
€77 million from the sale of Bayer’s interest in Onyx Pharmaceuticals Inc., United States. 

Tax expense in 2014 increased to €1,082 million as a result of earnings growth (2013: €1,021 million). 
Income after income taxes came in at €3,443 million. Income attributable to non-controlling interest 
rose by €20 million to €17 million. Bayer Group net income for 2014 was €3,426 million (2013: 
€3,189 million). 

16.2 Calculation of EBIT(DA) Before Special Items 

Key performance indicators for the Bayer Group are ebit before special items and ebitda before special 
items. These indicators are reported in order to allow a more accurate assessment of business opera-
tions. The special items – comprising effects that are non-recurring or do not regularly recur or attain 
similar magnitudes – are detailed in the following table. ebitda, ebitda before special items and ebit 
before special items are not defined in the International Financial Reporting Standards (ifrs) and should 
therefore be regarded only as supplementary information. ebitda before special items is a meaningful 
indicator of operating performance since it is not affected by depreciation, amortization, impairment 
losses, impairment loss reversals or special items. By reporting this indicator, the company aims to give 
readers a clear picture of the results of operations and ensure comparability of data over time. The 
ebitda margin before special items, which is the ratio of ebitda before special items to sales, serves as a 
relative indicator for the internal and external comparison of operational earning power. 

Depreciation, amortization and impairment losses increased by 1.4% in 2014 to €2,936 million 
(2013: €2,896 million), comprising €1,592 million (2013: €1,572 million) in amortization and impair-
ments of intangible assets, €2 million (2013: €13 million) in impairment loss reversals and €1,346 mil-
lion (2013: €1,337 million) in depreciation and impairments of property, plant and equipment. A total of 
€68 million (2013: €268 million) in depreciation, amortization and impairments constituted special 
items. This amount comprised €70 million (2013: €259 million) in impairment losses and €0 million 
(2013: €22 million) in depreciation and amortization, less €2 million (2013: €13 million) in impairment 
loss reversals. 

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171

Special Items Reconciliation 

[Table 3.16.2]

EBIT1  
4th Quarter 
2013 

EBIT1 
4th Quarter 
2014 

EBIT1 
Full Year 
2013 

EBIT1 
Full Year 
2014 

EBITDA²   

 4th Quarter 
2013 

EBITDA²   
4th Quarter  
2014 

EBITDA²   
Full Year 
2013 

EBITDA²   
Full Year 
2014 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

1,094 

(354) 

(55) 

(109) 

(180) 

(10) 

– 

– 

(40) 

(40) 

– 

– 

(18) 

(18) 

– 

(27) 

(25) 

(2) 

(439) 

(79) 

(37) 

(77) 

(38) 

(208) 

655 

1,003

(376)

(29)

–

(88)

(86)

–

(173)

(32)

–

(1)

(31)

(22)

(22)

–

(12)

(12)

–

(442)

(68)

(50)

5,773

(713)

(171)

(197)

(269)

(76)

–

–

(72)

(67)

(5)

–

6

(36)

42

(60)

(58)

(2)

(839)

(116)

(73)

1

(212)

(23)

(56)

5,944

(331)

(29)

–

(88)

(153)

35

(96)

(32)

–

(1)

(31)

(43)

(43)

–

(32)

(32)

–

(438)

(80)

(63)

(2)

(55)

1,769

(268)

–

(78)

(180)

(10)

–

–

(37)

(37)

–

–

(4)

(4)

–

(27)

(25)

(2)

(336)

(42)

(37)

(12)

(35)

1,846 

(347) 

– 

– 

(88) 

(86) 

– 

(173) 

(2) 

– 

(1) 

(1) 

(21) 

(21) 

– 

(12) 

(12) 

– 

(382) 

(37) 

(21) 

8,401

(476)

14

(145)

(269)

(76)

–

–

(64)

(59)

(5)

–

29

(13)

42

(60)

(58)

(2)

(571)

(83)

(73)

1 

1

(23) 

(53)

8,812

(298)

–

–

(88)

(149)

35

(96)

(2)

–

(1)

(1)

(38)

(38)

–

(32)

(32)

–

(370)

(49)

(34)

(2)

(51)

(302)

561

(382)

4,934

(238)

5,506

(210)

1,433

(302) 

1,464 

(363)

7,830

(234)

8,442

Before special items 

HealthCare 

Impairment losses / 
impairment loss reversals 

Restructuring 

Litigations 

Integration costs 

Settlement of pre-existing 
relationship3 

Divestitures 

CropScience 

Restructuring 

Litigations 

Divestitures 

MaterialScience 

Restructuring 

Divestitures 

Reconciliation 

Restructuring 

Litigations 

Total special items 

of which cost of goods sold 

of which selling expenses 

of which research and 
development expenses 

of which general 
administration expenses 

of which other operating 
income / expenses 

After special items 

1 EBIT = earnings before financial result and taxes 
2 EBITDA = EBIT plus amortization and impairment losses on intangible assets, plus depreciation and impairment losses on property, plant and equipment,  

minus impairment loss reversals 

3 For details see Note [6.2] to the consolidated financial statements 

16.3 Core Earnings Per Share  

Earnings per share according to ifrs are affected by the purchase price allocation for acquisitions and 
other special factors. To enhance comparability, we also determine core net income after eliminating 
amortization and impairment losses / impairment loss reversals of intangible assets, impairment losses / 
impairment loss reversals of property, plant and equipment and special items, and the related tax ef-
fects.  

From this core net income we calculate core earnings per share in the same way as earnings per share. 
Core earnings per share form the basis for our dividend policy. Core earnings per share in 2014 rose by 
7.3% to €6.02 (2013: €5.61). 

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Combined Management Report 

16. Earnings; Asset and Financial Position of the Bayer Group 

Bayer Annual Report 2014

Core Earnings per Share 

[Table 3.16.3]

EBIT (as per income statements) 

Amortization and impairment losses / loss reversals  
on intangible assets 

Impairment losses / loss reversals on property,  
plant and equipment  

Special items (other than amortization and  
impairment losses / loss reversals) 

Core EBIT 

Financial result (as per income statements) 

Special items in the financial result 

Income taxes (as per income statements) 

Special items in income taxes 

Tax effects related to amortization,  
impairment losses / loss reversals and special items  

Income after income taxes attributable  
to non-controlling interest (as per income statements)   

Core net income 

4th Quarter 
2013 

4th Quarter 
2014 

Full Year 
2013 

Full Year 
2014 

€ million 

€ million 

€ million 

€ million 

655

437

21

336

1,449

(84)

(72)

(129)

–

561 

507 

57 

382 

1,507 

(347) 

13 

16 

48 

4,934 

5,506

1,559 

1,590

48 

96

571 

7,112 

(727) 

10 

370

7,562

(981)

23

(1,021) 

(1,082)

– 

48

(266)

(246) 

(734) 

(576)

13

911

(6) 

985 

3 

4,643 

(17)

4,977

Shares 

Shares 

Shares 

Shares 

Number of issued ordinary shares 

826,947,808

826,947,808 

826,947,808 

826,947,808

Core earnings per share (€) 

1.10

1.19 

5.61 

6.02

  Consolidatd  
Financial 
Statements 
Note 16 

The calculation of earnings per share in accordance with ifrs is explained in Note [16] to the consolidat-
ed financial statements. Core net income, core earnings per share and core ebit are not defined in ifrs. 

16.4 Value Management 

SYSTEM BASED ON CASH VALUE ADDED 
The principal value-based steering parameters in the Bayer Group are the cash value added (cva) and 
the cash flow return on investment (cfroi). If the cva is positive, the respective company or business 
entity has exceeded the minimum requirements of the equity and debt capital providers and has created 
value. The cfroi is a ratio indicating the profitability of the Group or of individual business entities and 
must be compared to the cost of capital. 

CALCULATING THE COST OF CAPITAL 
Bayer calculates the cost of capital according to the debt / equity ratio at the beginning of the year using 
the weighted average cost of capital (wacc) formula. The cost of equity capital is the return expected by 
stockholders, computed from capital market information. The cost of debt capital used in calculating 
wacc is based on the terms for ten-year Eurobonds issued by industrial companies with an “a–” rating. 

Cost of capital for  
the Bayer Group 

7.6% 

To take into account the different risk and return profiles of our principal businesses, we calculate 
individual capital cost factors after income taxes for each of our subgroups. These were 7.9% for 
HealthCare, 7.3% for CropScience and 6.9% for MaterialScience. The capital cost factor for the Group 
as a whole in 2014 was 7.6%. 

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GROSS CASH FLOW, CASH VALUE ADDED AND CASH FLOW RETURN ON INVESTMENT AS 
PERFORMANCE YARDSTICKS 
The gross cash flow is the measure of our internal financing capability. Bayer has chosen this parameter 
because it is relatively free of accounting influences and is therefore a more meaningful performance 
indicator. 

Taking into account the costs of capital and of reproducing depletable assets, we determine the gross 
cash flow hurdle. If the gross cash flow hurdle is exceeded, the cva is positive and thus the required 
return on equity and debt plus the cost of asset reproduction has been earned.  

Positive CVA =  
value created 

The cfroi is the difference between the gross cash flow and the cost of reproducing depletable assets, 
divided by the capital invested. The capital invested is calculated from the statement of financial posi-
tion and basically comprises the property, plant and equipment and intangible assets required for op-
erations – stated at the historical cost of acquisition or construction – plus working capital, less interest-
free liabilities (such as current provisions). To mitigate the effect of fluctuations in the capital invested 
during the year, the cfroi is computed on the basis of the average capital invested for the respective 
year. 

The gross cash flow hurdle for 2014 was €4,447 million.  

Actual gross cash flow came in at €6,820 million, exceeding the hurdle by 53.4%. Thus the entire cost 
of capital and asset reproduction costs were earned in 2014. The positive cva of €2,373 million shows 
that Bayer exceeded the minimum return and reproduction requirements and created value. A cfroi of 
11.9% was achieved in 2014.   

HealthCare and CropScience exceeded their required returns (including asset reproduction), raised 
their cva and helped to increase the value of the Group. In 2014 MaterialScience reduced the gap to the 
gross cash flow hurdle, which continues to be impacted by growth investments. 

Value Management Indicators by Subgroup 

 [Table 3.16.4]

HealthCare 

CropScience 

MaterialScience 

Bayer Group 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

Gross cash flow1 (GCF) 

Gross cash flow hurdle 

3,573 

2,109 

4,011 

2,395 

1,590

906

1,835

902

887

1,060

961

1,025

5,832 

4,260 

6,820 

4,447 

Cash value added 
(CVA) 

Cash flow return on  
investment (CFROI) 

WACC 

Average capital 
invested 

1,464 

1,616 

684

933

(173)

(64)

1,572 

2,373 

14.1% 

13.4% 

14.2%

15.3%

7.9% 

7.9% 

7.3%

7.3%

5.5%

6.9%

6.0%

6.9%

11.1% 

11.9% 

7.6% 

7.6% 

22,480 

26,784 

9,881

10,841

10,371

10,524

43,548 

48,934 

Delta cash value added is not listed due to its limited importance. 
1 For definition see Chapter 16.5 “Liquidity and Capital Expenditures of the Bayer Group.” 

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Combined Management Report 

16. Earnings; Asset and Financial Position of the Bayer Group 

Bayer Annual Report 2014

16.5 Liquidity and Capital Expenditures 

of the Bayer Group 

Bayer Group Summary Statements of Cash Flows 

Gross cash flow1 

Changes in working capital / other non-cash items 

Net cash provided by (used in) operating activities (net cash flow) 

Net cash provided by (used in) investing activities 

Net cash provided by (used in) financing activities 

Change in cash and cash equivalents due to business activities 

Cash and cash equivalents at beginning of period 

Change due to exchange rate movements and to changes in scope of consolidation 

Cash and cash equivalents at end of period 

[Table 3.16.5]

Full Year 
2013 

Full Year 
2014 

€ million 

€ million 

5,832 

(661) 

5,171 

(2,581) 

(2,535) 

55 

1,698 

(91) 

1,662 

6,820

(1,010)

5,810

(15,539)

9,736

7

1,662

184

1,853

1  Gross cash flow = income after income taxes, plus income taxes, plus financial result, minus income taxes paid or accrued, plus depreciation, 
amortization and impairment losses, minus impairment loss reversals, plus / minus changes in pension provisions, minus gains(cid:3031)/(cid:3031)plus losses on 
retirements of noncurrent assets, minus gains from the remeasurement of already held assets in step acquisitions. The change in pension 
provisions includes the elimination of non-cash components of EBIT. It also contains benefit payments during the year. 

OPERATING CASH FLOW 
Gross cash flow climbed by 16.9% in 2014 to €6,820 million (2013: €5,832 million), mainly because of 
the improvement in ebit. Net cash flow moved ahead by 12.4% to €5,810 million (2013: €5,171 million), 
after a business-related increase in cash tied up in working capital and €778 million in deferred income 
from the one-time payment received in connection with the sGC collaboration with Merck & Co., Inc., 
United States. Income taxes paid in 2014 amounted to €1,835 million (2013: €1,281 million).  

INVESTING CASH FLOW 
Net cash outflow for investing activities in 2014 amounted to €15,539 million. Cash outflows for proper-
ty, plant and equipment and intangible assets were 10% higher at €2,371 million (2013: €2,157 million) 
and included €832 million (2013: €809 million) at HealthCare, €686 million (2013: €538 million) at 
CropScience and €605 million (2013: €559 million) at MaterialScience. The €13,545 million (2013: 
€1,082 million) in outflows for acquisitions mainly related to the purchases of the consumer care busi-
nesses of Merck & Co., Inc., United States, and Algeta asa, Norway. Cash outflows from noncurrent and 
current financial assets amounted to €177 million (2013: inflow of €301 million). Inflows from interest 
and dividends totaled €107 million (2013: €125 million). 

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The principal strategic capital expenditures for property, plant and equipment in the  
operating segments within the past two years are listed in the following table: 

Capital Expenditures for Property, Plant and Equipment             

[Table 3.16.6]

Segment 

Description 

CAPITAL EXPENDITURES 2014 

Pharmaceuticals 

Expansion of XareltoTM production capacities in Wuppertal and Leverkusen, Germany 

Expansion of production capacities for new rFactor VIII therapies in Wuppertal, 
Germany 

Expansion of R&D laboratory capacities in Wuppertal, Germany 

Modernization of research facilities in Berlin, Germany 

Expansion of production capacities in Beijing, China 

Expansion of Quality Control Biologics in Berkeley, California, United States 

– 

Completion of capacity expansion for fungicides in Germany and Switzerland 

Completion of capacity expansion for herbicides in Germany 

Establishment of breeding stations for various plant species worldwide 

Consumer Health 

CropScience 

MaterialScience 

Doubling of production capacities for polycarbonates in Shanghai, China 

Doubling of production capacities for hexamethylene diisocyanate (HDI) in Shanghai, 
China 

Completion of capacity expansion for diphenylmethane diisocyanate (MDI) in 
Shanghai, China 

Construction of a world-scale production complex for toluene diisocyanate (TDI) based 
on gas-phase phosgenation technology in Dormagen, Germany 

CAPITAL EXPENDITURES 2013 

Pharmaceuticals 

Consolidation of multiple administrative and business operations in Whippany,  

Consumer Health 

CropScience 

New Jersey, United States 

Expansion of XareltoTM production capacities in Wuppertal and Leverkusen, Germany 

Expansion of production capacities for biologics in Wuppertal, Germany 

– 

Capacity expansion and process modifications for the production of fungicides in 
Germany, Switzerland, and the United States and for related formulating units in 
France 

Expansion of manufacturing capacities for herbicidal active ingredients in Germany 
and the United States 

Establishment of breeding stations for wheat in Europe, North America, and  
Asia / Pacific; for soybeans in North America and Latin America; and for other crops 
and trait development 

MaterialScience 

Doubling of production capacities for polycarbonates in Shanghai, China 

Expansion of production capacities for diphenylmethane diisocyanate (MDI) in 
Shanghai, China 

Construction of a world-scale production complex for toluene diisocyanate (TDI) based 
on gas-phase phosgenation technology in Dormagen, Germany 

Completion of a multi-purpose facility for aliphatic isocyanates - hexamethylene 
diisocyanate (HDI) and isophorone diisocyanate (IPDI) - in Leverkusen, Germany 

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Combined Management Report 

16. Earnings; Asset and Financial Position of the Bayer Group 

Bayer Annual Report 2014

FINANCING CASH FLOW 
Net cash inflow for financing activities in 2014 amounted to €9,736 million, including net borrowings  
of €11,838 million (2013: net loan repayments of €619 million). Net interest payments were 7% higher 
at €362 million (2013: €338 million). The cash outflow for dividends amounted to €1,739 million (2013: 
€1,574 million).  

LIQUID ASSETS AND NET FINANCIAL DEBT 

Net Financial Debt 

Bonds and notes / promissory notes 

of which hybrid bonds1 

Liabilities to banks 

Liabilities under finance leases 

Liabilities from derivatives 

Other financial liabilities 

Positive fair values of hedges of recorded transactions 

Financial liabilities 

Cash and cash equivalents 

Current financial assets 

Net financial debt 

1 classified as debt according to IFRS 

[Table 3.16.7]

Dec. 31, 2013 

Dec. 31, 2014 

€ million 

€ million 

4,520 

1,344 

2,302 

382 

310 

1,516 

(504) 

8,526 

(1,662) 

(133) 

6,731 

14,964

4,552

3,835

441

642

1,976

(258)

21,600

(1,853)

(135)

19,612

Net financial debt of the Bayer Group increased in 2014 to €19.6 billion, mainly as a result of cash 
outflows for acquisitions. As of December 31, 2014, the Group had cash and cash equivalents of 
€1.9 billion (2013: €1.7 billion). Financial liabilities at the end of the reporting period amounted to 
€21.6 billion (2013: €8.5 billion), with three subordinated hybrid bonds reflected at €4.6 billion overall. 
Net financial debt should be viewed against the fact that Moody’s and Standard & Poor’s treat 75% 
and 50%, respectively, of the hybrid bond issued in July 2005 with a nominal volume of €1.3 billion as 
equity. Moody’s and Standard & Poor’s treat 50% of the hybrid bonds issued in July 2014 with nominal 
volumes of €1.75 billion and €1.5 billion, respectively, as equity. The hybrid bonds thus have a more 
limited effect on the Group’s rating-specific debt indicators than conventional borrowings. Our non-
current financial liabilities increased in 2014 from €5.6 billion to €18.5 billion, while current financial 
liabilities remained unchanged at €3.4 billion. 

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16.6 Asset and Capital Structure of the Bayer Group 

Bayer Group Summary Statements of Financial Position 

[Table 3.16.8]

Noncurrent assets 

Current assets 

Total assets 

Equity 

Noncurrent liabilities 

Current liabilities 

Liabilities 

Total equity and liabilities  

Dec. 31, 2013 

Dec. 31, 2014 

Change 

€ million 

€ million 

32,289

19,028

51,317

20,804

16,490

14,023

30,513

51,317

48,007

22,227

70,234

20,218

34,513

15,503

50,016

70,234

% 

+ 48.7 

+ 16.8 

+ 36.9 

– 2.8 

. 

+ 10.6 

+ 63.9 

+ 36.9 

Total assets as of December 31, 2014, increased by 36.9% to €70.2 billion. Noncurrent assets rose by 
48.7% to €48.0 billion due mainly to acquisitions. This was due to the €6.3 billion increase in goodwill 
and the €6.7 billion rise in other intangible assets. The carrying amount of current assets climbed to 
€22.2 billion. 

Equity was lower by €0.6 billion at €20.2 billion. The positive effects from the net income of €3.4 billion 
and the exchange differences of €1.4 billion (2013: negative effect of €0.7 billion) were offset by the 
negative effect from the increase of €3.5 billion (2013: positive effect from the decline of €1.3 billion) – 
recognized outside profit or loss – in post-employment benefit obligations and the dividend payment of 
€1.7 billion (2013: €1.6 billion). The equity ratio (equity coverage of total assets) as of December 31, 
2014 was 28.8% (2013: 40.5%).  

Liabilities increased by €19.5 billion compared with December 31, 2013, to €50.0 billion, due to the 
acquisition-related €12.8 billion increase in financial liabilities and the €4.9 billion increase in provisions 
for pensions and other post-employment benefits. 

Net Defined Benefit Liability for Post-Employment Benefits 

[Table 3.16.9]

Provisions for pensions and other post-employment benefits 

Net defined benefit asset 

Net defined benefit liability for post-employment benefits 

Dec. 31, 2013 

Dec. 31, 2014 

€ million 

€ million 

7,368

(117)

7,251

12,236 

(41) 

12,195 

The net defined benefit liability for pensions and other post-employment benefits increased from 
€7.3 billion to €12.2 billion in 2014, mainly due to a decline in long-term capital market interest rates for 
high-quality corporate bonds. 

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Bayer Annual Report 2014

Ratios 

Cost of sales ratio (%) 

R & D expense ratio (%) 

Return on sales in (%) 

EBIT margin (%) 

EBITDA margin before special items (%) 

Asset intensity (%) 

Reinvestment ratio (%) 

Liability structure (%) 

Gearing 

Free operating cash flow (€ million) 

Inventory turnover 

Receivables turnover 

Payables turnover 

Equity ratio (%) 

Return on equity (%) 

Return on assets (%) 

2013 figures restated 
1 property, plant and equipment 

Cost of goods sold 

Sales 

Research and development expenses 

Sales 

Income after income taxes 

Sales 

EBIT 

Sales 

EBITDA before special items 

Sales 

Property, plant and equipment 
+ intangible assets 

Total assets 

Capital expenditures1 

Depreciation1 

Current liabilities 

Liabilities 

Net debt + pension provisions 

Equity 

Net operating cash flow less cash outflows 
for property, plant and equipment  
and intangible assets 

Cost of goods sold 

Inventories 

Sales 

Trade accounts receivable 

Cost of goods sold 

Trade accounts payable 

Equity 

Total assets 

Income after income taxes 

Average equity 

Income before income taxes  
and interest expense 

Average total assets 

  [Table 3.16.10]

2013 

2014 

48.6  

48.0 

8.5  

7.9  

8.5 

8.2 

12.3  

13.0 

20.9  

20.9 

56.1  

61.6 

137.5  

165.5 

46.0  

31.0 

0.7  

1.6 

3,014  

3,439 

2.7  

5.3  

4.4  

2.4 

4.6 

3.8 

40.5  

28.8 

16.2  

16.8 

9.5  

8.6 

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16.7 Financial Management of the Group 

The financial management of the Bayer Group is conducted by the strategic management holding com-
pany Bayer AG. Capital is a global resource, generally procured centrally and distributed within the 
Group. The foremost objectives of our financial management are to help bring about a sustained in-
crease in corporate value and to ensure the Group’s liquidity and creditworthiness. This involves opti-
mizing the capital structure and effectively managing risks. The management of currency, interest rate, 
raw material price and default risks helps to reduce the volatility of our earnings. 

The contracted rating agencies assess Bayer as follows: 

Rating 

Standard & Poor’s 

Moody’s 

[Table 3.16.11]

Long-term rating 

Outlook 

Short-term rating 

A–

A3

stable

stable

A–2 

P–2 

These credit ratings reflect the company’s high solvency and ensure access to a broad investor base for 
financing purposes. It remains our goal to achieve and maintain financial ratios that support an “a” 
category rating in order to maintain our financial flexibility.  

We pursue a prudent debt management strategy to ensure flexibility, drawing on a balanced financing 
portfolio. This is based on bonds – predominantly a multi-currency European Medium Term Notes pro-
gram –, syndicated credit facilities, bilateral loan agreements and a global commercial paper program.  

We use financial derivatives to hedge against risks arising from business operations or financial transac-
tions, but do not employ contracts in the absence of an underlying transaction. It is our policy to dimin-
ish default risks by selecting trading partners with a high credit standing. We closely monitor the execu-
tion of all transactions, which are conducted in accordance with Group directives. 

Further details of our risk management objectives and the ways in which we account for all the major 
types of hedged transactions – along with price, credit and liquidity risks as they relate to the use of 
financial instruments – are given in Chapter 20.3 “Opportunities and Risks Report.” 

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Bayer Annual Report 2014

17. Earnings; Asset and Financial Position 

of Bayer AG 

Bayer AG is the parent corporation of the Bayer Group and functions as a management holding compa-
ny. The principal management functions for the entire Group are performed by the Board of Manage-
ment of Bayer AG. These include strategic planning, resource allocation, executive management and 
financial management. The performance of Bayer AG is largely determined by the business perfor-
mance of the Bayer Group. 

The financial statements of Bayer AG are prepared in accordance with the German Commercial Code 
(hgb) and Stock Corporation Act (AktG). 

17.1 Earnings Performance of Bayer AG 

Bayer AG Summary Income Statements according to the German Commercial Code 

[Table 3.17.1]

Income from investments in affiliated companies – net 

Interest expense – net 

Other financial income – net 

Other operating income 

General administration expenses 

Other operating expenses 

Income before income taxes 

Income taxes 

Net income 

Allocation to retained earnings 

Distributable profit 

2013 

2014 

€ million 

€ million 

3,542 

(315) 

110 

118 

(266) 

(148) 

3,041 

(543) 

2,498 

(761) 

1,737 

3,213

(341)

129

128

(272)

(147)

2,710

(256)

2,454

(593)

1,861

In fiscal 2014 Bayer AG’s net income was €2,454 million, which was around the same level as in the 
previous year (2013: €2,498 million). The main decline was in income from investments in affiliated 
companies. This was largely offset by lower tax expense. 

The income from investments in affiliated companies declined year on year by €329 million to €3,213 
million (2013: €3,542 million). Bayer Pharma AG posted income of €2,158 million (2013: €1,934 mil-
lion), which was once again by far the largest contribution. The improvement in this subgroup’s earn-
ings was mainly due to a substantial increase in business with recently launched high-margin products. 
Bayer CropScience AG contributed €787 million (2013: €1,379 million) to Bayer AG’s income. The pre-
vious year’s figure included one-time income of €570 million from the intra-Group sale of seed technol-
ogies. Having made a loss of €20 million in the previous year, Bayer MaterialScience made a positive 
earnings contribution of €154 million in 2014. The main reasons for this were an improvement in oper-
ating earnings resulting from lower procurement prices for raw materials and energy, and higher divi-
dend income. Other significant earnings contributions comprised €146 million (2013: €213 million) from 
a subsidiary that receives foreign dividend income. Bayer Business Services GmbH posted a loss of €75 
million (2013: €74 million), and Bayer Technology Services GmbH reported a loss of €18 million (2013: 
€30 million).  

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17. Earnings; Asset and Financial Position of Bayer AG

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181

Net interest expense was €341 million, an increase of €26 million compared with the previous year. This 
was mainly attributable to a rise in interest expense resulting from higher financial debt, principally as a 
consequence of bond issuances during the fiscal year. This was not fully compensated by lower interest 
rates. Of the net interest expense, €255 million was attributable to transactions with third parties and 
€86 million to intra-Group transactions.  

Other financial income and expenses yielded a positive balance of €129 million (2013: €110 million). 
This mainly comprised income of €180 million (2013: €162 million) from the subgroups and service 
companies to cover pension expenses for retirees remaining with Bayer AG following the hive-down of 
the operating business. The non-interest portion of the corresponding expense, amounting to €19 mil-
lion (2013: €26 million), is included in other financial expenses; the remainder is reflected in net interest 
expense. A further charge of €20 million (2013: €14 million) resulted from the translation of foreign 
currency receivables and payables and from currency derivatives.  

General administration expenses relating to Bayer AG’s performance of its functions as a holding compa-
ny amounted to €272 million (2013: €266 million). Miscellaneous operating expenses relating to these 
functions, net of the respective miscellaneous operating income, came to €19 million (2013: €30 million). 
The increase in administration expenses was attributable in part to a slight increase in the number of 
employees. 

Pre-tax income decreased to €2,710 million (2013: €3,041 million). Tax expense was also lower at €256 
million compared with €543 million in 2013. After deduction of taxes, net income was €2,454 million 
(2013: €2,498 million). An allocation of €593 million was made to other retained earnings, leaving a 
distributable profit of €1,861 million. 

The Board of Management and Supervisory Board will propose to the Annual Stockholders’ Meeting on 
May 27, 2015 that the distributable profit be used to pay a dividend of €2.25 per share (826,947,808 
shares) on the capital stock of €2,117 million entitled to the dividend for 2014. 

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17. Earnings; Asset and Financial Position of Bayer AG 

Bayer Annual Report 2014

17.2 Asset and Financial Position of Bayer AG 

Bayer AG Summary Statements of Financial Position according to the German Commercial Code 

[Table 3.17.2]

ASSETS 

Noncurrent assets 

Intangible assets, property, plant and equipment 

Financial assets 

Current assets 

Receivables from subsidiaries 

Remaining receivables, other assets 

Cash and cash equivalents, marketable securities 

Total assets 

EQUITY AND LIABILITIES 

Equity 

Provisions 

Other liabilities 

Bonds and notes, liabilities to banks 

Payables to subsidiaries 

Remaining liabilities 

Total equity and liabilities 

Dec. 31, 2013 

Dec. 31, 2014 

€ million 

€ million 

21 

35,300 

35,321 

18

40,919

40,937

1,712 

455 

972 

3,139 

2,729

460

1,243

4,432

38,460 

45,369

14,815 

15,532

2,976 

2,406

2,229 

16,983 

1,457 

20,669 

7,210

18,204

2,017

27,431

38,460 

45,369

The asset and liability structure of Bayer AG is dominated by its role as a holding company in managing 
the subsidiaries and financing corporate activities. This is primarily reflected in the high level of invest-
ments in affiliated companies and of the receivables from, and payables to, Group companies. 

Total assets of Bayer AG as of December 31, 2014 were €45.4 billion (2013: €38.5 billion), which was 
€6.9 billion more than at the start of the year. Non-current assets rose by €5.6 billion and current assets 
by €1.3 billion.  

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Bayer Annual Report 2014 

17. Earnings; Asset and Financial Position of Bayer AG

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183

Property, plant and equipment and intangible assets totaled €18 million (2013: €21 million) and were 
therefore of secondary importance. Financial assets increased by €5.6 billion, from €35.3 billion in the 
previous year to €40.9 billion at year end 2014, principally as a result of capital increases at subsidiar-
ies. Investments in affiliated companies continued to account for by far the largest item in total assets, 
amounting to 88.3% (2013: 89.7%). 

Receivables from subsidiaries amounted to €2.7 billion (2013: €1.7 billion) while payables to subsidiar-
ies totaled €18.2 billion (2013: €17.0 billion). These amounts accounted for 6.1% of total assets and 
40.1% of total equity and liabilities, respectively.  

Including the deferred charges, the other receivables reflected in current assets were almost unchanged 
at €460 million (2013: €455 million) and were of only secondary importance in relation to total assets. 
Cash and cash equivalents were €271 million higher than in the previous year at €1,243 million (2013: 
€972 million) due to higher bank deposits. 

Bayer AG had equity of €15.5 billion (2013: €14.8 billion), giving an equity ratio of 34.2% (2013: 
38.5%). Net income for 2014 was €2,454 million while equity was diminished by the €1,737 million 
dividend payment for 2013. Despite the absolute rise in equity of €0.7 billion, the equity ratio declined 
by 4.3 percentage points as a result of the considerable increase in total assets. 

Provisions decreased by €0.6 billion to €2.4 billion (2013: €3.0 billion). Pension provisions and provi-
sions for taxes accounted for roughly equal proportions of the decline. Pension provisions decreased by 
€294 million to €1,868 million (2013: €2,162 million) while tax provisions were €283 million lower at 
€399 million (2013: €682 million). The other provisions were virtually unchanged at €139 million (2013: 
€132 million).  

Other liabilities rose by €6.8 billion to €27.4 billion (net of deductible receivables; 2013: €20.7 billion), 
mainly due to the €6.1 billion increase in financial debt. Bonds with a total nominal amount of €5.25 
billion were issued in 2014. In addition, the commercial paper program was increased by €0.5 billion 
and intra-Group debt rose by €0.7 billion. A promissory note with a face value of €0.25 billion was re-
paid in 2014 and other debt was reduced by €0.1 billion. Bayer AG had financial liabilities of €28.2 
billion at year end 2014 (2013: €22.1 billion). After deduction of cash and cash equivalents of €1.2 bil-
lion, net debt was €5.9 billion higher than in the previous year at €27.0 billion (2013: €21.1 billion). 

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18. Corporate Governance Report 

Bayer Annual Report 2014

Corporate Governance Report 

18. Corporate Governance Report 

This Corporate Governance Report also constitutes the report pursuant to Section 3.10 of the German 
Corporate Governance Code. 

18.1  Declaration Concerning the German Corporate 

Governance Code* 

*not part of the audited management report 

DECLAR ATION BY THE BOARD OF MANAGEMENT AND SUPERVISORY BOARD
concerning the German Corporate Governance Code (June 24, 2014 version) pursuant to Section 161 
of the German Stock Corporation Act**

Under Section 161 of the German Stock Corporation Act, the Board of Management and the Supervisory 
Board of Bayer AG are required to issue an annual declaration that the company has been, and is, in 
compliance with the recommendations of the “Government Commission on the German Corporate Gover-
nance Code” as published by the Federal Ministry of Justice in the ofﬁ cial section of the Federal Gazette 
(Bundesanzeiger), or to advise of any recommendations that have not been, or are not being, applied and 
the reasons for this. An annual declaration was last issued in December 2013. 

With respect to the past, the following declaration refers to the May 13, 2013 version of the Code. With 
respect to present and future corporate governance practices at Bayer AG, the following declaration 
refers to the recommendations in the June 24, 2014 version of the Code. 

Pursuant to Section 161 of the German Stock Corporation Act, the Board of Management and 
Supervisory Board of Bayer AG hereby declare as follows:

1.  The company has been in compliance with the recommendations of the Code since issuance 

of the last annual compliance declaration in December 2013. 

2.  All the recommendations of the Code are now being complied with in full.

Leverkusen, December 2014

For the Board of Management 

For the Supervisory Board

DR. DEKKERS 

  DIETSCH 

WENNING
WENNING

**  This is an English translation of a German document. The German document is the ofﬁ cial and controlling version, and this English 

translation in no event modiﬁ es, interprets or limits the ofﬁ cial German version.

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185

18.2 Governance* 

*not part of the audited management report 

BAYER IN COMPLIANCE WITH THE RECOMMENDATIONS OF THE GERMAN CORPORATE 
GOVERNANCE CODE 
Bayer has always placed great importance on responsible corporate governance and will continue to do 
so. In 2014 the company was able to issue a declaration that it had fully complied with the recommen-
dations of the German Corporate Governance Code in the past and continued to do so.  

In 2014, the Board of Management and Supervisory Board again addressed the question of compliance 
with the German Corporate Governance Code, including the Code amendments of June 24, 2014. The 
resulting declaration, which is reproduced on the previous page, was issued in December 2014 and 
posted on Bayer’s website along with previous declarations. 

DUTIES AND ACTIVITIES OF THE BOARD OF MANAGEMENT 
Bayer AG is a strategic management holding company, run by its Board of Management on the Board’s 
own responsibility with the goal of sustainably increasing the company’s enterprise value and achieving 
defined corporate objectives. The Board of Management performs its tasks according to the law, the 
Articles of Incorporation and the Board’s rules of procedure, and works with the company’s other gov-
ernance bodies in a spirit of trust. 

The Board of Management defines the long-term goals and the strategies for the Group, its subgroups 
and its service companies, and sets forth the principles and directives for the resulting corporate poli-
cies. It coordinates and monitors the most important activities, defines the portfolio, develops and de-
ploys managerial staff, allocates resources and decides on the Group’s financial steering and reporting. 

The members of the Board of Management bear joint responsibility for running the business as a whole. 
However, the individual members manage the areas assigned to them on their own responsibility within 
the framework of the decisions made by the entire Board. The allocation of duties among the members 
of the Board of Management is defined in a written schedule. 

The entire Board of Management makes decisions on all matters of fundamental importance and in 
cases where a decision of the entire Board is prescribed by law or otherwise mandatory. The rules of 
procedure of the Board of Management contain a list of topics that must be dealt with and resolved by 
the entire Board. 

Meetings of the Board of Management are held regularly. They are convened by the Chairman of the 
Board of Management. Any member of the Board of Management may also demand that a meeting be 
held. The Board of Management makes decisions by a simple majority of the votes cast, except where 
unanimity is required by law. In the event of a tie, the Chairman has the casting vote. 

According to the Board of Management’s rules of procedure and schedule of duties, the Chairman bears 
particular responsibility for leading and coordinating the Board’s work. He represents the company and 
the Group in dealings with third parties and the workforce on matters relating to more than one part of 
the company or the Group. He also bears special responsibility for certain departments of the Corporate 
Center and their fields of activity.  

The responsibilities of the members of the Board of Management were redistributed effective October 1, 
2014. Under the schedule of duties as of that date, responsibility is assigned to one member for Strate-
gy and Portfolio Management; to one member for Finance; to one member for Human Resources, Tech-
nology and Sustainability (this member also serving as the Labor Director); and to one member for 
Innovation. In addition, three of the members are each responsible for a particular geographical region.   

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No committees of the Board of Management have been set up in view of the small number of members 
and the role of Bayer AG as a strategic management holding company. 

SUPERVISORY BOARD: OVERSIGHT AND CONTROL FUNCTIONS 
The role of the 20-member Supervisory Board is to oversee and advise the Board of Management. Under 
the German Codetermination Act, half the members of the Supervisory Board are elected by the stock-
holders, and half by the company’s employees. The Supervisory Board is directly involved in decisions on 
matters of fundamental importance to the company, regularly conferring with the Board of Management 
on the company’s strategic alignment and the implementation status of the business strategy. 

The Chairman of the Supervisory Board coordinates its work and presides over the meetings. Through 
regular discussions with the Board of Management, the Supervisory Board is kept constantly informed 
of business policy, corporate planning and strategy. The Supervisory Board approves the annual budget 
and financial framework. It also approves the financial statements of Bayer AG and the consolidated 
financial statements of the Bayer Group, along with the combined management report, taking into ac-
count the reports by the auditor. 

COMMITTEES OF THE SUPERVISORY BOARD 
The Supervisory Board currently has the following committees: 

Presidial Committee: This comprises the Chairman and Vice Chairman of the Supervisory Board along 
with a further stockholder representative and a further employee representative. The Presidial Commit-
tee serves primarily as the mediation committee pursuant to the German Codetermination Act. It has the 
task of submitting proposals to the Supervisory Board on the appointment of members of the Board of 
Management if the necessary two-thirds majority is not achieved in the first vote at a plenary meeting. 
Certain decision-making powers in connection with capital measures, including the power to amend the 
Articles of Incorporation accordingly, have also been delegated to this committee. 

Audit Committee: The Audit Committee comprises three stockholder representatives and three em-
ployee representatives. The Chairman of the Audit Committee in 2014, Dr. Klaus Sturany, satisfies the 
statutory requirements concerning the independence and the expertise in the field of accounting or 
auditing that a member of the Supervisory Board and the Audit Committee is required to possess. The 
Audit Committee meets regularly four times a year. Its tasks include examining the company’s finan-
cial reporting along with the financial statements of Bayer AG, the consolidated financial statements of 
the Bayer Group, the combined management report, the proposal for the use of the distributable profit 
of Bayer AG, and the interim financial statements and management reports of the Bayer Group, all of 
which are prepared by the Board of Management. On the basis of the auditor’s report on the audit of 
the financial statements of Bayer AG, the consolidated financial statements of the Bayer Group and the 
combined management report, the Audit Committee develops proposals concerning the approval of 
the statements by the full Supervisory Board. The Audit Committee is also responsible for the compa-
ny’s relationship with the external auditor. The Audit Committee submits a proposal to the full Super-
visory Board concerning the auditor’s appointment, prepares the awarding of the audit contract to the 
audit firm appointed by the Annual Stockholders’ Meeting, suggests areas of focus for the audit and 
determines the auditor’s remuneration. It also monitors the independence, qualifications, rotation and 
efficiency of the auditor. 

In addition, the Audit Committee oversees the company’s internal control system – along with the  
procedures used to identify, track and manage risk – and the internal audit system. It also deals with 
corporate compliance issues and discusses developments in this area at each of its meetings.  

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Human Resources Committee: On this committee, too, there is parity of representation between 
stockholders and employees. It consists of the Chairman of the Supervisory Board and three other 
members. The Human Resources Committee prepares the personnel decisions of the full Supervisory 
Board, which resolves on appointments or dismissals of members of the Board of Management. The 
Human Resources Committee resolves on behalf of the Supervisory Board on the service contracts of 
the members of the Board of Management. However, it is the task of the full Supervisory Board to 
resolve on the total compensation of the individual members of the Board of Management and the 
respective compensation components, as well as to regularly review the compensation system on the 
basis of recommendations submitted by the Human Resources Committee. The Human Resources 
Committee also discusses the long-term succession planning for the Board of Management. 

Nominations Committee: This committee carries out preparatory work when an election of stockholder 
representatives to the Supervisory Board is to be held. It suggests suitable candidates for the Superviso-
ry Board to propose to the Annual Stockholders’ Meeting for election. The Nominations Committee 
comprises the Chairman of the Supervisory Board and the other stockholder representative on the Pre-
sidial Committee. 

Detailed information on the work of the Supervisory Board and its committees is provided in the Report 
of the Supervisory Board on page 34ff. of this Annual Report. 

OBJECTIVES FOR THE COMPOSITION OF THE SUPERVISORY BOARD 
The Supervisory Board should be composed in such a way that its members together possess the neces-
sary expertise, skills and professional experience to properly perform their duties. In view of Bayer AG’s 
global operations, the Supervisory Board has set itself the goal of always having several members with 
international business experience or an international background. A further objective concerning the 
composition of the Supervisory Board is that, absent special circumstances, a member should not hold 
office beyond the end of the next Annual Stockholders’ Meeting following his or her 72nd birthday. 
With a view to avoiding potential conflicts of interest, the Supervisory Board has set itself the goal that 
more than half of the stockholder representatives be independent and also that at least three quarters of 
the total Supervisory Board membership (stockholder and employee representatives) be independent. 
The Supervisory Board assesses the independence of its members according to the recommendation 
contained in Section 5.4.2 of the German Corporate Governance Code. In assessing independence, the 
Supervisory Board also considers the criteria given in the recommendation of the European Commission 
of February 15, 20051. 

Another goal for the composition of the Supervisory Board is that women continue to account for at 
least 20% of the members of the Supervisory Board in the medium term, subject to any future changes 
in the law, and that the female membership be distributed as evenly as possible between the stockhold-
er and employee groups.  

The goals described refer to the Supervisory Board as a whole unless resolved otherwise. However, 
since the Supervisory Board can only nominate candidates for election as stockholder representatives, it 
can only take the targets into account in these nominations. 

Implementation status of the objectives 
Taking into account the new appointments in 2014, the Supervisory Board continues to have several 
members with international business experience and other international connections. The objective that 
a member should step down from the Supervisory Board at the Annual Stockholders’ Meeting following 
his or her 72nd birthday is being met. One member, Ernst-Ludwig Winnacker, who has been elected to 
serve until the Annual Stockholders' Meeting in 2016, had already reached 72 years of age at the time 
of the Annual Stockholders' Meeting 2014. However, he was proposed for reelection at that Meeting so 
that the Supervisory Board would continue to have one member with particular expertise in research 
until one or more members with similar experience can be appointed. One member of the Supervisory 
Board, Werner Wenning, was the Chairman of the company’s Board of Management until 2010. One 

1 Annex 2 to the recommendation of the European Commission of February 15, 2005, on the role of non-executive or supervisory directors of listed 

companies and on the committees of the (supervisory) board (2005/162/EC) 

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18. Corporate Governance Report 

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member, Ernst-Ludwig Winnacker, has been a member of the Supervisory Board since 1997, and thus 
has served more than three terms of office. However, neither Werner Wenning nor Ernst-Ludwig 
Winnacker has any personal or business relationship with the company or a governance body of the 
company that in the opinion of the Supervisory Board gives rise to a material conflict of interest of a 
more than temporary nature. In 2014 the proportion of women on the Supervisory Board reached the 
target of 20% set by the Supervisory Board itself for the minimum percentage of women members.  

DISCLOSURE OF SECURITIES TRANSACTIONS BY MEMBERS OF THE BOARD  
OF MANAGEMENT OR SUPERVISORY BOARD 
Members of the Board of Management and Supervisory Board and their close relatives are legally re-
quired to disclose all transactions involving the purchase or sale of Bayer stock where such transactions 
total €5,000 or more in a calendar year. Bayer publishes details of such transactions immediately on its 
website and also notifies the German Financial Supervisory Authority accordingly. This information is 
provided to the company register for archiving. The following transactions in 2014 were reported to 
Bayer AG:  

Securities Transactions by Members of the Board of Management or Supervisory Board 

[Table 3.18.1]

Date /  
Place 

Name / 
Function 

Financial  
instrument 

ISIN 

Transaction 

Price / 
Currency 

Quantity 

Total transaction 
volume 

March 5, 2014 / 
Xetra 

Dr. Paul Achleitner, 
Supervisory Board 

March 5, 2014 / 
Xetra 

Dr. Clemens Börsig, 
Supervisory Board 

March 5, 2014 / 
Xetra 

Thomas Ebeling, 
Supervisory Board  

March 5, 2014 / 
Xetra 

Dr.-Ing. Thomas Fischer, 
Supervisory Board 

March 5, 2014 / 
Xetra 

Dr. Klaus Kleinfeld, 
Supervisory Board 

March 5, 2014 / 
Xetra 

Dr. Helmut Panke, 
Supervisory Board 

March 5, 2014 / 
Xetra 

Michael Schmidt-Kiessling, 
Supervisory Board  

March 5, 2014 / 
Xetra 

Sue H. Rataj, 
Supervisory Board 

March 5, 2014 / 
Xetra 

Prof. Dr. Ekkehard Schulz, 
Supervisory Board  

March 5, 2014 / 
Xetra 

Dr. Klaus Sturany, 
Supervisory Board  

March 5, 2014 / 
Xetra 

Werner Wenning, 
Supervisory Board  

March 5, 2014 / 
Xetra 

Prof. Dr. Ernst-Ludwig 
Winnacker, 
Supervisory Board  

Shares 

DE000BAY0017 

Purchase 

EUR 100.68 

447 

EUR 45,003.96

Shares 

DE000BAY0017  

Purchase 

EUR 100.68 

298 

EUR 30,002.64 

Shares 

DE000BAY0017 

Purchase 

EUR 100.68 

298 

EUR 30,002.64 

Shares 

DE000BAY0017  

Purchase 

EUR 100.68 

447 

EUR 45,003.96

Shares 

DE000BAY0017  

Purchase 

EUR 100.68 

298 

EUR 30,002.64 

Shares 

DE000BAY0017    Purchase 

EUR 100.68 

298 

EUR 30,002.64 

Shares 

DE000BAY0017  

Purchase 

EUR 100.68 

298 

EUR 30,002.64 

Bayer AG 
American 
Depositary  
Receipt (ADR)   US0727303028 

Purchase 

US$ 137.69  

293  US$ 40,343.17

Shares 

DE000BAY0017  

Purchase 

EUR 101.00 

450 

EUR 45,450.00 

Shares 

DE000BAY0017  

Purchase 

EUR 100.68 

596 

EUR 60,005.28 

Shares 

DE000BAY0017  

Purchase 

EUR 100.68 

894 

EUR 90,007.92

Shares 

DE000BAY0017  

Purchase 

EUR 100.68 

298 

EUR 30,002.64

Information filed with the company by members of the Board of Management and Supervisory Board 
shows that, on the closing date for the financial statements, their total holdings of Bayer AG stock or 
related financial instruments were equivalent to less than 1% of the issued stock. 

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COMMON VALUES AND LEADERSHIP PRINCIPLES 
Bayer has committed itself to the values of Leadership, Integrity, Flexibility and Efficiency, or “life” for 
short. These values provide guidance to all Bayer employees, both in business dealings and in working 
together within the company. All employees are obligated to align their work to the life values. This is 
taken into account in human resources development and the regular performance evaluations. 

SYSTEMATIC RISK MANAGEMENT 
The established internal control system enables the company to identify any business or financial risks  
at an early stage and take appropriate action to manage them. This control system is designed to ensure 
that risks are monitored in a timely manner, all business transactions are properly accounted for, and 
reliable data on the company’s financial position is always available. 

When acquisitions are made, we aim to bring the acquired units’ internal control systems into line with 
those of the Bayer Group as quickly as possible. 

However, the control and risk management system cannot provide absolute protection against losses 
arising from business risks or fraudulent actions. 

DETAILED REPORTING 
To maximize transparency, we provide regular and timely information on the Group’s position and sig-
nificant changes in business activities to stockholders, financial analysts, stockholders’ associations, the 
media and the general public. Bayer complies with the recommendations of the Corporate Governance 
Code by publishing reports on business trends, financial position, results of operations and related risks 
four times a year. 

In line with statutory requirements, the members of the Group Management Board provide an assur-
ance that, to the best of their knowledge, the financial statements of Bayer AG, the consolidated finan-
cial statements of the Bayer Group and the combined management report provide a true and fair view.  

The financial statements of Bayer AG, the consolidated financial statements of the Bayer Group and  
the combined management report are published within 90 days following the end of each fiscal year. 
During the fiscal year, stockholders and other interested parties are kept informed of developments by 
means of the half-year financial report and additional interim reports for the first and third quarters.  
The half-year financial report is voluntarily subjected to an audit review by the auditor, whose appoint-
ment by the Annual Stockholders’ Meeting also relates specifically to this audit review. 

Bayer also provides information at news conferences and analysts’ meetings. In addition, the company 
uses the internet as a platform for timely disclosure of information, including details of the dates of 
major publications and events, such as the annual report, quarterly financial reports (Stockholders' 
Newsletters) or the Annual Stockholders’ Meeting. 

In line with the principle of fair disclosure, all stockholders and other principal target groups are  
treated equally as regards the communication of valuation-relevant information. All significant new facts 
are disclosed immediately to the general public. Stockholders also have immediate access to the infor-
mation that Bayer publishes locally in compliance with the stock market regulations of various coun-
tries. 

In addition to our regular reporting, we issue ad-hoc statements on developments that otherwise might 
not become publicly known but have the potential to materially affect the price of Bayer stock. 

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18.3 Compliance 

Bayer manages its businesses responsibly and in compliance with the statutory and regulatory require-
ments of the countries in which it operates. 

We define compliance as legally and ethically impeccable conduct by all employees in their daily work – 
because the way they carry out their duties affects the company’s reputation. Bayer does not tolerate 
any violation of applicable laws, relevant codes of conduct or internal regulations.  

The Board of Management is unreservedly committed to corporate compliance and Bayer will forgo any 
business transaction that would violate our compliance principles. These principles are enshrined in our 
Corporate Compliance Policy, which is available in 42 languages. This document details our commit-
ment to fair competition, integrity in business dealings including zero tolerance of corruption, the prin-
ciples of sustainability and product stewardship, the upholding of foreign trade laws and insider trading 
laws, the separation of business and private interests, proper record-keeping and transparent financial 
reporting, fair and respectful working conditions, and avoidance of all forms of discrimination. Every 
employee is required to immediately report any infringement of the Corporate Compliance Policy (ex-
cept in France where this requirement does not apply due to national law). Managerial employees have 
a vital part to play in implementing the Corporate Compliance Policy. As role models, they must help to 
ensure that this important code of conduct is adhered to in practice. Managers may lose their entitle-
ment to variable compensation components and be subject to disciplinary measures if systematic viola-
tions of applicable law entailing loss or damage to Bayer have occurred in their sphere of responsibility 
and could have been prevented if they had taken appropriate action. Compliant and lawful conduct 
forms part of the performance evaluations of all managerial employees.  

Bayer’s Corporate Audit department regularly verifies adherence to the Corporate Compliance Policy. In 
2014, 219 audits, including 62 compliance audits, were performed on the basis of a risk-oriented audit 
plan that takes potential corruption and other risks into account. Such audits were either preventive or 
incident-related. Observance of the Corporate Compliance Policy is also a focus of all regular audits. 
The head of Corporate Audit regularly attends the meetings of the Audit Committee of the Supervisory 
Board and provides it with a list of conducted audits and their outcomes at least once a year. 

The head of the Bayer Group’s compliance organization is the Group Compliance Officer, who regularly 
reports directly to the Chairman of the Board of Management and to the Audit Committee of the Super-
visory Board. A central compliance department supports the Group Compliance Officer in steering and 
implementing the Group-wide compliance activities. Each subgroup and service company has its own 
compliance officer, who is responsible for ensuring its adherence to Group-wide standards and to any 
applicable subgroup- or industry-specific standards. There is a central Compliance Officer for each 
country and country group, supported where necessary by further compliance functions, to advise em-
ployees on lawful and ethically correct behavior in business-related situations. 

The compliance organization operates in accordance with international standards such as the oecd 
Recommendations of the Council for Further Combating Bribery of Foreign Public Officials in Interna-
tional Business Transactions.  

Compliance is crucial to the success of our business. Bayer adopted a Group-wide Compliance Charter 
in 2013 to integrate compliance even more closely into all operating units and their work processes.  

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As part of the Charter's implementation we have launched the Group-wide Integrated Compliance Man-
agement (icm) project to turn the compliance organization's role into that of a proactive and preventive 
business partner. icm fosters close, systematic collaboration between the compliance experts and the 
managers responsible for business operations in order to identify business-relevant risk areas and min-
imize existing risks. We plan to carry out comprehensive, preemptive risk assessments in all three sub-
groups by the end of 2015. The project also includes regular self-monitoring by the operational business 
units based on appropriate auditing and inspection procedures. icm is focused on the areas of antitrust 
law, anticorruption measures, export controls, conflicts of interest, insider trading, antidiscrimination 
policies and data privacy.  

Group target 2015: 
implementation of 
preemptive risk 
assessments in all 
three subgroups 

  See Chapter 1.3  
for Group targets 

 online annex 3-18.3-1  

A systematic process is in place involving roundtable meetings to discuss identified compliance risks 
and coordinate steps to avert them. The participants in these roundtables are the respective compli-
ance functions and the managers responsible for the business concerned. The results of the 
roundtables are entered and tracked in a Group-wide compliance risk management database. 65 
roundtables were held following their introduction in May 2014.  

Group-wide training programs tailored to requirements and target groups, along with extensive com-
munications activities, help to raise the employees' awareness for compliance issues and the risks these 
involve.  

Group target from 
2015 onward: annual 
compliance training for 
all Bayer managers 
(>99%) 

 online annex 3-18.3-2 

Our training and communications activities are designed to support our employees by explaining to 
them the significance of compliance and how important it is to the company that the respective rules 
be observed. The goal is also to ensure that employees do not overstep boundaries out of ignorance 
or uncertainty. Our subject-specific communication and training activities reflect the icm focus areas. 

The compliance training courses are available in various formats to meet the needs of different em-
ployee groups. Some take the form of web-based training (wbt) programs, while others are face-to-
face training sessions or workshops.  

In 2014, 36,288 Bayer managers, or 94% of the global total, took at least one compliance trainng 
course. Starting in 2015, all managers worldwide are to receive compliance training at least annually, 
depending on their risk category, in line with our Group target.  

In 2014 we also implemented a new global web-based training program in 75 countries on the sub-
ject of antitrust violations. This program, available in 10 languages, has already been completed by 
27,435 employees.  

In addition, we have developed a standardized web-based training program for new hires incorporat-
ing basic information on the subjects of compliance, anticorruption measures and antitrust law. This 
program was completed by 3,145 newly hired employees in 2014.  

In view of the particularly strict compliance rules in the area of health care, special training courses 
have been developed for our HealthCare subgroup. These courses are based on a global directive, 
the Bayer HealthCare Anti-Corruption Compliance Manual, which applies to all divisions of 
HealthCare. The training courses outline the minimum requirements to be observed throughout the 
world when working with HealthCare's principal stakeholders, such as physicians, hospitals or pa-
tient organizations. These minimum standards are based on laws, industry codes and in-house regu-
lations. The courses not only explain general compliance principles but also give specific instructions 
in relation to non-reciprocal benefits and the exchange of services with health care professionals. 

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We again ran an extensive communication campaign about compliance in 2014, aimed at providing 
all employees with more detailed information, explaining who is now available to advise them under 
the new partnering concept, and raising awareness for compliance-critical situations. A quarterly 
newsletter for employees is published on the compliance intranet site.  

The communications activities in 2014 mainly focused on avoiding corruption or antitrust violations. 
Apart from specific training programs there was an interactive quiz on both topics along with in-
house publications such as flyers and articles, and videos accessible via Bayer News Channel or the 
compliance website. 

Compliance violations can be reported – anonymously if desired – via compliance hotlines that have 
been set up worldwide. In 2014 the compliance organization registered 70 reports via the central com-
pliance hotline and email address. Of these, 14 were from Germany and 56 from other countries. 60 
reports were received by email (17 of them anonymously) and 10 by telephone (eight of these anony-
mously). Suspected compliance violations may also be reported to the Compliance Officers, to Bayer’s 
Corporate Audit department or via local hotlines set up by the country organizations.  

All suspected compliance violations in the Group are recorded according to uniform criteria and dealt 
with according to the rules set forth in the Directive on the Management of Compliance Incidents. 

 online annex 3-18.3-3 

Where an investigation confirms that a compliance violation has occurred, the company has a gradu-
ated set of measures at its disposal. These include a verbal or written warning, transfer to a different 
unit, cancellation of a planned promotion, a reduction in the short-term incentive payment, down-
grading to a lower collectively agreed pay rate or managerial contract level, or ordinary or extraordi-
nary termination. This does not preclude the company from asserting further claims against the em-
ployee for cost reimbursement or damages or initiating a criminal prosecution. The action taken in a 
particular case depends on the gravity of the compliance violation and on applicable law. 

18.4 Compensation Report 

The Compensation Report describes the essential features of the compensation system for the members 
of the Board of Management and the Supervisory Board and explains the compensation of the individu-
al members. The report conforms to the requirements of the German Commercial Code including the 
principles of German Accounting Standard No. 17 (drs 17). It also complies with the recommendations 
of the German Corporate Governance Code and the International Financial Reporting Standards (ifrs).  

18.4.1 Compensation of the Board of Management 

OBJECTIVES  
The structure of the compensation system for the Board of Management of Bayer AG is aimed at ensur-
ing performance-oriented corporate governance and a long-term increase in the company’s value. The 
core elements of the system include fixed compensation, which takes into account the tasks and duties 
of the Board of Management members, and an incentivized component – the short-term incentive  
(sti) –, which depends on the attainment of the annual corporate performance targets. In addition to the 
compensation directly related to each year of service, there are two long-term stock-based components 
that are directly related to the development of Bayer’s share price over time and thus are intended to 
create an incentive for a sustained commitment to the company. The system is also designed to enable 
the company to successfully compete for highly qualified executives and to ensure statutory and regula-
tory compliance. Board of Management compensation is in line with the basic principles of the compen-
sation structure for managerial employees in the Bayer Group. The appropriateness of the system and 
the compensation level are regularly reviewed by the Supervisory Board, which then makes any neces-
sary adjustments. 

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COMPENSATION STRUCTURE 
The compensation paid to the members of the Board of Management includes both non-performance-
related and performance-related components. The compensation structure, based on average total 
annual compensation and 100% target attainment, is as follows:   

Board of Management Compensation Structure (German Commercial Code) 1

[Graphic 3.18.1]

~ 30%

Fixed annual 
compensation

~ 30%

Short-term variable 
cash compensation 
(50% STI)

1 excluding fringe beneﬁ ts and pension entitlements

~ 40%

Long-term variable 
compensation

~ 10% Aspire 

~ 30%  Virtual shares

(50% STI)

The non-performance-related compensation comprises the fixed annual compensation along with fringe 
benefits. The performance-related compensation partly comprises a variable component (sti), of which 
50% takes the form of short-term variable cash compensation and 50% consists of long-term cash 
compensation involving a grant of virtual Bayer shares that are retained for three years. The other per-
formance-related compensation component serving as a long-term incentive is the stock-based cash 
compensation program Aspire, where a four-year retention period applies.  

The individual performance-related components are capped at the grant date. To comply with the 
recommendation newly included in the 2013 version of the German Corporate Governance Code, caps 
have also been agreed for the disbursement of the performance-related components and for the com-
pensation as a whole (total of the annual fixed compensation and the variable components) with effect 
from the fiscal year 2014. The cap on the total compensation is 1.8 times the respective target compen-
sation and is determined annually when the fixed compensation is set.  

The members of the Board of Management also receive pension entitlements for themselves and their 
surviving dependents. 

Non-performance-related components 
Fixed annual compensation 
The level of the non-performance-related, fixed annual compensation takes into account the functions 
and responsibilities assigned to the members of the Board of Management as well as market conditions. 
The fixed compensation is regularly reviewed by the Supervisory Board in light of the consumer price 
indexes and adjusted if necessary. It is paid out in twelve monthly installments.  

Fringe benefits 
This component mainly includes perquisites such as a company car with driver or the use of the com-
pany carpool, payments toward the cost of security equipment, and the reimbursement of the cost of 
annual health screening examinations. Fringe benefits are reported at cost or the amount of the pecuni-
ary advantage gained. 

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Performance-related components 
Short-term variable cash compensation 
The short-term variable compensation (short-term incentive, or sti) is based on a set percentage of 
the fixed annual compensation (target value). This amount is adjusted according to the target attain-
ments of the Bayer Group, the subgroups and the individual Board of Management member.  

The Group component is determined in relation to core earnings per share of the Group, while the sub-
group components are governed by the weighted average target attainments of the HealthCare, Crop-
Science and MaterialScience subgroups. The annual subgroup targets are derived from the respective 
business strategies and operational priorities. The target attainment for HealthCare and CropScience is 
mainly based on the comparison of target and actual values for the ebitda margin before special items 
and sales growth. At MaterialScience it is measured in terms of the cash flow return on investment 
(cfroi). Target attainment also takes into account qualitative objectives including safety, compliance 
and sustainability aspects.  

The target attainment for the individual component of the variable compensation is determined by the 
Supervisory Board. One half of the sti for each year is paid out in the second quarter of the following 
year, while the other half is granted in the form of virtual Bayer shares. 

Short-Term Variable Compensation (STI) Components

[Graphic 3.18.2]

bayersti

Group
component

Subgroup
component

Individual
component

1/ 3 of STI target value

1/ 3 of STI target value

1/ 3 of STI target value

Based on Group target
attainment (core earnings
per share)

Based on attainment of
ﬁ nancial and qualitative targets
by the three subgroups
(weighted average)

Based on individual
performance

Long-term variable cash compensation based on virtual Bayer shares 
Both the number of virtual shares granted and the amount of the payment at the end of a three-year 
retention period are based on the average official closing price of Bayer shares over the last 30 trading 
days of the respective year in the Xetra system of the Frankfurt Stock Exchange. A cash payment with 
respect to the number of virtual shares held is made at the end of the three-year period according to the 
market price of Bayer shares at that time. In addition, the members of the Board of Management receive 
an amount equal to the total dividends paid on the equivalent number of real shares during the period. 
Payment is made in January of the year following the end of the three-year period. This payment is 
capped at 200% of the amount converted into virtual shares at the beginning of the three-year period. 
No option exists for the Board of Management members to extend the retention period or defer the 
payout. When a member leaves the Board of Management, the retention period for two-thirds of each 
tranche is shortened to two years. If the member leaves during a fiscal year, payment is made immedi-
ately with respect to two-thirds of any tranche that has already been retained for more than two years. 
The remaining one-third of each tranche continues to be subject to the three-year retention period. 

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Long-term stock-based cash compensation (Aspire I) 
Members of the Board of Management are eligible to participate in the annual tranches of the long-term 
stock-based compensation program Aspire i (“Aspire”) on condition that they purchase a certain num-
ber of Bayer shares – determined for each individual according to specific guidelines – as a personal 
investment and for as long as they continue in the service of the Bayer Group. The payments made 
under this program are based on the Aspire Target Opportunity, which is a contractually agreed per-
centage of fixed annual compensation. Depending on the performance of Bayer stock, both in absolute 
terms and relative to the euro stoxx 50 benchmark index, participants are granted an award of be-
tween 0% and 300% of their individual Aspire Target Opportunity at the end of the respective perfor-
mance period. The payout / performance matrix according to the absolute and relative development of 
Bayer’s share price is explained at http://www.investor.bayer.com/en/stock/stock-programs/aspire/. 

Tranches of the Aspire Program

[Graphic 3.18.3]

2010 – 2013

2011 – 2014

2012 – 2015

2013 – 2016

2014 – 2017

2010

2011

2012

2013

2014

2015

2016

2017

performance period

When a member of the Board of Management retires, current tranches may be shortened, thus reducing 
their value. In this case, tranches up to the one issued in 2011 are shortened on a pro-rated basis ac-
cording to the duration of the member’s active service on the Board of Management during the period 
of the tranche; tranches issued in 2012 or later are shortened according to the duration of the member’s 
active service on the Board of Management during the first year of the tranche. 

Expanded Share Ownership Guidelines 
On top of the requirement for participants in the Aspire program to make a personal investment in Bayer 
shares, the members of the Board of Management have undertaken to comply with expanded Share 
Ownership Guidelines. These require the Chairman of the Board of Management to build a position in 
Bayer shares to the value of 150% of his fixed annual compensation, and the other members to the value 
of 100% of their fixed annual salaries, within four years and to continue to hold them for as long as they 
remain Board of Management members. Half the number of virtual shares granted to them through con-
version of 50% of the sti into virtual shares counts toward this position. The Board of Management 
members must provide documentary evidence of their compliance with this obligation for the first time  
at the end of the four-year position-building period and again yearly thereafter. In the event of significant 
changes in fixed annual compensation, the value to which shares are held must be adjusted accordingly.  

Pension entitlements (retirement and surviving dependents‘ pensions) 
The members of the Board of Management appointed prior to 2013 are generally entitled to receive a 
lifelong company pension after leaving the Bayer Group, though not before the age of 60. This pension 
is normally paid out in the form of a monthly life annuity. Dr. Marijn Dekkers has the option to receive a 
capital sum in place of an annuity. 

The annual pension granted equals at least 15% of final fixed annual compensation. This percentage 
can increase with continuing service on the Board of Management up to a maximum of 60%. The ar-
rangements for surviving dependents basically provide for a widow’s pension amounting to 60% of the 
member's pension entitlement and an orphan's pension amounting to 15% of the member's pension 
entitlement for each child.  

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Future pension payments are annually reviewed and adjusted based on the development of consumer 
prices. Pension rights are suspended if a Management Board member works for a competitor of 
Bayer AG or of another Group company before the age of 65 without the prior written consent of the 
Supervisory Board.  

The annual pension entitlement for members of the Board of Management appointed in 2013 or thereaf-
ter is based on contributions. Bayer provides a hypothetical contribution amounting to 33% of the 
respective fixed compensation each year. This percentage is comprised of a 6% basic contribution and 
a 27% matching contribution – three times the member’s personal contribution of 9%. The total annual 
contribution is converted into a pension module according to the annuity table for the applicable tariff 
of the Rheinische Pensionskasse VVaG pension fund. The annual pension entitlement upon retirement 
(at 62 years of age at the earliest) is the total amount of the accumulated pension modules including an 
investment bonus. The investment bonus is determined annually based on the net return on the assets 
of the Rheinische Pensionskasse VVaG minus the minimum return on the contributions that is guaran-
teed under the tariff and approved by the German Financial Supervisory Authority. Kemal Malik has 
been granted, in addition, a vested entitlement to a fixed annual pension of €80 thousand starting  
on his 65th birthday. This is subject to a pro-rated reduction in the event that his term of office ends 
prior to his 65th birthday under certain conditions. 

The ultimate pension entitlement cannot be precisely determined in advance. It depends on the devel-
opment of the member’s compensation, the number of years of service on the Board of Management 
and the return on the assets of the Rheinische Pensionskasse VVaG. We currently estimate the achieva-
ble total pension entitlement at approximately 45% of a member's annual fixed compensation immedi-
ately prior to retirement, with roughly 38% financed by the company and 7% by the member of the 
Board of Management. 

Certain assets are administered by Bayer Pension Trust e.V. under a contractual trust arrangement (cta), 
providing substantial additional security for pension obligations resulting from direct commitments for 
the members of the Board of Management in Germany.  

Benefits upon termination of service on the Board of Management 
Post-contractual non-compete agreements  
Post-contractual non-compete agreements exist with the members of the Board of Management, provid-
ing for compensatory payments to be made by the company for the two-year duration of these agree-
ments. For the members newly appointed to the Board of Management on or after January 1, 2010, the 
compensatory payment is 100% of the average fixed compensation for the twelve months preceding 
their departure. The post-contractual non-compete agreement with Dr. Marijn Dekkers was rescinded 
without compensation when his service contract was extended in June 2014 in line with previous prac-
tice in a similar case. 

Change of control 
Agreements exist with the members of the Board of Management providing for severance payments to 
be made in certain circumstances in the event of a change in control. The amount of any possible sever-
ance payments in the case of early termination of service on the Board of Management as a result of a 
change in control is limited to the value of three years’ compensation in line with the recommendation 
in Section 4.2.3 of the German Corporate Governance Code. Such payments do not exceed the compen-
sation payable for the remaining term of the service contract. 

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Unfitness for work 
In the event of temporary unfitness for work, members of the Board of Management continue to receive 
the contractually agreed compensation. Bayer AG may early terminate the service contract if the mem-
ber has been continuously unfit for work for at least 18 months and is likely to be permanently incapa-
ble of fully performing his duties (permanent incapacity to work). A disability pension is paid in the 
event of contract termination before the age of 60 due to permanent incapacity to work. For the mem-
bers appointed to the Board of Management prior to 2013, the disability pension, like the retirement 
pension, amounts to at least 15% of the final fixed compensation and can increase with continuing 
service on the Board of Management up to a maximum of 60%. For members of the Board of Manage-
ment appointed in 2013 or thereafter, the amount of the disability pension under the service contract 
corresponds to the entitlement accrued on the date of contract termination, taking into account a ficti-
tious period of service between that date and the member’s 55th birthday where applicable.  

COMPENSATION OF THE BOARD OF MANAGEMENT IN 2014 
The aggregate compensation for the members of the Board of Management in 2014 totaled €15,648 
thousand (2013: €13,563 thousand), comprising €4,561 thousand (2013: €3,956 thousand) in non-
performance-related components and €11,087 thousand (2013: €9,607 thousand) in performance-
related components. The pension service cost amounted to €1,385 thousand (2013: €1,271 thousand).   

The following changes in the membership of the Board of Management or the terms of office of the 
members occurred in 2014:  

The Chairman of the Board of Management, Dr. Marijn Dekkers, extended his contract by two years 
until December 31, 2016, upon the expiration of his initial five-year term of office.  

Effective February 1, 2014, Kemal Malik was appointed to the Board of Management of Bayer AG. Effec-
tive April 30, 2014, he succeeded Prof. Wolfgang Plischke, who retired as of midnight on April 29, 2014.  

By resolution of the Supervisory Board, Werner Baumann, previously Chief Financial Officer (cfo), was 
appointed Chief Strategy and Portfolio Officer (cspo) effective October 1, 2014. Werner Baumann's 
current contract runs until December 31, 2017. 

Johannes Dietsch, previously Senior Bayer Representative and cfo for Greater China, based in Shang-
hai, was appointed to the Board of Management of Bayer AG effective September 1, 2014. He assumed 
the office of Chief Financial Officer effective October 1, 2014.  

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The following table shows the total compensation of the individual members of the Board of Manage-
ment who served in 2013 and / or 2014 according to the German Commercial Code: 

Board of Management Compensation (German Commercial Code) 

[Table 3.18.2] 

Fixed Annual 
Compensation 

Fringe 
Benefits 

Short-term 
Variable Cash 
Compensation 

Long-term Variable 
Cash Compensation Based on 
Virtual Bayer Shares 1 

Long-term 
Stock-Based 
Cash 
Compensation 
(Aspire) 2 

Aggregate 
Compensation 

Pension 
Service Cost 3 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2013 

2014 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

€ 
thou-
sand 

 € 
thou-
sand 

€ 
thou-
sand 

€ 
thou-
sand 

€ 
thou-
sand 

€ 
thou-
sand 

No. of 
shares 

€ 
thou-
sand 

No. of 
shares 

€ 
thou-
sand 

€ 
thou-
sand 

€ 
thou-
sand 

€ 
thou-
sand 

€ 
thou-
sand 

€ 
thou-
sand 

€ 
thou-
sand 

Serving members of the Board of Management as of December 31, 2014  

Dr. Marijn 
Dekkers 
(Chairman) 

Werner 
Baumann 

Johannes 
Dietsch 

Michael König  

Kemal Malik 

Former members   

1,347 

1,363 

39 

42 

1,532 

1,828  15,802 

1,532  15,809 

1,828 

382 

414 

4,832 

5,475 

677 

722 

888 

899 

43 

67 

881 

1,051 

9,085 

881 

9,088 

1,051 

252 

273 

2,945 

3,341 

189 

204 

– 

533 

– 

240 

719 

659 

– 

51 

– 

22 

– 

280 

– 

– 

2,424 

222 

529 

841 

5,451 

529 

7,271 

72 

– 

771 

– 

– 

6,665 

280 

841 

771 

– 

– 

– 

– 

– 

822 

– 

218 

1,642 

2,841 

120 

– 

– 

2,273 

– 

65 

176 

216 

Prof. Dr. 
Wolfgang 
Plischke4, 5, 6 

Dr. Richard 
Pott7 

Total 

710 

238 

35 

18 

1,476 

280 

7,631 

740 

2,485 

287 

201 

73 

3,162 

896 

6 

296 

– 

14 

– 

294 

– 

3,028 

294 

– 

– 

84 

– 

982 

– 

279 

2 

– 

3,774 

4,118 

182 

443 

4,712 

5,051  40,997 

3,976  43,742 

5,058 

919 

978  13,563  15,648 

1,271 

1,385 

1 fair value at conversion date  
2 fair value at grant date 
3 including company contribution to Bayer-Pensionskasse VVaG or Rheinische Pensionskasse VVaG 
4 Prof. Plischke stepped down from the Board of Management as of midnight on April 29, 2014. 
5 The short-term variable cash compensation for Prof. Plischke in 2013 includes the additional one-time variable payment of €771 thousand granted to him. 
6 In return for his acceptance of the early change made to the system of variable cash compansation in 2010, Prof. Plischke received one additional virtual Bayer share for every 20 

virtual Bayer shares resulting from the conversion of 50% of the STI into virtual Bayer shares. 

7 Dr. Pott stepped down from the Board of Management as of midnight on May 31, 2013. 

Fixed annual compensation 
The fixed compensation of the members of the Board of Management was adjusted in 2014. The total 
fixed compensation of all the members was €4,118 thousand (2013: €3,774 thousand). 

Short-term variable cash compensation 
The total short-term variable cash compensation (short-term portion of the sti) for all the members of 
the Board of Management in 2014 totaled €5,051 thousand (2013: €4,712 thousand) after deduction of 
the solidarity contribution. Provisions of €4,771 thousand were established for payment of this compen-
sation component to the members of the Board of Management serving as of December 31, 2014. The 
solidarity contribution is made by all employees of the companies covered by the respective agreements 
with the employee representatives to help safeguard jobs at the German sites. For 2014 it amounted to 
0.27% (2013: 0.47%) of each member's total sti award.  

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Long-term variable cash compensation based on virtual Bayer shares 
The conversion of 50% of the sti for 2014 into virtual Bayer shares was based on an average price of 
€115.66 (2013: €96.96).  

The long-term variable cash compensation based on virtual Bayer shares that is included in the  
aggregate compensation according to the German Commercial Code was valued at €5,058 thousand 
(2013: €3,976 thousand). The aggregate compensation according to the ifrs also includes a change of 
€1,559 thousand (2013: €5,030 thousand) in the value of existing entitlements. 

Provisions of €17,775 thousand (2013: €18,310 thousand) existed as of December 31, 2014, for the 
future cash disbursements to currently serving members of the Board of Management based on the 
virtual Bayer shares granted in the respective year. This amount also contains the dividend attributable 
to the respective prior year. 

Long-term stock-based cash compensation (Aspire) 
The long-term stock-based cash compensation under the Aspire program is included in the aggregate 
compensation according to the German Commercial Code at its fair value of €978 thousand (2013: 
€919 thousand) at the respective grant date.  

According to the ifrs, the aggregate compensation includes the fair value of the partial entitlement 
earned in the respective year. Grants of stock-based compensation with a four-year performance period 
are therefore expensed at their respective fair values over four years starting with the grant year. The 
aggregate compensation according to the ifrs also includes the change in the value of existing entitle-
ments under ongoing Aspire tranches granted in prior years.  

Board of Management Compensation – Aspire Program (IFRS)   

[Table 3.18.3]

Serving members of the Board of Management as of December 31, 2014 

Former members 

Dr. Marijn
Dekkers
(Chairman) 

Werner
Baumann 

Johannes
Dietsch3 

Michael
König3 

Kemal 
Malik3 

Prof. Dr. 
Wolfgang 
Plischke 

Dr. Richard
Pott 

Total 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand  

€ thousand  

€ thousand 

€ thousand 

2014 

2013 

2014 

2013 

2014 

2013 

1,186

1,115

272

703

1,458

1,818

684

679

154

444

838

1,123

78

–

18

–

96

–

246

141

43

87

289

228

247 

1,161 

– 

56 

– 

303 

– 

651 

144 

444 

1,305 

1,095 

–

339

–

634

–

973

3,602

2,925

687

2,312

4,289

5,237

Stock-based compensation 
entitlements earned in the 
respective year1 

Change in value of  
existing entitlements2 

Total 

1 The newly earned entitlements are derived from the 2011–2014 (2013: 2010–2013) tranches of the Aspire program because this compensation was or is being earned over  

a four-year period. They are stated at their pro-rated fair values in 2013 and 2014, respectively. 

2 This line shows the change in the value of the entitlements already earned in 2011, 2012 and 2013 (2013: 2010, 2011 and 2012). 
3 The Aspire entitlements earned in 2014 and the value changes for Johannes Dietsch, Michael König and Kemal Malik relate to Aspire tranches granted to them before they joined 

the Board of Management but not yet fully earned. This also applies to the 2013 data for Michael König. 

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18. Corporate Governance Report 

Bayer Annual Report 2014

Provisions of €7,155 thousand (2013: €6,813 thousand) were established for the Aspire entitlements of 
the members of the Board of Management serving as of December 31, 2014. 

Pension entitlements 
The pension service cost recognized for the members of the Board of Management in 2014 according to 
the German Commercial Code was €1,385 thousand (2013: €1,271 thousand), while the current service 
cost for pension entitlements recognized according to the ifrs was €1,716 thousand (2013: €1,805 
thousand).  

The service cost and the settlement or present value of the pension obligations attributable to the indi-
vidual members of the Board of Management are shown in the following table. 

Pension Entitlements (German Commercial Code and IFRS) 

German Commercial Code 

Pension service cost 1 

Settlement value of
pension obligation
as of December 31 

Current service cost for 
pension entitlements 

  [Table 3.18.4]

IFRS 

Present value of 
defined benefit
pension obligation
as of December 31 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

Serving members of the Board of Management as of December 31 

Dr. Marijn Dekkers  

Werner Baumann 

Johannes Dietsch 

Michael König 

Kemal Malik 

Former members 

Prof. Dr. Wolfgang 
Plischke2 

Dr. Richard Pott3 

677 

189 

– 

120 

– 

6 

279 

722

204

65

176

216

5,451

4,936

–

1,327

–

8,256

5,738

2,160

1,626

231

2

–

7,621

–

–

–

Total 

1,271 

1,385

19,335

18,011

960

291

–

185

–

–

369

1,805

877 

259 

85 

222 

273 

6,684 

6,354 

– 

1,719 

– 

12,812

10,701

4,133

3,259

1,343

– 

– 

8,716 

– 

–

–

1,716 

23,473 

32,248

1 including company contribution to Bayer-Pensionskasse VVaG or Rheinische Pensionskasse VVaG 
2 Prof. Plischke stepped down from the Board of Management as of midnight on April 29, 2014. 
3 Dr. Pott stepped down from the Board of Management as of midnight on May 31, 2013. 

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201

The difference between the pension service cost according to the German Commercial Code and the 
service cost for pension entitlements according to the ifrs arises from the difference in the valuation 
principles used in calculating the settlement value according to the German Commercial Code and the 
present value of the defined benefit pension obligation according to the ifrs.  

The aggregate compensation according to the ifrs is shown in the following table: 

Board of Management Compensation according to IFRS 

Fixed annual compensation 

Fringe benefits 

Total short-term non-performance-related compensation 

Short-term performance-related cash compensation 

Total short-term compensation 

Stock-based compensation (virtual Bayer shares) earned in the respective year 

Change in value of existing entitlements to stock-based compensation (virtual Bayer shares) 

Stock-based compensation (Aspire) earned in the respective year 

Change in value of existing entitlements to stock-based compensation (Aspire) 

Total stock-based compensation (long-term incentive) 

Service cost for pension entitlements earned in the respective year 

Total long-term compensation 

Aggregate compensation (IFRS) 

[Table 3.18.5]

2013 

2014 

€ thousand 

€ thousand 

3,774

182

3,956

4,712

8,668

3,976

5,030

2,925

2,312

14,243

1,805

16,048

24,716

4,118 

443 

4,561 

5,051 

9,612 

5,058 

1,559 

3,602 

687 

10,906 

1,716 

12,622 

22,234 

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Bayer Annual Report 2014

Bayer Annual Report 2014 

Combined Management Report

18. Corporate Governance Report

203

18.4.2 Disclosures Pursuant to the Recommendations of the 

German Corporate Governance Code  

The following tables show the compensation and fringe benefits paid for 2014, including the maximum 
and minimum achievable variable compensation, and the allocation of compensation for 2013 and 2014 
in line with the recommendations in the June 2014 version of the German Corporate Governance Code. 

Compensation and Benefits Granted for 2014  

Dr. Marijn Dekkers 
(Chairman) 

Joined Jan. 1, 2010 

Target
value
2013 

€ thou-
sand 

Target 
value 
2014 

€ thou-
sand 

Min. 
2014 

€ thou-
sand 

Max.3
2014 

€ thou-
sand 

Fixed annual compensation 

1,347

1,363 

1,363 

1,363

Fringe benefits 

39

42 

42 

42

Total annual fixed compensation 

1,386

1,405 

1,405 

1,405

Serving members of the Board of Management as of December 31, 2014 

Serving members of the Board of Management as of December 31, 2014 

 [Table 3.18.6]

Former members 

Werner Baumann
(Strategy) 

Johannes Dietsch
(Finance) 

Michael König2 
(Human Resources) 

Kemal Malik
(Innovation) 

Prof. Dr. Wolfgang Plischke1 

Dr. Richard Pott1 

Joined Jan. 1, 2010 

Joined Sep. 1, 2014 

Joined April 1, 2013 

Joined Feb. 1, 2014 

Stepped down April 29, 2014 

Stepped down June 1, 2013 

Target
value
2013 

€ thou-
sand 

888

43

931

Target
value
2014 

€ thou-
sand 

899

67

966

Min.
2014 

€ thou-
sand 

Max.3
2014 

€ thou-
sand 

899

67

966

899

67

966

Target 
value 
2013 

€ thou-
sand 

– 

– 

– 

Target 
value 
2014 

€ thou-
sand 

240 

22 

262 

Min. 
2014 

€ thou-
sand 

240 

22 

262 

Max.3
2014 

€ thou-
sand 

240

22

262

Target 
value 
2013 

€ thou-
sand 

533 

51 

584 

Target 
value 
2014 

€ thou-
sand 

719 

222 

941 

Min. 
2014 

€ thou-
sand 

719 

222 

941 

Max.3 
2014 

€ thou-
sand 

719 

222 

941 

Target 
value 
2013 

€ thou-
sand 

– 

– 

– 

Target 
value 
2014 

€ thou-
sand 

659 

72 

731 

Min.
2014 

€ thou-
sand 

Max.3
2014 

€ thou-
sand 

659

72

731

659

72

731

Target
value
2013 

€ thou-
sand 

710

35

745

Target
value
2014 

€ thou-
sand 

238

18

256

Min.
2014 

€ thou-
sand 

238

18

256

Max.3 
2014 

€ thou-
sand 

238 

18 

256 

Target 
value 
2013 

€ thou-
sand 

296 

14 

310 

1,448

1,466 

0 

2,931

833

843

0

1,685

– 

225 

0 

449

500 

674 

0 

1,348 

– 

618 

0

1,236

666

225

0

449 

278 

Short-term variable  
cash compensation  
(50% of STI) 

Long-term stock-based 
compensation (Aspire)4 

2013 (Jan. 1, 2013 –  
Dec. 31, 2016) 

2014 (Jan. 1, 2014 –  
Dec. 31, 2017) 

Long-term variable  
cash compensation  
(virtual Bayer shares)5 

2013 (Jan. 1, 2014 –  
Dec. 31, 2016) 

2014 (Jan. 1, 2015 –  
Dec. 31, 2017) 

HealthCare special bonus 

Total  

Service cost 

539

– 

– 

–

355

–

–

545 

0 

1,636

–

359

1,448

– 

–

–

1,466 

– 

– 

0 

– 

–

833

–

5,862

–

–

–

843

–

–

0

–

0

–

4,821

4,882 

1,405  11,834

2,952

3,011

677

722 

722 

722

189

204

966

204

–

1,078

–

3,370

–

7,099

204

– 

– 

– 

– 

– 

– 

– 

– 

– 

107 

– 

225 

– 

819 

65 

884 

– 

0 

– 

0 

– 

–

321

–

899

–

262 

1,931

65 

65

327 

1,996

93 

– 

– 

288 

500 

– 

– 

– 

674 

– 

– 

0 

– 

0 

– 

1,677 

2,577 

120 

176 

941 

176 

– 

863 

– 

2,696 

– 

5,848 

176 

1,797 

2,753 

1,117 

6,024 

– 

– 

– 

– 

– 

– 

– 

– 

– 

135 

– 

618 

– 

2,102 

216 

2,318 

–

0

–

0

–

731

216

947

–

284

405

–

–

96

–

699

–

2,471

–

–

500

4,843

2,894

216

6

5,059

2,900

230

0

807

2

809

–

0

–

0

0

– 

118 

288 

0 

– 

278 

921 

0 

256

1,914 

2

2 

– 

0 

984 

279 

258

1,916 

1,263 

Total compensation 

5,498

5,604 

2,127  12,556

3,141

3,215

1,170

7,303

1 including any contractually agreed free shares in connection with the grant of virtual shares  
2 The compensation and fringe benefits paid to Michael König in 2013 and to Johannes Dietsch, Michael König and Kemal Malik in 2014 relate solely to their service  

on the Board of Management. The 2013 and 2014 Aspire tranches were granted to them prior to the dates on which they were appointed to the Board of Management.  
The vesting periods for these tranches extend past those dates.  

3 The maximum achievable variable compensation shown here does not yet take into account the caps applicable from 2014 onward. Payments in a single year  

are limited to 1.8 times the target compensation. 

4 capped at 300% 
5 capped at 200% of the maximum short-term variable cash compensation (50% of STI) 

Target 
value 
2014 

€ thou-
sand 

Min.
2014 

€ thou-
sand 

Max.3
2014 

€ thou-
sand 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

 
 
 
 
  
 
 
 
 
 
  
  
  
  
  
  
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
  
  
 
 
 
 
 
  
  
  
 
 
 
 
 
  
  
 
 
 
 
 
  
  
  
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
 
 
 
 
 
  
 
 
 
 
 
 
 
 
   
 
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
 
 
 
 
 
  
  
  
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
 
 
 
 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
  
  
  
  
  
  
 
 
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» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT  

204 

Combined Management Report 

18. Corporate Governance Report 

Allocation of Compensation for 2013 and 2014  

Bayer Annual Report 2014

Bayer Annual Report 2014 

Serving members of the Board of Management as of December 31, 2014 

Serving members of the Board of Management as of December 31, 2014

Combined Management Report

18. Corporate Governance Report

205

[Table 3.18.7]

Former members 

Dr. Marijn Dekkers 
(Chairman) 

Werner Baumann
(Strategy) 

Johannes Dietsch
(Finance) 

Michael König 
(Human Resources) 

Kemal Malik
(Innovation) 

Prof. Dr. Wolfgang Plischke 

Dr. Richard Pott 

Joined Jan. 1, 2010 

Joined Jan. 1, 2010 

Joined Sept. 1, 2014 

Joined April 1, 2013 

Joined Feb. 1, 2014 

Stepped down April 29, 2014 

Stepped down June 1, 2013 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

Fixed annual compensation 

Fringe benefits 

Total 

Short-term variable cash compensation  

for 2013 

for 2014 

Long-term stock-based cash compensation 
(Aspire) 

2010 (Jan. 1, 2010 – Dec. 31, 2012) 

2010 (Jan. 1, 2010 – Dec. 31, 2013) 1 

Long-term cash compensation  
(virtual Bayer shares) 
2010 (Jan. 1, 2011 – Dec. 31, 2013) 

Advance payment of 2 / 3 of long-term  
cash compensation (virtual Bayer shares) 

2010 (Jan. 1, 2011 –Dec. 31, 2013) 

2011 (Jan. 1, 2012 – Dec. 31, 2014) 

HealthCare special bonus 

Total 

Service cost / benefit expense 

Total compensation 

1,347

39

1,386

1,532

–

–

–

–

–

–

–

2,918

677

3,595

1,363

42

1,405

–

1,828

–

960

1,594

–

–

–

5,787

722

6,509

888

43

931

881

–

–

–

–

–

–

–

1,812

189

2,001

899

67

966

–

1,051

–

759

978

–

–

–

3,754

204

3,958

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

240

22

262

–

280

–

–

–

–

–

–

542

65

607

The prior-year figures have been restated due to an amendment contained in the June 24, 2014 version of the German Corporate Governance Code.  
The short-term variable cash compensation is now allocated to the year in which it is granted rather than the year of disbursement.  
1 The payment to Michael König from the 2010 Aspire tranche related to a vesting period that began before he joined the Board of Management.  

The tranche was not yet fully vested at the date on which he joined the Board of Management. 

18.4.3 Compensation of the Supervisory Board 

The Supervisory Board is compensated according to the relevant provisions of the Articles of Incorporation.  

The members of the Supervisory Board receive fixed annual compensation of €120,000 plus reim-
bursement of their expenses.  

In accordance with the recommendations of the German Corporate Governance Code, additional com-
pensation is paid to the Chairman and Vice Chairman of the Supervisory Board and for chairing and 
membership of committees. The Chairman of the Supervisory Board receives fixed annual compensa-
tion of €360,000, the Vice Chairman €240,000. These amounts also cover membership and chairman-
ship of committees. The other members receive additional compensation for committee membership. 
The chairman of the Audit Committee receives an additional €120,000, the other members of the Audit 
Committee €60,000 each. The chairmen of the remaining committees receive €60,000 each, the other 
members of those committees €30,000 each. No additional compensation is paid for membership of the 
Nominations Committee. A Supervisory Board member who is a member of more than two committees 
receives compensation only for the two committees with the highest compensation. If changes are made 
to the Supervisory Board and / or its committees during the year, members receive compensation on a 
pro-rated basis. The members of the Supervisory Board also receive an attendance fee of €1,000 each 
time they personally attend a meeting of the Supervisory Board or a committee. The attendance fee is 
limited to €1,000 per day. 

533 

51 

584 

529 

– 

– 

– 

– 

– 

– 

– 

719 

222 

941 

– 

841 

– 

35 

– 

– 

– 

– 

1,113 

120 

1,233 

1,817 

176 

1,993 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

659

72

731

–

771

–

–

–

–

–

–

1,502

216

1,718

710

35

745

705

–

253

–

–

–

–

771

2,474

6

2,480

238

18

256

–

280

–

759

296 

14 

310 

294 

– 

253 

– 

1,026

– 

–

915

–

3,236

2

3,238

587 

– 

– 

1,444 

279 

1,723 

–

–

–

–

–

–

–

–

–

–

–

–

–

–

The members of the Supervisory Board have given a voluntary pledge that they will each purchase 
Bayer shares for 25% of their fixed compensation, including any compensation for committee member-
ship (before taxes), and hold these shares for as long as they remain members of the Supervisory Board. 
This does not apply to members who transfer at least 85% of their fixed compensation to the Hans 
Böckler Foundation in accordance with the rules of the German Trade Union Confederation or whose 
service or employment contract with a company requires them to transfer such compensation to that 
company. If less than 85% of the fixed compensation is transferred, the voluntary pledge applies to the 
portion not transferred. By voluntarily pledging to invest in and hold Bayer shares, the Supervisory 
Board members reinforce their interest in the long-term, sustainable success of the company.  

 
 
 
 
 
 
 
 
  
  
  
  
  
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
 
 
 
 
 
 
 
  
  
  
 
 
 
  
 
 
 
 
 
  
  
  
 
 
 
  
 
 
 
 
 
 
 
 
  
  
  
 
 
 
  
 
 
 
 
 
 
 
 
  
  
  
  
  
 
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
 
  
  
  
  
  
 
 
 
 
 
 
 
  
  
  
  
 
 
  
 
  
  
  
  
 
 
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
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18. Corporate Governance Report 

Bayer Annual Report 2014

COMPENSATION OF THE SUPERVISORY BOARD IN 2014 
The following table shows the components of each Supervisory Board member’s compensation  
for 2014. 

Compensation of the Members of the Supervisory Board of Bayer AG in 2014 

[Table 3.18.8]

Fixed Compensation 

Attendance Fee 

2013 

2014 

2013 

2014 

2013 

Total 

2014 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

€ thousand 

Members of the Supervisory 
Board as of December 31, 2014 

Dr. Paul Achleitner  

Dr. Simone Bagel-Trah 

Dr. Clemens Börsig 

André van Broich  

Thomas Ebeling  

Dr. Thomas Fischer  

Peter Hausmann 

Reiner Hoffmann 

Yüksel Karaaslan 

Petra Kronen 

Dr. Helmut Panke 

Sue H. Rataj 

Petra Reinbold-Knape 

Michael Schmidt-Kiessling 

Dr. Klaus Sturany 

Werner Wenning (Chairman) 

Prof. Dr. Otmar D. Wiestler1 

Thomas de Win (Vice Chairman) 

Prof. Dr. Dr. Ernst-Ludwig 
Winnacker 

Oliver Zühlke 

Members who left the 
Supervisory Board during 2014 

Prof. Dr. Ekkehard D. Schulz 

Dr. Klaus Kleinfeld 

Total 

180

–

120

120

120

180

150

180

120

150

120

120

120

120

240

360

–

240

120

150

180

81

120

120

120

180

150

180

120

150

155

120

120

120

240

360

0

240

120

150

4

–

4

4

4

8

4

8

4

3

3

3

3

4

8

8

–

7

4

4

180

120

3,210

59

90

3,175

8

4

99

5 

3 

4 

5 

4 

9 

4 

8 

5 

5 

5 

4 

4 

5 

8 

10 

0 

7 

5 

5 

3 

3 

184 

– 

124 

124 

124 

188 

154 

188 

124 

153 

123 

123 

123 

124 

248 

368 

– 

247 

124 

154 

188 

124 

185

84

124

125

124

189

154

188

125

155

160

124

124

125

248

370

0

247

125

155

62

93

111 

3,309 

3,286

1 Prof. Wiestler’s office as Chairman of the Management Board of the German Cancer Research Center precludes his acceptance of compensation 

for membership of the Supervisory Board. 

In addition to their compensation as members of the Supervisory Board, those employee representatives 
who are employees of Bayer Group companies receive compensation unrelated to their service on the 
Supervisory Board. The total amount of such compensation in 2014 was €737 thousand (2013: 
€727 thousand).  

No compensation was paid or benefits granted to members of the Supervisory Board for personally 
performed services such as consultancy or agency services. The company has purchased insurance for 
the members of the Supervisory Board to cover their personal liability arising from their service on the 
Supervisory Board. 

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Combined Management Report

19. Events After the End of the Reporting Period

207

18.4.4 Further Information 

ADVANCES OR LOANS TO MEMBERS OF THE BOARD OF MANAGEMENT  
OR SUPERVISORY BOARD  
There were no advances or loans to members of the Board of Management or the Supervisory Board 
outstanding as of December 31, 2014, nor at any time during 2014 or 2013.  

PENSION PAYMENTS TO FORMER MEMBERS OF THE BOARD OF MANAGEMENT OR THEIR 
SURVIVING DEPENDENTS 
We currently pay retired members of the Board of Management a monthly pension equal to a maximum 
of 80% of the fixed compensation received immediately prior to retirement. The pensions paid to for-
mer members of the Board of Management or their surviving dependents are reassessed annually and 
adjusted, taking into account the development of consumer prices. The pensions paid to former mem-
bers of the Board of Management or their surviving dependents in 2014 totaled €13,457 thousand 
(2013: €12,871 thousand). These benefits are in addition to any amounts they receive under previous 
employee pension arrangements. The present value of the defined benefit pension obligation for former 
members of the Board of Management and their surviving dependents according to the ifrs amounted 
to €187,759 thousand (2013: €150,148 thousand), while the settlement value of the pension obligation 
according to the German Commercial Code amounted to €146,341 thousand (2013: €136,307 thousand). 

Events After the End of the 
Reporting Period 

19. Events After the End of the 

Reporting Period 

Since January 1, 2015, no events of special significance have occurred that we expect to have a material 
impact on the financial position or results of operations of the Bayer Group. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
 
 
 
208 

Combined Management Report 

20. Future Perspectives 

Bayer Annual Report 2014

Report on Future Perspectives 
and on Opportunities and Risks 

20. Future Perspectives 

20.1 Economic Outlook 

GLOBAL ECONOMY  

Economic Outlook 

World 

European Union 

of which Germany 

United States 

Emerging markets² 

[Table 3.20.1]

Growth1 2014 

Growth forecast1 
2015 

+ 2.7% 

+ 1.3% 

+ 1.5% 

+ 2.4% 

+ 4.3% 

+ 3.0%

+ 1.7%

+ 1.6%

+ 3.1%

+ 4.1%

Growth 2014 restated 
1 real growth of gross domestic product, source: Global Insight 
2 including about 50 countries defined by Global Insight as emerging markets in line with the World Bank 
as of February 2015 

The global economy will probably grow more quickly in 2015 than in the previous year, supported as 
before by a generally expansionary monetary policy. Economic stimulus will also come from the sharp 
decline in oil prices, which will provide consumer relief and stimulate consumption. On the other hand, 
growth continues to be hampered in many countries by the high level of private and public indebted-
ness.  

We expect the economic recovery in the European Union to continue – driven by low inflation and the 
depreciation of the euro, and above all by the upswing in the United Kingdom. However, no significant 
growth stimulus is expected from the German economy. Economic development in the countries of 
southern Europe continues to be held back by high unemployment.  

The United States economy is predicted to grow considerably faster than in 2014. There, the main driv-
er of development will probably be private consumption, especially in light of the rapid increase in 
employment.  

The rate of expansion in the emerging countries is again likely to show a slight year-on-year decline. In 
China, particularly, we foresee slower growth in view of industrial overcapacities. Russia is expected to 
see a significant decline in economic activity due to an outflow of capital, economic sanctions and lower 
oil export revenues. 

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Bayer Annual Report 2014 

Economic Outlook for the Subgroups 

HealthCare 

Pharmaceuticals market 

Consumer care market 

Medical care market 

Animal health market 

CropScience 

Seeds and crop protection market 

MaterialScience  
(main customer industries) 

Automotive industry 

Construction industry  

Electrical / electronics industry 

Furniture industry 

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[Table 3.20.2]

Growth1 
2014 

Growth forecast1 
2015 

+ 8%

+ 4%

– 3%

+ 5%

+ 6%

+ 3%

+ 4%

+ 5%

+ 4%

+ 7% 

+ 4% 

– 2% 

+ 5% 

(cid:367)3% 

+ 4% 

+ 4% 

+ 6% 

+ 4% 

1 Bayer’s estimate, except pharmaceuticals. Source for pharmaceuticals market: IMS Health, IMS Market Prognosis. Copyright 2015.  

All rights reserved; currency-adjusted; 2014 data provisional 

As of February 2015 

HEALTHCARE 
The pharmaceuticals market is likely to grow rather more slowly in 2015 than in the previous year, 
especially because of the slightly lower growth rate predicted for this market in the United States. 
Following double-digit growth in the u.s. last year due to new product introductions and health system 
reforms, this market will probably expand at a somewhat slower rate in 2015, partly as a result of patent 
expirations and launches of new generic products. We expect a further increase in the demand for 
medicines in the emerging economies. 

Growth in the consumer care market in 2015 is likely to be level with the previous year. We expect to 
see slight shrinkage in the medical care market, with the diabetes care market weakening and the 
market for contrast agents and medical equipment (Radiology business unit) matching the previous 
year. The animal health market is anticipated to grow at about the same rate as in 2014.  

CROPSCIENCE 
Following the persistent dynamic growth in the global seed and crop protection market last year, we 
anticipate a volatile market environment in 2015. Global inventories of most agricultural commodities are 
predicted to increase in 2015, while prices will likely be buoyed by the steady rise in demand for food 
and feed products. In 2015 we expect a slower rate of overall growth in the low single digits. 

Latin America should continue to experience the strongest growth, though probably with a lower 
growth rate than in the prior year. This region’s seed and crop protection market is mainly driven by  
the steady expansion of soybean farming. In Asia / Pacific, too, we expect agricultural production to 
continue to expand, though with markedly lower growth rates than in Latin America. Development in 
this region will mainly depend on cereals and rice along with specialty crops such as fruit and vegeta-
bles. We expect markets in the industrialized regions of the northern hemisphere to show weaker 
growth momentum than in 2014. 

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MATERIALSCIENCE 
We expect the business climate for our principal customer industries to continue improving during 
2015. The positive economic development in North America is again fueling hopes of an increase in 
demand. On the other hand, the economic recovery in Europe will probably occur at a slower pace, with 
lower rates of growth in our principal customer industries. We expect comparatively high growth rates 
in Asia. 

We expect growth in the automotive industry to be higher in 2015 than in the previous year. A persis-
tently low oil price could contribute to positive development. Asia and North America will likely remain 
the principal growth drivers, whereas the automotive sector faces challenges in some South American 
and Eastern European countries. 

The global construction industry will probably grow at the prior-year rate in 2015. We anticipate a 
continued recovery in Europe. The prospects for North America and Asia are positive, and the invest-
ment climate in these regions should be stable. However, the economic development in Russia and 
Brazil could have adverse effects. 

We expect the global electrical / electronics industry to continue growing strongly in 2015. Demand is 
likely to be driven by Asia, especially China and India. We predict positive development in North Ameri-
ca, while growth in Europe is likely to remain slow.  

We anticipate steady growth in the global furniture industry in 2015. In North America we expect to 
see a robust increase in demand from which furniture manufacturers in Asia should also benefit. We 
also anticipate gratifying business development in the domestic Asian market. We predict a continuing 
recovery in the European furniture industry. 

20.2 Forecast for Key Data 

The following forecast is based on the business development described in this report, taking into ac-
count the potential risks and opportunities and assuming the inclusion of the MaterialScience business 
for the full year. 

BAYER GROUP 
Our forecast for fiscal 2015 is based on the exchange rates as of December 31, 2014, including a rate of 
us$1.21 to the euro. A 1% appreciation (depreciation) of the euro against all other currencies would 
decrease (increase) sales on an annual basis by some €300 million and ebitda before special items by 
about €70 million.  

We are planning sales in the region of €46 billion for 2015. This corresponds to a currency- and portfo-
lio-adjusted increase in the low single digits. We expect currency effects to boost sales by approximate-
ly 3% compared with the prior year. We plan to raise ebitda before special items by a low- to mid-teens 
percentage, allowing for expected positive currency effects of about 2%. We aim to increase core earn-
ings per share (calculated as explained in Chapter 16.3 “Core Earnings Per Share”) by a low-teens per-
centage, allowing for expected positive currency effects of around 3%. 

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Forecast 2015

Currency effects allowed for 
in the forecast 2

Group sales

Low-single-digit percentage increase1

Approx. €46 billion

Plus approx. 3%

ebitda before special items

Low- to mid-teens percentage 
increase

Plus approx. 2%
Plus approx. €200 million

Core earnings per share

Low-teens percentage increase

Plus approx. 3%

1 currency- and portfolio-adjusted
2 forecast for currency effects in 2015 computed by comparing exchange rates as of December 31, 2014 to full year 2014 rates

We expect to take special charges in the region of €700 million in 2015, with the integration of the 
acquired consumer care businesses and the planned stock market listing of MaterialScience accounting 
for most of this amount.  

Research and Development Budget 2015 by Subgroup

[Graphic 3.20.1]

5% 

MaterialScience

27%

CropScience

2%
Reconciliation 

€4.0 billion

66%

HealthCare

Pharmaceuticals 54%

Consumer Health 12%

Capital Expenditure Budget 2015 by Subgroup

[Graphic 3.20.2]

11%
Reconciliation 

€2.6 billion

39%

HealthCare

Pharmaceuticals 28%

Consumer Health 11% 

20%

MaterialScience

30%

CropScience

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We intend to increase our research and development spending by about 10% in 2015 to more than €4.0 
billion. We have budgeted capital expenditures of about €2.3 billion for property, plant and equipment 
and €0.3 billion for intangible assets. Depreciation and amortization are estimated at about €3.0 billion, 
including €1.6 billion in amortization of intangible assets. 

We predict the financial result to come in at around minus €1.0 billion. The effective tax rate is likely to 
be around 25%. We expect net financial debt to be below €18 billion at the end of 2015. 

HEALTHCARE 
At HealthCare we expect sales to post a mid-single-digit percentage increase on a currency- and portfo-
lio-adjusted basis to approximately €23 billion. We predict positive currency effects of about 3% com-
pared with 2014. We plan to raise ebitda before special items by a mid-teens percentage. 

In the Pharmaceuticals segment, we expect sales to move ahead by a mid- to high-single-digit percent-
age on a currency- and portfolio-adjusted basis to approximately €13 billion. Here we anticipate positive 
currency effects of about 2% compared with 2014. We intend to raise sales of our recently launched 
products in 2015 toward €4 billion. We plan to raise ebitda before special items by a low-teens percent-
age, allowing for an additional €300 million of investment in research and development. We therefore 
expect to slightly improve the ebitda margin before special items.  

In the Consumer Health segment, we expect sales to increase toward €10 billion, including those of the 
acquired consumer care businesses. We plan to grow sales by a mid-single-digit percentage on a cur-
rency- and portfolio-adjusted basis. Here we anticipate positive currency effects of around 3% com-
pared with 2014. We expect to raise ebitda before special items by a mid-to-high-twenties percentage, 
with the acquired consumer care businesses contributing to the increase. 

CROPSCIENCE 
At CropScience we expect to continue growing faster than the market and to raise sales by a low- to 
mid-single-digit percentage on a currency- and portfolio-adjusted basis to approximately €10 billion. We 
anticipate positive currency effects of about 4% compared with 2014. We plan to improve ebitda before 
special items by a low- to mid-single-digit percentage.   

MATERIALSCIENCE 
At MaterialScience we are planning further volume growth in 2015 accompanied by declining selling 
prices, leading to lower sales. However, we expect to see a significant increase in ebitda before special 
items. We aim to return to earning the full cost of capital in 2015. 

RECONCILIATION 
In 2015 we expect sales on a currency- and portfolio-adjusted basis to be level with the previous year. 
We are planning ebitda before special items of approximately minus €0.3 billion. 

BAYER AG 
As the holding company for the Bayer Group, Bayer AG derives most of its income from its subsidiaries. 
The earnings of the major subsidiaries in Germany are transferred directly to Bayer AG under profit and 
loss transfer agreements. The earnings of Bayer AG are therefore expected to reflect the positive busi-
ness development anticipated in the Bayer Group. A concerted dividend policy within the Group ensures 
the availability of sufficient distributable income. We expect an increase in net interest expense due to 
the higher level of net debt. Based on these factors, we expect Bayer AG to report a distributable profit 
that will again enable our stockholders to adequately participate in the Bayer Group’s earnings. 

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20.3 Opportunities and Risks Report 

// Risk management is integral to Bayer’s Group-wide corporate governance system 

// No risks that could endanger the Bayer Group’s continued existence are currently identified 

20.3.1 Group-wide Risk Management System 

Corporate governance forms the basis for sustainable growth and economic success. One factor for 
corporate governance is the ability to systematically identify and take advantage of opportunities while 
avoiding risks to the company’s success. 

Corporate Governance

[Graphic 3.20.3]

Corporate Governance

Business processes

Opportunity 
management

   Risk management

Internal control and monitoring systems

Strategic 
& planning
processes

Internal 
control  system

(Process risks)

Compliance 
management
system
(Compliance  risks)

Risk early warning 
system 

(Risks that could endan-
ger the company’s 
continued existence)

Identiﬁ cation   //   Evaluation   //   Management   //   Monitoring   //   Reporting

Process-independent monitoring

The entrepreneurial decisions we make daily in the course of business processes are based on balanc-
ing opportunities and risks. We therefore regard risk management as an integral part of our business 
management system rather than the task of a specific organizational unit. Our risk management begins 
with our strategy and planning processes, from which relevant external and internal opportunities and 
risks of an economic, ecological or social nature are derived. Opportunities and risks are identified by 
observing and analyzing trends along with macroeconomic, industry-specific, regional and local devel-
opments. The identified opportunities and risks are subsequently evaluated and incorporated into the 
subgroup-specific strategic and operational frameworks. We attempt to avoid or mitigate risks by taking 
appropriate countermeasures, or to transfer them to third parties (such as insurers) to the extent possi-
ble and economically acceptable. We consciously accept and bear manageable and controllable risks 
that are in reasonable proportion to the anticipated opportunities. We regard them as a general risk of 
doing business. Opportunities and risks are continuously monitored using indicators so that, for exam-
ple, changes in the economic or legal environment can be identified at an early stage and suitable coun-
termeasures can be initiated if necessary.  

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To enable the Board of Management and the Supervisory Board to monitor material business risks as 
legally required, the following systems are in place: an internal control system ensuring proper and 
effective financial reporting pursuant to Section 289 Paragraph 5 and Section 315 Paragraph 2 No. 5 of 
the German Commercial Code; a compliance management system; and a risk early warning system 
pursuant to Section 91 Paragraph 2 of the German Stock Corporation Act.  

The various management systems are based on different risk types, risk levels and timelines. Different 
processes, methods and it systems are therefore applied to identify, evaluate, manage, and monitor 
risks. The principles underlying the various systems are documented in Group directives that are inte-
grated into our central document control process (Margo) and are accessible to all employees via the 
Bayer intranet. In the subgroups, service companies, subsidiaries, and in the central functions of the 
Bayer Group, responsible persons and coordinators for the respective systems are named at the man-
agement level. The overall responsibility for the effectiveness and appropriateness of the systems lies 
with the Chief Financial Officer. 

The different systems are described below. 

INTERNAL CONTROL SYSTEM FOR (GROUP) ACCOUNTING AND FINANCIAL REPORTING 
(report pursuant to Sections 289 Paragraph 5 and 315 Paragraph 2 No. 5 of the German Commercial 
Code) 

Bayer has an internal control system (ics) in place for the (Group) accounting and financial reporting 
process. This process comprises defined structures and workflows implemented throughout the organi-
zation. The purpose of our ics is to ensure proper and effective accounting and financial reporting in 
accordance with Section 289 Paragraph 5 and Section 315 Paragraph 2 No. 5 of the German Commer-
cial Code.  

The ics is designed to guarantee timely, uniform and accurate accounting for all business processes and 
transactions based on applicable statutory regulations, accounting and financial reporting standards and 
the internal Group directives that are binding upon all consolidated companies.   

The ics is based on the coso i (Committee of the Sponsoring Organizations of the Treadway Commis-
sion) and cobit (Control Objectives for Information and Related Technology) frameworks and addresses 
misreporting risks in the consolidated financial statements. Risks are identified and evaluated, and steps 
are taken to counter them. Mandatory ics standards such as system-based and manual reconciliation 
processes and functional separation have been derived from these frameworks and promulgated 
throughout the Group by the Group Accounting and Controlling unit of Bayer AG.  

The management of each Group company holds responsibility for implementing the ics standards at the 
local level. Using the Group’s own shared service centers, the Group companies prepare their financial 
statements locally and transmit them with the aid of a data model that is standardized throughout the 
Group and based on the Group accounting directive. This ensures the regulatory compliance of the 
consolidated financial statements.  

The effectiveness of the ics processes for accounting and financial reporting is evaluated based on a 
cascaded self-assessment system that starts with the persons directly involved in the processes, then 
involves the principal responsible managers and ends with the Group Management Board. The system 
also makes use of internal and external audits. An it application in use throughout the Group ensures 
uniform and audit-proof documentation and transparent presentation of all ics-relevant business pro-
cesses, focusing especially on the relevant risks, controls and effectiveness evaluations.  

The Group Management Board has confirmed the effective functioning of the internal control system for 
accounting and financial reporting and the relevant criteria for the 2014 fiscal year. However, it should 
be noted that an internal control system, irrespective of its design, cannot provide absolute assurance 
that material misstatements in the accounting will be avoided or identified.  

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COMPLIANCE MANAGEMENT SYSTEM  
Our compliance management system is aimed at ensuring lawful, responsible and sustainable conduct 
by our employees. It is designed to identify potential violations in advance and systematically prevent 
their occurrence. The compliance management system thus contributes significantly to the integration 
of compliance into our operating units and their processes. 

In light of the Bayer Group’s diversified structure and international focus, we are active in different 
industry sectors, markets and geographical regions worldwide, each of which has its own local legisla-
tion and industry codes. Compliance risks are identified by performing a trend analysis based on cases 
reported from around the world. In 2014 we began implementing an integrated compliance manage-
ment system worldwide. The compliance management system enhances the systematic and preventive 
identification and assessment of risks. Risk identification is carried out both bottom-up via the country 
organizations and top-down via the global functions, taking global, local and business-specific aspects 
into account. In addition, compliance program audits are performed by the Corporate Audit department. 
These audits proactively evaluate the implementation of the Corporate Compliance Policy in the country 
organizations. All the results are discussed by the local business units, the local compliance officers and 
representatives of the headquarters functions at a round table and are entered into a risk database.  

RISK EARLY WARNING SYSTEM PURSUANT TO SECTION 91 PARAGRAPH 2 OF THE  
GERMAN STOCK CORPORATION ACT 
A process known as BayRisk has been established to enable the early identification of any adverse de-
velopments that are material and / or could endanger the company’s continued existence, thus satisfying 
the legal requirements regarding an early warning system for corporate risks pursuant to Section 91 
Paragraph 2 of the German Stock Corporation Act. A central unit within the Corporate Center establish-
es the framework and standards for the design of the Group’s risk early warning system.  

The BayRisk process is organized decentrally, with each subgroup, service company and central func-
tion being responsible for identifying, evaluating, managing and reporting risks at an early stage. It not 
only covers risks that could immediately impact our financial targets, but also those that could affect the 
achievement of qualitative objectives such as our good reputation. The Life Science units provide the 
information required for the BayRisk process from their own enterprise risk management systems. Risk 
officers are appointed to evaluate, manage and monitor the identified risks according to both financial 
and non-financial criteria.  

Risks are evaluated using estimates of the likelihood of occurrence, the potential impact and their rele-
vance for our external stakeholders. The following matrix illustrates the financial criteria for rating a 
risk as high, medium or low.  

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Risk Rating Matrix According to Financial Criteria  

[Table 3.20.3]

Accumulated impact (€ million) 

 > 1,250 

500 – 1,250 

 < 500 

H = high risk, M = medium risk, L = low risk 

Likelihood of occurrence 

Low   

Medium   

High 

H 

M 

L 

H 

M 

L 

H

H

L

All material risks and the respective countermeasures are documented in a Group-wide database. The 
risk portfolio is reviewed three times a year. Significant changes must be promptly entered in the data-
base and reported immediately to the Group Management Board. Details of the risk portfolio are docu-
mented in a management information system accessible to the members of the Group Leadership Circle. 
A report on the risk portfolio is submitted to the Audit Committee of the Supervisory Board once a year. 

PROCESS-INDEPENDENT MONITORING 
The effectiveness of our management systems is audited and evaluated at regular intervals by Corporate 
Audit, which performs an independent and objective audit function focused on verifying compliance 
with laws and directives. Corporate Audit also supports the company in achieving its goals by systemat-
ically evaluating the efficiency and effectiveness of governance, risk management and control processes 
and helping to improve them. The selection of audit targets follows a risk-based approach. Corporate 
Audit performs its tasks according to internationally recognized standards and performs reliable audit 
services. This is confirmed by a quality assessment undertaken in 2012 by the American Institute of 
Internal Auditors (iaa). A report on the internal control system and its effectiveness is presented annual-
ly to the Audit Committee of the Supervisory Board. 

Risks in the areas of occupational health and safety, plant safety, environmental protection and product 
quality are assessed through specific hseq (health, safety, environment and quality) audits.  

In addition, the external auditor, as part of its audit of the annual financial statements, assesses the 
basic suitability of the early warning system for identifying at an early stage any risks that could endan-
ger the company’s continued existence. The auditor regularly reports to the Group Management Board 
and the Supervisory Board on the identification of any weaknesses in the internal control system.  

Audit outcomes are taken into account in the continuous enhancement of our management processes.  

20.3.2 Opportunities and Risks 

As a global enterprise with a diversified portfolio, the Bayer Group is constantly exposed to a wide 
range of internal or external developments or events that could significantly impact the achievement of 
our financial and non-financial objectives. 

This chapter outlines both opportunities and risks. Only those risks that are classified in our risk matrix 
as “medium” or “high” are included. The risks are more highly aggregated here than in our internal 
documentation. The sequence in which the risks are listed does not imply any order of significance. The 
opportunities and risks described apply to all subgroups unless otherwise indicated. 

BUSINESS ENVIRONMENT 
Ethical conduct is a matter of essential importance for society. Many stakeholders evaluate companies 
according to whether they conduct themselves not just “legally,” – but also “legitimately.” The Bayer 
Group is dedicated to sustainable development in all areas of its commercial activity. Any violations of 
this voluntary commitment can result in adverse media reporting and thus lead to a negative public 
perception of the Bayer Group. We counter this risk through responsible corporate management that is 
geared toward generating not only economic but also ecological and societal benefit.  

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In the Emerging Markets – particularly Asia and Latin America – we see growth opportunities, such as 
those arising out of increasing affluence and the associated increase in demand for pharmaceutical 
products. Bayer is therefore systematically expanding its business in these regions in particular.  

At the same time, however, the risk exists that our growth could be impeded by increasing global cost 
pressure on health systems. Pharmaceutical products are subject to regulatory price controls and regu-
lations in many markets, and government reimbursement systems often favor less expensive generic 
medicines over branded products. In addition, in some markets, major suppliers in the health care sec-
tor can exert substantial pressure on prices. Price controls and pricing pressure reduce earnings from 
our pharmaceutical products and may occasionally make the market launch of a new product unprofita-
ble. According to our assessment the current extent of regulatory controls and market pressures on 
pricing will persist or increase. Changes with respect to price development and governmental price 
controls in our key markets are continuously monitored. Depending on the intensity of such price con-
trols and the pressure on prices, it could be necessary to adjust our business model. 

In some countries the marketing rights for certain pharmaceutical products are held by third parties. An 
inadequate performance by collaboration partners could adversely affect the development of our sales 
and costs. Therefore, we have established an Alliance Management unit to monitor the most important 
collaborations and provide relevant support to the operational functions. 

Further opportunities and risks may also arise if actual market developments vary from those we predict 
in Chapter 20.1 “Economic Outlook.” Where macroeconomic developments deviate from forecasts, this 
may either positively or negatively impact our sales and earnings expectations.  

For MaterialScience, an economic downturn, changes in competitors’ behavior or the market entry of 
new competitors can lead to a more intense competitive situation characterized by overcapacities and 
increased pressure on prices. 

Continuous analysis of the economic environment and of economic forecasts enables us to pursue the 
identified opportunities and to mitigate risks by adjusting our business strategy.  

INNOVATION 
We analyze global trends and develop innovative solutions to address them, thereby mastering the 
challenges and taking advantage of the opportunities they provide.  

Increase in life expectancy 
Certain diseases, such as cancer or chronic cardiovascular disorders, are on the rise as a consequence  
of higher life expectancy. HealthCare is responding to the increased demand for innovative health care 
products to treat age-related diseases by focusing its r&d activities on the respective therapeutic areas 
such as oncology and cardiology.  

Shortage of arable land and increasing demand for food 
The growing world population poses one of the principal challenges to the sustainable supply of food, 
particularly in view of the reduction in arable land caused by increasing urbanization and extreme 
weather events associated with climate change. Increasing affluence in the emerging countries is boost-
ing the demand for animal-based food products. We expect there to be an increasing need for high-
value seed and crop protection products to allow sufficient food and animal feed to be produced to 
satisfy rising demand despite limited acreages. For example, CropScience is developing processes to 
better protect crops against climate and environmental stresses.  

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Conserving natural resources and protecting the climate 
The finite nature of certain natural resources and efforts to protect the climate are boosting the demand 
for innovative products and technologies that reduce resource consumption and lead to lower emis-
sions. This trend is being reinforced by increasingly stringent regulatory requirements and growing 
consumer awareness for the need to use resources sustainably. MaterialScience is therefore developing 
new materials that help to raise energy efficiency and reduce emissions. For example, polyurethane 
from MaterialScience is used in the construction industry for thermal insulation, giving a positive ener-
gy balance, while the subgroup’s polycarbonate is used in the automotive industry to reduce vehicle 
weight. 

To strengthen our innovation capability, we place special importance on networking and cooperation 
both within and outside of our company. One example is interdisciplinary research at the interface 
between human, animal and plant health, which is being driven forward by our Life Sciences Fund. This 
enables us to achieve research synergies and investigate new mechanisms of action that in the long 
term may provide new impetus to product development. Our strategy also encompasses research proj-
ects with outside partners from science and industry that give us access to complementary technologies 
and external innovation potential.  

For further information, see Chapter 5 “Research, Development, Innovation” and Chapter 3 “Strategies 
of the Subgroups.”  

Despite all our efforts, we cannot assure that all of the products we are currently developing or will 
develop in the future will achieve planned approval / registration or commercial success. For example, a 
drug candidate may fail to meet trial endpoints. The Bayer Group pursues a holistic portfolio manage-
ment strategy in order to estimate the probability of success and prioritize its development projects. 
Furthermore, the expectations of the public and the regulatory authorities with regard to the safety and 
efficacy of chemical and pharmaceutical products are constantly rising. Against this background, we 
continue to anticipate increasing regulatory requirements for clinical or (eco)toxicological studies, for 
example. This increases product development costs and the time it takes to obtain registration or mar-
keting approval. Special projects are set up to coordinate and ensure the successful implementation of 
new regulations. 

Where it appears strategically advantageous, we supplement our organic growth by acquiring compa-
nies or parts of companies. Failure to successfully integrate a newly acquired business or unexpectedly 
high integration costs could jeopardize the achievement of qualitative or quantitative targets and ad-
versely impact earnings. Teams of experts therefore manage both the due diligence process and the 
integration itself. Due diligence includes, for example, reviewing risk-relevant factors such as compli-
ance with applicable environmental regulations and occupational health and safety standards at produc-
tion sites. 

PATENT PROTECTION 
Patents protect our intellectual property. When our products are successfully commercialized, profits 
can be invested in continued research and development. Due to the long period of time between the 
patent application and the market launch of a product, Bayer generally only has a few years in which to 
earn an adequate return on its investment in research and development. This makes effective and relia-
ble patent protection all the more important. 

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A large proportion of our products, especially in our Life Science businesses, is covered by patents. 
Generic manufacturers, in particular, attempt to contest patents prior to their expiration. Sometimes a 
generic version of a product may even be launched “at risk” prior to the issuance of a final patent deci-
sion. We are currently involved in legal proceedings to enforce patent protection for our products. De-
tails of risks arising from these proceedings are given in Note [32] to the consolidated financial state-
ments. When a patent defense is unsuccessful, or if one of our patents expires, our prices are likely to 
come under pressure because of increased competition from generic products entering the market. 
Legal action by third parties for alleged infringement of patent or proprietary rights by Bayer may im-
pede or even halt the development or manufacturing of certain products or require us to pay monetary 
damages or royalties to third parties. Our patents department regularly reviews the patent situation in 
collaboration with the respective operating units and monitors for potential patent infringements so that 
legal action can be taken if necessary.  

PRODUCTS AND PRODUCT STEWARDSHIP 
Bayer assesses the potential health and environmental risks of a product along the entire value chain – 
from research and development, production, commercialization and use by the customer to disposal.  

Despite extensive studies prior to approval or registration, it is possible that products could be partially 
or completely withdrawn from the market due to the occurrence of unexpected side effects or other 
factors. Such a withdrawal may be voluntary or result from legal or regulatory measures. Furthermore, 
the occurrence of traces of unwanted genetically modified organisms in agricultural products and / or 
food cannot be entirely excluded. Potential payments of damages in connection with the above risks 
may have a substantial negative impact on our earnings. 

Our Life Science businesses counter these risks through a holistic organizational structure and process 
organization in the areas of pharmaceutical and crop protection product safety and testing. In addition, 
a comprehensive product stewardship program is in place at CropScience. For further information, see 
Chapter 10 “Product Stewardship.” 

Another risk we face is that of illegal trading of counterfeit medicines and crop protection products by 
criminal third parties. In most cases, the composition and / or the quality of counterfeit products do not 
correspond to those of the original products. In addition, the fact that no local regulatory authority is 
involved in assuring the quality of the manufacturing or distribution process precludes any official 
product recall. Products originating from illegal third-party manufacturing not only endanger patients, 
users, animals and the environment, but also jeopardize the good reputation of our company and prod-
ucts and undermine our competitive position. 

Bayer actively cooperates with authorities’ efforts to combat product counterfeiting by adopting preven-
tive measures and prosecuting offenders.  

PROCUREMENT AND PRODUCTION 
Our Supplier Code of Conduct sets forth our sustainability principles and explains what we expect from 
our partners along the value chain. The Code requires that our suppliers observe environmental regula-
tions as well as occupational health and safety rules, respect human rights and therefore not employ 
child labor in any form. Violations of the Code may harm our company’s reputation. Through supplier 
assessments and audits, we verify whether our partners along the supply chain actually implement and 
adhere to our Code of Conduct (see Chapter 8 “Procurement and Production”). 

The Bayer Group requires significant quantities of energy and petrochemical feedstocks for its produc-
tion processes. Procurement prices for energy and raw materials may fluctuate significantly. Experience 
has shown that higher production costs cannot always be passed on to our customers through price 
adjustments. This applies especially to MaterialScience.  

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Bayer Annual Report 2014

We place great importance not only on product safety but also on protecting our employees and the 
environment. Risks associated with the manufacturing, filling, storage or shipping of products are miti-
gated through an integrated quality, health, environmental protection and safety management. The 
materialization of such risks may result in personal injury, property and environmental damage, loss of 
production, business interruptions and / or liability for compensation payments.  

Operations at our sites may be disrupted by natural disasters, fires or explosions, sabotage or supply 
shortages for our principal raw materials or intermediates. This applies particularly to the production of 
active ingredients and to the biotechnological products of HealthCare in view of the highly complex 
manufacturing processes involved. If we are unable to meet demand, sales may undergo a structural 
decline, particularly in our Pharmaceuticals business. We counter this risk by distributing production 
for certain products among multiple sites or by building up safety stocks. Furthermore, an emergency 
response system has been implemented for all our production sites as a mandatory component of our 
hseq management. It is aimed at protecting employees, neighbors, the environment and production 
facilities from the risks described. The Group Regulation “Safety and Crisis Management” forms the 
basis for this. 

Increased ecological awareness creates opportunities for MaterialScience in two ways. On the one hand, 
the development of innovative materials for our customers (see Chapter 5 “Research, Development, 
Innovation”) opens up market potential. On the other hand, if we succeed in increasing the energy 
efficiency of our own production processes, we can mitigate environmental impacts and achieve cost 
savings at the same time. By developing new production technologies and applying internationally 
recognized energy management systems, we aim to help meet increasing environmental requirements, 
further reduce emissions and waste, and increase energy efficiency. In this way we not only contribute 
to sustainable climate protection and the conservation of natural resources, but also achieve cost and 
competitive advantages. 

EMPLOYEES 
Skilled and dedicated employees are essential for the company’s success. There is keen competition 
among companies for highly qualified personnel, particularly in countries with full employment and in 
the emerging countries of Asia and Latin America. If we are unable to recruit a sufficient number of 
employees in these countries and retain them within Bayer, this could have significant adverse conse-
quences for the company’s future development. 

We are planning appropriate employee recruitment and development measures based on the analysis of 
future requirements. We aim to convince our target groups of the advantages of working for Bayer 
through comprehensive human resources marketing, including employer branding campaigns. Compet-
itive compensation containing performance-related components as well as an extensive range of train-
ing and development opportunities are among the essential elements of our human resources policies, 
which are based on the principles enshrined in our Human Rights Position, our corporate values and 
our Corporate Compliance Policy. In addition, our focus on diversity enables us to tap the full potential 
of the employment market. 

For more information, see Chapter 7 “Employees.” 

INFORMATION TECHNOLOGY 
Business and production processes and the internal and external communications of the Bayer Group 
are increasingly dependent on global it systems.  

A significant technical disruption or failure of it systems could severely impair our business and pro-
duction processes. Technical precautions such as data recovery and continuity plans are defined and 
continuously evolved in close cooperation with our internal it organization. 

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221

The confidentiality of internal and external data is of fundamental importance to us. A loss of data con-
fidentiality, integrity or authenticity could lead to manipulation and / or the uncontrolled outflow of data 
and expertise. We have measures in place to counter this risk, including an authorization system. 

Furthermore, a Group-wide committee has been established to determine the fundamental strategy, 
architecture and safety measures for the Bayer Group. These measures are designed to provide opti-
mum protection based on state-of-the-art technology. 

LAW AND COMPLIANCE 
The Bayer Group is exposed to numerous risks from legal disputes or proceedings to which we are 
currently a party or which could arise in the future, particularly in the areas of product liability, competi-
tion and antitrust law, patent law, tax law and environmental protection. 

Investigations of possible legal or regulatory violations, such as potential infringements of antitrust law 
or certain marketing and / or distribution methods, may result in the imposition of civil or criminal pen-
alties – including substantial monetary fines – and / or other adverse financial consequences, harm 
Bayer’s reputation and ultimately hamper our commercial success.  

Bayer has established a global compliance management system to ensure the sustainable observance of 
laws and regulations (see Chapter 18.3 “Compliance”). 

Legal proceedings currently considered to involve material risks are described in Note [32] to the con-
solidated financial statements. 

FINANCIAL OPPORTUNITIES AND RISKS 
The Bayer Group has financial opportunities at its disposal in the form of the market prices it can com-
mand for its products, and is exposed to financial risks in the form of liquidity, credit and market price 
risks, as well as risks resulting from pension obligations. 

The following paragraphs provide details of these and other financial opportunities and risks and how 
they are managed. 

The management of financial opportunities and risks takes place using established, documented pro-
cesses. One component is financial planning, which serves as the basis for determining the liquidity risk 
and the future foreign currency and interest-rate risks and covers all Group companies that are relevant 
from a cash-flow perspective. Financial planning comprises a planning horizon of 12 months and is 
regularly updated.  

Further information is provided in Chapter 16.7 “Financial Management of the Group.” 

  See Chapter 16.7 

Liquidity risk 
Liquidity risks result from the possible inability of the Bayer Group to meet current or future payment 
obligations due to a lack of cash or cash equivalents. The liquidity risk is determined and managed by 
the central finance department as part of our same-day and medium-term liquidity planning. 

Payment obligations from financial instruments are explained according to their maturity in Note [30.2] 
to the consolidated financial statements. 

  Consolidated 
Financial 
Statements 
Note 30.2 

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Bayer Annual Report 2014

The Group holds sufficient liquidity to ensure the fulfillment of all planned payment obligations at ma-
turity. In addition, a reserve is maintained for unbudgeted shortfalls in cash receipts or unexpected 
disbursements. The amount of this liquidity reserve is regularly reviewed and adjusted as necessary 
according to circumstances.  

Liquid assets are held mainly in the form of overnight and term deposits. Credit facilities also exist with 
banks. These include, in particular, a €3.5 billion syndicated credit facility, which is undrawn.  

Credit risks 
Credit risks arise from the possibility that the value of receivables or other financial assets of the Bayer 
Group may be impaired because counterparties cannot meet their payment or other performance obli-
gations. The Bayer Group does not conclude master netting arrangements with its customers for non-
derivative financial instruments. Here, the total value of the financial assets represents the maximum 
credit risk exposure. In the case of derivatives, positive and negative market values may be netted under 
certain conditions. 

To manage credit risks from trade receivables, the respective invoicing companies appoint credit man-
agers who regularly analyze customers’ creditworthiness. Some of these receivables are collateralized, 
and the collateral is used according to local conditions. It includes credit insurance, advance payments, 
letters of credit and guarantees. Reservation of title is generally agreed with our customers. Credit limits 
are set for all customers. All credit limits for debtors where total exposure is €10 million or more are 
evaluated by local credit management and submitted to the Group’s Central Financial Risk Committee. 

Credit risks from financial transactions are managed centrally in the finance department. To minimize 
risks, financial transactions are only conducted within predefined exposure limits and with banks and 
other partners that preferably have investment-grade ratings. All risk limits are based on methodical 
models. Adherence to the risk limits is continuously monitored. 

  Consolidated 
Financial 
Statements  
Note 30.3 

Opportunities and risks resulting from market price changes 
Opportunities and risks resulting from changes in market currency and interest rates are managed  
by the central finance department. Risks are eliminated or mitigated through the use of derivative finan-
cial instruments. Further details on derivatives are given in Note [30.3] to the consolidated financial 
statements. 

The type and level of currency and interest-rate risks are explained in the following paragraphs using 
sensitivity analyses based on hypothetical changes in risk variables (such as interest curves) to deter-
mine the potential effects of market price fluctuations on equity and earnings. The assumptions used in 
the sensitivity analyses reflect our view of the changes in currency exchange and interest rates that are 
reasonably possible over a one-year period. These assumptions are regularly reviewed. 

Foreign currencies 
Foreign currency opportunities and risks for the Bayer Group result from changes in exchange rates and 
the related changes in the value of financial instruments (including receivables and payables) and of 
anticipated payment receipts and disbursements in the functional currency. 

Receivables and payables in liquid currencies from operating activities and financial items are generally 
fully exchange-hedged through forward exchange contracts and cross-currency interest-rate swaps. 

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223

Anticipated exposure from planned payment receipts and disbursement in the future is hedged accord-
ing to the rules agreed between the Group Management Board, the finance department and the operat-
ing units. Hedging takes place through forward exchange contracts and currency options. 

Sensitivities were determined based on a hypothetical adverse scenario in which the euro depreciates 
by 10% against all other currencies compared with the year-end exchange rates. Under this scenario, 
the estimated hypothetical loss of cash flows from derivative and non-derivative financial instruments 
would have diminished earnings and equity (other comprehensive income) as of December 31, 2014 by 
€295 million (December 31, 2013: €250 million). Of this amount, €136 million is related to the u.s. dol-
lar, €41 million to the Japanese yen and €32 million to the Canadian dollar. Currency effects on antici-
pated exposure are not taken into account. 

Derivatives used to hedge anticipated currency exposure that are designated for hedge accounting 
would have diminished other comprehensive income by €315 million.  

Interest rates 
Interest-rate opportunities and risks result for the Bayer Group through changes in capital market inter-
est rates, which in turn could lead to changes in the fair value of fixed-rate financial instruments and 
changes in interest payments in the case of floating-rate instruments. 

Interest-rate opportunities and risks are managed over a target duration established by management for 
Bayer Group debt. This target duration is subject to regular review. Interest-rate swaps are concluded to 
achieve the target structure for Group debt. 

A sensitivity analysis based on our net floating-rate receivables and payables position at year end 2014, 
taking into account the interest rates relevant for our receivables and payables in all principal curren-
cies, produced the following result: a hypothetical increase of 100 basis points, or 1 percentage point, in 
these interest rates (assuming constant currency exchange rates) as of January 1, 2014 would have 
raised our interest expense for the year ended December 31, 2014 by €53 million (December 31, 2013: 
€33 million).  

Risk to pension obligations from capital market developments 
The Bayer Group has obligations to current and former employees related to pensions and other post-
employment benefits. Changes in relevant measurement parameters such as interest rates, mortality 
and salary increase rates may raise the present value of our pension obligations. This may lead to in-
creased costs for pension plans or diminish equity due to actuarial losses being recognized as other 
comprehensive income in the statement of comprehensive income. A large proportion of our pension 
and other post-employment benefit obligations is covered by plan assets including fixed-income securi-
ties, shares, real estate and other investments. Declining or even negative returns on these investments 
may adversely affect the future fair value of plan assets. Both these effects may negatively impact the 
development of equity and / or the company’s earnings and / or may necessitate additional payments by 
the company. Further details are given in Note [25] to the consolidated financial statements.  

We address the risk of market-related fluctuations in the fair value of our plan assets through balanced 
strategic investment, and we constantly monitor investment risks in regard to our global pension obliga-
tions.  

OVERALL ASSESSMENT OF OPPORTUNITIES AND RISKS 
The risks reported above do not endanger the company’s continued existence. Nor could we identify 
any risk interdependencies that could combine to endanger the company’s continued existence.  

Risks rated as “medium” or “high” did not change significantly compared with the previous year.  

Based on our product portfolio, our know-how and our innovation capability, we are convinced that we 
can take advantage of the opportunities resulting from our entrepreneurial activity and successfully 
master the challenges resulting from the risks stated above.  

  Consolidated 
Financial 
Statements  
Note 25 

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21. Takeover-Relevant Information 

Bayer Annual Report 2014

21. Takeover-Relevant Information 

Explanatory Report pursuant to Sections 289 Paragraph 4 and 315 Paragraph 4 of the 
German Commercial Code (HGB) 
The capital stock of Bayer AG amounted as of December 31, 2014 to €2,117 million, divided into 
826,947,808 no-par registered shares. The capital stock and the number of shares were thus unchanged 
from the end of the previous year. Each share confers one voting right.  

A small number of shares may be subject to temporary trading restrictions, such as retention periods, in 
connection with employee stock participation programs.  

  www.bayer.com/ 
ownership-
structure 

We received no notifications in 2014 of direct or indirect holdings of shares in Bayer AG that exceed 
10% of the capital stock. The company thus is not in possession of any notifications of holdings that 
exceed 10% of the capital stock. 

The appointment and dismissal of members of the Board of Management are subject to the provisions of 
Sections 84 and 85 of the German Stock Corporation Act, Section 31 of the German Codetermination Act 
and Section 6 of the company’s Articles of Incorporation. Pursuant to Section 84, Paragraph 1 of the 
German Stock Corporation Act, the members of the Board of Management are appointed and dismissed 
by the Supervisory Board. Since Bayer AG falls within the scope of the German Codetermination Act, the 
appointment or dismissal of members of the Board of Management requires a majority of two thirds of 
the votes of the members of the Supervisory Board on the first ballot pursuant to Section 31 Paragraph 2 
of that act. If no such majority is achieved, the appointment is resolved pursuant to Section 31 Paragraph 
3 of the Codetermination Act on a second ballot by a simple majority of the votes of the members of the 
Supervisory Board. If the required majority still is not achieved, a third ballot is held. Here again, a simple 
majority of the votes of the members suffices, but in this ballot the Chairman of the Supervisory Board 
has two votes pursuant to Section 31 Paragraph 4 of the Codetermination Act. Under Section 6 Paragraph 
1 of the Articles of Incorporation of Bayer AG, the number of members of the Board of Management is 
determined by the Supervisory Board but must be at least two. The Supervisory Board may appoint one 
member of the Board of Management to be its Chairman pursuant to Section 84 Paragraph 2 of the Ger-
man Stock Corporation Act and Section 6 Paragraph 1 of the Articles of Incorporation. 

Any amendments to the Articles of Incorporation are made pursuant to Section 179 of the German Stock 
Corporation Act and Sections 10 and 17 of the Articles of Incorporation. Under Section 179 Paragraph 1 
of the German Stock Corporation Act, amendments to the Articles of Incorporation require a resolution 
of the Stockholders’ Meeting. Pursuant to Section 179 Paragraph 2 of the German Stock Corporation 
Act, this resolution must be passed by a majority of three quarters of the voting capital represented at 
the meeting, unless the Articles of Incorporation provide for a different majority. However, where an 
amendment relates to a change in the object of the company, the Articles of Incorporation may only 
specify a larger majority. Section 17 Paragraph 2 of the Articles of Incorporation of Bayer AG utilizes the 
scope for deviation pursuant to Section 179 Paragraph 2 of the German Stock Corporation Act and pro-
vides that resolutions may be passed by a simple majority of the votes cast or, where a capital majority 
is required, by a simple majority of the capital represented. Pursuant to Section 10 Paragraph 6 of the 
Articles of Incorporation, the Supervisory Board may resolve on amendments to the Articles of Incorpo-
ration that relate solely to their wording. 

Provisions of the Articles of Incorporation concerning Authorized Capital i and Authorized Capital ii are 
entered in the commercial register of Bayer AG. With the approval of the Supervisory Board and until 
April 28, 2019, the Board of Management may use the Authorized Capital i to increase the capital stock 
by up to a total of €530 million. New shares may be issued against cash contributions and / or contribu-
tions in kind, but capital increases against contributions in kind may not exceed a total of €423 million. 
If the Authorized Capital i is used to issue shares in return for cash contributions, stockholders must 
normally be granted subscription rights. The Board of Management may only exclude stockholders’ 
subscription rights to a volume of shares issued out of the Authorized Capital i that did not represent 
more than 20% of the existing capital stock at the time the respective resolution was adopted by the 
Annual Stockholders’ Meeting on April 29, 2014. Absent a further resolution on the exclusion of stock-
holders’ subscription rights, the Board of Management also may only exclude stockholders’ subscrip-

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21. Takeover-Relevant Information

225

tion rights to a volume of shares issued under other authorizations regarding capital measures (Author-
ized Capital ii, bonds with warrants or convertible bonds, purchase and disposal of own shares) that did 
not represent more than 20% of the existing capital stock at the time the respective resolution was 
adopted by the Annual Stockholders’ Meeting on April 29, 2014. 

With the approval of the Supervisory Board and until April 28, 2019, the Board of Management is au-
thorized to increase the capital by up to €212 million in one or more installments by issuing shares out 
of the Authorized Capital ii against cash contributions. The stockholders must normally be granted 
subscription rights. However, the Board of Management is authorized, with the approval of the Supervi-
sory Board, to exclude subscription rights for stockholders provided the volume of shares issued out of 
the Authorized Capital ii against cash contributions does not exceed 10% of the capital stock existing at 
the time this authorization is registered or the time the new shares are issued and the issue price of the 
new shares is not significantly below the market price of the already listed shares.  

Conditional capital of €212 million exists in connection with an authorization – valid through April 28, 
2019 – to issue bonds with warrants or convertible bonds, profit-sharing rights or profit participation 
bonds (collectively referred to as “bonds”) with a total face value of €6 billion. The Board of Manage-
ment may, with the consent of the Supervisory Board and under certain conditions, exclude the bond 
subscription rights that would otherwise be granted to stockholders. One of the conditions is that the 
total volume of shares required to service the bonds exceed neither 10% of the capital stock that exist-
ed at the time the respective resolution was adopted by the Annual Stockholders’ Meeting on April 29, 
2014 nor 10% of the capital stock existing at the time this authorization is exercised. Any other shares 
issued without granting subscription rights to the stockholders in direct or analogous application of 
Section 186 Paragraph 3 Sentence 4 of the German Stock Corporation Act shall be credited against this 
10% limit. Further, by resolution of the Annual Stockholders’ Meeting on April 29, 2014, the Board of 
Management is authorized to purchase and dispose of own shares representing up to 10% of the capital 
stock existing at the time the resolution was adopted. The authorization to purchase own shares also 
includes the purchase of own shares using put or call options (derivatives) up to a volume of 5% of the 
capital stock existing at the time the resolution was adopted or at the time the authorization is exer-
cised. This authorization also expires on April 28, 2019.  

A material agreement that is subject to the condition precedent of a change of control pertains to the 
undrawn €3.5 billion syndicated credit facility arranged by Bayer AG and its u.s. subsidiary Bayer 
Corporation. This facility is available until December 2019 and can be extended by a further one-year 
period. The participating banks are entitled to terminate the credit facility in the event of a change of 
control at Bayer and demand repayment of any loans that may have been granted under this facility up 
to that time. A similar clause is contained in the agreement on a us$2 billion syndicated credit facility 
granted to Bayer subsidiary Bayer World Investments b.v., Netherlands, in 2014 and guaranteed by 
Bayer AG. The facility matures in May 2018.   

The terms of the €4.1 billion (as of December 31, 2014) in notes issued by Bayer in the years 2006 to 
2014 under its multi-currency European Medium Term Notes program also contain a change-of-control 
clause. Holders of these notes have the right to demand the redemption of their notes by Bayer AG in 
the event of a change of control if Bayer AG’s credit rating is downgraded within 120 days after such 
change of control becomes effective. The terms of the us$7 billion bond in 144a / Reg S format issued in 
October 2014 also contain a clause to this effect. 

Agreements exist for the members of the Board of Management in compliance with Section 4.2.3 of  
the German Corporate Governance Code to cover the eventuality of a takeover offer being made for 
Bayer AG. Under these agreements, payments promised in the event of early termination of the service 
contract of a Board of Management member due to a change of control are limited to the value of three 
years’ compensation and may not compensate more than the remaining term of the contract. 

» TABLE OF CONTENTS COMBINED MANAGEMENT REPORT   
 
 
 
  
 
» TABLE OF CONTENTS

Consolidated Financial Statements

227

Bayer Annual Report 2014

02 

Consolidated Financial Statements

Bayer Group Consolidated  
Income Statements 

Bayer Group Consolidated Statements 
of Comprehensive Income  

Bayer Group Consolidated Statements 
of Financial Position 

Bayer Group Consolidated Statements  
of Cash Flows 

Bayer Group Consolidated Statements 
of Changes in Equity 

Notes to the Consolidated Financial  
Statements of the Bayer Group 

 Key data by segment and region 

General information 

228

229

230

231

Notes to the Statements of Financial Position

17.	

18.		

19.  

20.		

21.		

22.		

23.		

24.		

25.		

	Goodwill	and	other	intangible	assets	

Property,	plant	and	equipment	

 Investments accounted for using  
the	equity	method	

Other	financial	assets	

Inventories	

	Trade	accounts	receivable	

Other	receivables		

Equity	

	Provisions	for	pensions	and	 
other	post-employment	benefits	

232

26.		

Other	provisions	

26.1		 Taxes	

234

234

236

26.2	

Environmental	protection	

26.3	 Restructuring	

26.4		 Trade-related	commitments	

26.5	

Litigations	

		Effects	of	new	financial	reporting	standards	

236	

26.6		 Personnel	commitments	

1. 

2.  

3.	

4.		

5.		

6.		

6.1	

6.2	

6.3 

	Basic	principles,	methods	and	 
critical accounting estimates 

		Segment	reporting	

	Scope	of	consolidation;	subsidiaries	 
and	affiliates	

Changes	in	the	scope	of	consolidation	

239

254

258

258

Business	combinations	and	other	acquisitions	 260

 Divestitures 

26.7		 Miscellaneous	

27.		

28.		

29.		

30.		

Financial	liabilities	

Trade	accounts	payable	

Other	liabilities	

Financial	instruments	

30.1		

	Financial	instruments	by	category	

30.2	 Maturity	analysis	

30.3	

Information	on	derivatives	

31. 

 Contingent liabilities and  
other	financial	commitments	

32.  

Legal risks 

Notes to the Statements of Cash Flows

33.		

34.	

35.		

	Net	cash	provided	by	 
(used	in)	operating	activities	

	Net	cash	provided	by	 
(used in) investing activities 

	Net	cash	provided	by	 
(used	in)	financing	activities	

Other Information  

36.		

37.		

38.		

Audit	fees	

	Related	parties	

		Total	compensation	of	the	Board	of	 
Management	and	the	Supervisory	Board,	 
advances	and	loans	

264

266

266

267

267

268

269

269

270

270

271

271

275

275 

Notes to the Income Statements

7.  

8.		

9.		

10.		

11.		

12.		

13.  

Net sales 

Selling	expenses	

Research	and	development	expenses	

Other	operating	income	

Other	operating	expenses	

Personnel	expenses	and	employee	numbers	

Financial result 

13.1  

 Income (loss) from investments  
in	affiliated	companies	

13.2	 Net	interest	expense	

13.3	 Other	financial	income	and	expenses	

14.		

15.  

Taxes	

 Income / losses attributable to 
non-controlling interest 

16.		

Earnings	per	share	

  For direct access to a chapter, simply click on its name.

276

280

282

283

284

285

286

287

291

299

300

300

300

301

301

301

303

304

307

308

309

309

315

318

320

322

326

327

327

328

328

330

 
 
 
228 

Consolidated Financial Statements 

Bayer Group Consolidated Income Statements 

Bayer Annual Report 2014

Bayer Group Consolidated Income Statements 

Net sales 

Cost of goods sold 

Gross profit 

Selling expenses 

Research and development expenses 

General administration expenses 

Other operating income 

Other operating expenses 

EBIT1 

Equity-method loss 

Financial income 

Financial expenses 

Financial result  

Income before income taxes 

Income taxes 

Income after income taxes 

of which attributable to non-controlling interest 

of which attributable to Bayer AG stockholders (net income) 

Earnings per share 

Basic 

Diluted 

2013 figures restated 
1 EBIT: earnings before financial result and taxes 

[Table 4.1]

Note 

2013 

2014 

€ million 

€ million 

[7] 

40,157 

42,239

(19,516) 

(20,266)

20,641 

21,973

(10,312) 

(11,018)

(3,406) 

(1,712) 

887 

(1,164) 

4,934 

(16) 

389 

(1,100) 

(727) 

(3,574)

(1,741)

716

(850)

5,506

(13)

343

(1,311)

(981)

[8] 

[9] 

[10] 

[11] 

[13.1] 

[13] 

4,207 

4,525

[14] 

(1,021) 

(1,082)

[15] 

[16] 

3,186 

(3) 

3,189 

3,443

17

3,426

€ 

€ 

3.86 

3.86 

4.14

4.14

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Bayer Group Consolidated Statements of Comprehensive Income

Consolidated Financial Statements

229

Bayer Group Consolidated Statements 
of Comprehensive Income 

Income after income taxes 

of which attributable to non-controlling interest 

of which attributable to Bayer AG stockholders 

Remeasurements of the net defined benefit liability  
for post-employment benefit plans 

Income taxes 

Other comprehensive income from remeasurements of the  
net defined benefit liability for post-employment benefit plans 

Other comprehensive income that will not be reclassified subsequently  
to profit or loss 

Changes in fair values of derivatives designated as cash flow hedges 

Reclassified to profit or loss 

Income taxes 

Other comprehensive income from cash flow hedges 

Changes in fair values of available-for-sale financial assets 

Reclassified to profit or loss 

Income taxes 

Other comprehensive income from available-for-sale financial assets 

Changes in exchange differences recognized on translation  
of operations outside the eurozone 

Reclassified to profit or loss 

Other comprehensive income from exchange differences 

[Table 4.2]

Note 

2013 

2014 

[15]

[25]

[14]

[30.3]

[14]

[20]

[14]

€ million 

€ million 

3,186 

(3) 

3,189 

3,443

17

3,426

1,946 

(604) 

(5,159)

1,621

1,342 

(3,538)

1,342 

(3,538)

221 

(156) 

(18) 

47 

52 

(76) 

16 

(8) 

(146)

(46)

57

(135)

–

–

(2)

(2)

(737) 

1,384

– 

–

(737) 

1,384

Other comprehensive income that may be reclassified subsequently to profit or loss 

(698) 

1,247

Effects of changes in scope of consolidation 

(1) 

–

Total other comprehensive income1 

of which attributable to non-controlling interest 

of which attributable to Bayer AG stockholders 

Total comprehensive income 

of which attributable to non-controlling interest 

of which attributable to Bayer AG stockholders 

1 total changes recognized outside profit or loss 

643 

(14) 

657 

3,829 

(17) 

3,846 

(2,291)

11

(2,302)

1,152

28

1,124

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
230 

Consolidated Financial Statements 

Bayer Group Consolidated Statements of Financial Position 

Bayer Annual Report 2014

Bayer Group Consolidated Statements 
of Financial Position 

Noncurrent assets 

Goodwill 

Other intangible assets 

Property, plant and equipment 

Investments accounted for using the equity method 

Other financial assets 

Other receivables 

Deferred taxes 

Current assets 

Inventories 

Trade accounts receivable 

Other financial assets 

Other receivables 

Claims for income tax refunds 

Cash and cash equivalents 

Total assets 

Equity 

Capital stock of Bayer AG 

Capital reserves of Bayer AG 

Other reserves 

Equity attributable to Bayer AG stockholders 

Equity attributable to non-controlling interest 

Noncurrent liabilities 

Provisions for pensions and other post-employment benefits 

Other provisions 

Financial liabilities 

Other liabilities 

Deferred taxes 

Current liabilities 

Other provisions 

Financial liabilities 

Trade accounts payable 

Income tax liabilities 

Other liabilities 

Total equity and liabilities  

[Table 4.3]

Note 

Dec. 31, 2013 

Dec. 31, 2014 

€ million 

€ million 

[17] 

[17] 

[18] 

[19] 

[20] 

[23] 

[14] 

[21] 

[22] 

[20] 

[23] 

[24] 

[25] 

[26] 

[27] 

[29] 

[14] 

[26] 

[27] 

[28] 

[26.1] 

[29] 

9,862 

8,914 

10,015 

203 

1,203 

496 

1,596 

16,168

15,653

11,428

223

1,107

447

2,981

32,289 

48,007

7,129 

7,569 

779 

1,476 

413 

1,662 

8,478

9,097

723

1,488

588

1,853

19,028 

22,227

51,317 

70,234

2,117 

6,167 

12,434 

20,718 

86 

2,117

6,167

11,822

20,106

112

20,804 

20,218

7,368 

1,977 

5,590 

362 

1,193 

12,236

2,016

18,484

1,088

689

16,490 

34,513

4,727 

3,441 

4,473 

101 

1,281 

14,023 

4,912

3,376

5,363

63

1,789

15,503

51,317 

70,234

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Consolidated Financial Statements

Bayer Group Consolidated Statements of Cash Flows

231

Bayer Group Consolidated Statements 
of Cash Flows 

Income after income taxes 

Income taxes 

Financial result 

Income taxes paid or accrued 

Depreciation, amortization and impairments 

Change in pension provisions 

(Gains) losses on retirements of noncurrent assets 

Gross cash flow 

Decrease (increase) in inventories 

Decrease (increase) in trade accounts receivable 

(Decrease) increase in trade accounts payable 

Changes in other working capital, other non-cash items 

[Table 4.4]

Note 

2013 

2014 

€ million 

€ million 

3,186 

1,021 

727 

(1,644) 

2,896 

(249) 

(105) 

5,832 

(608) 

(751) 

389 

309 

3,443

1,082

981

(1,315)

2,936

(337)

30

6,820

(741)

(1,094)

518

307

Net cash provided by (used in) operating activities (net cash flow) 

[33]

5,171 

5,810

Cash outflows for additions to property, plant, equipment and intangible assets 

(2,157) 

(2,371)

Cash inflows from sales of property, plant, equipment and other assets  

Cash inflows from divestitures 

Cash inflows from (outflows for) noncurrent financial assets 

Cash outflows for acquisitions less acquired cash 

Interest and dividends received 

Cash inflows from (outflows for) current financial assets 

Net cash provided by (used in) investing activities 

Dividend payments 

Issuances of debt 

Retirements of debt 

Interest paid including interest-rate swaps 

Interest received from interest-rate swaps 

Cash outflows for the purchase of additional interests in subsidiaries 

153 

79 

204 

143

304

(10)

(1,082) 

(13,545)

125 

97 

107

(167)

[34]

(2,581) 

(15,539)

(1,574) 

9,078 

(1,739)

27,584

(9,697) 

(15,746)

(550) 

212 

(4) 

(541)

179

(1)

Net cash provided by (used in) financing activities 

[35]

(2,535) 

9,736

Change in cash and cash equivalents due to business activities 

Cash and cash equivalents at beginning of year 

Change in cash and cash equivalents due to changes in scope of consolidation 

Change in cash and cash equivalents due to exchange rate movements 

Cash and cash equivalents at end of year 

55 

7

1,698 

1,662

– 

(91) 

–

184

1,662 

1,853

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
232 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS  

Consolidated Financial Statements 

Bayer Group Consolidated Statements of Changes in Equity 

Bayer Annual Report 2014

Bayer Annual Report 2014 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS  

233

Bayer Group Consolidated Statements of Changes in Equity

Consolidated Financial Statements

Bayer Group Consolidated Statements 
of Changes in Equity 

Dec. 31, 2012 

Equity transactions with owners 

Capital increase / decrease 

Dividend payments 

Other changes 

Other comprehensive income 

Income after income taxes 

Dec. 31, 2013 

Equity transactions with owners 

Capital increase / decrease 

Dividend payments 

Other changes 

Other comprehensive income 

Income after income taxes 

Dec. 31, 2014 

Capital stock 
of Bayer AG 

Capital reserves 
of Bayer AG 

Retained 
earnings  
incl. net income  

€ million 

2,117

€ million 

6,167

€ million 

11,861 

Exchange 
differences 

€ million 

(1,822)

(1,571) 

(3) 

1,341 

3,189 

(723)

2,117

6,167

14,817 

(2,545)

(1,737) 

6 

(3,538) 

3,426 

12,974 

1,373

(1,172)

2,117

6,167

Accumulated Total Comprehensive Income 

Fair-value  
measurement  
of securities 

Cash flow  
hedges  

Revaluation 
surplus 

Equity 
attributable 
to Bayer AG 
stockholders 

Equity 
attributable 
to non-controlling 
interest 

€ million 

€ million 

€ million 

40 

52 

36 

€ million 

18,451

€ million 

100

(8) 

32 

(2) 

30 

47 

99 

(135) 

(36) 

(5)

(1,571)

(8)

657

3,189

31 

20,718

(5)

26 

(1,737)

1

(2,302)

3,426

20,106

(3)

6

(14)

(3)

86

(2)

11

17

112

[Table 4.5]

Equity 

€ million 

18,551 

(1,574) 

(2) 

643 

3,186 

20,804 

(1,739) 

1 

(2,291) 

3,443 

20,218 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    
      
 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
 
 
  
  
  
 
  
  
 
  
  
 
 
 
 
 
 
 
 
  
  
  
 
 
 
  
  
  
 
  
  
 
 
  
  
 
 
 
 
234 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS  

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Bayer Annual Report 2014 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS  

235

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

Notes to the Consolidated Financial Statements 
of the Bayer Group 

1. Key data by segment and region 

Key Data by Segment 

HealthCare 

CropScience 

MaterialScience 

Pharmaceuticals 

Consumer Health 

CropScience 

MaterialScience 

All Other Segments 

Reconciliation 

Corporate Center and 
Consolidation 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

[Table 4.6]

Group 

2014 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

Net sales (external) 

Change 

Currency-adjusted change 

Intersegment sales 

Net sales (total) 

Other operating income 

EBIT 

EBIT before special items 

EBITDA before special items 

Gross cash flow 

Capital invested 

CFROI 

Net cash flow 

Equity-method income (loss) 

Equity-method investments 

Assets 

Capital expenditures 

Additions to noncurrent assets from acquisitions 

Depreciation, amortization and impairments 

of which impairment losses 

of which impairment loss reversals 

Liabilities 

Research and development expenses 

Number of employees (as of Dec. 31) 

2013 figures restated 

Key Data by Region 

Net sales (external) – by market 

Change  

Currency-adjusted change 

Net sales (external) – by point of origin 

Change  

Currency-adjusted change 

Interregional sales 

Other operating income 

EBIT 

Assets 

Capital expenditures 

Depreciation, amortization and impairments 

Liabilities 

Research and development expenses 

Number of employees (as of Dec. 31) 

2013 figures restated 

1,112

7

– 4.9% + 133.3%

– 4.4% + 133.3%

7

–

–

(2,363)

(2,356)

(2,459) 

(2,452) 

40,157 

+ 1.0% 

+ 5.4% 

– 

42,239

+ 5.2%

+ 8.0%

–

40,157 

42,239

316

(479)

(479)

(475)

(331)

(107)

–

224

–

–

71

(425) 

(425) 

(419) 

(318) 

(117) 

–

(824) 

–

–

887 

4,934 

5,773 

8,401 

5,832 

43,748 

11.1% 

5,171 

(16) 

203 

716

5,506

5,944

8,812

6,820

60,651

11.9%

5,810

(13)

223

70,234

2,490

13,785

2,936

225

(2)

50,016

3,574

2,155 

1,637 

2,896 

298 

(13) 

30,513 

3,406 

112,366 

118,888

11,188

+ 3.6%

12,052 

+ 7.7% 

+ 10.1%

+ 11.6% 

70

99 

11,258

12,151 

154

2,031

2,552

3,490

2,293

14,953

14.2%

1,853

–

–

184 

2,371 

2,657 

3,699 

2,745 

17,288 

15.3% 

3,266 

1 

2 

7,736 

– 0.9% 

+ 3.7% 

7 

7,743 

81 

1,229 

1,421 

1,844 

1,280 

8,367 

14.0% 

1,127 

– 

– 

7,923

+ 2.4%

+ 6.0%

9

7,932

156

1,210

1,255

1,785

1,266

19,492

10.6%

1,178

–

6

8,819 

9,494 

+ 5.2% 

+ 7.7% 

+ 9.9% 

+ 11.4% 

34 

8,853 

167 

1,729 

1,801 

2,248 

1,590 

9,909 

14.2% 

682 

– 

– 

49 

9,543 

208 

1,806 

1,838 

2,360 

1,835 

11,772 

15.3% 

950 

– 

– 

11,238 

– 2.2% 

+ 0.2% 

56 

11,651 

+ 3.7% 

+ 4.5% 

59 

11,294 

11,710 

1,169

– 7.2%

– 6.6%

2,196

3,365

112 

435 

429 

1,072 

887 

10,029 

5.5% 

977 

(16) 

203 

81 

555 

598 

1,187 

961 

11,019 

6.0% 

880 

(14) 

215 

57

(11)

49

222

113

597

–

308

–

–

2,243

3,355

16

(11)

21

200

331

1,197

–

360

–

–

16,585

19,393 

8,515 

20,192

10,826 

12,676 

8,429 

9,347 

1,981

2,253

4,981

6,373

51,317 

564

1,121

1,093

150

–

4,873

1,771

668 

2,661 

1,075 

39 

– 

7,075 

1,878 

209 

419 

505 

101 

(13) 

2,108 

458 

208

10,958

530

69

–

3,079

423

532 

97 

455 

3 

– 

4,114 

861 

699 

166 

552 

100 

– 

5,214 

974 

605 

– 

666 

29 

– 

2,473 

231 

647 

– 

594 

11 

(2) 

3,520 

210 

239

–

173

15

–

3,657

21

261

–

179

6

–

4,682

29

37,788

39,069 

17,924 

21,647

22,143 

23,060 

14,205 

14,122 

19,561

20,256

6

–

4

–

–

7

–

6

–

–

13,288

26,446

64

745

60

734

Europe 

North America 

Asia / Pacific 

Latin America / 
Africa / Middle East 

Reconciliation 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

[Table 4.7]

Total 

2014 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

15,086

+ 2.5%

+ 3.1%

16,649

+ 1.7%

+ 2.3%

8,828

567

3,965

15,806 

+ 4.8% 

+ 5.9% 

17,531 

+ 5.3% 

+ 6.3% 

9,178 

329 

3,571 

9,680 

+ 1.1% 

+ 4.2% 

9,556 

+ 0.9% 

+ 4.2% 

3,285 

102 

83 

10,248

+ 5.9%

+ 7.3%

10,081

+ 5.5%

+ 6.9%

3,397

147

829

27,359

29,378 

11,178 

23,856

1,136

1,758

19,756

2,209

53,274

1,289 

1,798 

32,120 

2,444 

55,207 

531 

672 

5,444 

968 

641

667

12,298

876

15,196 

16,317

8,623 

– 1.6% 

+ 6.9% 

8,442 

– 0.4% 

+ 8.3% 

642 

85 

612 

9,119 

6,768 

7,066 

+ 5.8% 

+ 1.3% 

+ 4.4% 

+ 8.8% 

+ 10.2% 

+ 12.8% 

8,872 

5,510 

5,755 

+ 5.1% 

+ 1.6% 

+ 4.4% 

+ 8.2% 

+ 12.6% 

+ 14.7% 

725 

70 

592 

607 

133 

753 

551 

170 

939 

6,694 

8,540 

4,490 

5,479 

363 

373 

2,937 

178 

403 

381 

3,436 

195 

125 

89 

1,183 

51 

157 

84 

1,473 

59 

27,684 

30,436 

16,212 

16,928 

–

–

–

–

–

–

–

–

–

–

–

–

(13,362)

(13,851)

–

(479)

1,596

–

4

1,193

–

–

–

(425)

2,981

–

6

689

–

–

40,157

+ 1.0%

+ 5.4%

40,157

+ 1.0%

+ 5.4%

–

887

4,934

51,317

2,155

2,896

30,513

3,406

42,239

+ 5.2%

+ 8.0%

42,239

+ 5.2%

+ 8.0%

–

716

5,506

70,234

2,490

2,936

50,016

3,574

112,366

118,888

 
 
 
 
 
   
  
 
 
 
 
 
 
 
 
 
 
   
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      
 
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
  
   
 
 
 
 
 
 
 
 
236 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

2. General information 

The consolidated financial statements of the Bayer Group as of December 31, 2014, were prepared by Bayer 
Aktiengesellschaft (Bayer AG) according to the International Financial Reporting Standards (ifrs) issued by the 
International Accounting Standards Board (iasb), London, and the interpretations of the ifrs Interpretations 
Committee (ifrs ic), both as endorsed by the European Union and in effect at the end of the reporting period. The 
applicable further requirements of Section 315a of the German Commercial Code were also taken into account. 

Bayer AG is a global enterprise based in Germany. Its registered office is at Kaiser-Wilhelm-Allee 1, 51368 
Leverkusen. Its material business activities in the fields of health care, agriculture and high-tech polymer materials 
take place in HealthCare, CropScience and MaterialScience. The activities of the various segments are outlined in 
note [5]. 

A declaration concerning the German Corporate Governance Code has been issued pursuant to Section 161 of the 
German Stock Corporation Act and made available to stockholders. 

The Board of Management of Bayer AG prepared the consolidated financial statements of the Bayer Group on 
February 13, 2015. They were discussed by the Audit Committee of the Supervisory Board of Bayer AG at its meet-
ing on February 24, 2015, and approved by the Supervisory Board at its plenary meeting on February 25, 2015. 

In the income statement and statement of comprehensive income, statement of financial position, statement of cash 
flows and statement of changes in equity, certain items are combined for the sake of clarity. These are explained  
in the Notes. The income statement is prepared using the cost-of-sales method. Assets and liabilities are classified 
by maturity. They are regarded as current if they mature within one year or within the normal business cycle of  
the company or the Group, or are held for sale. The normal business cycle is defined for this purpose as beginning 
with the procurement of the resources necessary for the production process and ending with the receipt of cash or 
cash equivalents as consideration for the sale of the goods or services produced in that process. Inventories and 
trade accounts receivable and payable are always presented as current items. Deferred tax assets and liabilities and 
pension provisions are always presented as noncurrent items. 

The consolidated financial statements of the Bayer Group are drawn up in euros. Amounts are stated in millions of 
euros (€ million) except where otherwise indicated. 

The financial statements of the individual consolidated companies are prepared as of the closing date of the Group 
financial statements. 

3. Effects of new financial reporting standards 

FINANCIAL REPORTING STANDARDS APPLIED FOR THE FIRST TIME IN 2014 
The first-time application of the following amended financial reporting standards had no impact, or no material 
impact, on the presentation of the Group financial position or results of operations, or on earnings per share.  

In December 2011, the iasb issued amendments to ias 32 (Financial Instruments: Presentation) entitled “Offsetting 
Financial Assets and Financial Liabilities.” The amendments clarify the meaning of “right of set-off in all circum-
stances” and “simultaneous settlement.” 

In October 2012, the iasb issued amendments to ifrs 10 (Consolidated Financial Statements), ifrs 12 (Disclosure 
of Interests in Other Entities) and ias 27 (Separate Financial Statements) entitled “Investment Entities.” The 
amendments exempt investment entities from the requirement to consolidate certain subsidiaries according to 
ifrs 10. Instead, they must recognize them at fair value through profit or loss. ifrs 12 introduces additional  
disclosure requirements for investment entities.  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

237

In May 2013, the ifrs ic issued the interpretation ifric 21 (Levies). The interpretation covers the accounting for 
government-imposed levies with the exception of income taxes covered by ias 12 (Income Taxes). It also provides 
guidance on when to recognize a liability for a levy. In terms of the ifrs, the interpretation is effective for annual 
periods beginning on or after January 1, 2014. For companies in the European Union, application of the interpreta-
tion is mandatory for annual periods beginning on or after June 17, 2014. The interpretation was early applied as  
of January 1, 2014. 

In November 2013, the iasb published narrow-scope amendments to ias 19 (Employee Benefits) under the title 
“Defined Benefit Plans: Employee Contributions.” These amendments address the accounting for contributions 
from employees or third parties to defined benefit pension plans according to whether the contributions are linked 
to service. Under certain conditions, such contributions may be accounted for as a reduction in current service cost 
in the period in which the related service was rendered. The amendments are to be applied for annual periods 
beginning on or after July 1, 2014. Earlier application is permitted. The amendments were early applied. 

PUBLISHED FINANCIAL REPORTING STANDARDS THAT HAVE NOT YET BEEN APPLIED 
The iasb and the ifrs Interpretations Committee have issued the following standards, amendments to standards, 
and interpretations whose application was not yet mandatory for the 2014 fiscal year and is conditional upon their 
endorsement by the European Union. 

In November 2009, the iasb issued ifrs 9 (Financial Instruments), containing rules for the classification and meas-
urement of financial assets. In October 2010, it issued new requirements for the classification and measurement of 
financial liabilities, incorporating them into ifrs 9. The new standard defines two instead of four measurement 
categories for financial assets, with classification to be based partly on the company’s business model and partly on 
the characteristics of the contractual cash flows from the respective financial asset. In the case of equity invest-
ments that are not held for trading, an entity may irrevocably opt at initial recognition to recognize future changes 
in their fair value outside profit or loss in the statement of comprehensive income. In November 2013, the iasb 
issued further amendments under the title “Hedge Accounting and amendments to ifrs 9, ifrs 7 and ias 39.” The 
focus of the amendments is on a thorough revision of hedge accounting rules with the aim of more appropriately 
reflecting risk management activities in the financial statements. This involves additional disclosures in the notes. 
In July 2014, the iasb published the new rules for the disclosure of financial instrument impairments. This new 
impairment model is based on the principle of accounting for expected losses. ifrs 9 is to be applied for annual 
periods beginning on or after January 1, 2018. The standard has not yet been endorsed by the European Union. 
The Bayer Group is currently evaluating the impact the standard will have on the presentation of its financial posi-
tion and results of operations.  

In December 2013, the iasb published the fifth and sixth sets of “Annual Improvements to ifrss.” The amendments 
address details of the recognition, measurement and disclosure of business transactions and serve to standardize 
terminology. They consist mainly of editorial changes to existing standards. They are to be applied for annual  
periods beginning on or after July 1, 2014. Early application is permitted. The Bayer Group is currently evaluating 
the impact the changes will have on the presentation of its financial position and results of operations. 

In January 2014, the iasb issued ifrs 14 (Regulatory Deferral Accounts). This standard addresses the accounting 
for regulatory deferral account balances by first-time adopters of the ifrs and therefore does not apply to entities 
that already prepare their financial statements according to the ifrs. ifrs 14 is to be applied for annual periods 
beginning on or after January 1, 2016. The standard has not yet been endorsed by the European Union. ifrs 14 will 
have no impact on the presentation of the Group’s financial position or results of operations. 

In May 2014, the iasb published amendments to ias 16 (Property, Plant and Equipment) and ias 38 (Intangible 
Assets) entitled "Clarification of Acceptable Methods of Depreciation and Amortisation." These amendments clarify 
that revenue-based depreciation of property, plant and equipment or amortization of intangible assets is inappro-
priate. The amendments are to be applied for annual periods beginning on or after January 1, 2016. Earlier applica-
tion is permitted. First-time application must take place prospectively. The amendments have not yet been en-
dorsed by the European Union. The Bayer Group is currently evaluating the impact the changes will have on the 
presentation of its financial position and results of operations. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
238 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

In May 2014, the iasb published amendments to ifrs 11 (Joint Arrangements) entitled “Accounting for Acquisitions 
of Interests in Joint Operations.” The amendments clarify the accounting for the acquisition of an interest in a joint 
operation in which the activity constitutes a business. They are to be applied prospectively for annual periods be-
ginning on or after January 1, 2016. Earlier application is permitted. The amendments have not yet been endorsed 
by the European Union. The Bayer Group is currently evaluating the impact the changes will have on the presenta-
tion of its financial position and results of operations. 

In May 2014, the iasb issued ifrs 15 (Revenue from Contracts with Customers). ifrs 15 is the new standard for 
revenue recognition. It clarifies that the expected consideration for goods or services must be recognized as reve-
nue when the goods are transferred or the services are rendered to the customer. This principle is applied in five 
steps. In step 1, the contract with the customer is identified. In step 2, the distinct performance obligations in the 
contract are identified. In step 3, the transaction price is determined. In step 4, this transaction price is allocated to 
the distinct performance obligations. Finally, in step 5, revenue is recognized when the identified distinct perfor-
mance obligations are satisfied, either over time or at a point in time. ifrs 15 replaces ias 11 (Construction Con-
tracts), ias 18 (Revenue), ifric 13 (Customer Loyalty Programmes), ifric 15 (Agreements for the Construction of 
Real Estate), ifric 18 (Transfers of Assets from Customers) and sic-31 (Revenue-Barter Transactions Involving 
Advertising Services). The new standard is to be applied for annual periods beginning on or after January 1, 2017. 
Earlier application is permitted. First-time application must take place retrospectively (modified). The standard has 
not yet been endorsed by the European Union. The Bayer Group is currently evaluating the impact the standard 
will have on the presentation of its financial position and results of operations. 

In June 2014, the iasb issued amendments to ias 16 (Property, Plant and Equipment) and ias 41 (Agriculture) enti-
tled “Agriculture: Bearer Plants.” The amendments clarify that plants used solely to grow agricultural produce are 
to be accounted for according to ias 16 (Property, Plant and Equipment). The amendments are to be applied for 
annual periods beginning on or after January 1, 2016. Earlier application is permitted. The amendments have not 
yet been endorsed by the European Union. The changes are not expected to have a material impact on the presen-
tation of the Group’s financial position or results of operations. 

In September 2014, the iasb published the seventh set of “Annual Improvements to ifrss.” The amendments ad-
dress details of the recognition, measurement and disclosure of business transactions and serve to standardize 
terminology. They consist mainly of editorial changes to existing standards. They are applicable for annual periods 
beginning on or after July 1, 2016. Earlier application is permitted. The amendments have not yet been endorsed 
by the European Union. The changes are not expected to have a material impact on the presentation of the Group’s 
financial position or results of operations. 

In September 2014, the iasb published amendments to ifrs 10 (Consolidated Financial Statements) and ias 28 
(Investments in Associates and Joint Ventures) entitled “Sale or Contribution of Assets between an Investor and its 
Associate or Joint Venture.” The amendments clarify that in a transaction involving an associate or joint venture the 
extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business. The 
amendments are to be applied for annual periods beginning on or after January 1, 2016. Earlier application is per-
mitted. The amendments have not yet been endorsed by the European Union. The Bayer Group is currently evalu-
ating the impact the changes will have on the presentation of its financial position and results of operations. 

In December 2014, further amendments were issued to ifrs 10 (Consolidated Financial Statements), ifrs 12  
(Disclosure of Interests in Other Entities) and ias 28 (Investments in Associates and Joint Ventures) under the title 
“Investment Entities: Applying the Consolidation Exception.” The amendments largely clarify which subsidiaries an 
investment entity must consolidate and which must be recognized at fair value through profit or loss. The amend-
ments are to be applied for annual periods beginning on or after January 1, 2016. Earlier application is permitted. 
The amendments have not yet been endorsed by the European Union. The changes are not expected to have a 
material impact on the presentation of the Group’s financial position or results of operations. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

239

CHANGES IN THE REPORTING OF FUNCTIONAL COSTS AND SPECIAL ITEMS 
To enhance the comparability and transparency of functional cost reporting, the organizational view was replaced 
in 2014 by a more function-based approach. This has the effect of reducing general administration expenses  
while increasing selling expenses and the cost of goods sold. In addition, certain special items are reflected in the 
respective functional costs rather than in other operating income or expenses so that their relationship to the  
functional costs is immediately apparent.  

The prior-year figures are restated accordingly: 

Accounting Changes: Consolidated Income Statement 2013 

Cost of goods sold 

Gross profit 

Selling expenses 

Research and development expenses 

General administration expenses 

Other operating income 

Other operating expenses 

Before 
accounting 
changes 

(19,347)

20,810

(10,080)

(3,190)

(1,883)

897

(1,620)

Accounting changes 

Functional cost 

Special items 

(69)

(69)

(159)

(4)

227

5

–

(100) 

(100) 

(73) 

(212) 

(56) 

(15) 

456 

[Table 4.8]

2013 

After 
accounting 
changes 

(19,516)

20,641

(10,312)

(3,406)

(1,712)

887

(1,164)

4. Basic principles, methods and critical accounting estimates 

The financial statements of the consolidated companies are prepared according to uniform accounting policies and 
measurement principles.  

The consolidated financial statements of the Group are based on the principle of the historical cost of acquisition, 
construction or production, with the exception of the items reflected at fair value, such as financial assets held for 
trading or available for sale, and derivatives. 

In preparing the consolidated financial statements, the management has to make certain assumptions and esti-
mates that may substantially impact the presentation of the Group’s financial position and / or results of operations. 

Such estimates, assumptions or the exercise of discretion mainly relate to the useful life of noncurrent assets, the 
discounted cash flows used for impairment testing and purchase price allocations, and the recognition of provi-
sions, including those for litigation-related expenses, pensions and other benefits, taxes, environmental compliance 
and remediation costs, sales allowances, product liability and guarantees. Essential estimates and assumptions that 
may affect reporting in the various item categories of the financial statements are described in the following sec-
tions of this note. Estimates are based on historical experience and other assumptions that are considered reason-
able under given circumstances. They are continually reviewed but may vary from the actual values. 

Changes in accounting policies or measurement principles in light of new or revised standards are applied retro-
spectively, except as otherwise provided in the respective standard. The income statement for the previous year 
and the opening statement of financial position for that year are adjusted as if the new accounting policies and / or 
measurement principles had always been applied. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
240 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

CONSOLIDATION 
The consolidated financial statements include subsidiaries, joint arrangements and associates.  

Subsidiaries are companies over which Bayer AG is currently able to exercise power by virtue of existing rights. 
Power means the ability to direct the activities that significantly influence a company’s profitability. Control is 
therefore only deemed to exist if Bayer AG is exposed, or has rights, to variable returns from its involvement with a 
company and has the ability to use its power over that company to affect the amount of that company’s returns. 
The ability to control another company generally derives from Bayer AG’s direct or indirect ownership of a majority 
of the voting rights. In the case of structured entities, however, control is based on contractual agreements. Inclu-
sion of an entity’s accounts in the consolidated financial statements begins when the Bayer Group is able to exer-
cise control over the entity and ceases when it is no longer able to do so. 

Sales revenues, income and expenses, and gains and losses arising from transactions among the consolidated 
companies, along with receivables and liabilities existing between them, are eliminated. Deferred income tax  
effects are reflected in consolidation. 

Capital consolidation is performed by offsetting the carrying amounts of subsidiaries against their underlying equi-
ty. When a majority interest in a company is acquired, its pro-rated equity at the acquisition date is measured using 
the acquisition method. Identifiable assets and liabilities (including contingent liabilities) are recognized at their 
fair values along with attributable deferred tax assets and liabilities. Any remaining difference to the purchase price 
is recognized as goodwill. The purchase prices of acquired companies domiciled outside the eurozone are translat-
ed at the exchange rates in effect at the respective dates of acquisition. 

The purchase of shares from other owners is presented as an equity transaction. The difference between the equity 
acquired from other owners and the purchase price is therefore directly offset against equity. 

Joint operations and joint ventures are based on joint arrangements. A joint arrangement is deemed to exist if the 
Bayer Group through a contractual agreement jointly controls activities managed with a third party. Joint control is 
only deemed to exist if decisions regarding the relevant activities require the unanimous consent of the parties 
sharing control. 

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights 
to the assets, and obligations for the liabilities, relating to the arrangement. The Bayer Group recognizes the share 
of assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with its rights 
and obligations.  

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to 
the net assets of the arrangement. Joint ventures are accounted for using the equity method. 

Associates over which Bayer AG exerts significant influence, generally through an ownership interest between 
20% and 50%, also are accounted for using the equity method.  

The carrying amount of a company accounted for using the equity method is adjusted annually by the change in  
its equity corresponding to Bayer’s percentage interest in the company. Differences arising upon first-time inclu-
sion using the equity method are accounted for according to full-consolidation principles. Bayer’s share of changes 
in these companies’ equities recognized in profit or loss – including impairment losses recognized on goodwill – 
are reflected in equity-method income / loss. Intercompany profits and losses for these companies were not material 
in either 2014 or 2013. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

241

Companies that do not have a material impact on the Group’s financial position or results of operations, either 
individually or in aggregate, are accounted for at cost of acquisition less any impairment losses.  

FOREIGN CURRENCY TRANSLATION 
The financial statements of the individual companies for inclusion in the consolidated financial statements are 
prepared in their respective functional currencies. A company’s functional currency is that of the economic envi-
ronment in which it primarily generates and expends cash. The majority of consolidated companies carry out their 
activities autonomously from a financial, economic and organizational point of view, and their functional currencies 
are therefore the respective local currencies. 

In the separate financial statements of the individual consolidated companies, receivables and liabilities in curren-
cies other than the respective functional currency are translated at closing rates. Related exchange differences are 
recognized in profit or loss as exchange gains or losses under other financial income and expenses. 

In the consolidated financial statements, the assets and liabilities of companies outside the eurozone at the start 
and end of the year are translated into euros at closing rates. All changes occurring during the year and all income 
and expense items and cash flows are translated into euros at average monthly rates. Equity components are trans-
lated at the historical exchange rates prevailing at the respective dates of their first-time recognition in Group 
equity.  

The exchange differences arising between the resulting amounts and those obtained by translating at closing rates 
are recognized outside profit or loss as “Exchange differences on translation of operations outside the eurozone” 
(in other comprehensive income) or “Exchange differences” (in the tables in the notes). When a company is decon-
solidated, such exchange differences are reclassified from equity to profit or loss. 

The exchange rates for major currencies against the euro varied as follows: 

Exchange Rates for Major Currencies 

[Table 4.9]

€1 / 

BRL 

CAD 

CHF 

CNY 

GBP 

JPY 

MXN 

RUB 

USD 

Brazil 

Canada 

Switzerland 

China 

United Kingdom 

Japan 

Mexico 

Russia 

United States 

Closing rate 

Average rate 

2013 

3.26

1.47

1.23

8.35

0.83

2014 

3.22

1.41

1.20

7.54

0.78

2013 

2.85 

1.37 

1.23 

8.16 

0.85 

2014 

3.12

1.47

1.21

8.17

0.81

144.72

145.23

129.20 

140.32

18.07

45.32

1.38

17.87

72.34

1.21

16.93 

42.23 

1.33 

17.65

50.25

1.33

Subsidiaries whose functional currencies have experienced a cumulative inflation rate of more than 100% over the 
past three years apply the rules of ias 29 (Financial Reporting in Hyperinflationary Economies). Gains and losses 
incurred upon adjusting the carrying amounts of non-monetary assets and liabilities for inflation are recognized in 
other operating income and expenses.  

In 2014, as in the previous year, the rules of ias 29 were relevant for Bayer s.a., Venezuela. The exchange rate used 
for translation in 2013 was the year-end rate calculated on the basis of the official exchange rate for the Venezue-
lan bolivar (vef) against the u.s. dollar (cadivi rate of vef 6.3 to the usd), converted at the respective usd / eur rate. 
Several widely differing official exchange rates against the u.s. dollar have been published for 2014. As of 2014, 
Bayer s.a., Venezuela, is included in the consolidated financial statements at the official exchange rate potentially 
applicable to future capital transfers if permission for conversion into usd is granted (sicad 1).  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
242 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Since Venezuelan exchange controls prevent direct currency conversion and it is not possible to accurately esti-
mate foreign exchange allocations, the Bayer Group is exposed to a potential devaluation loss that may adversely 
impact earnings. 

As of December 31, 2014, Bayer s.a., Venezuela, had trade accounts equivalent to €150 million payable to other 
Group companies in usd. The €59 million in exchange losses incurred in 2014 mainly resulted from the remeas-
urement of intra-Group liabilities due to the devaluation of the vef against the usd. 

NET SALES AND OTHER OPERATING INCOME 
All revenues derived from the selling of products or rendering of services or from licensing agreements are recog-
nized as sales. Other operational revenues are recognized as other operating income. Sales are recognized in profit 
or loss when the significant risks and rewards of ownership of the goods have been transferred to the customer, the 
company retains neither continuing managerial involvement to the degree usually associated with ownership nor 
effective control over the goods sold, the amount of revenue and costs incurred or to be incurred can be measured 
reliably, and it is sufficiently probable that the economic benefits associated with the transaction will flow to the 
company. 

Sales are stated net of sales taxes, other taxes and sales deductions at the fair value of the consideration received 
or to be received. Sales deductions are estimated amounts for rebates, cash discounts and product returns. They 
are deducted at the time the sales are recognized, and appropriate provisions are recorded. Sales deductions are 
estimated primarily on the basis of historical experience, specific contractual terms and future expectations of sales 
development. It is unlikely that factors other than these could materially affect sales deductions in the Bayer Group. 
Adjustments to provisions made in prior periods for rebates, cash discounts or product returns were of secondary 
importance for income before income taxes in the years under report. 

Provisions for rebates in 2014 amounted to 3.4% of total net sales (2013: 2.8%). In addition to rebates, Group 
companies offer cash discounts for prompt payment in some countries. Provisions for cash discounts as of Decem-
ber 31, 2014 and December 31, 2013 were less than 0.1% of total net sales for the respective year. 

Sales are reduced by the amount of the provisions for expected returns of defective goods or of saleable products 
that may be returned under contractual arrangements. The net sales are reduced on the date of sale or on the date 
when the amount of future returns can be reasonably estimated. Provisions for product returns in 2014 amounted 
to 0.5% of total net sales (2013: 0.3%). If future product returns cannot be reasonably estimated and are signifi-
cant to a sales transaction, the revenues and the related cost of sales are deferred until a reasonable estimate can 
be made or the right to return the goods has expired. 

Some of the Bayer Group’s revenues are generated on the basis of licensing agreements under which third parties 
have been granted rights to products and technologies. Payments received, or expected to be received, that relate 
to the sale or outlicensing of technologies or technological expertise are recognized in profit or loss as of the effec-
tive date of the respective agreement if all rights relating to the technologies and all obligations resulting from 
them have been relinquished under the contract terms. However, if rights to the technologies continue to exist or 
obligations resulting from them have yet to be fulfilled, the payments received are deferred accordingly. Upfront 
payments and similar non-refundable payments received under these agreements are recorded as other liabilities 
and recognized in profit or loss over the estimated performance period stipulated in the agreement.  

License or research and development collaboration agreements may be multiple-deliverable arrangements with 
varying consideration terms, such as upfront payments and milestone or similar payments. Such agreements there-
fore have to be assessed to determine whether the revenues allocated to individual deliverables must be recognized 
at different points in time and therefore form separate units of accounting.  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

243

To qualify as a separate unit of accounting for revenue recognition purposes, a deliverable must have value to the 
licensee on a stand-alone basis. If this is not the case, the agreement as a whole or a combination of individual 
deliverables that has value on a stand-alone basis forms a unit of accounting. 

If necessary goods have yet to be delivered or necessary services provided for a unit of accounting and such 
delivery or provision is probable, non-refundable (royalty) payments already received are recognized through profit 
or loss over the periods in which these goods are delivered or these services are provided. 

Other operating income may also arise from the exchange of intangible assets. The amount recognized is generally 
based on the fair value of the assets given up, calculated using the discounted cash flow method. If the assets given 
up are internally generated, the gain from the exchange generally equals their fair value.  

RESEARCH AND DEVELOPMENT EXPENSES 
For accounting purposes, research expenses are defined as costs incurred for current or planned investigations 
undertaken with the prospect of gaining new scientific or technical knowledge and understanding. Development 
expenses are defined as costs incurred for the application of research findings or specialist knowledge to plans or 
designs for the production, provision or development of new or substantially improved products, services or pro-
cesses, respectively, prior to the commencement of commercial production or use. 

Research and development expenses are incurred in the Bayer Group for in-house research and development  
activities as well as numerous research and development collaborations and alliances with third parties. 

Research and development expenses mainly comprise the costs for active ingredient discovery, clinical studies, 
research and development activities in the areas of application technology and engineering, field trials, regulatory 
approvals and approval extensions. 

Research costs cannot be capitalized. The conditions for capitalization of development costs are closely defined: an 
intangible asset must be recognized if, and only if, there is reasonable certainty of receiving future cash flows that 
will cover an asset’s carrying amount. Since our own development projects are often subject to regulatory approval 
procedures and other uncertainties, the conditions for the capitalization of costs incurred before receipt of approv-
als are not normally satisfied. 

In the case of research and development collaborations, a distinction is generally made between payments on con-
tract signature, upfront payments, milestone payments and cost reimbursements for work performed. If an intangible 
asset (such as the right to the use of an active ingredient) is acquired in connection with any of these payment obli-
gations, the respective payment is capitalized even if it is uncertain whether further development work will ultimately 
lead to the production of a saleable product. Reimbursements of the cost of research or development work are rec-
ognized in profit or loss.  

INCOME TAXES 
Income taxes comprise the taxes levied on taxable income in the individual countries along with changes in de-
ferred tax assets and liabilities that are recognized in profit or loss. The income taxes recognized are reflected at 
the amounts likely to be payable under the statutory regulations in force, or already enacted in relation to future 
periods, at the end of the reporting period. 

In compliance with ias 12 (Income Taxes), deferred taxes are recognized for temporary differences between the 
carrying amounts of assets and liabilities in the statement of financial position prepared according to ifrs and their 
tax bases. Deferred taxes are also recognized for consolidation measures and for tax loss carryforwards and tax 
credits that are likely to be usable. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
244 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Deferred tax assets relating to deductible temporary differences, tax credits or tax loss carryforwards are recog-
nized where it is sufficiently probable that taxable income will be available in the future to enable them to be used. 
Deferred tax liabilities are recognized on temporary differences taxable in the future. Deferred taxes are calculated 
at the rates which – on the basis of the statutory regulations in force, or already enacted in relation to future peri-
ods, as of the closing date – are expected to apply in the individual countries at the time of realization. Deferred tax 
assets and deferred tax liabilities are offset if they relate to income taxes levied by the same taxation authority and 
Bayer has a legal right to settle on a net basis. Material effects of changes in tax rates or tax law on deferred tax 
assets and liabilities are generally accounted for in the period in which the changes are enacted. Such effects are 
recognized in profit or loss except where they relate to deferred taxes that were recognized outside profit or loss, 
in which case they are recognized in other comprehensive income.  

Deferred and current taxes are recognized in profit or loss unless they relate to items recognized outside profit or 
loss in other comprehensive income, in which case they, too, are recognized in other comprehensive income.  

The probability that deferred tax assets resulting from temporary differences or loss carryforwards can be used in 
the future is the subject of forecasts by the individual consolidated companies regarding their future earnings 
situation and other parameters. 

Deferred tax liabilities are recognized on planned dividend payments by subsidiaries. Where no dividend payment 
is planned for the foreseeable future, no deferred tax liability is recognized on the difference between the propor-
tionate net assets according to ifrs and the tax base of the investment in the subsidiary. 

GOODWILL 
In a business combination, goodwill is capitalized at the acquisition date. It is measured at its cost of acquisition, 
which is the excess of the acquisition price for shares in a company over the acquired net assets. The net assets are 
the balance of the fair values of the acquired identifiable assets and the assumed liabilities and contingent liabili-
ties. 

Goodwill is not amortized, but tested annually for impairment. Details of the annual impairment tests are given 
under “Procedure used in global impairment testing and its impact.” Once an impairment loss has been recognized 
on goodwill, it is not reversed in subsequent periods. 

OTHER INTANGIBLE ASSETS 
An “other intangible asset” is an identifiable non-monetary asset without physical substance, other than goodwill 
(such as a patent, a trademark or a marketing right). It is capitalized if the future economic benefits attributable to 
the asset will probably flow to the company and the cost of acquisition or generation of the asset can be reliably 
measured. 

Other intangible assets are recognized at the cost of acquisition or generation. Those with a determinable useful 
life are amortized accordingly on a straight-line basis over a period of up to 30 years, except where their actual 
depletion demands a different amortization pattern. Determination of the expected useful lives of such assets and 
the amortization patterns is based on estimates of the period for which they will generate cash flows. An impair-
ment test is performed if there is an indication of possible impairment. 

Other intangible assets with an indefinite life (such as the Bayer Cross trademark) and intangible assets not yet 
available for use (such as research and development projects) are not amortized, but tested annually for impair-
ment.  

Any impairment losses are recognized in profit or loss. If the reasons for a previously recognized impairment loss 
no longer apply, the impairment loss is reversed provided that the reversal does not cause the carrying amount to 
exceed the (amortized) cost of acquisition or generation.  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

245

PROPERTY, PLANT AND EQUIPMENT 
Property, plant and equipment is carried at the cost of acquisition or construction and depreciated over its estimat-
ed useful life. An impairment loss is recognized in addition if an asset’s recoverable amount falls below its carrying 
amount. 

The cost of acquisition comprises the acquisition price plus ancillary and subsequent acquisition costs, less any 
reduction received on the acquisition price. The cost of self-constructed property, plant and equipment comprises 
the direct cost of materials, direct manufacturing expenses, and appropriate allocations of material and manufac-
turing overheads. Where an obligation exists to dismantle or remove an asset or restore a site to its former condi-
tion at the end of its useful life, the present value of the related future payments is capitalized along with the cost of 
acquisition or construction upon completion and a corresponding liability is recognized.  

If the construction phase of property, plant or equipment extends over a substantial period of time, the interest 
incurred on borrowed capital up to the date of completion is capitalized as part of the cost of acquisition or con-
struction in accordance with ias 23 (Borrowing Costs). 

Costs for regular, comprehensive maintenance work (such as the major overhaul of a technical facility) are capital-
ized as a separate component if they satisfy the recognition criteria.  

Property, plant and equipment is depreciated by the straight-line method over an asset’s useful life, except where 
depreciation based on actual depletion is more appropriate. 

The following depreciation periods are applied throughout the Group: 

Useful Life of Property, Plant and Equipment 

Buildings  

Outdoor infrastructure 

Storage tanks and pipelines 

Plant installations 

Machinery and equipment 

Furniture and fixtures 

Vehicles 

Computer equipment 

Laboratory and research facilities 

[Table 4.10]

20 to 50 years

10 to 20 years

10 to 20 years

6 to 20 years

6 to 12 years

4 to 10 years

4 to 8 years

3 to 5 years

3 to 5 years

Significant asset components with different useful lives are accounted for and depreciated separately. 

If there are indications that an individual item of property, plant and equipment may be impaired, the recoverable 
amount is compared to the carrying amount. If the recoverable amount is less than the carrying amount, an im-
pairment loss is recognized for the difference. If the reasons for a previously recognized impairment loss no longer 
apply, the impairment loss is reversed provided that the reversal does not cause the carrying amount to exceed the 
cost of acquisition or construction less depreciation. 

When assets are sold, closed down or scrapped, the difference between the net proceeds and the net carrying 
amount of the assets is recognized as a gain or loss in other operating income or expenses, respectively. 

Real estate held for investment comprises land and buildings not being used for operational or administrative pur-
poses. It is measured using the cost model. The fair value of the investment property reported in the Notes is de-
termined using the discounted cash flow method, comparisons with the current market values of similar properties, 
or reports from external experts. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
246 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

FINANCIAL ASSETS 
Financial assets comprise loans and receivables, acquired equity and debt instruments, cash and cash equivalents, 
and derivatives with positive fair values.  

They are recognized and measured in accordance with ias 39 (Financial Instruments: Recognition and Measure-
ment). Accordingly, financial assets are recognized in the consolidated financial statements if the Bayer Group has 
a contractual right to receive cash or other financial assets from another entity. Regular-way purchases and sales of 
financial assets are generally posted on the settlement date. Financial assets are initially recognized at fair value 
plus transaction costs. The transaction costs incurred for the purchase of financial assets held at fair value through 
profit or loss are expensed immediately. Interest-free or low-interest receivables are initially reflected at the present 
value of the expected future cash flows. Upon first-time recognition, each financial asset is assigned to one of the 
categories prescribed in ias 39. Subsequent measurement takes place according to the measurement rules for the 
respective category. The measurement rules for each category are set forth below: 

Financial assets held at fair value through profit or loss comprise those financial assets that are held for trading. Such 
financial assets were mainly acquired for purposes of liquidity management with the intention of reselling them 
within a short time. Receivables from forward commodity contracts and receivables from other derivatives that are 
included in other financial assets are also allocated to this category, except where hedge accounting is used. 
Changes in the fair value of financial assets in this category are recognized in profit or loss when the increase or 
decrease in fair value occurs. 

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted 
in an active market. They are accounted for at amortized cost using the effective interest method. This category 
comprises trade accounts receivable, the loans and receivables included in other financial assets, the additional 
financial receivables reflected in other receivables, and cash and cash equivalents. Interest income from items 
assigned to this category is determined using the effective interest method. 

Held-to-maturity financial assets are non-derivative financial assets, with fixed or determinable payments, that the 
Bayer Group is willing and able to hold until maturity. They are accounted for at amortized cost using the effective 
interest method. Held-to-maturity financial investments are recognized in other financial assets. 

Available-for-sale financial assets are those non-derivative financial assets that are not assigned to any of the above 
categories. They mainly include equity instruments, such as shares, and debt instruments not to be held to maturity 
that are included in other financial assets. After their first-time recognition, available-for-sale financial assets are 
measured at fair value and any unrealized gains or losses are recognized outside profit or loss in equity. These are 
only reclassified to profit or loss if the assets are sold or if there are objective indications of impairment, in which 
case the accumulated loss is recognized in profit or loss. An objective indication of impairment is a significant or 
prolonged decrease in the fair value of an equity instrument to below its acquisition cost. Previously recognized 
impairment losses are reversed if the reasons for them no longer apply. Impairment loss reversals for equity in-
struments are recognized outside profit or loss, while those for debt instruments are recognized in profit or loss. 
Where possible, a fair value for equity and debt securities is derived from market data. Financial assets for which 
no market price is available and whose fair value cannot be reasonably estimated are recognized at cost less any 
impairment losses.  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

247

If there are substantial and objective indications of a decline in the value of loans and receivables, held-to-maturity 
financial assets or available-for-sale financial assets, an impairment test is performed. Indications of possible im-
pairment include a high probability of insolvency, a significant deterioration in credit standing, a material breach of 
contract, operating losses reported by a company over several years, a reduction in market value, the financial 
restructuring of the debtor, or the disappearance of an active market for the asset. 

In the case of loans and receivables, and held-to-maturity financial assets, an impairment test is performed in 
which the carrying amount is compared to the present value of the expected future cash flows, discounted at the 
original effective interest rate. If the carrying amount exceeds the present value, an impairment loss is recognized 
for the difference between the two amounts. If the reasons for previously recognized impairment losses no longer 
apply, the impairment losses are reversed provided that this does not cause the carrying amounts to exceed the 
amortized cost of acquisition. 

Financial assets are derecognized when contractual rights to receive cash flows from the financial assets expire or 
the financial assets are transferred together with all material risks and benefits. 

INVENTORIES 
In accordance with ias 2 (Inventories), inventories encompass assets consumed in production or in the rendering 
of services (raw materials and supplies), assets in the production process for sale (work in process), goods held for 
sale in the ordinary course of business (finished goods and goods purchased for resale), and advance payments on 
inventories. Inventories are recognized at their cost of acquisition or production – calculated by the weighted-
average method – or at their net realizable value, whichever is lower. The net realizable value is the estimated 
selling price in the ordinary course of business less estimated cost to complete and selling expenses. 

CASH AND CASH EQUIVALENTS 
Cash and cash equivalents comprise cash, checks received, and balances with banks and companies. Cash equiva-
lents are highly liquid short-term financial investments that are subject to an insignificant risk of changes in value, 
are easily convertible into a known amount of cash and have a maturity of three months or less from the date of 
acquisition or investment. 

ASSETS HELD FOR SALE 
Assets held for sale comprise noncurrent assets or disposal groups (together with any liabilities), the carrying 
amounts of which will be realized principally through a highly probable sale transaction within the next twelve 
months or an already contractually agreed sale transaction, and not through continued use. At the time of their 
classification as “held for sale,” such assets are collectively measured at the lower of the carrying amount and fair 
value less costs of disposal, and depreciation or amortization ceases. 

PROVISIONS FOR PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS 
Within the Bayer Group, post-employment benefits are provided under defined contribution and / or defined benefit 
plans. In the case of defined contribution plans, the company pays contributions to publicly or privately adminis-
tered pension plans on a mandatory, contractual or voluntary basis. Once the contributions have been paid, the 
company has no further payment obligations. The regular contributions constitute expenses for the year in which 
they are due and as such are included in the functional cost items, and thus in ebit. All other post-employment 
benefit systems are defined benefit plans, which may be either unfunded, i.e. financed by provisions, or funded, i.e. 
financed through pension funds.  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
248 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

The present value of provisions for defined benefit plans and the resulting expense are calculated in accordance 
with ias 19 (Employee Benefits) by the projected unit credit method. The future benefit obligations are valued by 
actuarial methods and spread over the entire employment period on the basis of specific assumptions regarding 
beneficiary structure and the economic environment. These relate mainly to the discount rate, future salary and 
pension increases, variations in health care costs, and mortality rates. 

The discount rates used are calculated from the yields of high-quality corporate bond portfolios in specific curren-
cies with cash flows approximately equivalent to the expected disbursements from the pension plans. The uniform 
discount rate derived from this interest-rate structure is thus based on the yields, at the closing date, of a portfolio 
of “aa” rated corporate bonds whose weighted residual maturities approximately correspond to the duration nec-
essary to cover the entire benefit obligation.  

The fair value of plan assets is deducted from the present value of the defined benefit obligation for pensions and 
other post-employment benefits to determine the net defined benefit liability. The obligations and plan assets are 
valued at regular intervals of not more than three years. Comprehensive actuarial valuations for all major plans are 
performed annually as of December 31. Plan assets in excess of the benefit obligation are reflected in other receiv-
ables, subject to the asset ceiling specified in ias 19 (Employee Benefits). 

The balance of all income and expenses relating to defined benefit plans, except the net interest on the net liability, 
is recognized in ebit. The net interest is reflected in the financial result under other financial income and expenses.  

The effects of remeasurements of the net defined benefit liability are reflected in the statement of comprehensive 
income as other comprehensive income. They consist of actuarial gains and losses, the return on plan assets and 
changes in the effects of the asset ceiling, less the respective amounts included in net interest. Deferred taxes 
relating to the effects of remeasurements are also recognized in other comprehensive income. 

OTHER PROVISIONS 
Other provisions are recognized for present legal and constructive obligations arising from past events that will 
probably give rise to a future outflow of resources, provided that a reliable estimate can be made of the amount of 
the obligations. 

Other provisions are measured in accordance with ias 37 (Provisions, Contingent Liabilities and Contingent Assets) 
or, where applicable, ias 19 (Employee Benefits). Where the cash outflow to settle an obligation is expected to 
occur after one year, the provision is recognized at the present value of the expected cash outflow. Claims for re-
imbursements from third parties are separately reflected in other receivables if their realization is virtually certain.  

If the projected obligation declines as a result of a change in the estimate, the provision is reversed by the corre-
sponding amount and the resulting income recognized in the operating expense item(s) in which the original 
charge was recognized. 

To enhance the information content of the estimates, certain provisions that could have a material effect on the 
financial position or results of operations of the Group are selected and tested for their sensitivity to changes in the 
underlying parameters. To reflect uncertainty about the likelihood of the assumed events actually occurring, the 
impact of a five-percentage-point change in the probability of occurrence is examined in each case. This analysis 
has not shown other provisions to be materially sensitive. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

249

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of 
future taxable income. Given the wide range of international business relationships and the long-term nature and 
complexity of existing contractual agreements, differences arising between the actual results and the assumptions 
made, or future changes to such assumptions, could necessitate adjustments to tax income and expense in future 
periods. The Group establishes provisions for taxes, based on reasonable estimates, for liabilities to the tax au-
thorities of the respective countries that are uncertain as to their amount and the probability of their occurrence. 
The amount of such provisions is based on various factors, such as experience with previous tax audits and differ-
ing legal interpretations by the taxable entity and the responsible tax authority. 

Provisions for environmental protection are recorded if future cash outflows are likely to be necessary to ensure 
compliance with environmental regulations or to carry out remediation work, such costs can be reliably estimated 
and no future benefits are expected from such measures.  

Estimating the future costs of environmental protection and remediation involves many uncertainties, particularly 
with regard to the status of laws, regulations and the information available about conditions in the various coun-
tries and at the individual sites. Significant factors in estimating the costs include previous experiences in similar 
cases, the conclusions in expert opinions obtained regarding the Group’s environmental programs, current costs 
and new developments affecting costs, management’s interpretation of current environmental laws and regulations, 
the number and financial position of third parties that may become obligated to participate in any remediation 
costs on the basis of joint liability, and the remediation methods likely to be deployed. Changes in these assump-
tions could impact future reported results. 

Taking into consideration experience gained to date regarding environmental matters of a similar nature, provi-
sions are believed to be adequate based upon currently available information. Given the difficulties inherent in 
estimating liabilities in the businesses in which the Group operates, especially those for which the risk of environ-
mental damage is greater in relative terms (CropScience and MaterialScience), it remains possible that material 
additional costs will be incurred beyond the amounts accrued. It may transpire during remediation work that addi-
tional expenditures are necessary over an extended period and that these exceed existing provisions and cannot be 
reasonably estimated.  

Provisions for restructuring only cover expenses that arise directly from restructuring measures, are necessary for 
restructuring and are not related to future business operations. Such expenses include severance payments to 
employees and compensation payments in respect of rented property that can no longer be used. 

Restructuring measures may include the sale or termination of business units, site closures, relocations of business 
activities or fundamental reorganizations of business units.  

The respective provisions are established when a detailed restructuring plan has been drawn up, resolved upon by 
the responsible decision-making level of management and communicated to the employees and / or their represent-
atives. Provisions for restructuring are established at the present value of future disbursements. 

Trade-related provisions are recorded mainly for the granting of rebates or discounts, product returns, or obliga-
tions in respect of goods or services already received but not yet invoiced. 

As a global company with a diverse business portfolio, the Bayer Group is exposed to numerous legal risks for 
which provisions for litigations must be established under certain conditions – particularly in the areas of product 
liability, competition and antitrust law, patent disputes, tax law and environmental protection.  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
250 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Litigation and other judicial proceedings often raise complex issues and are subject to many uncertainties and 
complexities including, but not limited to, the facts and circumstances of each particular case, the jurisdiction in 
which each suit is brought and differences in applicable law. The outcomes of currently pending and future pro-
ceedings generally cannot be predicted. It is particularly difficult to assess the likely outcomes of class actions for 
damages in the United States, which may give rise to significant financial risks for the Bayer Group. As a result of a 
judgment in court proceedings, regulatory decisions or the conclusion of a settlement, the Bayer Group may incur 
charges for which no accounting measures have yet been taken for lack of reasonable estimability or which exceed 
presently established provisions and the insurance coverage. 

The Bayer Group considers the need for accounting measures in respect of pending or future litigations, and the 
extent of any such measures, on the basis of the information available to its legal department and in close consulta-
tion with legal counsel acting for the Bayer Group.  

Where it is more likely than not that such a litigation will result in an outflow of resources that is already reasonably 
estimable, a provision for litigation is recorded in the amount of the present value of the expected cash outflows. 
Such provisions cover the estimated payments to the plaintiffs, court and procedural costs, attorney costs and the 
cost of potential settlements.  

It is frequently impossible to reliably determine the existence of a present obligation or reasonably estimate the 
probability that a potential outflow of resources will result from a pending or future litigation. The status of the 
material “legal risks” is described in note [32]. Due to the special nature of these litigations, provisions generally 
are not established until initial settlements allow an estimate of potential amounts or judgments have been issued. 
Provisions for legal defense costs are established if it is probable that material costs will have to be incurred for 
external legal counsel to defend the company’s legal position.  

Internal and external legal counsel evaluate the current status of the Bayer Group’s material legal risks at the end 
of each reporting period. The need to establish or adjust a provision and the amount of the provision or adjustment 
are determined on this basis. Adjusting events are reflected up to the date of preparation of the consolidated finan-
cial statements. The measurement of provisions in the case of class actions or mass compensation claims is mainly 
based on any settlements reached during the past year and on pending or anticipated future claims. 

Personnel-related provisions are mainly those recorded for annual bonus payments, variable one-time payments, 
individual performance awards, long-service awards, severance payments in connection with early retirement 
arrangements, surpluses on long-term accounts and other personnel costs. Obligations under stock-based compen-
sation programs that provide for awards payable in cash are also included here. 

FINANCIAL LIABILITIES 
Financial liabilities comprise primary financial liabilities and negative fair values of derivatives.  

Primary financial liabilities are initially recognized in the consolidated financial statements at fair value if the Bayer 
Group has a contractual obligation to transfer cash or other financial assets to another party. In subsequent peri-
ods, such liabilities are measured at amortized cost using the effective interest method.  

Financial liabilities are derecognized when the contractual obligation is discharged or canceled, or has expired. 

OTHER RECEIVABLES AND LIABILITIES 
Accrued items and other non-financial assets and liabilities are carried at amortized cost. They are amortized to 
income by the straight-line method or according to performance of the underlying transaction. 

Grants and subsidies from third parties that serve to promote investment are reflected in the statement of financial 
position under other liabilities and amortized to income over the useful lives of the respective investments. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

251

DERIVATIVES 
The Bayer Group uses derivatives – such as forward exchange contracts and interest-rate swaps – to mitigate the 
risk of changes in exchange rates, interest rates and commodity prices. Derivatives are recognized at the trade 
date.  

Contracts concluded in order to receive or deliver non-financial goods for the company’s own purposes are not 
accounted for as derivatives but treated as pending transactions. Where embedded derivatives are identified that 
are required to be separated from the pending transactions, they are accounted for separately. To take advantage of 
market opportunities or cover possible peak demand, a non-material volume of transactions may be entered into 
for which the possibility of immediate resale cannot be excluded. Such transactions are allocated to separate port-
folios upon acquisition and accounted for as derivatives according to ias 39.  

Derivatives are carried at fair value. Positive fair values at the end of the reporting period are reflected in financial 
assets, negative fair values in financial liabilities. Changes in the fair values of these derivatives are recognized 
directly in profit or loss except where hedge accounting is used. Changes in the fair values of forward exchange 
contracts and currency options serving as hedges of items in the statement of financial position are reflected in 
other financial income and expenses as exchange gains or losses, while changes in the values of interest-rate 
swaps and interest-rate options are recognized in interest income or expense. Changes in the fair values of com-
modity futures and options, and of forward exchange contracts used to hedge forecasted transactions in foreign 
currencies, are recognized in other operating income or expenses. 

Changes in the fair values of derivatives designated as fair-value hedges and the adjustments in the carrying 
amounts of the underlying transactions are recognized in profit or loss.  

Changes in the fair values of the effective portion of derivatives designated as cash flow hedges are initially recog-
nized outside profit or loss in accumulated other comprehensive income. They are reclassified to profit or loss 
when the underlying transaction is realized. If such a derivative is sold or ceases to qualify for hedge accounting, 
the change in its value continues to be recognized in accumulated other comprehensive income until the forecasted 
transaction is realized. If the forecasted transaction is no longer probable, the amount previously recognized in 
accumulated other comprehensive income has to be reclassified to profit or loss. The ineffective portion of gains or 
losses on derivatives designated as cash flow hedges is recognized either in other operating income or expenses or 
in the financial result, depending on the type of underlying transaction. 

The income and expense reflected in the financial result pertaining to the derivatives and the underlying transac-
tions are shown separately. Income and expense are not offset. 

LEASING 
A lease is an agreement whereby the lessor assigns to the lessee the right to use an asset for an agreed period of 
time in return for a payment or series of payments. Leases are classified as either finance or operating leases. 
Leasing transactions that transfer substantially all the risks and rewards incidental to ownership of the leased asset 
to the lessee are treated as finance leases. All other leasing agreements are classified as operating leases. Whether 
an agreement constitutes a lease or contains a lease is determined upon inception of the lease. 

Where the Bayer Group is the lessee in a finance lease, the leased asset is capitalized at the lower of the fair value 
of the asset and the present value of the minimum lease payments at the beginning of the lease term and simulta-
neously recognized under financial liabilities. The minimum lease payments are divided into the principal portion 
of the remaining obligation and the financing costs, which are determined using the effective-interest method. The 
leased asset is depreciated by the straight-line method over the shorter of its estimated useful life or the lease term. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
252 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Where the Bayer Group is the lessee in an operating lease, the lease payments are expensed. Where it is the lessor, 
the lease payments received are recognized in profit or loss. The leased asset continues to be recognized under 
property, plant and equipment in the Bayer Group’s statement of financial position. 

ACQUISITION ACCOUNTING 
Acquired businesses are accounted for using the acquisition method, which requires that the assets acquired and 
liabilities assumed be recorded at their respective fair values on the date Bayer obtains control. Ancillary acquisi-
tion costs are recognized as expenses in the periods in which they occur.  

The application of the acquisition method requires certain estimates and assumptions to be made, especially con-
cerning the fair values of the acquired intangible assets, property, plant and equipment and the liabilities assumed 
at the acquisition date, and the useful lives of the acquired intangible assets, property, plant and equipment.  

Measurement is based to a large extent on anticipated cash flows. If actual cash flows vary from those used in 
calculating fair values, this may materially affect the Group’s future results of operations. In particular, the estima-
tion of discounted cash flows from intangible assets under development, patented and non-patented technologies 
and brands is based on assumptions concerning, for example: 

•  the outcomes of research and development activities regarding compound efficacy, results of clinical trials, etc., 
•  the probability of obtaining regulatory approvals in individual countries, 
•  long-term sales trends,  
•  possible selling price erosion due to generic competition in the market following patent expirations, 
•  the behavior of competitors (launch of competing products, marketing initiatives, etc.). 

For significant acquisitions, the purchase price allocation is carried out with assistance from independent third-
party valuation specialists. The valuations are based on the information available at the acquisition date. 

In step acquisitions, the fair values of the acquired entity’s assets and liabilities are measured in accordance with 
ifrs 3 (Business Combinations) at the date on which control is obtained. Any resulting adjustments to the fair value 
of the existing interest are recognized in profit or loss. The carrying amount of the assets and liabilities already 
recognized in the statement of financial position is then adjusted accordingly. 

PROCEDURE USED IN GLOBAL IMPAIRMENT TESTING AND ITS IMPACT 
Impairment tests are performed not only on individual items of intangible assets, property, plant and equipment, 
but also at the level of cash-generating units or groups of cash-generating units. A cash-generating unit is the 
smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows 
from other assets or groups of assets. The Bayer Group regards its strategic business entities or groups of strategic 
business entities, as well as certain product families, as cash-generating units and subjects them to global impair-
ment testing. The strategic business entities constitute the second financial reporting level below the segments. 

Cash-generating units and unit groups are globally tested if there is an indication of possible impairment. Those to 
which goodwill is allocated are tested at least annually. 

Impairment testing involves comparing the carrying amount of each cash-generating unit, unit group or item of 
intangible assets, property, plant or equipment to the recoverable amount, which is the higher of its fair value less 
costs of disposal or value in use. If the carrying amount exceeds the recoverable amount, an impairment loss 
must be recognized for the difference. If a strategic business entity or entity group is found to be impaired, an 
impairment loss is first recognized on any goodwill allocated to it. Any remaining part of the impairment loss is 
then allocated among the other assets of the strategic business entity or entity group in proportion to their carry-
ing amounts. The resulting expense is reflected in the functional item of the income statement in which the de-
preciation or amortization of the respective assets is recognized. The same applies to income from impairment 
loss reversals. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

253

The recoverable amount is generally determined on the basis of the fair value less costs of disposal, taking into 
account the present value of the future net cash flows as market prices for the individual units are not normally 
available. These are forecasted on the basis of the Bayer Group’s current planning, the planning horizon normally 
being three to five years. Forecasting involves making assumptions, especially regarding future selling prices, sales 
volumes and costs. Where the recoverable amount is the fair value less costs of disposal, the cash-generating unit 
or unit group is measured from the viewpoint of an independent market participant. Where the recoverable amount 
is the value in use, the cash-generating unit, unit group or individual asset is measured as currently used. In either 
case, net cash flows beyond the planning period are determined on the basis of long-term business expectations 
using the respective individual growth rates derived from market information. The measurement of fair value less 
costs of disposal is based on unobservable inputs (Level 3). 

The net cash inflows are discounted at a rate equivalent to the weighted average cost of equity and debt capital. To 
allow for the different risk and return profiles of the Bayer Group’s principal businesses, the after-tax cost of capital 
is calculated separately for each subgroup and a subgroup-specific capital structure is defined by benchmarking 
against comparable companies in the same industry sector. The cost of equity corresponds to the return expected 
by stockholders, while the cost of debt is based on the conditions on which comparable companies can obtain long-
term financing. Both components are derived from capital market information. 

The growth rates applied for impairment testing in 2014 and 2013 and the capital cost factors used to discount the 
expected cash flows are shown in the following table: 

Impairment Testing Parameters 

Pharmaceuticals 

Consumer Care 

Diabetes Care 

Radiology & Interventional 

Animal Health 

Crop Protection 

Seeds 

Environmental Science 

Diphenylmethane Diisocyanate (MDI) 

Polyether (PET) 

Polycarbonates (PCS) 

Base & Modified Isocyanates (BMI) 

Resins (RES) 

Specialty Films (SF) 

[Table 4.11]

Growth rate 

After-tax cost of capital 

2013 

% 

2014 

% 

0.0

0.0

0.0

0.0

0.0

2.0

2.8

1.3

1.0

0.0

1.0

1.5

1.5

0.5

0.0

0.0

0.0

0.0

0.0

2.0

2.8

1.3

1.5

0.0

1.5

2.0

2.0

1.0

2013 

% 

6.5 

6.5 

6.5 

6.5 

6.5 

7.3 

7.3 

7.3 

7.4 

7.4 

7.4 

7.4 

7.4 

7.4 

2014 

% 

6.5

6.5

6.5

6.5

6.5

6.7

6.7

6.7

6.0

6.0

6.0

6.0

6.0

6.0

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
  
  
 
 
 
  
  
  
  
  
  
 
  
254 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

No impairment losses were recognized on goodwill on the basis of the global annual impairment testing of the 
cash-generating units and unit groups in 2014 or 2013. Impairment losses of €6 million were recognized on good-
will in 2014 due to divestitures (2013: €0 million). Taking into account impairment loss reversals of €2 million 
(2013: €13 million), net impairment losses on goodwill, other intangible assets, property, plant and equipment 
amounted to €223 million (2013: €285 million). Details are provided in notes [17] and [18]. 

Although the estimates of the useful lives of certain assets, assumptions concerning the macroeconomic environ-
ment and developments in the industries in which the Bayer Group operates, and estimates of the discounted fu-
ture cash flows are believed to be appropriate, changes in assumptions or circumstances could require changes in 
the analysis. This could lead to additional impairment losses in the future or – except in the case of goodwill – to 
reversals of previously recognized impairment losses if developments are contrary to expectations. 

The sensitivity analysis for cash-generating units and unit groups to which goodwill is allocated was based on a 
10% reduction in future cash flows, a 10% increase in the weighted average cost of capital or a one-percentage-
point reduction in the long-term growth rate. Bayer concluded that no impairment loss would need to be recog-
nized on goodwill in any cash-generating unit or unit group under these conditions. 

5. Segment reporting 

At Bayer the Board of Management, as the chief operating decision maker, allocates resources to the operating 
segments and assesses their performance. The reportable segments and regions are identified, and the disclosures 
selected, in line with the internal financial reporting system (management approach) and based on the Group 
accounting policies outlined in note [4]. 

As of December 31, 2014, the Bayer Group comprised three subgroups, with operations subdivided into strategic 
business entities known as divisions (HealthCare), business groups (CropScience) or business units (Material-
Science). Their activities are aggregated into four reportable segments according to economic characteristics, 
products, production processes, customer relationships, methods of distribution and regulatory environment.  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

255

The segments’ activities are as follows: 

Activities of the Segments 

[Table 4.12]

Subgroup / Segment 

Activities 

HealthCare 

Pharmaceuticals 

Consumer Health 

CropScience 

CropScience 

MaterialScience 

MaterialScience 

Development, production and marketing of prescription pharmaceuticals, such as 
anticoagulants, treatments for hemophilia, multiple sclerosis, cancer, eye diseases, pulmonary 
hypertension, high blood pressure and infectious diseases; and contraceptives 

Development, production and marketing of over-the-counter medications, dermatology 
products, nutritional supplements, veterinary medicines and grooming products for animals; 
diagnostic systems such as blood glucose meters, medical products such as injection systems 
and contrast media for diagnostic procedures 

Development, production and marketing of a comprehensive product portfolio in the areas of 
seeds and plant traits, crop protection, and for gardens, the green industry and non-agricultural 
pest control 

Development, production and marketing of high-tech polymer materials in the areas of 
polyurethanes, polycarbonates, coating and adhesive raw materials and specialty chemicals; 
production and marketing of selected inorganic basic chemicals 

Business activities that cannot be allocated to any other segment are reported under “All other segments.” These 
include primarily the services provided by the service areas: Business Services, Technology Services and Currenta. 

Holding companies’ activities, the elimination of intersegment sales, and higher or lower expenses for Group-wide 
long-term stock-based compensation arising from fluctuations in the performance of Bayer stock are presented in 
our segment reporting as “Corporate Center and Consolidation.” 

The reconciliation in the table “Key Data by Region” eliminates interregional items and transactions and reflects 
income, expenses, assets and liabilities not allocable to geographical areas, particularly those relating to the Corpo-
rate Center.  

The segment data are calculated as follows: 

•  The intersegment sales reflect intra-Group transactions effected at transfer prices fixed on an arm’s-length 

basis. 

•  Although ebit before special items and ebitda before special items are not defined in the International Financial 
Reporting Standards, they represent key performance indicators for the Bayer Group. The special items com-
prise effects that are non-recurring or do not regularly recur or attain similar magnitudes. ebitda is the ebit as 
reported in the income statement plus amortization and impairment losses on intangible assets and depreciation 
and impairment losses on property, plant and equipment, minus impairment loss reversals. 

•  The gross cash flow comprises income after taxes, plus income taxes, plus financial result, minus income taxes 
paid or accrued, plus depreciation, amortization and impairment losses, minus impairment loss reversals,  
plus / minus changes in pension provisions, minus gains / plus losses on retirements of noncurrent assets, minus 
gains from the remeasurement of already held assets in step acquisitions. The change in pension provisions in-
cludes the elimination of non-cash components of ebit. It also contains benefit payments during the year. 
•  The net cash flow is the cash flow from operating activities as defined in ias 7 (Statement of Cash Flows). 
•  The capital invested and the segment assets include all assets serving the respective segment that are required 
to yield a return on their cost of acquisition. Segment assets include, in addition, assets held for sale where the 
return is covered by the sale proceeds. Similarly, the segment liabilities include the liabilities directly related to 
assets held for sale. Also included in the capital invested and in segment assets are material participating inter-
ests of direct relevance to business operations. Intangible assets and property, plant and equipment are included 
in the capital invested at cost of acquisition, generation or construction throughout their useful lives. Interest-
free liabilities are deducted from the capital invested, which is stated as of December 31.  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
  
256 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

•  The cfroi – a measure of the return on the capital employed – is the difference between the gross cash flow and 

the cost of reproducing depletable assets, divided by the average capital invested for the year. 

•  The equity items reflect the earnings and carrying amounts of companies accounted for using the equity method. 
•  Since the financial management of Group companies is carried out centrally by Bayer AG, financial liabilities are 
not directly allocated among the segments. Consequently, the liabilities shown for the individual segments do 
not include financial liabilities. These are included in the reconciliation. 

•  The number of employees on either permanent or fixed-term contracts is stated in full-time equivalents (fte), 

with part-time employees included on a pro-rated basis in line with their contractual working hours. The figures 
do not include apprentices.  

RECONCILIATIONS 
The reconciliations of ebitda before special items, ebit before special items and ebit to Group income before in-
come taxes and of the assets and liabilities of the segments to the assets and liabilities, respectively, of the Group 
are given in the following tables: 

Reconciliation of Segments’ EBITDA Before Special Items to Group Income Before Income Taxes  

[Table 4.13]

EBITDA before special items of segments 

EBITDA before special items of Corporate Center 

EBITDA before special items  

2013 

2014 

€ million 

€ million 

8,876 

(475) 

8,401 

9,231

(419)

8,812

Depreciation, amortization and impairment losses / loss reversals before special items of segments 

(2,624) 

(2,862)

Depreciation, amortization and impairment losses / loss reversals before special items of Corporate Center 

(4) 

(6)

Depreciation, amortization and impairment losses / loss reversals before special items 

(2,628) 

(2,868)

EBIT before special items of segments 

EBIT before special items of Corporate Center 

EBIT before special items  

Special items of segments 

Special items of Corporate Center 

Special items 

EBIT of segments 

EBIT of Corporate Center 

EBIT 

Financial result 

Income before income taxes  

6,252 

(479) 

5,773 

(839) 

– 

(839) 

5,413 

(479) 

4,934 

(727) 

4,207 

6,369

(425)

5,944

(438)

–

(438)

5,931

(425)

5,506

(981)

4,525

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

257

Reconciliation of Segments’ Assets to Group Assets 

Assets of the operating segments 

Corporate Center assets  

Non-allocated assets 

Group assets 

Reconciliation of Segments’ Liabilities to Group Liabilities 

Liabilities of the operating segments 

Corporate Center liabilities 

Non-allocated liabilities 

Group liabilities 

[Table 4.14]

2013 

2014 

€ million 

€ million 

46,336 

63,861

179 

4,802 

195

6,178

51,317 

70,234

[Table 4.15]

2013 

2014 

€ million 

€ million 

17,225 

2,842 

10,446 

30,513 

23,570

3,409

23,037

50,016

The reconciliation of segment sales to Group sales is apparent from the table of key data by segment in note [1]. 

INFORMATION ON GEOGRAPHICAL AREAS 
The following table provides a regional breakdown of external sales by market and of intangible assets, property, 
plant and equipment: 

Information about Geographical Areas 

Germany 

United States 

China 

Other 

Total 

Net sales (external) 
– by market 

[Table 4.16]

Intangible assets and 
property, plant and 
equipment 

2013 

2014 

2013 

2014 

€ million 

€ million 

€ million 

€ million 

4,862

8,351

3,305

23,639

40,157

4,981

8,908

3,625

24,725

42,239

12,806 

6,836 

2,349 

6,800 

12,403

18,307

3,102

9,437

28,791 

43,249

INFORMATION ON MAJOR CUSTOMERS 
Revenues from transactions with a single customer in no case exceeded 10% of Bayer Group sales in 2014  
or 2013. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
258 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

6. Scope of consolidation; subsidiaries and affiliates 

6.1 Changes in the scope of consolidation 

Changes in the scope of consolidation in 2014 were as follows: 

Change in Number of Consolidated Companies 

[Table 4.17]

Bayer AG and consolidated companies 

December 31, 2013 

Changes in scope of consolidation 

Additions 

Retirements 

December 31, 2014 

Germany 

Other countries 

Total 

65

1

1

–

67

224 

5 

20 

(14) 

235 

289

6

21

(14)

302

The increase in the number of consolidated companies in 2014 was primarily due to acquisitions. Derecognitions 
were primarily due to mergers among Group companies. 

The Bayer Group holds 100% of the voting rights in the fully consolidated subsidiary Bayer Pearl Polyurethane 
Systems llc, United Arab Emirates, pursuant to a contractual agreement with the non-controlling stockholders. 

Pure Salt Baytown llc, United States, is fully consolidated as a structured entity. The Bayer Group guarantees the 
liabilities of Pure Salt Baytown llc to banks. These liabilities, which are reflected in full in the consolidated state-
ment of financial position, amounted to €20 million as of December 31, 2014 (2013: €22 million).  

The above table includes the joint operation Lyondell Bayer Manufacturing Maasvlakte vof, Netherlands, as of 
December 31, 2014 (2013: two joint operations). Pursuant to ifrs 11, Bayer’s shares of these companies’ assets, 
liabilities, revenues and expenses are included in the consolidated financial statements in accordance with Bayer’s 
rights and obligations. The main purpose of Lyondell Bayer Manufacturing Maasvlakte vof is the joint production 
of propylene oxide (po) for Bayer and its partner Lyondell. 

Three (2013: two) associates and three (2013: three) joint ventures are accounted for in the consolidated financial 
statements using the equity method. Details of these companies are given in note [19]. 

Nanjing Baijingyu Pharmaceutical Co., Ltd., China, was newly classified as an associate in view of Bayer’s repre-
sentation on its executive committee and supervisory board. This enables Bayer to exert significant influence over 
its financial and operating policy decisions despite owning only 15% of its voting rights and capital. 

A total of 78 (2013: 79) subsidiaries, including one (2013: one) structured entity and 12 (2013: 14) associates or 
joint ventures that in aggregate are immaterial to the Bayer Group’s financial position and results of operations are 
not consolidated but recognized at cost. The immaterial subsidiaries accounted for less than 0.2% of Group sales, 
less than 0.3% of equity and less than 0.2% of total assets. 

Details of subsidiary and affiliated companies pursuant to Section 313 of the German Commercial Code can be 
accessed at www.annualreport2014.bayer.com/en/companylist.pdfx 

The following domestic subsidiaries availed themselves in 2014 of certain exemptions granted under Section 264 
Paragraph 3 and Section 264b of the German Commercial Code regarding the preparation, auditing and publication 
of financial statements: 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS  

259

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

German Exempt Subsidiaries 

Company Name 

Place of Business  

Bayer’s interest

[Table 4.18]

Adverio Pharma GmbH 
AgrEvo Verwaltungsgesellschaft mbH 
Alcafleu Management GmbH & Co. KG 
Bayer 04 Immobilien GmbH 
Bayer 04 Leverkusen Fußball GmbH 
Bayer Altersversorgung GmbH 
Bayer Animal Health GmbH 
Bayer Beteiligungsverwaltung Goslar GmbH 
Bayer Business Services GmbH 
Bayer Chemicals AG 
Bayer Consumer Care Deutschland GmbH 
Bayer CropScience AG 
Bayer CropScience Biologics GmbH 
Bayer CropScience Deutschland GmbH 
Bayer Direct Services GmbH 
Bayer Gastronomie GmbH 
Bayer Gesellschaft für Beteiligungen mbH 
Bayer HealthCare AG 
Bayer Innovation GmbH 
Bayer Intellectual Property GmbH 
Bayer MaterialScience AG 
Bayer MaterialScience Customer Services GmbH 
Bayer MaterialScience GmbH 
Bayer MaterialScience Oldenburg GmbH & Co. KG 
Bayer Real Estate GmbH 
Bayer Schering Pharma AG 
Bayer Technology Services GmbH 
Bayer Vital GmbH 
Bayer Weimar GmbH und Co. KG 
Bayer-Handelsgesellschaft mit beschränkter Haftung 
BGI Deutschland GmbH 
Chemion Logistik GmbH 
Dritte Bayer Real Estate VV GmbH & Co. KG 
Dritte K-W-A Beteiligungsgesellschaft mbH  
Epurex Films GmbH & Co. KG 
Erste Bayer Real Estate VV GmbH & Co. KG 
Erste K-W-A Beteiligungsgesellschaft mbH 
Euroservices Bayer GmbH 
Fünfte Bayer Real Estate VV GmbH & Co. KG 
Generics Holding GmbH 
GP Grenzach Produktions GmbH 
Hild Samen GmbH 
Intendis GmbH 
Intraserv GmbH & Co. KG 
Jenapharm GmbH & Co. KG 
KOSINUS Grundstücks-Verwaltungsgesellschaft mbH & Co. Gamma OHG 
KVP Pharma+Veterinär Produkte GmbH 
Marotrast GmbH 
MENADIER Heilmittel GmbH 
Schering-Kahlbaum Gesellschaft mit beschränkter Haftung 
Sechste Bayer Real Estate VV GmbH & Co. KG 
Siebte Bayer VV GmbH 
Steigerwald Arzneimittelwerk GmbH 
TECTRION GmbH 
TravelBoard GmbH 
Vierte Bayer Real Estate VV GmbH & Co. KG 
Zweite Bayer Real Estate VV GmbH & Co. KG 
Zweite K-W-A Beteiligungsgesellschaft mbH 

Schönefeld 
Frankfurt am Main 
Schönefeld 
Leverkusen 
Leverkusen 
Leverkusen 
Leverkusen 
Leverkusen 
Leverkusen 
Leverkusen 
Berlin 
Monheim am Rhein 
Malchow / Poel Island 
Langenfeld 
Leverkusen 
Leverkusen 
Leverkusen 
Leverkusen 
Leverkusen 
Monheim am Rhein 
Leverkusen 
Leverkusen 
Darmstadt 
Oldenburg 
Leverkusen 
Berlin 
Leverkusen 
Leverkusen 
Weimar 
Leverkusen 
Leverkusen 
Leverkusen 
Schönefeld 
Leverkusen 
Bomlitz  
Schönefeld 
Leverkusen 
Leverkusen 
Schönefeld 
Leverkusen 
Grenzach-Wyhlen  
Marbach am Neckar 
Berlin 
Schönefeld 
Jena  
Schönefeld 
Kiel 
Jena  
Berlin 
Berlin 
Schönefeld 
Leverkusen 
Darmstadt 
Leverkusen 
Leverkusen 
Schönefeld 
Schönefeld 
Leverkusen 

% 

100
100
99.9
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100

 
 
 
 
 
   
 
 
 
 
 
 
 
 
260 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

6.2 Business combinations and other acquisitions 

ACQUISITIONS IN 2014 
Acquisitions are accounted for by the acquisition method, the results of the acquired businesses therefore being 
included in the consolidated financial statements as of the respective acquisition dates. The purchase prices of 
acquired companies domiciled outside the eurozone were translated at the exchange rates in effect at the respec-
tive acquisition dates. 

The total purchase price of the acquisitions made in 2014 was €13,741 million (2013: €1,441 million). The purchase 
prices of the acquired companies or businesses were settled mainly in cash. Total goodwill of €5,990 million 
(2013: €801 million) arose on these acquisitions. It related principally to the following transactions: 

On March 6, 2014, CropScience completed the acquisition of all the shares of Biagro Group, a producer and dis-
tributor of biological seed treatment solutions headquartered in General Las Heras in the province of Buenos Aires, 
Argentina. The company operates production facilities in Argentina and Brazil. Its portfolio of established brands 
includes seed-applied inoculants, plant-growth-promoting microorganisms and other products for integrated pest 
management based on bacterial and fungal strains. The acquisition will help CropScience to build on the success of 
its soybean seed business in Latin America. The acquisition remains subject to the approval of the Argentinian 
antitrust authorities. A one-time payment and purchase price adjustment totaling €10 million were agreed upon 
along with potential milestone payments reflected at €6 million in the purchase price allocation. The milestone 
payments are mainly dependent on the achievement of certain sales targets and product approvals. The purchase 
price mainly pertained to the technology platform and goodwill. Sales of €6 million were recorded since the acqui-
sition date. 

In March 2014, Pharmaceuticals successfully completed the takeover offer for the shares of Algeta asa, Oslo,  
Norway, and acquired 100% of the outstanding shares. Bayer issued a takeover offer for all the shares of Algeta at 
a price of nok362 per share in cash on January 20, 2014. On expiration of the offer deadline, Bayer had received 
acceptances from Algeta shareholders representing about 98% of the share capital. On March 14, 2014, a compul-
sory acquisition process was carried out to obtain the remaining 2% of the shares, also at a price of nok362 per 
share.  

Algeta develops novel cancer therapies based on its world-leading, patented technologies. The company  
develops alpha-pharmaceuticals designed to target cancers using the unique properties of alpha particle radiation. 
HealthCare and Algeta have collaborated since 2009 to develop and commercialize radium-223 dichloride, which 
was approved in the United States in May 2013 under the tradename Xofigo™. The acquisition strengthens the 
oncology business of Pharmaceuticals. The purchase price was €1,974 million, including €35 million for the settle-
ment of the pre-existing relationship between Algeta and Bayer. The latter amount represents the value of the 
advantage enjoyed by the acquirer from the contractual relationship that existed prior to the acquisition compared 
to current market conditions for similar collaborations. The settlement amount is reflected in other operating in-
come and at the same time increases the consideration transferred. 

The purchase price mainly pertained to an intangible asset for the product-specific radium-223 technology along 
with goodwill. The goodwill is mainly attributable to synergies in administration processes and infrastructure, 
including cost savings in the selling, research and development, and general administration functions. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

261

On September 30, 2014, CropScience completed the acquisition of the seeds business of Granar s.a., headquar-
tered in Encarnación, Paraguay. Granar specializes in the breeding, production and marketing of improved seed, 
especially soybean seed, that is adapted to the growing conditions in subtropical regions. It has a strong presence 
in Paraguay and Uruguay and an increasing presence in Brazil. Granar will continue to sell the seed for its own 
account for the 2014 / 15 sowing season. Bayer will take over marketing in 2015. Part of the agreed one-time pay-
ment of €15 million to acquire the business has been retained for disbursement over the next six years and is re-
flected at €2 million in the purchase price allocation. 

On October 1, 2014, HealthCare completed the acquisition of the consumer care business of u.s. company Merck & 
Co., Inc., Whitehouse Station, New Jersey. The acquired business is primarily comprised of products in the cold, 
allergy, sinus & flu, dermatology (including sun care), foot health and gastrointestinal categories. The most im-
portant brands are Claritin™ (allergy), Coppertone™ (sun care), MiraLAX™ (gastrointestinal) and Afrin™ (cold), and 
– in North America and Latin America – Dr. Scholl’s™ (foot health). These products complement Bayer’s existing 
range of non-prescription medicines. 

The acquisition significantly enhances Bayer’s over-the-counter (otc) business across multiple therapeutic catego-
ries and geographies. It gives Consumer Health the global number two position in a widely diversified sector and 
strong global positions in the five most important otc segments: dermatology, gastrointestinal, sinus & flu (cold, 
allergy, sinus, flu), dietary supplements and pain therapy. 

In those countries where the consumer care business was acquired via an asset deal, Merck & Co., Inc. will contin-
ue the sales activities in its own name for a transitional period until the marketing authorizations are transferred to 
Bayer or Bayer can take over the business as distributor. During this period, the economic rewards and risks will 
already accrue to Bayer, and Bayer will receive the operating profit on the business from Merck. The transitional 
period has already ended for the majority of countries. 

Where the business was acquired via a share deal, Bayer purchased 100% of the respective company’s shares. 

Bayer paid a provisional purchase price of €11,177 million, less specific amounts that are being retained pending 
the receipt of antitrust approvals in the Republic of Korea and the transfer of further assets. The provisional pur-
chase price allocation mainly comprises goodwill of €5,137 million and acquired brands valued at €5,362 million. 
Goodwill is largely based on cost synergies, especially in marketing and manufacturing, as well as on sales syner-
gies resulting from the increased distribution capability and use of the global infrastructure. As expected, a  
goodwill amount of €3,761 million is tax-deductible. The acquired business recorded sales of €289 million in the 
Consumer Health segment and €7 million in the Pharmaceuticals segment since the acquisition date. 

Upon closure of this acquisition, the strategic pharmaceutical collaboration agreed between Bayer and Merck & Co., 
Inc. in the field of soluble guanylate cyclase (sGC) modulation also came into effect. Bayer’s aim in entering into the 
global co-development and co-commercialization agreement, which has already received antitrust clearance, is to 
strengthen its development potential in the cardiovascular therapeutic area. In this connection, Merck & Co., Inc. is 
to make payments to Bayer of up to us$2.1 billion, comprising an up-front payment of us$1.0 billion (€793 million) 
and sales milestone payments of up to us$1.1 billion related to future joint activities with certain compounds includ-
ing Adempas™ (riociguat) to treat pulmonary hypertension. The one-time payment of €793 million is to be recog-
nized in sales and earnings over a period of 13.5 years. It includes an amount of €15 million recognized for the 
fourth quarter of 2014. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
262 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

On November 1, 2014, Consumer Health acquired all the shares of Dihon Pharmaceutical Group Co. Ltd., Kunming, 
Yunnan, China. Dihon is a pharmaceutical company specializing in the manufacture and marketing of over-the-
counter (otc) and herbal traditional Chinese medicine products. A provisional purchase price of €401 million was 
paid, based on a purchase price adjustment mechanism. The purchase price pertained mainly to acquired trade-
marks and goodwill. Sales of €3 million were recorded since the acquisition date. 

On December 1, 2014, CropScience completed the acquisition of land management assets in the United States, 
Canada, Mexico, Australia and New Zealand from E. I. DuPont de Nemours and Company, United States. The ac-
quisition provides CropScience with access to the growing forestry and range & pasture business segments in 
North America. Bayer paid a provisional purchase price of €120 million. A potential milestone payment for a suc-
cessful registration was agreed upon in addition. This payment was included at €18 million in the purchase price 
allocation. The purchase price pertained mainly to intangible assets for product-related technologies and goodwill. 

The purchase price allocations for Biagro Group, the consumer care business of Merck & Co., Inc., Dihon Pharma-
ceutical Group Co. Ltd. and the land management assets of E. I. DuPont de Nemours and Company currently re-
main incomplete pending compilation and review of the relevant financial information. It is therefore possible that 
changes will be made in the allocation of the purchase prices to the individual assets and liabilities. 

The acquired businesses named above contributed €305 million to Bayer Group sales in 2014. Of this amount, 
€296 million pertained to the consumer care business acquired from Merck & Co., Inc. and €3 million to Dihon. 
Their combined ebit for 2014 amounted to minus €132 million, with the consumer care business acquired from 
Merck & Co., Inc. accounting for minus €57 million, Algeta for minus €52 million and Dihon for minus €22 million. 
Their total income after taxes since the respective dates of their first-time consolidation was minus €194 million, 
of which the consumer care business acquired from Merck & Co., Inc. accounted for minus €108 million, Algeta 
for minus €64 million and Dihon for minus €20 million. This includes the financing costs incurred since the re-
spective acquisition dates. 

If the above acquisitions had already been made as of January 1, 2014, the Bayer Group would have had total 
sales of €43,639 million in 2014, with €1,525 million pertaining to the consumer care business acquired from 
Merck & Co., Inc. and €112 million to Dihon. Group income after taxes would have amounted to €3,292 million, 
with the consumer care business acquired from Merck & Co., Inc. accounting for minus €214 million, Algeta for 
minus €86 million and Dihon for minus €46 million. This takes into account the effects of the hypothetical financ-
ing costs for the full year. The acquisition of the above-named businesses as of January 1, 2014, would have  
diminished earnings per share by €0.18. 

The effects of these and other, smaller transactions made in 2014 – and of purchase price adjustments made in 
2014 relating to previous years’ / quarters’ transactions – on the Group’s assets and liabilities as of the respective 
acquisition or adjustment dates are shown in the table. Net of acquired cash and cash equivalents, the transactions 
resulted in the following cash outflow: 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

263

Acquired Assets and Assumed Liabilities (Fair Values at the Respective Acquisition Dates) 

[Table 4.19]

2013 

Of which 
Conceptus 

2014 

Of which 
Merck CC 

Of which  
Algeta 

Of which 
Dihon 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

Goodwill 

Patents and technologies 

Trademarks 

Production rights 

R&D projects 

Other rights 

Property, plant and equipment 

Other noncurrent assets 

Deferred tax assets 

Inventories 

Receivables 

Other current assets 

Cash and cash equivalents 

Provisions for pensions and other post-
employment benefits 

Other provisions 

Financial liabilities 

Other liabilities 

Deferred tax liabilities 

Net assets 

Changes in non-controlling interest 

Purchase price 

Acquired cash and cash equivalents 

Settlement gain from pre-existing relationship 

Liabilities for future payments  

Payments for previous  
years’ / quarters’ acquisitions 

Purchase price adjustment 

801

400

281

–

64

35

55

1

101

59

38

7

74

(9)

(16)

(85)

(93)

(273)

1,440

1

1,441

(74)

–

(295)

14

–

475

338

45

–

28

15

14

1

78

24

26

7

58

–

(10)

(83)

(76)

(160)

780

–

780

(58)

–

–

–

–

5,990

1,762

5,672

71

16

30

235

9

443

331

222

–

105

–

(105)

(213)

(292)

(535)

5,137

–

5,362

–

–

–

146

–

401

295

106

–

3

–

(101)

(20)

(150)

(2)

13,741

11,177

–

–

13,741

11,177

(105)

(35)

(92)

4

33

(3)

–

(65)

–

–

679 

1,758 

– 

– 

2 

21 

23 

– 

39 

15 

39 

– 

90 

– 

– 

(128) 

(79) 

(485) 

1,974 

– 

1,974 

(90) 

(35) 

– 

– 

– 

Net cash outflow for acquisitions 

1,086

722

13,546

11,109

1,849 

96

–

295

–

–

6

66

9

3

18

70

–

12

–

(3)

(65)

(60)

(46)

401

–

401

(12)

–

–

–

33

422

ACQUISITIONS IN 2013 
In 2013, the following acquisitions were accounted for in accordance with ifrs 3: 

On January 2, 2013, Consumer Health wholly acquired the u.s. company Teva Animal Health Inc., St. Joseph, 
Missouri. The acquisition broadens Consumer Health’s range of anti-infective solutions for livestock and expands 
the existing product offering to include reproductive hormones. The transaction also adds dermatological products 
for companion animals, pet wellness products and nutraceuticals to the company’s portfolio. The parties agreed 
on a one-time payment of €38 million plus potential milestone payments, for which an amount of €45 million was 
included in the purchase price allocation. The milestone payments are mainly dependent on the achievement of 
various sales targets. The purchase price pertained mainly to product trademarks. 

On January 18, 2013, CropScience acquired all the shares of PROPHYTA Biologischer Pflanzenschutz GmbH, a 
leading supplier of biological crop protection products headquartered in Malchow in the German state of Mecklen-
burg-Western Pomerania. In addition to research and development facilities, the acquisition also includes state- 
of-the-art production and formulation facilities in the city of Wismar. A purchase price of €25 million was agreed, 
pertaining mainly to technologies, research and development projects and goodwill. In addition, two related 
distribution rights were acquired for €5 million.  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
264 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

On March 15, 2013, CropScience wholly acquired soybean seed producer Wehrtec Tecnologia Agricola Ltda. and 
the soybean business of Agricola Wehrmann Ltda. Both companies are headquartered in Cristalina in the Brazilian 
state of Goiás. This transaction strengthens the soybean research and development activities of CropScience and 
contributes to the development of varieties tailored to the requirements of Brazilian soybean growers. A purchase 
price of €34 million was agreed along with potential milestone payments of up to €11 million. The purchase price 
pertained mainly to marketable crop plants, breeding material and goodwill. 

In June 2013, Pharmaceuticals successfully completed the tender offer for the shares of Conceptus, Inc., currently 
headquartered in Milpitas, California, United States, and acquired 100% of the outstanding shares. Conceptus, Inc. 
has developed Essure™, the only non-surgical permanent birth control method, which it markets in the u.s. and 
other countries. This acquisition enables Bayer to offer an even broader range of short-term, long-term and perma-
nent contraceptive choices for women. A purchase price of €780 million was paid, pertaining mainly to technology 
and trademark rights. The goodwill remaining after the purchase price allocation is attributable to various factors, 
including significant cost savings in the marketing and sales functions along with general administration and infra-
structure synergies. 

In April 2013, the District Court of Berlin reached a decision in the court proceeding initiated by former minority 
stockholders of Bayer Pharma AG (formerly Bayer Schering Pharma AG) to review the adequacy of compensation 
payments made by Bayer in connection with the domination and profit and loss transfer agreement of 2006. The 
court decided that the compensation by Bayer at the time should be increased by about 40%. Bayer disagrees with 
this decision and has appealed. The potential supplementary payment represents a subsequent purchase price 
adjustment according to the March 31, 2004 version of ifrs 3 applicable at the acquisition date. Additional good-
will of €261 million, excluding interest, has been capitalized for this proceeding and for the parallel proceeding 
relating to the squeeze-out of the former minority stockholders. 

On July 1, 2013, Consumer Health acquired all the shares of Steigerwald Arzneimittelwerk GmbH, Darmstadt, 
Germany. Steigerwald holds a strong position in the German phytopharmaceuticals market, which is focused on 
pharmacy-only herbal medicines. Its product portfolio includes Iberogast™ for the treatment of functional gastroin-
testinal disorders and Laif™ for the treatment of mild to moderate depression. A purchase price of €218 million  
was agreed, pertaining mainly to product trademarks, technologies and goodwill. 

On December 2, 2013, CropScience acquired fn Semillas s.a. and its parent company Holding Manager s.a., both 
headquartered in Buenos Aires, Argentina. fn Semillas specializes in the breeding, production and marketing of 
improved soybean seeds in Argentina. A purchase price of €25 million was agreed, pertaining mainly to commer-
cial cultivars, germplasm and goodwill. 

6.3 Divestitures   

DIVESTITURES IN 2014 
The effects of divestitures made in 2014 and previous years on the consolidated financial statements for 2014 are 
detailed below. 

On August 29, 2014, Consumer Health completed the sale of the Interventional device business to Boston Scientific 
Corporation, Natick, Massachusetts, United States. The sale comprised the AngioJet™ thrombectomy system  
and the Jetstream™ atherectomy system, as well as the Fetch™2 aspiration catheter used in cardiology, radiology 
and peripheral vascular procedures. The total transaction price, including fees for transitional services to Boston 
Scientific and before working capital adjustments, was €315 million. Disregarding the transitional services, a 
special gain of €80 million and deferred income of €2 million were recognized. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

265

On October 1, 2014, the strategic pharmaceutical collaboration agreed between Bayer and Merck & Co., Inc., 
United States, in the area of soluble guanylate cyclase (sGC) modulation came into effect. Pharmaceuticals and 
Merck & Co., Inc. assumed joint control of the sGC modulators business. The collaboration agreement provides for 
future net cash flows to be equally shared between Bayer and Merck & Co., Inc. Of the goodwill allocated to the 
Pharmaceuticals segment, €173 million was derecognized through profit or loss as of the date the collaboration 
came into effect. 

The effects of these and other, smaller divestitures made in 2014 were as follows: 

Divested Assets and Liabilities 

Goodwill 

Patents and technologies 

Other intangible assets 

Property, plant and equipment 

Other noncurrent assets 

Inventories 

Other current assets 

Other provisions 

Other liabilities 

Divested net assets 

Net cash inflow from divestitures 

Changes in future cash payments receivable 

Deferred income 

Net gain / (loss) from divestitures (before taxes) 

[Table 4.20]

2013 

2014 

€ million 

€ million 

– 

– 

– 

13 

– 

– 

4 

(2) 

(3) 

12 

79 

(25) 

– 

42 

286

62

17

18

2

10

–

–

–

395

304

–

2

(93)

Of these divested assets and liabilities, €354 million were reported in previous quarters as held for sale. 

In December 2014, Consumer Health signed an agreement to sell two equine products, Legend / Hyonate and 
Marquis, to Merial, Inc. A sale price of us$135 million was agreed. The transaction is subject to various conditions, 
including antitrust approvals, and is expected to close in the first quarter of 2015. 

DIVESTITURES IN 2013 
On June 1, 2013, MaterialScience sold its global powder polyester resins business and its u.s.-based liquid 
polyester resins merchant business to Stepan Company of Northfield, Illinois, United States. A purchase price of 
€45 million was agreed. The divestment gain of €42 million was reported under special items. 

The Bayer Group received further revenue-based payments of €25 million in 2013 in connection with the transfer  
of the hematological oncology portfolio to Genzyme Corp., United States, effected in May 2009. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
266 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Notes to the Income Statements 

7. Net sales 

Net sales are derived primarily from product deliveries. Total reported net sales rose compared to 2013 by 
€2,082 million, or 5.2%, year on year to €42,239 million. The increase resulted from the following factors: 

Factors in Sales Development 

Volume 

Price 

Currency 

Portfolio 

Total 

[Table 4.21]

2014 

% 

+ 6.8

+ 0.4

– 2.8

+ 0.8

+ 5.2

€ million 

2,730 

174 

(1,136) 

314 

2,082 

Breakdowns of net sales by segment and by region are given in the table in note [1]. 

8. Selling expenses 

Selling expenses comprise all expenses incurred in the reporting period for the sale, storage and transportation of 
saleable products, advertising, the provision of advice to customers, and market research. Selling expenses were 
comprised as follows:  

Selling Expenses 

Internal and external sales force 

Advertising and customer advice 

Physical distribution and warehousing of finished products 

Commission and licensing expenses 

Other selling expenses 

Total 

2013 figures restated 

[Table 4.22]

Dec. 31, 2013  Dec. 31, 2014 

€ million 

€ million 

4,547 

2,393 

1,071 

877 

1,424 

4,611

2,565

1,157

1,084

1,601

10,312 

11,018

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

267

9. Research and development expenses 

Research and development expenses and their accounting treatment are defined in note [4]. Breakdowns of 
research and development expenses by segment and region are given in note [1]. 

10. Other operating income 

Other operating income was comprised as follows: 

Other Operating Income 

Gains on retirements of noncurrent assets 

Reversal of impairment losses on receivables 

Reversals of unutilized provisions 

Gains from derivatives 

Miscellaneous operating income 

Total 

of which special items 

2013 figures restated 

[Table 4.23]

2013 

2014 

€ million 

€ million 

134 

42 

29 

365 

317 

887 

49 

133

24

44

149

366

716

118

Gains from the sale of noncurrent assets included a gain of €80 million in the Consumer Health segment from the 
divestiture of the Interventional device business to Boston Scientific Corporation, Natick, Massachusetts, United 
States. A gain of €9 million was also incurred from the sale of transfer rights by Bayer 04 Leverkusen Fußball 
GmbH. The Consumer Health segment recorded a gain of €10 million from the termination of the licensing and 
distribution agreement for the pain reliever Flector. The sale of the Monroe production site in Argentina and the 
Xochimilco site in Mexico resulted in gains of €9 million and €6 million, respectively, in the Pharmaceuticals 
segment.  

The miscellaneous operating income included a gain of €35 million in the Pharmaceuticals segment resulting from 
the pre-existing partnership between Algeta asa, Norway, and Bayer to develop and commercialize radium-223 
dichloride. A gain of €21 million was recorded from the divestiture of the Consumer Health products Bronkaid and 
Neo-Synephrine. A gain of €18 million resulted from the divestiture of the pharmaceutical product Betapace. Also 
reflected in this item are €64 million in payments received from insurers. 

In 2013, gains from the sale of noncurrent assets included a €42 million gain in the MaterialScience segment from 
the sale of the global powder polyester resins business and the u.s.-based liquid polyester resins merchant busi-
ness to Stepan Company of Northfield, Illinois, United States. A gain of €22 million was also incurred from the sale 
of transfer rights at Bayer 04 Leverkusen Fußball GmbH. A gain of €11 million was recorded in the CropScience 
segment from the sale of the Bayer House administration building in Powdai, India. In the Consumer Health 
segment, a gain of €11 million was received from the sale of the French insect repellent Cinq sur Cinq. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
268 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

The miscellaneous operating income in 2013 contained a €17 million gain in the MaterialScience segment from the 
sale of the Desmolux product line for uv-curing coating systems to Allnex S.à r.l., Luxembourg, and Allnex Belgium 
sa, Belgium, and a €16 million gain in the Pharmaceuticals segment from the sale of the antibiotic Binotal to  
Paladin Labs Inc., Canada. The Consumer Health segment recorded a €13 million gain from the reversal of an im-
pairment loss previously recognized on a patent. 

11. Other operating expenses 

Other operating expenses were comprised as follows: 

Other Operating Expenses 

Losses on retirements of noncurrent assets 

Impairment losses on receivables 

Expenses related to significant legal risks 

Losses from derivatives 

Miscellaneous operating expenses 

Total 

of which special items 

2013 figures restated 

[Table 4.24]

2013 

2014 

€ million 

€ million 

(28) 

(82) 

(334) 

(253) 

(467) 

(1,164) 

(431) 

(198)

(87)

(168)

(74)

(323)

(850)

(356)

The losses on retirements of noncurrent assets included €173 million from the derecognition of the goodwill allo-
cated to the Pharmaceuticals segment in connection with the pharmaceutical collaboration between Bayer and 
Merck & Co., Inc., United States.  

The €168 million in expenses related to significant legal risks mainly included accounting measures for anticipated 
litigation defense costs. The €334 million in expenses reported under this item in 2013 mainly pertained to the 
Yasmin™ /  yaz™, Cipro™ and Mirena™ litigations.  

The miscellaneous operating expenses included €10 million in restructuring charges, which were incurred entirely 
by MaterialScience (2013: €111 million in total, of which Pharmaceuticals accounted for €31 million, Consumer 
Health for €35 million, CropScience for €29 million, MaterialScience for €2 million and the service areas for 
€14 million). Pharmaceuticals and Consumer Health also incurred expenses of €12 million and €71 million, respec-
tively (2013: €52 million in total, of which €46 million in Pharmaceuticals and €6 million in Consumer Health) for 
the integration of acquired businesses.   

As in the previous year, the remaining amount of miscellaneous operating expenses comprised a large number of 
individually immaterial items at the subsidiaries. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

269

12. Personnel expenses and employee numbers 

Personnel expenses rose in 2014 by €415 million to €9,845 million (2013: €9,430 million), with higher variable 
compensation and regular salary adjustments accounting for most of this increase.  

Personnel Expenses 

Salaries 

Social expenses and expenses for pensions and other benefits 

of which for defined contribution pension plans 

of which for defined benefit and other pension plans 

Total 

[Table 4.25]

2013 

2014 

€ million 

€ million 

7,585 

1,845 

487 

410 

7,998

1,847

491

351

9,430 

9,845

The personnel expenses shown here do not contain the interest portion of the allocation to personnel-related 
provisions – mainly for pensions and other post-employment benefits – which is included in the financial result 
under other financial expenses (note [13.3]). 

The average numbers of employees, classified by corporate function, were as shown in the table below: 

Employees 

Production 

Marketing and distribution 

Research and development 

General administration 

Total 

Apprentices 

2013 figures restated 

[Table 4.26]

2014 

46,614

45,889

13,967

9,167

2013 

46,117 

43,748 

13,286 

9,174 

112,325 

115,637

2,277 

2,349

The number of employees on either permanent or fixed-term contracts is stated in full-time equivalents, with  
part-time employees included on a pro-rated basis in line with their contractual working hours. The figures do not 
include apprentices. The increase is mainly due to the acquisition of the consumer care business of Merck & Co., 
Inc., Whitehouse Station, New Jersey, United States, and the acquisition of Dihon Pharmaceutical Group Co. Ltd., 
Kunming, Yunnan, China. 

13. Financial result 

The financial result for 2014 was minus €981 million (2013: minus €727 million), comprising an equity-method loss 
of €13 million (2013: €16 million), financial expenses of €1,311 million (2013: €1,100 million) and financial income 
of €343 million (2013: €389 million). Details of the components of the financial result are provided below. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
270 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

13.1  Income (loss) from investments in affiliated companies 

The net income (loss) from investments in affiliated companies was comprised as follows: 

Income (Loss) from Investments in Affiliated Companies 

Net loss from investments accounted for using the equity method (equity-method loss) 

Expenses 

Impairment losses on investments in affiliated companies 

Gains 

Impairment loss reversals on investments in affiliated companies 

Gains / losses from investments in affiliated companies and from profit and loss transfer agreements (net) 

Gains from the sale of investments in affiliated companies 

Total 

[Table 4.27]

2013 

2014 

€ million 

€ million 

(16) 

(13)

(2) 

– 

– 

77 

59 

–

2

1

–

(10)

The main components of the income from investments in affiliated companies were the €18 million (2013: 
€20 million) equity-method loss from the associate po jv, lp, United States and the €5 million (2013: €4 million) 
aggregate of the equity-method gains and losses of the remaining joint ventures and associates accounted for 
using the equity method. 

Further details of the companies accounted for using the equity method are given in note [19]. 

13.2  Net interest expense 

The net interest expense was comprised as follows: 

Net Interest Expense 

Expenses 

Interest and similar expenses 

Interest expenses for derivatives (held for trading) 

Income 

Interest and similar income 

Interest income from derivatives (held for trading) 

Total 

[Table 4.28]

2013 

2014 

€ million 

€ million 

(602) 

(54) 

257 

44 

(355) 

(618)

(75)

283

54

(356)

Interest and similar expenses included interest expense of €55 million (2013: €43 million) relating to non-financial 
liabilities. Interest and similar income included interest income of €48 million (2013: €26 million) from non-
financial assets. 

At the end of April 2013, the District Court of Berlin reached a decision in the court proceeding initiated by  
former minority stockholders of Bayer Pharma AG (formerly Bayer Schering Pharma AG) to review the adequacy of 
compensation payments made by Bayer in connection with the domination and profit and loss transfer agreement 
of 2006. The court decided that the compensation paid by Bayer at the time should be increased by about 40%. 
Bayer disagrees with this decision and has appealed. Interest expense of €10 million was recognized in 2014 
(2013: €63 million) in connection with a potential additional payment. 

The change in the liability for redeemable non-controlling interests is reflected in interest income or expense.  
In 2014 a €46 million decrease (2013: €31 million increase) in this liability was recognized as interest income 
(2013: interest expense). 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

271

13.3 Other financial income and expenses  

Other financial income and expenses were comprised as follows: 

Other Financial Income and Expenses 

Expenses 

Interest portion of interest-bearing provisions 

Exchange loss 

Miscellaneous financial expenses 

Income 

Miscellaneous financial income 

Total 

[Table 4.29]

2013 

2014 

€ million 

€ million 

(297) 

(120) 

(25) 

11 

(431) 

(322)

(248)

(48)

3

(615)

The interest portion of noncurrent provisions comprised €275 million (2013: €302 million) in interest expense for 
pension and other post-employment benefit provisions plus €47 million (2013: minus €5 million) in effects of inter-
est expense and interest-rate fluctuations for other provisions and corresponding overfunding. The interest ex-
pense for pension and other post-employment benefit provisions included €828 million (2013: €763 million) for the 
unwinding of discount on the present value of the defined benefit obligation and €553 million (2013: €461 million) 
in interest income from plan assets. 

The higher exchange loss was partly due to the devaluation of the Venezuelan bolivar. 

14. Taxes 

The breakdown of tax expenses by origin was as follows:  

Tax Expense by Origin 

Taxes paid or accrued 

Income taxes 

Germany 

Other countries 

Other taxes 

Germany 

Other countries 

Deferred taxes 

from temporary differences 

from tax loss carryforwards and tax credits 

2013 

Of which
income taxes 

[Table 4.30]

2014 

Of which
income taxes 

€ million 

€ million 

€ million 

€ million 

(795)

(849)

(43)

(188)

(1,875)

569

54

623

(566) 

(749) 

(48) 

(189) 

(1,552) 

163 

70 

233 

(1,315)

233

(1,644)

623

Total  

(1,252)

(1,021)

(1,319) 

(1,082)

The other taxes mainly include land, vehicle and other indirect taxes. They are reflected in the respective functional 
cost items. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
272 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

The deferred tax assets and liabilities were allocable to the following items in the statement of financial position: 

Deferred Tax Assets and Liabilities 

[Table 4.31]

Intangible assets 

Property, plant and equipment 

Financial assets 

Inventories 

Receivables 

Other assets 

Dec. 31, 2013 

Dec. 31, 2014 

Deferred 
tax assets 

Deferred  
tax liabilities 

Deferred  
tax assets 

Deferred 
tax liabilities 

€ million 

€ million 

€ million 

€ million 

328

86

181

628

207

19

2,217 

639 

185 

37 

538 

13 

765 

86 

57 

652 

286 

24 

2,520

672

207

50

627

13

Provisions for pensions and other post-employment benefits 

2,044

1,075 

3,508 

1,037

Other provisions 

Liabilities 

Tax loss carryforwards 

Tax credits 

of which noncurrent 

Set-off 

Total 

933

587

313

126

5,452

4,142

(3,856)

1,596

288 

57 

– 

– 

5,049 

4,692 

(3,856) 

1,193 

976 

674 

446 

144 

7,618 

6,361 

(4,637) 

2,981 

129

71

–

–

5,326

4,912

(4,637)

689

Deferred taxes on remeasurements, recognized outside profit or loss, of the net liability for defined benefit pension 
and other post-employment benefits increased equity by €1,621 million (2013: diminished equity by €604 million). 
Deferred taxes on changes, recognized outside profit or loss, in fair values of available-for-sale financial assets and 
derivatives designated as cash flow hedges increased equity by €55 million (2013: diminished equity by €2 million). 
These effects on equity are reported in the statement of comprehensive income. 

The use of tax loss carryforwards reduced the income taxes paid or accrued in 2014 by €24 million (2013: 
€62 million). The use of tax credits reduced income taxes paid or accrued by €10 million (2013: €18 million). 

Of the total tax loss carryforwards of €4,535 million in 2014 (2013: 3,071 million), an amount of €1,737 million 
(2013: €2,127 million) is expected to be usable within a reasonable period. The increase in loss carryforwards  
was mainly due to losses that newly arose in 2014 and tax reassessments for prior years. Deferred tax assets of 
€446 million (2013: €313 million) were recognized for the amount of loss carryforwards expected to be usable.  
The deferred tax assets included an amount of €39 million (2013: €98 million) that resulted from purchase price 
allocations and was recognized outside profit or loss. 

The use of €2,798 million (2013: €944 million) of tax loss carryforwards was subject to legal or economic re-
strictions. Consequently, no deferred tax assets were recognized for this amount. If these tax loss carryforwards 
had been fully usable, deferred tax assets of €138 million (2013: €117 million) would have been recognized. 

Tax credits of €144 million were recognized in 2014 (2013: €126 million) as deferred tax assets, including 
€0 million (2013: €2 million) outside profit or loss. The use of €45 million (2013: €29 million) of tax credits was 
subject to legal or economic restrictions. Consequently, no deferred tax assets were recognized for this amount. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

273

Unusable tax credits and tax loss carryforwards will expire as follows: 

Expiration of Unusable Tax Credits and Tax Loss Carryforwards 

[Table 4.32]

Within one year 

Within two years 

Within three years 

Within four years 

Within five years  

Thereafter 

Total 

Tax credits 

Tax loss carryforwards 

Dec. 31, 2013 

Dec. 31, 2014 

Dec. 31, 2013 

Dec. 31, 2014 

€ million 

€ million 

€ million 

€ million 

–

3

–

2

1

23

29

4

–

3

–

23

15

45

43 

– 

3 

7 

24 

867 

944 

14

9

3

24

82

2,666

2,798

In 2014, subsidiaries that reported losses for 2014 or 2013 recognized net deferred tax assets totaling 
€1,296 million (2013: €757 million) from temporary differences and tax loss carryforwards. These assets were 
considered to be unimpaired because the companies concerned were expected to generate taxable income in the 
future. 

Deferred tax liabilities of €6 million were recognized in 2014 (2013: €10 million) for planned dividend payments by 
subsidiaries. Deferred tax liabilities of €48 million were recognized in 2014 (2013: €0 million) for the planned sale 
of shares in subsidiaries upon the separation of the MaterialScience business. Deferred tax liabilities were not 
recognized for temporary differences on €8,648 million (2013: €10,583 million) of retained earnings of subsidiaries 
because the Bayer Group is able to control the timing of the difference reversal and the temporary differences will 
not reverse in the foreseeable future. 

The reported tax expense of €1,082 million for 2014 (2013: €1,021 million) differed by €58 million (2013: €32 mil-
lion) from the expected tax expense of €1,140 million (2013: €1,053 million) that would have resulted from apply-
ing an expected weighted average tax rate to the pre-tax income of the Group. This average rate, derived from the 
expected tax rates of the individual Group companies, was 25.2% in 2014 (2013: 25.0%). The effective tax rate 
was 23.9% (2013: 24.3%). 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
274 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

The reconciliation of expected to reported income tax expense and of the expected to the effective tax rate for the 
Group was as follows: 

Reconciliation of Expected to Actual Income Tax Expense 

Expected income tax expense and expected tax rate 

Reduction in taxes due to tax-free income 

Income related to the operating business 

Income from affiliated companies and divestiture proceeds 

First-time recognition of previously unrecognized deferred tax assets on tax loss 
carryforwards 

Use of tax loss carryforwards on which deferred tax assets were not previously 
recognized 

Increase in taxes due to non-tax-deductible expenses 

Expenses related to the operating business 

Impairment losses on investments in affiliated companies 

New tax loss carryforwards unlikely to be usable 

Existing tax loss carryforwards on which deferred tax assets were previously 
recognized but which are unlikely to be usable 

Tax income (–) and expenses (+) relating to other periods 

Tax effects of changes in tax rates 

Other tax effects 

2013 

€ million 

1,053

 %  

€ million 

25.0 

1,140 

[Table 4.33]

2014 

 % 

25.2

(123)

(39)

(2.9) 

(0.9) 

(92) 

(2) 

(2.0)

–

(6)

–

173

1

10

1

42

(55)

(36)

(0.1) 

(15) 

(0.3)

– 

(1) 

–

4.1 

– 

0.2 

– 

1.0 

(1.3) 

(0.8) 

149 

2 

57 

7 

(119) 

(10) 

(34) 

3.3

–

1.3

0.2

(2.6)

(0.2)

(1.0)

Actual income tax expense and effective tax rate 

1,021

24.3 

1,082 

23.9

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

275

15. Income / losses attributable to non-controlling interest 

Income attributable to non-controlling interest amounted to €19 million (2013: €1 million). Losses attributable to 
non-controlling interest amounted to €2 million (2013: €4 million).  

16. Earnings per share  

Earnings per share are determined according to ias 33 (Earnings per Share) by dividing net income by the 
weighted average number of ordinary shares in issue during the year.  

Earnings per Share 

Income after income taxes 

of which attributable to non-controlling interest 

of which attributable to Bayer AG stockholders (net income) 

Weighted average number of issued ordinary shares 

Basic earnings per share  

Diluted earnings per share  

[Table 4.34]

2013 

2014 

€ million 

3,186 

(3) 

3,189 

€ million 

3,443

17

3,426

Shares 

Shares

826,947,808 

826,947,808

€ 

3.86 

3.86 

€

4.14

4.14

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
276 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Notes to the Statements of Financial Position 

17. Goodwill and other intangible assets 

Changes in intangible assets in 2014 were as follows:  

Changes in Intangible Assets 

[Table 4.35]

Transfers (IFRS 5) 

(254) 

(126) 

Acquired 
goodwill 

Patents and 
technologies 

Trade-
marks 

Marketing 
and 
distribution 
rights 

Production 
rights 

R&D 
projects  

Other rights 
and advance 
payments  

Total 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

9,862 

11,021 

4,282

1,598

2,062

775 

2,994 

32,594

– 

– 

5,990 

1,762 

–

5,672

– 

(38) 

– 

39 

(33) 

9 

6 

– 

602 

– 

– 

155 

18

(21)

–

(27)

–

–

318

16,168 

12,827 

10,242

–

–

124

(21)

18

–

–

–

89

1,808

–

71

–

(6)

34

–

–

–

7

2,168

– 

16 

115 

(61) 

(17) 

– 

– 

– 

54 

882 

2 

30 

127 

(143) 

(44) 

– 

– 

– 

2

13,541

423

(323)

–

(407)

6

–

223 

3,189 

1,448

47,284

6,653 

2,262

834

1,773

131 

2,165 

13,818

– 

– 

(6) 

6 

– 

6 

– 

– 

– 

– 

– 

– 

(22) 

803 

800 

3 

(2) 

– 

(67) 

63 

–

(2)

269

228

41

–

–

(11)

70

7,428 

2,588

16,168 

5,399 

7,654

9,862 

4,368 

2,020

–

(20)

188

135

53

–

1

–

36

1,039

769

764

–

(6)

104

104

–

–

34

–

6

1,911

257

289

– 

(4) 

15 

– 

15 

– 

– 

– 

11 

153 

729 

644 

2 

(135) 

182 

171 

11 

– 

(35) 

– 

165 

2

(195)

1,567

1,438

129

(2)

–

(78)

351

2,344 

15,463

845 

31,821

829 

18,776

Cost of acquisition  
or generation,  
December 31, 2013 

Changes in scope  
of consolidation 

Acquisitions 

Capital expenditures 

Retirements 

Transfers 

Inflation adjustment (IAS 29) 

Remeasurement (IFRS 3) 

Exchange differences 

December 31, 2014 

Accumulated amortization  
and impairment losses,  
December 31, 2013 

Changes in scope  
of consolidation 

Retirements 

Amortization and  
impairment losses in 2014 

Amortization 

Impairment losses 

Impairment loss reversals 

Transfers 

Transfers (IFRS 5) 

Exchange differences 

December 31, 2014 

Carrying amounts,  
December 31, 2014 

Carrying amounts,  
December 31, 2013 

The capitalized patents and technologies include an amount pertaining to the active ingredient alemtuzumab 
(product name: Lemtrada) for the treatment of multiple sclerosis. Bayer gave back the worldwide distribution rights 
for alemtuzumab to Genzyme Corp., United States, in 2009 and in return received global co-promotion rights and 
an entitlement to royalties and revenue-based milestone payments. Genzyme Corp. received marketing approval for 
alemtuzumab in Europe in 2013 and in the United States in 2014. Bayer has decided not to exercise its co-
promotion rights. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

277

Impairment losses of €127 million, net of a €2 million impairment loss reversal, were recognized on intangible 
assets. In the Pharmaceuticals reporting segment, a €29 million impairment loss was recognized on marketing and 
distribution rights in a segment of cardiovascular risk management due to a heightened competitive environment. 
In the Consumer Health reporting segment, a €22 million impairment loss was recognized on trademarks at Animal 
Health in light of strong generic competition. 

Impairment losses were recognized on further intangible assets in the Consumer Health segment (€40 million), the 
CropScience segment (€24 million), the MaterialScience segment (€5 million), the Pharmaceuticals segment 
(€4 million) and Other Segments (€3 million). 

Details of acquisitions and divestitures are provided in notes [6.2] and [6.3]. The impairment testing procedure for 
goodwill and other intangible assets is explained in note [4]. 

Changes in intangible assets in 2013 were as follows:  

Changes in Intangible Assets 
(Previous Year) 

[Table 4.36]

Acquired 
goodwill 

Patents and
technologies 

Trade-
marks 

Marketing 
and 
distribution 
rights 

Production 
rights 

R&D 
projects  

Other rights 
and advance 
payments 

Total 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

9,293 

10,743

4,048

1,440

2,079

899 

2,968

31,470

– 

801 

– 

– 

– 

– 

6 

– 

–

400

35

(185)

87

–

–

–

–

281

–

(4)

–

–

–

–

1

–

117

(44)

126

–

–

–

–

–

–

(13)

–

–

–

–

(238) 

9,862 

(59)

11,021

(43)

4,282

(42)

1,598

(4)

2,062

6,082

2,107

760

1,661

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

–

(158)

766

737

29

(13)

–

–

(24)

6,653

–

(2)

180

176

4

–

–

–

(23)

2,262

9,862 

4,368

2,020

9,293 

4,661

1,941

–

(44)

135

131

4

–

–

–

(17)

834

764

680

–

(13)

128

114

14

–

–

–

(3)

1,773

289

418

– 

64 

69 

(55) 

(180) 

– 

– 

– 

(22) 

775 

6 

– 

(55) 

186 

– 

186 

– 

– 

– 

(6) 

131 

644 

893 

3

35

162

(32)

(33)

–

–

–

4

1,581

383

(333)

–

–

6

–

(109)

2,994

(517)

32,594

2,097

12,713

2

(32)

177

164

13

–

–

–

2

(304)

1,572

1,322

250

(13)

–

–

(79)

2,165

(152)

13,818

829

18,776

871

18,757

Cost of acquisition  
or generation,  
December 31, 2012 

Changes in scope  
of consolidation 

Acquisitions 

Capital expenditures 

Retirements 

Transfers 

Transfers (IFRS 5) 

Inflation adjustment (IAS 29) 

Remeasurement (IFRS 3) 

Exchange differences 

December 31, 2013 

Accumulated amortization  
and impairment losses,  
December 31, 2012 

Changes in scope  
of consolidation 

Retirements 

Amortization and  
impairment losses in 2013 

Amortization 

Impairment losses 

Impairment loss reversals 

Transfers 

Transfers (IFRS 5) 

Exchange differences 

December 31, 2013 

Carrying amounts,  
December 31, 2013 

Carrying amounts,  
December 31, 2012 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
278 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Changes in the carrying amounts of goodwill for the reporting segments in 2014 and 2013 were as follows:   

 Goodwill by Reporting Segment 

[Table 4.37]

Carrying amounts, January 1, 2013 

Change in scope of consolidation 

Acquisitions 

Retirements 

Impairment losses in 2013 

Transfers 

Transfers (IFRS 5) 

Inflation adjustment (IAS 29) 

Remeasurement (IFRS 3) 

Exchange differences 

Carrying amounts, December 31, 2013 

Change in scope of consolidation 

Acquisitions 

Retirements 

Impairment losses in 2014 

Transfers 

Transfers (IFRS 5) 

Inflation adjustment (IAS 29) 

Remeasurement (IFRS 3) 

Exchange differences 

Carrying amounts, December 31, 2014 

Pharma-
ceuticals 

Consumer 
Health 

HealthCare 

CropScience 

Material-
Science 

Bayer Group 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

4,648

–

680

2,420

–

95

7,068

–

775

–

–

–

–

–

–

(90)

5,238

–

767

(30)

–

–

–

–

–

–

6

–

(86)

2,435

–

5,154

(2)

–

–

–

–

–

–

6

–

(176)

7,673

–

5,921

(32)

–

–

(143)

(111)

(254)

–

–

185

6,017

6

–

289

7,771

6

–

474

13,788

1,983 

242 

9,293

– 

26 

– 

– 

– 

– 

– 

– 

(58) 

1,951 

– 

69 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

(4) 

238 

– 

– 

– 

(6) 

– 

– 

– 

– 

–

801

–

–

–

–

6

–

(238)

9,862

–

5,990

(32)

(6)

–

(254)

6

–

117 

2,137 

11 

243 

602

16,168

Goodwill and other intangible assets with an indefinite useful life that are of material significance for the Bayer 
Group are allocated to the following cash-generating units or unit groups as of the end of the reporting period: 

Intangible Assets with Indefinite Useful Life 

Reporting segment 

Pharmaceuticals 

Consumer Health 

CropScience 

CropScience 

Cash-generating unit / 
Group of cash-generating units 

Pharmaceuticals 

Consumer Care 

Crop Protection 

Seeds 

[Table 4.38]

Important intangible assets 
with indefinite useful life 

€ million 

459

23

88

149

Goodwill 

€ million 

6,017

6,467

1,259

427

In the case of research and development projects, the point in time from which a capitalized asset can be expected 
to generate an economic benefit for the company cannot be determined. Such assets are therefore classified as 
having an indefinite useful life. Development projects were capitalized at a total amount of €729 million as of the 
end of 2014 (2013: €644 million).  

Another intangible asset classified as having an indefinite useful life is the Bayer Cross, which was reacquired for 
the North America region in 1994, having been awarded to the United States and Canada under the reparations 
agreements at the end of the First World War. The period for which the Bayer Group will derive an economic bene-
fit from this name cannot be determined as Bayer intends to make continuous use of it. The Bayer Cross is capital-
ized at €107 million. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

279

PATENTS 
The Bayer Group endeavors to obtain patent protection for its products and technologies in the major markets. 

The following table sets forth the expiration dates in our major markets of the most important patents covering 
Adempas™, Avalox™ / Avelox™, Betaferon™ / Betaseron™, Eylea™ / Eylia™, Kogenate™, Levitra™,  
Magnevist™, Mirena™, Nexavar™, Stivarga™, Xarelto™, Xofigo™, yaz™, Yasmin™ and Yasminelle™: 

Expiration Dates of Most Important Patents  

[Table 4.39]

Market 

Germany 

France 

U.K. 

Italy 

Spain 

Japan 

China 

U.S.A. 

Canada 

Products 

Adempas™ 

Active ingredient 

Avalox™ / Avelox™ 

Active ingredient 

Active ingredient 
monohydrate 

Tablets 

Betaferon™ / Betaseron™ 

Active ingredient 

Eylea™ / Eylia™ 

Active ingredient 

Kogenate™  

Active ingredient 

Formulation 

Levitra™ 

2023a 

2023a

2023a

2023a

2023a

2023a 

2023 

2023a

2023

2014 

2014

2014

2014

2014

2014 

2013 

2014

2015

2016 

2019 

2016

2019

2016

2019

2016

2019

2016

2019

2016 

2019 

2016 

2019 

2016

2019

– 

–

–

–

–

– 

– 

2020a 

2025

2020a

2025

2025

2020a/f 

2020 

–

–

– 

2017 

–

2017

–

2017

–

2017

–

2017

– 

2020c 

– 

2017 

2014

2016c

2016

2019

2016

2020

2021

2017

Active ingredient 

2018 

2018

2018

2018

2018

2020 

2018 

2018

2018

Mirena™ 

Inserter 

Inserter (improved) 

Nexavar™ 

2015 

2029d 

2015

2029d

2015

2029d

2015

2029d

2015

2029d

– 

2029 

2015 

2029 

2015

2029b

2015

2029b

Active ingredient 

2021 

2021

2021

2021

2021

2020h 

2020 

2020/2027g

2020

Stivarga™ 

Active ingredient 

2024a 

2028i

2024a

2028i

2028i

2024j 

2024 

2029c/e

2024

Xarelto™ 

Active ingredient 

2023 

2023

2023

2023

2023

2024 

2020 

2021a

2020

Xofigo™ 

Use 

Production process 

YAZ™ 

Formulation 

Dosage regimen 

2019a 

2031k 

2019a

2031k

2019a

2031k

2019a

2031k

2019a

2031k

– 

– 

–

–

–

–

–

–

–

–

Production process 

2025 

2025

2025

2025

2025

Yasmin™ 

Formulation 

Production process 

Yasminelle™ 

Formulation 

Production process 

– 

2025 

– 

2025 

–

2025

–

2025

–

2025

–

2025

–

2025

–

2025

–

2025

–

2025

2019 

2031b 

2021 

2014b 

2026 

2020 

2026 

2020 

2026 

2019 

2031b 

2020a

2031

2019

2031b

2020 

– 

2026 

2020 

2026 

2020 

2026 

–

–

2025

–

2025

–

2025

2020

2014

2026

2020

2026

2020

2026

a   current expiration date; extension applied for 
b  patent pending. 
c   patent expiry date updated 
d  opposition to EP patent pending 
e   patent term adjustment under calculation 
f   indication-specific term extensions until 2021 for AMD and until 2022 for CRVO 
g  compound patent expires 2020, polymorph patent expires 2027 
h  patent term extension granted for kidney cancer until 2021 and liver cancer until 2022; patent term extension for thyroid cancer applied for 
i   patent term extension granted 
j   patent term extension granted for colon cancer until 2026; patent term extension for GIST applied for 
k   notice of allowance received 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
  
  
  
  
  
 
  
 
  
  
  
  
  
  
  
  
 
 
 
 
  
  
 
 
  
 
 
 
 
  
  
 
 
  
 
 
 
 
  
  
 
 
  
 
 
 
 
  
  
 
 
  
 
 
 
 
  
  
 
 
  
 
 
 
 
  
  
 
 
  
 
 
 
 
  
  
 
 
  
 
 
 
 
  
  
 
 
  
 
 
 
 
  
  
 
 
  
 
 
 
 
  
  
 
 
  
 
 
 
 
  
  
 
 
  
 
 
 
 
  
  
 
 
  
 
 
 
 
  
  
 
 
  
 
 
 
 
  
  
 
 
  
 
 
 
 
  
  
 
 
  
 
  
  
 
  
 
  
  
  
280 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

18. Property, plant and equipment 

Changes in property, plant and equipment in 2014 were as follows: 

Changes in Property, Plant and Equipment 

Cost of acquisition or construction,  
December 31, 2013 

Changes in scope of consolidation 

Acquisitions 

Capital expenditures 

Retirements 

Transfers 

Transfers (IFRS 5) 

Inflation adjustment (IAS 29) 

Remeasurement (IFRS 3) 

Exchange differences 

December 31, 2014 

Accumulated depreciation and impairment losses,  
December 31, 2013 

Changes in scope of consolidation 

Retirements 

Depreciation and impairment losses in 2014 

Depreciation 

Impairment losses 

Impairment loss reversals 

Transfers 

Transfers (IFRS 5) 

Exchange differences 

December 31, 2014 

Carrying amounts, December 31, 2014 

Carrying amounts, December 31, 2013 

Plant 
installations 
and 
machinery 

Furniture, 
fixtures and 
other 

equipment   

Construction 
in progress 
and advance 
payments  

Land and 
buildings 

[Table 4.40]

Total 

€ million 

€ million 

€ million  

€ million  

€ million 

8,375

16,556

1,853 

1,671 

28,455

5

74

248

(165)

233

(11)

5

–

324

9,088

4,630

4

(122)

282

258

24

–

1

(1)

146

4,940

4,148

3,745

3

85

468

(351)

611

(6)

1

–

777

18,144

– 

27 

216 

(176) 

34 

(5) 

– 

– 

60 

2,009 

12,414

1,390 

3

(329)

819

786

33

–

–

(3)

522

13,426

4,718

4,142

– 

(156) 

205 

205 

– 

– 

(1) 

(2) 

46 

1,482 

527 

463 

– 

49 

1,135 

(6) 

(878) 

(1) 

2 

– 

106 

2,078 

6 

– 

(3) 

39 

– 

39 

– 

– 

– 

1 

43 

2,035 

1,665 

8

235

2,067

(698)

–

(23)

8

–

1,267

31,319

18,440

7

(610)

1,345

1,249

96

–

–

(6)

715

19,891

11,428

10,015

Impairment losses totaling €96 million were recognized on property, plant and equipment in the CropScience 
segment (€76 million), the Consumer Health segment (€7 million), the Pharmaceuticals segment (€6 million), the 
MaterialScience segment (€4 million) and Other Segments (€3 million).  

In 2014, borrowing costs of €32 million (2013: €34 million) were capitalized as components of the cost of acquisi-
tion or construction of qualifying assets, applying an average interest rate of 3.1% (2013: 3.8%). 

Capitalized property, plant and equipment included assets with a total net value of €504 million (2013: 
€439 million) held under finance leases. The cost of acquisition or construction of these assets as of the closing 
date totaled €827 million (2013: €695 million). They comprised plant installations and machinery with a carrying 
amount of €233 million (2013: €201 million), buildings with a carrying amount of €132 million (2013: €126 million) 
and other property, plant and equipment with a carrying amount of €139 million (2013: €112 million). For infor-
mation on the liabilities arising from finance leases, see note [27]. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

281

In 2014, rental payments of €219 million (2013: €215 million) were made for assets leased under operating leases 
as defined in ias 17 (Leases).   

Lease payments of €2 million are expected to be received in 2015 from operating leases – as defined in ias 17 
(Leases) – pertaining to property, plant and equipment. Lease payments totaling €7 million are expected to be 
received in 2016–2019 and lease payments totaling €2 million after 2019. 

INVESTMENT PROPERTY 
The fair values of investment property are mainly determined using the income approach based on internal valua-
tions for buildings and developed sites, and using the market comparison approach for undeveloped sites.  

The total carrying amount of investment property as of December 31, 2014, was €175 million (December 31, 2013: 
€173 million). The fair value of this property was €501 million (2013: €540 million). The rental income from invest-
ment property was €14 million (2013: €20 million), and the operating expenses directly allocable to this property 
amounted to €9 million (2013: €12 million). A further amount of €2 million (2013: €4 million) in operating expenses 
was directly allocable to investment property from which no rental income was derived. 

Changes in property, plant and equipment in 2013 were as follows: 

Plant 
installations 
and 
machinery 

Furniture, 
fixtures and 
other 
equipment  

Construction 
in progress 
and advance 
payments  

Land and 
buildings 

[Table 4.41]

Total 

€ million 

€ million 

€ million 

€ million  

€ million 

8,273

16,555

1,854

1,343 

28,025

Changes in Property, Plant and Equipment (Previous Year) 

Cost of acquisition or construction,  
December 31, 2012 

Changes in scope of consolidation 

Acquisitions 

Capital expenditures 

Retirements 

Transfers 

Transfers (IFRS 5) 

Inflation adjustment (IAS 29) 

Remeasurement (IFRS 3) 

Exchange differences 

December 31, 2013 

10

21

196

(119)

217

–

5

–

(228)

8,375

11

15

406

(387)

360

–

2

–

(406)

16,556

Accumulated depreciation and impairment losses,  
December 31, 2012 

4,539

12,214

Changes in scope of consolidation 

Retirements 

Depreciation and impairment losses in 2013 

Depreciation 

Impairment losses 

Impairment loss reversals 

Transfers 

Transfers (IFRS 5) 

Exchange differences 

December 31, 2013 

Carrying amounts, December 31, 2013 

Carrying amounts, December 31, 2012 

12

(82)

276

264

12

–

2

–

(117)

4,630

3,745

3,734

8

(363)

844

826

18

–

(1)

–

(288)

12,414

4,142

4,341

5

3

190

(162)

32

–

–

–

(69)

1,853

1,370

3

(144)

208

199

9

–

(1)

–

(46)

1,390

463

484

– 

16 

980 

(8) 

(609) 

– 

1 

– 

26

55

1,772

(676)

–

–

8

–

(52) 

1,671 

(755)

28,455

4 

– 

(7) 

9 

– 

9 

– 

– 

– 

– 

6 

1,665 

1,339 

18,127

23

(596)

1,337

1,289

48

–

–

–

(451)

18,440

10,015

9,898

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
282 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

19. Investments accounted for using the equity method 

Three (2013: two) associates and three (2013: three) joint ventures were accounted for using the equity method.  

Associates and Joint Ventures Accounted for Using the Equity Method 

Company Name 

Associates 

Place of Business 

Nanjing Baijingyu Pharmaceutical Co., Ltd. 

Nanjing, China 

Paltough Industries (1998) Ltd. 

PO JV, LP 

Joint ventures 

Bayer IMSA, S.A. de C.V. 

Bayer Zydus Pharma Private Limited 

DIC Bayer Polymer Ltd. 

Kibbutz Ramat Yochanan, Israel 

Wilmington, U.S.A. 

Nuevo Leon, Mexico 

Mumbai, India 

Tokyo, Japan 

[Table 4.42]

Bayer’s 
interest 

% 

15

25

39.4

50

50

50

In 2000 Bayer acquired the polyols business and parts of the propylene oxide (po) production operations of  
Lyondell Chemicals with the objective of ensuring access to patented technologies and safeguarding the long-term 
supply of po, a starting product for polyurethane. As part of this strategy, a company was established to produce  
po (po jv, lp, United States, in which Bayer holds a 39.4% interest). Bayer benefits from fixed long-term supply 
quotas / volumes of po from this company’s production. The two following tables contain summarized data from the 
income statements and statements of financial position of the associate po jv, lp, United States, which is accounted 
for using the equity method, and show the respective amounts recognized in the consolidated financial statements 
of the Bayer Group. 

Income Statement Data of PO JV, LP, Accounted for Using the Equity Method 

Net sales 

Net loss after taxes 

Share of net loss after taxes 

Share of total comprehensive income after taxes 

Gain (loss) after taxes from impairments / derecognition of other interests 

Recognized loss after taxes of PO JV, LP, accounted for using the equity method 

[Table 4.43]

2013 

2014 

€ million  

€ million 

2,217 

2,414

(46) 

(18) 

(18) 

(2) 

(20) 

(44)

(17)

(17)

(1)

(18)

Data from the Statements of Financial Position of PO JV, LP, Accounted for Using the Equity Method 

[Table 4.44]

Noncurrent assets 

Equity 

Share of equity 

Other 

Carrying amount of PO JV, LP, accounted for using the equity method 

Dec. 31, 2013 

Dec. 31, 2014 

€ million  

€ million 

441 

441 

175 

(1) 

174 

462

462

182

2

184

The item “Other” mainly comprised differences arising from adjustments of data to Bayer’s uniform accounting 
policies, purchase price allocations and their amortization in profit or loss. 

The following table contains a summary of the aggregated income statement data and aggregated carrying 
amounts of the individually non-material associates that are accounted for using the equity method. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

283

Income Statement Data and Carrying Amount of Associates Accounted for Using the Equity Method 

[Table 4.45]

Income after taxes 

Share of income after taxes 

Share of total comprehensive income after taxes 

Carrying amount of associates accounted for using the equity method 

2013 

2014 

€ million  

€ million 

4 

1 

1 

20 

4

1

1

27

The following table contains a summary of the aggregated income statement data and aggregated carrying 
amounts of the individually non-material joint ventures that are accounted for using the equity method. 

Income Statement Data and Carrying Amount of Joint Ventures Accounted for Using the Equity Method 

[Table 4.46]

Income after taxes 

Share of income after taxes 

Share of total comprehensive income after taxes 

Gain (loss) after taxes from impairments / derecognition of other interests 

Recognized income after taxes of joint ventures accounted for using the equity method 

Carrying amount of joint ventures accounted for using the equity method 

2013 

2014 

€ million  

€ million 

6 

4 

4 

(1) 

3 

9 

8

4

4

–

4

12

20. Other financial assets 

The other financial assets were comprised as follows: 

Other Financial Assets 

[Table 4.47]

Loans and receivables 

Available-for-sale financial assets 

of which debt instruments 

of which equity instruments 

Held-to-maturity financial investments 

Receivables from derivatives 

Receivables under lease agreements 

Total 

Dec. 31, 2013 

Dec. 31, 2014 

Total 

Of which 
current 

Total 

Of which 
current 

€ million 

€ million 

€ million  

€ million 

815

298

238

60

96

765

8

1,982

38

133

133

–

34

574

–

779

915 

354 

261 

93 

69 

484 

8 

1,830 

177

143

136

7

11

392

–

723

The loans and receivables mainly comprised capital with a nominal volume of €595 million (2013: €595 million) 
provided to Bayer-Pensionskasse VVaG (Bayer-Pensionskasse) for its effective initial fund, and jouissance right 
capital (Genussrechtskapital) with a nominal volume of €150 million (2013: €150 million), also provided to Bayer-
Pensionskasse.  

The debt instruments reported as available-for-sale financial assets comprised German treasury bills in the amount 
of €125 million (2013: €125 million). These treasury bills, which were lent to a bank, continue to be recognized  
as available-for-sale financial assets because the related risks and rewards remain with Bayer. Upon maturity or 
redemption of the treasury bills, Bayer is obligated to replace them with German government securities until 2016.  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
284 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

The equity instruments reported as available-for-sale financial assets included €29 million (2013: €22 million) in 
instruments whose fair value could not be determined from a stock exchange or other market price or by discount-
ing reliably determinable future cash flows. These equity instruments were recognized at cost.  

In 2014, impairment loss reversals totaling €2 million (2013: impairment losses totaling €2 million) on available-for-
sale financial assets were recognized in profit or loss. 

Unimpaired other financial assets of €8 million (2013: €8 million) were past due on the closing date. 

Further information on the accounting for receivables from derivatives is given in note [30]. 

Receivables under lease agreements relate to finance leases where Bayer is the lessor and the economic owner  
of the leased assets is the lessee. These receivables comprised expected lease payments of €46 million (2013: 
€48 million), including €37 million (2013: €40 million) in interest. Of the expected lease payments, €1 million 
(2013: €1 million) is due within one year, €2 million (2013: €4 million) within the following four years and 
€43 million (2013: €43 million) in subsequent years. 

21. Inventories 

Inventories were comprised as follows:  

Inventories 

Raw materials and supplies 

Work in process, finished goods and goods purchased for resale 

Advance payments 

Total 

[Table 4.48]

Dec. 31, 2013 

Dec. 31, 2014 

€ million  

€ million 

1,369 

5,745 

15 

7,129 

1,603

6,781

94

8,478

Impairment losses recognized on inventories were reflected in the cost of goods sold. They were comprised as 
follows: 

Impairments of Inventories 

Accumulated impairment losses, January 1 

Changes in scope of consolidation 

Impairment losses in the reporting period 

Impairment loss reversals or utilization 

Exchange differences 

Accumulated impairment losses, December 31 

[Table 4.49]

2013 

2014 

€ million  

€ million 

(384) 

2 

(214) 

149 

24 

(423) 

(423)

–

(214)

176

(16)

(477)

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

285

22. Trade accounts receivable 

Trade accounts receivable less impairment losses amounted to €9,097 million (2013: €7,569 million) on the closing 
date and were comprised as follows: 

Trade Accounts Receivable 

Trade accounts receivable (before impairments) 

Accumulated impairment losses 

Carrying amount, December 31 

of which noncurrent 

Changes in impairment losses on trade accounts receivable were as follows: 

Impairments of Trade Accounts Receivable 

Accumulated impairment losses, January 1 

Impairment losses in the reporting period 

Impairment loss reversals or utilization 

Exchange differences 

Accumulated impairment losses, December 31 

[Table 4.50]

2013 

2014 

€ million  

€ million 

7,769 

(200) 

7,569 

18 

9,330

(233)

9,097

32

[Table 4.51]

2013 

2014 

€ million  

€ million 

(240) 

(66) 

85 

21 

(200)

(73)

39

1

(200) 

(233)

Trade accounts receivable amounting to €9,029 million (2013: €7,499 million) were not individually impaired. 
Of this amount, €1,105 million (2013: €1,222 million) was past due or due immediately on the closing date.  

The amounts of impaired and past-due trade accounts receivable are summarized in the following table: 

Impaired and Past-Due Trade Accounts Receivable 

[Table 4.52]

Of which
neither
impaired
nor past due
at the
closing date 

Of which 
unimpaired but  
past due at the  
closing date 

Of which 
impaired
at the
closing date 

Carrying 
amount 

up to 
3 months 

3 – 6 
months 

6 – 12 
months 

more than 
12 months  

December 31, 2014 

December 31, 2013 

9,097 

7,569 

7,924

6,277

738

848

165

130

85

104

117 

140 

68

70

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

The gross carrying amount of individually impaired trade accounts receivable was €217 million (2013: 
€193 million). The impairment losses recognized on these assets totaled €149 million (2013: €123 million), result-
ing in a net carrying amount of €68 million (2013: €70 million). 

The unimpaired receivables were deemed to be collectible on the basis of established credit management process-
es and individual assessments of customer risks. The impairment losses recognized included an appropriate allow-
ance for the default risk as of the end of the reporting period.  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
286 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Receivables from government health service institutions, especially in Greece, Italy, Portugal and Spain, are under 
special observation in view of the government debt crisis. Although there were no material defaults on such receiv-
ables in 2014 or 2013, it is possible that future developments in these countries could result in payment delays  
and / or defaults. This could necessitate the recognition of impairment losses due to new occurrences. Trade ac-
counts receivable from government health service institutions in the above countries at the end of 2014 totaled 
€183 million (2013: €231 million).  

An excess-of-loss policy exists for the HealthCare subgroup as part of a global credit insurance program. More than 
80% of the receivables of the HealthCare subgroup are insured up to a maximum total annual compensation pay-
ment of €100 million (2013: €100 million).  

A further €459 million (2013: €438 million) of receivables was secured by advance payments, letters of credit or 
guarantees or by liens on land, buildings or harvest yields. 

23. Other receivables 

Other receivables, after impairment losses of €3 million (2013: €4 million), were comprised as follows: 

Other Receivables 

[Table 4.53]

Other tax receivables 

Deferred charges 

Reimbursement claims 

Net defined benefit asset 

Receivables from employees 

Miscellaneous receivables 

Total 

Dec. 31, 2013 

Dec. 31, 2014 

Total 

Of which  
current 

Total 

Of which 
current 

€ million 

€ million  

€ million  

€ million 

577

269

321

117

41

647

1,972

504 

240 

321 

– 

41 

612 

297 

127 

41 

48 

370 

1,476 

810 

1,935 

528

273

113

–

44

530

1,488

The reimbursement claims of €127 million (2013: €321 million) consisted mainly of receivables from insurance 
companies in connection with product liability claims.  

The miscellaneous receivables include a €57 million receivable from Merck & Co., Inc., United States, arising from 
the business that Merck & Co., Inc. continues to operate pending its final transfer to Bayer. The operating profit 
earned during this transition period is transferred to Bayer. 

Of the €678 million (2013: €526 million) in financial receivables included in other receivables, €675 million (2013: 
€524 million) was unimpaired. Of this amount, €313 million (2013: €204 million) was past due or due immediately 
on the closing date. The gross carrying amount of individually impaired other receivables was €6 million (2013: 
€6 million). The impairment losses recognized on these assets totaled €3 million (2013: €4 million), resulting in a 
net carrying amount of €3 million (2013: €2 million). 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

287

The amounts of impaired and past-due financial receivables included in other receivables are summarized in the 
following table: 

Impaired and Past-Due Other Financial Receivables 

[Table 4.54]

Of which 
neither 
impaired
nor past due
at the
closing date 

Of which 
unimpaired but 
past due at the 
closing date 

Of which 
impaired
at the
closing date 

Carrying 
amount 

up to 
3 months 

3 – 6
months 

6 – 12
months 

more than 
12 months 

December 31, 2014 

December 31, 2013 

678 

526 

362

320

259

148

17

12

9

18

28 

26 

3

2

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

24. Equity 

The foremost objectives of our financial management are to help bring about a sustained increase in the value of 
the Bayer Group for the benefit of all stakeholders, and to ensure the Group’s creditworthiness and liquidity. The 
pursuit of these goals means reducing our cost of capital, optimizing our capital structure, improving our financing 
cash flow and effectively managing risk. 

The rating agencies commissioned by Bayer assess the creditworthiness of the Bayer Group as follows:  

Rating 

Standard & Poor’s 

Moody’s 

Long-term rating

Outlook 

Short-term rating

A-

A3

stable 

stable 

A-2

P-2

[Table 4.55]

These investment-grade ratings reflect the company’s good creditworthiness and ensure access to a broad investor 
base for financing purposes. Bayer’s capital management strategy is based on the debt ratios published by the 
rating agencies, which – by somewhat differing methods – look at the cash flow for a given period in relation to 
debt. The financial strategy of the Bayer Group focuses on an “a” category rating and on preserving our financial 
flexibility. Apart from utilizing cash inflows from our operating business to reduce net financial debt, we are im-
plementing our financial strategy by way of vehicles such as the subordinated hybrid bonds issued in July 2005 and 
July 2014, the authorized and conditional capital amounts created by resolutions of the Annual Stockholders’ Meet-
ing, and a potential share buyback program. Bayer’s Articles of Incorporation do not stipulate capital ratios. 

The changes in the various components of equity during 2013 and 2014 are shown in the consolidated statements 
of changes in equity. 

CAPITAL STOCK 
The capital stock of Bayer AG on December 31, 2014 amounted to €2,117 million (2013: €2,117 million), divided 
into 826,947,808 (2013: 826,947,808) registered shares, and was fully paid in. Each share confers one voting right. 

AUTHORIZED CAPITAL 
The Authorized Capital i amounting to €530 million was canceled because it would have expired on April 29, 2015, 
prior to the planned date of the 2015 Annual Stockholders’ Meeting. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
288 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

A new Authorized Capital i in the same amount was approved by the Annual Stockholders’ Meeting on April 29, 
2014. It expires on April 28, 2019. It can be used to increase the capital stock by issuing new no-par registered 
shares against cash contributions and / or contributions in kind, but capital increases against contributions in kind 
may not exceed a total of €423 million (Authorized Capital i). Stockholders must normally be granted subscription 
rights. However, the Board of Management is authorized, with the consent of the Supervisory Board, to exclude 
stockholders’ subscription rights where the subscription ratio gives rise to fractions in the case of capital increases 
against cash and / or contributions in kind, and also to the extent necessary to grant the holders of bonds with 
warrants or conversion rights or obligations issued by the Company or its group companies a right to subscribe for 
new shares to the extent to which they would be entitled after exercise of their warrants or conversion rights, or 
performance of their exercise or conversion obligations. The Board of Management is also authorized, with the 
consent of the Supervisory Board, to exclude stockholders’ subscription rights if the shares are issued in connec-
tion with the admission of shares to a foreign stock exchange and the total interest in the capital stock attributable 
to the new shares for which subscription rights are excluded does not exceed 10% of the existing capital stock on 
the date of entry of the authorization in the commercial register or, in the event that this amount is lower, 10% of 
the existing capital stock on the date of issuance of the new shares. The Board of Management is further author-
ized, with the consent of the Supervisory Board, to exclude stockholders’ subscription rights if the capital is in-
creased against contributions in kind to issue shares either for the purpose of acquiring companies, parts of com-
panies, interests in companies, or other assets, or for the purpose of implementing a scrip dividend, where stock-
holders are given the option of contributing their dividend entitlements to the Company (either in whole or in part) 
as a contribution in kind against the issuance of new shares out of the Authorized Capital i. The amount of capital 
stock represented by shares issued against cash contributions and / or contributions in kind without granting sub-
scription rights to the stockholders must not exceed a total of 20% of the capital stock that existed on the date the 
authorized capital was approved by the Annual Stockholders’ Meeting. 

The Authorized Capital ii amounting to €212 million was canceled because it would have expired on April 29, 2015, 
prior to the planned date of the 2015 Annual Stockholders’ Meeting. 

A new Authorized Capital ii in the same amount was approved by the Annual Stockholders’ Meeting on April 29, 
2014. It expires on April 28, 2019. The Board of Management is authorized, with the consent of the Supervisory 
Board, to increase the capital stock by up to a total of €212 million by issuing new no-par registered shares against 
cash contributions (Authorized Capital ii). Stockholders must normally be granted subscription rights. However, 
the Board of Management is authorized, with the consent of the Supervisory Board, to exclude stockholders’ sub-
scription rights where the subscription ratio gives rise to fractions and also if the shares are issued against cash 
contributions and the total interest in the capital stock attributable to the new shares for which subscription rights 
are excluded does not exceed 10% of the existing capital stock on the date of entry of the authorization in the 
commercial register or, in the event that this amount is lower, 10% of the existing capital stock on the date of 
issuance of the new shares, and the issue price of the new shares is not significantly below the market price of the 
already listed shares of the company of the same class at the time when the issue price is finalized by the Board of 
Management within the meaning of Section 203, Paragraphs 1 and 2 in conjunction with Section 186 Paragraph 3 
sentence 4 of the German Stock Corporation Act. Any own shares that are sold on or after April 29, 2014, while 
excluding stockholders’ subscription rights pursuant to Section 71 Paragraph 1 No. 8 Sentence 5 in conjunction 
with Section 186 Paragraph 3 Sentence 4 of the German Stock Corporation Act count toward the above 10% limit. 
Shares that have been or may be issued to service bonds with warrants or conversion rights or obligations, where 
such bonds are issued on or after April 29, 2014, while excluding stockholders' subscription rights in analogous 
application of Section 186 Paragraph 3 Sentence 4 of the German Stock Corporation Act also count toward this 
limit. 

Neither of these authorized capital amounts has been utilized so far. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

289

CONDITIONAL CAPITAL 
The Conditional Capital 2010 created by the Annual Stockholders’ Meeting on April 30, 2010, was canceled be-
cause it would have expired prior to the planned date of the 2015 Annual Stockholders’ Meeting. 

The Annual Stockholders’ Meeting on April 29, 2014 approved the creation of Conditional Capital 2014, again 
authorizing a conditional increase of up to €212 million in the capital stock through the issuance of up to 
82,694,750 new no-par registered shares. The conditional capital increase serves to grant registered no-par value 
shares to the holders of bonds with warrants or convertible bonds, profit participation certificates, or income bonds 
(or combinations of these instruments) (collectively referred to as “debt instruments”), each with options or con-
version rights or obligations, that may be issued up to April 28, 2019, on the basis of the authorization resolved by 
the Annual Stockholders’ Meeting on April 29, 2014, by Bayer AG or a group company of Bayer AG within the 
meaning of Section 18 of the German Stock Corporation Act in which Bayer AG has a direct or indirect interest in 
at least 90% of the votes and capital. Such new shares are to be issued at the option premium or conversion price 
to be determined in accordance with the authorizing resolution referred to above. The authorization to issue such 
instruments is limited to a total nominal amount of €6 billion. In principle, stockholders have a statutory right to be 
granted subscription rights to such instruments. However, the Board of Management is authorized, with the con-
sent of the Supervisory Board, to exclude stockholders’ subscription rights where the subscription ratio gives rise 
to fractions and also to the extent necessary to grant the holders of bonds with warrants or conversion rights or 
obligations a right to subscribe for new shares to the extent to which they would be entitled after exercise of their 
warrants or conversion rights, or performance of their exercise or conversion obligations. Furthermore, the Board 
of Management is authorized, with the consent of the Supervisory Board, to fully exclude stockholders’ subscrip-
tion rights to debt instruments with options or conversion rights or obligations issued against cash contributions if 
the Board of Management, after due consideration, is of the opinion that the issue price of the debt instruments is 
not significantly below their hypothetical fair value determined in accordance with accepted methods, and in par-
ticular, valuation techniques. This authorization to exclude subscription rights applies to bonds with warrants or 
conversion rights or exercise or conversion obligations for shares with a proportionate interest in the capital stock 
not exceeding 10% of the total capital stock either at the date when the resolution is adopted or, in the event that 
this amount is lower, at the date on which this authorization is exercised. New shares that are issued on or after 
April 29, 2014, while excluding stockholders’ subscription rights in accordance with Sections 203 Paragraph 1 and 
2 in conjunction with Section 186 Paragraph 3 Sentence 4 of the German Stock Corporation Act as well as own 
shares that are sold on or after April 29, 2014, while excluding stockholders’ subscription rights pursuant to Sec-
tion 71 Paragraph 1 Number 8 Sentence 5 in conjunction with Section 186 Paragraph 3 Sentence 4 of the German 
Stock Corporation Act also count toward this 10% limit. 

Absent a further resolution of the Annual Stockholders’ Meeting on the exclusion of stockholders’ subscription 
rights, the Board of Management will only use the existing authorizations to increase the capital stock out of the 
Authorized Capital or the Conditional Capital – while excluding stockholders’ subscription rights – up to a total 
amount of 20% of the capital stock that existed when the respective resolutions were adopted by the Annual 
Stockholders’ Meeting on April 29, 2014. All issuances or sales of shares or of bonds with warrants or conversion 
rights or obligations that are effected while excluding stockholders’ subscription rights also count toward this 20% 
limit. 

ACCUMULATED COMPREHENSIVE INCOME 
Accumulated comprehensive income comprises retained earnings and accumulated other comprehensive income. 
The retained earnings include prior years’ undistributed income of consolidated companies and all remeasure-
ments of the net liability for defined benefit pension and other post-employment benefit plans that are recognized 
outside profit or loss. The accumulated other comprehensive income comprises exchange differences, the changes 
in fair values of cash flow hedges and available-for-sale financial assets, and the revaluation surplus. The latter 
results from the acquisition in 2005 of the remaining 50% interest in an otc joint venture with Roche in the United 
States that was established in 1996 and the acquisition in 2008 of the remaining 50% interest in Bayer Material-
Science Oldenburg GmbH & co. KG, Oldenburg, Germany. In 2014, an amount of €5 million (2013: €5 million) 
corresponding to the annual amortization / depreciation of the respective assets was transferred from the revalua-
tion surplus to retained earnings. The exchange differences included an amount of minus €28 million (2013: €12 
million) attributable to associates and joint ventures accounted for using the equity method. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
290 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

DIVIDEND 
Under the German Stock Corporation Act (AktG), the dividend payment is determined by the distributable profit 
reported in the annual financial statements of Bayer AG, which are prepared according to the German Commercial 
Code. Retained earnings were diminished by payment of the dividend of €2.10 per share for 2013. The proposed 
dividend for the 2014 fiscal year is €2.25 per share, which would result in a total dividend payment of €1,861 mil-
lion. Payment of the proposed dividend is contingent upon approval by the stockholders at the Annual Stockhold-
ers’ Meeting and therefore is not recognized as a liability in the consolidated financial statements. 

NON-CONTROLLING INTEREST 
The changes in the non-controlling interest in Group equity during 2013 and 2014 are shown in the following table: 

Components of Non-Controlling Interest in Equity 

January 1 

Changes in equity not recognized in profit or loss 

Exchange differences on translation of operations outside the eurozone 

Other changes in equity 

Dividend payments 

Changes in equity recognized in profit or loss 

December 31 

[Table 4.56]

2013 

2014 

€ million 

€ million 

100 

(14) 

6 

(3) 

(3) 

86 

86

11

–

(2)

17

112

Non-controlling interests exist mainly in the equities of Bayer CropScience Limited, India; Bayer Jinling 
Polyurethane Co. Ltd., China; Bayer Pearl Polyurethane Systems fzco, United Arab Emirates; Bayer East Africa 
Ltd., Kenya; and Bayer s.a., Peru. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

291

25. Provisions for pensions and other post-employment 

benefits 

Provisions were established for defined benefit obligations pertaining to pensions and other post-employment 
benefits. The net liability was accounted for as follows: 

Net Defined Benefit Liability Reflected in the Statement of Financial Position 

Pensions 

Other post-employment 
benefits 

[Table 4.57]

Total 

Provisions for pensions and other post-
employment benefits (net liability) 

of which Germany 

of which other countries 

Net defined benefit asset 

of which Germany 

of which other countries 

Net defined benefit liability 

of which Germany 

of which other countries 

Dec. 31, 2013  Dec. 31, 2014  Dec. 31, 2013  Dec. 31, 2014  Dec. 31, 2013  Dec. 31, 2014 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

7,037

6,230

807

114

95

19

6,923

6,135

788

11,796

10,336

1,460

38

22

16

11,758

10,314

1,444

331

–

331

3

–

3

328

–

328

440

–

440

3

–

3

437

–

437

7,368 

6,230 

1,138 

117 

95 

22 

7,251 

6,135 

1,116 

12,236

10,336

1,900

41

22

19

12,195

10,314

1,881

The expenses for defined benefit plans for pension and other post-employment benefits comprised the following 
components: 

Expenses for Defined Benefit Plans

[Table 4.58]

Germany 

Other countries 

2013 

2014 

2013 

2014 

2013 

Pension plans 

Other post-employment 
benefit plans 

Total 

2014 

Other countries 

2013 

2014 

Current service cost 

Past service cost 

of which plan curtailments 

Plan settlements 

Net interest 

Total 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

287 

30 

– 

– 

233 

550 

236

23

–

–

223

482

71

2

1

(1)

48

120

66

(25)

(15)

21

34

96

358

32

1

(1)

281

670

302 

(2) 

(15) 

21 

257 

578 

22 

(1) 

(1) 

– 

21 

42 

28

2

–

–

18

48

In 2014, a total of minus €5,159 million (2013: €1,946 million) in effects of remeasurements of the net defined 
benefit liability was also recognized outside profit or loss. Of this amount, minus €5,098 million (2013: 
€1,810 million) related to pension obligations and minus €61 million (2013: €135 million) to other post-employment 
benefit obligations. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
292 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS  

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Bayer Annual Report 2014 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS  

293

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

The net defined benefit liability developed as follows: 

Changes in Net Defined Benefit Liability 

[Table 4.59]

Defined benefit obligation 

Fair value of plan assets 

Effects of the asset ceiling 

Net defined benefit liability 

2013 

2014 

2013 

2014 

2013 

2014 

2013 

2014 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

Germany 

January 1 

Acquisitions 

Divestitures / changes in the scope of consolidation 

Current service cost 

Past service cost 

Gains / losses from plan settlements 

Net interest 

Net actuarial (gain) loss 

of which due to changes in financial assumptions 

of which due to changes in demographic assumptions 

of which due to experience adjustments 

Return on plan assets excluding amounts recognized as interest income 

Remeasurement of asset ceiling 

Employer contributions 

Employee contributions 

Payments due to plan settlements 

Benefits paid out of plan assets 

Benefits paid by the company 

December 31 

Other countries 

January 1 

Acquisitions 

Divestitures / changes in the scope of consolidation 

Current service cost 

Past service cost 

Gains / losses from plan settlements 

Net interest 

Net actuarial (gain) loss 

of which due to changes in financial assumptions 

of which due to changes in demographic assumptions 

of which due to experience assumptions 

Return on plan assets excluding amounts recognized as interest income 

Remeasurement of asset ceiling 

Employer contributions 

Employee contributions 

Payments due to plan settlements 

Benefits paid out of plan assets 

Benefits paid by the company 

Plan administration costs paid out of plan assets 

Exchange differences 

December 31 

of which other post-employment benefits 

16,049

14,870 

8,640 

8,735

9

25

287

30

–

509

(1,453)

(1,485)

–

32

35

–

(209)

(412)

– 

– 

236 

23 

– 

553 

5,254 

5,208 

– 

46 

38 

– 

(211) 

(424) 

– 

21 

–

–

276 

330

(114) 

86 

35 

– 

802

331

38

–

(209) 

(211)

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

(7,409) 

(6,135)

(9) 

(4) 

(287) 

(30) 

– 

(233) 

1,453 

1,485 

– 

(32) 

(114) 

– 

86 

– 

– 

– 

–

–

(236)

(23)

–

(223)

(5,254)

(5,208)

–

(46)

802

–

331

–

–

–

412 

424

14,870

20,339 

8,735 

10,025

– 

– 

(6,135) 

(10,314)

6,539

5,812 

4,742 

4,705

–

(1)

93

1

1

254

(473)

(451)

7

(29)

6

(1)

(261)

(43)

(303)

5,812

721

– 

– 

94 

(23) 

21 

275 

1,094 

815 

264 

15 

9 

(64) 

(254) 

(53) 

521 

7,432 

918 

– 

– 

–

–

185 

223

133 

387

120 

6 

(1) 

(261) 

– 

(219) 

4,705 

393 

130

9

(64)

(254)

(1)

425

5,560

481

(13) 

– 

– 

– 

(9) 

– 

– 

– 

1 

– 

– 

(9) 

– 

3 

(9) 

– 

(9) 

(1,810) 

(1,116)

– 

1 

(93) 

(1) 

(1) 

(69) 

473 

451 

(7) 

29 

133 

1 

120 

– 

– 

– 

43 

– 

87 

–

–

(94)

23

(21)

(52)

(1,094)

(815)

(264)

(15)

387

–

130

–

–

–

53

(1)

(96)

(1,116) 

(328) 

(1,881)

(437)

Total as at December 31 

20,682

27,771 

13,440 

15,585

(9) 

(7,251) 

(12,195)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
  
 
  
  
 
 
  
  
 
 
 
 
 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
  
 
  
  
 
 
  
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
294 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

The pension obligations pertained mainly to Germany (73%; 2013: 72%), the United States (14%; 2013: 14%) 
and the United Kingdom (6%; 2013: 7%). In Germany, current employees accounted for about 45% (2013: 39%), 
retirees or their surviving dependents for about 47% (2013: 54%) and former employees with vested pension 
rights for about 8% (2013: 7%) of entitlements under defined benefit plans. In the United States, current employ-
ees accounted for about 26% (2013: 28%), retirees or their surviving dependents for about 61% (2013: 60%) and 
former employees with vested pension rights for about 13% (2013: 12%) of entitlements under defined benefit 
plans. 

In Brazil, employees were given the option of switching from a defined benefit plan to a defined contribution plan. 
This offer was accepted by around 34% of the employees. This resulted in a plan settlement loss of €21 million and 
a plan curtailment gain of €11 million. The defined benefit obligation was reduced by a total of €55 million and plan 
assets by €65 million. 

The actual return on the assets of defined benefit plans for pensions or other post-employment benefits amounted 
to €1,691 million (2013: €414 million) and €51 million (2013: €66 million), respectively. 

The following table shows the defined benefit obligations for pensions and other post-employment benefits along 
with the funded status of the funded obligations. 

Defined Benefit Obligation and Funded Status 

Defined benefit obligation 

of which unfunded 

of which funded 

Funded status of funded obligations 

Overfunding 

Underfunding 

Pension obligation 

Other post-employment 
benefit obligation 

2013 

2014 

2013 

2014 

2013 

[Table 4.60]

Total 

2014 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

19,961

794

19,167

26,853

1,117

25,736

124

6,244

47

10,679

721

95

626

3

236

918 

104 

814 

3 

336 

20,682 

889 

19,793 

27,771

1,221

26,550

127 

6,480 

50

11,015

PENSION AND OTHER POST-EMPLOYMENT BENEFIT OBLIGATIONS 
Group companies provide retirement benefits for most of their employees, either directly or by contributing to 
privately or publicly administered funds. The way these benefits are provided varies according to the legal, fiscal 
and economic conditions of each country, the benefits generally being based on employee compensation and years 
of service. The obligations relate both to existing retirees’ pensions and to pension entitlements of future retirees. 

The Bayer Group has set up funded pension plans for its employees in various countries. The most appropriate 
investment strategy is determined for each defined benefit pension plan based on the risk structure of the obliga-
tions (especially demographics, the current funded status, the structure of the expected future cash flows, interest 
sensitivity, biometric risks etc.), the regulatory environment and the existing level of risk tolerance or risk capacity. 
A strategic target investment portfolio is then developed in line with the plan’s risk structure, taking capital market 
factors into consideration. Further determinants are risk diversification, portfolio efficiency and the need for both a 
country-specific and a global risk / return profile centered on ensuring the payment of all future benefits. As the 
capital investment strategy for each pension plan is developed individually in light of the plan-specific conditions 
listed above, the investment strategies for different pension plans may vary considerably. For example, the propor-
tion of plan assets invested in equities is greater with the non-German pension plans than with the plans domiciled 
in Germany. The investment strategies are generally aligned less toward maximizing absolute returns and more 
toward the reasonable assurance of financing pension commitments over the long term. For plan assets, stress 
scenarios are simulated and other risk analyses (such as value at risk) undertaken with the aid of risk management 
systems. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

295

Bayer-Pensionskasse VVaG (Bayer-Pensionskasse), Leverkusen, Germany, is by far the most significant of the pen-
sion plans. It was closed to new members effective January 1, 2005. This legally independent fund is regarded as a 
life insurance company and is therefore subject to the German Insurance Supervision Act. The benefit obligations 
covered by Bayer-Pensionskasse comprise retirement, surviving dependents’ and disability pensions. It constitutes 
a multi-employer plan, to which the active members and their employers contribute. The company contribution is a 
certain percentage of the employee contribution. This percentage is the same for all participating employers, in-
cluding those outside the Bayer Group, and is set by agreement between the plan’s executive committee and su-
pervisory board, acting on a proposal from the responsible actuary. It takes into account the differences between 
the actuarial estimates and the actual values for the factors used to determine liabilities and contributions. Bayer 
may also adjust the company contribution in agreement with the plan’s executive committee and supervisory 
board, acting on a proposal from the responsible actuary. The plan’s liability is governed by Section 1, Paragraph 1, 
Sentence 3 of the German Law on the Improvement of Occupational Pensions. This means that if the pension plan 
exercises its right under the articles of association to reduce benefits, each participating employer has to make up 
the resulting difference. Bayer is not liable for the obligations of participating employers outside the Bayer Group, 
even if they cease to participate in the plan. 

Pension entitlements for people who joined Bayer in Germany on or after January 1, 2005 are granted via 
Rheinische Pensionskasse VVaG, Leverkusen. Future pension payments from this plan are based on contributions 
and the return on plan assets; a guaranteed interest rate applies. 

Another important pension provision vehicle is Bayer Pension Trust e.V. (bpt). This covers further retirement provi-
sion arrangements of the Bayer Group, deferred compensation, pension obligations previously administered by 
Schering Altersversorgung Treuhand e.V., and components of other direct commitments.  

The defined benefit pension plans in the United States have been frozen for some years, and no significant new 
entitlements can be earned under these plans. The assets of all the u.s. pension plans are held by a master trust for 
reasons of efficiency. The applicable regulatory framework is based on the Employee Retirement Income Security 
Act (erisa), which includes a statutory 80% minimum funding requirement to avoid benefit restrictions. The actu-
arial risks, such as investment risk, interest-rate risk and longevity risk, remain with the company. 

The defined benefit pension plans in the United Kingdom are closed to new members. Plan assets in the u.k. are 
administered by independent trustees, who are legally obligated to act solely in the interests of the beneficiaries.  
A technical assessment is performed every three years in line with u.k. regulations. This serves as the basis for 
developing a plan to cover any potential financing requirements. Here, too, the actuarial risks remain with the 
company. 

The other post-employment benefit obligations outside Germany mainly related to retirees’ health care benefit 
payments in the United States. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
296 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

The fair value of the plan assets to cover pensions and other post-employment benefit obligations was as follows: 

Fair Value of Plan Assets as of December 31 

[Table 4.61]

Pension obligations 

Other post-employment 
obligations 

Germany 

Other countries 

Other countries 

2013 

2014 

2013 

2014 

2013 

2014 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

–

1,724

–

–

–

1,941

–

–

2,911

3,345

8

369

–

28

409

–

168

1,490

146

952

755

89

115

236

5,012

5,723

3,951

532

51

1,213

1,678

–

–

249

3,723

8,735

544

70

1,493

1,931

–

(4)

268

4,302

10,025

36

52

8

–

50

–

215

361

4,312

205 

1,669 

162 

690 

1,509 

86 

98 

236 

4,655 

41 

59 

6 

– 

60 

– 

258 

424 

5,079 

16 

110 

– 

155 

6 

1 

14 

– 

302 

– 

– 

– 

– 

– 

– 

91 

91 

393 

18

125

–

110

90

–

14

–

357

–

–

–

–

–

–

124

124

481

Plan assets based on quoted prices  
in active markets 

Real estate and special real estate funds 

Equities and equity funds 

Callable debt instruments 

Non-callable debt instruments 

Bond funds 

Derivatives 

Cash and cash equivalents 

Other 

Plan assets for which quoted prices  
in active markets are not available 

Real estate and special real estate funds 

Equities and equity funds 

Callable debt instruments 

Non-callable debt instruments 

Bond funds 

Derivatives 

Other 

Total plan assets 

The fair value of plan assets in Germany included real estate leased by Group companies, recognized at a fair value 
of €65 million (2013: €67 million), and Bayer AG shares and bonds held through investment funds, recognized at 
their fair value of €58 million (2013: €49 million) and €6 million (2013: €0 million), respectively. The other plan 
assets comprise mortgage loans granted, other receivables and qualified insurance policies. 

RISKS 
The risks from defined benefit plans arise partly from the defined benefit obligations and partly from the invest-
ment in plan assets. The risks lie in the possibility that higher direct pension payments will have to be made to the 
beneficiaries and/or that additional contributions will have to be made to plan assets in order to meet current and 
future pension obligations. 

Demographic / biometric risks 
Since a large proportion of the defined benefit obligations comprises lifelong pensions or surviving dependents’ 
pensions, longer claim periods or earlier claims may result in higher benefit obligations, higher benefit expense 
and / or higher pension payments than previously anticipated. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

297

Investment risks 
If the actual return on plan assets were below the return anticipated on the basis of the discount rate, the net de-
fined benefit liability would increase, assuming there were no changes in other parameters. This could happen as a 
result of a drop in share prices, increases in market rates of interest, default of individual debtors or the purchase 
of low-risk but low-interest bonds, for example. 

Interest-rate risk 
A decline in capital market interest rates, especially for high-quality corporate bonds, would increase the defined 
benefit obligation. This effect would be at least partially offset by the ensuing increase in the market values of the 
debt instruments held.  

MEASUREMENT PARAMETERS AND THEIR SENSITIVITIES 
The following weighted parameters were used to measure the pension obligations as of December 31 and the 
expense for pensions and other post-employment benefits in the respective year: 

Parameters for Benefit Obligations 

[Table 4.62]

Pension obligations 

Discount rate 

of which U.S.A 

of which U.K. 

Projected future salary increases 

Projected future benefit increases 

Other post-employment benefit obligations 

Germany 

Other countries 

2013 

% 

2014 

% 

3.80

2.00

3.00

1.75

3.00

1.75

2013 

% 

4.70

4.50

4.60

3.95

3.60

2014 

% 

3.70

3.70

3.60

3.65

3.30

2013 

% 

4.05 

4.50 

4.60 

3.25 

2.20 

Total 

2014 

% 

2.40

3.70

3.60

3.15

2.10

Discount rate 

–

–

4.90

3.95

4.90 

3.95

In Germany the Heubeck 2005 G mortality tables were used, in the United States the rp-2014 (2013: rp-2000) 
Combined Healthy Mortality Tables, and in the United Kingdom 95% of s1nxa. The adjustment of the mortality 
table in the u.s. led to actuarial losses of approximately €224 million. 

Parameters for Benefit Expense 

Pension obligations 

Discount rate 

Projected future salary increases 

Projected future benefit increases 

Other post-employment benefit obligations 

Germany 

Other countries 

2014 

% 

3.80

3.00

1.75

2013 

% 

4.05

3.85

3.20

2014 

% 

4.70

3.95

3.60

2013 

% 

3.20

3.00

1.75

[Table 4.63]

Total 

2014 

% 

4.05

3.25

2.20

2013 

% 

3.45 

3.20 

2.15 

Discount rate 

–

–

4.15

4.90

4.15 

4.90

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
298 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

The parameter sensitivities were computed by expert actuaries based on a detailed evaluation similar to that per-
formed to obtain the data presented in Table 4.59. Altering individual parameters by 0.5 percentage points (mortal-
ity by 10 percent per beneficiary) while leaving the other parameters unchanged would have impacted pension and 
other post-employment benefit obligations as of year end 2014 as follows: 

Sensitivity of Benefit Obligations 

Germany 

Other countries 

[Table 4.64]

Total 

Increase 

Decrease 

Increase 

Decrease 

Increase 

Decrease 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

Pension obligations 

0.5 %-pt. change in discount rate  

(1,712)

1,969

(441)

494 

(2,153) 

2,463

0.5 %-pt. change in projected future  
salary increases  

0.5 %-pt. change in projected future  
benefit increases 

10 % change in mortality 

Other post-employment benefit obligations 

0.5 %-pt. change in discount rate  

10 % change in mortality 

145

(135)

44

(41) 

189 

(176)

1,119

(657)

(1,020)

737

–

–

–

–

106

(168)

(51)

(22)

(76) 

179 

56 

24 

1,225 

(825) 

(1,096)

916

(51) 

(22) 

56

24

Provisions are also set up for the obligations, mainly of u.s. subsidiaries, to provide post-employment benefits in 
the form of health care cost payments to retirees. The valuation of health care costs was based on the assumption 
that they will increase at a rate of 7.0% (assumption in 2013: 7.5%), which should gradually decline to 5.0% 
(2013: 5.0%) by 2018. The following table shows the impact on other post-employment benefit obligations and 
total benefit expense of a one-percentage-point change in the assumed cost increase rates: 

Sensitivity to Health Care Cost Increases 

Impact on other post-employment benefit obligations 

Impact on benefit expense 

[Table 4.65]

Increase  
of one  
percentage  
point 

Decrease 
of one
percentage 
point 

€ million 

€ million 

86 

4 

(72)

(4)

PAYMENTS MADE AND EXPECTED FUTURE PAYMENTS 
The following payments correspond to the employer contributions made or expected to be made to funded  
benefit plans:  

Employer Contributions Paid or Expected 

2013 

2014 

Germany 

2015 
expected 

2013 

2014 

[Table 4.66]

Other countries 

2015 
expected 

€ million 

€ million 

€ million 

€ million  

€ million  

€ million 

Pension obligations 

Other post-employment benefit obligations 

Total 

86

–

86

331

–

331

71

–

71

117 

3 

120 

112 

18 

130 

111

10

121

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
    
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

299

Bayer has currently committed to make annual deficit contributions through 2016 amounting to gbp21 million for 
its u.k. pension plans and will likely have to make annual payments of us$50 million for its u.s. pension plans over 
the same period. 

Pensions and other post-employment benefits payable in the future from funded and unfunded plans are estimated 
as follows: 

Future Benefit Payments 

[Table 4.67]

Payments out of plan assets 

Payments by the company 

Other post-
employment 
benefits 

Other 
countries 

Pensions 

Other 
countries 

Germany 

Other post- 
employment  
benefits 

Other 
countries 

Pensions 

Other 
countries 

Total 

Total 

Germany 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

2015 

2016 

2017 

2018 

2019 

214

217

219

223

227

266 

280 

292 

304 

315 

2020-2024 

1,216

1,659 

12

13

13

15

15

82

492

510

524

542

557

437

445

451

458

465

57

55

58

63

65

36 

34 

36 

38 

40 

530

534

545

559

570

2,957

2,404

403

222 

3,029

The weighted average term of the pension obligations is 18.0 years in Germany and 13.9 years in other countries. 
The weighted average term of the obligations for other post-employment benefits in other countries is 12.1 years. 

26. Other provisions 

Changes in the various provision categories in 2014 were as follows: 

Changes in Other Provisions 

[Table 4.68]

Environ-
mental
protec-
tion 

Restruc-
turing 

Trade-
related
commit-
ments 

Taxes 

Personnel  
commit- 
ments 

Litigations 

Miscella-

neous  

Total 

€ million  

€ million 

€ million 

€ million 

€ million 

€ million  

€ million  

€ million 

1,148 

1 

1,341 

(1,557) 

(87) 

– 

24 

870 

250

–

41

(31)

(6)

17

12

283

242

–

60

(116)

(22)

–

9

1,530

100

3,729

(3,196)

(468)

–

156

173

1,851

934

–

209

(401)

(59)

–

87

770

2,325 

4 

2,287 

(1,775) 

(208) 

49 

69 

275 

1 

263 

6,704

106

7,930

(249) 

(7,325)

(67) 

(917)

1 

6 

67

363

2,751 

230 

6,928

December 31, 2013 

Acquisitions / divestments 

Additions 

Utilization 

Reversal 

Interest cost 

Exchange differences 

December 31, 2014 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
300 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

The provisions recognized in the statement of financial position as of December 31, 2014 were expected to be 
utilized as follows:  

Expected Utilization of Other Provisions 

[Table 4.69]

Environ-
mental 
protec-
tion 

Restruc-
turing 

Trade-
related 
commit-
ments 

Taxes 

Personnel 
commit- 
ments 

Litigations 

Miscella- 
neous  

Total 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

2015 

2016 

2017 

2018 

2019 

2020 or later 

Total 

393 

34 

1 

278 

2 

162 

870 

39

29

22

19

6

168

283

124

18

12

8

4

7

1,768

603

1,834 

58

12

11

2

–

70

37

–

3

57

770

242 

168 

120 

67 

320 

2,751 

173

1,851

151 

11 

– 

5 

– 

63 

230 

4,912

462

252

441

84

777

6,928

The provisions were partly offset by claims for refunds in the amount of €124 million (2013: €318 million), which 
were recognized as receivables. These claims related principally to product liability and environmental protection 
measures.  

26.1 Taxes 

Provisions for taxes comprised provisions for income taxes amounting to €805 million (2013: €1,079 million) and 
provisions for other types of taxes amounting to €65 million (2013: €69 million). 

Further income tax commitments according to ias 12 (Income Taxes) existed at year end in the amount of 
€63 million (2013: €101 million), recognized in the statement of financial position as income tax liabilities. 

26.2 Environmental protection 

Provisions for environmental protection mainly related to the rehabilitation of contaminated land, recultivation of 
landfills, and redevelopment and water protection measures. 

26.3 Restructuring 

Provisions for restructuring included €126 million (2013: €189 million) for severance payments and €47 million 
(2013: €53 million) for other restructuring expenses, which mainly comprised other costs related to the closure of 
production facilities. 

A major focus in HealthCare was on continuing the restructuring begun in the Medical Care Division (Consumer 
Health reporting segment) in 2013, utilizing the provisions established for this purpose. Provisions were also estab-
lished for the integration of newly acquired businesses. Provisions for the above and other restructuring measures 
at HealthCare as of December 31, 2014, amounted to €71 million. Of this amount, severance payments accounted 
for €62 million and other restructuring expenses for €9 million. 

In CropScience, the restructuring initiated in the United States in 2011, involving the closure of several carbamate 
production facilities and a formulation plant, continued in 2014, utilizing the provisions established for this pur-
pose. Provisions for the above and other restructuring measures at CropScience as of December 31, 2014, amount-
ed to €70 million, comprising €35 million for severance payments and €35 million for other restructuring expenses. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

301

Provisions for restructuring measures in MaterialScience pertained largely to the global consolidation of produc-
tion facilities in the Polycarbonates unit, including the closure of the site in Darmstadt, Germany. Provisions for 
restructuring at MaterialScience as of December 31, 2014, amounted to €18 million, comprising €17 million for 
severance payments and €1 million for other restructuring expenses.  

In addition, restructuring measures focusing on the introduction of country platforms, along with further efficiency 
improvements, were carried out throughout the Group so as to more effectively pool central functions. The restruc-
turing provisions associated with these measures as of December 31, 2014, amounted to €14 million, comprising 
€12 million for severance payments and €2 million for other restructuring expenses. 

26.4 Trade-related commitments 

Provisions for trade-related commitments comprised provisions for rebates, discounts and other price adjustments, 
product returns, outstanding invoices, pending losses and onerous contracts. 

26.5 Litigations 

The legal risks currently considered to be material, and their development, are described in note [32]. 

26.6 Personnel commitments 

Provisions for personnel commitments mainly include those for variable one-time payments under short-term in-
centive programs, credit balances on long-term accounts, service awards, early retirements, pre-retirement part-
time working arrangements and other personnel costs. Also reflected here are the obligations under the stock-
based compensation programs. Provisions for severance payments resulting from restructuring are reflected in 
provisions for restructuring. 

STOCK-BASED COMPENSATION PROGRAMS 
The Bayer Group offers stock-based compensation programs collectively to different groups of employees. As re-
quired by ifrs 2 (Share-based Payment) for compensation systems involving cash settlement, awards to be made 
under the stock-based programs are covered by provisions in the amount of the fair value of the obligations exist-
ing as of the date of the financial statements vis-à-vis the respective employee group. All resulting valuation ad-
justments are recognized in profit or loss. 

The following table shows the changes in provisions for the various programs: 

Changes in Provisions for Stock-Based Compensation Programs 

[Table 4.70]

December 31, 2013 

Additions 

Utilization  

Reversal 

Exchange differences 

December 31, 2014 

Stock 
Incentive 
Program 

Stock 
Participation 
Program 

Aspire I
Four-Year 
Program 

Aspire II 
Four-Year 
Program 

Total 

€ million 

€ million 

€ million 

€ million 

€ million 

0

–

–

–

–

0

5

1

(5)

–

(1)

0

134

80

(49)

(26)

3

142

230 

182 

(83) 

(40) 

22 

311 

369

263

(137)

(66)

24

453

The value of the Aspire tranches that were fully earned at the end of 2014, resulting in payments at the beginning 
of 2015, was €151 million (2013: €136 million). 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
302 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Total expense for all stock-based compensation programs in 2014 was €278 million (2013: €275 million), including 
€5 million (2013: €4 million) for the BayShare stock participation program and €10 million (2013: €12 million) for 
grants of virtual Bayer shares forming a component of long-term compensation. 

The fair value of obligations under the standard stock-based compensation programs was calculated using the 
Monte Carlo simulation method based on the following key parameters: 

Parameters for Monte Carlo Simulation 

Dividend yield 

Risk-free interest rate for the four-year program  

Volatility of Bayer stock 

Volatility of the EURO STOXX 50 

Correlation between Bayer stock price and the EURO STOXX 50 

[Table 4.71]

2013 

2.14% 

2014 

1.89%

0.644% 

(0.079)%

27.06% 

22.54% 

0.77 

23.39%

18.11%

0.76

LONG-TERM INCENTIVE PROGRAM FOR MEMBERS OF THE BOARD OF MANAGEMENT AND OTHER 
SENIOR EXECUTIVES (ASPIRE I) 
Since 2005, members of the Board of Management and other senior executives have been entitled to participate in 
Aspire i on the condition that they purchase a certain number of Bayer shares – determined for each individual 
according to specific guidelines – and retain them for the full term of the program. A percentage of the executive’s 
annual base salary – based on his / her position – is defined as a target for variable payments (Aspire target oppor-
tunity). Depending on the performance of Bayer stock, both in absolute terms and relative to the euro stoxx 50 
benchmark index during a four-year performance period, participants are granted an award of up to 300% of their 
individual Aspire target opportunity. The four-year tranche issued in 2010 expired at the end of 2013, and payment 
of the maximum resulting amount (300%) was made at the beginning of 2014. 

LONG-TERM INCENTIVE PROGRAM FOR MIDDLE MANAGEMENT (ASPIRE II) 
Also since 2005, other senior managers and middle managers have been offered Aspire ii, which is similar to 
Aspire I but does not require a personal investment in Bayer shares. This program was extended to further mana-
gerial employees in 2012. The amount of the award is based entirely on the absolute performance of Bayer stock 
over a four-year period. The maximum award is 250% of each manager’s Aspire target opportunity. The four-year 
tranche issued in 2010 expired at the end of 2013, and payment of the maximum resulting amount (250%) was 
made at the beginning of 2014. 

BAYSHARE 2014 
All management levels and non-managerial employees are offered an annual stock participation program known as 
BayShare, under which Bayer subsidizes their personal investments in the company’s stock. The discount under 
this program is set separately each year. In 2014 it was 20% (2013: 20%) of the subscription amount. Employees 
stated a fixed amount that they wished to invest in shares. The maximum subscription amount in Germany was set 
at €2,500 (2013: €2,500) or €5,000 (2013: €5,000), depending on the employee’s position. The shares thus acquired 
must be retained until December 31 of the year following the year of purchase, irrespective of continued employ-
ment with the Bayer Group.   

In 2014, employees purchased a total of about 225,000 shares (2013: 242,600 shares) under the BayShare program.  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

303

STOCK-BASED COMPENSATION PROGRAMS 2004 
The stock-based compensation programs offered to the different employee groups in 2004 had similar basic struc-
tures. Changes in the obligations under these programs are reflected in the financial statements at fair value 
through profit or loss. Entitlements to awards under these programs are conditioned on retention of the Bayer 
shares for a certain time period. The tranches issued in 2004 expired in 2014.  

STOCK INCENTIVE PROGRAM  
A Stock Incentive Program was offered to middle management until 2004. Participants receive a cash payment 
equivalent to a defined number of Bayer shares on certain dates during the ten-year duration of the program. For 
every ten shares held in a special account (personal investment), they receive two shares after two years, and a 
further four shares after six and ten years, respectively. To qualify for these payments, they must still hold the per-
sonal investment on the incentive payment dates and the percentage rise in the price of Bayer stock by the pay-
ment date must be above the performance of the euro stoxx 50 since the start of the program. Participants may 
sell their shares during the term of the program. However, the shares sold do not qualify for incentive payments on 
subsequent distribution dates. The number of shares that each employee could transfer to the program was equiva-
lent to half of his or her performance-related bonus for the preceding fiscal year.  

STOCK PARTICIPATION PROGRAM  
The structure of this program, which was offered to the other employee groups until 2004, is similar to the Stock 
Incentive Program. However, the incentive payments are based exclusively on the period for which employees hold 
their personal investment in Bayer shares. Incentive payments are half those allocated under the Stock Incentive 
Program. For every ten shares held, participants receive the equivalent of one share after two years and the equiva-
lent of a further two shares after six and ten years, respectively. 

26.7 Miscellaneous  

Miscellaneous provisions included those for other liabilities, contingent liabilities from business combinations, 
asset retirement obligations (other than those included in provisions for environmental protection) and guarantees. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
304 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

27. Financial liabilities 

Financial liabilities were comprised as follows: 

Financial Liabilities 

[Table 4.72]

Bonds and notes / promissory notes 

Liabilities to banks 

Liabilities under finance leases  

Liabilities from derivatives 

Other financial liabilities  

Total 

Dec. 31, 2013 

Dec. 31, 2014 

Total 

Of which 
current 

Total 

Of which 
current 

€ million 

€ million 

€ million 

€ million 

 4,520

 2,302

 382

 311

 1,516

 9,031

 1,560 

 14,964 

 549 

 51 

 117 

 1,164 

 3,441 

 3,835 

 441 

 644 

 1,976 

 21,860 

 169

 1,221

 53

 296

 1,637

 3,376

A breakdown of financial liabilities by contractual maturity is given below: 

Maturities of Financial Liabilities 

Maturity 

Dec. 31, 2013 

  Maturity 

2014 

2015 

2016 

2017 

2018 

2019 or later 

Total 

€ million 

3,441

1,208

713

491

1,165

2,013

9,031

2015 

2016 

2017 

2018 

2019 

2020 or later 

Total 

[Table 4.73]

Dec. 31, 2014 

€ million 

3,376

2,191

2,075

3,359

1,857

9,002

21,860

The Bayer Group’s financial liabilities are mostly unsecured and – with the exception of the three subordinated 
hybrid bonds with nominal volumes of €1,500 million, €1,750 million and €1,300 million – are of equal priority. 

In addition to promissory notes in the amount of €120 million (2013: €370 million), the Bayer Group has issued the 
following bonds and notes: 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Bonds and Notes 

Effective 
interest rate 

Stated rate 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

305

[Table 4.74]

Nominal volume 

Dec. 31, 2013 

Dec. 31, 2014 

€ million 

€ million 

  Bayer AG 

Floating1 

Floating1  EMTN bond 2014 / 2016 

1.206% 

1.125%  EMTN bond 2014 / 2018 

5.774% 

5.625%  EMTN bond 2006 / 2018 

5.541% 

5.625%  EMTN bond 2006 / 2018 (increase) 

2.042% 

1.875%  EMTN bond 2014 / 2021 

3.742% 

3.750%  Hybrid bond 2014 / 2074 

2.995% 

3.000%  Hybrid bond 2014 / 2075 

EUR 500 million

EUR 750 million

GBP 250 million

GBP 100 million

EUR 750 million

EUR 1,500 million

EUR 1,750 million

– 

– 

298 

120 

– 

– 

– 

5.155% 

5.000%  Hybrid bond 2005 / 2105 

EUR 1,300 million

1,344 

  Bayer Capital Corporation B.V. 

500

747

319

129

753

1,493

1,742

1,317

–

497

169

308

206

69

103

69

200

499

411

329

698

1,635

1,230

1,421

EUR 1,300 million

EUR 500 million

1,310 

– 

US$ 200 million

US$ 350 million

JPY 30 billion

JPY 10 billion

JPY 15 billion

JPY 10 billion

EUR 200 million

EUR 500 million

US$ 500 million

US$ 400 million

US$ 850 million

US$ 2,000 million

US$ 1,500 million

US$ 1,750 million

145 

284 

207 

69 

104 

69 

200 

– 

– 

– 

– 

– 

– 

– 

4,150 

14,844

4.750% 

4.625%  EMTN bond 2009 / 2014 

1.310% 

1.250%  EMTN bond 2014 / 2023 

  Bayer Corporation 

7.180% 

7.125%  Notes 1995 / 2015 

6.670% 

6.650%  Notes 1998 / 2028 

  Bayer Holding Ltd. 

0.858% 

0.816%  EMTN bond 2012 / 2017 

1.493% 

1.459%  EMTN bond 2010 / 2017 

3.654% 

3.575%  EMTN bond 2008 / 2018 

0.629% 

0.594%  EMTN bond 2013 / 2019 

  Bayer Nordic SE 

Floating2 

Floating2  EMTN bond 2013 / 2016 

Floating3 

Floating3  EMTN bond 2014 / 2017 

  Bayer U.S. Finance LLC 

Floating4 

Floating4  Notes 2014 / 2016 

Floating5 

Floating5  Notes 2014 / 2017 

1.611% 

1.500%  Notes 2014 / 2017 

2.468% 

2.375%  Notes 2014 / 2019 

3.001% 

3.000%  Notes 2014 / 2021 

3.484% 

3.375%  Notes 2014 / 2024 

  Total 

1 floating-rate coupon comprising three-month EURIBOR plus 22 basis points 
2 floating-rate coupon comprising three-month EURIBOR plus 35 basis points 
3 floating-rate coupon comprising three-month EURIBOR plus 22 basis points 
4 floating-rate coupon comprising three-month USD LIBOR plus 25 basis points 
5 floating-rate coupon comprising three-month USD LIBOR plus 28 basis points 

MULTI-CURRENCY EUROPEAN MEDIUM TERM NOTES PROGRAM 
An important means of external financing are the bonds issued under the multi-currency European Medium Term 
Notes (emtn) program. The following transactions took place in 2014 and 2013: 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
306 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

In January 2014, Bayer AG issued three tranches of emtn bonds with a total nominal volume of €2 billion. One of 
these tranches had a nominal volume of €500 million, and the other two had a nominal volume of €750 million 
each. In March 2014, Bayer Nordic se issued an emtn bond with a nominal volume of €500 million. In November 
2014, Bayer Capital Corporation b.v. issued an emtn bond with a nominal volume of €500 million. In September 
2014, it redeemed at maturity the emtn bond with a nominal volume of €1.3 billion issued in March 2009. 

In April 2013, Bayer Nordic se issued an emtn bond with a nominal volume of €200 million. In May 2013, Bayer AG 
redeemed at maturity the emtn bond with a nominal volume of €1,000 million issued in May 2006. In May 2013, 
Bayer Holding Ltd. issued an emtn bond with a nominal volume of jpy 10 billion. In July 2013, Bayer Holding Ltd. 
redeemed at maturity the emtn bond with a nominal volume of jpy 10 billion issued in June 2008. 

OTHER BONDS 
In October 2014, Bayer u.s. Finance llc issued six tranches of bonds in 144a / Reg S format with a total volume of 
us$7,000 million. The six tranches had nominal volumes of us$500 million, us$400 million, us$850 million, 
us$2,000 million, us$1,500 million and us$1,750 million. 

SUBORDINATED BONDS 
In July 2014, Bayer AG issued two subordinated hybrid bonds with a total nominal volume of €3,250 million. The 
first tranche of €1,750 million has a maturity of 61 years and a coupon of 3.0 percent. Bayer has an early redemp-
tion option at par for the first time in 2020. The second tranche of €1,500 million has a maturity of 60 years and a 
coupon of 3.75 percent. On this tranche, Bayer has an early redemption option at par for the first time in 2024. 
From 2020 and 2024 respectively the coupons will be reset every five years based on the five-year swap rate. 
Moody’s and Standard & Poor’s treat 50% of these bonds as equity. They therefore have a more limited effect on 
the Group’s rating-relevant debt indicators than conventional borrowings. 

In July 2005, Bayer AG issued a 100-year subordinated hybrid bond with a nominal volume of €1,300 million. This 
issue matures in 2105 and has a fixed coupon of 5.0% in the first 10 years. Thereafter, interest is calculated quar-
terly at a floating rate. After the first 10 years, Bayer AG has a quarterly option to redeem the bond at face value. In 
note [30.2] the 100-year hybrid bond is reflected at the earliest possible repayment date in 2015. It is treated as 
75% equity by Moody’s and as 50% equity by Standard & Poor’s. 

Bayer AG guarantees all the bonds issued by subsidiaries. 

LEASING LIABILITIES 
Lease payments totaling €603 million (2013: €538 million), including €162 million (2013: €156 million) in interest, 
are to be made under finance leases to the respective lessors in future years. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

307

The liabilities under finance leases mature as follows: 

Leasing Liabilities 

Maturity 

2014 

2015 

2016 

2017 

2018 

2019 or later 

Total 

Dec. 31, 2013 

Liabilities 
under 
finance 
leases 

Lease 
payments 

Interest 
component 

  Maturity 

Lease 
payments 

Interest 
component 

[Table 4.75]

Dec. 31, 2014 

Liabilities 
under 
finance 
leases 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

71 

63 

54 

44 

41 

265 

538 

20 

19 

18 

16 

14 

69 

156 

51

44

36

28

27

196

382

2015 

2016 

2017 

2018 

2019 

2020 or later 

Total 

76

70

63

53

47

294

603

23 

21 

19 

16 

14 

69 

162 

53

49

44

37

33

225

441

OTHER FINANCIAL LIABILITIES 
The other financial liabilities as of December 31, 2014, included commercial paper of €1,433 million (2013: 
€943 million). 

OTHER INFORMATION 
As of December 31, 2014, the Group had credit facilities at its disposal totaling €7.3 billion (2013: €5.8 billion), of 
which €3.8 billion (2013: €2.3 billion) was used and €3.5 billion (2013: €3.5 billion) was unused and thus available 
for borrowing on an unsecured basis. 

Further information on the accounting for liabilities from derivatives is given in note [30]. 

28. Trade accounts payable 

Trade accounts payable comprised €5,357 million (2013: €4,467 million) due within one year and €6 million 
(2013: €6 million) due after one year.  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
308 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

29. Other liabilities 

Other liabilities comprised: 

Other Liabilities 

[Table 4.76]

Other tax liabilities 

Deferred income 

Liabilities to employees 

Liabilities for social expenses  

Accrued interest on liabilities 

Liabilities to non-controlling interest 

Miscellaneous liabilities 

Total 

Dec. 31, 2013 

Dec. 31, 2014 

Total 

Of which 
current 

Total 

Of which 
current 

€ million 

€ million 

€ million 

€ million 

409

319

183

150

105

49

428

1,643

378 

122 

168 

137 

99 

– 

377 

1,281 

477 

1,136 

196 

154 

201 

– 

713 

433

207

185

140

192

–

632

2,877 

1,789

Deferred income included an upfront payment of us$1 billion in connection with the strategic pharmaceutical 
collaboration agreed between Bayer and Merck & Co., Inc., United States, in the field of soluble guanylate cyclase 
(sGC) modulation. The deferred income will be amortized over a period of 13.5 years and includes €15 million 
amortized in 2014. The remaining amount deferred as of the end of 2014 was €778 million. 

The deferred income included €70 million (2013: €61 million) in grants and subsidies received from governments, 
of which €8 million (2013: €9 million) was reversed and recognized in profit or loss. 

Liabilities to non-controlling interest pertained to the pro-rated claim that exists on the total assets of Currenta 
GmbH & co. ohg in view of the other stockholder’s statutory right of termination, which it could exercise at any 
time. 

The miscellaneous liabilities included €204 million (2013: €73 million) from derivatives. A further liability of 
€54 million existed for payments not yet made for inventories taken over as part of the acquisition of the consumer 
care business of Merck & Co., Inc., United States. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

309

30. Financial instruments 

The system used by the Bayer Group to manage credit risks, liquidity risks and the various types of market risks 
(interest-rate, currency and other price risks), together with its objectives, methods and procedures, is outlined in 
the Risk Report, which forms part of the Combined Management Report. 

30.1  Financial instruments by category 

The following table shows the carrying amounts and fair values of financial assets and liabilities by category of 
financial instrument and a reconciliation to the corresponding line item in the statements of financial position. 
Since the line items “Other receivables,” “Trade accounts payable” and “Other liabilities” contain both financial 
instruments and non-financial assets or liabilities (such as other tax receivables or advance payments for services 
to be received in the future), the reconciliation is shown in the column headed “Non-financial assets / liabilities.” 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
310 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS  

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Bayer Annual Report 2014 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS  

311

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

Carrying Amounts and Fair Values of Financial Instruments 

Carried at
amortized cost 

Carried at fair value 

Dec. 31, 2013 

Non-
financial 
assets / 
liabilities 

Based on 
quoted 
prices in 
active 
markets 
(Level 1) 

Carrying 
amount 

Based on 
observable 
market data 
(Level 2) 

Based on 
unobserv-
able inputs  
(Level 3) 

Carrying 
amount 

Carrying 
amount 

Carrying 
amount 

Carrying 
amount 
in the 
statement 
of financial 
position 

Carrying 
amount

Dec. 31, 
2013 

Fair value 
(for infor-
mation) 

Carried at 
amortized cost 

Carried at fair value 

[Table 4.77]

Dec. 31, 2014 

Non-
financial 
assets / 
liabilities 

Based on 
quoted 
prices in 
active 
markets  
(Level 1) 

Carrying 
amount 

Based on 
observable  
market data  
(Level 2) 

Based on 
unobserv-
able inputs 
(Level 3) 

Carrying 
amount 

Carrying 
amount 

Carrying 
amount 

Carrying 
amount 
in the 
statement 
of financial 
position 

Carrying 
amount 

Dec. 31, 
2014 

Fair value 
(for infor-
mation) 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

Trade accounts receivable 

Loans and receivables 

Other financial assets 

Loans and receivables 

Available-for-sale financial assets 

Held-to-maturity financial assets 

Derivatives that qualify for hedge accounting 

Derivatives that do not qualify  
for hedge accounting 

Other receivables 

Loans and receivables 

Non-financial assets 

Cash and cash equivalents 

Loans and receivables 

Total financial assets 

of which loans and receivables 

Financial liabilities 

Carried at amortized cost 

Derivatives that qualify for hedge accounting 

Derivatives that do not qualify  
for hedge accounting 

Trade accounts payable 

Carried at amortized cost 

Non-financial liabilities 

Other liabilities 

Carried at amortized cost 

Carried at fair value (non-derivative) 

Derivatives that qualify for hedge accounting 

Derivatives that do not qualify  
for hedge accounting 

Non-financial liabilities 

Total financial liabilities 

of which carried at amortized cost 

of which derivatives that qualify  
for hedge accounting 

of which derivatives that do not qualify  
for hedge accounting 

7,569

823

97

526

1,662

8,967

4,276

620

7,569

7,569

941

823

22

96

526

526

1,662

1,662

10,698

10,580

8,720

8,720

4,276

4,276

620

620

13,616

13,616

276

276

737

28 

335

402

28 

276

737

28 

311

200

111

38

15

23

349

215

134

35 

35 

35 

35 

7,569

7,569

1,982

823

298

96

335

430

1,972

526

1,446

1,662

1,662

11,739

10,580

9,031

8,720

200

111

4,473

4,276

197

1,643

620

15

58

950

14,000

13,616

215

169

1,446 

1,446 

197 

197 

950 

950 

9,093 

923 

70 

678 

1,853 

22,835 

5,113 

790 

9,097 

9,097 

1,021 

923 

29 

69 

678 

678 

1,853 

1,853 

12,649 

12,551 

21,216 

21,216 

5,113 

5,113 

790 

790 

27,119 

27,119 

325 

450 

34

325 

189 

261 

34

325 

450 

34

644 

284 

360 

176 

156 

20 

820 

440 

380 

59

31

28

59

28

9,097

9,097

1,830

923

354

69

189

295

1,935

678

1,257

1,853

1,853

13,458

12,551

21,860

21,216

284

360

5,363

5,113

250

2,877

790

31

156

48

1,852

27,998

27,119

440

408

1,257

1,257

250

250

1,852

1,852

 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
  
  
 
  
 
 
  
  
 
 
  
  
 
 
  
  
 
 
 
  
  
 
 
 
  
 
 
 
  
 
 
  
  
 
 
 
 
  
 
 
 
  
  
 
 
  
  
 
  
 
 
 
  
  
 
 
 
 
 
  
  
 
 
  
  
 
 
 
  
  
 
 
 
  
  
 
 
 
  
 
 
  
  
 
 
 
 
  
 
 
 
 
  
  
 
 
 
 
  
  
 
 
 
 
  
  
 
 
 
  
 
 
 
 
  
 
 
  
 
 
 
  
  
 
 
 
  
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
  
  
  
 
 
  
  
 
 
  
 
  
  
 
 
  
  
 
 
  
  
 
 
  
  
  
 
 
 
  
  
  
 
  
  
  
 
  
  
 
 
  
  
  
  
 
  
  
  
 
 
  
  
 
 
  
 
  
  
  
 
 
 
 
 
 
  
  
 
 
  
  
 
 
  
  
  
 
 
  
  
  
 
 
  
  
  
 
  
  
 
 
  
  
  
  
 
  
  
  
  
 
 
  
  
  
  
 
  
  
  
 
 
  
  
  
 
  
  
  
  
 
  
  
 
  
  
  
 
 
  
  
  
 
 
  
  
  
 
312 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

The loans and receivables reflected in other financial assets and the liabilities measured at amortized cost also 
include receivables and liabilities under finance leases in which Bayer is the lessor or lessee and which are there-
fore measured in accordance with ias 17. 

Because of the short maturities of most trade accounts receivable and payable, other receivables and liabilities, and 
cash and cash equivalents, their carrying amounts at the closing date did not significantly differ from the fair values. 

The fair value stated for noncurrent receivables, loans, held-to-maturity financial investments and non-derivative 
financial liabilities is the present value of the respective future cash flows. This was determined by discounting the 
cash flows at a closing-date interest rate that takes into account the term of the assets or liabilities and the credit-
worthiness of the counterparty. Where a market price was available, however, this was deemed to be the fair value. 

The fair values of available-for-sale financial assets correspond to quoted prices in active markets for identical 
assets (Level 1). 

The fair values of derivatives for which no publicly quoted prices existed in active markets (Level 1) were deter-
mined using valuation techniques based on observable market data as of the end of the reporting period (Level 2). 
In applying valuation techniques, credit value adjustments were determined to allow for the contracting party’s 
credit risk. 

The respective currency and commodity forward contracts were measured individually at their forward rates or 
forward prices on the closing date. These depend on spot rates or prices including time spreads. The fair values of 
interest-rate hedging instruments and cross-currency interest-rate swaps were determined by discounting future 
cash flows over the remaining terms of the instruments at market rates of interest, taking into account any foreign 
currency translation as of the closing date. 

Fair values measured using unobservable inputs are categorized within Level 3 of the fair value hierarchy. This 
applies in some cases to the fair values of embedded derivatives or to obligations for contingent consideration in 
business combinations. 

Embedded derivatives were separated from their respective host contracts. Such host contracts are generally sales 
or purchase agreements relating to the operational business. The embedded derivatives cause the cash flows from 
the contracts to vary with fluctuations in exchange rates, commodity prices or other prices, for example. The inter-
nal measurement of embedded derivatives is mainly performed using the discounted cash flow method, which is 
based on unobservable inputs (Level 3). These included planned sales and purchase volumes, and prices derived 
from market data. Regular monitoring is carried out based on these fair values as part of quarterly reporting. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

313

Income, expense, gains and losses on financial instruments can be assigned to the following categories: 

Income, Expense, Gains and Losses on Financial Instruments 

Held-to-
maturity 
financial 
investments 

Available-
for-sale 
financial 
assets 

Loans and 
receivables 

Liabilities  
carried at  
amortized  
cost 

Held for 
trading 

[Table 4.78]

2014 

Total 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

Interest income 

Interest expense 

Income / expenses from affiliated companies 

Changes in fair value 

Impairment losses 

Impairment loss reversals 

Exchange gains / losses 

Gains / losses from retirements 

Other financial income/expenses 

Net result 

111

–

–

–

(87)

24

590

–

–

638

1

–

–

–

–

–

–

–

–

1

1

–

1

–

–

2

–

–

–

4

54

(75)

–

32

–

–

(245)

–

–

122 

(563) 

– 

– 

– 

– 

(552) 

– 

(44) 

(234)

(1,037) 

Income, Expense, Gains and Losses on Financial Instruments (Previous Year) 

Held-to-
maturity 
financial 
investments 

Available-
for-sale 
financial 
assets 

Loans and 
receivables 

Liabilities  
carried at  
amortized  
cost 

Held for 
trading 

289

(638)

1

32

(87)

26

(207)

–

(44)

(628)

[Table 4.79]

2013 

Total 

Interest income 

Interest expense 

Income / expenses from affiliated companies 

Changes in fair value 

Impairment losses 

Impairment loss reversals 

Exchange gains / losses 

Gains / losses from retirements 

Other financial income/expenses 

Net result 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

77

–

–

–

(82)

42

(506)

–

(1)

(470)

1

–

–

–

–

–

–

–

–

1

2

–

–

–

(2)

–

–

77

(3)

74

44

(54)

–

(10)

–

–

372

–

–

352

151 

(559) 

– 

– 

– 

– 

275

(613)

–

(10)

(84)

42

(21) 

(155)

– 

6 

77

2

(423) 

(466)

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
     
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
314 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

The interest expense of €563 million (2013: €559 million) from non-derivative financial liabilities also included the 
income and expense from interest-rate swaps that qualified for hedge accounting. Interest income from financial 
assets not measured at fair value through profit or loss amounted to €67 million (2013: €80 million). Interest in-
come from interest-rate derivatives that qualified for hedge accounting was €122 million (2013: €151 million). The 
changes in fair values of financial assets held for trading related mainly to forward commodity contracts and em-
bedded derivatives. 

The changes in the net amount of financial assets and liabilities recognized at fair value based on unobservable 
inputs (Level 3) were as follows: 

Changes in the Net Amount of Financial Assets and Liabilities Recognized at Fair Value Based on Unobservable Inputs 

[Table 4.80]

Carrying amounts of net assets / (net liabilities), January 1 

Gains (losses) recognized in profit or loss 

of which related to assets / liabilities recognized  
in the statements of financial position  

Gains (losses) recognized outside profit or loss 

Additions of assets / (liabilities) 

Settlements of (assets) / liabilities 

Reclassifications 

Carrying amounts of net assets / (net liabilities), December 31 

The changes recognized in profit or loss were included in other operating income or expenses. 

2013 

2014 

€ million  

€ million 

22 

(29) 

(29) 

– 

– 

– 

– 

(7) 

(7)

(8)

(8)

–

(31)

21

–

(25)

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

315

Derivatives that constitute financial assets and form part of a master netting arrangement but do not satisfy, or only 
partially satisfy, the offsetting criteria and are only enforceable in the event of breach of contract by, or insolvency 
of, one of the contracting parties amounted to €360 million (2013: €685 million); the related financial liabilities 
(derivatives) were €242 million (2013: €140 million). Derivatives classified as financial liabilities and forming part of 
a master netting arrangement amounted to €773 million (2013: €299 million); the related financial assets (deriva-
tives) were €242 million (2013: €140 million). 

30.2  Maturity analysis 

The liquidity risks to which the Bayer Group was exposed from its financial instruments at the end of the reporting 
period comprised obligations for future interest and repayment installments on financial liabilities and the liquidity 
risk arising from derivatives, as shown in the table in note [30.3]. 

There was also a liquidity risk from an as yet unpaid €1,005 million (2013: €1,005 million) portion of the effective 
initial fund of Bayer-Pensionskasse VVaG, which may result in further payments by Bayer AG in subsequent years. 
This amount was reported under loan commitments. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
316 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS  

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Bayer Annual Report 2014 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS  

317

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

Maturity Analysis of Financial Instruments 

[Table 4.81]

Financial liabilities 

Bonds and notes / promissory notes1 

Liabilities to banks 

Remaining liabilities 

Trade accounts payable 

Other liabilities 

Accrued interest on liabilities 

Remaining liabilities 

Liabilities from derivatives 

Derivatives that qualify for hedge accounting 

Derivatives that do not qualify for hedge accounting 

Receivables from derivatives 

Derivatives that qualify for hedge accounting 

Derivatives that do not qualify for hedge accounting 

Loan commitments 

Financial guarantees 

Dec. 31, 2014 

Cash flows 2015 

Cash flows 2016 

Cash flows 2017 

Cash flows 2018 

Cash flows 2019 

Cash flows after 2019 

Carrying 
amount 

Interest and 
repayment 

Interest and 
repayment 

Interest and 
repayment 

Interest and 
repayment 

Interest and 
repayment 

Interest and 
repayment 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

14,964

3,835

2,417

1,690 

1,281 

1,714 

1,521

475

405

2,131 

277 

65 

1,612 

1,921 

55 

2,037 

65 

48 

8,353

18

294

5,113

5,114 

201

620

440

408

189

295

–

–

192 

582 

169 

311 

144 

257 

1,006 

25 

6

2

6

131

80

21

2

–

–

3 

1 

9 

11 

13 

21 

23 

– 

– 

1 

1 

4 

109 

1 

2 

2 

– 

– 

– 

1 

1 

24 

1 

2 

1 

– 

– 

–

4

21

–

3

3

14

–

2

1 Repayment of the €1,300 million 100-year hybrid bond is reflected at the earliest possible repayment date in 2015.  

Dec. 31, 2013 

Cash flows 2014 

Cash flows 2015 

Cash flows 2016 

Cash flows 2017 

Cash flows 2018 

Cash flows after 2018 

Carrying 
amount 

Interest and 
repayment 

Interest and 
repayment 

Interest and 
repayment 

Interest and 
repayment 

Interest and 
repayment 

Interest and 
repayment 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

Financial liabilities 

Bonds and notes / promissory notes1 

Liabilities to banks 

Remaining liabilities 

Trade accounts payable 

Other liabilities 

Accrued interest on liabilities 

Remaining liabilities 

Liabilities from derivatives 

Derivatives that qualify for hedge accounting 

Derivatives that do not qualify for hedge accounting 

Receivables from derivatives 

Derivatives that qualify for hedge accounting 

Derivatives that do not qualify for hedge accounting 

Loan commitments 

Financial guarantees 

4,520

2,302

1,898

1,664 

629 

1,236 

1,575

722

408

4,276

4,273 

105

515

215

169

335

430

–

–

99 

441 

45 

140 

215 

359 

1,006 

25 

4

1

8

1

26

67

32

–

–

1 Repayment of the €1,300 million 100-year hybrid bond is reflected at the earliest possible repayment date in 2015.  

330 

386 

55 

2 

1 

6 

55 

1 

36 

25 

– 

– 

325 

207 

47 

– 

1 

2 

2 

1 

14 

– 

– 

– 

570 

522 

42 

– 

1 

4 

114 

1 

2 

2 

– 

– 

531

70

269

–

3

66

–

2

2

16

–

–

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
318 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

30.3 Information on derivatives 

Asset and liability fair values and future cash flows are exposed to currency, interest-rate and commodity price 
risks. Derivatives are used to reduce this risk. In some cases they are designated as hedging instruments in a 
hedge accounting relationship. 

CURRENCY RISKS 
Foreign currency receivables and liabilities are hedged using foreign exchange derivatives without the existence of 
a hedge accounting relationship. A bond of Bayer AG denominated in British pounds was swapped on the issuance 
date into a fixed-rate euro bond by means of a cross-currency interest-rate swap, which was designated as a cash 
flow hedge. Certain forward exchange contracts and cross-currency interest-rate swaps used to hedge intra-Group 
loans are also designated as cash flow hedges.  

Fluctuations in future cash flows resulting from forecasted foreign currency transactions and procurement activities 
are avoided partly through derivatives contracts, most of which are designated as cash flow hedges. 

INTEREST-RATE RISKS 
The interest-rate risks from fixed-interest borrowings are managed in part using interest-rate swaps. The principal 
borrowings concerned are the us$200 million bond issued in 1995, the €1.3 billion bond issued in 2005, and a 
portion of the €750 million bond issued in 2014 and maturing in 2021. Hedge accounting is applied to the respec-
tive borrowings and hedging instruments (fair-value hedge). 

Losses of €47 million (2013: €65 million) were recorded on fair-value hedging instruments in 2014. Gains of 
€47 million (2013: €65 million) were recorded on the underlying hedged items. 

COMMODITY PRICE RISKS 
Hedging contracts are also used to partly reduce exposure to fluctuations in future cash outflows resulting from 
price changes on procurement markets. 

HEDGING OF OBLIGATIONS UNDER STOCK-BASED EMPLOYEE COMPENSATION PROGRAMS 
A portion of the obligations to make variable payments to employees under stock-based compensation programs 
(Aspire) is hedged against fluctuations in the share price using derivatives contracts that are designated as cash 
flow hedges. 

FURTHER INFORMATION ON CASH FLOW HEDGES 
Accumulated other comprehensive income from cash flow hedges in 2014 decreased by €102 million (2013: in-
creased by €157 million) due to changes in the fair values of derivatives net of tax. Gains of €46 million (2013: 
€156 million) from fair-value changes – originally recognized in accumulated other comprehensive income – of 
derivatives designated as cash flow hedges were reclassified to profit or loss. The respective pro-rated deferred tax 
expense of €13 million (2013: €46 million) was likewise reclassified to profit or loss. 

No material ineffective portions of hedges required recognition in profit or loss in 2014 or 2013. 

The income and expense from cash flow hedges recognized in accumulated other comprehensive income mainly 
comprised gains of €115 million (2013: €186 million) and losses of €156 million (2013: €15 million) from the hedg-
ing of forecasted transactions in foreign currencies. Of these gains and losses, gains of €81 million (2013: 
€135 million) and losses of €152 million (2013: €15 million) will be reclassifiable to profit or loss within one year 
and gains of €34 million (2013: €51 million) and losses of €4 million (2013: €0 million) in subsequent years. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

319

The fair values of existing contracts in the major categories at the end of the reporting period are indicated in the 
following table together with the included volumes of cash flow hedges. 

Fair Values of Derivatives 

Currency hedging of recorded transactions 

Forward exchange contracts 

of which cash flow hedges 

Currency options 

Cross-currency interest-rate swaps 

of which cash flow hedges 

Currency hedging of forecasted transactions 

Forward exchange contracts 

of which cash flow hedges 

Currency options 

of which cash flow hedges 

Interest-rate hedging of recorded transactions 

Interest-rate swaps 

of which fair value hedges 

Commodity price hedging 

Forward commodity contracts 

Commodity option contracts 

Hedging of stock-based employee  
compensation programs 

Share price options 

of which cash flow hedges 

Total  

of which current derivatives  

for currency hedging 

for interest-rate hedging2 

for commodity hedging 

for hedging of stock-based employee  
compensation programs 

Dec. 31, 2013 

[Table 4.82]

Dec. 31, 2014 

Notional 
amount1

Positive 
fair value 

Negative 
fair value 

Notional 
amount1 

Positive 
fair value 

Negative 
fair value 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

14,535

10,519

–

1,752

2,264

2,132

3,925

3,191

3,000

734

407

3,851

3,851

2,745

16

10

6

–

–

–

22,327

17,091

15,785

1,300

6

–

348

286

–

23

39

38

194

153

150

41

40

146

146

107

2

1

1

–

–

–

690

533

446

85

2

–

(260)

(58)

–

–

(202)

(200)

(19)

(17)

(15)

(2)

–

(47)

(47)

–

(1)

(1)

–

–

–

–

(327)

(106)

(81)

(24)

(1)

–

14,023 

11,754 

– 

– 

2,269 

2,269 

3,743 

3,230 

3,158 

513 

430 

2,771 

2,771 

1,665 

27 

5 

22 

14 

14 

14 

20,578 

17,092 

14,494 

2,571 

27 

– 

176 

176 

– 

– 

– 

– 

117 

83 

82 

34 

33 

83 

83 

62 

3 

1 

2 

12 

12 

12 

391 

329 

251 

75 

3 

(618)

(334)

–

–

(284)

(284)

(159)

(151)

(150)

(8)

(6)

(24)

(24)

–

(2)

–

(2)

–

–

–

(803)

(455)

(429)

(24)

(2)

– 

–

1 The notional amount is reported as gross volume, which also contains economically closed hedges. 
2 The fair value of long-term interest-rate swaps resulting from current interest payments was classified as current. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
320 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

31. Contingent liabilities and other financial commitments 

CONTINGENT LIABILITIES 
The following warranty contracts, guarantees and other contingent liabilities existed at the end of the  
reporting period: 

Contingent Liabilities  

Warranties 

Guarantees 

Other contingent liabilities 

Total 

[Table 4.83]

Dec. 31, 2013 

Dec. 31, 2014 

€ million 

€ million 

107 

140 

467 

714 

95

144

339

578

The guarantees mainly comprise a declaration issued by Bayer AG to the trustees of the u.k. pension plans guaran-
teeing the pension obligations of Bayer Public Limited Company and Bayer CropScience Limited. Under the decla-
ration, Bayer AG – in addition to the two companies – undertakes to make further payments into the plans upon 
receipt of a payment request from the trustees. The net liability with respect to these defined benefit plans as of 
December 31, 2014, amounted to €144 million (2013: €100 million). 

The potential payment claims related to the partial exemption from the surcharge levied under the German Renew-
able Energy Act that were included in other contingent liabilities in 2013 no longer exist following the conclusion 
of the e.u. state-aid proceedings in 2014 (2013: €172 million). 

OTHER FINANCIAL COMMITMENTS 
The other financial commitments were as follows:  

Other Financial Commitments 

Operating leases  

Orders already placed under purchase agreements  

Unpaid portion of the effective initial fund  

Potential payment obligations under R&D collaboration agreements  

Revenue-based milestone payment commitments  

Total 

[Table 4.84]

Dec. 31, 2013 

Dec. 31, 2014 

€ million 

€ million 

596 

365 

1,005 

2,106 

2,191 

6,263 

671

476

1,005

2,427

2,169

6,748

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

321

The non-discounted future minimum lease payments relating to operating leases totaled €671 million (2013: 
€596 million). The maturities of the respective payment obligations were as follows: 

Operating Leases 

Maturing in 

2014 

2015 

2016 

2017 

2018 

2019 or later 

Total 

Dec. 31, 2013 

  Maturing in 

€ million 

174

144

81

66

42

89

2015 

2016 

2017 

2018 

2019 

2020 or later 

596

Total 

[Table 4.85]

Dec. 31, 2014 

€ million 

174

125

98

70

59

145

671

Financial commitments resulting from orders already placed under purchase agreements related to planned or 
ongoing capital expenditure projects totaled €476 million (2013: €365 million). 

The unpaid capital provided to Bayer-Pensionskasse VVaG for its effective initial fund amounted to €1,005 million 
(2013: €1,005 million). 

The Bayer Group has entered into cooperation agreements with third parties under which it has agreed to fund 
various research and development projects or has assumed other payment obligations based on the achievement of 
certain milestones or other specific conditions. If all of these payments have to be made, their maturity distribution 
as of December 31, 2014 was expected to be as set forth in the following table. The amounts shown represent the 
maximum payments to be made, and it is unlikely that they will all fall due. Since the achievement of the conditions 
for payment is highly uncertain, both the amounts and the dates of the actual payments may vary considerably 
from those stated in the table. 

Potential Payment Obligations Under R&D Collaboration Agreements 

Maturing in 

Dec. 31, 2013 

  Maturing in 

2014 

2015 

2016 

2017 

2018 

2019 or later 

Total 

€ million 

155

181

144

113

95

1,418

2,106

2015 

2016 

2017 

2018 

2019 

2020 or later 

Total 

[Table 4.86]

Dec. 31, 2014 

€ million 

155

198

164

130

203

1,577

2,427

In addition to the above commitments, there were also revenue-based milestone payment commitments totaling 
€2,169 million (2013: €2,191 million), of which €2,157 million (2013: €2,090 million) were not expected to fall due 
until 2020 (2013: 2019) or later. These commitments are also highly uncertain. 

Should the achievement of the milestones or specific conditions become sufficiently probable, a provision or  
other liability is recognized in the statement of financial position, and this may also lead to the recognition of an 
intangible asset in the same amount. The above table includes neither current revenue-based royalty payments  
nor future payments that are probable and therefore already reflected in the statement of financial position. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
322 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

32. Legal risks 

As a global company with a diverse business portfolio, the Bayer Group is exposed to numerous legal risks, par-
ticularly in the areas of product liability, competition and antitrust law, patent disputes, tax assessments and envi-
ronmental matters. The outcome of any current or future proceedings cannot normally be predicted. It is therefore 
possible that legal or regulatory judgments or future settlements could give rise to expenses that are not covered, 
or not fully covered, by insurers’ compensation payments and could significantly affect our revenues and earnings. 

Legal proceedings currently considered to involve material risks are outlined below. The legal proceedings referred 
to do not represent an exhaustive list. 

HealthCare: 

PRODUCT-RELATED LITIGATION 
Yasmin™ / yaz™: As of January 31, 2015, the number of claimants in the pending lawsuits and claims in the 
United States totaled about 5,000 (excluding claims already settled). Claimants allege that they have suffered per-
sonal injuries, some of them fatal, from the use of Bayer’s drospirenone-containing oral contraceptive products 
such as Yasmin™ and / or yaz™ or from the use of Ocella™ and / or Gianvi™, generic versions of Yasmin™ and yaz™, 
respectively, marketed by Barr Laboratories, Inc. in the United States. Claimants seek compensatory and punitive 
damages, claiming, in particular, that Bayer knew, or should have known, of the alleged risks and should be held 
liable for having failed to disclose them or adequately warn users. All cases pending in u.s. federal courts have 
been consolidated in a multidistrict litigation proceeding for common pre-trial management. 

A few State Attorney Generals in the u.s. are investigating the alleged off-label promotion of Yasmin™ and yaz™ as 
well as the alleged failure to warn about an alleged increased risk of developing blood clots in violation of consum-
er protection statutes. One Attorney General has filed an action against Bayer. 

As of January 31, 2015, 13 class actions had been served upon Bayer in Canada and two in Israel. 

As of January 31, 2015, Bayer had reached agreements, without admission of liability, to settle approximately 9,500 
claims in the u.s. for venous clot injuries (deep vein thrombosis or pulmonary embolism) for a total amount of 
about us$1.9 billion. Bayer will continue to consider the option of settling such claims after a case-specific analysis 
of medical records. At present, about 2,000 such claims are under review. 

Bayer has also settled, without admission of liability, approximately 7,200 claims for gallbladder injuries in the u.s. 
for a total amount of about us$21.5 million. As of January 31, 2015, only a few claims for such injuries remained 
pending. 

Additional lawsuits are anticipated. Bayer believes that it has meritorious defenses and will continue to defend 
itself vigorously against all claims that are not considered for settlement. Bayer has taken appropriate accounting 
measures for anticipated defense costs and for agreed and anticipated future settlements based on the information 
currently available and based on the number of pending and estimated future claims alleging venous clot injuries.  

Mirena™: As of January 31, 2015, lawsuits of approximately 3,000 users of Mirena™, a levonorgestrel-releasing 
intrauterine system providing long-term contraception, had been served upon Bayer in the u.s. Most of the cases 
pending in u.s. federal courts have been consolidated in a multidistrict litigation proceeding for common pre-trial 
management. Additional lawsuits are anticipated. Plaintiffs allege personal injuries resulting from the use of Mire-
na™, including perforation of the uterus, ectopic pregnancy, or idiopathic intracranial hypertension, and seek com-
pensatory and punitive damages. Plaintiffs claim, inter alia, that Mirena™ is defective and that Bayer knew or 
should have known of the risks associated with it and failed to adequately warn its users. As of January 31, 2015, 
four class actions relating to Mirena™ had been served upon Bayer in Canada. Bayer believes it has meritorious 
defenses and intends to defend itself vigorously. Based on the information currently available, Bayer has taken 
appropriate accounting measures for anticipated defense costs. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

323

Xarelto™: As of January 31, 2015, lawsuits of approximately 200 recipients of Xarelto™, an oral anticoagulant for 
the treatment and prevention of blood clots, had been served upon Bayer in the u.s. Plaintiffs allege personal inju-
ries from the use of Xarelto™, including cerebral, gastrointestinal or other bleeding and death, and seek compensa-
tory and punitive damages. They claim, amongst other things, that Xarelto™ is defective and that Bayer knew or 
should have known of the risks associated with the use of Xarelto™ and failed to adequately warn its users. Addi-
tional lawsuits are anticipated. Cases pending in u.s. federal courts have been consolidated in a multidistrict litiga-
tion for common pre-trial management. As of February 8, 2015, one class action relating to Xarelto™ was filed in 
Canada. Bayer believes it has meritorious defenses and intends to defend itself vigorously. Based on the infor-
mation currently available, Bayer has taken appropriate accounting measures for anticipated defense costs. 

In connection with the above proceedings concerning Yasmin™ / yaz™, Mirena™ and Xarelto™, Bayer is insured 
against product liability risks to the extent customary in the industry. However, the accounting measures taken with 
regard to the Yasmin ™ / yaz™ claims exceed the available insurance coverage. 

COMPETITION LAW PROCEEDINGS 
Phillips’ Colon Health / Department of Justice: In September 2014, the United States Department of Justice, 
representing the United States Federal Trade Commission, filed a motion in New Jersey federal court alleging that 
Bayer is making unsubstantiated claims about Phillips’ Colon Health, a probiotic product, and thereby violating a 
2007 consent decree requiring it to have competent and reliable scientific evidence to substantiate claims made 
about its dietary supplements. The suit seeks relief in the form of monetary damages and an order mandating 
Bayer to cease from making unsubstantiated claims. In December 2014, the parties attended a court-ordered medi-
ation, which did not resolve the matter. Discovery continues. Bayer believes it has meritorious defenses and in-
tends to defend itself vigorously. 

PATENT DISPUTES 
Beyaz™ / Safyral™: In 2013, Bayer received two notices from Watson Laboratories, Inc. that Watson has filed 
Abbreviated New Drug Applications with a Paragraph iv certification (“anda iv”) seeking approval of generic ver-
sions of both Beyaz™ and Safyral™, Bayer’s oral contraceptives containing folate, in the United States. In response, 
Bayer filed two suits against Watson in u.s. federal court for infringement of the same patent. The lawsuits were 
consolidated. 

Betaferon™ / Betaseron™: In 2010, Bayer filed a complaint against Biogen Idec ma Inc. in u.s. federal court seek-
ing a declaration by the court that a patent issued to Biogen in 2009 is invalid and not infringed by Bayer’s produc-
tion and distribution of Betaseron™, Bayer’s drug product for the treatment of multiple sclerosis. Biogen is alleging 
patent infringement by Bayer through Bayer’s production and distribution of Betaseron™ and Extavia™ and has 
sued Bayer accordingly. Bayer manufactures Betaseron™ and distributes the product in the United States. Extavia™ 
is also a drug product for the treatment of multiple sclerosis; it is manufactured by Bayer, but distributed in the 
United States by Novartis Pharmaceuticals Corporation, another defendant in the lawsuit. 

Finacea™: In 2013, Bayer filed a patent infringement suit in a u.s. federal court against Glenmark Generics Ltd. 
Earlier that year, Bayer had received a notice from Glenmark that Glenmark had filed an anda iv seeking approval 
of a generic version of Bayer’s Finacea™ topical gel in the United States. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
324 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Damoctocog alfa pegol (bay 94-9027, long-acting rFVIII): In 2013, Bayer filed a lawsuit against Nektar Therapeu-
tics in the district court of Munich, Germany. In this proceeding, Bayer claims rights to certain European patent 
applications based on a past collaboration between Bayer and Nektar in the field of hemophilia. The European 
patent applications with the title “Polymer-factor viii moiety conjugates” are part of a patent family registered in 
the name of Nektar comprising further patent applications and patents in other countries including the United 
States. However, Bayer believes that the patent family does not include any valid patent claim relevant for Bayer’s 
drug candidate bay 94-9027 for the treatment of hemophilia a. 

Nexavar™: In January 2015, Bayer filed a patent infringement suit in a u.s. federal court against Mylan Pharma-
ceuticals Inc. and Mylan Inc. (together “Mylan”). In December 2014, Bayer had received notice of an anda iv pur-
suant to which Mylan seeks approval of a generic version of the cancer drug Nexavar™ in the United States. 

Staxyn™: In 2012, Bayer filed a patent infringement suit in a u.s. federal court against Watson Laboratories, Inc. In 
2013, Bayer filed a similar suit against Par Pharmaceutical, Inc. and Par Pharmaceutical Companies, Inc. (together 
“Par Pharmaceutical”). Earlier in 2012, Bayer had received notice of an anda iv pursuant to which Watson seeks 
approval to market a generic version of Bayer’s erectile dysfunction treatment Staxyn™ prior to patent expiration in 
the United States. Earlier in 2013, Bayer had received a similar notice from Par Pharmaceutical. In 2014, Par 
Pharmaceutical amended its anda iv to no longer seek market approval prior to patent expiration whereupon the 
suit against Par Pharmaceutical was dismissed without prejudice. Staxyn™ is an orodispersible (orally disintegrat-
ing) formulation of Levitra™. Both drug products contain the same active ingredient, which is protected in the u.s. 
by two patents expiring in 2018. 

Bayer believes it has meritorious defenses in the above patent disputes and intends to defend itself vigorously. 

FURTHER LEGAL PROCEEDINGS 
Trasylol™ / Avelox™: A qui tam complaint relating to marketing practices for Trasylol™ (aprotinin) and Avelox™ 
(moxifloxacin) filed by a former Bayer employee is pending in the United States District Court in New Jersey. The 
u.s. government has declined to intervene at the present time. 

Bayer Pharma AG former shareholder litigation: In 2008, the squeeze-out of the former minority shareholders of 
Bayer Pharma AG (formerly named Bayer Schering Pharma AG), Berlin, Germany, became effective. As usual in 
such cases, several shareholders have initiated special court proceedings to review the adequacy of the compensa-
tion payments made by Bayer for the transfer of the shares in the squeeze-out. In another court proceeding initiat-
ed by former minority shareholders of Bayer Pharma AG (formerly Bayer Schering Pharma AG) to review the ade-
quacy of compensation payments made by Bayer in connection with the 2006 domination and profit and loss trans-
fer agreement, the District Court (Landgericht) of Berlin decided in 2013 that the compensation paid by Bayer at 
the time should be increased by about 40%. Bayer disagrees with this decision and has appealed. Appropriate 
accounting measures have been taken for this proceeding as well as for the parallel proceeding relating to the 
squeeze-out of the former minority shareholders. 

Newark Bay Environmental Matters: In the United States, Bayer is one of numerous parties involved in a series of 
claims brought by federal and state environmental protection agencies. The claims arise from operations by entities 
which historically were conducted near Newark Bay or surrounding bodies of water, or which allegedly discharged 
hazardous waste into these waterways or onto nearby land. Bayer and the other potentially responsible parties are 
being asked to remediate and contribute to the payment of past and future remediation or restoration costs and 
damages. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

325

In the Lower Passaic River matter, a group of more than sixty companies including Bayer is investigating contami-
nated sediments in the riverbed under the supervision of the United States Environmental Protection Agency  
(epa) and other governmental authorities. Future remediation will involve some form of dredging, the nature and  
scope of which are not yet defined, and potentially other tasks. The cost of the investigation and the remediation 
work may be substantial if the final remedy involves extensive dredging and disposal of impacted sediments.  
In the Newark Bay matter, an unaffiliated party is currently conducting an investigation of sediments in Newark 
Bay under epa supervision. The investigation is in a preliminary stage. Bayer has contributed to certain investiga-
tion costs in the past and may incur costs for future investigation and remediation activities in Newark Bay. 

Bayer has also been notified by governmental authorities acting as natural resource trustees that it may have 
liability for natural resource damages arising from the contamination of the Lower Passaic River, Newark Bay and 
surrounding water bodies. Bayer is currently unable to determine the extent of its liability. 

CropScience: 

Asbestos: A further risk may arise from asbestos litigation in the United States. In many cases, the plaintiffs  
allege that Bayer and co-defendants employed third parties on their sites in past decades without providing them 
with sufficient warnings or protection against the known dangers of asbestos. Additionally, a Bayer affiliate in the 
United States is the legal successor to companies that sold asbestos products until 1976. Union Carbide has agreed 
to indemnify Bayer for this liability. Bayer believes it has meritorious defenses and intends to defend itself vigor-
ously. 

MaterialScience: 

Partial exemption from the surcharge under the Renewable Energy Act: Under the German Renewable Energy 
Act (Erneuerbare-Energien-Gesetz) of 2012 (“eeg 2012”), all consumers of electricity normally have to pay a sur-
charge which is used to promote the development of renewable energies in Germany (“eeg surcharge”). Some 
energy-intensive companies are partially exempted from this surcharge. In 2013, the European Commission had 
launched a formal investigation into such partial exemptions. The investigation was closed in November 2014,  
and the European Commission approved in principle this German state aid regulation on renewable energies (eeg 
2012). Remaining claims for further payments against which Bayer has appealed are in the low one digit million 
euro range. Bayer believes the risks remaining in this matter are no longer material. 

TAX PROCEEDINGS 
Stamp taxes in Greece: In February 2014, a Greek administrative court of first instance dismissed Bayer’s appeal 
against the assessment of stamp taxes and contingent penalties in the total amount of approximately €23 million  
on certain intra-Group loans to a Greek subsidiary. Bayer is convinced that the decision is wrong and has appealed. 
In a second court proceeding of first instance before the same court, Bayer has appealed against the assessment  
of stamp taxes and contingent penalties in a total amount of approximately €90 million. In addition, at the end of 
2014 Bayer received new assessments of stamp tax and contingent penalties in a total amount of approximately 
€16 million which were appealed on administrative level. Bayer believes it has meritorious arguments to support its 
legal position and intends to defend itself vigorously. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
326 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Notes to the Statements of Cash Flows 

The statement of cash flows shows how cash inflows and outflows during the fiscal year affected the cash and cash 
equivalents of the Bayer Group. Cash flows are classified by operating, investing and financing activities in accord-
ance with ias 7 (Statement of Cash Flows). Effects of changes in the scope of consolidation are stated separately.  

Of the cash and cash equivalents, an amount of €72 million (2013: €119 million) had limited availability due to 
foreign exchange restrictions. Past experience has shown such restrictions to be of short duration. The above 
amount included €64 million (2013: €96 million) of exchange-restricted cash in Venezuela. The conversion of cash 
from Venezuelan bolivars (vef) into u.s. dollars is subject to a government approval process. In the event of a de-
valuation of the bolivar, the carrying amount of cash and cash equivalents will therefore be reduced accordingly.  

The cash flows reported by consolidated companies outside the eurozone are translated at average monthly ex-
change rates, with the exception of cash and cash equivalents, which are translated at closing rates. The “Change 
in cash and cash equivalents due to exchange rate movements” is reported in a separate line item. 

33. Net cash provided by (used in) operating activities 

The gross cash flow for 2014 of €6,820 million (2013: €5,832 million) is the cash surplus from operating activities 
before any changes in working capital. The cash flows by segment are shown in note [1].  

The net cash of €5,810 million (2013: €5,171 million) provided by operating activities (net cash flow) also takes into 
account the changes in working capital and other non-cash transactions.  

An income-tax-related net cash outflow of €1,835 million (2013: €1,281 million) is included in the net cash flow for 
2014. The changes in income tax liabilities, income tax provisions and claims for reimbursement of income taxes 
are shown in the line item “Changes in other working capital, other non-cash items.”  

The transfers of bonds with a total value of €250 million to pension funds in the prior year were non-cash transac-
tions and therefore did not result in an operating cash outflow.  

In 2013, the net cash flow included €200 million in receipts from sales of securities held for trading, which must be 
reflected under operating activities according to ias 7.  

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

327

34. Net cash provided by (used in) investing activities 

Net cash outflow for investing activities in 2014 amounted to €15,539 million (2013: €2,581 million).  

Additions to property, plant and equipment and intangible assets in 2014 resulted in a cash outflow of 
€2,371 million (2013: €2,157 million). Cash inflows from sales of property, plant and equipment and other assets 
amounted to €143 million (2013: €153 million).  

Cash outflows of €13,545 million (2013: €1,082 million) pertained to acquisitions, primarily those of the consumer 
care business of Merck & Co., Inc., United States, and Algeta asa, Norway. The prior-year figure mainly comprised 
the acquisitions of Conceptus, Inc., United States; Teva Animal Health Inc., United States; the soybean seed  
producer Wehrtec Tecnologia Agricola Ltda., Brazil; the soybean business of Agricola Wehrmann Ltda., Brazil; the 
soybean seed producer fn Semillas s.a., Argentina; PROPHYTA Biologischer Pflanzenschutz GmbH, Germany;  
and Steigerwald Arzneimittelwerk GmbH, Germany. Further details of acquisitions and divestitures are given in 
notes [6.2] and [6.3], respectively. 

The net cash outflow for noncurrent and current financial assets amounted to €177 million (2013: inflow of 
€301 million).  

The transfers of bonds with a total value of €250 million to pension funds in the prior year were non-cash  
transactions and therefore did not result in an investing cash inflow.  

35. Net cash provided by (used in) financing activities 

In 2014 there was a net cash inflow of €9,736 million (2013: outflow of €2,535 million) for financing activities.  
Net borrowings amounted to €11,838 million (2013: net loan repayments of €619 million). 

Cash outflows for dividend payments amounted to €1,739 million (2013: €1,574 million). Net interest payments – 
including payments for and receipts from interest-rate swaps – rose to €362 million (2013: €338 million). 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
328 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

Other Information 

36. Audit fees 

The following fees for the services of the worldwide network of PricewaterhouseCoopers (PwC), including Pricewa-
terhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft (PwC AG wpg), were recognized as expenses: 

Audit Fees 

[Table 4.87]

Financial statements auditing 

Audit-related services and other audit work 

Tax consultancy 

Other services 

Total 

PwC 

Of which PwC AG WPG 

2013 

2014 

2013 

2014 

€ million 

€ million 

€ million 

€ million 

10

4

2

1

17

12 

4 

2 

6 

24 

3 

3 

– 

1 

7 

4

3

–

–

7

The fees for the auditing of financial statements mainly comprise those for the audits of the consolidated financial 
statements of the Bayer Group and the financial statements of Bayer AG and its subsidiaries. The fees for audit-
related services and other audit work comprise those for audits of the internal control system – including project 
audits in connection with the implementation of new it systems – along with interim financial statement reviews 
and other assurance services. The increase in other services is mainly the result of PwC’s acquisition of Strategy& 
(formerly Booz & Company) effective April 1, 2014. 

37. Related parties 

Related parties as defined in ias 24 (Related Party Disclosures) are those legal entities and natural persons that are 
able to exert influence on Bayer AG and its subsidiaries or over which Bayer AG or its subsidiaries exercise control 
or joint control or have a significant influence. They include, in particular, non-consolidated subsidiaries, joint 
ventures and associates included in the consolidated financial statements at cost of acquisition or using the equity 
method, and post-employment benefit plans, as well as the corporate officers of Bayer AG whose compensation is 
reported in note [38] and in the Compensation Report, which forms part of the Combined Management Report. 

Transactions with non-consolidated subsidiaries, joint ventures and associates included in the consolidated finan-
cial statements at cost of acquisition or using the equity method, and post-employment benefit plans are carried 
out on an arm’s-length basis. 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

329

The following table shows the volume of transactions with related parties included in the consolidated financial 
statements of the Bayer Group at amortized cost or using the equity method, and with post-employment benefit 
plans: 

Related Parties 

Non-consolidated 
subsidiaries 

Joint ventures 

Associates 

Post-employment 
benefit plans 

2013 

[Table 4.88]

2014 

Sales of 
goods and 
services 

Purchases  
of goods and 
services 

Receivables 

Liabilities 

Sales of 
goods and 
services 

Purchases 
of goods and 
services 

Receivables 

Liabilities 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

€ million 

24

25

8

–

9 

– 

703 

6

5

3

– 

825

28

2

1

66

21

29

33

–

4

–

758

–

8 

4 

5 

803 

18

–

5

64

Goods and services in the amount of €737 million (2013: €703 million) were purchased from the associate po jv, lp, 
Wilmington, United States, mainly in the course of day-to-day business operations. 

Bayer AG has undertaken to provide jouissance right capital (Genussrechtskapital) in the form of an interest-
bearing loan with a nominal volume of €150 million for Bayer-Pensionskasse VVaG. The entire amount remained 
drawn as of December 31, 2014. Loan capital was first provided to Bayer-Pensionskasse VVaG in 2008 for its effec-
tive initial fund. This capital amounted to €595 million as of December 31, 2014 (2013: €595 million). The outstand-
ing receivables, comprised of different tranches, are subject to a multi-year interest-rate adjustment mechanism. 
Bayer AG recognized €22 million in interest for the year 2014 and €32 million for 2013. 

No impairment losses were recognized on receivables from related parties in 2014 (2013: €2 million). 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
330 

Consolidated Financial Statements 

Notes to the Consolidated Financial Statements of the Bayer Group 

Bayer Annual Report 2014

38. Total compensation of the Board of Management  
and the Supervisory Board, advances and loans 

The compensation of the Board of Management comprises short-term payments, stock-based payments and  
post-employment benefits. 

The following table shows the individual components of the Board of Management’s compensation according to ifrs: 

Board of Management Compensation according to IFRS 

Fixed annual compensation 

Fringe benefits 

Total short-term non-performance-related compensation 

Short-term performance-related cash compensation 

Total short-term compensation 

Stock-based compensation (virtual Bayer shares) earned in the respective year 

Change in value of existing entitlements to stock-based compensation (virtual Bayer shares) 

Stock-based compensation (Aspire) earned in the respective year 

Change in value of existing entitlements to stock-based compensation (Aspire) 

Total stock-based compensation (long-term incentive) 

Service cost for pension entitlements earned in the respective year 

Total long-term compensation 

Aggregate compensation (IFRS) 

[Table 4.89]

2013 

2014 

€ thousand 

€ thousand 

3,774 

182 

3,956 

4,712 

8,668 

3,976 

5,030 

2,925 

2,312 

14,243 

1,805 

16,048 

24,716 

4,118

443

4,561

5,051

9,612

5,058

1,559

3,602

687

10,906

1,716

12,622

22,234

In addition to the above compensation, actuarial losses of €11,311 thousand (2013: gains of €1,437 thousand) 
incurred in connection with pension obligations to the currently serving members of the Board of Management 
were recognized outside profit or loss. These changes mainly resulted from the sharp decline in interest rates 
(2013: rise in interest rates). 

Further details are provided in the Compensation Report, which forms part of the Combined Management Report. 

In addition to the provisions of €4,771 thousand (2013: €4,712 thousand) for the short-term variable cash compen-
sation, an amount of €17,775 thousand (2013: €18,310 thousand) is recognized in the statement of financial posi-
tion for future payments of stock-based compensation based on virtual shares to the members of the Board of 
Management serving as of December 31, 2014. 

An amount of €7,155 thousand (2013: €6,813 thousand) is recognized in the statement of financial position for 
future payments of stock-based compensation based on the Aspire program to the members of the Board of Man-
agement serving as of December 31, 2014. 

The present value of the defined benefit pension obligation for the members of the Board of Management serving 
as of December 31, 2014, was €32,248 thousand (2013: €23,473 thousand). 

Pension payments to former members of the Board of Management and their surviving dependents amounted to  
€13,457 thousand (2013: €12,871 thousand). The defined benefit obligation for former members of the Board of 
Management and their surviving dependents amounted to €187,759 thousand (2013: €150,148 thousand). 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayer Annual Report 2014 

Notes to the Consolidated Financial Statements of the Bayer Group

Consolidated Financial Statements

331

The compensation of the Supervisory Board amounted to €3,286 thousand (2013: €3,309 thousand). 

In addition to their compensation as members of the Supervisory Board, those employee representatives who are 
employees of Bayer Group companies receive compensation unrelated to their service on the Supervisory Board. 
The total amount of such compensation in 2014 was €737 thousand (2013: €727 thousand). 

Pension obligations for employee representatives on the Supervisory Board amounted to €3,623 thousand (2013: 
€2,218 thousand). 

There were no advances or loans to members of the Board of Management or the Supervisory Board outstanding 
as of December 31, 2014, or at any time during 2014 or 2013.  

Leverkusen, February 13, 2015 

Bayer Aktiengesellschaft  

The Board of Management 

» TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS   
 
 
 
 
 
 
 
 
 
332

Responsibility  
Statement

To the best of our knowledge, and in accordance with the applicable reporting principles for financial 
 reporting, the consolidated financial statements give a true and fair view of the assets, liabilities, 
financial position and profit or loss of the Bayer Group, and the combined management report includes 
a fair review of the development and performance of the business and the position of the Bayer Group 
and Bayer AG, together with a description of the principal opportunities and risks associated with the 
expected development of the Bayer Group and Bayer AG.

Leverkusen, February 13, 2015
Bayer Aktiengesellschaft

The Board of Management

Dr. Marijn Dekkers 
Chairman

Werner Baumann                 Johannes Dietsch                    Michael König                 Kemal Malik 

Responsibility Statement Bayer Annual Report 2014» TABLE OF CONTENTS 
333

Independent Auditor’s 
Report

To Bayer Aktiengesellschaft, Leverkusen 

REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
We have audited the accompanying consolidated financial statements of Bayer Aktiengesellschaft and  
its subsidiaries, which comprise the consolidated income statement and statement of comprehensive  
income, the consolidated statement of financial position, the consolidated statement of cash flows, the 
consolidated statement of changes in equity and the notes to the consolidated financial statements for 
the business year from January 1, 2014 to December 31, 2014.

Board of Management’s Responsibility for the Consolidated Financial Statements
The Board of Management of Bayer Aktiengesellschaft is responsible for the preparation of these 
consolidated financial statements. This responsibility includes that these consolidated financial state-
ments are prepared in accordance with International Financial Reporting Standards, as adopted by 
the EU, and the additional requirements of German commercial law pursuant to § (Article) 315a Abs. 
(paragraph) 1 HGB (“Handelsgesetzbuch”: German Commercial Code) and that these consolidated 
 financial statements give a true and fair view of the net assets, financial position and results of opera-
tions of the group in accordance with these requirements. The Board of Management is also respon-
sible for the internal controls as the Board of Management determines are necessary to enable the 
preparation of consolidated financial statements that are free from material misstatement, whether 
due to fraud or error.

Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our 
audit. We conducted our audit in accordance with § 317 HGB and German generally accepted stan-
dards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute 
of Public Auditors in Germany) (IDW) and additionally observed the International Standards on Audit-
ing (ISA). Accordingly, we are required to comply with ethical requirements and plan and perform the 
audit to obtain reasonable assurance about whether the consolidated financial statements are free 
from material misstatement.

An audit involves performing audit procedures to obtain audit evidence about the amounts and disclo-
sures in the consolidated financial statements. The selection of audit procedures depends on the audi-
tor’s professional judgment. This includes the assessment of the risks of material misstatement of the 
consolidated financial statements, whether due to fraud or error. In assessing those risks, the auditor 
considers the internal control system relevant to the entity’s preparation of consolidated financial state-
ments that give a true and fair view. The aim of this is to plan and perform audit procedures that are 
 appropriate in the given circumstances, but not for the purpose of expressing an opinion on the effec-
tiveness of the group’s internal control system. An audit also includes evaluating the appropriateness  
of accounting policies used and the reasonableness of accounting estimates made by the Board of 
 Management, as well as evaluating the overall presentation of the consolidated financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 
our audit opinion.

Independent Auditors’ Report  Bayer Annual Report 2014» TABLE OF CONTENTS 
334

Independent Auditors’ Report

Audit Opinion
According to § 322 Abs. 3 Satz (sentence) 1 HGB, we state that our audit of the consolidated financial 
statements has not led to any reservations.

In our opinion based on the findings of our audit, the consolidated financial statements comply, in all 
material respects, with IFRSs, as adopted by the EU, and the additional requirements of German commer-
cial law pursuant to § 315a Abs. 1 HGB and give a true and fair view of the net assets and financial posi-
tion of the Group as at December 31, 2014 as well as the results of operations for the business year then 
ended, in accordance with these requirements.

REPORT ON THE COMBINED MANAGEMENT REPORT
We have audited the accompanying group management report of Bayer Aktiengesellschaft for the 
 business year from January 1, 2014 to December 31, 2014, which is combined with the management 
 report of the company. The Board of Management of Bayer Aktiengesellschaft is responsible for the 
preparation of the combined management report in accordance with the requirements of German com-
mercial law applicable pursuant to § 315a Abs. 1 HGB. We conducted our audit in accordance with  
§ 317 Abs. 2 HGB and German generally accepted standards for the audit of the combined management 
report promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany) (IDW). 
Accordingly, we are required to plan and perform the audit of the combined management report to 
 obtain reasonable assurance about whether the combined management report is consistent with the 
consolidated financial statements and the audit findings, as a whole provides a suitable view of the 
Group‘s position and suitably presents the opportunities and risks of future development.

According to § 322 Abs. 3 Satz 1 HGB we state, that our audit of the combined management report has 
not led to any reservations.

In our opinion based on the findings of our audit of the consolidated financial statements and combined 
management report, the combined management report is consistent with the consolidated financial 
statements, as a whole provides a suitable view of the Group’s position and suitably presents the oppor-
tunities and risks of future development.

Essen, February 14, 2015

PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft

Dr. Peter Bartels 
Wirtschaftsprüfer   

Eckhard Sprinkmeier
Wirtschaftsprüfer

 Bayer Annual Report 2014» TABLE OF CONTENTS 
 
 
 
Independent Assurance Report

335

Independent Assurance 
Report

To Bayer AG, Leverkusen

We have been engaged to perform a limited assurance engagement on the online annexes of the  
augmented online version of the Annual Report of Bayer AG, Leverkusen, (hereinafter: the Company), 
for the business year from 1 January to 31 December 2014 (“Annual Report 2014 – Augmented Version”; 
hereinafter: Online Version) as well as on the chapters “Investor Information” and “Reporting Princi-
ples” of the Annual Report (together: the “Content”).  The Content selected by the Company and evaluat-
ed by us has been marked with the label “limited assurance”.

MANAGEMENT’S RESPONSIBILIT Y
Company’s Board of Managing Directors is responsible for the proper preparation of the Content in  
accordance with the criteria stated in the Sustainability Reporting Guidelines Vol. 3.1 (pp. 7 to 17) of the 
Global Reporting Initiative (GRI):

•  Materiality,
•  Stakeholder Inclusiveness,
•  Sustainability Context,
•  Completeness,
•  Balance,
•  Clarity,
•  Accuracy,
•  Timeliness,
•  Comparability and
•  Reliability.

This responsibility includes the selection and application of appropriate methods to prepare the Content 
and the use of assumptions and estimates for individual sustainability disclosures which are reasonable 
in the circumstances. Furthermore, the responsibility includes designing, implementing and maintaining 
systems and processes relevant for the preparation of the Content.

OUR INDEPENDENCE AND QUALIT Y CONTROL
We have complied with the independence and other ethical requirements of the Code of Ethics for  
Professional Accountants issued by the International Ethics Standards Board for Accountants, which is 
founded on fundamental principles of integrity, objectivity, professional competence and due care,  
confidentiality and professional behavior. 

1 Our engagement applies to the German and English online annexes of the online version of the Annual Report of Bayer AG, which describe 
the sustainability performance of the Company. This text is a translation of the Independent Assurance Report issued in German language – 
the German text is authoritative. The Online Version is available at www.bayer.de/GB14 and www.bayer.com / AR14 respectively. 

  Bayer Annual Report 2014» TABLE OF CONTENTS336

Independent Assurance Report

The firm applies International Standard on Quality Control 1 and accordingly maintains a comprehensive 
system of quality control including documented policies and procedures regarding compliance with  
ethical requirements, professional standards and applicable legal and regulatory requirements. 

PR ACTITIONER’S RESPONSIBILIT Y
Our responsibility is to express a conclusion based on our work performed as to whether anything has 
come to our attention that causes us to believe that the information marked with the label “limited  
assurance” in the Content have not been prepared, in all material respects, in accordance with the above 
mentioned criteria of the Sustainability Reporting Guidelines Vol. 3.1 (pp. 7 to 17) of the GRI. Within the 
scope of our independent assurance engagement we did not perform an audit of any links to external 
sources of documentation as well as prospective statements and statements from external experts set 
out in the Content. We also have been engaged to make recommendations for the further development 
of sustainability management and sustainability reporting based on the results of our assurance  
engagement.

We conducted our work in accordance with the International Standard on Assurance Engagements 
(ISAE) 3000. This Standard requires that we comply with ethical requirements and plan and perform the 
assurance engagement, under consideration of materiality, to provide our conclusion with limited  
assurance.

In a limited assurance engagement the evidence-gathering procedures are more limited than for a  
reasonable assurance engagement and therefore less assurance is obtained than in a reasonable  
assurance engagement. The procedures selected depend on the practitioner’s judgement.

•  Inquiries of personnel responsible for the preparation of the online annexes regarding the process  
to prepare the reporting of sustainability information and the underlying internal control system;
•  Inspection of documents regarding the sustainability strategy as well as understanding the sustain-

ability management structure, the stakeholder dialogue and the development process of Company’s 
sustainability program;

•  Recording of the systems and processes for collection, analysis, validation and aggregation of  

sustainability data and their documentation on a sample basis;

•  Performance of site visits as part of the inspection of processes for collecting, analyzing and  

aggregating selected data at:
–   Bayer CropScience Monheim (Germany),
–   Bayer CropScience Vapi (India),
–   Bayer HealthCare Bitterfeld (Germany),
–   Bayer HealthCare Shiga (Japan),
–   Bayer MaterialScience Tarragona (Spain),
–   Bayer MaterialScience Uerdingen (Germany),
–   Currenta Uerdingen (Germany),
–   Bayer Business Services Leverkusen (Germany);

•  Analytical procedures on sustainability data included in the Online Version;
•  Gaining further evidence for selected data of the online annexes through inspection of internal  

documents, contracts and invoices/reports from external service providers.

 Bayer Annual Report 2014» TABLE OF CONTENTS 
 
 
 
 
 
 
 
Independent Assurance Report

337

CONCLUSION
Based on our limited assurance engagement, nothing has come to our attention that causes us to believe 
that the information marked with the label “limited assurance” in the Content has not been prepared,  
in all material respects, in accordance with the above mentioned criteria of the Sustainability Reporting 
Guidelines Vol. 3.1 (pp. 7 to 17) of the GRI. 

EMPHASIS OF MATTER – RECOMMENDATIONS
Without qualifying our conclusion presented above, we make the following recommendations for the 
further development of the Company’s sustainability management and sustainability reporting:

•  Further development of the sustainability approach of Bayer AG in consideration of the planned and 

entire focus on the Life Science businesses;

•  Further formalization of the internal controls system for sustainability information and transformation 

into standardized processes in the course of the further development of Integrated Reporting;

•  Further alignment of future reporting with the updated materiality analysis, especially considering 

the requirements of the new G4 Guidelines of GRI.

Düsseldorf, February 25, 2015

PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft

Michael Werner 

ppa. Christian Fischl

  Bayer Annual Report 2014» TABLE OF CONTENTS 
 
338

Further Information

» TABLE OF CONTENTS

Bayer Annual Report 2014

03 

Further Information

Governance Bodies 

Organization Chart 

GRI Index and UN Global Compact Principles 

Glossary 

Five-Year Summary 

339

343

344

346

348

  For direct access to a chapter, simply click on its name.

Bayer Annual Report 2014

339

Further Information

Governance Bodies

(cid:34)(cid:74)(cid:81)(cid:64)(cid:77)(cid:73)(cid:60)(cid:73)(cid:62)(cid:64)(cid:3)(cid:29)(cid:74)(cid:63)(cid:68)(cid:64)(cid:78)

Supervisory Board

(cid:40)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:46)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:67)(cid:64)(cid:71)(cid:63)(cid:3)(cid:74)(cid:65)(cid:190)(cid:62)(cid:64)(cid:78)(cid:3)(cid:60)(cid:78)(cid:3)(cid:72)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:78)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:61)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:74)(cid:77)(cid:3)(cid:60)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:60)(cid:77)(cid:60)(cid:61)(cid:71)(cid:64)(cid:3)(cid:78)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:68)(cid:73)(cid:66)(cid:3)(cid:61)(cid:74)(cid:63)(cid:84)(cid:3)(cid:74)(cid:65)(cid:3)
(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:77)(cid:75)(cid:74)(cid:77)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:78)(cid:3)(cid:71)(cid:68)(cid:78)(cid:79)(cid:64)(cid:63)(cid:3)(cid:4)(cid:60)(cid:78)(cid:3)(cid:60)(cid:79)(cid:3)(cid:31)(cid:64)(cid:62)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:3)31, 2014(cid:3)(cid:74)(cid:77)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:63)(cid:60)(cid:79)(cid:64)(cid:3)(cid:74)(cid:73)(cid:3)(cid:82)(cid:67)(cid:68)(cid:62)(cid:67)(cid:3)(cid:79)(cid:67)(cid:64)(cid:84)(cid:3)(cid:62)(cid:64)(cid:60)(cid:78)(cid:64)(cid:63)(cid:3)(cid:79)(cid:74)(cid:3)(cid:61)(cid:64)(cid:3)(cid:72)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:46)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)
of Bayer AG):

WERNER WENNING
Leverkusen, Germany 
(born October 21, 1946) 
Chairman of the Supervisory 
Board effective October 2012
Chairman of the Supervisory 
Board of Bayer AG and  
Chairman of the Supervisory 
Board of E.ON SE
Memberships on other 
 supervisory boards: 
•  E.ON SE (Chairman) 
•   Henkel Management AG
•   Siemens AG 

(Vice Chairman)

Memberships in comparable 
supervising bodies of German 
or foreign corporations:
•   Henkel AG & Co. KGaA  

(Member of the  
Share holders’ Committee)

THOMAS DE WIN
Cologne, Germany 
(born November 21, 1958)
Vice Chairman of the Super-
visory Board, Member of the 
Supervisory Board effective 
April 2002
Chairman of the Bayer Group 
Works Council
Chairman of the Bayer Central 
Works Council  
(until February 2015)
Memberships on other 
 supervisory boards: 
•  Bayer MaterialScience AG

DR. PAUL ACHLEITNER
Munich, Germany 
(born September 28, 1956)
Member of the Supervisory 
Board effective April 2002
Chairman of the Supervisory 
Board of Deutsche Bank AG
Memberships on other 
 supervisory boards:
•   Daimler AG 
•   Deutsche Bank AG  

(Chairman)

Memberships in comparable 
supervising bodies of German 
or foreign corporations:
•   Henkel AG & Co. KGaA  

(Member of the  
Share holders’ Committee)

DR. RER. NAT. SIMONE  
 BAGEL-TR AH
Düsseldorf, Germany 
(born January 10, 1969)
Member of the Supervisory 
Board effective April 2014
Chairman of the Supervisory 
Board of Henkel AG & Co. 
KGaA and Henkel Manage-
ment AG and Shareholders’ 
Committee of Henkel AG & Co. 
KGaA
Memberships on other 
 supervisory boards:
•   Henkel AG & Co. KGaA 

(Chairman)

•   Heraeus Holding GmbH
Memberships in comparable 
supervising bodies of German 
or foreign corporations:
•   Henkel AG & Co. KGaA  

(Chairman of the  
Shareholders’ Committee)

» TABLE OF CONTENTS FURTHER INFORMATION340

Further Information

Governance Bodies

Bayer Annual Report 2014

PETR A KRONEN
Krefeld, Germany 
(born August 22, 1964)
Member of the Supervisory 
Board effective July 2000
Chairman of the Works Council 
of the Uerdingen site of Bayer
Memberships on other 
 supervisory boards:  
•   Bayer MaterialScience AG 

(Vice Chairman)

DR. RER. NAT. HELMUT PANKE
Munich, Germany 
(born August 31, 1946)
Member of the Supervisory 
Board effective April 2007
Member of various supervisory 
boards
Memberships in comparable 
supervising bodies of German 
or foreign corporations: 
•  Microsoft Corporation 
•  Singapore Airlines Limited 
•  UBS AG

DR. CLEMENS BÖRSIG
Frankfurt am Main, Germany 
(born July 27, 1948)
Member of the Supervisory 
Board effective April 2007
Member of various  
supervisory boards
Memberships on other 
 supervisory boards: 
•  Daimler AG 
•  Linde AG 
Memberships in comparable 
supervising bodies of German 
or foreign corporations:
•  Emerson Electric Co.
•   Istituto per le Opere  

di  Religione  
(Member of the Board  
of Superintendence) 
(effective July 2014)

ANDRÉ VAN BROICH
Dormagen, Germany 
(born June 19, 1970)
Member of the Supervisory 
Board effective April 2012
Chairman of the Works Council 
of the Dormagen site of Bayer
Memberships on other 
 supervisory boards: 
•  Bayer CropScience AG 

THOMAS EBELING
Muri bei Bern, Switzerland 
(born February 9, 1959)
Member of the Supervisory 
Board effective April 2012

(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:287)(cid:70)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)
ProSiebenSat.1 Media AG 
Memberships in comparable 
supervising bodies of German 
or foreign corporations:
•   Lonza Group AG

DR.-ING. THOMAS FISCHER
Krefeld, Germany 
(born August 27, 1955)
Member of the Supervisory 
Board effective October 2005
Chairman of the Group 
 Managerial Employees’ 
 Committee of Bayer
Memberships on other 
 supervisory boards:
•  Bayer MaterialScience AG

PETER HAUSMANN
Winsen / Aller, Germany 
(born February 13, 1954)
Member of the Supervisory 
Board effective April 2006
Member of the Executive 
 Committee of the German 
 Mining, Chemical and Energy 
Industrial Union
Memberships on other 
 supervisory boards:
•   Continental AG
•   Henkel AG & Co. KGaA
•   50Hertz Transmission 

GmbH

•   Vivawest Wohnen GmbH

REINER HOFFMANN
Wuppertal, Germany 
(born May 30, 1955)
Member of the Supervisory 
Board effective October 2006
Chairman of the German Trade 
Union Confederation
Memberships on other 
 supervisory boards:
•   Evonik Services GmbH 

(Vice Chairman) 
(until June 2014)

•   SASOL Germany GmbH 

(Vice Chairman) 
(until October 2014)

YÜKSEL K AR A ASLAN 
Hohen Neuendorf, Germany 
(born March 1, 1968) 
Member of the Supervisory 
Board effective April 2012
Chairman of the Works Council 
of the Berlin site of Bayer
Vice Chairman of the Bayer 
Central Works Council
Memberships on other 
 supervisory boards:
•  Bayer Pharma AG

DR. RER. POL.  
KLAUS KLEINFELD 
New York, U.S.A. 
(born November 6, 1957)
Member of the Supervisory 
Board until September 2014
Chairman and Chief Executive 
(cid:50)(cid:73)(cid:287)(cid:70)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:36)(cid:79)(cid:70)(cid:82)(cid:68)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:3)
Memberships in comparable 
supervising bodies of German 
or foreign corporations:
•   Member of the Board of 

 Directors of Morgan Stanley

•   Member of the  

Board  of Directors of  
Hewlett-Packard Company 
(effective July 2014)

» TABLE OF CONTENTS FURTHER INFORMATION  Bayer Annual Report 2014

341

Further Information

Governance Bodies

SUE H. R ATA J
Sebastopol, U.S.A. 
(born January 8, 1957)
Member of the Supervisory 
Board effective April 2012
Member of the Board of 
 Directors (non-executive) of 
Cabot Corporation, Boston, 
U.S.A.

PETR A REINBOLD-KNAPE
Berlin, Germany 
(born April 16, 1959)
Member of the Supervisory 
Board effective April 2012
Northeast District Secretary of 
the German Mining, Chemical 
and Energy Industrial Union
Memberships on other 
 supervisory boards:
•   envia Mitteldeutsche 

 Energie AG

•   Vattenfall Europe  
Genera tion AG

Memberships in comparable 
supervising bodies of German 
or foreign corporations:
•   MDSE Mitteldeutsche  

Sanierungs- und 
Entsorgungs  gesellschaft 
mbH 

MICHAEL SCHMIDT-KIESSLING
Schwelm, Germany 
(born March 24, 1959)
Member of the Supervisory 
Board effective April 2012
Chairman of the Works Council 
of the Elberfeld site of Bayer
Memberships on other 
 supervisory boards: 
•   Bayer Pharma AG  
(until May 2014)

PROF. DR.-ING.  
EKKEHARD D. SCHULZ
Krefeld, Germany 
(born July 24, 1941)
Member of the Supervisory 
Board until April 2014
Member of various supervisory 
boards
Memberships on other 
 supervisory boards:
•   MAN SE (Vice Chairman)
•  RWE AG 

PROF. DR. DR. H.C. MULT.  
ERNST-LUDWIG WINNACKER
Munich, Germany 
(born July 26, 1941)
Member of the Supervisory 
Board effective April 1997
Secretary General of the  
Human Frontier Science  
Program, Strasbourg
Memberships on other 
 supervisory boards:
•  Wacker Chemie AG 

DR. KLAUS STUR ANY*
Ascona, Switzerland 
(born October 23, 1946)
Member of the Supervisory 
Board effective April 2007
Member of various supervisory 
boards
Memberships on other 
 supervisory boards:
•   Hannover  

Rückversicherung AG  
(Vice Chairman)

Memberships in comparable 
supervising bodies of German 
or foreign corporations:
•  Sulzer AG 

OLIVER ZÜHLKE 
Solingen, Germany 
(born December 11, 1968)
Member of the Supervisory 
Board effective April 2007
Chairman of the Bayer Central 
Works Council  
(effective February 2015)
Chairman of the Works Council 
of the Leverkusen site of Bayer
Chairman of the Bayer  
European Forum
Memberships on other 
 supervisory boards:
•   Bayer Pharma AG  

(effective May 2014)

Standing committees  
of the Supervisory Board  
of Bayer AG  
(as at Dec. 31, 2014)

PRESIDIAL COMMIT TEE /  
MEDIATION COMMIT TEE 
Wenning (Chairman),  
Achleitner, Hausmann,  
de Win 

AUDIT COMMIT TEE 
Sturany* (Chairman),  
Fischer, Hoffmann, Panke,  
Wenning, de Win 

HUMAN RESOURCES  
COMMIT TEE    
Wenning (Chairman),  
Achleitner, Kronen,  
Zühlke 

NOMINATIONS 
COMMIT TEE 
Wenning (Chairman),  
Achleitner

*  independent expert member pursuant  

to Section 100 Paragraph 5 of the German 
Stock Corporation Act (AktG)

PROF. DR. DR. H.C. OTMAR  
D. WIESTLER
Heidelberg, Germany 
(born November 6, 1956)
Member of the Supervisory 
Board effective October 2014

(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:76)(cid:287)(cid:70)(cid:3)
 Member of the Management 
Board of the German Cancer 
 Research Center

» TABLE OF CONTENTS FURTHER INFORMATION342

Further Information

Governance Bodies

Bayer Annual Report 2014

(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:74)(cid:65)(cid:3)(cid:40)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)

(cid:40)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:74)(cid:65)(cid:3)(cid:40)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:67)(cid:64)(cid:71)(cid:63)(cid:3)(cid:74)(cid:65)(cid:190)(cid:62)(cid:64)(cid:78)(cid:3)(cid:60)(cid:78)(cid:3)(cid:72)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:78)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:74)(cid:77)(cid:84)(cid:3)(cid:61)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3)(cid:74)(cid:77)(cid:3)(cid:60)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:60)(cid:77)(cid:60)(cid:61)(cid:71)(cid:64)(cid:3)(cid:78)(cid:80)(cid:75)(cid:64)(cid:77)(cid:81)(cid:68)(cid:78)(cid:68)(cid:73)(cid:66)(cid:3) 
(cid:61)(cid:74)(cid:63)(cid:84)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:77)(cid:75)(cid:74)(cid:77)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:78)(cid:3)(cid:71)(cid:68)(cid:78)(cid:79)(cid:64)(cid:63)(cid:3)(cid:4)(cid:60)(cid:78)(cid:3)(cid:60)(cid:79)(cid:3)(cid:31)(cid:64)(cid:62)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:3)31, 2014(cid:3)(cid:74)(cid:77)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:63)(cid:60)(cid:79)(cid:64)(cid:3)(cid:74)(cid:73)(cid:3)(cid:82)(cid:67)(cid:68)(cid:62)(cid:67)(cid:3)(cid:79)(cid:67)(cid:64)(cid:84)(cid:3)(cid:62)(cid:64)(cid:60)(cid:78)(cid:64)(cid:63)(cid:3)(cid:79)(cid:74)(cid:3)(cid:61)(cid:64)(cid:3)(cid:72)(cid:64)(cid:72)(cid:61)(cid:64)(cid:77)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:29)(cid:74)(cid:60)(cid:77)(cid:63)(cid:3) 
(cid:74)(cid:65)(cid:3)(cid:40)(cid:60)(cid:73)(cid:60)(cid:66)(cid:64)(cid:72)(cid:64)(cid:73)(cid:79)(cid:3)(cid:74)(cid:65)(cid:3)(cid:29)(cid:60)(cid:84)(cid:64)(cid:77)(cid:3)AG):

DR. MARIJN DEKKERS
(born September 22, 1957)
Chairman  
(effective October 1, 2010)
Member of the Board of 
 Management effective  
January 1, 2010, appointed  
until December 31, 2016
•   Board of Directors of 

WERNER BAUMANN 
(born October 6, 1962)
Member of the Board of 
 Management effective  
January 1, 2010, appointed  
until  December 31, 2017
•   Bayer Business Services 

GmbH (Chairman)  
(until September 30, 2014)

 General Electric Company

•   Bayer CropScience AG  

JOHANNES DIETSCH
(born January 2, 1962)
Member of the Board of 
 Management effective  
September 1, 2014,  
appointed until August 31, 
2017
•   Bayer Business Services 

GmbH (Chairman)  
(effective October 1, 2014)

(Chairman) 

•   Bayer MaterialScience AG 

(Chairman)  
(effective April 30, 2014)

MICHAEL KÖNIG 
(born September 3, 1963)
Member of the Board of 
 Management effective 
April 1, 2013, appointed  
until March 31, 2016
Labor Director
•   Bayer HealthCare AG  

(Chairman) 

•   Bayer Pharma AG  

(Chairman)

•   Bayer Technology Services 

GmbH  
(Chairman effective  
June 13, 2014)

•   Currenta Geschäftsfüh-

rungs-GmbH (Chairman)

KEMAL MALIK
(born September 29, 1962)
Member of the Board of 
 Management effective 
February 1, 2014, appointed 
until January 31, 2017

PROF. DR. WOLFGANG PLISCHKE
(born September 15, 1951)
Member of the Board  
of  Management until  
April 29, 2014
•   Bayer MaterialScience AG 

(Chairman)

•   Bayer Technology Services 

GmbH (Chairman) 

» TABLE OF CONTENTS FURTHER INFORMATION  Bayer Annual Report 2014

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BAYER AG (HOLDING COMPANY )

Group Management Board

343

Further Information

Organization Chart

[Graphic 5.1]

Marijn Dekkers
Chairman

Werner Baumann 1
Strategy and  Portfolio 
Management

Johannes Dietsch
Finance

Michael König *
Human Resources, 
 Technology, Sustainability

Kemal Malik 
Innovation

Corporate Center

(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:50)(cid:73)(cid:287)(cid:70)(cid:72)(cid:3) 
M. Arnold
Corporate Brand,  
Communications and  
Government Relations 
H. Heitmann
Investor Relations  
A. Rosar
Corporate Audit  
R. Schwarz

Mergers & Acquisitions  
F. Rittgen 
Corporate Development  
T. - P. Hausner

Law, Patents & Compliance  
R. Hartwig 
Regional Coordination  
I. Paterson
Group Accounting &  
Controlling  
U. Hauck 2
Finance  
P. Müller
Global Taxes  
B. - P. Bier

Environment &  
Sustaina bility 
W. Grosse Entrup
Corporate Human  
Resources & Organization 
H. - U. Groh 
Technology &  
Manufacturing Strategy  
T. Kirchner

Digital Strategy  
J. Federer
Innovation Strategy 
M. Lessl

BUSINESS AREAS

SERVICE AREAS

Bayer HealthCare

Bayer CropScience

Bayer MaterialScience

Bayer Business Services

O. Brandicourt 2 (photo)
Chairman
M. Vehreschild 
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:73)(cid:287)(cid:70)(cid:72)(cid:85)
D. Ehle 
Animal Health
E. Mann
Consumer Care
A. Main
Medical Care
D. Weinand
Pharmaceuticals
A. Busch
Global Drug Discovery
J. Möller
Global Development
M. Devoy
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:48)(cid:72)(cid:71)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:50)(cid:73)(cid:287)(cid:70)(cid:72)(cid:85)
H. Klusik *
Product Supply
N. Sheail
Business  Development &  
Licensing
S. Gehring
General Counsel
A. Günther
Human Resources
O. Renner
Communications and  
Public Affairs

as of February 1, 2015

L. Condon (photo)
Chairman
M. A. Schulz
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:73)(cid:287)(cid:70)(cid:72)(cid:85)
B. Naaf *
Business Management
M. Reichhardt
Agricultural Commercial 
Operations 
G. Riemann 3
Environmental Science
M. Haug
Human Resources
S. Kurzawa
Communications
G. Marchand
General Counsel
A. Percy
Research & Development
D. Backhaus
Product Supply
M. Kremer
Strategy 

P. Thomas (photo)
Chairman
F. H. Lutz
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:73)(cid:287)(cid:70)(cid:72)(cid:85)
J. Wolff
Polyurethanes
M. Steilemann
Polycarbonates
D. Meyer
Coatings, Adhesives, 
Specialties
K. Schäfer
Industrial Operations
G. Harnier
General Counsel 
M. Bernhardt *
Human Resources 
R. Northcote
Communications, Public 
Affairs & Sustainability

Executive Board  
D. Hartert (photo)
Chairman
W. Oehlschläger *

Bayer Technology Services

D. Van Meirvenne 
Managing Director

Currenta

* Labor Director

1  also Chairman of Bayer HealthCare 
effective April 1, 2015
2 until March 31, 2015
3 J. Applegate from April 1, 2015

Executive Board  
G. Hilken (photo)
Chairman
J. Waldi * 

» TABLE OF CONTENTS FURTHER INFORMATION344

Further Information

GRI and UN Global Compact Index

Bayer Annual Report 2014

Index of the Global Reporting Initiative (GRI)  
and the 10 UN Global Compact Principles

UNGC 
prin-
ciples

GRI Core Indicators according to the G3.1 Guidelines

VISION & STRATEGY

1-10

1.1

Statement from the most senior decision-maker of the organization

1.2

Description of key impacts, risks, and opportunities

ORGANIZATIONAL PROFILE

2.1

Name of the organization

2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10

Primary brands, products, and / or services
Operational structure of the organization
Location of organization’s headquarters
Number of countries where the organization operates, and names of countries with major operations
Nature of ownership and legal form
Markets served
Scale of the reporting organization

(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)
Awards received in the reporting period

REPORT PARAMETERS

3.1

3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9

3.10

3.11
3.12
3.13

Reporting period for information provided

Date of most recent previous report
Reporting cycle
Contact point for questions regarding the report or its contents

(cid:51)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:71)(cid:72)(cid:287)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:72)(cid:81)(cid:87)
Boundary of the report 

(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:287)(cid:70)(cid:3)(cid:79)(cid:76)(cid:80)(cid:76)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:70)(cid:82)(cid:83)(cid:72)(cid:3)(cid:82)(cid:85)(cid:3)(cid:69)(cid:82)(cid:88)(cid:81)(cid:71)(cid:68)(cid:85)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)
Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities
Data measurement techniques and the bases of calculations
Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons  
for such re-statement 
(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:83)(cid:85)(cid:72)(cid:89)(cid:76)(cid:82)(cid:88)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:70)(cid:82)(cid:83)(cid:72)(cid:15)(cid:3)(cid:69)(cid:82)(cid:88)(cid:81)(cid:71)(cid:68)(cid:85)(cid:92)(cid:15)(cid:3)(cid:82)(cid:85)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:80)(cid:72)(cid:87)(cid:75)(cid:82)(cid:71)(cid:86)(cid:3) 
applied in the report
GRI-Index
Policy and current practice with regard to seeking external assurance 

GOVERNANCE, COMMITMENTS & ENGAGEMENT

4.1
4.2

4.3

4.4

4.5
4.6

4.7

4.8

4.9

4.10
4.11

Governance structure of the organization

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Number and gender of members of the highest governance body that are independent and / or non-executive 
members
Mechanisms for shareholders and employees to provide recommendations or direction to the highest 
governance body
Linkage between compensation of the highest governance body, senior managers, and executives and the 
organization’s performance

(cid:51)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:83)(cid:79)(cid:68)(cid:70)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:75)(cid:76)(cid:74)(cid:75)(cid:72)(cid:86)(cid:87)(cid:3)(cid:74)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:69)(cid:82)(cid:71)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:81)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:288)(cid:76)(cid:70)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:68)(cid:89)(cid:82)(cid:76)(cid:71)(cid:72)(cid:71)
(cid:51)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:71)(cid:72)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:84)(cid:88)(cid:68)(cid:79)(cid:76)(cid:287)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:85)(cid:87)(cid:76)(cid:86)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:75)(cid:76)(cid:74)(cid:75)(cid:72)(cid:86)(cid:87)(cid:3)
governance body and its committees, including any consideration of gender and other indicators of diversity
Statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and 
social performance

(cid:51)(cid:85)(cid:82)(cid:70)(cid:72)(cid:71)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:75)(cid:76)(cid:74)(cid:75)(cid:72)(cid:86)(cid:87)(cid:3)(cid:74)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:69)(cid:82)(cid:71)(cid:92)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:86)(cid:72)(cid:72)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:82)(cid:85)(cid:74)(cid:68)(cid:81)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:287)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)
of sustainability performance, including relevant risks and opportunities, and adherence or compliance with 
internationally agreed standards, codes of conduct, and principles
Processes for evaluating the highest governance body’s own performance, particularly with respect to 
sustainability
Explanation if precautionary approach or principle is addressed 

1-10

1-10

1-10

7

full

full

full

full
full
full
full
full
full
full
full
full

full

full
full
full
full
full
full
full
full

full

full
full
full

full
full

full

full

full
full

full

full

full

full
full

1-10

4.12

Support of externally developed economic, environmental, and social charters, principles, or other initiatives 

full

Level of 
reporting Page reference

Online annex

1-7
49-52, 54, 57, 59f., 
79-81, 83, 102, 213, 
215-217

3-6-1, 3-6-4

46
46, 55, 108f., 111-113, 
279
55, 254-257
46
47, 166f.
43, 46
47, 108f., 111-113, 166f.
46, 169, 177
57, 74-76, 258-265
42, 88

3-15.5-1

front cover, 30f.
Annual Report: 
Feb. 28, 2014
annually
inside cover
31, 81
31
31
31
31, 131f., 239-254
47, 63, 89, 100, 204, 
228, 234, 239

none
344f.
31, 333-337

32-38, 184-188
34-38, 186

n.a.
43, 189, Financial 
Calendar

91, 190, 194, 196f., 204
187f., 190

79f., 186f.

47f., 80

3-6-2

79-81, 123, 186, 190, 
214, 216

3-11-2

204f.
114
43, 79 114, 129, 134, 
139, 190

3-10-1

3-3-BHC-1
3-6-2, 3-6-4, 3-10-2, 
3-10-BCS-1,  
3-11-5, 3-12.3-1
3-6-4
3-6-4

1-10

4.13
4.14
4.15

Principal memberships in industry associations and / or national / international advocacy organization´s 
List of stakeholder groups engaged by the organization 

(cid:37)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:287)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:87)(cid:68)(cid:78)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:90)(cid:75)(cid:82)(cid:80)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:81)(cid:74)(cid:68)(cid:74)(cid:72)

full
full
full

54
54, 83

» TABLE OF CONTENTS FURTHER INFORMATION   
Bayer Annual Report 2014

Further Information

GRI and UN Global Compact Index

345

UNGC 
prin-
ciples

GRI Core Indicators according to the G3.1 Guidelines

Level of 
reporting Page reference

Online annex

4.16

1-10

4.17

Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group 
Key topics and concerns that have been raised through stakeholder engagement, and how the organization has 
responded

full

full

1,6,7

ECONOMIC PERFORMANCE INDICATORS - MANAGEMENT APPROACH

EC1
EC2
EC3

EC4

EC5
EC6

EC7

7
1, 6

6

Direct economic value generated and distributed
Financial implications and other risks and opportunities due to climate change 

(cid:38)(cid:82)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:82)(cid:85)(cid:74)(cid:68)(cid:81)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:291)(cid:86)(cid:3)(cid:71)(cid:72)(cid:287)(cid:81)(cid:72)(cid:71)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:287)(cid:87)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:3)(cid:82)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)

(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:287)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:76)(cid:86)(cid:87)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:72)(cid:71)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:74)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)
(cid:53)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:68)(cid:85)(cid:71)(cid:3)(cid:72)(cid:81)(cid:87)(cid:85)(cid:92)(cid:3)(cid:79)(cid:72)(cid:89)(cid:72)(cid:79)(cid:3)(cid:90)(cid:68)(cid:74)(cid:72)(cid:3)(cid:69)(cid:92)(cid:3)(cid:74)(cid:72)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:79)(cid:3)(cid:80)(cid:76)(cid:81)(cid:76)(cid:80)(cid:88)(cid:80)(cid:3)(cid:90)(cid:68)(cid:74)(cid:72)(cid:3)(cid:68)(cid:87)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)
locations of operation.

(cid:51)(cid:82)(cid:79)(cid:76)(cid:70)(cid:92)(cid:15)(cid:3)(cid:83)(cid:85)(cid:68)(cid:70)(cid:87)(cid:76)(cid:70)(cid:72)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:83)(cid:72)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:81)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:79)(cid:79)(cid:92)(cid:16)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:79)(cid:76)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)
Local hiring: policy and proportion of senior management hired from the local community

EC8

(cid:44)(cid:81)(cid:73)(cid:85)(cid:68)(cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:76)(cid:80)(cid:68)(cid:85)(cid:76)(cid:79)(cid:92)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:287)(cid:87)(cid:3)

7, 8, 9

ENVIRONMENTAL PERFORMANCE INDICATORS – MANAGEMENT APPROACH

EN1 Materials used by weight or volume 

EN2
EN3 / 
EN4

EN5

Percentage of materials used that are recycled input materials 

Direct and indirect energy consumption by primary energy source

(cid:40)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:86)(cid:68)(cid:89)(cid:72)(cid:71)(cid:3)(cid:71)(cid:88)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:72)(cid:73)(cid:287)(cid:70)(cid:76)(cid:72)(cid:81)(cid:70)(cid:92)(cid:3)(cid:76)(cid:80)(cid:83)(cid:85)(cid:82)(cid:89)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)

(cid:44)(cid:81)(cid:76)(cid:87)(cid:76)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)(cid:72)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:16)(cid:72)(cid:73)(cid:287)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:85)(cid:3)(cid:85)(cid:72)(cid:81)(cid:72)(cid:90)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:72)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:71)(cid:88)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)
energy requirements as a result of these initiatives
Total water withdrawal by source 

EN6
EN8
EN9 (cid:58)(cid:68)(cid:87)(cid:72)(cid:85)(cid:3)(cid:86)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:71)(cid:85)(cid:68)(cid:90)(cid:68)(cid:79)(cid:3)(cid:82)(cid:73)(cid:3)(cid:90)(cid:68)(cid:87)(cid:72)(cid:85)
Percentage and total volume of water recycled and reused
EN10

EN11 Use of land in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas

partial

EN12

EN14

(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:69)(cid:76)(cid:82)(cid:71)(cid:76)(cid:89)(cid:72)(cid:85)(cid:86)(cid:76)(cid:87)(cid:92)(cid:3)(cid:76)(cid:81)(cid:3)(cid:83)(cid:85)(cid:82)(cid:87)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:85)(cid:72)(cid:68)(cid:86)
Strategies, current actions, and future plans for managing impacts on biodiversity.

EN16

Total direct and indirect greenhouse gas emissions by weight 

EN17 Other relevant indirect greenhouse gas emissions by weight 

8, 9

8, 9

8
7

8

8

8

8,9

8

7, 8, 9

EN18

Initiatives to reduce greenhouse gas emissions and reductions achieved

8

8
8

8

8

EN19 Emissions of ozone-depleting substances by weight 
EN20 (cid:49)(cid:50)(cid:91)(cid:15)(cid:3)(cid:54)(cid:50)(cid:91)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:68)(cid:76)(cid:85)(cid:3)(cid:72)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:92)(cid:83)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:90)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)
EN21

Total water discharge by quality and destination 

EN22

Total weight of waste by type and disposal method 

EN23

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:81)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:89)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:86)(cid:83)(cid:76)(cid:79)(cid:79)(cid:86)

7, 8, 9

EN26

Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation

EN27

Percentage of products sold and their packaging materials that are reclaimed by category 

EN28

EN29

(cid:48)(cid:82)(cid:81)(cid:72)(cid:87)(cid:68)(cid:85)(cid:92)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:287)(cid:81)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:81)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:81)(cid:82)(cid:81)(cid:16)(cid:80)(cid:82)(cid:81)(cid:72)(cid:87)(cid:68)(cid:85)(cid:92)(cid:3)(cid:86)(cid:68)(cid:81)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:81)(cid:82)(cid:81)(cid:16)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:76)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)
environmental laws and regulations 

(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:72)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:79)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:74)(cid:82)(cid:82)(cid:71)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:3)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
organization’s operations, and transporting members of the workforce

SOCIAL PERFORMANCE INDICATORS

1, 3, 6

Labor Practices and Decent Work – Management Approach

LA1
LA2
LA4

LA5

LA7

6
1,3

1,3

1

Total workforce by employment type, employment contract, and region, broken down by gender
Total number and rate of new employee hires and employee turnover by age group, gender, and region
Employees covered by collective bargaining agreements

(cid:48)(cid:76)(cid:81)(cid:76)(cid:80)(cid:88)(cid:80)(cid:3)(cid:81)(cid:82)(cid:87)(cid:76)(cid:70)(cid:72)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:11)(cid:86)(cid:12)(cid:3)(cid:85)(cid:72)(cid:74)(cid:68)(cid:85)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:90)(cid:75)(cid:72)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:76)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:287)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)
collective agreements
Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by 
region and by gender

43, 81, 83, 91, 189

3-6-4, 3-7-7

31, 54, 81, 83, 215
46-48, 50, 52f., 101f., 
147 
52f., 98, 145, 271-274

129, 218, 220
98, 100, 291-299

64

101f., 116

96

147f.
51, 78, 106-108, 127-
131, 133-141, 144f., 
190, 219-221
106, 108, 140

128f.

129f.

129f.
135f.

134
135

141

139

139

131f.

133

129-131

133

134
136f.

137

141, 144

78, 120, 129f.

3-6-3, 3-6-4

3-13-1

3-5-2

3-7-13
3-8-1, 3-8-2

3-3-BHC-1,  
3-8-6, 3-10-BCS-2, 
3-13-4

3-12.5-2

3-12.4-2

3-12.2-1

3-12.2-2

3-12.3-3
3-12.3-1

3-12.3-3

3-12.5-3

3-12.5-1, 3-12-5.2

3-12.5-2

3-12.2-6

3-12.2-1, 3-12.2-3, 
3-12.2-4, 3-12.2-6

3-12.2-7

3-12.2-4, 3-12.4-1, 
3-12.4-2

3-12.6-2
3-10-BHC-2,  
3-10-BCS-2,  
3-12.2-1, 3-12.2-2

3-12.4-2

221, 299f., 322, 324f.

133

3-12.2-6

49, 51f., 87f., 92f., 95-
101, 123f., 220
87-89, 91, 96
88, 90
99f.

3-7-7
3-7-2, 3-7-4, 3-7-10
3-7-1, 3-7-3

full

full
full

full

full
partial

full

full

partial

partial

full

full

full
full

full
full

full

full

full

full

full

full

full
full

full

full

full

partial

full

full

full
partial
full

full

92

3-6-4, 3-7-6, 3-7-7

partial

124f.

Prevention and risk-control programs in place regarding serious diseases

LA8
LA10 Average hours of training per year per employee by gender, and by employee category 
LA11
LA12

Programs for skills management and lifelong learning that support the continued employability
Percentage of employees receiving regular performance and career development reviews, by gender

full
full
full
full

LA13

Composition of governing bodies and breakdown of employees according to age group / gender / culture

partial

LA14
LA15

(cid:53)(cid:68)(cid:87)(cid:76)(cid:82)(cid:3)(cid:82)(cid:73)(cid:3)(cid:69)(cid:68)(cid:86)(cid:76)(cid:70)(cid:3)(cid:86)(cid:68)(cid:79)(cid:68)(cid:85)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:80)(cid:88)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:90)(cid:82)(cid:80)(cid:72)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:72)(cid:81)(cid:3)(cid:69)(cid:92)(cid:3)(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:3)(cid:70)(cid:68)(cid:87)(cid:72)(cid:74)(cid:82)(cid:85)(cid:92)(cid:15)(cid:3)(cid:69)(cid:92)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)
operation 
Return to work and retention rates after parental leave, by gender

partial
full

Human Rights – Management Approach

100f., 124f.
95
93, 95
91
88, 96, 100, 187f., 
339-343

98
97
50, 52,79f., 98f., 102-
104, 127, 190, 219

(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:74)(cid:85)(cid:72)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:3)(cid:70)(cid:79)(cid:68)(cid:88)(cid:86)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:75)(cid:88)(cid:80)(cid:68)(cid:81)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:70)(cid:72)(cid:85)(cid:81)(cid:86)(cid:15)(cid:3)(cid:82)(cid:85)(cid:3)
that have undergone human rights screening (percentage and total number)

partial

127

(cid:51)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:68)(cid:74)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:79)(cid:76)(cid:72)(cid:85)(cid:86)(cid:15)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:74)(cid:82)(cid:81)(cid:72)(cid:3)(cid:75)(cid:88)(cid:80)(cid:68)(cid:81)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)(cid:3)
screening, and actions taken 
Employee training on human rights, including the percentage of employees trained 
Total number of incidents of discrimination and corrective actions taken

(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:79)(cid:76)(cid:72)(cid:85)(cid:86)(cid:29)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:73)(cid:85)(cid:72)(cid:72)(cid:71)(cid:82)(cid:80)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:86)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:79)(cid:79)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:69)(cid:68)(cid:85)(cid:74)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:68)(cid:69)(cid:82)(cid:79)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)
HR5-7
child labor, elimination of all forms of forced or compulsory labor
HR10 (cid:51)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:68)(cid:74)(cid:72)(cid:3)(cid:18)(cid:3)(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:89)(cid:72)(cid:85)(cid:76)(cid:287)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:82)(cid:69)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:75)(cid:88)(cid:80)(cid:68)(cid:81)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)
HR11 Number of grievances relating to human rights and measures taken

full
partial
partial

full
partial
partial

102f.
99, 104
192, 215

98f., 102-104
98f., 102-104, 190-192
98f., 103, 190-192, 215

1, 6

1, 6
1, 6

1-6

1-6

1-6
1-6
1, 2, 6

1-5

HR1

HR2
HR3
HR4

3-11-1
3-7-15, 3-11-2, 
3-11-3

3-7-5, 3-7-8

3-7-9

3-7-13
3-7-11

3-8-6

3-8-4
3-8-5
3-18.3-3

3-8-6

3-18.3-3

» TABLE OF CONTENTS FURTHER INFORMATION 
346

Further Information

GRI and UN Global Compact Index

Bayer Annual Report 2014

UNGC 
prin-
ciples

GRI Core Indicators according to the G3.1 Guidelines

10

Society – Management Approach

10
10
10
1-10

SO1
SO2
SO3
SO4
SO5

SO6

SO7
SO8
SO9

Percentage of operations with implemented local community engagement, impact assessments, and 
development programs
Corruption: Percentage and total number of business units analyzed
Corruption: Percentage of employees trained in anti-corruption
Actions taken in response to incidents of corruption
Public policy positions and participation in public policy development and lobbying 

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:287)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:81)(cid:16)(cid:78)(cid:76)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:87)(cid:76)(cid:70)(cid:76)(cid:68)(cid:81)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:86)(cid:87)(cid:76)(cid:87)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)
country
Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their 
outcomes

(cid:48)(cid:82)(cid:81)(cid:72)(cid:87)(cid:68)(cid:85)(cid:92)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:287)(cid:81)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:68)(cid:81)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:81)(cid:82)(cid:81)(cid:16)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:76)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:79)(cid:68)(cid:90)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)
Operations with (potential) negative impacts on local communities

SO10

(cid:51)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:76)(cid:87)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:76)(cid:80)(cid:83)(cid:79)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:83)(cid:82)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:3)(cid:82)(cid:85)(cid:3)(cid:68)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79)(cid:3)(cid:81)(cid:72)(cid:74)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)
impacts on local communities

1, 8

Product Responsibility – Management Approach

1, 8

PR1

8

PR3

Product life cycle stages for which health and safety impacts are assessed and percentage of products subject 
to such procedures
Type of product information required by procedures, and percentage of products subject to such information 
requirements 

full

full
full
full

full

full

full

Level of 
reporting Page reference

Online annex

51, 125f., 134f., 145-
148, 190-192, 215, 221

3-6-4, 3-9-BHC-2, 
3-13-2, 3-18.3-3

full
partial
full
partial
full

3-6-4
145f.
3-18.3-1
190
191
3-18.3-2
192, 215, 221, 299f., 322 3-18.3-3
117

3-5-3, 3-6-4

3-6-4, 3-13-2

221, 299f., 322f.
221, 299f., 322-325
125f., 134f., 141, 144

3-11-4

125f., 134f., 141, 144
51f., 108-110, 112-116, 
118-121, 123, 190, 
219-221
66, 114, 116, 118-120, 
123,  

114-116, 118f., 123

3-12.3-2, 3-12.6-2
3-9-BHC-1, 3-9-
BHC-2, 3-9-BHC-3, 
3-9-BMS-1
3-10-1, 3-10-4, 
3-10-BMS-1
3-10-BHC-1, 3-10-
BMS-1
3-9-BHC-3, 3-9-
BMS-1
3-9-BHC-1, 3-9-
BHC-2, 3-10-6

PR5

Practices related to customer satisfaction, including results of surveys measuring customer satisfaction

partial

108, 110, 112

10

PR6

Programs for adherence to laws, standards, and voluntary codes related to marketing communications

PR9

(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:287)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:287)(cid:81)(cid:72)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:81)(cid:82)(cid:81)(cid:16)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:76)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:79)(cid:68)(cid:90)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:70)(cid:72)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:88)(cid:86)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3)
and services 

full

full

108-110, 112f., 120

221, 299f., 322-325

» TABLE OF CONTENTS FURTHER INFORMATION   
Bayer Annual Report 2014

Glossary

347

Further Information

Glossary

C

E

(cid:38)(cid:82)(cid:81)(cid:288)(cid:76)(cid:70)(cid:87)(cid:3)(cid:80)(cid:76)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:86) are those 
(cid:72)(cid:68)(cid:73)(cid:64)(cid:63)(cid:3)(cid:68)(cid:73)(cid:3)(cid:62)(cid:74)(cid:73)(cid:191)(cid:68)(cid:62)(cid:79)(cid:3)(cid:77)(cid:64)(cid:66)(cid:68)(cid:74)(cid:73)(cid:78)(cid:9)(cid:3) 
They include tin, tungsten and 
tantalum ores, gold or their 
derivatives. Among the regions 
(cid:68)(cid:73)(cid:3)(cid:82)(cid:67)(cid:68)(cid:62)(cid:67)(cid:3)(cid:60)(cid:77)(cid:72)(cid:64)(cid:63)(cid:3)(cid:62)(cid:74)(cid:73)(cid:191)(cid:68)(cid:62)(cid:79)(cid:78)(cid:3)(cid:74)(cid:81)(cid:64)(cid:77)(cid:3)
the control of these resources 
occur are the eastern part of 
the Democratic Republic of 
Congo and neighboring coun-
tries.

(cid:11)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:12)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:79)(cid:76)(cid:68)(cid:81)(cid:70)(cid:72) 
 comprises the observance of 
statutory and company regula-
tions on lawful and responsible 
conduct.

(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:74)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72) 
 comprises the long-term man-
agement and oversight of the 
company in accordance with 
the principles of responsibility 
and transparency. The German 
Corporate Governance Code 
sets out basic principles for 
the management and oversight 
of listed companies.

(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:71)(cid:72)(cid:73)(cid:68)(cid:88)(cid:79)(cid:87)(cid:3)(cid:86)(cid:90)(cid:68)(cid:83)(cid:86)(cid:3)(cds) 
Credit default swaps are trad-
able insurance contracts used 
to hedge against the default  
of a borrower.

D

Diversity designates the 
 variation within the workforce 
in terms of gender, origin, 
 nationality, age, religion and 
physical incapacitation.

Capital invested (ci) Capital 
invested comprises the assets 
on which the company must 
obtain a return by generating 
(cid:60)(cid:73)(cid:3)(cid:60)(cid:75)(cid:75)(cid:77)(cid:74)(cid:75)(cid:77)(cid:68)(cid:60)(cid:79)(cid:64)(cid:3)(cid:62)(cid:60)(cid:78)(cid:67)(cid:3)(cid:68)(cid:73)(cid:191)(cid:74)(cid:82)(cid:22)(cid:3) 
in some cases the cost of ulti-
mately reproducing the assets 
must be earned in addition.

(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:288)(cid:82)(cid:90)(cid:3)(cid:85)(cid:72)(cid:87)(cid:88)(cid:85)(cid:81)(cid:3)(cid:82)(cid:81)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)-
ment (cfroi) The cfroi is the 
difference between the gross 
(cid:62)(cid:60)(cid:78)(cid:67)(cid:3)(cid:191)(cid:74)(cid:82)(cid:3)(cid:68)(cid:73)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:75)(cid:64)(cid:77)(cid:68)(cid:74)(cid:63)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)
cost of reproducing depletable 
assets, divided by the capital 
invested. The cfroi is thus a 
measure of the return on capi-
tal employed in the period.

Cash value added (cva) This  
is the difference between the 
(cid:66)(cid:77)(cid:74)(cid:78)(cid:78)(cid:3)(cid:62)(cid:60)(cid:78)(cid:67)(cid:3)(cid:191)(cid:74)(cid:82)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:66)(cid:77)(cid:74)(cid:78)(cid:78)(cid:3)(cid:62)(cid:60)(cid:78)(cid:67)(cid:3)
(cid:191)(cid:74)(cid:82)(cid:3)(cid:67)(cid:80)(cid:77)(cid:63)(cid:71)(cid:64)(cid:9)(cid:3)(cid:36)(cid:79)(cid:3)(cid:68)(cid:78)(cid:3)(cid:79)(cid:67)(cid:64)(cid:77)(cid:64)(cid:65)(cid:74)(cid:77)(cid:64)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)
amount by which the gross 
(cid:62)(cid:60)(cid:78)(cid:67)(cid:3)(cid:191)(cid:74)(cid:82)(cid:3)(cid:64)(cid:83)(cid:62)(cid:64)(cid:64)(cid:63)(cid:78)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:77)(cid:64)(cid:79)(cid:80)(cid:77)(cid:73)(cid:3)
and reproduction require-
(cid:72)(cid:64)(cid:73)(cid:79)(cid:78)(cid:9)(cid:3)(cid:36)(cid:65)(cid:3)cva is positive, the 
investors’ return and repro-
duction requirements have 
(cid:61)(cid:64)(cid:64)(cid:73)(cid:3)(cid:78)(cid:60)(cid:79)(cid:68)(cid:78)(cid:190)(cid:64)(cid:63)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:81)(cid:60)(cid:71)(cid:80)(cid:64)(cid:3)(cid:67)(cid:60)(cid:78)(cid:3)
been created for the company.

cdp (formerly Carbon Disclo-
sure Project) is an indepen-
(cid:63)(cid:64)(cid:73)(cid:79)(cid:8)(cid:3)(cid:73)(cid:74)(cid:79)(cid:238)(cid:65)(cid:74)(cid:77)(cid:238)(cid:75)(cid:77)(cid:74)(cid:190)(cid:79)(cid:3)(cid:74)(cid:77)(cid:66)(cid:60)(cid:73)(cid:68)(cid:85)(cid:60)-
tion that works on behalf of 
analysts and investors to pro-
mote the transparent reporting 
of greenhouse gas emissions 
and water use (Water Disclo-
sure Report) by companies. 
cdp publishes two climate 
rankings each year: the Cli-
mate Disclosure Leadership 
(cid:3)(cid:36)(cid:73)(cid:63)(cid:64)(cid:83)(cid:3)(cdli)(cid:3)(cid:77)(cid:60)(cid:79)(cid:64)(cid:78)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:64)(cid:83)(cid:79)(cid:64)(cid:73)(cid:79)(cid:3)
and quality of the disclosure  
of climate-relevant data,  
while the best-rated compa-
nies are additionally listed in 
the Climate Performance 
(cid:39)(cid:64)(cid:60)(cid:63)(cid:64)(cid:77)(cid:78)(cid:67)(cid:68)(cid:75)(cid:3)(cid:36)(cid:73)(cid:63)(cid:64)(cid:83)(cid:3)(cpli).

emtn program The multi- 
currency European Medium 
Term Notes (emtn) program is 
a documentation platform that 
enables Bayer to raise capital 
by quickly issuing debt on  
the global capital market. Ma-
turities, currencies and condi-
(cid:79)(cid:68)(cid:74)(cid:73)(cid:78)(cid:3)(cid:62)(cid:60)(cid:73)(cid:3)(cid:61)(cid:64)(cid:3)(cid:81)(cid:64)(cid:77)(cid:84)(cid:3)(cid:191)(cid:64)(cid:83)(cid:68)(cid:61)(cid:71)(cid:84)(cid:3)(cid:63)(cid:64)-
signed.

(cid:40)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:3)(cid:68)(cid:81)(cid:68)(cid:79)(cid:92)-
sis involves identifying the 
 aspects of the activities, prod-
(cid:80)(cid:62)(cid:79)(cid:78)(cid:3)(cid:74)(cid:77)(cid:3)(cid:78)(cid:64)(cid:77)(cid:81)(cid:68)(cid:62)(cid:64)(cid:78)(cid:3)(cid:74)(cid:65)(cid:3)(cid:60)(cid:73)(cid:3)(cid:74)(cid:77)(cid:66)(cid:60)(cid:73)(cid:68)(cid:85)(cid:60)-
tion that can impact the envi-
ronment.

F

Fluoroquinolones are a group 
of antibiotics.

G

ghg(cid:3)(cid:51)(cid:85)(cid:82)(cid:87)(cid:82)(cid:70)(cid:82)(cid:79)(cid:3)The Green-
house Gas Protocol Corporate 
Standard is an internationally 
(cid:77)(cid:64)(cid:62)(cid:74)(cid:66)(cid:73)(cid:68)(cid:85)(cid:64)(cid:63)(cid:3)(cid:78)(cid:79)(cid:60)(cid:73)(cid:63)(cid:60)(cid:77)(cid:63)(cid:3)(cid:65)(cid:74)(cid:77)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)
recording and reporting of 
greenhouse gas emissions.  
(cid:36)(cid:79)(cid:3)(cid:62)(cid:74)(cid:81)(cid:64)(cid:77)(cid:78)(cid:3)(cid:63)(cid:68)(cid:77)(cid:64)(cid:62)(cid:79)(cid:3)(cid:4)(cid:46)(cid:62)(cid:74)(cid:75)(cid:64)(cid:3)1) 
and indirect (Scope 2) green-
house gas emissions relating 
to a company’s value-added 
chains, as well as emissions 
resulting from third-party and 
acquired upstream services 
(Scope 3).

(cid:42)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:68)(cid:83)(cid:72)(cid:85)(cid:3)
 program Commercial paper 
(cp) issued under Bayer’s 
 program is a short-term,  
unsecured debt instrument 
normally issued at a discount 
and redeemed at nominal 
(cid:3)(cid:81)(cid:60)(cid:71)(cid:80)(cid:64)(cid:9)(cid:3)(cid:36)(cid:79)(cid:3)(cid:68)(cid:78)(cid:3)(cid:60)(cid:3)(cid:191)(cid:64)(cid:83)(cid:68)(cid:61)(cid:71)(cid:64)(cid:3)(cid:82)(cid:60)(cid:84)(cid:3)(cid:74)(cid:65)(cid:3) 
obtaining short-term funding 
on the  capital market.

gri(cid:3)(cid:4)(cid:34)(cid:71)(cid:74)(cid:61)(cid:60)(cid:71)(cid:3)(cid:45)(cid:64)(cid:75)(cid:74)(cid:77)(cid:79)(cid:68)(cid:73)(cid:66)(cid:3)(cid:36)(cid:73)(cid:68)(cid:79)(cid:68)(cid:60)-
(cid:79)(cid:68)(cid:81)(cid:64)(cid:5)(cid:3)(cid:68)(cid:78)(cid:3)(cid:60)(cid:3)(cid:62)(cid:67)(cid:60)(cid:77)(cid:68)(cid:79)(cid:60)(cid:61)(cid:71)(cid:64)(cid:3)(cid:74)(cid:77)(cid:66)(cid:60)(cid:73)(cid:68)(cid:85)(cid:60)-
tion that works on behalf of 
the dissemination and optimi-
(cid:85)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:74)(cid:65)(cid:3)(cid:78)(cid:80)(cid:78)(cid:79)(cid:60)(cid:68)(cid:73)(cid:60)(cid:61)(cid:68)(cid:71)(cid:68)(cid:79)(cid:84)(cid:3)(cid:77)(cid:64)(cid:75)(cid:74)(cid:77)(cid:79)-
ing. The gri guidelines are 
considered the most frequently 
used and internationally most 
(cid:77)(cid:64)(cid:62)(cid:74)(cid:66)(cid:73)(cid:68)(cid:85)(cid:64)(cid:63)(cid:3)(cid:78)(cid:79)(cid:60)(cid:73)(cid:63)(cid:60)(cid:77)(cid:63)(cid:3)(cid:65)(cid:74)(cid:77)(cid:3)(cid:78)(cid:80)(cid:78)-
tainability reporting. These 
guidelines are evolved in a 
multi-stakeholder process. gri 
was established in 1997 by the 
Ceres Coalition of environmen-
tally responsible economies 
and the United Nations Envi-
ronment Programme (unep).

(cid:42)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:288)(cid:82)(cid:90)(cid:3)(cid:75)(cid:88)(cid:85)(cid:71)(cid:79)(cid:72) The 
gcf hurdle is the gross cash 
(cid:191)(cid:74)(cid:82)(cid:3)(cid:79)(cid:67)(cid:60)(cid:79)(cid:3)(cid:73)(cid:64)(cid:64)(cid:63)(cid:78)(cid:3)(cid:79)(cid:74)(cid:3)(cid:61)(cid:64)(cid:3)(cid:66)(cid:64)(cid:73)(cid:64)(cid:77)(cid:60)(cid:79)-
ed to satisfy investors’ return 
and reproduction require-
ments.

GxP is a collective term for all 
guidelines that govern “good 
working practice” and are par-
(cid:79)(cid:68)(cid:62)(cid:80)(cid:71)(cid:60)(cid:77)(cid:71)(cid:84)(cid:3)(cid:77)(cid:64)(cid:71)(cid:64)(cid:81)(cid:60)(cid:73)(cid:79)(cid:3)(cid:65)(cid:74)(cid:77)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:190)(cid:64)(cid:71)(cid:63)(cid:78)(cid:3)
of medicine, pharmacy and 
pharmaceutical chemistry. The 
“G” stands for “Good” and the 
“P” for “Practice,” while the 
(cid:102)(cid:83)(cid:103)(cid:3)(cid:68)(cid:73)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:72)(cid:68)(cid:63)(cid:63)(cid:71)(cid:64)(cid:3)(cid:68)(cid:78)(cid:3)(cid:77)(cid:64)(cid:75)(cid:71)(cid:60)(cid:62)(cid:64)(cid:63)(cid:3)
by the respective abbreviation 
(cid:65)(cid:74)(cid:77)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:78)(cid:75)(cid:64)(cid:62)(cid:68)(cid:190)(cid:62)(cid:3)(cid:60)(cid:77)(cid:64)(cid:60)(cid:3)(cid:74)(cid:65)(cid:3)(cid:60)(cid:75)(cid:75)(cid:71)(cid:68)(cid:62)(cid:60)-
tion – such as Good Manufac-
turing Practice (gmp), Good 
Laboratory Practice (glp), 
Good Clinical Practice (gcp)  
or Good Agricultural Practice 
(gap). These guidelines are  
established by institutions 
such as the European Medi-
cines Agency or the u.s. Food 
and Drug Administration.

» TABLE OF CONTENTS FURTHER INFORMATION 
 
348

Further Information

Glossary

Bayer Annual Report 2014

H

N

S

W

(cid:58)(cid:68)(cid:87)(cid:72)(cid:85)(cid:3)(cid:86)(cid:87)(cid:72)(cid:90)(cid:68)(cid:85)(cid:71)(cid:86)(cid:75)(cid:76)(cid:83) is the  
sustainable use of water as a 
natural resource.

(cid:58)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:70)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79) (wacc) The weighted 
average cost of capital (wacc) 
(cid:77)(cid:64)(cid:75)(cid:77)(cid:64)(cid:78)(cid:64)(cid:73)(cid:79)(cid:78)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:77)(cid:64)(cid:79)(cid:80)(cid:77)(cid:73)(cid:3)(cid:64)(cid:83)(cid:75)(cid:64)(cid:62)(cid:79)(cid:64)(cid:63)(cid:3)
by investors on the capital  
(cid:68)(cid:73)(cid:81)(cid:64)(cid:78)(cid:79)(cid:64)(cid:63)(cid:3)(cid:68)(cid:73)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:60)(cid:73)(cid:84)(cid:9)(cid:3)(cid:36)(cid:79)(cid:3)(cid:68)(cid:78)(cid:3)
computed as a weighted  
average of the cost of equity 
and debt. The cost of equity is  
derived from capital market  
information and represents the 
(cid:77)(cid:64)(cid:79)(cid:80)(cid:77)(cid:73)(cid:3)(cid:64)(cid:83)(cid:75)(cid:64)(cid:62)(cid:79)(cid:64)(cid:63)(cid:3)(cid:61)(cid:84)(cid:3)(cid:78)(cid:79)(cid:74)(cid:62)(cid:70)(cid:67)(cid:74)(cid:71)(cid:63)-
ers, while the cost of debt  
represents the conditions at 
which the company can  
borrow money over the long 
term.

who Class i The World Health 
(cid:74)(cid:77)(cid:66)(cid:60)(cid:73)(cid:68)(cid:85)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(who) divides 
crop protection products into 
(cid:81)(cid:60)(cid:77)(cid:68)(cid:74)(cid:80)(cid:78)(cid:3)(cid:67)(cid:60)(cid:85)(cid:60)(cid:77)(cid:63)(cid:3)(cid:62)(cid:71)(cid:60)(cid:78)(cid:78)(cid:64)(cid:78)(cid:9)(cid:3)(cid:30)(cid:71)(cid:60)(cid:78)(cid:78)(cid:3)i 
products are deemed to be 
(cid:3)(cid:64)(cid:83)(cid:79)(cid:77)(cid:64)(cid:72)(cid:64)(cid:71)(cid:84)(cid:3)(cid:67)(cid:60)(cid:85)(cid:60)(cid:77)(cid:63)(cid:74)(cid:80)(cid:78)(cid:9)

(cid:54)(cid:92)(cid:81)(cid:71)(cid:76)(cid:70)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:73)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)
Credit line agreed with a group 
of banks. Generally used for 
(cid:64)(cid:83)(cid:79)(cid:64)(cid:73)(cid:78)(cid:68)(cid:81)(cid:64)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:73)(cid:66)(cid:3)(cid:77)(cid:64)(cid:76)(cid:80)(cid:68)(cid:77)(cid:64)-
ments, such as when making 
an acquisition, to increase 
available liquidity or as secu-
rity for the issuance of debt 
instruments. The credit facility 
(cid:62)(cid:60)(cid:73)(cid:3)(cid:61)(cid:64)(cid:3)(cid:80)(cid:79)(cid:68)(cid:71)(cid:68)(cid:85)(cid:64)(cid:63)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:77)(cid:64)(cid:75)(cid:60)(cid:68)(cid:63)(cid:3)
(cid:191)(cid:64)(cid:83)(cid:68)(cid:61)(cid:71)(cid:84)(cid:8)(cid:3)(cid:64)(cid:68)(cid:79)(cid:67)(cid:64)(cid:77)(cid:3)(cid:68)(cid:73)(cid:3)(cid:65)(cid:80)(cid:71)(cid:71)(cid:3)(cid:74)(cid:77)(cid:3)(cid:68)(cid:73)(cid:3)(cid:75)(cid:74)(cid:77)-
tions, during its term.

U

ungc (United Nations Global 
(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:12) The un Global  
Compact is a strategic policy 
initiative for businesses that 
are committed to aligning their 
operations and strategies with 
ten universally accepted prin-
ciples in the areas of human 
rights, labor, environment and 
anti-corruption. By doing so, 
business – as a primary driver 
(cid:74)(cid:65)(cid:3)(cid:66)(cid:71)(cid:74)(cid:61)(cid:60)(cid:71)(cid:68)(cid:85)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:240)(cid:3)(cid:62)(cid:60)(cid:73)(cid:3)(cid:67)(cid:64)(cid:71)(cid:75)(cid:3) 
ensure that markets, com-
(cid:72)(cid:64)(cid:77)(cid:62)(cid:64)(cid:8)(cid:3)(cid:79)(cid:64)(cid:62)(cid:67)(cid:73)(cid:74)(cid:71)(cid:74)(cid:66)(cid:84)(cid:3)(cid:60)(cid:73)(cid:63)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:64)(cid:3)
(cid:60)(cid:63)(cid:81)(cid:60)(cid:73)(cid:62)(cid:64)(cid:3)(cid:68)(cid:73)(cid:3)(cid:82)(cid:60)(cid:84)(cid:78)(cid:3)(cid:79)(cid:67)(cid:60)(cid:79)(cid:3)(cid:61)(cid:64)(cid:73)(cid:64)(cid:190)(cid:79)(cid:3)
economies and societies every-
where. By committing to the 
ungc, companies agree to doc-
ument each year their efforts 
to uphold the ten principles.

Hybrid bond A hybrid bond 
is a corporate bond with 
 equity-equivalent properties, 
usually with either no maturity 
date or a very long maturi-
ty. Due to its subordination, 
 issuer bankruptcy carries a 
lower likelihood of repayment 
than a normal bond.

I

ilo (cid:70)(cid:82)(cid:85)(cid:72)(cid:3)(cid:79)(cid:68)(cid:69)(cid:82)(cid:85)(cid:3)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:68)(cid:85)(cid:71)(cid:86)  
The eight core labor stand-
ards of the ilo(cid:3)(cid:4)(cid:36)(cid:73)(cid:79)(cid:64)(cid:77)(cid:73)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:60)(cid:71)(cid:3)
(cid:3)(cid:39)(cid:60)(cid:61)(cid:74)(cid:80)(cid:77)(cid:3)(cid:42)(cid:77)(cid:66)(cid:60)(cid:73)(cid:68)(cid:85)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:5)(cid:3)(cid:79)(cid:67)(cid:60)(cid:79)(cid:3)
(cid:63)(cid:64)(cid:190)(cid:73)(cid:64)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:72)(cid:68)(cid:73)(cid:68)(cid:72)(cid:80)(cid:72)(cid:3)(cid:77)(cid:64)(cid:76)(cid:80)(cid:68)(cid:77)(cid:64)-
ments for humane working 
conditions are internationally 
(cid:77)(cid:64)(cid:62)(cid:74)(cid:66)(cid:73)(cid:68)(cid:85)(cid:64)(cid:63)(cid:3)(cid:102)(cid:76)(cid:80)(cid:60)(cid:71)(cid:68)(cid:79)(cid:60)(cid:79)(cid:68)(cid:81)(cid:64)(cid:3)(cid:78)(cid:74)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)
standards.” They represent 
universal human rights that 
are deemed valid in all coun-
tries regardless of their eco-
nomic development status.

L

(cid:47)(cid:76)(cid:73)(cid:72)(cid:3)(cid:54)(cid:70)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:86) Field of activi-
ties comprising particularly 
health care and agriculture.  
At Bayer this refers to the 
 activities of the HealthCare 
and CropScience subgroups.

(cid:49)(cid:72)(cid:82)(cid:81)(cid:76)(cid:70)(cid:82)(cid:87)(cid:76)(cid:81)(cid:82)(cid:76)(cid:71)(cid:86)(cid:3)Chemical 
class of systemic insecticides

O

otc At Bayer HealthCare, otc 
(over-the-counter) medicines 
are those obtainable without  
(cid:60)(cid:3)(cid:75)(cid:77)(cid:64)(cid:78)(cid:62)(cid:77)(cid:68)(cid:75)(cid:79)(cid:68)(cid:74)(cid:73)(cid:9)(cid:3)(cid:36)(cid:73)(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:64)(cid:8)(cid:3)otc 
represents trade between 
(cid:3)(cid:190)(cid:73)(cid:60)(cid:73)(cid:62)(cid:68)(cid:60)(cid:71)(cid:3)(cid:72)(cid:60)(cid:77)(cid:70)(cid:64)(cid:79)(cid:3)(cid:75)(cid:60)(cid:77)(cid:79)(cid:68)(cid:62)(cid:68)(cid:75)(cid:60)(cid:73)(cid:79)(cid:78)(cid:3)
(cid:74)(cid:80)(cid:79)(cid:78)(cid:68)(cid:63)(cid:64)(cid:3)(cid:74)(cid:65)(cid:3)(cid:60)(cid:73)(cid:3)(cid:74)(cid:77)(cid:66)(cid:60)(cid:73)(cid:68)(cid:85)(cid:64)(cid:63)(cid:3)(cid:64)(cid:83)-
change. otc transactions are 
nevertheless subject to securi-
ties trading laws.

P

Phase i-iii studies are clinical 
phases in the development  
of a drug product. The active 
ingredient candidate is tested  
in healthy subjects (with the 
(cid:64)(cid:83)(cid:62)(cid:64)(cid:75)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:74)(cid:65)(cid:3)(cid:74)(cid:73)(cid:62)(cid:74)(cid:71)(cid:74)(cid:66)(cid:84)(cid:5)(cid:3)(cid:68)(cid:73)(cid:3)
Phase i, and in sick patients  
in Phases ii and iii. The stud-
ies are subject to strict legal 
requirements and documen-
tation procedures.

(cid:51)(cid:85)(cid:76)(cid:70)(cid:72)(cid:3)(cid:18)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:288)(cid:82)(cid:90)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82) The 
(cid:75)(cid:77)(cid:68)(cid:62)(cid:64)(cid:3)(cid:10)(cid:3)(cid:62)(cid:60)(cid:78)(cid:67)(cid:3)(cid:191)(cid:74)(cid:82)(cid:3)(cid:77)(cid:60)(cid:79)(cid:68)(cid:74)(cid:3)(cid:68)(cid:78)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3) 
ratio of the share price to 
(cid:66)(cid:77)(cid:74)(cid:78)(cid:78)(cid:3)(cid:62)(cid:60)(cid:78)(cid:67)(cid:3)(cid:191)(cid:74)(cid:82)(cid:3)(cid:75)(cid:64)(cid:77)(cid:3)(cid:78)(cid:67)(cid:60)(cid:77)(cid:64)(cid:9)(cid:3)(cid:36)(cid:79)(cid:3)
shows how long it would take 
(cid:65)(cid:74)(cid:77)(cid:3)(cid:79)(cid:67)(cid:64)(cid:3)(cid:62)(cid:74)(cid:72)(cid:75)(cid:60)(cid:73)(cid:84)(cid:101)(cid:78)(cid:3)(cid:62)(cid:60)(cid:78)(cid:67)(cid:3)(cid:191)(cid:74)(cid:82)(cid:3) 
to cover the share price.

(cid:51)(cid:85)(cid:76)(cid:70)(cid:72)(cid:3)/ eps(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:3)(cid:11)(cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:3)(cid:18)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)-
ings ratio) This is the ratio  
of the current share price  
to earnings per share. A high 
price / eps ratio indicates  
that the market assigns a  
high value to the stock in the  
(cid:64)(cid:83)(cid:75)(cid:64)(cid:62)(cid:79)(cid:60)(cid:79)(cid:68)(cid:74)(cid:73)(cid:3)(cid:74)(cid:65)(cid:3)(cid:65)(cid:80)(cid:79)(cid:80)(cid:77)(cid:64)(cid:3)(cid:64)(cid:60)(cid:77)(cid:73)(cid:68)(cid:73)(cid:66)(cid:78)(cid:3)
growth.

» TABLE OF CONTENTS FURTHER INFORMATION  Bayer Annual Report 2014 

» TABLE OF CONTENTS FURTHER INFORMATION

» TABLE OF CONTENTS FURTHER INFORMATION  

Further Information  

Further Information 

349

350 

Bayer Annual Report 2014

Five-Year Summary 

Bayer Group 

Sales 

Sales outside Germany 

EBIT1 

EBIT before special items2 

EBITDA2 

EBITDA before special items2 

Income before income taxes 

Income after income taxes 

Earnings per share (€)3 

Core earnings per share (€) 

Noncurrent assets 

of which goodwill and other intangible assets 

of which property, plant and equipment 

Current assets 

Inventories 

Receivables and other current assets 

Cash and cash equivalents 

Financial liabilities 

Noncurrent  

Current  

Interest expense – net 

Return on equity 

Gross cash flow4 

Capital expenditures (total) 

Depreciation and amortization 

Research and development expenses 

Equity including non-controlling interest (total) 

Capital stock 

Reserves 

Net income 

Non-controlling interest 

Liabilities (total) 

Total assets 

Equity ratio 

Bayer AG 

Net income 

Allocation to (withdrawal from) retained earnings 

Total dividend payment 

Dividend per share (€) 

2010 

2011 

2012 

2013 

2014 

€ million 

€ million 

€ million 

€ million 

€ million 

[Table 1.2] 

Employees 

Number of employees5 (Dec. 31) 

2010 

2011 

2012 

2013 

2014 

[Table 1.2 (continued)] 

111,400

111,800

110,000 

112,400 

118,900

35,088

87.4%

2,730

4,452

6,286

7,101

1,721

1,310

1.57

4.19

33,188

20,163

9,835

18,318

6,104

9,374

2,840

11,833

9,944

1,889

(499)

6.9%

4,771

1,621

2,571

3,053

18,896

2,117

16,779

1,301

63

32,610

51,506

36.7%

1,245

5

1,240

1.50

36,528

87.3%

4,149

5,025

6,918

7,613

3,363

2,472

2.99

4.83

32,697

19,455

9,823

20,068

6,368

11,846

1,770

11,679

7,995

3,684

(335)

39,741 

88.3% 

40,157

87.9%

3,928 

5,639 

6,916 

8,280 

3,176 

2,453 

2.91 

5.30 

32,308 

18,757 

9,898 

19,010 

6,991 

10,321 

1,698 

9,530 

6,962 

2,568 

4,934

5,773

7,830

8,401

4,207

3,186

3.86

5.61

32,289

18,776

10,015

19,028

7,129

10,237

1,662

9,031

5,590

3,441

(252) 

(355)

42,239

88.2%

5,506

5,944

8,442

8,812

4,525

3,443

4.14

6.02

48,007

31,821

11,428

22,227

8,478

11,896

1,853

21,860

18,484

3,376

(356)

13.0%

13.0% 

16.2%

16.8%

5,172

1,666

2,521

2,932

19,271

2,117

17,154

2,470

59

33,494

52,765

36.5%

1,125

(239)

1,364

1.65

4,556 

1,929 

2,641 

3,013 

18,551 

2,117 

16,434 

2,403 

100 

32,767 

51,318 

36.1% 

889 

(682) 

1,571 

1.90 

5,832

2,157

2,611

3,406

20,804

2,117

18,687

3,189

86

30,513

51,317

40.5%

2,498

761

1,737

2.10

6,820

2,371

2,713

3,574

20,218

2,117

18,101

3,426

112

50,016

70,234

28.8%

2,454

593

1,861

2.25

Personnel expenses (including pension expenses) (€ million) 

8,099

8,726

9,194 

9,430 

9,845

Proportion of women in senior management (%) 

Number of nationalities in the Group Leadership Circle   

Proportion of employees with health insurance (%) 

Proportion of employees covered by collective agreements 
on pay and conditions (%) 

Safety 

Recordable Incident Rate for Bayer employees (RIR) 

Lost Time Recordable Incident Rate for Bayer employees (LTRIR) 

Loss of Primary Containment Incident Rate (LoPC-IR)6 

Number of transport incidents 

Environmental Protection 

Direct greenhouse gas emissions (CO2 equivalents in million t)7 

Indirect greenhouse gas emissions (CO2 equivalents in million t)7 

Volatile organic compounds (VOC) (thousand t/a)8 

Ozone-depleting substances (ODS) (t/a)9 

Total organic carbon (TOC) (thousand t/a) 

Total phosphorus in wastewater (thousand t/a) 

Total nitrogen in wastewater (thousand t/a) 

Hazardous waste generated (thousand t/a) 

Hazardous waste landfilled (thousand t/a) 

Water use (million m³/a) 

Primary energy consumption (petajoules/a)10 

Secondary energy consumption (petajoules/a)10 

Energy efficiency (MWh/t)11 

21

21

94

55

0.62

0.34

–

8

4.80

3.70

2.54

22

22

94

54

0.56

0.31

–

7

4.23

3.92

2.69

23 

23 

94 

53 

0.49 

0.27 

0.38 

6 

4.24 

4.12 

2.60 

25 

31 

95 

54 

0.47 

0.26 

0.35 

11 

4.09 

4.29 

2.27 

26

35

96

52

0.43

0.22

0.23

12

4.02

4.70

2.12

20.77

16.31

16.28 

15.65 

14.79

1.42

0.09

0.49

354

56

474

51.63

34.08

3.77

1.50

0.08

0.53

474

122

411

50.10

34.85

3.63

1.42 

0.15 

0.70 

603 

175 

384 

49.05 

34.14 

3.50 

1.53 

0.11 

0.69 

467 

53 

361 

47.58 

33.27 

3.44 

1.20

0.10

0.76

487

65

350

45.57

39.74

3.37

2013 figures restated; figures for 2010 – 2012 as last reported  
1   EBIT = earnings before financial result and taxes 
2   For definition see Combined Management Report, Chapter 16.2 “Calculation of EBIT(DA) Before Special Items.” 
3   Earnings per share as defined in IAS 33 = net income divided by the average number of shares. For details see Note [16] to the consolidated financial statements.  
4  For definition see Combined Management Report, Chapter 16.5 "Liquidiy and Capital Expenditures of the Bayer Group." 
5  Full-time equivalents 
6  LoPC-IR: rate of incidents in which chemicals leak from their primary container, such as pipelines, pumps, tanks or drums, per 200,000 working hours in areas relevant to plant 

safety. LoPC-IR has been recorded since 2012. 

7  Portfolio-adjusted in accordance with the Greenhouse Gas Protocol 
8  Volatile organic compounds (VOC) excluding methane 
9  Ozone-depleting substances (ODS) in CFC-11 equivalents 
10 1 petajoule = 1015 joules 
11 Energy efficiency: quotient of total energy consumption and manufactured sales volume. For MaterialScience, only manufactured sales volumes that also form the basis for 

calculating MaterialScience-specific emissions are taken into account. 

 
 
 
 
 
 
      
 
  
  
  
  
 
  
  
  
  
 
 
  
  
 
  
 
 
  
  
 
 
 
  
  
 
  
 
 
  
  
 
 
 
  
  
 
  
  
  
 
 
  
 
 
 
 
 
 
  
  
  
 
 
  
  
  
  
 
 
  
 
 
  
 
 
  
 
 
 
 
  
 
 
  
  
» TABLE OF CONTENTS

351

Financial Calendar

q1 2015 Interim Report 

April 30, 2015 

Annual Stockholders’ Meeting 2015 

May 27, 2015 

Planned dividend payment date 

May 28, 2015 

q2 2015 Interim Report 

q3 2015 Interim Report 

2015 Annual Report 

July 29, 2015 

October 29, 2015 

February 25, 2016 

q1 2016 Interim Report  

April 26, 2016 

Annual Stockholders’ Meeting 2016 

April 29, 2016

Further InformationFinancial CalendarBayer Annual Report 2014Masthead

Publisher
Bayer AG, 51368 Leverkusen,
Germany

Editor
Jörg Schäfer, Tel. +49 214 30 39136
email: joerg.schaefer@bayer.com

Investor Relations
Peter Dahlhoff, Tel. +49 214 30 33022
email: peter.dahlhoff@bayer.com

Date of publication
Thursday, February 26, 2015 

Environment & Sustainability
Dagmar Jost, Tel. +49 214 30 75284
email: dagmar.jost@bayer.com

English edition
Currenta GmbH & Co. ohg
Language Service

issn 0343 / 1975

(cid:38)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:287)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:16)(cid:75)(cid:82)(cid:88)(cid:86)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:41)(cid:44)(cid:53)(cid:40)(cid:17)(cid:86)(cid:92)(cid:86)

The paper this report is printed on is derived from socially, economically and ecologically sustainable 
sources and therefore bears the seal of the Forest Stewardship Council® (fsc Mix Credit).  
The inside section was produced using 100%(cid:3)(cid:85)(cid:72)(cid:70)(cid:92)(cid:70)(cid:79)(cid:72)(cid:71)(cid:3)(cid:287)(cid:69)(cid:72)(cid:85)(cid:86)(cid:3)(cid:331)(cid:3)(cid:68)(cid:86)(cid:3)(cid:74)(cid:88)(cid:68)(cid:85)(cid:68)(cid:81)(cid:87)(cid:72)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)e.u. Ecolabel  
(cid:70)(cid:72)(cid:85)(cid:87)(cid:76)(cid:287)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:11)(cid:83)(cid:68)(cid:83)(cid:72)(cid:85)(cid:3)(cid:85)(cid:72)(cid:74)(cid:17)(cid:3)(cid:81)(cid:82)(cid:17)(cid:3)fr / 011 / 003).

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Meeting 2014 
Information available  
at: bayer.com / asm

Other publications 
Overview available at:   
bayer.com / publications

Bayer on the internet: www.bayer.com

Forward-Looking Statements
This Annual Report contains forward-looking 
statements based on current assumptions and 
forecasts made by Bayer Group or subgroup 
management. Various known and unknown risks, 
uncertainties and other factors could lead to 
(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:71)(cid:76)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:86)(cid:3)(cid:69)(cid:72)(cid:87)(cid:90)(cid:72)(cid:72)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79)(cid:3)(cid:287)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)
position, development or performance of the 
company and the estimates given here. These 
factors include those discussed in Bayer’s  

public reports, which are available on the Bayer  
website at www.bayer.com. The company  
assumes no liability whatsoever to update these 
forward-looking statements or to conform them 
to future events or developments.

Legal Notice
The product names designated with ™ are 
brands of the Bayer Group or our distribution 
partners and are registered  trademarks in  
many countries.

» TABLE OF CONTENTS