Bayer’s Q1 Surprises with 35% Net Income Drop But Pharma Soars 77%

Bayer Group kicked off 2025 with a steady yet mixed performance, as CEO Bill Anderson emphasized the year’s significance and complexity in Tuesday’s financial report. He cited the pharmaceutical division’s profit surge as a “strong signal” that cost-efficiency strategies are beginning to pay off. Bayer expects this division to hit the upper end of its annual guidance for both revenue and margins.

The pharmaceutical segment stood out with a 4.1% sales boost, driven by notable product success: Nubeqa skyrocketed by 77.5%, and Kerendia rose 86.6% year-over-year. Sales of the popular eye drug Eylea continued their upward trend, while the oral contraceptive line also saw robust growth. Though blood thinner Xarelto was dragged down by generic competition, overall profits jumped 12.4%, reaching €1.342 billion.

The group’s overall Q1 revenue stayed flat at €13.738 billion, slightly down 0.1% after adjusting for currency and portfolio effects. However, operating earnings before special items fell 7.4% to €4.085 billion, largely due to weaker crop science performance, higher incentive costs, and persistent inflation.

The crop science division, under mounting cost pressure, experienced a 3.3% sales dip, landing at €7.58 billion. Regulatory setbacks and shifting distributor strategies in North America impacted herbicide and seed sales. EBITDA before special items slumped 10.2%, reflecting external headwinds. In response, Bayer launched a five-year transformation plan aimed at trimming portfolios, optimizing production, and focusing R&D on high-value innovations—with €3.5 billion in new sales expected by 2029.

Consumer health sales rose 2.5%, fueled by gains in North America and Asia-Pacific, particularly in digestive health products. Nonetheless, allergy and nutrition categories faced declines, and profit margins dipped 0.3% despite better cost control.

Despite a 35.1% plunge in net income to €1.299 billion, Bayer improved free cash flow from -€2.626 billion to -€1.528 billion, driven by prepayments in the crop science business. Total net debt stood at €34.255 billion as of March 31.

Bayer reaffirmed its 2025 outlook at constant exchange rates, citing confidence in the pharma pipeline and risk controls around global tariffs. CFO Wolfgang Nickl confirmed the company is “tracking to plan,” even as legal risks and geopolitical shifts continue to loom.