Bayer Q1 2025 Results Highlight Pharma Growth and CropScience Issues
German pharmaceutical and life-sciences giant Bayer AG reported first-quarter 2025 earnings that beat market estimates, driven by robust demand for its new oncology and nephrology therapies. While Group revenues were essentially flat year-on-year, key pharmaceutical launches underpinned a 4.4% sales rise in that division, offsetting a 4.1% decline in CropScience.
Q1 Financial Highlights
- Group sales: €13.7 billion, down 0.1% vs. Q1 2024, roughly in line with consensus (€13.6bn).
- EBITDA before special items: €4.1 billion, a 7.4% decrease y/y but above Bloomberg consensus of €3.9 billion. EBITDA margin held at ~30%.
- Core EPS: €2.50, down 11.7% from €2.83 in Q1 2024, yet exceeding analyst forecasts of €2.35.
- R&D investment: €2.3 billion, up 5.2% y/y, representing 16.8% of Group sales.
- Capex: €1.1 billion, primarily allocated to production capacity at the pharmaceutical sites in Leverkusen and the planned cell-therapy facility in Cambridge, MA.
Pharmaceutical Division Performance
Pharma sales grew 4.4% to €6.9 billion. North America led with 6.2% growth, supported by U.S. uptake of the new androgen receptor antagonist Nubeqa (darolutamide) for non-metastatic castration-resistant prostate cancer, and the mineralocorticoid receptor antagonist Kerendia (finerenone) for chronic kidney disease in type 2 diabetes patients. EMEA sales were flat, while Asia-Pacific delivered 3.1% growth.
Key Drug Launches and Pipeline Advances
- Nubeqa: Q1 sales reached €450 million, reflecting 28% sequential quarterly growth due to expanded label indications and formulary additions in the U.S. Estimated peak sales: €2.5–3.0 billion.
- Kerendia: €320 million in Q1 revenues, up 35% y/y, as guideline updates elevated finerenone to a class IIa recommendation by the European Society of Cardiology.
- Eylea (aflibercept): €800 million, +5% y/y, boosted by regimen optimization and new reimbursement approvals in South Korea.
- Contraceptives: YAZ and Mirena combined for €600 million (+8% y/y), supported by digital adherence programs in Europe.
- Xarelto: €550 million, down 12% after loss of exclusivity and generic erosion in the U.S. and EU markets.
CropScience Division Outlook
CropScience sales fell 4.1% to €3.2 billion, weighed down by a 15% drop in glyphosate revenues amid persistent low agrochemical pricing and intensified competition from Chinese suppliers. Integrated pest-management products showed resilience in Latin America (+3%), but Europe remained weak due to delayed spring planting and regulatory headwinds.
“We continue to see robust runoff in herbicide markets, but margins are under pressure by raw-material cost inflation and overcapacity,” said Alex Morgan, senior agrochemical analyst at JP Morgan. He expects mid-single-digit growth in the second half as new biologicals gain traction.
Macroeconomic and Geopolitical Context
Bayer flagged that easing tariff concerns between the U.S. and China, following Washington and Beijing’s recent agreement to suspend additional duties for 90 days, has improved supply-chain visibility. The German Ifo business climate index rose from 91.6 in April to 92.3 in May, and the ZEW economic sentiment index climbed to –12.1, reflecting reduced recession fears.
Additional Analysis
1. Currency and Hedging Impact Analysis
Bayer’s results assume constant currencies. The Group maintains an average hedge ratio of 70% for U.S. dollar-denominated sales, with forward contracts locked in at a €/$ rate of 1.08 through Q4 2025. A 1 cent appreciation of the euro vs. the dollar would shave approximately €70 million off annual EBITDA.
2. R&D Investment and Pipeline Diversification
With R&D spend up 5.2%, Bayer is reallocating resources toward next-generation modalities including antibody-drug conjugates (ADCs) and cell therapy partnerships with biotech firms. The oncology pipeline now comprises 14 clinical-stage assets, including two phase III trials in non-small-cell lung cancer, potentially adding €1 billion in peak sales each.
3. Litigation Risk and Regulatory Environment
Bayer remains exposed to legacy Monsanto litigation, with over 150,000 Roundup claims pending in U.S. courts. Bayer has provisioned €4.5 billion for settlements. Regulatory reviews of glyphosate by the European Chemicals Agency (ECHA) are ongoing; a renewal decision is expected in H2 2025, which could affect CropScience margins.
CEO Commentary and Full-Year Outlook
Bill Anderson, CEO of Bayer, stated: “Our Q1 performance underscores the resilience of our pharmaceutical portfolio and the discipline of our teams in executing launches. While CropScience faces headwinds from regulatory and pricing pressures, we remain confident in the fundamentals of our business and reaffirm our 2025 guidance at constant currencies. We expect Pharma to land at the upper end of our sales and EBITDA margin targets.”
Bayer reiterated its full-year 2025 guidance: Group sales growth of 2–4% at constant currencies and an EBITDA margin before special items of 29–31%. The Pharma division is expected to achieve 7–9% top-line growth.