Sustainable Conduct – Responsibility in Value Creation Marketing and Distribution Our marketing and distribution activities are geared toward acquiring new clients and retaining existing customers over the long term. Depending on market conditions, we supply our customers in the health care sector, in agriculture, in industry and in the private sector through wholesalers, specialist retailers or direct sales organizations. Bayer has established market- and customer-specific distribution channels in accordance with the respective demand. We systematically analyze our customers’ satisfaction with our performance in the individual segments, register their complaints and safeguard our long-term business success by deriving optimization measures from this analysis. Online Annex: A 220.127.116.11-1 limited assurance Pharmaceuticals and Consumer Health Our customer environment in the health care business includes in equal measure patients, consumers, physicians, pharmacists, caretakers, patient organizations, health policy decision-makers and opinion leaders, partners from research and development, and health authorities and health care payers. The distribution channels and the measures we employ to enter into dialogue with these groups are as diverse as these groups are themselves. The prescription products of Pharmaceuticals are primarily distributed through wholesalers, pharmacies and hospitals. The nonprescription products of Consumer Health are generally sold in pharmacies, with supermarket chains, online specialists and other large retailers also playing a significant role in certain markets such as the United States. Direct contact between Bayer and the customer environment, and especially patients, is regulated very differently for the Pharmaceuticals and Consumer Health segments. For example, different legal requirements apply for prescription medicines from Pharmaceuticals than for Consumer Health’s nonprescription medicines, dietary supplements, medical devices and cosmetics with regard to the collection of customer satisfaction data. The primary market research and data research that must be conducted, including systematic internet analysis, strictly adheres to the legal requirements, which can vary significantly depending on the market. Crop Science We offer our crop protection products in more than 120 countries and market them primarily via wholesalers, directly to retailers or, in limited cases, directly to farmers. Our seeds are sold to growers, seedling companies, specialist retailers and the processing industry. We improve plant traits with the help of modern breeding methods and then either license them to other seed companies or incorporate them into proprietary seed varieties. We market our Environmental Science range of pest and weed control products through wholesalers and specialist retailers to professional users in the green industry, forestry, industrial vegetation management and pest control. We also market our products in the area of public health, mainly through tendering by government agencies and NGOs as with efforts to control malaria and dengue fever, for example. The requirements of our customers vary according to product, region and culture, and range from rising demands in terms of food safety and quality to trends such as digital farming. Our marketing activities (field marketing) are therefore aligned particularly to the local needs of our customers, whose satisfaction is individually determined by the country organizations using standardized questionnaires. To strengthen customer centricity along the entire value chain, Crop Science is intensifying its direct cooperation with farmers through initiatives such as Bayer ForwardFarms. On Bayer ForwardFarms, the company cooperates with farmers to demonstrate innovative crop solutions and services for sustainable agriculture to interested stakeholders. Bayer expanded the network of ForwardFarms in 2017 to include Brazil and Argentina. The food chain partnership model successfully developed by Crop Science is also being steadily expanded. Crop Science has initiated over 500 food chain partnership initiatives for 76 crops in more than 40 countries, mainly in Asia, Latin America and Europe. The goal is, together with participants in the food chain such as farmers, the processing industry, exporters and dealers, to develop integrated solutions for sustainable agriculture so as to safeguard and increase yields and to improve the quality of harvested produce. The central element of the initiative is the BayGap program via which Bayer trains producers so that they meet the Global G.A.P. certification standard. Farmers need this in order to be able to access professional markets. Animal Health Depending on national regulatory frameworks, we market our animal health products through veterinarians and other distribution channels such as pharmacies or retail stores. Depending on the respective market segment, Animal Health conducts studies on customer satisfaction and customer retention. Commitment to ethical conduct In the development, sale and marketing of our products, we do not tolerate bribery or any other form of improper exertion of influence on our business partners. Our minimum standards are derived from laws and other statutory regulations, industry codes and internal rules. Our rules of conduct are established in our Corporate Policy “Responsible Marketing & Sales.” Furthermore, we are committed to ethical advertising and communication for all our products and services. As part of our compliance management system, we register and investigate any suspected violation of our responsible marketing principles, irrespective of whether the complaints come from within the company or are notified to us from outside. Our corporate policy and the respective training programs are implemented decentrally in the segments. Online Annex: A 18.104.22.168-2 limited assurance Pharmaceuticals and Consumer Health The marketing and distribution of pharmaceuticals, medical devices and nonprescription (over-the-counter = OTC schließen OTC (over-the-counter) designates the business with nonprescription medicines. ) medications are strictly regulated and subject to relevant laws that we are committed to observing. Also applicable at Bayer at the global or regional levels are industry codes adopted by relevant associations of the pharmaceuticals and medical devices industries. In many countries, these standards are further solidified by local codes – all of which apply to prescription pharmaceuticals and many of which also apply to nonprescription medicines, dietary supplements, medical devices and cosmetics. All codes of the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) serve as a binding minimum global standard for all prescription human pharmaceutical products marketed by Bayer. In addition, Bayer observes the codes of the European Federation of Pharmaceutical Industries and Associations (EFPIA) for dealings with health care professionals and patient organizations. The WHO’s Ethical Criteria for Medicinal Drug Promotion, together with national ethical standards that are usually also enshrined in industry codes at the local level, represent the minimum global standard for the advertising of human pharmaceutical products at Bayer. All the aforementioned codes contain provisions governing, among other issues, advertising material standards, the distribution of samples, cooperation with medical and pharmaceutical specialist groups in connection with speaker and consultancy contracts, and scientific studies. Based on the new EFPIA transparency code and the corresponding local interpretations, Pharmaceuticals discloses any grants to health care professionals and organizations annually for the preceding calendar year. Bayer compliance rules supplement codes The most important internal Bayer corporate policy in this context is our Anti-Corruption Procedure. The key requirements and the minimum global standard for compliant and ethical conduct are summarized in the Anti-Corruption Compliance Manual, which applies worldwide at Pharmaceuticals and Consumer Health. Principles for ethically and legally acceptable advertising for pharmaceuticals and medical devices are set out in a further Bayer corporate policy. Bayer has also put in place directives and corporate policies to prevent price fixing and ensure data protection. Should several regulations be relevant, Bayer principally applies the more stringent standards. Training measures on product-related communication, antitrust law, data protection and anti-corruption are fundamental elements of the compliance management system at Bayer. Principles communicated in these training courses provide an overview of globally applicable minimum requirements for cooperation with key stakeholders in the health care industry, such as physicians, hospitals or patient organizations. The anti-corruption courses explain general compliance principles and also give specific instructions in relation to nonreciprocal benefits and the exchange of services with health care professionals. Crop Science Crop Science follows the guidelines of its Product Stewardship Policy with regard to the distribution and use of its crop protection products. This policy, which also satisfies the requirements of the Corporate Policy “Responsible Marketing & Sales,” is based on the International Code of Conduct issued by the Food and Agriculture Organization of the United Nations (FAO). We carry out training courses on this topic worldwide. Animal Health In the marketing and use of its products, Animal Health not only observes statutory regulations, but also further-reaching Group-wide policies and voluntary industry-wide commitments. Where several regulations are applicable, Animal Health principally observes the more stringent requirements. Most of our companion and farm animal products are subject to the provisions of drug advertising law.