Pharmaceu­ticals

Pharmaceuticals market continues to grow

Growth in the pharmaceuticals market in 2017 was 3% (2016: 5%). Intensified pricing pressure caused by generic competition and health care reforms led to lower growth in all regions compared with the prior year.

Increase in sales

Sales of Pharmaceuticals rose by 4.3% (Fx & portfolio adj.) to €16,847 million in 2017. Our key growth products Xarelto™, Eylea™, Stivarga™, Xofigo™ and Adempas™ once again registered strong growth, as their combined sales rose by 16.3% (Fx adj.) to €6,196 million (2016: €5,413 million). Combined sales of the 15 best-selling Pharmaceuticals products advanced by 6.9% (Fx adj.). Sales of Kogenate™ declined considerably due particularly to a lower order volume for the active ingredient from a distribution partner. After adjusting for this effect, sales of Pharmaceuticals rose by 5.6% (Fx & portfolio adj.).

Sales by product

• Business with our oral anticoagulant Xarelto™ continued to develop successfully in 2017. The significant growth in sales was primarily attributable to higher volumes in Europe, Japan and China. We also posted further gains for our license revenues – recognized as sales – in the United States, where Xarelto™ is marketed by a subsidiary of Johnson & Johnson.
• We recorded strong growth with our eye medicine Eylea™, due especially to expanded volumes in Europe, Canada and Japan.
• Sales of our cancer drug Xofigo™ increased significantly, due mainly to its market launch in Japan in 2016 and to higher demand in the United States.
• We registered a substantial increase in sales of our cancer drug Stivarga™. Here we benefited from new approvals for the drug in 2017 as a second-line treatment for patients with hepatocellular carcinoma, especially in the United States and Japan.
• We posted strong growth in sales of our pulmonary hypertension treatment Adempas™, mainly as a result of expanded volumes in the United States. As in the past, sales of the product reflected the proportionate recognition of upfront and milestone payments resulting from the sGC collaboration with Merck & Co., United States.
• Business with the hormone-releasing intrauterine devices of the Mirena™ product family (Mirena™, Kyleena™ and Jaydess™ / Skyla™) expanded noticeably. This trend mainly reflected the successful launch of the Kyleena™ intrauterine device, which led to higher volumes particularly in the United States and Europe. Sales of Mirena™ grew primarily in Latin America and China.
• Sales of the blood-clotting medicines Kogenate™ / Kovaltry™ were down sharply overall due to lower order volumes being placed for the active ingredient by a distribution partner ahead of the planned contract termination at the end of the year. Adjusted for this development, sales came in at the prior-year level.
• We registered a slight decline in sales of our cancer drug Nexavar™. This resulted from decreased demand and elevated pressure on prices, particularly in Germany and the United States.
• As expected, sales of our multiple sclerosis product Betaferon™ / Betaseron™ continued to fall. Volumes receded primarily as a result of a highly competitive market environment in the United States and Europe.
• We registered a decline in sales of our YAZ™ / Yasmin™ / Yasminelle™ line of oral contraceptives, due primarily to generic competition in the United States. Sales growth in Japan, where we benefited from a product line extension, and in China was insufficient to offset this effect.
• We posted marked sales gains for Adalat™, our product to treat hypertension, our Aspirin™ Cardio product for the secondary prevention of heart attacks, and for our diabetes treatment Glucobay™, mainly as a result of a continued positive business performance in China.
• There was an encouraging increase in sales of our MRI contrast agent Gadavist™ / Gadovist™ that was primarily attributable to the positive development of business in the United States and Japan.
• Sales of the antibiotic Avalox™ / Avelox™ declined mainly as a result of lower license revenues in Europe. Encouraging sales development in China was not sufficient to offset this effect.

Earnings

In 2017, EBITDA before special items increased by an encouraging 8.8% to €5,711 million. Adjusted for negative currency effects of €98 million, earnings advanced by 10.6%. Growth was mainly driven by higher volumes and a lower cost of goods sold. Expenses for research and development were level with the prior year and included a gain in the mid-double-digit millions from a development collaboration. In addition, we recorded a positive earnings effect from a receivable in the mid-double-digit millions as one of our distribution partners for the active ingredient in Kogenate™ did not fulfill its purchase obligation.

EBIT of Pharmaceuticals rose by a substantial 27.6% to €4,325 million, after special charges of €340 million (2016: €558 million). These mainly comprised €207 million in impairment losses on intangible assets and €124 million in provisions for litigations.