Focus on Innovation

Overview

  • Bayer and Ginkgo Bioworks form a new company to develop beneficial microbes for plants
  • LifeHub in Boston, United States, reinforces our open innovation network
  • Pharmaceuticals successful with further approvals; cooperation with Loxo Oncology contributes to further expansion of oncology area
  • Crop Science cooperation network with many strategic partners expanded

Innovation is one of our core competencies and therefore a cornerstone of our Group strategy. We define innovations as new solutions that generate added value for our customers and society. Our activities focus on innovative products based on our strong research and development (R&D) competencies supplemented with targeted process, service and business model innovations.

Group target 2017:

increase in R&D investments to €4.8 billion

Our innovations help us contribute to solving global challenges in medical care and food security. In addition to the strong innovative capabilities of our employees throughout the company, our efforts concentrate on excellence in research and development, the use of new, groundbreaking technologies and a broad open innovation network.

To further develop the innovation expertise of the entire organization, we set ourselves the goal in 2017 of training our employees in new methods, creating a central platform for innovation topics and establishing an agile organizational structure to support employees in developing new ideas and innovation projects. We have successfully implemented this and given around 950 employees an introduction to new methods such as Design Thinking and Systematic Inventive Thinking. In addition, we have established an innovation platform where employees can find information about new trends and current projects and interconnect and exchange with each other on innovation topics globally. An agile, global, cross-divisional network with innovation coaches supports our employees in developing new ideas and pursuing projects. Our activities were honored with the Learning 100! Excellence Award 2017 for innovation, where we achieved 16th place among the top 100 companies worldwide and were the best life science company.

Excellence in research and development

Bayer’s success has always been based on excellence in research and development. Our researchers develop new molecules and technologies in research-intensive fields to improve human, animal and plant health. The R&D activities we pursue are aligned with the innovation strategies of our segments. At Pharmaceuticals, Crop Science and Animal Health, these activities focus on the research and development of safe and sustainable active ingredients to meet the need for new pharmaceutical and crop protection products as well as of new seed products. Meanwhile, Consumer Health concentrates first on the development of new, nonprescription products and solutions, such as improved product formulations, packaging, technical applications and medical devices. Second, the transition of prescription drugs to OTC (over-the-counter) designates the business with nonprescription medicines. status is a key tool for meeting the growing desire of customers for self-care products.

Bayer maintains a global network of R&D locations, which employ more than 14,000 researchers. In 2017, we increased our research and development investment by 3.1% (Fx adj.) to €4,504 million. We plan to invest around €4.1 billion in R&D in 2018.

Information on Research and Development in 2017

 

 

R&D expenses

 

R&D expenses before special items

 

Share of R&D expenses

 

R&D expenses before special items

 

R&D employees

 

 

2016

2017

 

2016

2017

 

2016

2017

 

2016

2017

 

2016

2017

 

 

€ million

€ million

 

€ million

€ million

 

%

%

 

% of sales

% of sales

 

FTE

FTE

2016 figures restated

Pharmaceuticals

 

2,787

2,888

 

2,736

2,724

 

63.3

64.1

 

16.7

16.2

 

7,934

8,138

Consumer Health

 

259

240

 

234

228

 

5.9

5.3

 

3.9

3.9

 

331

368

Crop Science

 

1,164

1,166

 

1,156

1,120

 

26.4

25.9

 

11.7

11.7

 

5,631

5,174

Animal Health

 

140

155

 

140

145

 

3.2

3.4

 

9.2

9.2

 

308

333

Reconciliation

 

55

55

 

55

55

 

1.2

1.2

 

5.2

4.7

 

9

28

Total

 

4,405

4,504

 

4,321

4,272

 

100

100

 

12.4

12.2

 

14,213

14,041

Global open innovation network

Partnerships are integral to our innovation strategy. We enter into strategic alliances with various partners such as universities, governmental agencies, start-ups, suppliers and industry. This gives us access to complementary technologies and expertise that expand our framework conditions for innovation.

Our open innovation network spans all parts of the company along the entire value chain. Our open innovation portal offers a platform for interdisciplinary collaborations between different organizational units. We also invest in venture capital funds that finance life science start-up companies, among other projects. Our newly established, cross-segment LifeHub in Boston, Massachusetts, United States, reinforces our opportunities to work with leading partners to develop new health care and nutrition solutions.

Online Annex: A 1.3-1

limited assurance

In addition to our cross-segment LifeHub in Boston, Massachusetts, United States, the segments maintain their own innovation hubs in leading innovation centers throughout the world where global research partnerships are coordinated.

In the United States and Germany, we operate an incubator model for young life science companies under the CoLaborator™ name. The objective of the global CoLaborator™ concept is to offer these companies suitable laboratory and office infrastructure in the direct vicinity of Bayer’s own research facilities and the opportunity to exchange experiences with our experts.

In 2017, we continued the Grants4Indications™, Grants4Apps™, Grants4Targets™ and PartnerYourAntibodies™ crowdsourcing programs at Pharmaceuticals, as well as Grants4Targets™ and Grants4Traits™ at Crop Science. Moreover, we launched a new Grants4Tech™ program with which we are seeking new technical production solutions.

Also in 2017, SRI-BAYER Discovery and Innovation Grants was launched in conjunction with the Society for Reproductive Investigation (SRI). The objective of these grants is to develop new treatment options for women’s health issues where there is a high medical need. Running for the duration of 2017, Bayer and the American Heart Association launched the AHA-Bayer Discovery Target Grants Program to advance scientific understanding and address unmet medical needs in cardiovascular disease.

By investing in venture capital funds, we support up-and-coming companies in pharmaceutical and agricultural technologies. We have already set up various venture capital funds with partners such as Versant Ventures, HTGF, Flagship Ventures, Trendlines and Finistere Ventures, LLC. The Bayer Trendlines AG Innovation Fund has established IBI-AG, a company involved in the crop protection arena. The company’s goal is to discover and develop a novel, environmentally friendly pest management platform.

Scientists from Bayer are engaged in constant dialogue with renowned research institutes and support partnership projects in the public and private sectors. In 2017, public funding worth more than €47.5 million was spent worldwide on Bayer R&D projects. This is equivalent to roughly 1.1% of our annual R&D expenses.

Use of groundbreaking technologies

Another key tool for achieving our strategic goals is the use of new, groundbreaking technologies. We pursue such technologies through the activities of Leaps by Bayer (formerly Lifescience Center) and our Life Science Collaboration program.

Leaps by Bayer has the strategic goal of establishing access to state-of-the-art technologies through a new innovation and collaboration model. After making investments in defined research applications for the CRISPR-Cas9 technology (Casebia) and in the development of highly efficient induced pluripotent stem cell therapies (BlueRock Therapeutics) in the past two years, we entered into our first agreement in the agricultural sector in September 2017. In conjunction with U.S.-based Ginkgo Bioworks, Inc., Bayer founded a new company focused on the plant microbiome. The primary focus of this research is the mechanism of nitrogen fixation for minimizing agriculture’s environmental impact. This entry into microbiome research is part of Bayer’s innovation strategy. The company will be located in Boston, Massachusetts, and Sacramento, California, in the United States.

In addition, with the help of our Life Science Collaboration Program, we are conducting cross-divisional evaluations of groundbreaking biological and technological innovations in the fields of optogenetics and artificial intelligence, for example.

Patents protect Bayer’s intellectual property

Globally reliable protection of intellectual property rights is particularly relevant for an innovation company like Bayer. Depending on the legal framework, we therefore endeavor to obtain patent protection for our products and technologies in major markets. When we successfully market patent-protected products, this enables us to reinvest the profits in sustainable research and development. Several years can pass between the time we submit a product approval application and market launch of a product, so only a few years are left for generating a return on the investment in this intellectual property. At the end of 2017, we owned approximately 48,100 valid patent applications and patents worldwide relating to more than 4,700 protected inventions. The following table shows the expiration dates for the Bayer Group’s significant patents.

Pharmaceuticals Patent Expiration Dates

 

 

Market

 

 

Germany

 

France

 

Italy

 

Switzer­land

 

Spain

 

U.K.

 

China

 

Japan

 

Brazil

 

Canada

 

U.S.A.

a

Current expiration date; patent term extension applied for

b

Patent application pending

c

Patent term revised

d

Application-specific term extension(s)

e

Patent term extension granted

Products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adempas™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active ingredient

 

2028

 

2028

 

2028

 

2028

 

2028

 

2023a

 

2023

 

2027–2028d

 

2023b

 

2023

 

2023a

Production process / intermediate

 

2030

 

2030

 

2030

 

2030

 

2030

 

2030

 

2030

 

2030

 

2030b

 

2030

 

2030

Eylea™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active ingredient

 

2025

 

2025

 

2025

 

2025

 

2025

 

2020a

 

2020

 

2021–2023d

 

2020b

 

2020

 

Formulation

 

2027

 

2027

 

2027

 

2027

 

2027

 

2027

 

2027b

 

2028–2029d

 

2027b

 

2027

 

Kogenate™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active ingredient

 

 

 

 

 

 

 

 

 

 

2021

 

Formulation

 

2017

 

2017

 

2017

 

2017

 

2017

 

2017

 

2017

 

2020

 

2020

 

2017

 

Kovaltry™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active ingredient

 

 

 

 

 

 

 

 

 

 

2021

 

Formulation

 

2017

 

2017

 

2017

 

2017

 

2017

 

2017

 

2017

 

2023e

 

2020

 

2017

 

Production process

 

2018

 

2018

 

2018

 

2018

 

2018

 

2018

 

2018

 

2023e

 

2023

 

2018

 

2018a

Production process
(cell line / chaperone)

 

2029e

 

2024a

 

2029e

 

 

2024a

 

2024a

 

 

2028e

 

 

2024

 

2024

Mirena™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inserter

 

2029

 

2029

 

2029

 

2029

 

2029

 

2029

 

2029

 

2029

 

2029b

 

2029

 

2031c

Nexavar™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active ingredient

 

2021

 

2021

 

2021

 

2021

 

2021

 

2021

 

2020

 

2021–2025d

 

2025

 

2020

 

2020

Salt form

 

2022

 

2022

 

2022

 

2022

 

2022

 

2022

 

 

 

 

 

Polymorph

 

2025

 

2025

 

2025

 

2025

 

2025

 

2025

 

2025

 

2025–2026d

 

2025b

 

2025

 

2027

Formulation

 

2026

 

2026

 

2026

 

2026

 

2026

 

2026

 

2026

 

2026–2027d

 

2026b

 

2026

 

2028c

Stivarga™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active ingredient

 

2028

 

2028

 

2028

 

2028

 

2028

 

2024a

 

2024

 

2026d

 

2024b

 

2024

 

2031

Formulation

 

2025

 

2025

 

2025

 

2025

 

2025

 

2025

 

2025

 

2026d

 

2025b

 

2025

 

2031

Production process

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031b

 

2031

 

2031

Xarelto™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active ingredient

 

2023

 

2023

 

2023

 

2023

 

2023

 

2023

 

2020

 

2022–2025d

 

2022

 

2020

 

2024

Formulation

 

2024

 

2024

 

2024

 

2024

 

2024

 

2024

 

2024

 

2025–2028d

 

2024b

 

2024

 

2024

Xofigo™

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Use

 

2024

 

2024

 

2024

 

2024

 

2024

 

2024

 

2019

 

2019a

 

 

2019

 

2022e

Production process

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031

 

2031b

 

2031b

 

2031

Online Annex: A 1.3-2

limited assurance

Patent protection is essential

Patent terms vary according to the laws of the country granting the patent. In view of the high investment required for product research and development, the European Union (E.U.) member states, the United States, Japan and some other countries extend patent terms or issue supplementary protection certificates to compensate for the shortening of the effective patent protection period due to regulatory approval processes for new drugs.

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

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