Management Report
8. Research and Development
Innovation is the key driver of Bayer's future growth. Challenges such as providing health care and nutrition for a growing world population and using natural resources efficiently can only be overcome with innovative solutions.
That is why the inventor company Bayer focuses on research and development. In 2011 a total of €2,932 million (2010: €3,053 million) was spent on research and development. This was equivalent to 8.0% (2010: 8.7%) of sales. The number of employees working in research and development worldwide was 13,300.
We supplement our internal research and development activities with an international network of collaborations and alliances with leading universities, public-sector research institutes and partner companies. The creation of science hubs in growth regions such as Asia is one of the ways this innovation network is being expanded.
To strengthen our position in the global competitive arena, we are deploying our resources selectively and narrowing our focus – even within individual business units – to areas where there is an urgent need for innovation and significant growth opportunities therefore exist. This pooling of expertise enables us to rapidly translate new business ideas into successful products.
With a strong, efficient research and development organization, an international network of partners and a focus on growth areas and markets, we are laying the foundations for Bayer's future success. Our activities remain centered on our customers' needs – true to our mission "Bayer: Science For A Better Life."
HealthCare
In 2011 we invested €1,948 million (2010: €2,066 million) in research and development in the Pharmaceuticals and Consumer Health segments. This represented 66.4% of the Bayer Group's entire research and development spending and was equivalent to 11.3% (2010: 12.2%) of HealthCare sales. At the end of 2011, some 7,700 employees of the HealthCare subgroup were working in research and development.
Research and development expenses in the Pharmaceuticals segment amounted to €1,556 million (2010: €1,684 million), or 15.6% (2010: 16.9%) of segment sales. The decline was mainly due to lower development costs following the successful completion of the majority of Phase III studies for our anticoagulant Xarelto™. Our research and development outlay underscores our focus on growth through innovation. Drug discovery in the Pharmaceuticals segment is concentrated in the areas of cardiology and oncology, along with gynecological treatments and hematology. Other areas of focus are inflammatory processes and ophthalmology. In addition, we are strengthening our established products through life-cycle management, an example being the development of innovative administration forms for contraceptives. Research activities and capacities are concentrated at three sites in Berlin and Wuppertal, Germany, and Berkeley, California, United States. Work in Berlin and Wuppertal mainly focuses on the discovery, optimization and development of new active substances. Research is also carried out at these sites in the fields of drug metabolism, pharmacokinetics, toxicology and clinical pharmacology. Berkeley is a major research and development center focused on biologicals for hematology, such as Kogenate™. We also operate further research centers, such as those in Beijing, China.
In 2011 we extended our strategic alliance with the German Cancer Research Center in Heidelberg, Germany, by a further three years. This partnership is aimed at jointly developing new approaches for anticancer drugs. In June 2011 we also formed an alliance with the Ludwig Boltzmann Institute (LBI) for Lung Vascular Research. This alliance was expanded in November 2011 to include a collaboration with the newly founded LBI for Translational Heart Failure Research. Both institutes are based at the Medical University of Graz, Austria. In 2011 we continued our research activities in Singapore, where – through our contractual partner Economic Development Board (EDB) Singapore – we are working with various institutions such as the National University of Singapore and the university hospital to adapt drug candidates to the specific needs of Asian (cancer) patients.
We conducted clinical studies with several drug candidates from our research and development pipeline during 2011 to drive the development of new substances to treat diseases with a high unmet medical need. Following the completion of the required studies with some of these drug candidates, we submitted applications to one or more agencies for approvals or approval extensions.
The most important drug candidates currently in the registration process are:
| Products in Registration | [Table 3.30] |
|---|
| | Indication |
| EYLEA™ (VEGF Trap-Eye) | Wet age-related macular degeneration |
LCS-12 (ULD LNG
Contraceptive System) |
E.U., U.S.A.; contraception, duration of use: up to 3 years |
Natazia™ (E2V/DNG)
| U.S.A., treatment of heavy menstrual bleeding in women without organic
pathology who desire oral contraception |
| Xarelto™ | Secondary prophylaxis of acute coronary syndrome |
| YAZ™ Flex | E.U., oral contraception, flexible dosage regimen |
The following table shows our most important drug candidates currently in Phase III or II of clinical testing:
| Research and Development Projects (Phases III and II)* | [Table 3.31] |
|---|
| | Indication | Status |
| Alemtuzumab** | Multiple sclerosis | Phase III |
Alpharadin
| Treatment of bone metastases in hormone-refractory/castration-resistant prostate cancer | Phase III |
| ATX-101 | Reduction of submental fat | Phase III |
| FC Patch low | Contraception | Phase III |
Florbetaben
| PET imaging in diagnosis of Alzheimer's disease | Phase III |
| Gadovist™ | Magnetic resonance imaging | Phase III |
| LCS-16 (ULD LNG Contraceptive System) | Contraception, duration of use: 5 years | Phase III |
| Nexavar™ | Breast cancer | Phase III |
| Nexavar™ | Adjuvant therapy of liver cancer | Phase III |
| Nexavar™ | Non-small-cell lung cancer | Phase III |
| Nexavar™ | Adjuvant therapy of kidney cancer | Phase III |
| Nexavar™ | Thyroid cancer | Phase III |
| Regorafenib (DAST inhibitor) | Colorectal cancer | Phase III |
Regorafenib (DAST inhibitor)
| Treatment of metastatic or inoperable gastrointestinal stromal tumors | Phase III |
| Riociguat (sGC stimulator) | Pulmonary hypertension (CTEPH) | Phase III |
| Riociguat (sGC stimulator) | Pulmonary hypertension (PAH) | Phase III |
| Tedizolid | Complicated skin infections and pneumonia | Phase III |
| Vaginorm™ | Vulvovaginal atrophy | Phase III |
| VEGF Trap-Eye | Diabetic macular edema | Phase III |
VEGF Trap-Eye
| Abnormal retinal angiogenesis following pathological myopia | Phase III |
| VEGF Trap-Eye | Central retinal vein occlusion | Phase III |
Xarelto™
| Treatment and secondary prevention of venous thromboembolism | Phase III |
| Alpharadin | Treatment of bone metastases in cancer | Phase II |
| Amikacin Inhale | Pulmonary infection | Phase II |
| Ciprofloxacin Inhale | Pulmonary infection | Phase II |
| MEK inhibitor | Cancer | Phase II |
| MR antagonist (BAY94-8862) | Chronic heart failure | Phase II |
| Nexavar™ | Additional indications | Phase II |
| Regorafenib (DAST inhibitor) | Cancer | Phase II |
| Riociguat (sGC stimulator) | Pulmonary hypertension | Phase II |
* as of February 14, 2012
** co-promotion PET = positron emission tomography; CTEPH = chronic thromboembolic pulmonary hypertension; PAH = pulmonary arterial hypertension The nature of drug discovery and development is such that not all compounds can be expected to meet the pre-defined project goals. It is possible that any or all of the projects listed above may have to be discontinued due to scientific and/or commercial reasons and will not result in commercialized products.
It is also possible that the requisite FDA, European Medicines Agency (EMA) or other regulatory approval will not be granted for these compounds. |
We regularly evaluate our research and development pipeline in order to prioritize the most promising pharmaceutical projects.
Xarelto™ (active ingredient: rivaroxaban) has been on the market since 2008 for prophylaxis of venous thromboembolism in adult patients following elective hip or knee replacement surgery. Xarelto™ is registered in more than 110 countries around the world and marketed in this indication by Bayer HealthCare outside the United States. On December 19, 2011, Xarelto™ was also approved in the European Union for stroke prevention in patients with atrial fibrillation as well as for the treatment of deep vein thrombosis (DVT) and the prevention of recurring DVT and pulmonary embolism following acute DVT in adult patients.
In the United States, where Xarelto™ was approved in July 2011 for DVT prophylaxis in adult patients following elective hip or knee joint replacement surgery, Janssen Pharmaceuticals, Inc. – a subsidiary of Johnson & Johnson – holds the commercialization rights for Xarelto™. Bayer HealthCare supports the sales team of Janssen Pharmaceuticals, Inc. in selected hospitals and specialty markets in the United States. In addition, on November 4, 2011, Xarelto™ was approved in the United States to reduce the risk of stroke in patients with atrial fibrillation.
The following study results for rivaroxaban were presented in 2011. In a Phase III study (MAGELLAN study) on the prevention of venous thromboembolism in hospitalized patients with acute medical illness, presented in April 2011, rivaroxaban achieved the primary efficacy endpoints. In the first evaluation, however, a consistently positive benefit-risk balance was not seen across the heterogeneous patient population studied. In May 2011, a subgroup analysis of the ROCKET AF Phase III clinical study confirmed that rivaroxaban is highly effective in preventing recurrent strokes in patients with atrial fibrillation who have experienced a prior stroke or transient ischemic attack. In November 2011 the Phase III ATLAS ACS 2-TIMI 51 study on secondary prevention of acute coronary syndrome reached the primary efficacy endpoint of reduced cardiovascular death, myocardial infarction and stroke compared with patients receiving antiplatelet therapy alone.
In December 2011 we submitted an application to the European Medicines Agency (EMA) for marketing authorization for Xarelto™ in secondary prevention following acute coronary syndrome (ACS). The application to the U.S. Food and Drug Administration (FDA) was submitted by our cooperation partner Janssen Research & Development, L.L.C. Given the seriousness of ACS and the potential clinical benefit, the FDA has granted rivaroxaban fast-track designation.
Riociguat is the first member of a new class of vasodilating agents known as soluble guanylate cyclase (sGC) stimulators. Administered in tablet form, riociguat is currently being investigated as a new approach for the treatment of various forms of pulmonary hypertension. In May 2011 we presented promising results from a Phase II study with riociguat in pulmonary hypertension owing to chronic obstructive pulmonary disease (COPD).
In April 2010 we launched a Phase III program with regorafenib for the treatment of advanced colorectal cancer. Regorafenib is a novel, oral multi-kinase inhibitor that inhibits various signaling pathways responsible for tumor growth. We enrolled patients with metastatic colorectal carcinoma whose disease was progressing despite previous standard treatments. The study achieved positive results and met the primary endpoint – a statistically significant improvement of overall survival. This was confirmed by a pre-planned interim analysis of the available trial data by an independent Data Monitoring Committee (DMC). Based on the recommendation of the DMC, the so-called CORRECT trial (patients with metastatic colorectal cancer treated with regorafenib or placebo after failure of standard therapy) was concluded ahead of schedule to prepare the data for submission. In May 2011, the U.S. Food and Drug Administration (FDA) granted fast-track designation to regorafenib for the treatment of metastatic and/or inoperable gastrointestinal stromal tumors. This developmental product also received orphan drug status, which includes U.S. market exclusivity for a seven-year period if the sponsor complies with certain FDA requirements. In 2011 we restructured our partnership with Onyx Pharmaceuticals, Inc., United States, extending it to include the joint development of regorafenib. Under the terms of the agreement, Bayer will have final decision-making authority for global development and commercialization, and Onyx will receive a royalty on future sales. In addition, Bayer will contract the Onyx sales force to promote regorafenib, along with Bayer sales representatives, in the United States.
In the area of women's healthcare, we are conducting research into gynecological therapies and additional contraception options. Our contraceptive patch (FC Patch low) is currently in Phase III clinical trials. It is intended to become the only transparent product of its kind and the smallest, lowest-dosed contraceptive patch on the market. In December the new hormone-releasing intrauterine device LCS-12 was submitted for approval in the United States and Europe. This lower-dose device is smaller than Mirena™ and remains effective for up to three years. A further hormone-releasing device (LCS-16), with a duration of use of up to five years, is currently undergoing Phase III clinical development.
We are adding to the portfolio of development products from our own research and development activities through selective inlicensing.
In 2011 we continued the strategic alliance begun in 2010 with OncoMed Pharmaceuticals, Inc., United States, to research, develop and market novel therapeutics against cancer stem cells.
The collaboration formed in 2010 with Prometheus Laboratories Inc., United States, to develop new personalized medicine options was also continued.
In a Phase III study, Alpharadin – the cancer drug we are jointly developing with Algeta ASA, Norway – demonstrated a significant improvement in overall survival in patients with hormone-refractory/castration-resistant prostate cancer and bone metastases. With the positive efficacy data, the study met its primary endpoint and was concluded ahead of schedule in June 2011. The application for regulatory approval of Alpharadin is in preparation. Alpharadin was granted fast-track designation by the U.S. Food and Drug Administration in August 2011.
In collaboration with Genzyme Corp., United States, we are developing the humanized monoclonal antibody alemtuzumab. In 2011 two Phase III studies investigating alemtuzumab in multiple sclerosis (MS) were completed with positive results. Genzyme intends to submit applications for marketing approval of alemtuzumab in the United States and the European Union under the trade name LEMTRADA™ in the second quarter of 2012. The U.S. Food and Drug Administration has already granted fast-track designation to alemtuzumab (LEMTRADA™).
VEGF Trap-Eye is our joint developmental project with Regeneron Pharmaceuticals, Inc., United States. VEGF (vascular endothelial growth factor) is a natural growth factor that stimulates the formation of new blood vessels (angiogenesis). VEGF Trap-Eye blocks this growth factor specifically and very effectively, thus preventing the abnormal formation of new blood vessels that tend to leak blood. The medication is administered directly into the eye. In November 2011, our cooperation partner Regeneron Pharmaceuticals received approval from the U.S. Food and Drug Administration for VEGF Trap-Eye under the trade name EYLEA™ for the treatment of wet age-related macular degeneration (AMD). In addition, the product was submitted for marketing authorization to the European Medicines Agency and the Japanese Ministry of Health, Labor and Welfare in June 2011. Once the product has been approved, Bayer will market it outside the United States. Regeneron Pharmaceuticals, Inc., United States, retains exclusive commercialization rights to VEGF Trap-Eye in the U.S. This product has also achieved positive Phase III clinical development results for the treatment of central retinal vein occlusion (CRVO), another frequent cause of blindness. In addition, two Phase III studies are ongoing for the treatment of diabetic macular edema (DME).
In July 2011 we signed an agreement with Trius Therapeutics, Inc., United States, to jointly develop and commercialize Trius' antibiotic tedizolid phosphate (tedizolid). This agreement gives us exclusive rights for the markets of Asia – excluding North and South Korea – and all countries of Africa, Latin America and the Middle East. Under the agreement, we will develop tedizolid, which is already in Phase III clinical development in the United States and Europe, for the treatment of various infectious diseases such as acute bacterial skin and skin structure infections and Gram-positive pneumonia. Trius retains full development and commercialization rights for the United States, Canada and the European Union.
We also invest in continuous life-cycle management to identify possible additional indications and improved delivery forms for products already on the market. For example, the additional indication for our oral contraceptive Qlaira™ – treatment of heavy and/or prolonged menstrual bleeding – was approved in Europe in 2010. The approval process in the United States (trade name: Natazia™) remained ongoing in the reporting period. Qlaira™/ Natazia™ is the first product in a new class of oral contraceptives whose estrogen component acts like the endogenous substance estradiol. Another example is our cancer drug Nexavar™, which we are continuing to develop jointly with Onyx Pharmaceuticals, Inc., United States. The promising active substance sorafenib, which attacks both cancer cells and the vascular system of the tumor, has been registered for the treatment of advanced renal cell carcinoma since 2005 and for liver cell carcinoma since 2007. To further develop this drug beyond these two therapeutic areas, we have put in place a broadly based life-cycle management program in which we are currently conducting Phase III registration studies with sorafenib as an adjuvant after curative tumor resection in renal cell carcinoma and – also as an adjuvant – after curative tumor removal in liver cell carcinoma, as well as in combination with other systemically effective cancer drugs. In addition, we are conducting Phase III registration studies in non-small-cell lung cancer, thyroid cancer and breast cancer. Further tumor indications are under investigation.
In the Consumer Health segment, we raised our research and development expenditures to €392 million (2010: €382 million), or 5.4% (2010: 5.5%) of segment sales.
In our Consumer Care Division, research and development activities at the product development centers in Morristown, New Jersey, United States, and Gaillard, France, focus on the development and commercialization of non-prescription (over-the-counter = OTC) products. These activities center on supporting both existing and new brands by implementing product-specific and clinical development strategies that enable the successful exploitation of new technologies, the extension of indications for existing products or the reclassification of current prescription medicines as OTC products. We introduced a number of new product line extensions to various markets in 2011. They included Bayer™ Advanced Aspirin in the United States with a patent-pending technology that relieves pain twice as fast as our classic Aspirin™ tablet, and Citracal™ Slow Release 1200, which continuously releases calcium and vitamin D3. This innovative once-daily formulation enables the steady and therefore efficient absorption of the ingredients. Other new launches included Alka-Seltzer Plus™ Allergy and Severe Sinus Congestion Allergy and Cough in the United States.
The research and development activities of our Medical Care Division focus on blood glucose monitoring and the continuing development of medical equipment used in the diagnosis or treatment of various diseases. At the four U.S. research and development locations for our diabetes care business, the largest of which is in Tarrytown, New York, we are working to strengthen our product lines and continue expanding into attractive segments of the diabetes market. In 2011 we progressed with the launch of several innovative products in key markets to meet the specific needs of people with diabetes. Examples include Contour™ USB with integrated diabetes management software and the option of direct computer connection (plug & play), the diabetes management software Glucofacts™ Deluxe, and A1CNow™ SelfCheck, which is used to determine long-term blood glucose values (A1c).
To strengthen our position among the leading companies in the field of innovative, high-quality diagnostic imaging and interventional processes, we merged the Diagnostic Imaging unit, previously part of the Pharmaceuticals segment, with our medical equipment business to create the new Radiology and Interventional unit. The aim of our research and development activities for the medical equipment business is to steadily improve our contrast injection, thrombus removal and other vascular intervention systems in order to build on our leadership position, especially in the United States. We also intend to enter additional attractive segments such as medical data management tools for contrast injection systems, and drug-coated balloon catheters to treat vascular disease. The respective research and development centers are located near Pittsburgh, Pennsylvania, and Minneapolis, Minnesota, in the United States and in Sydney, Australia. The research center for diagnostic imaging is located in Berlin, Germany. The U.S. Food and Drug Administration (FDA) granted marketing authorization in March 2011 for Gadavist™ as a contrast agent for magnetic resonance imaging of the central nervous system. Gadavist™ is known under the brand name Gadovist™ outside the United States and is marketed in more than 60 countries worldwide.
In September 2011 we acquired Pathway Medical Technologies, Inc., United States, to strengthen our medical equipment business in the field of interventional cardiology. This company is a leading supplier of products for the mechanical removal of arterial plaque. Pathway's JETSTREAM™ systems achieve this using a minimally invasive technology without damaging healthy tissue.
The Animal Health Division focuses its research and development activities at the Monheim site in Germany on antibiotics and antiparasitics as well as active substances to treat non-infectious disorders in animals. The research activities of Animal Health were integrated into the Global Drug Discovery unit of BHC effective March 1, 2011. The advantage of the new organizational structure lies in the joint use of technology platforms and the pooling of know-how and experience in drug discovery. At the same time, Animal Health continues to collaborate with the CropScience units, especially in the area of parasitology, to leverage our status as a company with multiple life science businesses. In addition to developing new products to combat bacterial infections and parasites in companion animals and livestock, we are continuing to expand the product portfolio for the treatment of chronic kidney diseases in cats. A number of further product line extensions were registered in different markets, including products such as Veraflox™ (active ingredient: pradofloxacin) and Procox™ (active ingredients: emodepside and toltrazuril) in Europe. Veraflox™ is the first of a new generation of fluoroquinolone antibiotics for the treatment of bacterial infections in dogs and cats. Procox™ is the first combination treatment for worms and coccidia in dogs. In addition, Baytril™ 1 Inject was registered for antibiotic treatment of pigs and other livestock.
CropScience
In 2011, €723 million (2010: €722 million) in research and development expenditures, or 24.7% of the Bayer Group total, were made in the CropScience subgroup. This was equivalent to 10.0% of subgroup sales.
CropScience maintains a global network of research and development facilities employing some 4,300 people. Our largest R&D sites for crop protection products are located in Monheim and Frankfurt am Main, Germany, and in Lyon, France. The major research centers of the BioScience unit, which focuses on seed technology and breeding, are located in Ghent, Belgium; Haelen, Netherlands; and Morrisville, North Carolina, United States.
While research is carried out centrally at a small number of sites, our development and seed breeding activities take place both at these sites and at field testing stations across the globe. This ensures that future active substances and crop varieties can be tested according to specific regional requirements.
CropScience is refocusing its research and development (R&D) activities so that it can better respond to the future development of global markets. We are placing increasing emphasis on the BioScience business unit, with its seeds and traits, and on new growth areas in agrochemical research, such as plant health and stress tolerance. We plan to double our annual R&D spending in BioScience between 2010 and 2015 (2010: about €200 million) and gradually raise the annual R&D budget of CropScience as a whole by about 20 percent over the same period, to more than €850 million.
We aim to offer tailored solutions for the benefit of our customers across the entire value chain. Therefore, as part of our integrated research approach, scientists in the fields of agricultural chemistry and seed technology are increasingly collaborating to pool the knowledge acquired through chemical, biological and genetic research and field development, aligning this expertise to our long-term research objectives and business strategies for the various crops.
In the Crop Protection unit, we identify and develop innovative, safe and sustainable products for use in agriculture as insecticides, fungicides, herbicides or seed treatment products, and carry out research projects across all indications in new areas of future importance, such as plant health and stress tolerance. In addition to conventional chemistry, biology and biochemistry, modern technologies such as genetic analysis, high-throughput screening and bioinformatics play an important role in identifying new chemical lead structures. Collaborations with external partners complement our own activities.
We broaden the range of uses for our products by developing new mixtures or innovative formulations of products already on the market so that they can be applied in additional crops or be made easier to handle.
The active ingredient pipeline of Crop Protection currently comprises seven developmental projects, five of which are in late-stage and two in early-stage development. Some 30 additional projects are in the research phase.
In 2011 we successfully launched the new Xpro™ (bixafen) family of cereal fungicides, which also boost crop yields thanks to their positive effect on plant physiology. The Xpro™ technology was developed specifically for foliar application to combat speckled leaf blotch (Septoria tritici) and brown rust (Puccinia recondita). Representing a new group of active ingredients, Xpro™ is well suited as a component of resistance management.
We also commercialized Alion™ (indaziflam), a new alkylazine herbicide, for the first time in 2011. The product is characterized by a long duration of action and is effective against a broad spectrum of difficult-to-control broad-leaf weeds and grasses. Alion™ is intended for use in agricultural specialty crops, such as fruits and grapes.
We plan to launch four more promising new products during the period 2012 -2015, subject to their successful registration:
| Planned Product Launches | [Table 3.32] |
|---|
Product
(active ingredient) | Use | Planned
launch |
| Luna™ (fluopyram) | Fungicide | 2012 |
| Emesto™, Evergol™ (penflufen) | Seed treatment fungicide | 2012/2013 |
| Sivanto™ (flupyradifurone) | Insecticide | 2014/2015 |
| N.N. (triafamone) | Herbicide | 2015 |
Luna™ (fluopyram) has been developed to combat problematic plant diseases caused by fungal pathogens. It is planned to market Luna™ worldwide for foliar application and seed treatment in more than 70 crops. Key benefits are better storability and longer shelf life of harvested produce.
Emesto™ and Evergol™ (penflufen) are new seed treatment fungicides for use in a wide variety of crops. The Emesto™ product family has outstanding efficacy against the fungus genus Rhizoctonia and improves potato quality and yield. The use of Evergol™ in oilseed rape/canola, soybeans, wheat, rice, corn and cotton helps build vitality in young plants and thus improves yield potential.
Sivanto™ (flupyradifurone) is effective against sucking pests such as aphids, cicadas and whiteflies in fruits, vegetables and broad acre crops.
The new rice herbicide triafamone controls a variety of weeds, including millet and grass species, and is also suitable for pre-emergence application.
In BioScience we are conducting research to improve plant traits and are developing new seed varieties in our established core crops – cotton, canola, rice and vegetables. We have now extended our research activities to include two new core crops – cereals and soybeans. Our research and development work focuses on improving the agronomic and quality traits of these crops, such as yield potential and post-harvest quality. Examples include improving the profile of rapeseed (canola) oil or enhancing the properties of cotton fibers. We are also targeting the development of plants with high tolerance against stress factors such as extreme temperatures and drought. Further areas of focus include developing new herbicide tolerance technologies based on alternative mechanisms of action, and improving the resistance of plants to damage from insects and disease. To do this we employ modern breeding methods including plant biotechnology. Our research and development pipeline for broad acre crops presently contains more than 60 lead projects and is complemented by around 90 research agreements with public- and private-sector partners.
In 2011 we acquired Hornbeck Seed Company, Inc., United States, and the oilseed rape seed business of Raps GbR, Germany. We have also entered into important partnerships, including a global licensing agreement with DuPont, United States, for a canola herbicide tolerance trait and a license and cooperation agreement with RAGT Semences S.A.S., France, giving us access to winter wheat germplasm.
Business growth in BioScience is supported by the introduction of new varieties and traits. The following developments are of particular significance:
In 2011 we launched our proprietary glyphosate herbicide tolerance technology GlyTol™ in FiberMax™ cotton seed varieties in the United States. We also commercialized the industry's first two combined herbicide tolerant varieties featuring both GlyTol™ and LibertyLink™ technologies.
In 2012 we plan to launch new conventional oilseed rape seeds in Europe. We will also launch new soybean seed varieties in the U.S. and Brazil in 2012 to further expand our offering in this core crop.
In 2013 we plan to offer a new combined insect-resistance and herbicide-tolerance solution for cotton, featuring both TwinLink™ and GlyTol™ technologies for the first time, and also expect to launch a new hybrid canola seed line in Australia.
Starting in 2014, we plan to commercialize a number of new hybrid rice varieties with improved stress and insect resistance under the Arize™ brand.
And by 2015 we intend to offer soybean farmers in North America a groundbreaking herbicide-tolerant trait stack with a new mode of action. This product will be tolerant to both isoxaflutole and glyphosate herbicides and will provide an important resistance management tool.
We are steadily bringing new Nunhems™ vegetable seeds to market, with more than 70 varieties introduced in 2011 and a comparable number of innovations anticipated for 2012.
The Environmental Science unit tests compounds developed by Crop Protection or with external partners and evaluates them for possible non-agricultural uses. Current development projects include gels and baits to combat insect pests, herbicides, fungicides, biological solutions, and products for the control of disease-transmitting insects.
Further milestones achieved in 2011 included the market introduction of LifeNet™ mosquito nets in selected countries. New product introductions in the garden and green industry, and vegetation management segments strengthened our portfolio in the United States. June 2011 saw the introduction of Nortica™, a product with a biologically derived mechanism of action that enhances root growth and lawn resistance. Also in the U.S., we launched a number of herbicides based on the newly registered active ingredient indaziflam for weed control on golf courses, sports grounds, railroad tracks and roadways. We plan to introduce more new herbicides for professional users in 2012. In the consumer business (Bayer Garden™/Bayer Advanced™), we continued to expand the Natria™ product line, which is based on natural or nature-derived ingredients, and launched it in further European markets.
MaterialScience
In 2011, MaterialScience spent €237 million (2010: €231 million) on research and development (not including the costs of joint development activities with customers) – equivalent to 2.2% of subgroup sales. The subgroup thus accounted for roughly 8.1% of the Bayer Group's total research and development expenses.
A total of about 1,000 people were employed in research and development – some of them at the Polymer Research & Development Center in Shanghai, China, for example, which was expanded in 2011 and plays a key role in developing new products for the Asian market and enhancing Bayer's technical expertise in the region. At the same time, this local presence is aimed at more closely linking the company's research activities with customers in the emerging markets.
In the Polyurethanes business unit, the application areas for our products are being systematically broadened and their properties further improved. A key area in this respect is the construction industry, where rigid polyurethane foams serve as highly efficient heat and cold insulation materials, helping to reduce energy consumption and thereby protect the climate. Ongoing development work with our materials is aimed mainly at improving insulating properties and optimizing flame retardancy.
Polyurethanes are also used in the field of alternative energy generation, and we are working on potential applications in wind, solar and wave energy technology. Thanks to their versatility, polyurethanes help to boost the potential of renewable energies and reduce the cost of their production. Newly developed polyurethane systems offer potential advantages over existing materials in terms of mechanical strength and productivity improvements.
Another area of focus is the use of polyurethanes in light-weight construction. For many years Bayer has offered solutions based on conventional composite materials such as glass fibers, minerals and natural fibers. We are also working on particularly high-performance composites for the automotive industry based on other materials – such as carbon fibers – that help to significantly reduce vehicle weight and therefore fuel consumption. These materials are also suited for use in other sectors, such as construction and transport.
Our process development is aimed at achieving further efficiency improvements to safeguard our long-term cost leadership. The focus is on manufacturing polyurethane raw materials with minimum energy consumption and greenhouse gas emissions. We are also increasingly working on the use of renewable raw materials – and also of carbon dioxide – as feedstocks for polymers. In early 2011, for example, we started up a globally unique pilot plant in Leverkusen for producing polyether polycarbonate polyols (PPP) – a feedstock for polyurethane – with the aid of CO2.
In the Polycarbonates business unit, the main emphasis is on developing specialty products with benefits such as lower weight, increased safety or wide design freedom for new applications.
Our research activities are based on three core elements:
"Focused Innovation" means we are concentrating our resources on core fields of application such as automotive engineering and the IT sector and continuing to improve our materials for use in these areas. We are also focusing on rapidly expanding applications such as solar energy production. Our "Open Innovation" activities are aimed at developing new solutions in collaboration with external partners. The "Global Innovation" aspect ensures that strong support for our worldwide development activities is provided by our product research and development centers in Leverkusen, Germany, and Shanghai, China.
Our strategy focuses on selected development areas such as polycarbonate glazing and other light-weight solutions for the transportation sector, LED illumination management (for use in street lighting, for example), safety applications (such as safety glazing), and improvements in the cost efficiency of manufacturing processes. We also place importance on the continued development of particularly eco-friendly product grades, such as flame-retardant plastics bearing the Ecolabel of the European Union or polycarbonate blends containing recycled or bio-based materials.
In the Coatings, Adhesives, Specialties business unit, we are driving the development of raw materials for high-performance polyurethane coatings, adhesives and sealants. For example, our polyaspartic systems form the basis for sustainable and efficient coating systems for floors, wind rotor blades and large vehicles – markets that are showing strong, steady growth. We are also progressively developing eco-friendly systems based on water instead of solvents or capable of efficient radiation curing. An example of our entry into new market segments is an innovative technique for on-site coating of parquet flooring. Radiation curing enables the floor to be walked on again very soon afterwards.
In collaboration with our industrial partner KAST, Germany, and the Institute of Concrete Structures and Building Materials at Karlsruhe Institute of Technology (KIT), Bayer has developed the earthquake protection material EQ-Top™ for residential and office buildings. This system, combining glass fiber fabric with a waterborne specialty adhesive from Bayer, greatly strengthens masonry and is as easy to apply as wallpaper.
In the field of cosmetics – where we develop precursors for facial and body care, hair styling and sun protection products – the new Baycusan™ product line satisfies important demands such as the use of "green" raw materials (solvent-free formulations).
Our activities in functional films are centered partly around films based on polycarbonates or thermoplastic polyurethanes. Combining these films with additional surface technologies and modifying their properties gives rise to multifunctional or holographic films with attractive applications such as 3D flat screens or flexible displays. Another area of focus is on electroactive polymers (EAP) as a platform technology. Our research activities relate mainly to polymer films as a basis for developing alternative engine and generator concepts with partners in the industry. The acquisition of the U.S. company Artificial Muscle, Inc. in 2010 further strengthened our activities in this field. In 2011 we launched our first EAP film product under the brand name ViviTouch™ for a new application in video games. The material provides a special tactile feedback.
Bayer Technology Services
All Bayer subgroups work closely with our service company Bayer Technology Services worldwide on technology solutions, particularly in the fields of process technology, plant engineering, automation and product development. For example, this service company cooperates with MaterialScience in the development of new production processes that make efficient use of energy and raw materials, helping the subgroup to safeguard its technological and cost leadership. Examples include the new TDI production process being used for the first time at the MaterialScience site in Shanghai and the catalytic conversion of carbon dioxide to polymers. Centralized development work on technologies relevant to more than one subgroup, such as nanotechnology and biotechnology, along with expertise in mathematical simulation and statistical data analysis, helps HealthCare and CropScience to accelerate the development of new products. This also includes the development of entirely new production concepts, for example at the INVITE research center, a collaborative venture between Bayer Technology Services and Dortmund Technical University.