Bayer AG, Q1 2012 Investor Handout

1. Investor Handout
Q1 2012
April 2012 I Leverkusen

2. Disclaimer
This presentation may contain forward-looking statements based on current
assumptions and forecasts made by Bayer Group or subgroup management.
Various known and unknown risks, uncertainties and other factors could lead to
material differences between the actual future results, financial situation,
development or performance of the company and the estimates given here.
These factors include those discussed in Bayer’s public reports which are
available on the Bayer website at www.bayer.com. The company assumes no
liability whatsoever to update these forward-looking statements or to conform
them to future events or developments.
Page 2 • Investor Handout • Q1 2012

3. Bayer –
Science For A Better Life
 Market leading positions in vast majority of portfolio
 New product pipeline strength in Pharma, CropProtection & BioScience
 Strong and profitable growth in emerging markets, especially China
 Unique opportunity at the interfaces of human, animal and plant health
 Group wide excellence initiatives to further boost earnings and free-up
growth resources
 Incentive systems aligned to business specific challenges
Mid-term targets show significant further value generation potential
Page 3 • Investor Handout • Q1 2012

4. 1st Quarter 2012 –
Encouraging Start To The Year
Sales EBIT EBITDA Core EPS
in € million adjusted*
% currency & portfolio adj. in € million in € million in €
10,056 2,442
9,415 2,232
1.68
1,637 1.45
1,148
Q1’11 Q1’12 Q1’11 Q1’12 Q1’11 Q1’12 Q1’11 Q1’12
+5% +43% +9% +16%
*before special items
Page 4 • Investor Handout • Q1 2012

5. 2007 – 2011
A Period of Significant Progress
Sales (€ billion) EBITDA before special items margin* (%)
22
36.5
35.1
21.1
32.4 32.9
31.2 21 20.9 20.8 20.8
20.2
20
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
EBITDA before special items* (€ billion) Core earnings per share* (€)
6
7.6
7.1 4.83
6.9 5
6.8
6.5 4.17 4.19
4 3.80 3.64
3
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
* 2007 - 2008 from continuing operations
Page 5 • Investor Handout • Q1 2012

6. 2007 – 2011
Consistent Strong Cash Generation
Gross Cash Flow* (€ billion) Trade working capital to sales ratio (%)
5.3 40
5.2
35 31.2
4.8 4.8 30.4
4.7 29.6
30 26.4 26.4
25
20
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
Net Cash Flow* (€ billion) Net financial debt** (€ billion)
20
5.4 5.8 16 14.2
5.1 12.2
4.3 9.7
3.6 12 7.9
7.0
8
4
0
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
*2007 - 2008 from continuing operations
Page 6 • Investor Handout • Q1 2012 ** year-end data

7. 2012
–
Financial Outlook
Page 7 • Investor Handout • Q1 2012

8. Outlook 2012 –
Planning Assumptions
2011 Group sales break-down in %, growth estimates in %
Expected 2012 Global Market Development
10 % OTC-pharma
Low- to mid-single digit growth
3 % Diabetes care
low-single digit growth
27 % Rx-pharma
Mid-single digit growth, driven by
emerging markets
3 % Animal Health
Moderate growth
20 % Agrochemicals/Seeds
Positive development
15 % Others
5 % Furniture/wood 6 % Automotive
Robust growth
Ongoing recovery,
small growth
6 % Construction 5 % Electro/electronic
Ongoing recovery Robust growth
Page 8 • Investor Handout • Q1 2012

9. Fiscal 2012 Outlook Projects Further Growth
And Higher Earnings
Sales ∆ Fx and portfolio adjusted, EBITDA before special items
2011 ∆ vs. 2010 2012E
+~3% or
Sales €36.5bn +6%
~€37bn*
Adj. EBITDA €7.6bn +7% Slightly improve
Core EPS €4.83 +15% Slightly improve
*Assuming Fx rate of $1.40 per €
Page 9 • Investor Handout • Q1 2012 Outlook depends on specific planning assumptions as detailed in the Annual Report

10. Fiscal 2012 –
Guidance By Subgroup
Expect sales to increase by low- to mid-single-digit
HealthCare percentage. Plan to slightly improve adj. EBITDA .
Expect sales to remain stable or move slightly higher, and adj.
Pharma EBITDA to approx. match prior year level.
Consumer Anticipate mid-single-digit percentage growth of sales and
Health adj. EBITDA.
Plan to grow above market. Guidance (issued in February)
projects an increase of sales and adj. EBITDA by mid-single-
CropScience digit percentages. Up-date with publication of Q2 results –
depending on future business development.
Expect sales and adj. EBITDA to remain level with prior year.
MaterialScience Q2’12: Expect an improvement in sales and significantly
higher adj. EBITDA compared to Q1’12.
Sales ∆ Fx and portfolio adjusted, EBITDA before special items
Page 10 • Investor Handout • Q1 2012 Outlook depends on specific planning assumptions as detailed in the Annual Report

11. Strategic
Priorities
Page 11 • Investor Handout • Q1 2012

12. Building A World-Class Innovation
Company
Portfolio Growth Productivity
 Enhance competitive  Invest in innovation  Decomplex
position capabilities structures and
processes
 Strengthen  Maximize value of
LifeSciences new product pipeline  Implement two-year
strength group restructuring
 Intensify cooperation plan
& licensing activities  Leverage competitive
advantage of new  Further adjust
 Exploit synergy TDI gas phase business processes
potential of human, technology at MaterialScience to
animal and plant ongoing
health  Realize emerging commoditization
market opportunity
Page 12 • Investor Handout • Q1 2012

13. Two Distinct Business Models
LifeSciences MaterialScience
 Product innovation,  Process innovation,
R&D-ratio ~11% of sales capital intensive
 COGS relatively low,  COGS high (~79%)
16%
selling & distribution 31% marketing & selling
relatively high relatively low (SAARE**
 High profitability, ~11%)
adj. EBITDA-margins  Lower profitability, adj.
23-27%* 84% EBITDA margins ~11%*
 Increasing generic 69%  Few competitors, new
competition & government entrants from Asia, Middle
intervention East
 Structural risk: approvals,  Cyclical risk: demand and
meta-analysis, product Sales Adj. EBITDA supply fluctuations
liability 2011 2011
Breakdown excl. Reconciliation
Page 13 • Investor Handout • Q1 2012 *EBITDA before special items in % of sales, 2011
**Selling, administration and R&D

14. Mid-term
Targets
Page 14 • Investor Handout • Q1 2012

15. HealthCare –
Building Growth Momentum
Priority Target 2014
 Accelerate growth  HealthCare sales of ~€20bn
 Pharma: Successfully commercialize  Sales of ~€11.5bn
late-stage pipeline and realize  High-single to low-double-digit % EM
emerging markets (EM) opportunity growth
 Consumer Health: Aspire to become
 Sales of ~€8.5bn
world-leading OTC company
 HealthCare margin* of ≥28%
 Improve profitability  Pharma margin* of >30%
 Consumer Health margin* of ~25%
*EBITDA before special items to sales in %
Page 15 • Investor Handout • Q1 2012

16. CropScience –
Propelling Future Growth
Priority Target 2014 (normal market conditions)
 Above market growth  >€8bn sales
 New crop protection product sales
 Translate R&D effectively into sales
(=launched since 2006) of ~ €1.5bn
 Aspiration to grow business in-line with
 Extend BioScience footprint average of last 3 years, i.e. CAGR ~20%
p.a.
 Improve profitability  Generate adj. EBITDA* margin of ~24%
*EBITDA before special items to sales in %
Page 16 • Investor Handout • Q1 2012

17. MaterialScience –
Earn A Premium Over Cost of Capital
Priority Performance Targets
 Grow business (volume) above global
 Growth
GDP
 Defend #1 market positions in
 Leadership
polycarbonates and MDI
 Leverage competitive advantage of  Increase market share of TDI business
TDI gas-phase technology (2011: 23-24%*)
 CapEx (PPE) budget of €1.5-2bn until
 Closely monitor timing and necessity 2014
of capital investments  Expand Caojing, China site
 Establish world-scale facilities in Germany
 Earn a premium over cost of capital  CFRoI after reproduction > WACC
*by volume
Page 17 • Investor Handout • Q1 2012

18. New Incentive Scheme Reflects Business
Specific Challenges
Individual Subgroup Group
Performance + Performance + Performance
HealthCare
 Sales growth & adj.
EBITDA* margin, innovation
CropScience
Individual  Sales growth & adj.
Business EBITDA* margin; relative Core EPS
Targets performance vs. peers,
innovation
MaterialScience
 CFRoI vs. cost of capital,
process innovation
*before special items
Page 18 • Investor Handout • Q1 2012

19. Innovation
Page 19 • Investor Handout • Q1 2012

20. Pharma Pipeline –
Significant Progress Achieved Since 2011
Project Indication Peak Sales Status & Targets
Potential
Xarelto Cardiology / > €2bn  SPAF: launched (US, EU, J, others)
Anticoagulation  DVT treatment and sec. prevention: launched
 VTE prev. ORS: launched in US
 Sec. prev. ACS: filed
 PE treatment and sec. VTE prevention: filed (EU)
VEGF Trap- Ophthalmology / ≥ €1bn  Filed for wet AMD in EU and Japan
Eye Inhibition of blood  Phase III for DME and wet AMD (China) initiated
vessel growth  Positive phase III data in CRVO
Alpharadin Oncology / ≥ €1bn  CR prostate cancer: 44% improvement of OS
Targeting of bone  Fast track designation by FDA
metastases  Filing target: mid 2012
Regorafenib Oncology / ≥ €1bn  Metastatic colorectal cancer: 29% improvement of
Oral multi-kinase OS
inhibition  Fast track designation by FDA
 Filing target: 1H 2012
 Phase III study in mGIST met primary efficacy
endopoint
ACS: acute coronary syndrome; AMD: age-related macular degeneration; CR: castration refractory; CRVO:
central retina vein occlusion; DME: diabetic macular edema; DVT: deep vein thrombosis; mGIST: metastatic
Page 20 • Investor Handout • Q1 2012 gastrointestinal stromal tumor; ORS: orthopedic surgery; OS: overall survival; PE: pulmonary embolism; SPAF:
stroke prevention in atrial fibrillation; VTE: venous thromboembolism

21. Crop Protection –
Pipeline with €2bn Sales Potential
Sales in €bn from launches 2011-2015e Launches 2011–2015e*
~ 2.0 Fungicide
Seed
Treatment
Herbicide
Fungicide
Seed
Treatment
~ 0.2
Sivanto Insecticide
Peak sales
2011 potential
Triafamone Herbicide
* subject to regulatory approval
Page 21 • Investor Handout • Q1 2012

22. New LifeSciences’ Technologies Allow For A
Stronger Cross-Fertilization
From a species-oriented research … … to a multi-species research approach
Human Health Animal Health Plant Health Human Health Animal Health Plant Health
New Technologies
New Perspectives
Paradigm: Paradigm:
 Mammals and crops differ substantially from each  There is more common ground between mammals and
other crops than assumed before
► Strong silo mentality in research ► Growing interest of researchers in different species
(„cross fertilization“)
Page 22 • Investor Handout • Q1 2012

23. Opportunity
Emerging Markets
Page 23 • Investor Handout • Q1 2012

24. Emerging Markets –
Sales Growth Well Above Global Average
In € million, ∆% yoy Fx adjusted
FY2011 Group Sales by Region Emerging Economies
+5%
USA Emerging
+3% Economies¹
~5,100
+9% +12%
19%
~4,300
36%
+12%
+9%
~2,100
34% 11% ~1,800
Western Europe Others²
+4% +4%
Emerging Latin Eastern Africa &
Group €36,528m; +6% Asia³ America Europe Middle East
¹ Emerging economies include: Latin America, Asia w/o Japan, Australia,
New Zealand, Africa and Middle East incl. Turkey, Eastern Europe
² Others = Japan, Australia, New Zealand, Canada
Page 24 • Investor Handout • Q1 2012 ³ Emerging Asia = Asia w/o Japan, Australia, New Zealand

25. Emerging Markets –
All Subgroups Have Strong Foothold
FY 2011 Group sales breakdown; ∆% yoy Fx adjusted
HealthCare CropScience MaterialScience
32% 43% 42%
+10% +11% +7%
= Developed Markets = Emerging Markets1
¹ Emerging markets: Latin America; Asia/Pacific w/o Japan, Australia,
Page 25 • Investor Handout • Q1 2012 New Zealand; Africa and Middle East incl. Turkey; Eastern Europe

26. All BRIC-Countries in Our Most
Important Country Portfolio
FY 2011 sales in € billion; ∆% yoy Fx adjusted
+3%
+5%
4.0
3.0
+4%
2.0 +3%
+13%
+2% +1%
1.0 +5%
+5% +10% -2%
+15% +11% +14%
*
* Greater China includes PR China, Hong Kong, Macau and Taiwan
Page 26 • Investor Handout • Q1 2012

27. Bayer in Greater China – Key Facts
Sales Bayer FY 2011
In € million
37%
BHC
8%
China: €2,957m €2,957m
€36,528m 58% 5%
BMS BCS
Employees Sales Development
Bayer Greater China (FTE) Bayer Greater China (in € billion)
10,924
10,001
8,350 2.9 3.0
1.9 2.1
1.8
1.5
2009 2010 2011 2006 2007 2008 2009 2010 2011
Greater China: PR China, Hongkong, Macao, Taiwan
Page 27 • Investor Handout • Q1 2012

28. Efficiency
Page 28 • Investor Handout • Q1 2012

29. Restructuring Program Fully On Track
Contribution by Subgroup  Target: €800m annual cost savings by
2013
Holding & HealthCare  Reinvestment of ~50%
Admin.
~12%  One-time-charges of approx. €1bn of
~54% which €842m booked until end Q1’12
 Plans include staff reductions of 4,500
€800m
€800m
~34%  2,500 new hires in growth and
innovation, particularly in emerging
markets
CropScience Measures with €649m annualized
savings already implemented
until end Q1’12
Page 29 • Investor Handout • Q1 2012

30. Full Year 2012 –
R&D And CapEx Budgets
R&D 2012e: ~€3.0bn CapEx (PPE) 2012e: ~€1.5bn
HealthCare MaterialScience HealthCare MaterialScience
2.0bn 0.2bn 0.5bn 0.5bn
thereof
Pharma
1.5bn
8%
8% 33% 34%
CropScience
0.8bn
25%
24%
66%
67%
1%
13%
20%
Reconciliation Reconciliation CropScience
0.05bn 0.2bn 0.3bn
Page 30 • Investor Handout • Q1 2012

31. Appendix
Page 31 • Investor Handout • Q1 2012

32. Financial
Performance –
Q1 2012
Page 32 • Investor Handout • Q1 2012

33. 1st Quarter 2012 –
Encouraging Start To The Year
( ) = Fx & portfolio adjusted
Q1‘11 Q1‘12 ∆% Highlights of Financial Results
€ million € million
Sales 9,415 10,056 +7 (+5)  Organic sales growth of +5%, reported
EBIT up 43%, Core EPS +16%
EBITDA
- reported 1,866 2,377 +27  Strong start to the season at
- adjusted* 2,232 2,442 +9 CropScience, increases at HealthCare,
continuing margin pressure at
EBIT
MaterialScience
- reported 1,148 1,637 +43
- adjusted* 1,590 1,806 +14  Continued innovation pipeline progress
Net income 684 1,050 +54
NCF 801 271 -66  Outlook for 2012 reiterated
oFCF 563 15 -97
EPS
- reported 0.83 1.27 +53
- core 1.45 1.68 +16
*before special items
Page 33 • Investor Handout • Q1 2012

34. 1st Quarter 2012 –
HealthCare: Increase In All Divisions
In € million, ∆% yoy, () = Fx & portf. adjusted
Q1’12 Sales Earnings
Consumer Pharma Adj. Adj.
Health 36% +4% (+2%)
EBIT*
EBITDA*
+4% (+3%)
1,825 2,517 1,181 +4%
1,140
861 +7%
724 740 +2% 806
493 520 +5%
416 441 +6%
HealthCare €4,342m; +4% (+2%)
313 341 +9%
Price Volume Fx Portfolio
0% +2% +2% 0%
Q1‘11 Q1‘12 Q1‘11 Q1‘12
*before special items
Page 34 • Investor Handout • Q1 2012

35. 1st Quarter 2012 –
CropScience: Good Start To The Season
In € million, ∆% yoy, () = Fx & portf. adjusted
Q1’12 Sales Earnings
Environmental Crop Protection Adj. Adj.
Science 36% +16% (+15%) EBITDA* EBIT*
+5% (+3%)
187 1,937 981 +32%
861 +38%
486
745
624
BioScience
+21% (+17%)
CropScience €2,610m; +16% (+14%)
Price Volume Fx Portfolio
+1% +14% +2% -1% Q1‘11 Q1‘12 Q1‘11 Q1‘12
*before special items
Page 35 • Investor Handout • Q1 2012

36. 1st Quarter 2012 –
MaterialScience: Continuing Margin Pressure
In € million, ∆% yoy, () = Fx & portf. adjusted
Q1’12 Sales Earnings
Polycarbonates Polyurethanes Adj. Adj.
-1% (-4%) 36% +7% (+5%) EBITDA* EBIT*
706 1,443
CAS** 345
462
0% (+4%) 278 -19%
177 205
IO***
+13% (+9%)
127 -38%
MaterialScience €2,788m; +4% (+3%)
Price Volume Fx Portfolio
0% +3% +2% -1%
Q1‘11 Q1‘12 Q1‘11 Q1‘12
*before special items
Page 36 • Investor Handout • Q1 2012 **CAS: Coatings, Adhesives, Specialties
*** IO: Industrial Operations

37. 1st Quarter 2012 –
Cash Flow And Net Debt Development
Cash Flow in € million, Net Debt in € billion,
Q1’12 Cash Flow Net Debt Development
GCF NCF Invest- oFCF -€162m
cont. ments
7.0 6.9
1,595 271 256 15
∆%
y-o-y +22 -66 +8 -97
Q4´11 Q1´12
Page 37 • Investor Handout • Q1 2012