Bayer HealthCare

Key Data – HealthCare	2007	2008	Change
	€ million	€ million	%
Sales	14,807	15,407	+ 4.1
Pharmaceuticals	10,267	10,704	+4.3
Consumer Health	4,540	4,703	+3.6
Sales by Region
Europe	6,184	6,379	+3.2
North America	4,439	4,512	+1.6
Asia/Pacific	2,023	2,278	+12.6
Latin America/Africa/Middle East	2,161	2,238	+3.6
EBITDA*	3,065	3,692	+20.5
Special items	(727)	(465)
EBITDA before special items *	3,792	4,157	+9.6
EBITDA margin before special items	25.6%	27.0%
EBIT *	1,564	2,181	+39.5
Special items	(928)	(583)
EBIT before special items *	2,492	2,764	+10.9
Gross cash flow **	2,389	3,045	+ 27.5
Net cash flow **	2,010	2,259	+12.4
* for definition see “Calculation of EBIT(DA) Before Special Items” ** for definition see “Liquidity and Capital Resources”

Sales of the HealthCare subgroup rose by 4.1% in 2008 to €15,407 million (2007: €14,807 million). Adjusted for currency and portfolio effects, business expanded by 6.9%. Sales growth was driven by positive business trends in both the Pharmaceuticals and the Consumer Health segments.

EBITDA before special items of HealthCare rose by 9.6% in 2008 to €4,157 million (2007: €3,792 million). The EBITDA margin before special items came in at 27.0%, meeting the target set for the year. This increase was attributable to the pleasing business trend and the synergies realized from the Schering integration. Earnings growth was held back by negative currency effects and appreciably higher marketing expenses for the expansion of our activities in emerging markets and the introduction of new products. EBIT before special items came to €2,764 million, up 10.9% from the prior-year level of €2,492 million. The net special charges of €583 million (2007: €928 million) resulted mainly from expenses relating to the acquisition and integration of Schering AG, Berlin, Germany, litigations and asset write-downs. EBIT jumped by 39.5% to €2,181 million (2007: €1,564 million).

Pharmaceuticals

Key Data – Pharmaceuticals	2007	2008	Change
	€ million	€ million	%
Sales	10,267	10,704	+4.3
Primary Care	3,055	3,113	+1.9
Women’s Healthcare	2,630	2,873	+9.2
Diagnostic Imaging (including Medrad)	1,298	1,323	+1.9
Specialized Therapeutics	1,253	1,364	+8.9
Hematology/Cardiology	1,033	896	-13.3
Oncology	754	885	+17.4
Dermatology (Intendis)	244	250	+2.5
Sales by Region
Europe	4,367	4,403	+0.8
North America	2,862	2,966	+3.6
Asia/Pacific	1,659	1,867	+12.5
Latin America/Africa/Middle East	1,379	1,468	+6.5
EBITDA*	2,108	2,657	+26.0
Special items	(699)	(423)
EBITDA before special items *	2,807	3,080	+9.7
EBITDA margin before special items	27.3 %	28.8 %
EBIT *	741	1,294	+74.6
Special items	(900)	(541)
EBIT before special items *	1,641	1,835	+11.8
Gross cash flow **	1,685	2,220	+31.8
Net cash flow **	1,451	1,627	+12.1
* for definition see “Calculation of EBIT(DA) Before Special Items” ** for definition see “Liquidity and Capital Resources”

Sales of our Pharmaceuticals segment increased by 4.3% in 2008 to €10,704 million (2007: €10,267 million). Adjusted for currency and portfolio effects, sales rose by 7.1%.

Best-Selling Pharmaceutical Products	2007	2008	Change	Currency- adjusted change
	€ million	€ million	%	%
YAZ®/Yasmin®/Yasminelle® (Women’s Healthcare)	1,042	1,222	+17.3	+22.2
Betaferon®/Betaseron® (Specialized Therapeutics)	1,028	1,144	+11.3	+15.0
Kogenate® (Hematology/Cardiology)	818	848	+3.7	+7.3
Adalat® (Primary Care)	614	626	+2.0	+3.9
Avalox®/Avelox® (Primary Care)	445	462	+3.8	+7.8
Nexavar® (Oncology)	270	462	+71.1	+75.7
Mirena® (Women’s Healthcare)	361	462	+28.0	+35.5
Levitra® (Primary Care)	332	341	+2.7	+7.0
Cipro®/Ciprobay® (Primary Care)	383	338	-11.7	-8.9
Glucobay® (Primary Care)	298	304	+2.0	+1.8
Aspirin Cardio® (Primary Care)	229	270	+17.9	+19.6
Ultravist® (Diagnostic Imaging)	235	261	+11.1	+16.5
Magnevist® (Diagnostic Imaging)	301	241	-19.9	-17.4
Iopamiron® (Diagnostic Imaging)	211	199	-5.7	-10.1
Diane® (Women’s Healthcare)	175	164	-6.3	-3.6
Total	6,742	7,344	+8.9	+12.4
Proportion of Pharmaceuticals sales	66 %	69 %

Sales of the Primary Care business unit expanded by 1.9% to €3,113 million (2007: €3,055 million). On a currency-adjusted (Fx adj.) basis, business was up by 4.2%, thanks largely to increases for Aspirin Cardio® (Fx adj. +19.6%), info

Avalox®/

Avelox® (Fx adj. +7.8%) and info

Levitra® (Fx adj. +7.0%). The cholesterol-lowering drug info

Zetia® (Fx adj. +147%), launched on the Japanese market in summer 2007, also contributed to the upward trend. Sales of info

Cipro®/

Ciprobay® fell significantly in Europe due to generic competition but rose in the United States following the signing of a two-year contract with the U.S. government.

The Women’s Healthcare business unit saw sales increase by a substantial 9.2% to €2,873 million (2007: €2,630 million). On a currency-adjusted basis, business expanded by 13.6%. Sales of the intra-uterine system info

Mirena® developed very well (Fx adj. +35.5%), due particularly to higher unit sales in the United States. While business with the older oral contraceptive product info

Diane® continued to decline (Fx adj. -3.6%), sales of ourYAZ®/ info

Yasmin®/

Yasminelle® line of oral contraceptives registered another strong increase (Fx adj. +22.2%). Sales of the info

YAZ® product family as a whole gained at about the same rate in the United States too, despite the launch of a generic competitor for Yasmin®. The market introduction of Yaz® in Europe began in September 2008.

Sales of our Diagnostic Imaging business unit moved ahead by 1.9% in 2008 to €1,323 million (2007: €1,298 million). The 2008 figure includes the sales of U.S.-based thrombectomy systems supplier Possis Medical, Inc., acquired in April. Adjusted for currency and portfolio changes, sales rose by 1.7%. Our medical appliances business (Medrad) continued its positive prior-year performance, with sales advancing by a currency- and portfolio-adjusted 7.5%. Sales of info

Magnevist® declined (Fx adj. -17.4%), due partly to a shift toward info

Gadovist® in Europe. Business with info

Ultravist® (Fx adj. +16.5%) developed very well, especially in China and France. Sales of info

Iopamiron® were hampered by a government-imposed price reduction in Japan.

The Specialized Therapeutics business unit grew sales by a substantial 8.9% to €1,364 million (2007: €1,253 million). Adjusted for shifts in exchange rates, business expanded by 12.2%. This gratifying performance was due especially to the successful marketing for our multiple sclerosis drug info

Betaferon®/ info

Betaseron® (Fx adj. +15.0%).

In the Hematology/Cardiology business unit, sales fell by 13.3% to €896 million (2007: €1,033 million), or by 9.6% when adjusted for currency and portfolio effects. This decline was attributable to the worldwide suspension of marketing for Trasylol® in November 2007, sales of this product in 2007 having amounted to €103 million. Business with our blood coagulation factor info

Kogenate® showed pleasing growth (Fx adj. +7.3%). At the end of 2008 we already commenced marketing activities for our new anti-thrombosis drug info

Xarelto® in 19 countries.

Our Oncology business unit saw sales grow by a substantial 17.4% to €885 million (2007: €754 million). After adjusting for currency changes, business expanded by 20.9%. This positive performance was attributable to the significant gains made by info

Nexavar® (Fx adj. +75.7%), which more than offset slight declines for other products. We received new or extended marketing authorizations for the cancer drug Nexavar® in numerous countries during 2007 and 2008.

Sales of our Dermatology business (Intendis) advanced by 2.5% in 2008 to €250 million (2007: €244 million). The currency-adjusted increase came to 4.7%.

EBITDA before special items of the Pharmaceuticals segment rose by 9.7% in 2008 to €3,080 million (2007: €2,807 million). This increase was due especially to the realization of planned synergies from the integration of Schering, Berlin, Germany, as well as to the gratifying business trend. The considerable business growth more than offset higher marketing costs, which were incurred mainly in connection with the expansion of our Primary Care business in China and the launch of YAZ®, Xarelto® and Nexavar®. EBIT before special items advanced by 11.8% to €1,835 million (2007: €1,641 million). Of the net special charges of €541 million, expenses related to the acquisition and integration of Schering accounted for €365 million. In addition, we discontinued marketing of the former Schering product Vasovist® and terminated clinical development for Spheramine®. We also incurred special charges in connection with the suspension of marketing for Trasylol®. EBIT climbed by a substantial €553 million to €1,294 million (2007: €741 million).

Consumer Health

Key Data – Consumer Health	2007	2008	Change
	€ million	€ million	%
Sales	4,540	4,703	+3.6
Consumer Care	2,634	2,770	+5.2
Diabetes Care	950	970	+2.1
Animal Health	956	963	+0.7
Sales by Region
Europe	1,817	1,976	+8.8
North America	1,577	1,546	-2.0
Asia/Pacific	364	411	+12.9
Latin America/Africa/Middle East	782	770	-1.5
EBITDA*	957	1,035	+8.2
Special items	(28)	(42)
EBITDA before special items *	985	1,077	+9.3
EBITDA margin before special items	21.7%	22.9%
EBIT *	823	887	+7.8
Special items	(28)	(42)
EBIT before special items *	851	929	+9.2
Gross cash flow **	704	825	+17.2
Net cash flow **	559	632	+13.1
* for definition see “Calculation of EBIT(DA) Before Special Items” ** for definition see “Liquidity and Capital Resources”

Our Consumer Health segment improved sales by 3.6% to €4,703 million (2007: €4,540 million). After adjusting for currency and portfolio effects, the increase came to 6.3%, with all divisions contributing similarly to growth.

Best-Selling Consumer Health Products	2007	2008	Change	Currency- adjusted change
	€ million	€ million	%	%
Contour®* (Diabetes Care)	488	554	+13.5	+18.4
Aspirin®** (Consumer Care)	460	449	-2.4	+1.2
Advantage® product line (Animal Health)	314	329	+4.8	+11.1
Aleve®/naproxen (Consumer Care)	239	220	-7.9	-1.4
Canesten® (Consumer Care)	182	200	+9.9	+16.1
Bepanthen®/Bepanthol® (Consumer Care)	145	173	+19.3	+20.7
Baytril® (Animal Health)	156	152	-2.6	+1.6
Breeze®* (Diabetes Care)	152	145	-4.6	-0.5
Supradyn® (Consumer Care)	134	140	+4.5	+6.8
One-A-Day® (Consumer Care)	130	138	+6.2	+13.8
Total	2,400	2,500	+4.2	+9.0
Proportion of Consumer Health sales	53%	53%
* previously included with the Ascensia® product family ** total Aspirin® sales = €719 million (2007: €689 million), including Aspirin Cardio®, which is reflected in sales of the Pharmaceuticals segment

In the Consumer Care Division, sales advanced by 5.2% to €2,770 million (2007: €2,634 million). The increase came in part from the calcium supplement info

Citracal® acquired in October 2007, the Sagmel business in eastern Europe acquired in June 2008 and, since September 2008, the Topsun acquisition in China. Sales rose by 6.2% on a currency- and portfolio-adjusted basis. info

Bepanthen®/ info

Bepanthol® (Fx adj. +20.7%), info

Canesten® (Fx adj. +16.1%) and info

One-A-Day® (Fx adj. +13.8%) developed particularly well.

Sales of our Diabetes Care Division rose by 2.1% to €970 million (2007: €950 million). After adjusting for shifts in exchange rates, the increase came to 6.4%. The blood glucose monitoring systems of our info

Contour® product line performed very well in the market, with sales up by a currency-adjusted 18.4%. This growth was partly due to substitution of the older Elite® systems, sales of which declined by a currency-adjusted 26.5%. Also contributing to the positive business performance of Diabetes Care was our Contour® TS product line, launched in the second half of 2007, which generated sales of €25 million in 2008 (2007: €4 million).

Animal Health recorded sales of €963 million (2007: €956 million). On a currency-adjusted basis, business expanded by 6.4%. Our info

Advantage® product line for flea and tick control performed particularly well (Fx adj. +11.1%). We also benefited from higher sales of our Drontal® line of dewormers (Fx adj. +5.5%).

EBITDA before special items of our Consumer Health segment improved by 9.3% to €1,077 million (2007: €985 million) due chiefly to the favorable business development in all divisions. EBIT before special items moved ahead €78 million to €929 million (2007: €851 million). After special charges of €42 million related to litigations, EBIT advanced by 7.8% to €887 million (2007: €823 million).