Management Report

Performance by Subgroup and Segment

Corporate structure

Bayer AG, headquartered in Leverkusen, Germany, is the strategic management holding company for the Bayer Group. Business activities are conducted by the HealthCare, CropScience and MaterialScience subgroups, which are supported by service companies.

We have implemented a number of organizational changes that affect our segment reporting effective January 1, 2009 as described below. The prior-year figures have been restated accordingly.

MaterialScience is reported as a single segment. The Thermoplastic Polyurethanes (TPU) business unit has been dissolved. The TPU granules business has been integrated into the Polyurethanes business unit, while the TPU films activities now form part of the Coatings, Adhesives, Specialties business unit (Functional Films). In light of organizational changes, the non-core businesses previously reported as “Other Systems” are reported under Industrial Operations.

We have also made organizational changes in the HealthCare subgroup. Our dermatology business (Intendis) is no longer part of the Pharmaceuticals segment, but has been integrated into the Consumer Care Division within the Consumer Health segment. The Diabetes Care Division has been combined with our medical equipment business Medrad – which previously formed part of the Diagnostic Imaging business unit in the Pharmaceuticals segment – to create the Medical Care Division. In the Pharmaceuticals segment we now conduct our business in the General Medicine (formerly Primary Care and Cardiology), Specialty Medicine (formerly Specialized Therapeutics, Oncology and Hematology), Women’s Healthcare and Diagnostic Imaging business units.

The commentaries in this report relate exclusively to continuing operations, except where specific reference is made to discontinued operations or to a total value.

Key Data by Subgroup and Segment, 3rd Quarter
	Sales		EBIT before special items*		EBITDA before special items*		EBITDA margin before special items*
	3rd Quarter 2008	3rd Quarter 2009	3rd Quarter 2008	3rd Quarter 2009	3rd Quarter 2008	3rd Quarter 2009	3rd Quarter 2008	3rd Quarter 2009
	€ million	€ million	€ million	€ million	€ million	€ million	%	%
HealthCare	3,802	3,936	703	786	1,018	1,141	26.8	29.0
Pharmaceuticals	2,474	2,548	444	475	700	765	28.3	30.0
Consumer Health	1,328	1,388	259	311	318	376	23.9	27.1
CropScience	1,248	1,140	78	(16)	207	108	16.6	9.5
Crop Protection	1,067	973	88	12	197	118	18.5	12.1
Environmental Science, BioScience	181	167	(10)	(28)	10	(10)	5,5	(6.0)
MaterialScience	2,549	2,038	138	100	255	238	10.0	11.7
Reconciliation	349	278	(28)	(33)	13	12	3.7	4.3
Continuing operations	7,948	7,392	891	837	1,493	1,499	18.8	20.3
2008 figures restated * for definition see chapter “Calculation of EBIT(DA) Before Special Items”

Key Data by Subgroup and Segment, First Nine Months
	Sales		EBIT before special items*		EBITDA before special items*		EBITDA margin before special items*
	First Nine Months 2008	First Nine Months 2009	First Nine Months 2008	First Nine Months 2009	First Nine Months 2008	First Nine Months 2009	First Nine Months 2008	First Nine Months 2009
	€ million	€ million	€ million	€ million	€ million	€ million	%	%
HealthCare	11,267	11,824	2,005	2,237	3,062	3,314	27.2	28.0
Pharmaceuticals	7,357	7,769	1,279	1,521	2,167	2,404	29.5	30.9
Consumer Health	3,910	4,055	726	716	895	910	22.9	22.4
CropScience	5,030	5,112	1,031	975	1,421	1,342	28.3	26.3
Crop Protection	4,215	4,247	910	833	1,239	1,152	29.4	27.1
Environmental Science, BioScience	815	865	121	142	182	190	22.3	22.0
MaterialScience	7,683	5,504	672	(185)	1,034	243	13.5	4.4
Reconciliation	1,015	856	(72)	(72)	57	60	5.6	7.0
Continuing operations	24,995	23,296	3,636	2,955	5,574	4,959	22.3	21.3
2008 figures restated * for definition see chapter “Calculation of EBIT(DA) Before Special Items”