The Bayer Group is focusing on the fast-growing, innovation-driven health care, nutrition and high-tech materials businesses in line with its mission statement: “Bayer: Science For A Better Life.” By strategically aligning ourselves to these attractive markets and concentrating on our core competencies, we aim to invest more intensively in growth areas and innovative technologies in order to achieve a leadership role or expand our already strong market positions. We will also press ahead with cost-containment and efficiency-improvement efforts in order to further increase the company’s value over the long term. For a detailed description of our financial strategy, please consult the Liquidity and Capital Resources section.

Bayer HealthCare
Bayer HealthCare’s goal is to match or exceed market growth in all divisions.

Our biggest HealthCare division, Pharmaceuticals, comprises both Specialty Care and Primary Care activities. In addition to products emerging from our own research and development laboratories, our strategy for strengthening our portfolio also includes inlicensing and life cycle management. We also regularly examine options for expanding our business through collaborations or acquisitions.

Our primary goal in Specialty Care, which concentrates on the growth and development indications oncology and hematology/cardiology, is the global expansion of our business. In this field, which is characterized by a high demand for innovation, Bayer offers a number of successful products, such as Kogenate® and Trasylol®, and promising new brands and development projects, such as Nexavar® and the Factor Xa inhibitor BAY 59-7939. The introduction of Nexavar® in the United States at the end of 2005 for the treatment of renal cell carcinoma was an important step in strengthening our pharmaceutical specialties business.

Our Primary Care business offers products for general practitioners, such as our young Levitra® brand and more established brands like Adalat®, Avelox®, Cipro® and Glucobay®. While we have formed a marketing alliance with Schering-Plough in the United States, we handle business in the other regions ourselves. Here we aim to further strengthen our activities through targeted inlicensing.

The goal of our Consumer Care Division is to expand our leading position in the OTC market. Following the successful integration of Roche Consumer Health, we aim to fully exhaust the growth potential of our well-known brands such as Alka-Seltzer®, Aspirin®, Bepanthen®, One-A-Day® and Rennie® through intensive marketing and product management. We also plan to further expand our position through external growth.

Our Diagnostics Division is working toward taking a place among the world’s leading suppliers. Here we are focusing on the immunoassay, clinical chemistry and molecular testing market segments. Our strategy is focused on achieving growth by reaching new customer groups and offering cost-effective system solutions and services. We are also investing in the expansion of our position in growing markets such as Asia.

Our Diabetes Care Division aims to expand its competitive position in the area of blood glucose measurement. To this end, we are expanding our product range by developing new measurement systems and test strips to enable even more user-friendly blood sugar monitoring for diabetics. We intend to enhance our competitiveness through cost-containment measures and the more efficient use of our resources. Our strategy also includes increasing our expertise through strategic partnerships.

In the Animal Health Division we aim to become a preferred partner and solutions provider. Our strategy is directed primarily at strengthening the division through organic growth and the focus on attractive markets. In order to supplement our product range, Animal Health regularly evaluates options for acquisitions or strategic alliances.

Bayer CropScience
The Bayer CropScience subgroup, which is comprised of the Crop Protection and Environmental Science, BioScience segments, aims to strengthen its leading market position. Here we plan to further develop our existing portfolio in order to achieve sustained profitable growth. We will evaluate external growth options particularly in the Environmental Science, BioScience segment. Bayer CropScience intends to achieve its earnings targets primarily by introducing new products, keeping tight control on costs and consolidating its portfolio. We aim to further increase efficiency in all areas of Bayer CropScience through cost-containment and the improvement of internal business processes.

Our Crop Protection segment is committed to defending its leading market position. Here we are relying in particular on our strong global presence and on our innovative portfolio of high-performance insecticides, fungicides, herbicides and seed treatment products. We are also focusing on the continuous introduction of new products from our research and development pipeline and on consistent life cycle management.

Environmental Science is one of the world’s leading suppliers of non-agricultural pest control products. Our goal is to further expand this market position by developing and marketing high-quality products. We also aim to build strong partnerships with our customers and offer made-to-measure, customer-oriented innovations that generate strong brand loyalty.

BioScience is internationally active in seed research, development and marketing. The business unit offers solutions based on plant biotechnology and breeding, concentrating on canola, cotton, rice and vegetables. We also develop innovative, plant-based materials for applications in health care, biomaterials and nutrition.

Bayer MaterialScience
The Bayer MaterialScience subgroup aims to further expand its global market position. Here we are relying in particular on our technological know-how, new applications for our products and the targeted expansion of our presence in the growth markets of Asia.

Our portfolio is focused mainly on polycarbonates and polyurethanes. Here we concentrate on world-scale facilities featuring state-of-the-art technology, and pursue an organic growth strategy. In addition to our activities in the growth market of China, we constantly evaluate business options in other regions in order to expand our market coverage.

We rely on products and applications emerging from our R&D laboratories for the further development of our businesses. To access innovative markets, Bayer MaterialScience identifies new technology and market trends, evaluates them and transfers the most promising ideas to research and development projects. We also support our growth strategy by examining strategic partnerships and opportunities for forward integration.