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Risk Report
As a global enterprise with a diverse business portfolio, the Bayer Group is exposed to numerous risks. We therefore have an appropriate risk management system in place. Apart from financial risks there are also business-specific selling market, procurement market, product development, patent, production, environmental and regulatory risks.
Legal risks exist particularly in the areas of product liability, competition and antitrust law, patent disputes, tax assessments and environmental matters. The outcome of any current or future proceedings cannot be predicted with certainty. It is therefore possible that legal or regulatory judgments or settlements could give rise to expenses that are not covered, or not fully covered, by insurers’ compensation payments and could significantly affect our revenues and earnings.
Information on the Bayer Group’s risk situation is provided in the Bayer Annual Report 2007 (see Risk Report and Legal Risks). The Bayer Annual Report 2007 can be downloaded free of charge at http://www.bayer.com/en/Annual-Reports.aspx. The following significant changes have occurred in respect of the legal risks since publication of the Bayer Annual Report 2007:
Legal risks exist particularly in the areas of product liability, competition and antitrust law, patent disputes, tax assessments and environmental matters. The outcome of any current or future proceedings cannot be predicted with certainty. It is therefore possible that legal or regulatory judgments or settlements could give rise to expenses that are not covered, or not fully covered, by insurers’ compensation payments and could significantly affect our revenues and earnings.
Information on the Bayer Group’s risk situation is provided in the Bayer Annual Report 2007 (see Risk Report and Legal Risks). The Bayer Annual Report 2007 can be downloaded free of charge at http://www.bayer.com/en/Annual-Reports.aspx. The following significant changes have occurred in respect of the legal risks since publication of the Bayer Annual Report 2007:
Antitrust proceedings in connection with polymers
As reported in the Bayer Annual Report 2007, Bayer expects that civil antitrust lawsuits for damages concerning the products rubber chemicals, butadiene rubber, styrene butadiene rubber, polychloroprene rubber and nitrile butadiene rubber will be filed against Bayer in Europe. At the end of February 2008, a group of plaintiffs who are primarily producers of tires brought an action for damages before the High Court of Justice in the United Kingdom against Bayer and other producers of butadiene rubber and styrene butadiene rubber based on alleged violations of antitrust law.
Proceedings involving contraceptives and other hormonal products
Yasmin®: In the Bayer Annual Report 2007, we reported that, in April 2005, Bayer Schering Pharma filed suit against Barr Pharmaceuticals Inc. and Barr Laboratories Inc. in U.S. federal court alleging patent infringement by Barr for the intended generic version of Bayer Schering Pharma’s Yasmin® oral contraceptive product in the United States. In June 2005 Barr filed its counterclaim seeking to invalidate Bayer Schering Pharma’s patent. In March 2008, the U.S. federal court invalidated Bayer Schering Pharma’s ’531 patent for Yasmin®. Bayer has appealed this ruling.
In March 2008 Bayer HealthCare Pharmaceuticals Inc. and Bayer Schering Pharma AG received two notices of an Abbreviated New Drug Application with a Paragraph IV certification (an “ANDA IV”) pursuant to which Watson Laboratories Inc. and Sandoz Inc. seek approval to market a generic version of Bayer Schering Pharma’s oral contraceptive Yasmin® in the United States. Bayer has filed suit against Watson and Sandoz in U.S. federal court alleging patent infringement by Watson and Sandoz for the intended generic version of Yasmin®.
YAZ®: In the Bayer Annual Report 2007, we reported that, in January 2007, Barr Laboratories Inc. filed an ANDA IV application with the U.S. FDA seeking approval of a generic version of Bayer Schering Pharma’s YAZ® oral contraceptive. In October 2007 Bayer Schering Pharma received also notice from Watson Laboratories Inc. that it has filed an ANDA IV application with the U.S. FDA seeking approval of a generic version of YAZ®. Both applications claim that Bayer Schering Pharma’s patents are invalid and/or that the respective generic product does not infringe them. Bayer has filed a patent infringement suit against Watson claiming, inter alia, that Bayer’s ’531 patent has been infringed. Bayer’s ’531 patent is also at issue in the patent infringement suit against Barr, mentioned in the previous paragraph, relating to the Yasmin® oral contraceptive. Bayer is currently evaluating the impact of the court’s decision regarding Yasmin® on YAZ®. However, regardless of the outcome of the court decision invalidating the company’s ’531 patent with regard to Yasmin®, Bayer retains marketing exclusivity for YAZ® as an oral contraceptive in the U.S. until March 16, 2009. No generic manufacturer can lawfully market a generic version of YAZ® for an oral contraceptive indication until after March 16, 2009.
The Yasmin® and YAZ® oral contraceptive products are very important to the business. Bayer is deeply committed to maintaining its leadership in oral contraception and intends to continue to vigorously defend its position.
In March 2008 Bayer HealthCare Pharmaceuticals Inc. and Bayer Schering Pharma AG received two notices of an Abbreviated New Drug Application with a Paragraph IV certification (an “ANDA IV”) pursuant to which Watson Laboratories Inc. and Sandoz Inc. seek approval to market a generic version of Bayer Schering Pharma’s oral contraceptive Yasmin® in the United States. Bayer has filed suit against Watson and Sandoz in U.S. federal court alleging patent infringement by Watson and Sandoz for the intended generic version of Yasmin®.
YAZ®: In the Bayer Annual Report 2007, we reported that, in January 2007, Barr Laboratories Inc. filed an ANDA IV application with the U.S. FDA seeking approval of a generic version of Bayer Schering Pharma’s YAZ® oral contraceptive. In October 2007 Bayer Schering Pharma received also notice from Watson Laboratories Inc. that it has filed an ANDA IV application with the U.S. FDA seeking approval of a generic version of YAZ®. Both applications claim that Bayer Schering Pharma’s patents are invalid and/or that the respective generic product does not infringe them. Bayer has filed a patent infringement suit against Watson claiming, inter alia, that Bayer’s ’531 patent has been infringed. Bayer’s ’531 patent is also at issue in the patent infringement suit against Barr, mentioned in the previous paragraph, relating to the Yasmin® oral contraceptive. Bayer is currently evaluating the impact of the court’s decision regarding Yasmin® on YAZ®. However, regardless of the outcome of the court decision invalidating the company’s ’531 patent with regard to Yasmin®, Bayer retains marketing exclusivity for YAZ® as an oral contraceptive in the U.S. until March 16, 2009. No generic manufacturer can lawfully market a generic version of YAZ® for an oral contraceptive indication until after March 16, 2009.
The Yasmin® and YAZ® oral contraceptive products are very important to the business. Bayer is deeply committed to maintaining its leadership in oral contraception and intends to continue to vigorously defend its position.
Further patent disputes
In the Bayer Annual Report 2007, we reported that Abbott Laboratories commenced a lawsuit in the United States against Bayer and another party alleging infringement of two of Abbott’s patents relating to blood glucose monitoring devices. The devices concerned are sold by Bayer as part of its Ascensia® Contour® system and its DEX® and Autodisc® system. In April 2008 the court granted summary judgement in favor of Bayer with regard to one of the two patents on the basis that the patent’s claims that were asserted by Abbott against Bayer are invalid. On the second patent, the court found that Bayer did not literally infringe Abbott’s patent, but left for trial the question of whether Bayer infringed that patent under the so-called doctrine of equivalents. A jury trial on this second patent is scheduled to begin in May 2008. Bayer believes it has meritorious defenses in this matter and intends to defend itself vigorously.
In the Bayer Annual Report 2007, we reported that Bayer has filed suit against several companies in the U.S. alleging patent infringement in connection with moxifloxacin (Avelox®). In the two proceedings still pending Bayer has reached agreement with Teva Pharmaceuticals USA, Inc., the adverse party, to settle their patent litigation with regard to the two Bayer patents. Under the settlement terms agreed upon, Teva will obtain a license to sell its generic moxifloxacin tablet product in the U.S. shortly before the second of the two Bayer patents expires in March 2014. The impact on the Avelox® business in the U.S. is expected to be immaterial. Teva acknowledges the validity and enforceability of the two Bayer patents.
At present, no potential risks have been identified that either individually or in combination could endanger the continued existence of the Bayer Group.
In the Bayer Annual Report 2007, we reported that Bayer has filed suit against several companies in the U.S. alleging patent infringement in connection with moxifloxacin (Avelox®). In the two proceedings still pending Bayer has reached agreement with Teva Pharmaceuticals USA, Inc., the adverse party, to settle their patent litigation with regard to the two Bayer patents. Under the settlement terms agreed upon, Teva will obtain a license to sell its generic moxifloxacin tablet product in the U.S. shortly before the second of the two Bayer patents expires in March 2014. The impact on the Avelox® business in the U.S. is expected to be immaterial. Teva acknowledges the validity and enforceability of the two Bayer patents.
At present, no potential risks have been identified that either individually or in combination could endanger the continued existence of the Bayer Group.
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