Innovation and Products

Bayer believes that product stewardship involves the comprehensive assessment of health and environmental risks along the entire value chain – from product research and development through production, product marketing and application to disposal. Here, we also take into account the precautionary principle [ @99 ] as defined by the United Nations and the European Commission.

All major elements of the Responsible Care Global Charter are addressed by our HSEQ management systems and activities. In this context, our products are continuously assessed with regard to new findings, their hazard potential and possible risks, and a suitable risk management policy is implemented that includes communication of risks. We evaluate individual products with the help of the Bayer Sustainability Check.

Our activities as regards process, plant, occupational and transport safety are described in the Employees and Ecology sections.

We are also involved internationally in associations and political initiatives for the further development of scientific risk assessment. We have compiled an online overview of our international commitment to product safety [ @104 ].

The safe handling and use of our products lie at the focus of our activities, which include in particular transparent communication and distribution of our product safety information. All subgroups compile product information enabling them to meet the respective product safety and information obligations for raw materials, intermediates or end products. This data compilation is updated accordingly whenever new legal requirements are established.

Bayer HealthCare further expanded its substance databases worldwide in 2010 to further improve the accessibility of data for the assessment of possible environmental and health hazards.

Bayer CropScience uses the “E-Label Server” to record data for all products marketed in Europe and parts of Asia, South America and Africa. In 2010, the global rollout focused on Vietnam, Thailand, Indonesia, Malaysia and the Philippines. Furthermore, the External Adverse Incident Guideline governs the internal reporting channels worldwide for incidents involving products of Bayer CropScience.

Bayer MaterialScience also maintains a global product safety database. Bayer MaterialScience is prepared to deal with potential incidents involving its products thanks to regulations covering product surveillance and recall management.

Since 2007, we have operated in accordance with the European chemicals regulation REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) [ 103 ]. This regulation revises chemicals legislation within the E.U. REACH affects all activities by Bayer as a manufacturer, importer and user. In 2010, we met the statutory deadline by registering 125 substances that we produce or import in volumes of more than 1,000 metric tons annually or that are particularly hazardous. Currenta’s Analytics Business Unit and the Toxicology and Process and Plant Safety departments play a key role in helping us to register and test these substances. Group-wide and subgroup-specific directives provide assistance in all areas in coping with the volume and complexity of the REACH policy requirements. As we also use products from other manufacturers, we require our suppliers to confirm compliance with REACH for these products. REACH also involves an authorization procedure with a substitution obligation that will lead to the replacement or prohibition of hazardous substances. The first official list of substances requiring authorization and the substances earmarked for the second list were published on February 17, 2011. The authorization process will thus be applied this year for the first time. According to the current state of knowledge, Bayer does not need to apply for any authorizations.

The Globally Harmonized System of Classification and Labeling of Chemicals (GHS) [ 105 ] came into effect in Europe in 2009 and in China and several other countries in 2010. Implementation of the GHS is coordinated at Bayer by a Group-wide working group. By the deadline of November 30, 2010, we had registered with the European Chemicals Agency (ECHA) all substances marketed by US in the European Union that require classification according to the GHS. Having notified the agency of more than 1,000 substances, we will inform the agency of all GHS-relevant mixtures by May 31, 2015.

Bayer is active in the fight against illegally marketed or counterfeit pharmaceuticals and crop protection products. Such products can present considerable dangers to people and the environment due to properties such as their uncontrolled composition. Bayer actively proceeds against product counterfeiting so as to minimize negative effects on the health and lives of unsuspecting patients, customers or users.

In the campaign against counterfeiting, Bayer HealthCare cooperates closely with the responsible authorities and is actively committed to the development of a system to combat product piracy. Through the Internet campaign “Beware of Counterfeits” [106 ] we systematically inform patients about the risks of pharmaceutical counterfeiting to protect them against the acquisition and use of pirated products. Among the information users will find here are important details on how to distinguish original products from counterfeits. The rate of counterfeit products in the crop protection market lies between 5 and 7 percent. Bayer CropScience (BCS) therefore supports the fight against illegal crop protection products both with its Product Defense Network and through the support of regional and global association committees such as the Anti Counterfeiting Expert Group of the European Crop Protection Association (ECPA) [ 107 ] and the Anti Counterfeiting Steering Committee of CropLife International (CLI) [ 108 ] . Our Product Defense Team cooperates intensively with national and international authorities, which led to numerous confiscations of counterfeit products and the prosecution of the counterfeiters in a number of countries in 2010. In connection with CLI’s “Know Your Customer” campaign, BCS launched an initiative aimed at preventing the transport of counterfeit products by more closely inspecting freight and customers in collaboration with shipping companies, among other measures.

Bayer CropScience also works not only to strengthen existing legislation, but also to expand laws and provisions dealing with the identification and confiscation of illegal crop protection products.

Here, the company supports initiatives of the ECPA and CLI aimed at providing information and training for dealers, farmers and governmental agencies through anti-counterfeiting training materials (manuals, workshops).

In 2010, BCS’s Packaging Technology Department presented a new packaging design intended to transform generic industrial packaging into Bayer-specific, counterfeit-proof packaging. Furthermore, communication of the potential risks and dangers of illegal crop protection products in the media was significantly intensified in the reporting period.

Bayer HealthCare is a health care company with global research activities that develops products in the areas of Pharmaceuticals, Consumer Care, Diabetes Care and Animal Health. These four areas account for two thirds of Bayer’s R&D expenses. Three current examples can be found in the table below.

Our research follows a long-term strategy of developing therapeutic options for currently unmet medical needs. To achieve this, we undertake to use innovative technologies responsibly. This also applies to the development of drug products to treat diseases that are both severe and very rare – also known as “orphan diseases.” Among these are the hereditary disease cystic fibrosis, which we treat with an innovative development from Bayer called the ciprofloxacin inhaler. This preparation was classified by the Food and Drug Administration (FDA) [ 109 ] as an orphan drug.

Advances in the field of biomedical research are opening up completely new possibilities for us, but at the same time they raise questions about the responsible use of new technologies and the findings they enable. This applies, for example, to pharmacogenetics, stem cell research and regenerative medicine. We address concerns and suggestions, and undertake to act ethically. Stem cells provide a beacon of hope in medicine, as they can be transformed into various cell and tissue types. Bayer HealthCare is not currently conducting research projects with embryonic stem cells and has not done so in the past. However, we are convinced that research – particularly with adult stem cells – in the field of regenerative medicine should be promoted. Scientific discoveries in this area could lead to new therapeutic solutions for serious and life-threatening diseases.

We strengthen our own research infrastructure with a global network of external partners from science and industry, thus safeguarding the long-term success of our product pipeline.

Clear and binding requirements apply not just to the research of new pharmaceuticals, but also to their manufacture and commercialization.

We continuously evaluate the benefit-risk profile of our pharmaceutical and medical products from their development until their registration and throughout their life cycles. Within the framework of the safety risk management process at Bayer HealthCare, experts from various disciplines form so-called Safety Management Teams (SMTs). These teams jointly evaluate the available data and other information on a product so as to identify possible safety risks at an early stage, build up a base of data and undertake measures to reduce these risks.

Examples of such measures include the revision of pack inserts, targeted information programs and training measures for physicians and patients. The comprehensive risk management plans are among the core tasks of the SMTs. Should further risks become known following the regulatory approval of a product, we immediately take steps to minimize them. In this connection, we employ the same process and update each respective risk management plan.

The Global Pharmacovigilance unit of Bayer HealthCare pools all safety-relevant information on our prescription medicines. This information is continuously updated and evaluated by experts. Bayer works closely with the responsible regulatory and oversight authorities at an international, national and regional level. These include the U.S. Food and Drug Administration (FDA), the European Medicines Agency (EMA) [ 111 ] and the German Federal Institute for Drugs and Medical Devices (BfArM) [ 112 ].

The Bayer HealthCare Compliance Management System also plays a key role in added safety. It describes measures aimed at permanently and continuously satisfying regulatory requirements for quality assurance in human and veterinary medicine. The observation of technical compliance standards is verified through systematic internal inspection both for all functions summarized as “global clinical development” and for production. These audits also cover contracted institutes and suppliers. Risks are systematically identified and assessed with the help of a risk management system. If process deviations, violations of the rules or quality deficiencies are established, these are analyzed on a case-by-case basis, and preventive or corrective measures undertaken. Countries and regions continuously receive support in observing pharmaceutical compliance.

The results of our risk management process and the activities derived from it help to ensure the safety of our patients and the correct use of our products, thus ensuring an optimal medical benefit-risk ratio.

As a global company with a diverse business portfolio, the Bayer Group is exposed to numerous legal risks, especially in the area of product liability.

As of April 16, 2011, there were about 8,000 lawsuits pending in the United States involving Bayer’s oral contraceptives Yasmin™ and YAZ™. The lawsuits claim that Yasmin™ and/or YAZ™ – or Ocella™ and/or Gianvi™, generic versions of Yasmin™ and YAZ™ marketed in the United States by Barr Laboratories, Inc. – had caused harm to the health of users, and in isolated cases even death. Pursuant to agreements in 2008 and 2010, Bayer manages product liability litigation for Ocella™ and Gianvi™, Bayer retains product liability for Ocella™ product supplied by Bayer with certain exceptions, and the parties have allocated potential future product liability relating to Gianvi™ product supplied by Bayer. Plaintiffs seek compensatory and punitive damages, claiming, in particular, that Bayer knew, or should have known, of these risks and should be held liable for having failed to disclose them or adequately warn users of Yasmin™ and/or YAZ™. Bayer has also been served with three putative class actions claiming economic loss, one of them also claiming personal injuries. One of these class actions, brought in federal court on behalf of all private health insurers in the United States, was dismissed with prejudice. All cases pending in U.S. federal courts have been consolidated in a multidistrict litigation (MDL) proceeding for common pre-trial management. In addition, 13 Canadian class actions have been served upon Bayer as of February 1, 2011. Additional lawsuits are anticipated. Bayer believes that it has meritorious defenses and intends to defend itself vigorously. Based on the information currently available, Bayer has taken accounting measures for anticipated defense costs.

Further examples of particular challenges in this context, such as Trasylol™, are given in our Annual Report 2010.

Within the scope of its product stewardship, Bayer HealthCare aims to pursue an adequate, risk-based and responsible approach to the issue of “pharmaceuticals in the environment.” Following the use of pharmaceuticals by patients, trace amounts of these pharmaceuticals or degradation products are excreted and in many cases can thus enter wastewater. Wastewater treatment facilities reduce or degrade these substances. However, some substances are not completely removed and can thus enter natural bodies of water. A special working group conducts tests on ecotoxicity and on the dispersal and degradation behavior of our pharmaceuticals so as to keep trace elements in the soil and groundwater as low as possible and enable risks to be closely monitored.

Bayer also participates in important research projects. One activity being undertaken with various cooperation partners, including from the water resources industry, is the European PILLS (Pharmaceutical Input and Elimination from Local Sources) [ 113 ] project, which is scheduled to run from 2007 to 2011. The PILLS partnership focuses on wastewater treatment. As it seems efficient to undertake measures at point sources where there is a high concentration of residues in wastewater, the collaboration focuses on the development of local treatment facilities for hospitals and nursing homes. Bayer HealthCare is represented on the scientific advisory committee of PILLS. The company contributes its expertise in the assessment of the ecological risks of pharmaceutical trace amounts and in the treatment of wastewater resulting from the company’s own production activities.

Bayer HealthCare has marketed products for livestock and companion animals for more than 100 years. The company today offers over 100 different products for animal health and parasite control. These products minimize the risk of transmission of possible pathogens to humans.

At Animal Health, safety and quality standards apply that are comparable to those in human medicine. Here, we focus particularly on the environmental compatibility of our products.

Through training measures and information materials, we provide veterinarians and private consumers with targeted details on the responsible use of our products. In this context, we support the initiative of EPRUMA, the European Platform for the Responsible Use of Medicines in Animals [ 114 ], and provide assistance in minimizing the risk of infectious disease among animals and thus reducing the consumption of antibiotics.

We also observe stringent guidelines in the marketing of our pharmaceutical products. As a member of the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) [ 115 ] and the European Federation of Pharmaceutical Industries and Associations (EFPIA) [ 116 ], Bayer HealthCare undertakes to observe the relevant codes. Also valid are the company’s own Corporate Compliance Policy and national ethical standards that are usually established in local industry codes such as that of the “Voluntary Self-Monitoring by the Pharmaceutical Industry” (FSA) [ 117 ] in Germany. In the event of discrepancies, we apply the more stringent code in each case.

With its global research activities, Bayer CropScience plays an important role in the development of innovative solutions for crop protection, seed treatment and non-agricultural pest control. One example in this context is the development of innovative products to tackle fungal infection in cereals. Such products, for example, prevent fungal toxins from entering the food chain.

Between 2000 and 2010, 23 new active ingredients reached market maturity. The company will continue to rely on its innovation potential in the future: by 2012, CropScience aims to introduce six new crop protection active ingredients to the market. The BioScience Business Unit is researching improved plant traits and innovative seed in a total of 60 projects. In this connection, Bayer CropScience also maintains research partnerships and collaborations that served as the basis of the new developments last year. Three examples of such developments are listed below.

The safety of our products is very important to us. This applies to both crop protection and to pest, weed and disease control in non-agricultural applications or plant biotechnology. A special task force ensures already at the research stage that activities at Bayer CropScience comply with our sustainability strategy. As the products are further developed, they are subjected to stringent and extensive testing that in turn is regulated by governmental agencies. Our toxicologists evaluate the toxicological properties of the active ingredient and its formulation, while our residue analysts determine how much product remains on the plants following proper application and how these amounts are reduced through washing or handling. Numerous further safety inspections must be completed by experts before a product is ultimately introduced to the market.

Bayer CropScience observes the International Code of Conduct on the Distribution and Use of Pesticides of the United Nations Food and Agriculture Organization (FAO) [ 118 ]. The principles of this code cover the entire life cycle of a product, from its discovery through its development to its application and beyond. Our business activities worldwide include programs and training courses to ensure that the greatest possible care is taken in the handling of crop protection agents. These programs are designed to ensure that the products of Bayer CropScience (BCS) are applied in a way that is safe for users, the environment and consumers. Bayer CropScience implements all major aspects of responsible product handling in its Product Stewardship Program [ 120 ], which is based on the principles of the company’s own Product Stewardship Policy, which is contained in a dedicated brochure.

Even beyond its core business, Bayer CropScience participates in projects targeted at added product stewardship. One current example is being implemented in Brazil, where the company has joined an initiative for sustainable sugarcane cultivation [ @121 ].

A central aspect of product safety at Bayer CropScience is the assistance we provide to our customers and partners – such as farmers, dealers and medical personnel – in the proper, safe and targeted use of our products.

The participants receive training worldwide primarily in the area of user safety. They learn about the proper use of Bayer products, the correct way to wear protective clothing and how to practice sustainable waste disposal. In 2010, for example, such training courses were held in more than 22,000 villages in India. In Colombia, around 16,000 farmers once again received training through the AgroVida program in South America. Initiatives for enhanced safety awareness have been implemented there since the 1990s.

We are also active in the development and application of technical solutions: in Europe, we have optimized application equipment (including sowing machines) to provide better protection for users and the environment. The company’s range of educational programs for product stewardship is rounded out by internal employee training measures.

Bayer CropScience also provides information about dealing with herbicide resistances through integrated weed management [ 119 ]. This approach includes important tools and strategies for farmers such as crop rotation, crop practices and field hygiene and the use of herbicides with varying principles of action.

In streamlining its portfolio, Bayer CropScience continuously launches onto the market product solutions with better environmental properties – for example by introducing new active ingredients, products, application technologies and types of packaging. We discontinued the sale of products containing endosulfan worldwide at the end of 2010. Marketing activities for aldicarb will be ceased worldwide by 2012 at the latest. Bayer CropScience will rigorously continue to successively reduce WHO Class I products. Further information on E.U.-wide requirements [ @122 ] for crop protection agents can be found online.

Bees are a vital part of the ecosystem. That is why maintaining and promoting the health of bees [ 123 ] is an important task for beekeepers, farmers, politicians, industry and society. Operating in the agricultural sector, both we and our customers – the farmers – are reliant on honey bees for the pollination of many crop plants. Therefore, even though the bee population worldwide is growing in the long term, we are very concerned about the decline of bee populations in some parts of the world, such as in Europe and the United States.

Bayer takes the huge danger that pathogens pose for bees very seriously, which is why Bayer Animal Health has been researching bee health for over 25 years. We intend to intensify our R&D activities in the years ahead to provide beekeepers with safe and effective methods for protecting their bees. With this in mind, the company recently acquired a new product to combat Varroa mites [ @124 ] [ 125 ], underscoring our commitment in this area. We also work internationally with research institutes on matters of bee health.

To ensure outstanding dressing quality for our seed products, a multi-stage quality program for seed dressing has been developed at the Seed Treatment Application Center in Monheim, Germany. Furthermore, in close cooperation with sowing machine manufacturers and in coordination with the responsible regulatory and inspection agencies, a technical retrofitting concept for sowing machines has been developed that is designed to considerably limit the spread of abrasive dust during the sowing of treated seed through a ground-level waste air duct.

These drift minimization processes developed by Bayer CropScience in collaboration with the agricultural machinery industry are setting the standard across Europe. Other regulatory authorities, such as those in Austria, Switzerland, the Netherlands and also France, are already using the corresponding concepts as a guide in approval procedures. Implemented across the board, the developed measures can sustainably minimize the unwanted spread of dust during sowing and thus reduce the burden on the environment. They are being taught to employees around the world in multi-day training courses.

In the United States, Bayer is party to multiple lawsuits in connection with genetically modified rice. The plaintiffs allege that they have suffered economic losses after traces of genetically modified rice were identified in samples of conventional long-grain rice grown in the United States. As of April 18, 2011, Bayer was aware of a total of approximately 425 lawsuits, involving about 11,800 plaintiffs, pending in U.S. courts in this connection. In the development of this rice, field testing was conducted in the United States in cooperation with third parties from 1998 to 2001. The rice was never commercialized. The U.S. authorities have stated that the genetically modified rice does not present a health risk and is safe for use in food and feed and for the environment. Since December 2009, Bayer has tried several cases in front of U.S. juries. In some cases the company was required to pay compensatory damages; in others the litigation was settled. Bayer disagrees with the verdicts against the company and will appeal the adverse findings to the extent it has not already done so. More detailed information can be found in the Annual Report 2010.

Bayer MaterialScience (BMS) works closely with customers and external partners to develop new products and applications, as well as energy-efficient technologies and production processes for polymer materials.

For example, the waste product and climate gas carbon dioxide (CO₂) could be used as an alternative raw material for high-tech materials in the future, thus replacing a proportion of the conventional fossil-based raw materials used to date. In the “Dream Production” [ @126 ] project, BMS and Bayer Technology Services are working with RWTH Aachen University and other partners to realize the catalytic conversion of CO₂ on a pilot plant scale for the first time.

We are also working intensively to further develop the production of energy from renewable sources through our materials. The current product spectrum ranges from polyurethane sheathing for solar modules with integrated assembly systems to a sandwich composite of polycarbonate sheets with solar cells. Furthermore, Bayer materials also help to substantially reduce energy consumption and thus the emission of carbon dioxide in applications such as automotive engineering or thermal insulation in buildings and refrigerated appliances.

Bayer MaterialScience is also a technological leader in the field of electroactive polymers for the consumer electronics industry. These high-tech materials are used in the development, design and manufacture of actuators and sensing components, offering unique opportunities: they provide touchscreen panels with “awareness through touch” by creating tactile feedback when the display is touched.

Through its research and applications development, Bayer MaterialScience converts scientific findings into customer-oriented business. The Innovation Community Council (ICC) was established to steer the global innovation activities of Bayer Material-Science.

Bayer MaterialScience invested €231 million in innovation in the reporting year. The areas of application range from lighting technology through traffic engineering to the plastics production of tomorrow.

Within the scope of its product stewardship and with the aim of implementing the international Global Product Strategy, Bayer MaterialScience assesses and takes steps to reduce risks for the environment and human health. This applies to the entire life cycle of chemicals used at Bayer – from production through logistics to their use, recycling and disposal.

The Product Safety Assessment compiled is based on parameters with which product safety can be determined. The assessment takes place in four steps: product prioritization, risk characterization, risk management and risk communication. The product prioritization steps are aimed at ensuring that the relevant chemicals for the characterization of the risks are identified. Depending on the scope of the identified risk potential, suitable steps are implemented to manage the risk. Such steps can include proposals for technical measures, the use of personal protective clothing or marketing restrictions. The final step involves the statutorily prescribed safety data sheets, technical information sheets and labeling.

A central role is also played by the BayCare platform [ 127 ]. A detailed and transparent description of the product safety assessment steps can be found on the “BayCare Worldwide” Internet site. Here, Bayer informs customers and other stakeholders about its measures. BayCare is being expanded step by step to include new countries and languages, with regional sites for China and Brazil going online in 2010.

Bayer MaterialScience also handles nanomaterials with a high sense of responsibility. Regarding the safe handling of innovative carbon nanotubes, we have initiated a comprehensive Product Stewardship Program. This program supports the safe handling of these materials – from production through processing and use to disposal – in all areas in which this technology is used.

We have summarized our principles for the handling of nanotechnology in the Bayer Position on Nanotechnology [ 128 ]. We support the carbon nanotube safety projects promoted by the German Ministry of Education and Research (BMBF) [ 129 ]. We also work intensively on the international harmonization of terminology and characterization at the ISO level and on the drafting of toxicological test guidelines at OECD level. Furthermore, we foster a close stakeholder dialogue with committees, associations, industry partners, customers, authorities, universities and the public.

Bayer MaterialScience now also markets its multi-wall carbon nanotubes Baytubes™ in the United States, as the U.S. Environmental Protection Agency (EPA) has granted marketing authorization for this purpose. The EPA approval represents an important milestone for the company in its endeavors to open up new areas of application together with customers. This significantly reinforces Bayer MaterialScience’s role as the world’s leading manufacturer of carbon nanotubes.

Baytubes™ can be added to polymer matrices or metal systems to improve their mechanical strength and antistatic properties. The product’s applications include rotor blades for wind turbines, battery systems, and sports equipment such as skis, hockey sticks, baseball bats and surfboards. Nanotubes are also used to modify light metals such as aluminum or magnesium and thus considerably improve their properties.

At the Chempark Leverkusen site, BMS operates a pilot plant and laboratory facility for the product and process development of carbon nanotubes. Around €22 million was invested in its planning, construction and development. The global market for carbon nanotubes is currently predicted to grow by 25 percent per year. Experts estimate that annual sales of these products will reach US$2 billion within about 10 years.

Bayer regularly seeks dialogue with its stakeholders in order to ensure the greatest possible transparency with regard to nanotechnology.

Bayer is very attentively following the scientific discussion about the chemical bisphenol A (BPA), a feedstock for various plastics. As documented by numerous extensive, scientifically validated studies that attest to the safety of BPA, we remain convinced that the safety of BPA is ensured in its existing areas of application. This assessment is consistent with evaluations by the responsible regulatory authorities in Europe, the United States, Australia, Japan and other countries. The European Food Safety Authority reiterated in September 2010 that BPA-based products can be safely used by consumers. And an independent group of experts convened by the World Health Organization also currently sees no cause to undertake specific measures to protect health in connection with BPA.

The moratoriums on the production and sale of BPA-based polycarbonate baby bottles that took effect in March and June 2011, respectively, take into account neither the scientific data nor the prevailing views of competent authorities worldwide. In addition, in response to market developments the BPA-based polycarbonate is now hardly used as a material for baby bottles in Europe anyway.

The three service companies Bayer Technology Services, Bayer Business Services and Currenta – which together employ more than 13,000 people – also contribute to new, innovative solutions with specialized services.

Bayer Business Services concentrates on IT-based services, particularly in the areas of human resources, finance and accounting. Bayer Technology Services specializes in processes and in the planning, construction and further development of facilities. The service company Currenta – a joint venture between Bayer and Lanxess – provides services in the areas of utilities, waste management, infrastructure, safety & security, analytics and vocational training. All three companies aim to design processes and technologies in a more efficient and environmentally friendly manner in keeping with our sustainability strategy. This is documented by the innovation examples listed below.