(Please check against delivery)


Ladies and gentlemen,

In our hectic and dynamic world of digital networks and electronic data streams, plants seem almost to be pristine. It feels like something as tangible and uncomplicated as seed has been around self-evident for thousands of years. From the lay-person's perspective there doesn't appear to be much change in this aspect of life. But this impression is deceptive. In our BioScience business unit, around 1,000 scientists and breeders all over the world are using state-of-the-art methods to study crop plants and to refine them continuously.


(2009-1515e-1)

I want to start today by giving you a brief insight into this world of plant biotechnology. I will then talk about our BioScience business, and will conclude by going into more detail about our plans for expanding this business in the coming years and the targets that we have set ourselves.


(2009-1515e-2)

Our researchers are continuing a tradition that has existed for thousands of years. People have been modifying the plant world by selecting and specifically breeding plants ever since mankind began growing food. Healthy plants are the basis of all technical and cultural progress. Human life is dependent on plants in every sense of the word. Without them, all the wonders of modern science and technology would be pointless. Plants are the basis of the air that we breathe and the food that we eat; mankind would not have been evolved and could not survive without them. Nowadays an adequate supply of low-cost food is taken for granted in many parts of the world – but in others the situation is just the opposite.


(2009-1515e-3)

People have forgotten how extensively human intervention over the course of the millennia has modified plants and in some instances has completely redesigned them. Our ancestors did not eat kohlrabi or Brussels sprouts – both are plants that have been bred from wild cabbage. Evolution is toiling tirelessly too, forcing plants to adapt to their environment and making weeds and insect pests more resistant. Our crops have lost the components that enabled their wild ancestors to protect themselves, and today would not survive long without human care. A constant effort has to be made to protect crops and to adapt them repeatedly to changing conditions.


(2009-1515e-4)

In this scheme of things, modern plant breeding is becoming increasingly important for global agriculture and for Bayer CropScience too. We use the full spectrum of possibilities that this science offers. This includes the development of high-yielding hybrid varieties and a technique known as smart breeding, which makes breeding faster and more targeted. It also includes genetic modification, in which genes are selective transposed and which has become an important breeding tool. All these techniques and our classical breeding efforts pursue the same objectives: to protect harvests from disease, pests and weeds, to increase yields, and to improve the plants.


(2009-1515e-5)

Genetic modification is becoming increasingly firmly established outside Europe. Genetically modified plants have been cultivated worldwide on a major scale for the past 13 years or so, and are currently being grown on some 125 million hectares of land. That's almost one tenth of all the land being used for agriculture. More than 13 million farmers – and not just large operations but also small-scale farmers in Asia and Africa – are counting on seed produced using modern plant biotechnology.

The cultivation of many types of genetic modified crops is standard today; examples include soybeans, corn, cotton and canola. But there are also genetically modified varieties of less extensively grown crops, such as cucurbits, lucerne, sugar beet, tomatoes, poplars and papaya, and developments are moving ahead at a tremendous pace.

But the obstacles are clear to us as well. Not all the hopes and expectations placed in genetic modification 20 years ago have been fulfilled. It is already very successful in major segments such as protection against insect pests; but other goals have proven more difficult to achieve, such as the development of drought-resistant plants or plants with more efficient fertilizer uptake.

Yet we urgently need further progress if we are to counter the impact of population growth, climate change and desertification. It's something that requires perseverance, and we are gradually getting closer to our objectives: with plants that are resistant to attack by fungi, viruses and nematodes; with plants that are better adapted to unfavorable growing conditions such as salty and karstified soil. In the past 20 years we have learnt an enormous amount about the ways in which plants cope with adverse environmental conditions and defend themselves against pests – and about how complex these organisms, which look so simple on first sight, really are. This is why we are confident that our technologies will enable us to make a major contribution to the agriculture of the future.


(2009-1515e-6)

Up to now, our activities in the BioScience business unit have focused on our four core crops: cotton, canola, rice and vegetables.


(2009-1515e-7)

We market top-quality seed from our in-house research for these crops. We are experiencing high growth rates in our four core crops and have achieved a strong position in these sectors worldwide.


(2009-1515e-8)

For example, sales of our strongest-selling crop – canola, the type of oilseed rape grown in North America – expanded by an average of more than 20 percent annually between 2002 and 2008. We are the market leader in North America with InVigor® hybrid canola varieties. They offer direct advantages not only for farmers – such as yield which is reliably higher than that produced by other comparable seed varieties – but also for consumers in the form of InVigor® Health, the oil profile of which is particularly healthy. These "specialty oils" enable us to offer our partners in the value-added chain solutions tailored to their needs and applications.

With significant investments, we are seeking to expand our canola business in the medium term in additional countries and are researching intensively to develop this crop further.


(2009-1515e-9)

Our second-biggest crop is cotton, the world's most important textile plant. Here Bayer CropScience has boosted sales in recent years by an average of 25 percent. We are the number 1 in cotton seed worldwide and in the United States. We strengthened our cotton business substantially when we acquired the U.S. cotton seed producer Stoneville two years ago. An increasing number of products of our own research are now reaching the market. One major step over the next year will be the introduction of our new herbicide-tolerant cotton varieties in the United States, which will further increase the herbicide options for growers. We believe that this business will remain attractive even if the public's attention is currently focused on plants primarily used for food production.


(2009-1515e-10)

Our fastest-expanding segment is our hybrid rice seed business, which is recording year-on-year growth averaging 38 percent. Among the multinational companies, we are the global leader in this segment by a wide margin. This rice is a good example of the advantages offered by modern seed breeding. Our Arize® hybrid rice is a high-performance plant and produces yields more than 30 percent higher than those of conventional inbred rice varieties. Rice growers can recoup the higher cost of this higher-quality seed between three- and six-fold. Last year we successfully introduced Arize® Dhani, which is resistant to a much-feared leaf disease. We will continue to improve our hybrid rice varieties with further traits of this kind to increase their tolerance of flooding and excess salinity in the soil, for example.


(2009-1515e-11)

We are continuously expanding our vegetable franchise, the fourth main focus of our business, as well. We rank fourth worldwide in this segment. The tremendous increase in our knowledge of plants that has been gained through molecular biology also assists in the breeding of vegetables. In this segment we are working to continuously improve the flavor, nutrient value and cultivation and processing properties of our 2,500 conventional vegetable varieties. Our Intense™ tomato, for example, combines resistance to fungi and viruses during cultivation with very good processing properties, and has been awarded two coveted innovation prizes for this achievement. Other examples of the progress that our breeders have made include melons with enhanced flavor and particularly high-yielding cucumber plants – advantages which benefit growers, the food chain and consumers directly. We are aiming to expand our vegetable business on a regional basis, with special emphasis on the Asia-Pacific region.


(2009-1515e-12)

We have a global presence with our four core crops: primarily in North America with canola, in North and Latin America, India and southern Europe with cotton, in Asia and, starting this year, the United States with hybrid rice, and in over 100 countries worldwide with our vegetable varieties. We want to continue expanding this portfolio on a regional basis, and we also want to expand our BioScience business to include additional crops.


(2009-1515e-13)

The market for seed and plant traits is not only interesting right now; it is set to grow constantly in the coming years. We expect this market to expand by an average of 6 percent or so annually through 2025.


(2009-1515e-14)

This means an increase from roughly EUR 18 billion in 2008 to EUR 32 billion in 2018 and around EUR 47 billion in 2025.

As in previous years, North America will play the dominant role here, while the significance of the developing countries and emerging economies is growing at the same time. We are currently active in about one quarter of the seeds and traits market. In the future we want to offer an expanded portfolio of products that will serve around one half of this market directly. We will enable our innovations to move into the other market segments by out-licensing our traits, and will thus profit from growth in these areas too.

Our goal is for our BioScience business unit to grow roughly twice as fast as the market in the next few years.


(2009-1515e-15)

We are charting a consistently good course despite the global economic crisis. In the first six months of this year our BioScience business grew 17 percent, accelerating the growth recorded in previous years. Our sales target for 2018 is roughly EUR 1.4 billion – about three times our current level. Major growth drivers include the introduction of new varieties, regional expansion, seizing the potential of our plant traits through out-licensing, and expansion of our portfolio to include other crops.

This growth is in part the result of our substantial spending on research and development, investment in facilities, and acquisitions. Our investment budget is equivalent to 27 percent of sales, making it one of the most generous in the global agricultural industry. And we will continue to invest systematically in the expansion of our business. One of the constant main focuses will be research and development, and we will be expanding our network of worldwide research locations.


(2009-1515e-16)

In the United States, our second BioScience focused innovation center will be opening in a few weeks in Morrisville, North Carolina. This center is important for our presence in the North American market and will complement activities being pursued at our European center in Ghent, Belgium. In August we inaugurated one of the world's most modern canola research and breeding stations in Saskatoon, western Canada. In addition, we operate a total of 80 breeding and field stations worldwide.

Further research and development activities are pursued through a number of cooperation agreements with companies and institutes in the public sector.


(2009-1515e-17)

This year we have continued to expand our cooperation efforts and so far have concluded ten new large research agreements and some smaller ones with biotech facilities in China, Israel, Canada and the United States. These cooperations will enlarge the "toolbox" available to our researchers and breeders by adding new findings and processes, but they are also of strategic importance. They are designed to expand our business in the four core crops and beyond.

In July we concluded a long-term, wide-ranging cooperation agreement with the Commonwealth Scientific and Industrial Research Organization, or CSIRO for short, based in Canberra, Australia – one of the most important research institutes in the world.


(2009-1515e-18)

Together we want to develop new cereal varieties, with an emphasis on wheat. Wheat is grown on more agricultural land worldwide than any other crop. Bayer CropScience's is the world leader in wheat crop protection and we are familiar with the problems associated with this crop and with wheat farmers' requirements.

We want to develop a joint world-class research and development platform for cereals. The focus will be on improved yields, enhanced tolerance, and better nutrient uptake by plants. This cooperation with CSIRO commits Bayer CropScience to cereals as a further core crop in its BioScience business. New products for wheat could be available from 2015. We want to offer integrated solutions from sowing to harvest for this crop too.

This alliance is an outstanding example of our intensive collaboration with the public sector. Public-sector investment in agricultural research has plummeted in the past few decades. Yet the challenges facing agriculture as a result of population growth and climate change are too big for individual players to handle. This is the context in which we are seeking a partnership-based exchange with experts worldwide.

Licensing agreements are a further important element in the expansion of our business.


(2009-1515e-19)

Licensing agreements provide companies with access to our technologies, enabling them to incorporate these technologies into crops that we do not market. The growing resistance manifested by weeds, for example, is making our LibertyLink® herbicide-tolerance technology an increasingly attractive proposition for other seed suppliers.

If this technology is combined with existing products, this gives farmers more options for weed control. In the United States, for example, there are now more than 85 seed companies using LibertyLink® technology for their soybean seed; they are offering their customers an additional reliable approach to weed control. We are also entering partnerships in order to expand our portfolio with further plant-biotechnology solutions.

A few weeks ago, we concluded major agreements in this field with the U.S. companies Monsanto and DuPont. We expect the combined sales potential of our four most important licensing agreements, which will bear fruit in the coming years, to exceed EUR 500 million.


(2009-1515e-20)

We are currently pursuing a total of 56 BioScience research projects involving six crops. In addition to our core crops, we are now working on the wheat projects that I mentioned before and on soybean projects. We are also researching new solutions for sugar crops. Around half of these projects involve genetic modification.

Ladies and gentlemen,
We are expanding our business by strengthening in-house research, through alliances and through targeted acquisitions – and will remain open to further acquisitions in the future. The investments totaling EUR 3.5 billion through 2018 that Professor Berschauer announced do not include acquisitions of this kind. The most important event so far this year is the planned acquisition of Athenix Corporation, a biotech company based in North Carolina.


(2009-1515e-21)

Athenix offers us an opportunity to acquire the expertise of a major U.S. research-based company in the field of plant biotechnology. Athenix has an extensive research pipeline, numerous traits for corn and soybeans, and an extensive gene library. It employs leading plant biotechnology experts. Together we are planning to create a powerful research and development platform in North America, which is currently the major market for plant biotechnology.

And finally I would like to mention a decisive aspect. This targeted expansion of the BioScience business unit will not be pursued at the expense of the biggest segment at Bayer CropScience, classical crop protection. On the contrary, the future challenges facing agriculture can only be overcome by combining all the available technologies. Integrated packages of solutions also offer us significant business potential. In the past, our BioScience and Crop Protection business operation units were largely independent of each other. Today they are increasingly growing together.


(2009-1515e-22)

This is why, in recent months, Bayer CropScience has reorganized its portfolio management and structured it according to crops. In these crops we want to provide comprehensive solutions to growers from seed to harvest.

Our BioScience business is a major element of our strategy.
– We will expand it on a regional basis.
– We will include further crops in our core portfolio.
– We will also out-license our solutions, and
– We will continue to invest significantly in our business.


Thank you for listening.



Forward-Looking Statements
This release may contain forward-looking statements based on current assumptions and forecasts made by Bayer Group or subgroup management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in Bayer’s public reports which are available on the Bayer website at www.bayer.com. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.