Performance Report

Product stewardship

We consider the safety and compatibility of our products to have top priority. We therefore inspect and monitor all Bayer products in applications known to us with regard to potential health, safety, environment and quality (HSEQ) risks. Our product stewardship activities cover the entire value chain – from product development and production through to product use and final disposal. Since 1994, we have aligned ourselves to the voluntary Responsible Care initiative of the chemical and pharmaceutical industries, and Bayer signed the revised Global Charter of that initiative in 2006.

Comprehensive information on substances and products

For us, product stewardship means ensuring that our products are safe for people and the environment throughout their life cycle when used responsibly and properly. We restrict product marketing or discontinue production altogether when this is required to protect against health and environmental risks.

Our employees receive regular training in the safe handling of the substances and preparations, as well as in the use of appropriate protective equipment and in emergency measures and rescue operations. Special operating instructions are available for the handling of chemicals.

Virtually all the products manufactured by Bayer are subject to extensive and strict legal requirements concerning the publication of information. To satisfy the requirements of the E. U. chemicals regulation known as REACH (Registration, Evaluation and Authorization of Chemicals), we successfully completed the pre-registration in 2008 of all substances we manufacture in the European Union or import from elsewhere, thus enabling the further commercialization of our products

. In addition, we support international efforts to achieve a uniform global system of classification and labeling for substances and preparations (mixtures). According to the Globally Harmonized System of Classification and Labeling of Chemicals (GHS) that took effect in Europe at the beginning of 2009, chemical substances in Europe must be labeled according to global standards by December 2010 parallel to the implementation of the REACH regulation; the deadline for preparations ends in 2015. We are well prepared to meet the requirements of GHS.

Relevant safety information for the materials used throughout the Bayer Group – be they raw materials, intermediates or end products – is contained in product databases and continuously updated safety data sheets that we also make available to our customers. All the subgroups are updating their recording systems to comply with the new regulations. As part of the implementation of REACH, Bayer HealthCare has established an E. U.-wide database that will now be globally expanded in connection with the introduction of GHS. Bayer CropScience collects all product labeling information in its “e-Label Server” database. At present, this covers the products we market in Europe and parts of Africa and Asia.

In 2008, Bayer CropScience revised its External Adverse Incident Reporting Guideline, which governs internal reporting processes worldwide in the event of incidents involving products of that subgroup. This guideline represents a system for registering and evaluating the possible negative consequences of products and taking account of them in product development. Among other purposes, it serves as an early warning system for health or ecological risks, gives advice regarding medical care and provides a basis of information for preventive measures and continuing education seminars.

Bayer MaterialScience is currently preparing a product safety database from which up-to-date information will be accessible at any time and from anywhere in the world from mid-2009. As a producer of high-quality materials and innovative system solutions, Bayer MaterialScience is subject to a number of different product safety and information obligations. The subgroup thus globally monitors and centrally registers all potential detrimental effects of its products on health and the environment. All employees are instructed to pass on any information about possible risks to the global product observation function, which evaluates this information and, where necessary, defines, introduces and monitors suitable remedial actions. Since 2000, furthermore, Bayer MaterialScience has maintained the BayCare® program, which is aimed primarily at its customers in the Americas. Through BayCare® all safety information and instructions for Bayer MaterialScience products marketed both in this region and in some cases worldwide are available on the Internet.

Scientific risk assessment of chemicals

Bayer participates in many research projects dealing with the risk assessment of industrially manufactured substances as part of the Long-Range Research Initiative (LRI) set up by the international chemical associations. Through the Organization for Economic Co-operation and Development (OECD) and the European Center for Ecotoxicology & Toxicology of Chemicals (ECETOC), furthermore, we participate through LRI in the development and scientific validation of test methods and serve as an active partner in the development of suitable new regulations. We endorse the aims of the European Environment and Health Action Plan, particularly with regard to children’s health. Bayer supports association activities, for example on the continued development of human biomonitoring as a tool for exposure analysis. We are also involved in many scientific bodies such as the Society of Environmental Toxicology and Chemistry (SETAC), the International Life Sciences Institute / Health and Environmental Sciences Institute (ILSI / HESI) and ECETOC.

Limiting animal studies

Animal studies are essential and legally required to assess the detrimental effects and possible risks of chemicals or new drug products. In keeping with our “Policy on animal welfare and animal studies,” we are committed to the basic principle of using only as many animals as necessary to attain scientifically meaningful results. This is regularly monitored by animal welfare officers and also applies to external studies.

To date, very few alternatives to animal studies have been validated and recognized by the authorities. Nonetheless, where possible, we first employ substitute methods in all areas, and only when these tests deliver promising data are the substances then tested in animal studies. Thanks to this procedure, we have been able to markedly reduce the number of animals used in tests in recent years. In 1989, 454,000 animals were required by Bayer AG for test purposes compared to a worldwide Bayer total of 157,710 animals in 2008 – a reduction of 65 percent.

The rule here is that mice and rats are always used first; as a result, approximately 95 percent of test animals are rodents. Fish and birds make up approximately four percent of our test animals, while cats, dogs and primates account for 0.9 percent. In view of the great genetic and physiological similarity of non-human primates (NHPS) to humans, Bayer is committed to particular responsibility going beyond the legal requirements in regard to the use of nhps in preclinical research studies. A special Ethics Committee comprising Bayer experts and external specialists is therefore charged with specifically assessing these studies with non-human primates.

Bayer is a member of the European Partnership for Alternative Approaches to Animal Testing (EPAA), a joint initiative of the European Commission, numerous companies and further advocacy groups. The EPAA works to implement the “3R” principle, which in turn is aimed at “reducing” the number of experimental animals, “refining” experimentation methods and “replacing” animal studies by new procedures. Bayer also participates in joint studies by pharmaceutical companies and universities and cooperates in various international projects designed to develop and globally validate alternative methods.

Nanotechnology – An opportunity and a responsibility

Nanotechnology is an important and growing research and development field for Bayer. This technology has tremendous potential to yield economic growth and sustainable innovations in the future.

Nanotechnology is a cross-sectional technology: Interdisciplinary research can enable Bayer to offer new and improved product solutions in all areas of our business – from materials technology, electronics and medical technology to the delivery of active substances in medicine and new formulations in crop protection.

Bayer MaterialScience has already introduced to the market its first nanoproducts, such as Baytubes®. These innovative carbon nanotubes are many times stronger than steel at a fraction of its weight. They are used, for example, in the construction of highly efficient, ultra-lightweight rotor blades in modern wind turbines.

Researchers at Bayer HealthCare are working to open up new diagnosis and treatment options by packaging active substances in nanoparticles, for example. Ideally, the nanoparticles will make their way directly to diseased tissue without being detected by the immune system, and systematically release their active substance at the right place. The aim is to enable highly specific action against tumor cells without damaging healthy tissue.

As nanotechnology is a relatively new technology, a sound, scientific risk analysis is particularly important to protect health and the environment. We take our responsibility in the development and use of nanomaterials seriously, and carry out risk analyses for all phases of the life cycle. Like all other pharmaceuticals, nanomedicinal products are comprehensively evaluated and not registered for market use until a thorough risk-benefit analysis for patients has yielded positive results.

The Bayer Position on Nanotechnology and the Bayer Code of Good Practice in the Production and On-site Use of Nanomaterials serve as the basis for a responsible approach to nanotechnology at all company sites. With Baytubes®, we have built up extensive risk management knowledge regarding the handling of nanomaterials that we are applying to the development of further nanomaterials. To develop harmonized assessment concepts, we are participating in the safety research projects TRACER, NanoCare and CarboSafe, which are supported by the German Ministry of Education and Research, and in the international standardization of nanotechnology within an ISO working group. Bayer also plays an active role in committees and associations, and fosters dialog with relevant stakeholders such as industrial partners, customers, regulatory agencies, universities and the general public.

Stringent drug safety requirements

The manufacture of pharmaceuticals and medical equipment is subject to very stringent quality standards that are regularly evaluated by regulatory authorities and external experts.

The Global Pharmacovigilance section, which employs more than 350 people worldwide, is responsible for drug safety at Bayer. It ensures that all the available information concerning the adverse effects and interactions of all the medicinal products marketed by Bayer is compiled and evaluated on an ongoing basis. In this way the risk-benefit potential of our products can be continuously monitored not just during their development, but also after regulatory approval has been granted. In matters of patient safety, we work closely with regulatory authorities such as the Food and Drug Administration (FDA) in the United States, the European Medicines Agency (EMEA) and the Federal Institute for Drugs and Medical Devices (BFARM) in Germany. Bayer HealthCare also makes available information about clinical studies through its “Clinical Trials Registry and Results” website. This platform comprises not just new substances, but also trial results for registered pharmaceutical or biological products that are already being commercialized by Bayer.

Should new adverse effects or risks be discovered following the registration of a product, we immediately take suitable steps such as informing the regulatory authorities, sending information letters to physicians and amending pack inserts. For example, one data analysis uncovered a very rare adverse effect of the antibiotic Avelox® (active substance: moxifloxacin): In very rare cases, serious adverse effects on the skin and liver can occur. In July 2008, EMEA’s Committee for Medicinal Products for Human Use (CHMP) determined that the therapeutic benefit of Avelox® is higher than the risk, but recommended that its indications be restricted to cases in which other antibiotics are not an option or are not effective.

Continued suspension of Trasylol marketing

Bayer temporarily withdrew Trasylol® from the global market in November 2007 after the interim results from an independent clinical study in Canada had produced evidence of a possibly increased risk of mortality in patients treated with Trasylol®. In 2006 and 2007, post-marketing studies reported a possible connection between administration of Trasylol® and serious impairment of kidney function, heart attacks, strokes and increased mortality. Trasylol® (active substance: aprotinin) is a drug approved for use in reducing perioperative blood loss in patients undergoing coronary bypass operations. The product will not be marketed again until the final results of the Canadian study have been analyzed and the risk-benefit profile of Trasylol® has been re-evaluated in collaboration with the drug regulatory authorities. In some countries, including the United States, Trasylol® will continue to be made available for certain groups of patients with a specific medical need. We are working closely with the authorities to clarify the questions that have been raised.

By May 4, 2009, a total of 553 lawsuits had been brought against Bayer in the United States as well as one class action in Canada. The plaintiffs claim that Trasylol® caused harm to health such as kidney failure or death. They are demanding compensation and punitive damages on the grounds that Bayer was aware of or should have been aware of these risks, and that Bayer is liable as it did not provide adequate warning about risks associated with the use of Trasylol®. All the cases still pending before U. S. federal courts have been consolidated into a multi-district litigation (MDL) for pre-trial coordination. More lawsuits are to be expected. Bayer believes it has meritorious defenses and intends to defend these cases vigorously.

Responsible marketing of medicines

We observe stringent guidelines in the marketing of our products. This applies particularly to medical products, an area in which we are bound by national and international codes that ensure ethical conduct in cooperation between the pharmaceutical industry and members of medical and pharmaceutical specialist groups.

Bayer HealthCare undertakes to adhere to the code published by the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) for the ethical marketing of pharmaceutical products. We also observe marketing provisions contained in the code of the European Federation of Pharmaceutical Industries and Associations (EFPIA), the revised edition of which took effect in July 2008, and in additional national regulations for the ethical commercialization of drug products. Such provisions govern, among other things, advertising material standards, the distribution of samples, and cooperation with members of medical and pharmaceutical specialist groups in connection with consultancy contracts, studies and scientific lectures.

Since July 1, 2008, Bayer HealthCare has published the details of its cooperations with patient organizations in Germany, including all project-related data, on the website of its marketing subsidiary Bayer Vital (only in German). Furthermore, Bayer has made a commitment to observe the new code of the association “Voluntary Self-Monitoring by the Pharmaceutical Industry” (FSA) pertaining to collaborations with patient organizations, which came into force in October 2008. This code governs cooperations between patient organizations and pharmaceutical companies in order to maintain the organizations’ neutrality and independence and ensure appropriate cooperation in the patients’ best interests.

Bayer is committed to the highest ethical standards, and we are deeply committed to promoting our medications and products in a manner consistent with the approved indications. The FDA criticized advertising spots for YAZ® in the United States because, it claimed, these also contained statements on indications for which the drug had not been approved. Bayer has worked closely with the FDA and agreed on a course of action, and we are pleased to report that our new YAZ® advertisements are now being aired in markets around the country. We believe that the new advertisements correct any misperceptions that might exist. As always, Bayer remains committed to providing truthful and accurate informational materials to both health care providers and patients.

Despite extensive measures to ensure compliance in product marketing, isolated cases of conflict regarding compliance with marketing and competition laws have occurred in the past, as previously reported.

Analysis of pharmaceuticals in the environment

Traces of pharmaceuticals are found in bodies of water and occasionally in drinking wate

. One reason for this is the excretion of pharmaceuticals and their degradation products by patients. In many cases, wastewater treatment facilities can filter these substances out of wastewater or degrade them. However, some substances are only partially or not at all removable, and can thus enter natural bodies of water. Bayer HealthCare wants to further investigate the possible risks of pharmaceutical active substances in the environment to be able to assess these in a more differentiated manner. With this goal in mind, we are expanding the data base on environmental properties to include the results of tests on ecotoxicity and on the dispersion and degradation behavior of pharmaceutical products.

Bayer HealthCare also participated in several important research projects in 2008. In Germany, Bayer was engaged in the start project dealing with strategies for addressing pharmaceutical active substances in drinking water; at the European level, the subgroup contributed to the KNAPPE (Knowledge and Need Assessment on Pharmaceutical Products in Environmental Waters) and ERAPharm (Environmental Risk Assessment of Pharmaceuticals) projects, which were completed in 2008.

As part of the ERAPharm project, the meaningfulness of the guidelines that have been binding for the registration of new drug products in the European Union since 1998 (veterinary pharmaceuticals) and 2006 (human pharmaceuticals) was evaluated and improvement suggestions were developed. The results of the start project were summarized in a brochure explaining particularly the possible courses of action and implementation perspectives for reducing contamination. The analyses of the KNAPPE project contain a report on the status of incidences of pharmaceuticals in the environment and their evaluation, as well as recommendations on the technical options for reducing emissions from wastewater treatment facilities and on laws and regulations and political issues.

Responsibility in animal health

The Animal Health Division of Bayer HealthCare produces and distributes worldwide more than 100 different veterinary pharmaceuticals and grooming products for livestock and companion animals. We apply the highest quality and safety standards to our animal health products as well. That’s why we invest in extensive research and development measures and carefully design our production processes and the marketing and distribution of our products in order to ensure the highest possible standards with regard to quality, effectiveness, and the safety of animals, people and the environment. Through workshops, extensive information material and other measures, we also advise veterinarians and end users specifically and comprehensively in the proper and responsible use of our products.

Safety for humans and animals

In 2008, Bayer Animal Health joined with the organization Vets Beyond Borders (VBB) and the University of Queensland, Australia, in initiating a research project in India. Its goal is to analyze canine vector-borne diseases (CVBD) in stray dogs and the potential resultant health risks for people.

Biotechnology – A technology of the future

In recent years, biotechnology has also achieved increasingly important significance in pharmaceutical research and production. For example, two of our best-selling products – the multiple sclerosis treatment Betaferon® / Betaseron® and the hemophilia drug Kogenate® – are produced through biotechnological processes. Innovative crop research, modern plant breeding and the use of new technologies too are of tremendous importance when it comes to feeding the growing world population. In this context, biotechnology offers diverse opportunities for increasing the performance potential and stress resistance of plants and raising crop yields.

Safety is our top priority in the development and use of biotechnology. Bayer respects consumers’ rights to receive information and freely select food products, and observes all relevant legal provisions. We have spelled this out in our Position on the Responsible Use of Gene Technology and in specific directives in the subgroups and service companies. Before a new product is introduced to the market, it is subjected to a stringent registration processes to determine whether it is safe for people, animals and the environment. We understand the concerns about genetically modified organisms (GMOS) expressed by society, but we are convinced that GMOS do not represent a safety risk when the legal requirements and corresponding safety checks are observed.

Measures to combat counterfeit products

Counterfeit products and the trading of illegal goods have become a serious problem around the world in recent years, causing enormous economic losses. Not only are counterfeit pharmaceutical and crop protection products often ineffective, they can also present a risk to the health of unsuspecting patients, users and consumers. What’s more, the illegal production and the trade of counterfeit products regularly violate our intellectual property rights. It cannot be reliably estimated how many counterfeit products are in circulation in which markets. What is clear, however, is that the volume of such products is increasing. We intensively work to increase awareness about this problem and institute legal proceedings against counterfeiters. Our focus here is on education, product-related security measures, internal and external investigations and close cooperation with associations, authorities and the World Health Organization (WHO).

Bayer HealthCare has launched the “Beware of Counterfeits” education campaign for patients, which features extensive information material. At the international level, we advocate the coding of pharmaceutical products. The “Coding” project of the European federation EFPIA, in which Bayer HealthCare is playing a very active role, has model character for all pharmaceutical producers. Coding should ensure complete tracking of pharmaceutical products along the value chain in the future, at least in legal distribution channels.

Due to a lack of testing and registration, illegally produced crop protection products also frequently present a health risk to people WHO work in the agriculture industry, as well as a danger to consumers and the environment. Bayer CropScience therefore will continue to resolutely assert its intellectual property rights against illegal producers. A worldwide network of employees focuses on protecting our products at the global, regional and national levels. As a result, large quantities of counterfeit crop protection products were seized by local authorities in Poland, Russia, Paraguay and Indonesia in 2008. Several regional workshops on the effective coordination of product defense measures took place in the period under review. Furthermore, Bayer CropScience supports regional and global association committees that focus on fighting product piracy. Among these bodies are the Anti-Counterfeiting Project Team of the European Crop Protection Association (ECPA) and the Anti-Counterfeiting Steering Committee of CropLife International. To help customers correctly identify a Bayer CropScience product and impede product piracy, the company uses testing instruments to certify the authenticity of products and identify original packaging.

In ProteXXion®, Bayer Technology Services offers a solution for forgery-proof authentification that is unique worldwide. ProteXXion® is based on a laser-optic process from the British technology partner Ingenia Technology Ltd. that enables surfaces to be clearly authenticated without the need for additional identification marks. The object itself becomes the marking. It is therefore practically impossible to overcome the security barrier of ProteXXion®.

Responsible use of crop protection agents

Bayer CropScience helps safeguard harvests and raise crop yields worldwide by deploying the latest crop protection methods and new solutions in the areas of plant biotechnology and breeding. The crop protection solutions of Bayer CropScience are an important contribution to efficient agricultural activities. Extensive scientific risk testing of crop protection agents are specified under country-specific regulations and result in comprehensive product information on safe and recommended storage, application and disposal procedures. This information is available in a comprehensible form in the relevant lingua franca. This is part of a comprehensive product stewardship system with which Bayer CropScience promotes the appropriate use of its products worldwide to rule out negative effects on people and the environment. This system is based on the international Code of Conduct on the Distribution and Use of Pesticides by the Food and Agriculture Organization (FAO).

In addition to the development of technical solutions for the safe use of our products, we regularly carry out on-site training measures for our customers and partners as regards the appropriate, safe and targeted handling (product stewardship) of crop protection products. Here, targeted and selective use also involves adapted application technologies and packaging techniques. In India alone, we instructed more than 100,000 employees of the agriculture industry in the safe use of crop protection products in 2008. Further areas of focus for training measures are South America and China, where Bayer CropScience received the official distinction “Best Safe Use Training Company” for the third time in a row.

New requirements for active substances in crop protection

The European Union has agreed on a new ordinance to harmonize existing legislation on crop protection. While we welcome the efforts made by the European Union the results of the consultations lead us to be increasingly concerned about the introduction of hazard-based exclusion criteria. This entails a departure from the socially accepted principle – also predominant in technological evaluations – that, alongside a theoretical evaluation of risk, an evaluation based on exposure in practice is an essential factor that must be taken into account in any risk assessment. In addition, Bayer CropScience supports the proposition that substance analyses should not take a one-sided approach that focuses solely on the potential risk that could be associated with the usage of substances. In order to ensure a comprehensive and thorough approach, it is also necessary to evaluate the potential consequences of any failure to gain approval for a substance on the environment and consumers. Once the new regulation comes into force, the primary focus will be on helping to shape the implementation process based on scientific findings and on creating a practical system of rules. Bayer CropScience will make its experience and skills available in order to support the search for suitable solutions in cooperation with associations such as the European Crop Protection Association (ECPA) and the German agrochemical industrial association Industrieverband Agrar (IVA).

Instruction in handling crop protection agents

The Agro Vida training program, which Bayer runs in many South American countries, has long proven successful in ensuring that crop protection products are used safely. In recent years, many tens of thousands of people employed in agriculture have taken part in the program. The program is directed at various groups of agricultural laborers and farmers, focusing on risk management training: the correct handling of safety equipment and the prevention of product misuse and incorrect applications. The Agro Vida program involves vocational instructors, farmers, crop protection agent distributors and independent advisors.

Replacement of WHO Class I pesticides

Bayer CropScience only distributes crop protection products that have been granted regulatory approval by the authorities in the countries concerned which are safe when used responsibly and as intended, and which pose no risk to either people or the environment. We are aware that crop protection products may not always be used correctly under certain circumstances in some Third World countries. This is why the company has undertaken to gradually replace products in WHO Class I preferentially in these countries. This is being accomplished, for example, by developing and introducing new active substances, products, application technologies and types of packaging. The company has made great progress in this respect in recent years. In the past five years alone, Bayer CropScience has removed a substantial number of Class I products from its portfolio. The active substances discontinued during this period include methyl and ethyl parathion – we have not sold ethyl parathion in developing countries since 1992 – monocrothophos, oxydemeton-methyl, azinphos-methyl, amitraz and trichlorphon. Bayer CropScience will systematically maintain this approach. New active substances with markedly better risk profiles, e. g. spiromesifen, flubendiamide and spirotetramate and their formulations, are now available to customers worldwide to replace the old products that have been withdrawn from the market.

However, there are still some vital products for which no alternative is available because it takes a long time to develop and register new crop protection products. In addition, individual countries differ considerably in terms of cultivation and market conditions and the pests that affect them, and this factor makes it impossible to provide a single standardized solution. If no alternatives are available, we promote the safe use of older products by providing numerous additional training events for users.

Bee safety and the insecticide clothianidin

In the spring of 2008, incorrectly treated corn seed resulted in the loss of bees in the Upper Rhine region of Germany. Investigations by both the authorities and Bayer have since found that the bee deaths were caused by improper application by the seed dressing companies of the crop protection product clothianidin (trade name: Poncho® Pro) in seed treatment. As a result of these findings, the German Federal Office of Food Safety and Consumer Protection (BVL) temporarily suspended marketing authorization for clothianidin as a seed treatment for various crops in May 2008, but has since lifted this suspension. The suspension for use with corn is continuing because the authority is reviewing further documents on bee safety.

We have since submitted further documentation to the BVL demonstrating the product’s safety when used properly. Following the final examination of this documentation, the BVL will decide whether to lift the temporary suspension of marketing authorization for clothianidine as a corn seed treatment product.

The active substance clothianidin is needed to fight the corn rootworm, a reportable quarantine pest that first appeared in Germany in 2007. For the 2008 sowing season, therefore, the treatment of corn seed with clothianidin was prescribed for certain areas in Baden-Württemberg and parts of Bavaria in accordance with the corresponding E. U. regulation. Protection of crops from quarantine pests such as the corn rootworm is essential. Experts estimate that the potential annual damage to crops in Europe alone in the long term will amount to roughly half a billion euros. The pest is thus an existential threat for farmers in the infested regions.

Some batches of the corn seed treated with clothianidin were incorrectly treated in 2008, however, with the result that abrasive dust containing the active substance entered the environment when certain pneumatic sowing machines were used. There is no risk to the environment when the product is correctly used. Contact of the substance with the environment is reduced to a minimum through seed treatment, and it is broken down in the soil.

To minimize the risk of incorrect use in the future, we have worked with the sowing machine manufacturers and in close coordination with the relevant regulatory and monitoring agencies to develop technical retrofitting concepts that ensure a considerable reduction in dust driftage. Through a ground-level exhaust air duct, the new concepts prevent any abrasive dust from potentially entering the surrounding air and thus coming into contact with other plants. The effectiveness of these retrofitting concepts was confirmed in extensive test procedures carried out by the Julius Kühn Institute (Federal Crop Research Institute). Comprehensive information on the topic of bee safety and clothianidin can be found at the Bayer CropScience website.