Aspirin, Drug Demand Boost Bayer’s Earnings

By Ilya Rzhevskiy
Ilya Rzhevskiy
Ilya Rzhevskiy
June 30, 2011 Updated: June 30, 2011

MUNICH—The wonder of aspirin continues, as the century-old drug has revitalized pharmaceutical giant Bayer AG’s first quarter sales with an astounding 23 percent growth compared to the same quarter last year.

It proves a point—sometimes what is simple and old fashioned is better. Invented in 1897 by German chemist Felix Hoffmann, aspirin has ailed many pains ever since, and to this day it is considered one of the best painkillers along with its rival Tylenol, produced by New Jersey-based Johnson & Johnson (J&J).

J&J, on the other hand, has experienced a slump lately, as it was forced to recall more than 200 million packages of Tylenol from the market for having an unusually unpleasant smell. That recall has cost J&J around $900 million in lost sales and a 14 percent revenue decline in the past 12 weeks.

"It’s a disaster for the [Tylenol] brand, but good for others, including good old-fashioned aspirin, as some customers seek an alternative painkiller,” says Erik Gordon who is a professor at the University of Michigan, in a BusinessWeek report.

Around five years ago, Bayer started to intensively invest in Aspirin marketing and promotion. It has also successfully proven that Aspirin could lower the chance of heart disease, which has boosted its sales ever since.

Armed with successful Aspirin sales, Bayer experienced impressive 13.2 percent growth in the first quarter of 2011 compared to the same period last year, booking $9.4 billion in revenue. As a result of great sales, Bayer is also raising its yearly forecast, aiming to reach 37 billion euros (US$53.7 billion) in sales in 2011.

Besides Aspirin, Bayer’s line up of other drugs are selling well too, with complex inter-galactic names such as Kogenate, Betaferon, Nexavar, Adalat, and Avalox.

Bayer is Germany’s biggest pharmaceutical company. Founded in Bremen, Germany, in 1863, the company became part of IG Farben after World War I, and then re-emerged as an independent brand when Farben was broken up by the Allies following World War II.

Bayer is headquartered in Leverkusen and employs around 110,000 people worldwide. Interestingly, Heroin—a well-known narcotic today—was Bayer’s trademarked drug used as a cough suppressant until World War I. But to this day Bayer is best known for its most popular painkiller: aspirin. The company has annual revenues of 35 billion euros (US$51 billion).