Bayer AG

XETRA:BAYN

Earnings Call Transcript 2022-Q3

[Operator]

[Audio Gap]

[Operator Instructions]

I would like to hand over to Michael Preuss, Head of Group Communication at Bayer.

[Michael Preuss, executive]

Thank you very much, Ms. Anst, and good morning. Welcome to our news conference for the figures on Q3 for 2022. Lovely to have you with us, and thank you for your interest. We have the Chief Executive Officer at Bayer AG, Werner Baumann; and the Chief Financial Officer, Wolfgang Nickl, with us today. They will be giving us the most important information on business performance, and then we'll open up the question-and-answer session. Before we begin, I'd like to make your -- draw your attention to the future -- the forward-looking information. I'd now like to hand over to Werner Baumann.

[Werner Baumann, executive]

Thank you very much. I too would like to welcome you [indiscernible] today's conference call for the third quarter of 2022. I'll begin together with Wolfgang Nickl, by summarizing the key developments in the third quarter. We maintained our strong business performance across all 3 divisions in the third quarter. Despite rising inflation and the global supply chain problems, we are again able to boost sales and earnings. And we are right on track to achieve the full year financial targets that we raised in August. At Crop Science, in particular, we continued the growth trajectory. This is primarily due to higher price of herbicides and a successful start to the new season in Latin America. Sales were also up against the prior quarter at Pharmaceuticals and Consumer Health. At Pharmaceuticals, we continue to grow sales of our ophthalmology drug, Eylea and we're also particularly pleased to see our new cancer drug, Nubeqa, contributing considerably to sales growth. In the nonprescription medicines business, the Allergy & Cold category, in particular, was successful. Dermatology business also registered significant gains. In addition, we continue to make progress with our innovation activities in all areas. At Crop Science, we recently concluded a multiyear partnership with Ginkgo Bioworks that we announced in April. The aim of this partnership is to accelerate the search and development of biological products for agriculture. As you may or may not know, we are already the market leader in the area of biological crop protection products. At Consumer Health, we've successfully launched our nonsteroid antihistamine nasal spray Astepro on the over-the-counter market in the United States. We've also achieved good progress with innovations at Pharmaceuticals. For example, we initiated a Phase III clinical program investigating the use of the active agent as Asundexian in the prevention of stroke. This is one of our largest Phase III projects to date and is expected to start before the end of this year. That was also good news regarding our development candidate aflibercept 8 mg, which compared with Eylea containing 2 milligrams of aflibercept in 2 pivotal studies. The trials showed that the dosing interval could be extended with aflibercept to 16 weeks in 2 different indications compared to 8 weeks for Eylea, while maintaining a consistent safety profile. Regarding our products in the early development stage, we received clearance in August to begin a clinical trial in France. It's concerned with investigating in gene therapy for treating Huntington's disease, a serious hereditary disease that affects the nerve cells in the brain and for which there are currently no approved treatments. We also achieved new key milestones for Nubeqa in the third quarter. In August, that product was approved in the United States for an additional indication in patients with a certain type of prostate cancer. We've additionally submitted applications for this indication extension in the EU, Japan and China. We also made progress with our established products. In August, for example, we received U.S. approval extending the duration of concept of use of a long-acting Mirena system to up to 8 years. The corresponding approval procedure was successfully concluded in Europe as well, with the first national approvals expected here in the fourth quarter of 2022. This means that the Mirena now offers the longest duration of concept of use of all hormonal intrauterine systems. We've also continued to make strides in the field of sustainability. Our efforts in this field are being acknowledged as evidenced by another improvement in important rating. MSCI has upgraded our ESG rating from BB to A for the group. This represents another key milestone in our efforts to strengthen our ESG profile. The improved rating was partly thanks to a revaluation of the alleged environmental risk presented by genetic-modified organisms and the additional disclosure of data in the dialogue with investors and rating agencies. We also achieved an [indiscernible] milestone of our portfolio. In early October, we completed the sale of our Environmental Science Professional business to private equity firm, Cinven. The base purchase price for the business amounted to the equivalent of EUR 2.6 billion. With that, I'd like to hand over to Wolfgang Nickl, who will give you a more detailed definition of the business data and present our outlook for the full year.

[Wolfgang Nickl, executive]

Thank you, Werner. From me too, a warm welcome. I'd like to begin the figures for the group as a whole before I move on to the business performance in our 3 divisions. And please note that all the sales growth figures I mentioned are adjusted for currency and portfolio effects, and this I explicitly state otherwise. I'd like to begin by briefly summarizing the key factors influencing sales and earnings. The growth in sales was driven mainly by higher price in glyphosate. But in the third quarter, we saw these prices decline compared to the first half of 2022. In the fourth quarter, we expect them to normalize further. At the same time, all our divisions had to contend with the substantial cost increases for input materials, energy, freight and warehousing. Personnel expenses also increased. Another key factor was exchange rates. These had a positive effect on sales, but a negative effect on earnings in the third quarter. This was attributable to seasonally lower sales coupled with the high cost base in the United States and also to the posting of adjustments in connection with the hyperinflationary economies of Argentina and Turkey.

Now let's turn to the numbers. Group sales in the third quarter increased by 5.7% to EUR 11.3 billion, and there's a positive currency effect here of EUR 940 million. Our earnings KPI, clean EBITDA increased by more than 17% to EUR 2.5 billion, the clean EBITDA margin of the Bayer Group rose from 21.4% in the prior quarter to 21.7% this year. Core earnings per share increased by 7.6% year-on-year to EUR 1.13, and this is driven primarily by our good business performance. Free cash flow declined by 11.1% year-on-year to EUR 1.7 billion in the third quarter. The decrease was partly due to inflation-related cost increases within inventories. That brings me to our divisions and I would like to begin with our agriculture business. The Crop Science division reached a stronger than third quarter with sales rising by 8.4% to EUR 4.7 billion.

In Latin America and Europe, Middle East, Africa, we achieved double-digit percentage gains. But in North America, sales fell significantly, mainly due to higher seed returns. The strongest growth was in Herbicides with sales expanding by 45%. This was mainly due to the persistently positive market environment and resulting higher prices. Sales at Corn Seed & Traits decreased by 15.8% in the third quarter, a result of lower licensing revenue and higher returns due to lower acreages. Since the beginning of the year, however, sales are up. Sales at Soybean Seed & Traits was also down due to higher turns in North America. The business did expand in Latin America. Clean EBITDA at Crop Science in the third quarter increased to EUR 629 million, following EUR 471 million in the previous year. This is due primarily to the good business performance. The ongoing efficiency programs also had a positive impact here. Earnings were mainly diminished by inflation-driven cost increases. That brings me to our Pharmaceuticals Division. Here, sales in third quarter rose by 2.9% to almost EUR 5 billion in the third quarter. The division continued the successful launch of new products, and particularly Nubeqa and Kerendia were important growth drivers at Pharmaceuticals with sales of Nubeqa almost doubling.

Ophthalmology drug, Eylea, once again, created to growth with gains in all regions. In addition, we received milestone payments via platforms for cell and gene therapy and for chemoproteomics . As expected, anticoagulant Xarelto had a noticeable decrease in sales due to tender procedures in China and the expiration of our patent in Brazil.

Clean EBITDA at Pharmaceuticals rose significantly third quarter, namely by 15.2% to EUR 1.6 billion. In addition, earnings benefited from the growth in sales from income from the sale of non-core businesses. These effects were more than offset ongoing investments in market and new products as well as research and development expenses. That brings me to Consumer Health. Our business over the counter products posted sales of more than EUR 1.5 billion in the third quarter, which was a year-on-year increase of 4.4%. The most significant gains were adjusted in the Allergy & Cold category, with sales of cough and cold products rose by 19.2% and sales of allergy products increased by 14.3%. This is attributable to higher cold incidence rates and especially the launch of Astepro in the United States. In the Dermatology business, we also reached a strong growth of 14.3%, driven in particular by new product, Bepanthen Derma.

In the Nutritionals category, sales declined, but they remained at a high level after the robust gains in the past 2 years, driven by strong sales growth, clean EBITDA, its Consumer Health, advanced by 9.1% to EUR 336 million. Earnings were mainly weighed down by investments associated with the launch of new products, especially Astepro and inflation-related increases in costs. Let's now move on to our outlook for the full year 2022. We upgraded our guidance in August, and now following the strong third quarter performance, we can confirm the guidance with any mine adjustments to our forecast for free cash flow and net financial debt. We now predict that free cash flow will be somewhat higher on a currency adjusted basis of EUR 3 billion, which is slightly higher because the settlement payments for litigation will be lower than expected.

As such, we now anticipate that net financial debt at the end of year will be somewhat lower on a currency-adjusted basis at around EUR 31 billion, which takes into account the higher cash flow and the sale of the Environmental Science Professionals business. And with that, I can hand back to you, Werner.

[Werner Baumann, executive]

Thank you, Wolfgang. As you can see, we remain very much on track to follow up the very strong previous year with a very good performance in 2022. And all this while navigating these difficult times, was, of course, we, too, have to contend with the current unfavorable business environment. The cost increases because of high inflation has already been mentioned several times. And we expect that this will continue in the coming year. Energy supply risks are also on our radar. In Germany, we want to be independent of Russian gas by the end of this year. However, uncertainties remain here, too. As global supply chains remain very much under strain, it means that procurement management and the supply chain stability are our top priorities. With this purpose, we continue to build up inventories to mitigate the impact of supply bottlenecks. And we are working together closely with our suppliers and contract manufacturers to shore up supply chain stability even further. However, and I'd like to stress this -- would like to reiterate that in view of the macroeconomic situation geopolitically, the third quarter once again showed how robust our business is and how well positioned we are with our clear portfolio focus on health and nutrition, especially in view of the current situation, by leveraging our expertise in these as we can play a key part in overcoming some of the biggest challenges of our time.

And to do that, we need innovation [Audio Gap] to boost agricultural productivity and feed more and more people. We need to make business more sustainable and stop climate change. And we need to find better ways of treating diseases like cancer, hemophilia and Parkinson's, and maybe we'll be able to even cure them one day. We are working on all these things. And that's why we are continuously expanding our research network in part through our impact investment arm, Leaps by Bayer. And that's why we are continuing to invest regularly in research and development, more than EUR 5 billion every year.

This considerable sum reflects our confidence that we can truly make a difference with the expertise in science and research. And it's also the foundation for our future business success. Thank you for your attention. And now we're ready to take your questions.

[Unknown Executive]

Thank you very much, Mr. Baumann and Mr. Nickl. And as we said, it's now time for your questions. I'd like to hand over to Ms. Anst once again.

[Operator]

[Operator Instructions] The first question is from [ Jansen ] from FAZ. You have the floor.

[Unknown Analyst]

I have a couple of follow-up questions. First of all, I'd like to know if we could perhaps have some more information on these returns due to lower amounts of farmland in the United States. Is this something that is regular? Is this a one-off thing? Or is this something that we do expect the farmers will be returning -- ordering and then returning the seeds. And I'd also like to know with regard to free cash flow, Mr. Nickl, you said that this was -- the litigation costs were less than expected. Maybe you could give us more details on that, in which cases are concerned here?

[Werner Baumann, executive]

Good morning, Mr. [ Jansen ]. Let me answer your first question, and then Wolfgang Nickl will then take the second question on cash flow adjustments at the end of the year. With regard to returns, this is a perfectly normal process for our seed business. It always works in this way. At the beginning of the season, farmers order seed, and then depending on the weather and also the market environment, then they plant more or less. And generally, they stock up enough so that they can be ready to face all different scenarios. And this always leads to the fact that -- in the last 1/3 of the season, the seed manufacturings receive returns. This, however, can fluctuate from 1 quarter to the next. It could be in the second or in the third quarter, depending on the season.

And that's why you see certain changes between these 2 different quarters compared to the previous year. So it makes it difficult to compare. And that's why if you want to assess business, you have to take a look at the first 9 months. So this is nothing unusual. On the contrary, it's perfectly normal. However, in the seed business, we had higher returns in industry because the weather and also the market environment meant that farmers were planting less than expected in the United States and less acreage, that means they consume less seed. And now I'd like to hand over to you, Wolfgang.

[Wolfgang Nickl, executive]

Thank you. You noted that correctly, the free cash flow outlook was increased from EUR 2.5 billion to EUR 3 billion, and that was due to lower settlement payments. You may recall that at the beginning of the year, we had expected about EUR 2.5 billion for settlement payments. And now we're assuming it will be EUR 2 billion. But you will also see that in the first 3 quarters, it's only EUR 1.1 billion or EUR 1.2 billion were incurred. So this figure could be even lower than EUR 2 billion. It depends on whether certain cases will be this year or next year. In principle, when it comes to glyphosate, we have a very good track record in the last 5 cases. We won them, and that's why we are settling only in strategic individual cases and our program for the future has not yet been launched. So now we're observing things. And this year, we expect it will be less than originally expected.

[Unknown Executive]

The next question comes from [indiscernible].

[Unknown Analyst]

I have 3 questions. Xarelto, you said there was a decline, that was as expected? Or is there a special effect that you noted in the third quarter? And another question on the seed situation in North America. You heard about market shares and that you lost market shares, is that correct? Or is this something that was distributed evenly throughout the industry when it comes to the amount of acreage. And the third question, how to do you see Bayer’s assessment on the stock exchange. Corteva is remarkable, and this is maybe a smaller competitor, creating just as much value? And how do you see that.

[Werner Baumann, executive]

Mr. [indiscernible], thank you for your questions. Xarelto. This year, we expected that sales would go down because in some countries, either the patents are expiring, in particular, in Brazil, where we have a large share of our market going to generics. And in China, as we commented last year, here we have a different price structure due to the value-based procurement. And here, we are in a tender procedure. And that means that we are in a different situation for competition. And Xarelto in China had exclusivity and patent protection. This will continue next year. But here, again, I have to add the following information. Due to the very difficult situation in China, we are somewhat weaker than we had expected for this year because our sales organization, this cannot go to the hospitals because of the lockdowns that continue there.

And the second topic is seed. As I said, question of returns is something that we see throughout the industry. And as far as market shares are concerned, in our most important crop, corn, irrespective of the returns, we were able to somewhat increase our market share overall, even in direct competition with Corteva. They're a very strong seed company. With soy, that's somewhat different here. We are transitioning to our next seed generation, which will have certain tolerance, herbicide tolerance. And this is something that it does not yet have today. So that's a supplement. And as a result, in soy, we lost a certain market share in the United States. Not -- could not be completely offset by the gains in market share in Latin America. As I said, this is something that had been expected. The third question is on market capitalization. We see the share on the stock exchange, and we have a very strong business performance this year that we expect compared to a very good fiscal year 2021. And you also know that there are some one-off issues which have an effect on the assessment of our company and we are working on all of that. And then, of course, this is something that will be taken care of.

[Unknown Executive]

The next question comes from Reuters, [indiscernible].

[Unknown Analyst]

Yes. So I just have 1 question on the figures that have gone up in the last month. Can you explain the dynamism that has been witnessed and sum up the seed returns in more detail.

[Werner Baumann, executive]

Mr. [ Mr. Boga ]. You were very difficult to understand. I'll try and answer on the basis of what I think I understood. First of all, the glyphostate prices. In glyphosate, there are a large number of manufacturers. We are the biggest in the world, but there are a lot of other manufacturers as well. And glyphosate has no patent protection at all any longer, if you like, it's just a herbicide commodity because of different effects. We have seen a significant uptrend in many other sectors. This includes the nonselective herbicides. And compared to the end of 2020, the beginning of 2021, the price level of course, has moved up significantly. On the other hand, there were some capacity bottlenecks, to which we also contributed after Hurricane Ida with a temporary break in production in South United States. On the other hand, there have been substantially smaller volumes for a variety of reasons available in the market in China, where in addition to the rally in a competitive price, which exited anyway, it led to price developments for generic glyphosate. So now, in the second half of the year and the beginning of the third quarter, we seeing a certain normalization after really top prices witnessed at the beginning of the year. And on this basis, we expect further normalization in the fourth quarter moving into the new year and also trying to look further ahead, it would be very difficult. The market is very volatile. And that is something which we would then take into account and try to balance that in the course of 2020 to regard an anticipated price level for glyphostate in 2023. I didn't -- understand your question 1% regarding seed. Perhaps you could ask that question again.

[Unknown Executive]

Mr. [ Boga ], your line is open, you can repeat the question, please. We can't hear Mr. [ Boga ]. Mr. [ Boga ] can't be heard, unfortunately. So I'll move on to the next question at this point. The next question comes from [indiscernible].

[Unknown Analyst]

I have 2 questions as well. First of all, if you look at the 9-month figures, and the question is mainly to Mr. Nickl. The financial result is EUR 1 billion worth roughly. Can you explain what that is connected with? And then I don't really understand why the net debt is now reported in currency-adjusted form. What's the meaning of that? Because nominally, it has declined slightly. Hasn't it?

[Wolfgang Nickl, executive]

Yes, Mr. [ Becker ]. I'm happy to reply to that. Financial debt, I can begin with. It's quite simply that in about 40% of debt that is denominated in U.S. dollars. And we have to see if the dollar becomes stronger than it works out differently in euros. And you saw the guidance was EUR 31 billion at last year's exchange rate. But on the balance sheet, we're going to have to take the present exchange rate as a basis. And with the super strong Europe, almost parity, it adds about EUR 2 billion. On the other hand, it means we also have better earnings. So the leverage is not quite the same as the reason for the financial indebtedness. The sale of Environmental Science, which went through there. And that was also certain dollars, by the way, which brings in more euros in revenue. So that makes the free cash flow look a bit better. The financial results, there are different effects playing a role there. Last year, we see an upturn in some -- the valuation of some financial holdings. So last year was particularly good. This year, we guided EUR 1.5 billion.

Now we're at EUR 1.8 billion. And we've increased it since August. There are a number of effects there. First of all, we have a hybrid bond, which we refinanced at the beginning of the year. And that, of course, was somewhat more expensive in interest rates than the one that it replaced. Then in the financial results, there are some other effects that are taken to account. Just 1 or 2 examples here. For example, there is a loan that we've made to our pension vehicle with different interest rates, the cash value of the receivable drops. So we have to have the noncash fair value adjustment. That's a second example.

And the third example, would, for example, be if you have different personnel programs at assets. So if you've got time saving programs and these assets have a lower price on the stock exchange, and this has been taken account in the balance sheet. So it's very technical. And last but not least, certain hedging effects and expatriation costs in hyperinflationary countries such as Argentina. And these 4 factors contribute to the fact that, as we said in August, this -- it's gone from about EUR 1.5 billion to EUR 1.8 billion. So it's very technical.

[Unknown Executive]

At this point, I'd like to hand over to Mr. [ Boga ], once again so that you can repeat your question. Mr. [ Boga ], the floor is yours.

Mr. [ Boga ] unfortunately we still can't hear you. Right. Let's turn to the next question, [ Patricia Weiss ] from Reuters. You have the floor.

[Unknown Analyst]

Good morning to all of you in Leverkusen. I have 3 questions. You've mentioned some of them already on seed and glyphosate. And maybe you could give us some information on your further strategy for the future. And I'd also like to know if you still plan for 31,000 of the 138,000 cases have been settled. And I'd also be interested in the situation at Bayer, and how you want to, I'd like to ask about China. How do you see your business there considering the most recent developments and tension and also the zero-COVID strategy there, that doesn't seem to be coming to an end? Thank you very much.

[Wolfgang Nickl, executive]

Our defense strategy, Ms. [ Weiss ], well, I can say the following. We are working on the 5-point plan that we announced last year, we're going through this step by step. This includes a number of different aspects, of course, to further defend cases and also appeal proceedings where either technical errors or legal errors have been made. And then this would then make sense for us to appeal. And then, of course, in some cases, we are going to very -- to the Supreme Court for very important decisions. And this applies forecast and among others. And in addition, we have a number of cases that have not yet been settled. These are what we call holdouts. And we have very strict policies here that we've been following, and this is due primarily to the fact that we consider the quality of the cases and also want to not go into every demand from the people suing us. And this is also the extent to which some of these cases can be settled strategically. We do so. But we always take a look at the corresponding costs, and also the other cases that have already been settled.

Now Twitter. Well, I can't really say anything on that. I'm not really involved in Twitter. And as a company, we don't take on a position there in one way or another. And the third point, China. With China, as I said before, with one of the other questions on Xarelto. Of course, we are suffering as a result of the quarantine measurements -- measures, and we see this in particular in Pharmaceuticals, that is our largest division in China, where normal business activities, especially in the field of sales organizations is certainly not possible now. So that means a lot of hospitals cannot be visited and seminars cannot be held and the whole idea of medical education through our medical affairs organization. None of this can be done or only to a very limited extent. And this is something that we also see in our business -- so in China, in Pharmaceuticals, we are below our expectations as a result of these effects that I mentioned. And every country has its own approach to managing the pandemic. We're familiar with the Swedish experiment, and we know how things are dealt within Europe and in Germany. China took a different approach. And I think we have to realize and take a look at how things are going on in China and how the vaccines developed there, how they did compared to the vaccines developed in Western countries. But this is up to the Chinese government, and I certainly don't want to comment on that.

[Unknown Executive]

The next question comes from [ Andrew Hennings ] from [indiscernible].

[Unknown Analyst]

I also have 2 questions. You went to China with the Chancellor. What were the impressions that you brought home from China? And my second question is, your successor, when can we expect a decision there? Maybe you can give us some information on that.

[Werner Baumann, executive]

Well, [ Ms. Hennings ], thank you for already giving me the answer to your second question. Of course, I can't say anything on that. This is a process that relates to me in my present role. And the right person to ask this question is would be the Supervisory Board, Mr. Winkeljohann as the Chairman of the Supervisory Board. And you know that we have a good Supervisory Board, and they deal with important topics with due diligence. And I think that the search for a successor for my position, is something that I certainly cannot answer. I cannot give you any information on that. I don't know anything about this, and I'm not the right person to be asked.

Now with regard to the impressions from China, a lot has been written about that. And I personally would only like to mention a couple of things. As I said, most of this is something is certainly already read or written yourselves. The trip was very important, in my opinion, because -- it was a very symbolic journey. And with regard to intensifying and normalizing relations, not only between Germany, but also in Europe and the West with China. And secondly, it was good to be in China, to have the possibility to be in China during the pandemic and to have some personal discussions and to get an idea as to what the mood is locally and also the whole atmosphere in the meeting of this delegation. As far as the atmosphere goes, it was very friendly, constructive, and it was very welcoming.

And in addition, there are no further details, which I can share with you now. On the one hand, there were discussions, which were confidential. I'm the wrong person to be asking that question. And also the economic delegation, there was nothing major in terms of content that was discussed there. The symbolic nature of this trip was important for the economic delegation.

[Unknown Executive]

The next question comes from Bloomberg [indiscernible].

[Unknown Analyst]

I've got a few questions. First of all, the subject of the agriculture business in the United States and North America. You said that at the beginning, the market has changed in the last few months. I'd like to know whether that is a short-term or long-term development. I think it might be connected with the weather. That could be the reason. That's the first question. Is it something long-term to do with the market? Or is it something limited to this quarter? And then I also wanted to ask, in Europe, Africa and the Middle East, the figures were very good for Crop Sciences. Has that anything to do with the war in Ukraine or is that independent of that? Those are the 2 questions.

[Wolfgang Nickl, executive]

Good morning, Mr. [indiscernible]. Thank you for your questions. I'll begin with the market development. In the short-term, we always see developments due to the weather in the agriculture sector. It's connected to the fact that either it rains too much or too little, and there can be drought or disaster scenarios in some areas and the weather phenomena can be more or less pronounced, and they have effects on agriculture production, of course. Then, as I mentioned earlier on, there's always a question of what farmers do expecting the earnings and what do they plant and how much they plant. We've seen all of that this year. So it's nothing unusual. The effect on our business is due mainly to the fact that all in all, less was planted on the market than expected. And as you can also see on the part of the commodity prices, prices remain very high. The price level. Also, if you look at the futures into 2023, remain high because there are very low inventories worldwide on the one hand.

And on the other hand, of course, the problem that this year, the inventory situation isn't being improved following the harvest because due to the lower acreage, harvest will be smaller again in North America. And for Latin America, which I have to wait and see. It's only the beginning of the season there.

So in the short-term, the weather and short-term market phenomena, yes, on the long-term, it could be a huge issue because where if you look -- there are more and more pronounced consequences of climate change. Big rivers in Southern Europe are drying up. The Mississippi is carrying [ fireless ] water, the Rhine is carrying [ fireless ] water. And that is a signal of how strongly, in particular, the climatic situation is changing. And the agriculture industry has to respond with innovations with the relevant plant varieties and drip irrigation and everything that is possible in that field to handle water differently. These are all things that we are working on, as are our competitors. Of course, this is a challenge for the farmers with respect to conducting their business, agriculture. On the other hand, it's extremely important, it's a great business opportunity for us because it means that with new solutions and innovations, we can, of course, expand our business in the years to come to satisfy the demand on the market.

So net-net, it's positive news. In the longer term, too, outlook for the agricultural input market. And then the thing versus Europe, Asia, Middle East, that has nothing to directly with the Ukraine crisis because we're an agricultural input supplier. We provide seed, plant protection agents biologic products, which we supply to these markets. So what we are seeing are certain volume developments, a slight increase in volumes and also a massive increase in costs on our side, which have led to price increase that we could pass on the higher costs, which you can see in across all regions, including Europe, Africa and Middle East.

[Unknown Executive]

The next question comes from the English telephone conference.

Unfortunately, we can't hear the question here.

We're not hearing anything at the moment.

[Kevin Grogan, analyst]

Hello, my name wasn't called while I was trying to ask a question.

[Unknown Executive]

Now it works, we can hear you.

[Unknown Analyst]

This is Kevin Grogan from Scrip. Am I okay to ask my question now?

[Unknown Executive]

Yes, go ahead.

[Kevin Grogan, analyst]

Excellent. Thank you very much. I was just wondering if you could give me an update on Osocimab. Given that the Ionis pact for some reason was called off despite positive Phase II results. Have you now also decided to return the right to Osocimab to Ionis as well? And would that be a business decision or is that because maybe the trial didn't work out as you expected?

[Werner Baumann, executive]

The question is to do with our Factor XI development program. We have 3 different molecules under development, with very good data for Asundexian. And we decided, therefore, that Asundexian should go into a very broad Phase III program -- in 2 Phase III programs with continued development, and this has effect on the allocation of resources and concentration on the most promising active agents, where the other 2 active agents and one of these is the Ionis program, being de-prioritized. So we're not going to continue developing that.

[Unknown Executive]

The next question is [indiscernible].

[Unknown Analyst]

Thank you. Hello to everyone in Leverkusen. A couple of questions on glyphosate. First of all, I'd like to know -- you talked about extremely high prices early in the year. Could you give us an example how high, what was the price compared to the previous year? My second question is, what share of your herbicide business is accounted for by glyphosate? Is it half? Or is it more? And thirdly, you said that you still have some pending glyphosate cases, and they haven't been all that many settlements. So for how many open cases, how many pending cases are there? And how many cases have been completed? And my final question is what about approval procedures in Europe? What is the status there? Will there be another approval for glyphosate in the future.

[Werner Baumann, executive]

[indiscernible], no problem. Thank you for all your questions. First of all, the price level. If you take a look at the generic commodity price of glyphosate, then -- and if you take a look at the end of 2020 and early 2021, if you take that as your basis, then the average price for 2022 is expected to be about 2.5x of the base price. So this is a significant increase in the commodity markets. And your second question, we do not give any information with regard to the individual herbicides in our overall product portfolio, but you can assume that glyphosate is clearly the one with the largest share of this business, also due to the developments over the last 1.5 years.

Now with regard to the number of cases, we have 149,000 cases. And of these 149,000 cases, 108,000 have either been settled or there has not -- they have not been sufficiently substantiated, so they were dismissed. That is the current state of play. As far as the approval procedure is concerned, it looks now as if the group of countries are going to make a recommendation with regard to safety of glyphosate and the approval procedure is up and running. It's entering the second phase now. There will be an expertise after we have the required quorum and that was not available. We just missed that, and that was what we needed for a reapproval, and this is a process that is now up and running.

[Unknown Executive]

The next question comes from [indiscernible].

[Unknown Analyst]

[indiscernible] from [ Plato ]. Mr. Baumann, you talked about how robust your business is and what a good position you're in, in Pharmaceuticals and Crop Science. But not everybody agrees with you. Some of the investors and analysts recommend that you could split up the company. Could it be that these discussions and also the tailwinds you've been given, maybe you're making more progress with these critical voices. What is your impression? That's what I'd be interested in hearing.

[Werner Baumann, executive]

[indiscernible], thank you for your question, of course. The strategy and implementation of the strategy is something that cannot be based on quarterly results. We have a strategy, which the company follows for a very long time when it comes to Health and Pharmaceuticals. If you take a look at this and what's been going on in the world, then I think you can say that with our strategy that we focused on these 2 areas and that we have an excellent position.

The next question, of course, is whether these businesses are -- can be managed competitively in this way? Or could they be managed better in a different setup. And if I take a look at how things have gone in the last few years, then I think that the performance speaks for itself. We can see this not in the share price, of course, it's not reflected there. That's one of the questions. That's why people thinking in the short-term have said they'd like to see some structural changes in order to have some movement in the share price. If this is going to the price, this is a totally different story. We've seen this in a number of the statements made by some of our competitors. The expected development of the share price has not taken off as it should have. And that is why all I can say is that Consumer Health. We see this as 1 of the top 3 companies and that we outperformed the market on a regular basis. And in the field of Crop Science, we are, by far, the leading company. And even with very high market share, such as in Corn, we still gain market share, also in growth.

And if you take a look at this for 2021 or 2022, I don't think if we compare ourselves with the best peers in the industry as far as competitive as this is concerned, we are 50% ahead of the next closest competitor. So I think the figures speak for themselves. And the issues that we are dealing with now, of course, we talk about the different questions liability. These are questions that we're working on and you can also see what we have achieved this year. We won 5 cases in a series of cases. And I think when it comes to settlements, it's taking time, of course, on the other hand, because the positions of the claimants have also been weakened. So I think we're really on the right track.

[Unknown Executive]

That was the last question, Mr. Preuss.

[Unknown Executive]

Thank you, Ms. Anst, and thank you, everyone. With that, we can close the question-and-answer session. Thank you very much for your interest, for your questions. And that, we wish you a good day. And of course, the most important thing, stay healthy.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]