Management Report & Annexes | Report on Economic Position
15.5 Business Development in the Emerging Markets
The Emerging Markets again accounted for a disproportionately large share of sales growth in 2013. For reporting purposes we have defined the Emerging Markets as Asia (excluding Japan), Latin America, Eastern Europe, Africa and the Middle East.
Sales in these markets rose in 2013 by 7.3% (Fx adj.) to €15,040 million (2012: €14,785 million), with pleasing gains in Latin America, Asia and Eastern Europe. The Emerging Markets accounted for 37.5% of sales (2012: 37.2%).
HealthCare raised sales in the Emerging Markets by 8.0% (Fx adj.) in 2013 to €6,236 million (2012: €6,169 million), with the Latin America region posting the highest currency-adjusted growth rate. Here, Argentina and Brazil saw the strongest currency-adjusted increases, especially in sales of our Consumer Care products. The largest increase in absolute terms occurred in China, mainly in light of the continued expansion of our distribution network. We also achieved gratifying sales growth in Russia, primarily in Consumer Care. The Emerging Markets accounted for 33.0% (2012: 33.2%) of total HealthCare sales.
In Russia, HealthCare is supporting the ongoing reorganization of the country’s health system that forms part of the government’s “Pharma 2020” reform program. This program is designed to achieve a 10-year increase in life expectancy by 2020 by improving health care, establishing a government-run health insurance system and modernizing the pharmaceutical industry. Bayer plans to provide assistance with educational and prevention programs.
CropScience improved sales in the Emerging Markets by 18.2% (Fx adj.) in 2013, to €3,959 million (2012: €3,570 million). Business developed particularly well in Latin America, especially in Brazil and Argentina. We posted encouraging sales gains in Asia and Eastern Europe. Sales in Africa/Middle East also increased. The Emerging Markets’ share of total CropScience sales in 2013 was 44.9% (2012: 42.6%).
Growing the business in the Emerging Markets, and especially in developing countries, also involves finding solutions to specific local challenges.
CropScience aims to contribute to increased agricultural productivity in Africa and intends to expand its presence there. The subgroup’s range of products and services is tailored to the needs of African farmers and includes integrated crop solutions based on improved seed varieties and modern crop protection technologies. We also run product safety programs and provide training in good agricultural practice. We regard public-private partnerships as the key to rural development and affluence in Africa and therefore work together with local governments, farmers’ associations, cooperatives, non-governmental organizations, agricultural input suppliers, banks and insurers.
CropScience also aims to help raise living standards in rural areas of India by boosting value added and ensuring it is reinvested in the community. An example is the Model Village Project launched in 2010. The aim of this project is to train farmers in sustainable cultivation methods and show them new ways of irrigating their land in order to improve productivity. Parallel measures are also being taken to improve general living conditions, such as the commissioning of a drinking water purification plant and the launch of health promotion and children’s educational programs. The Bayer Prayas Rural Development Association coordinates the activities at the local level in the model villages in the state of Karnataka in southwest India.
In the Emerging Markets, MaterialScience had sales of €4,761 million in 2013 (2012: €4,933 million), down 1.0% year on year (Fx. adj.). Sales fell considerably in Africa/Middle East, especially in Turkey. Sales in Asia were practically flat with the prior year, although business expanded in China. In Latin America, too, sales came in at the previous year’s level. In Eastern Europe, however, we posted a slight increase. The Emerging Markets accounted for 42.4% (2012: 42.9%) of total sales at MaterialScience.
In cooperation with external partners, MaterialScience is evolving and implementing technical solutions to help low-income people in developing countries and Emerging Markets gain improved access to high-quality, safe and easy-to-build yet affordable housing. These activities currently focus on Asia. The company is mainly contributing its expertise in the field of polyurethane rigid foam for the construction industry.