Continuing on a growth course Audited

Focus on four health themes

Consumer Health Care specializes in over-the-counter pharmaceutical products, focusing on four health themes: Mobility, Everyday Health Protection, Women’s and Children’s Health, and Cough and Cold. The main distribution channels for our products are pharmacies, as well as retail chains, drug stores and mail order in some countries and certain markets. We are building on the strength of our well-known brands and the long-standing trust consumers place in them with respect to their quality and efficacy.

Strong brands and regional expansion

Total revenues of the Consumer Health Care division rose by 5.7% to € 467 million in 2009. We thus met our objective of continuing on our growth course. Organic growth was 8.6%. Sales by wholesalers to end customers even saw double-digit growth due to increased destocking, as for instance mandated by law. Following a difficult first half, attributable also to destocking, business recovered markedly in the last two quarters, with sales significantly exceeding market growth in many countries. The cornerstones of our strategy are strong brands and regional expansion. With a few exceptions, our key markets developed well. However, in some markets, negative currency effects diminished organic growth and the successes achieved. This was primarily noticeable in the United Kingdom as well as in Poland and Mexico.

The operating result of the Consumer Health Care division declined by 21% to € 48 million; ROS was 10.3% versus 13.9% in 2008. In comparison with the previous year, it should be noted that exceptional items had a strong impact in 2008, primarily the sale of the biManán® brand in Spain for € 11 million. Additionally, the operating result was adversely affected by exchange rate losses, mainly with respect to Venezuela. Research and development spending rose by 16% to € 19 million. Underlying free cash flow increased by 28% to € 49 million in 2009.

Further improving the innovation rate

In order to satisfy consumer needs even better and meet trends even faster in the future, the division realigned its research and development organization. The aim is to achieve even better quality and strengthen our strategic brands. Although our innovation rate, meaning the share of the total portfolio accounted for by new products, is among the highest in an international comparison, the objective is to achieve further improvements.