First in class, best in class, or nothing – that is the new R&D strategy Bayer is pursuing in its pharmaceuticals division. This means that drug candidates will only be developed if they have the potential to fundamentally change the current standard of care for treating diseases. That strategy carries more risk – especially since Bayer is now focusing its research exclusively on cardiology, oncology, cell and gene therapies, and immunology. But if the plan succeeds, the unit faces a bright future – of this the Head of Pharmaceuticals Division Stefan Oelrich is deeply convinced.

„Research and development (R&D) is always risky,“ Oelrich said at a recent press event in San Sebastián. While a broader setup does help diversify risk, „there is no innovation premium for me-too products,“ the executive noted.

The company's ambitions are big. „Today we rank 17th worldwide in pharmaceuticals. In Europe and China, we are already among the top 10. I want us to be in the global top 10,“ Oelrich stressed, while at the same time qualifying that this was not a set target but rather a vision. His conclusion is that "we have to stretch ourselves in pharmaceuticals.“

Pharmaceutical research, Oelrich believes, has fundamentally changed in recent years. Chemistry, which dominated drug research in the previous century, is no longer the sum of all things. Today, cell and gene therapies are at the centre. To this end, the Leverkusen-based company has acquired three biotech firms in recent years – BlueRock Therapeutics (cell therapy), AskBio (gene therapy), and Vividion (drug discovery) – that will shape the future of Bayer’s pharmaceuticals business.

All three companies are technology platforms. In other words, once the first therapy based on the new technology reaches the market, treatments for other diseases can be replicated following the same model.

The latest developments are certainly encouraging: last week, the first patient was enrolled in the Phase III trial for the cell therapy candidate Bemdaneprocel. The cell therapy is being developed to treat Parkinson’s disease and represents an entirely new therapeutic approach. In the fight against Parkinson’s, Bayer is thus in pole position.

The therapy, in which embryonic stem cells are implanted into patients’ brains, is intended to regenerate the neuronal networks destroyed by the disease. The US Food and Drug Administration (FDA) has also recognised the potential of this new approach and granted it a special designation for further development. Bayer was able to move directly from Phase I of clinical development into a combined Phase II/III trial, which qualifies for approval.

Recruitment of the roughly 100 patients is expected to be completed by the end of 2026. The study will last 18 months. If everything goes according to plan, the therapy could be approved as early as 2029. The small number of patients required for the Phase III trial is due to the nature of the therapy, as the cell transplantation is an irreversible procedure that can only be performed on patients with Parkinson’s disease.

Cell and gene therapies share a common feature: they do not aim to alleviate symptoms but rather to cure the disease. In gene therapy, there is also a development candidate (AB-1005) for Parkinson’s disease. It is currently in Phase II of clinical development and could likewise be approved by the end of the decade.

How to build a viable business case from this, however, remains uncertain. The therapies are designed to achieve the desired outcome with a single application. It is easy to imagine the pricing implications of this. According to Bayer, it is still too early to discuss pricing models. Speculation would be irresponsible, as the development is only at the beginning of the crucial clinical development phase.

On the path to commercialisation, production is considered a bottleneck in both cell and gene therapies. Bayer is addressing this issue with an integrated approach. In both therapy areas, the Leverkusen-based company covers the entire value chain from research to production. In the field of gene therapy, the AskBio subsidiary Viralgen, based in San Sebastián, is responsible for manufacturing as a contract producer.

To reach the global top 10, Bayer also intends to continue relying on in-licensing. The greatest value leverage comes when a development candidate is close to entering clinical development. „However, these opportunities are not easy to find,“ Oelrich explains. In contrast, a fierce price competition has emerged for worldwide marketing rights to late-stage development candidates. Due to their deeper pockets, Big Pharma usually wins out with these drug candidates.

Given the progress in its own development pipeline, Bayer can afford not to participate in this race, said CEO Bill Anderson. The company now expects to fully offset the revenue loss from the patent expiry of the blood thinner Xarelto with new products. Recently, the 2025 target for the pharmaceuticals division was raised.

In terms of results, the dry spell will last a bit longer. Bayer does not expect an increase in the operating profit margin based on adjusted Ebitda until 2028. However, if the still-young platform companies meet the expectations placed on them, Bayer Pharmaceuticals could indeed be back among the leaders. There is a lot of hope involved, but the latest successes leave Oelrich optimistic.