Performance by Subgroup and Segment

Group structure

Bayer AG, headquartered in Leverkusen, Germany, is the strategic management holding company for the Bayer Group. Business activities are conducted by the HealthCare, CropScience and MaterialScience subgroups, supported by the service companies Bayer Business Services, Bayer Technology Services and CURRENTA. There have been no material changes to the Bayer Group’s structure since the 2006 Annual Report.

The commentaries in this report relate exclusively to continuing operations, except where specific reference is made to discontinued operations or to a total value (total). The divested activities of the Diagnostics Division from the HealthCare subgroup and of H.C. Starck and Wolff Walsrode from the MaterialScience subgroup are reported as discontinued operations. The prior-year figures have been restated accordingly.

The acquired business of Schering, Berlin, Germany, is included in the Pharmaceuticals segment of the HealthCare subgroup as of June 23, 2006. As of December 31, 2007, our interest in the voting capital of Bayer Schering Pharma AG, Berlin, Germany, amounted to 96.3 percent. The names “Bayer Schering Pharma” or “Schering” as used in this report always refer to Bayer Schering Pharma AG, Berlin, Germany, or its predecessor, Schering AG, Berlin, Germany, respectively. The reference to Bayer Schering Pharma AG or Schering AG also includes business conducted by affiliated entities in countries outside Germany. Bayer Schering Pharma AG and Schering-Plough Corporation, New Jersey, U.S., are unaffiliated companies that have been totally independent of each other for many years.

Sales by Segment in Percent, 2007 (2006 in parentheses)

Key Data by Subgroup and Segment, 2007

	Sales		EBIT before special items*		EBITDA before special items*		EBITDA margin before special items*
€ million	2006	2007	2006	2007	2006	2007	2006	2007
HealthCare	11,724	14,807	1,715	2,492	2,613	3,792	22.3%	25.6%
Pharmaceuticals	7,478	10,267	934	1,641	1,686	2,807	22.5%	27.3%
Consumer Health	4,246	4,540	781	851	927	985	21.8%	21.7%
CropScience	5,700	5,826	641	786	1,204	1,324	21.1%	22.7%
Crop Protection	4,644	4,781	441	632	927	1,093	20.0%	22.9%
Environmental Science/BioScience	1,056	1,045	200	154	277	231	26.2%	22.1%
MaterialScience	10,161	10,435	1,210	1,117	1,677	1,606	16.5%	15.4%
Materials	2,925	3,041	289	100	448	273	15.3%	9.0%
Systems	7,236	7,394	921	1,017	1,229	1,333	17.0%	18.0%
Reconciliation	1,371	1,317	(87)	(108)	90	55	6.6%	4.2%
Continuing operations	28,956	32,385	3,479	4,287	5,584	6,777	19.3%	20.9%