Largely on the basis of the strong competitive advantages of the healthcare group and to a lesser extent the crop science business, we believe Bayer (BAYRY) has created a wide economic moat. Also, the recent divestiture of no-moat material science group Covestro leaves the company in a stronger competitive position.
In the healthcare division, Bayer’s strong lineup of recently launched drugs and solid exposure to biologics should support steady long-term growth. Two of Bayer’s key drugs are biologics: Betaferon for multiple sclerosis and Kogenate for hemophilia. While competition is increasing in both areas, the manufacturing complexity of these drugs deters generics from entering the market. Further, strong demand for cardiovascular drug Xarelto and ophthalmology drug Eylea should continue to drive growth.
Damien Conover, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.