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Investment in technology needs large market, say Bayer execs

Update: October, 06/2014 - 08:25

Michael Koenig.

A member of the Bayer AG board, Michael Koenig, paid his first visit to Viet Nam recently. Viet Nam News asked him and David Champion, general director in Viet Nam, about their company's mission of ‘science for a better life'.

"Our success is based on inno-vation" is one of your company's key strategies. Why? What are your major recent innovations and what have they added to the bottom line?

Koenig: If you look at Bayer's history of 150 years, one thing we are really good at is our ability to innovate – and to convert our scientific excellence into successful products. That has always been our strength. It started with organic dye stuff many years ago to chemicals to polymers to crop protection chemicals to healthcare, but it was always about molecules, scientific research translated into products, and that is what we do until today.

If you look into material science, we have invented certain polymers and we are also working on integrating these polymers in high-tech applications.

If you look into crop science, we also see an innovation story. We are selling products we have invented ourselves. By that we create a competitive edge over others for our customers and farmers.

The same is true in healthcare where we recently launched five new products. They are in the scientific sense new molecular entities that make the life of people better. We estimate the peak sales potential of the five to be more than 7.5 billion euros (US$9.5 billion).

Also tell us about the company's mission of "science for a better life". How has this been achieved in Viet Nam in the 20 years the company has been here, and what are your plans for the future?

Koenig: Our mission "Science For A Better Life" is our motivation and at the same time our promise to society. It means we are improving people's quality of life by preventing, alleviating, or curing diseases and we are helping to provide an adequate supply of high-quality food, feed, fibre, and renewable plant-based raw materials. Moreover, high-tech polymer materials are making significant contributions to factors such as energy and resource efficiency in the areas of mobility, construction, and home living.

Champion: In line with the Group's mission, Bayer Viet Nam takes up global innovations and tailor-made solutions to urban and rural people to improve their quality of life, particularly in agriculture, health care and manufacturing. With our innovative integrated solution Much More Rice, we are enabling Vietnamese farmers to increase their yields, profits, and, eventually, living standards, just to name one example. We are on a good momentum to further develop our business here.

David Champion, general director of Bayer Viet Nam, gives school supplies to children at An Minh Bac primary school in Kien Giang Province. — VNS Photo

The Vietnamese Government is looking for FDI to develop technology, especially agricultural. Is your company interested and considering this? Do you think it is an attractive area for investors? What should be done do to attract them?

Champion: We see the importance of investment, not necessarily of FDI. The important thing is having partnerships, public-private partnerships for example. We need to find partners to come to Viet Nam to essentially bring in some branded products which will lift the whole scene, both investment and interest.

The policy to attract investment in high-tech is absolutely fine. Definitely I feel Viet Nam's doing a good job to attract and keep those people. Much of the desire to be here in the short term will still be about labour costs and the availability of skills and people to support those businesses.

Possibly, some things could improve, like infrastructure. For us other things are fine and in place.

Koenig: You have to have either market size locally and/or good export opportunities. That's fundamentally what investors look at. And it pretty much relies also on local conditions. You need a good, well-skilled labour force, a good education base and a skilled middle management, these are important factors for the long term. And then there are of course other aspects like reliability and availability of services. So, Viet Nam has done a lot to attract FDI and I know some of the customers in material science have moved to Viet Nam, some Japanese companies, some Taiwanese companies and in the end, we help them to be able to do that because we deliver their raw materials. For us, to do a very large investment here, I believe the market would still have to grow.

Bayer said a few years ago that it targets annual revenues of EUR300 million ($380 million) in Viet Nam by 2015. Are you on course to achieve it? Since Viet Nam is an agricultural country, is the company focused much on this sector?

Champion: Bayer Viet Nam has a sustainable growth record in the last 20 years. The turmoil in global and regional economics has had a negative impact on many businesses in Viet Nam and elsewhere. It has also softened our previous projection. However, where we find ourselves today is very gratifying since we have achieved positive growth in all our business areas and our vision of sustainable growth in Viet Nam remains as highly attractive for further conducting the business. With a long history of strong R&D and know-how and an extensive portfolio of integrated and innovative offerings, Bayer has helped and will continue to help Vietnamese farmers increase yields and, in turn, incomes in a sustainable manner.

You recently acquired the OTC business of Merck. What was the rationale and will the acquisition have any impact on your Vietnamese operations?

Koenig: We just closed the acquisition of the consumer care business of US pharmaceutical company Merck & Co for $14.2 billion.

This acquisition marks a major milestone on our path towards global leadership in the attractive non-prescription medicines business. At the same time we are leveraging our capabilities in the cardiovascular therapeutic area. In a related transaction, we have entered into a global co-development and co-commerc-ialisation agreement with Merck & Co, Inc in the field of soluble guanylate cyclase modulators.

For Bayer HealthCare in Viet Nam, this will help to significantly enhance our product portfolio across multiple therapeutic categories. It will also enable us to meet the increasing demand for better healthcare in Viet Nam. — VNS

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