Building Bayer CropScience. Crop Protection

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1 Building Bayer CropScience

2 Disclaimer Forward-Looking Statements This presentation may contain forward-looking statements based on current assumptions and forecasts made by Bayer Group management. Various known and unknown risks, uncertainties and other factors could lead to substantial differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in our public reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission (including our Form 20-F). The company accepts no obligation to continue to report or update these forward-looking statements or adjust them to future events or developments.

3 Investor Forum - Goldman Sachs Bayer Business Development 2001 Research Platform Bayer CropScience Strategic Rationale and Objectives New Organizational Structure Integration Status

4 World Market in 2001: Slight Decline Herbicides: 35 Insecticides: 30 Fungicides: Bn Currency Europe: 15 US$ NAFTA: Euro Asia/Pacific: Latin America: Source: Bayer Estimates Market decline: - 1% in (- 5% in US$)

5 Market Performance - Key Factors in 2001 Continued low commodity prices and depressed farm incomes EU intervention prices decreased Ongoing decline of Japanese rice area Further increase of GM crop area in North and South America Euro remains weak against the US Dollar Reduced cereal area in the EU Industry consolidation process continues Market decline of 1% in (5% in US$) for agrochemicals

6 Bayer : Exceptional Growth in 2001 Despite Difficult Market Environment (mm ) 2, % Organic Growth 2,700 Flint, Mikado E +4% +6% Sales development 2001 ( )( I Europe F NAFTA H LA GPC Asia Successful integration of of Flint Flint and and Mikado Mikado Strong Strong performance of of our our blockbusters: Imidacloprid (Confidor( (Confidor,, Gaucho Gaucho ) ) and and Tebuconazole (Folicur (Folicur,, Raxil Raxil )) Building Building the the new new Bayer Bayer herbicide herbicide portolio: portolio: Axiom Axiom,, Everest Everest,, Attribut Attribut and and Innova Innova

7 Regional Breakdown 2001 (E) World Market 30 bn / - 1% Bayer 2.7 bn / + 10% 16% 13% 23% 14% 11% 38% 12% 15% 33% 25% Europe NAFTA International Latin America North East Asia

8 Breakdown by Business Units 2001 (E) World Market 30 bn Bayer 2.7 bn / MS 8.9 % 8% 11% 45% 26% 21% 20% 30% 39% Insecticides Fungicides Herbicides GPC

9 FLINT - Successful Integration into Bayer Portfolio 2001 FLINT product line reached 100 mm in sales despite negative factors such as delayed registration in France (April 2001) and significant reduction of UK cereal fungicide market (-22 %). Business still dilutive % Significant growth of FLINT line with full registration in place to 170 mm. Business expected to become accretive E Sales (mm ) Novartis Bayer peak FLINT product line targeted to reach 300 mm annual sales supported by growing demand for high performance strobilurin based products.

10 Building the New Bayer Herbicide Portfolio INNOVA Bayer s new new and and innovative herbicides are are expected to to contribute more than mm mm Euro to to our our future herbicide portfolio in in 2005

11 INNOVA - Establishing a New Rice Market Segment in Japan Unique, Unique, innovative application concept concept combining Innova Innova GR GR with with the the Innovator Innovator herbicide herbicide applicator (0DAT (0DAT = 0 days days after after transplanting) Enables Enables Japanese Japanese farmer farmer to to save save time time and and labour labour as as rice rice transplanting and and herbicide herbicide application can can be be done done together together in in only only one one step step Innova Innova GR GR contains contains Fentrazamide,, the the novel novel Bayer Bayer grass grass herbicide herbicide which which not not only only sets sets new new standards in in efficacy, efficacy, but but also also shows shows excellent excellent crop crop safety safety making making it it suitable suitable for for the the new new 0DAT 0DAT application

12 Bayer s Significant Entry into the NAFTA Wheat Herbicide Market The The superior superior product product for for control control of of Wild Wild Oats Oats and and Green Green Foxtail Foxtail in in wheat wheat A successful and and rapid rapid product product introduction into into a mature mature and and crowded crowded market market Fast Fast adoption adoption of of the the product product with with a different different mode mode of of action action shows shows that that the the market market is is very very receptive receptive to to this this innovation

13 Attribut : A New Selective Herbicide from Bayer A new new selective herbicide from from Bayer Bayer for for grass grass control in in winter winter wheat, wheat, rye rye and and triticale in in Europe Europe 4 Key Key grasses Solution blackgrass,, silky silky bent, bent, couch, couch, bromus 2001: 2001: Launch in in Eastern Europe 2002: 2002: Germany, UK UK and and Belgium expected Further EU EU countries and and US US to to follow follow

14 Imidacloprid - The Exciting Story of the World s Best Selling Insecticide Now Reaching 600 mm in Sales Sales [mio Euro] Crops 39 Crops Europe Europe USA USA Japan Japan 61 Crops 61 Crops Brazil Brazil Italy Italy Garden Garden India India Korea Korea USA- USA- Seed Seed treatment treatment Bayer Bayer Advanced Advanced > 160 Crops > 160 Crops E

15 Milestones from Bayer s Agrochemical Research 2001 Fentrazamid (Innova ) 2001 Propoxycarbazone (Attribut ) 2000 Iprovalicarb (Melody ) 2000 Thiacloprid (Calypso ) 2000 Flucarbazone (Everest ) 1999 Fenhexamid (Teldor ) 1998 Carpropamid (Win ) 1998 Flufenacet (Axiom ) 1997 Spiroxamine (Impulse ) 1995 Tebupirimfos (Aztec ) 1991 Imidacloprid (Confidor ) Goal: 2-3 New Compounds per year

16 The Challenge: The Traditional Research Approach Faces More and Stronger Limiting Hurdles on Its Way to Success Technical Performance Price Pressure Environment Trade Product X X Candidate The The Solution: New New Modes of of Action

17 Cutting Edge Technology for Bayer s Technology Platform Genomics (U)HTS Chemical Libraries Products with new modes of action Logistics Micro Screening Scientific Computation

18 (U)HTS on the Way up! Genomics (U)HTS 24x 26x 28x Chemical Libraries Data points [Index] 8x Logistics 1x 2x Scientific Computation Micro Screening

19 Building Aventis CropScience Bayer CropScience The contemplated acquisition of Aventis CropScience by Bayer is subject to review by regulatory authorities and to the proceedings of information and consultation of the employees representatives, according to the rules and regulations of the involved countries.

20 Strategic Rationale for Acquisition of Aventis CropScience Reinforcement of Herbicide range Improved regional presence Critical mass - competitive cost structure Access to leading company in AgBiotech Strengthen the GPC business Ability to offer complete solutions to our customers in all key markets!

21 Complementary Strengths: Bayer and ACS Strengths Bayer Product portfolio: Insecticides, Fungicides Technical competence Strong Strong presence in in Europe Europe Strong Strong position in in speciality -- markets: GPC, GPC, Seed Seed Treatment High High profitability Strengths ACS Product portfolio: Herbicides, Insecticides Strong Strong presence in in all all important regions regions and and crops crops Biotechnology and and Seed Seed Good Good position with with Environmental Science

22 Bayer`s Strategic Intent: Become the Leading CropScience Company (Insecticides, Fungicides, Herbicides, GPC) Seeds (Breeding Know-how, Lucrative Niches) Green Biotechnology (Input Traits, Output Traits)

23 Bayer CropScience - Our Objective Pro forma combined company 20% EBIT in 2005 (in bn ) % % % % * 0.85* Bayer 2000 Aventis CS 2000 Turnover EBIT (excl. special items) Combi Company 2000 * excl. 625 mm one-time charges Bayer CropScience 2005 Target % EBIT Margin

24 Bayer CropScience - Development Above Market Growth (bn ) 6.5 EBIT EBIT 13% 13% Revenue Growth Driver - Herbicides - BioScience - Fungicides - Environmental Science 8.1* EBIT EBIT 20% 20% Profit Growth Driver - Improved product mix - Turnaround Biotech & Seed - Realization of synergies * w/o future divestments

25 Bayer CropScience - Organizational Structure Management Board Portfolio Management Europe Environmental Science Corporate & Research North America BioScience other Services Development Cono Sur Technical Operations North-East Asia Supply Chain International

26 Bayer CropScience - Selection Process Open, fair and professional selection process supported by external consultants Outstanding Management Team nominated forming the basis for our future success!

27 Building Bayer CropScience - Goals and Principles of Integration Process Protect top line and enhance business momentum Bayer CropScience fully operational at Closing Date Optimize resources as appropriate Retain talent and motivate all employees Act with social responsibility Responsible Speed

28 Building Bayer CropScience - Key Milestones Design of integration process Design of new organizational structure Identification of first level leadership team Kick-off Integration Teams Identification of key country leadership Identification of next management Feb-Mar top managers identified before Closing Design of detailed structure and processes Mar 2002 Expected Closing date End Mar 2002

29 Bayer CropScience - Objectives 1. Growth above market development (> 4% p.a.) - Top-Line synergies due to bundling capabilities and best-of-class market coverage - Unique Development pipeline - Unique Research platform 2. Fast realization of synergies Target: 20% EBIT by 2005