Bayer AG - Stockholders' Newsletter Third Quarter 2007 - Performance by Subgroup and Segment

Management Report

Performance by Subgroup and Segment

Changes in corporate structure

Our business activities are grouped into the HealthCare, CropScience and MaterialScience subgroups.

As of September 30, 2007, our interest in the voting capital of Bayer Schering Pharma AG, Berlin, Germany, amounted to 96.3 percent. The acquired business of Schering, Berlin, Germany, is included in the Pharmaceuticals segment of the HealthCare subgroup as of June 23, 2006.

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, United States, are unaffiliated companies that have been totally independent of each other for many years.

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, H.C. Starck and Wolff Walsrode are reported as discontinued operations. The prior-year figures have been restated accordingly.

Sales by Segment in Percent, 9M 2007 (9M 2006 in parentheses)

Key Data by Subgroup and Segment

	Sales		EBIT before special items*		EBITDA before special items*		EBITDA margin before special items*
€ million	3rd Quarter 2006	3rd Quarter 2007	3rd Quarter 2006	3rd Quarter 2007	3rd Quarter 2006	3rd Quarter 2007	3rd Quarter 2006	3rd Quarter 2007
HealthCare	3,482	3,680	498	644	882	953	25.3%	25.9%
Pharmaceuticals	2,444	2,570	291	438	640	715	26.2%	27.8%
Consumer Health	1,038	1,110	207	206	242	238	23.3%	21.4%

CropScience	1,049	1,157	3	34	143	167	13.6%	14.4%
Crop Protection	872	985	8	60	133	175	15.3%	17.8%
Environmental Science, BioScience	177	172	(5)	(26)	10	(8)	5.6%	(4.7%)

MaterialScience	2,596	2,625	264	295	381	421	14.7%	16.0%
Materials	743	767	38	32	77	80	10.4%	10.4%
Systems	1,853	1,858	226	263	304	341	16.4%	18.4%

Reconciliation	332	331	4	(20)	53	18	16.0%	5.4%

Continuing operations	7,459	7,793	769	953	1,459	1,559	19.6%	20.0%

2006 figures restated
* for definition see Bayer Group Key Data, also Calculation of EBIT(DA) Before Special Items.

	Sales		EBIT before special items*		EBITDA before special items*		EBITDA margin before special items*
€ million	First Nine Months 2006	First Nine Months 2007	First Nine Months 2006	First Nine Months 2007	First Nine Months 2006	First Nine Months 2007	First Nine Months 2006	First Nine Months 2007
HealthCare	7,942	11,007	1,254	1,908	1,817	2,870	22.9%	26.1%
Pharmaceuticals	4,780	7,648	671	1,274	1,123	2,137	23.5%	27.9%
Consumer Health	3,162	3,359	583	634	694	733	21.9%	21.8%

CropScience	4,398	4,505	641	743	1,062	1,147	24.1%	25.5%
Crop Protection	3,554	3,681	452	599	816	946	23.0%	25.7%
Environmental Science, BioScience	844	824	189	144	246	201	29.1%	24.4%

MaterialScience	7,629	7,856	1,023	876	1,370	1,239	18.0%	15.8%
Materials	2,176	2,263	271	99	386	231	17.7%	10.2%
Systems	5,453	5,593	752	777	984	1,008	18.0%	18.0%

Reconciliation	1,017	977	(61)	(14)	77	99	7.6%	10.1%

Continuing operations	20,986	24,345	2,857	3,513	4,326	5,355	20.6%	22.0%

2006 figures restated
* for definition see Bayer Group Key Data, also Calculation of EBIT(DA) Before Special Items.