Investor Handout 1st Half The Transformation has begun 1st Half 2002 Results

The Transformation has begun 1st Half 2002 Results

Safe Harbor This presentation contains 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 material 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 assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments. 2

A Far-Reaching Transformation... Focus Portfolio management Outcome Optimization of business mix Capital allocation Strict capital discipline Efficiency improvement Ideally prepared for next upswing Organization Management holding structure Corporate culture Entrepreneurship, performance orientation... to significantly increase corporate value 3

Portfolio Optimization Continues Acquisitions/Joint Ventures Divestitures 2001 Jan + Mikado 2001 May Erdölchemie Aug + Aventis CropScience Dec 2002 Jan Haarmann & Reimer¹ ) PolymerLatex¹ ) Rhein Chemie¹ ) Generics¹ ) (F, SA, E) Real estate Organic pigments¹ ) 2002 Feb + Aventis Behring 2) Mar May Household insecticides¹ ) Agfa stake July + Visible Genetics¹ ) June CropScience: antitrust requirements Dates of announcement 1) Pending 2) Non-binding letter of intent to establish a joint venture, Subject to due diligence, the negotiation 4 of a final agreement, approval by the boards of both companies and regulatory authorities

Strategic Priorities HealthCare CropScience Polymers Chemicals Find strategic partner Successfully manage ACS integration Expand global leadership Participate in industry consolidation Life cycle management of established products Successful launch of new products Build the pipeline Establish new business group Biologicals" Achieve Diagnostics restructuring targets Gain market share Optimize regional presence Exploit full synergy potential Achieve margin target Develop position of Agbio Optimize business mix Concentrate on high-valueadded polymers Exploit growth potential in Asia Research new areas of applications Achieve specific efficiency improvements Streamline portfolio rigorously Strengthen specialty business Consider all options for cooperations Achieve targeted cost savings Find long-term solutions for Basic, Fine and Specialty Chemicals 5

Bayer HealthCare: Strong Presence in Main Areas of the Business Consumer Care Global # 5 in OTC Strong brands Sustainable growth Focused business portfolio Diagnostics Strong # 3 / 4 Profitability improving Excellent position in NAD Pharmacogenomics opportunities Sales 2001: 10.7 bn 19% 20% 8% 9% Animal Health* Competitive # 4 position Very stable business Strong in companion animals 44% Pharma Limited growth potential Maturing top products Avelox / Vardenafil opportunities Structural difficulties Very strong R&D-platform Search for strategic partner continues Biologicals Worldwide # 3 Turnaround managed Kogenate on track Negotiations with Aventis Behring continue * Animal Health business is part of HealthCare 6 effective January 1, 2002

Building a New Biologicals Company* million Bayer Biologicals Sales 2001: 945 million Albumin Prolastin Others 101 11% 131 14% 121 13% 343 36% 249 26% Gamimune Kogenate Combination of Bayer s Biologicals with Aventis Behring Bayer would own a substantial majority interest Option of acquiring the remaining interest at a later date Attractive long-term growth prospects Reliable and steady plasma supply Potential to optimize plasma utilization Potential to increase efficiency in quality assurance and manufacturing processes Stronger pipeline and technology platform * Non-binding letter of intent to establish a joint venture, subject to due diligence, the negotiation of a final agreement, approval by the boards of both companies and regulatory authorities. 7

A World Class Drug Discovery Platform pathomechanism molecular target screening optimization Genomics Functional Genomics Proteomics Bioinformatics High Throughput Screening Combinatorial Chemistry Substance Libraries Millennium CuraGen Myriad Genome Therap. Incyte Nova DX Affymetrix Dynax Onyx Oxford Glyco Science Lion Bioscience CyBio Novalon Receptron Pharmacopeia ArQule ComGenex Oxford Asymmetry Genzyme Genetics Institute Morphosys More than 1bn investment committed US $ 465 million genomics cooperation with Millennium Bioinformatics alliance with Lion Bioscience First risk/reward sharing agreement with CuraGen Toxicogenomics CuraGen 8

Substantial Growth of the Pipeline Research Development Number of candidates/year 5 9 20 Number of candidates/stage 13 13 24 1998 2001 9 5 5 2 3 4 97 99 01 04* Preclinical *objective Phase I Phase II Phase III Phase III / NDAs Vardenafil: highly selective and potent PDE 5 inhibitor, filed in US, EU and Japan Cipro OD: innovative once daily formulation, filed in US Acarbose IGT:new indication for Glucobay/Precose Repinotan: intravenous drug for the treatment of acute stroke Faropenem: new broad spectrum antibiotic 9

Vardenafil: The New Blockbuster Peak sales potential > EUR 1 bn A highly selective and potent PDE 5 inhibitor Significant improvement in key efficiency parameters irrespective of age, severity and etiology A very favorable safety profile Global co-promotion partner (except Japan): GSK NDA submission: 9/2001 US, Mexico 12/2001 Europe, Japan NDA review status: 7/2002 US (approvable letter) / Mexico (approved) Improvement of erections after treatment with Vardenafil %Yes General Population Diabetics / Prostatectomized men 65% 80% 85% 72% 57% 59% 65% 28% 13% 13% Placebo 5 mg 10 mg 20 mg Placebo 10 mg 20 mg 10

Leading AG Companies Turnover 2001 million (including Seeds & Biotechnology) 1. 2. Syngenta Bayer CropScience* 7.062 7.011 3. Monsanto 5.821 4. 5. 6. DuPont BASF Dow 3.478 3.174 4.291 7. 8. 9. 10. MAI Sumitomo FMC Nufarm 876 818 729 589 650 700 m estimated divestments * Pro-forma basis without divestments Source: Phillips McDougall 12

EU/FTC-Approval of the ACS Acquisition The European Commission and the U.S. FTC approved the acquisition of Aventis CropScience < 10 percent of the combined business ( 650 700 m) to be divested Insecticides Global business for fipronil based products for agro-chemical applications. Option to license back ex USA and EU Business for certain specialty insecticides Fungicides EU business for ACS fungicides, mainly used for seed treatment Herbicides EU business for metamitron (Goltix ), flucarbazone business (Everest ) Strategic rationale for the acquisition remains intact 13

Bayer CropScience: Combination of Two Strong Companies % of total* 2001 Sales: 6.5 bn Market Share: ~ 20% BioScience 3% Environmental Science Insecticides 12% (24% ms) 32% (26% ms) 1 1 Herbicides 31% (14% ms) 3 Fungicides 22% (22% ms) 2 ( ) market share market ranking * Pro-forma combination 2001 including Bayer s Environmental Health business and including estimated post divestment impact 14

Bayer CropScience: Matching the Critical Success Factors Economy of scale Cost structure Bundling capabilities Environmental Science Seed treatment A leading player in input traits (LibertyLink, Bt) Seed business (breeding know-how) Output trait know-how Competitive pricing Speciality applications Ag bio solutions Complete product portfolio Strong presence in key regions Innovative chemistry Strong position in all segments Herbicide #3 Fungicide #2 Insecticide #1 Env. Science #1 North America #3 Europe #1 Latin America #2 Asia #2 Excellent research platform 2-3 new launches per year 15

Bayer CropScience: Become the Leading Crop Science Company Objectives Sales growth of 4 % p.a. (double estimated market growth) EBIT margin of 20 % in 2006 Key drivers Exploit full potential of new portfolio Execute divestments Analyse and streamline remaining portfolio Drive innovation with pipeline products Turnaround in BioScience Optimize asset management and supply chain processes Realize full synergy potential 16

Customer Structure Sales 2001: 14.5 bn (Polymers & Chemicals) Health Care* Polymers 20 % 13 % Automotive Electronics 38% 39% 12 % Construction 16 % Chemicals 10% CropScience* 13% Chemicals 8 % 6 % 25 % Furniture Textile, Leather & Footwear Others * Animal Health business included in Health Care 18

Global Leadership in High-Value-Added Polymers Sales 2001: 11.0 bn 20% Rubber 2% Fibers ms = Market share # = Ranking 31% Plastics 18% Coatings and Colorants 29% Polyurethanes Isocyanates 38 > 50 1 Adhesives 14 34 1 Colorants 25 24 1 Others 23 sales% ms% # Polycarbonates 40 30 2 Styrenics 35 15 2 Semicrystalline Thermoplastics 10 > 5 6 Fabricated Products 10 > 20 2 TPU 5 > 20 2 sales% ms% # sales% ms% # TDI 17 25 1 MDI 33 26 1 Polyols 43 26 1 19

Chemicals Business Portfolio and Operational Performance Substantially Improved Sales EUR 4,898 m Inorganics Organic Chemicals Specialty Products H.C. Starck EC Erdölchemie H-acid Solar-grade silicon Titanium dioxide Silicones Citric acid Enamels Abrasives & Refractory Organic Pigments ChemDesign divested Cytec Sybron Sales EUR 3,748 m Basic & Fine Chemicals Specialty Products DyStar divested CSM H.C. Starck Haarmann & Reimer divested 1) regrouped Wolff Walsrode 1996 Divestitures Σ 2,800 Headcount 1) pending; subject to regulatory approval 2) including 3,800 of H & R Acquisitions Σ 480 10,000 2) 2001 21

Bayer Chemicals Attractive Opportunities in Specialist Applications Sales 2001: 3.7 bn H.C. Starck Metallic powders Ceramic powders 22% 27% Basic & Fine Chemicals Basic Chemicals Fine chemicals Inorganic basic chemicals 12% 39% Specialty Products Textiles auxiliaries Wolff Walsrode Cellulose derivatives Plastic films Leather chemicals Paper chemicals Polymer additives Ion exchange Material protection 22

Strategic Priorities* Sales (cont.) 2001: 28,938 m Health Care Find strategic partner(s) 38% 10% CropScience Successfully manage ACS integration 13% 39% Polymers Expand global leadership Chemicals Participate in industry consolidation * Animal Health business included in Health Care Sales of Aventis CropScience not included 23

Strict Capital Spending Discipline Enforced million 1.8 2,703 2,632 1.5 2,647 2,617 2,516 2,139 1,543 1,811 1.2 1.0 1.0 1998 1999 2000 2001 Target CapEx: Capital Expenditure CapEx/D&A-Ratio D&A: Depreciation & Amortization 25

R & D and CapEx. Budgets for 2002 million CapEx. R & D Polymers 37% Chemicals 16% 15% Central 6% 58% Health Care 7% 25% Chemicals 7% 13% 16% CropScience Health Care Polymers CropScience 2,335 (cont.) ( 8.5 % to 2001) 2,440 (cont.) ( 1.9 % to 2001) Animal Health included in CropScience 26

Efficiency Improvement Program Planned savings of 1.8 bn by 2005 Number of projects: 9 Total one-time charges: 640 m Headcount reduction: 5,000 54 235 329 511 1,734 million Identified Net Savings (after excep.) 605 98-01 2002 2003 2004 2005 Total 28

Working Capital Performance million Objectives: Reduction of 1 bn Additional 1-1.5 bn 1,821 1,067 768 1,207 647 834 1,093 757 Net cash flow Gross cash flow 534 441 297-770 -235 766 1,175 240-594 336 Change in net working capital -104-84 822 1,375 176 571 W. Cap. Improvement (prev. year) Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2'02 29

The New Bayer Principle of new corporate structure Most effective possible support for businesses and sufficient flexibility for mastering strategic challenges Group Management Board Corporate Center-Dep. Services Bayer Business Services GmbH Bayer Health Care AG Bayer Crop Science AG Bayer Polymers AG Bayer Chemicals AG Bayer Technology Services GmbH Bayer Standort Dienste GmbH & Co. OHG 31

Building a Highly Competitive Business Platform Stronger focus on markets, core competencies and business performance Strengthen entrepreneurial approach, direct management and direct responsibility for earnings Reduce complexity of corporate organization and governance Achieve necessary flexibility for strategic partnerships and integration of acquisitions Exploit cross-business-group synergies in business area companies more efficiently Enhance visibility and competitive stance of service functions 32

Stock Option Plan Value Creation Incentivized Authorized Prerequisite Maturity Exercise hurdle I Excercise hurdle II Excercise hurdle III Introduction Board members and first management level Individual investment in stock 3 5 years, revolving yearly 30 percent performance of shares Outperformance of EURO STOXX 50 Value creation through link to CVA January 1st 2000 34

35 The Transformation has begun Financials

2002 Financial Highlights million Q2'02 % H1'02 % Sales 7,504 7.0 14,737 7.7 Sales (cont.) 7,271 6.7 14,281 6.6 Operating income 248 69.9 1,088 34.9 Operating income (cont.) 227 53.7 1,045 19.6 Operating income 318 40.7 808 44.3 pre-exceptionals (cont.) Non-operating result 48 146.2 109 52.6 Pre-tax income 296 58.8 979 32.1 After-tax income 296 47.7 820 18.3 Net income 293 48.0 816 18.9 Earnings/share (Euro) 0.40 48.0 1,12 18.9 36

Components of 1H Sales Trend million Sales Discontinuing Continuing 15,293 + Acquisitions/ Divestitures + Currencies + Prices + Volumes 2001 2002 % 15,972 14,737 7.7 679 456 + 219 + 1.4-276 - 591-364 -1.8-3.8-2.4 Continuing 14,281 6.6 Aventis CropScience + 313 Covexx - 42 ChemDesign - 41 Bayer Classics - 8 H-acid - 8 other + 5 37

2002 Quarterly Sales Development million 2002 2001 % 1st half* H & R EC Continuing operations 14,737 456 14,281 15,972 446 233 15,293-7.7-6.6 2nd quarter* H & R EC Continuing operations 7,504 233 7,271 8,071 224 57 7,790-7.0-6.7 1st quarter H & R EC Fibers Continuing operations 7,233 223 53 6,957 7,901 222 176 63 7,440-8.5-6.5 *) restated, Fibers in cont. operations 38

Group Quarterly Performance (cont.) million Sales 6,651 7,115 6,957 7,271 14,281 YoY -6.1% -4.7% -6.5% -6.7% -6.6% OPI (pre-except.) 356 493 318 808 YoY 46-93.4% -41.7% -45.9% -40.7% -44.3% Except. -373-105 328-91 237 Q3'01* Q4'01* Q1'02 Q2'02 1H'02 * as reported 39

HealthCare Quarterly Performance million Sales 2,167 2,737 2,410 2,350 4,760 Pharmaceuticals below expectations Cipro: ongoing inventory reduction YoY -13.9% -0.9% -6.1% -15.3% -10.9% Adalat: intensified generic competition OPI (pre-except.) YoY 24 302-92.8% -27.4% 244-35.8% 193 +35.0% 437-16.4% Kogenate: on track Gamimune: fierce price competition Consumer Care: economic / political crisis in Latin America Except. -308-67 -14 55 Q3'01* Q4'01* Q1'02 Q2'02 41 1H'02 Diagnostics: continuing improvement Animal Health: above budget 40 * as reported

Pharmaceuticals Top 10 Products 1H '02 million Q2 02 % 1H 02 % (1) Ciprobay 368 9 775 + 5 (2) Adalat 237 3 444 13 (3) Kogenate 92 + 77 176 + 75 (4) Gamimune 78 18 154 1 (5) Glucobay 71 10 145 6 (6) Avelox 44 + 33 112 + 6 (7) Prolastin 40 + 60 82 + 46 (8) Nimotop 32 + 28 65 + 7 (9) Trasylol 20 35 64 4 (10) Fraction V 23 15 44 13 41

CropScience: Comparable Sales Development million 1,949 + 16.0% 1H 1,680 1,636-2.6% Business nearly maintained in declining markets Q2 866 770-11.1% 1,083 + 25.1% Trend by segment & region Insect. Europe Fungic. NAFTA Herbic. LA Env.Sci. Asia Q1 814 866 + 6.4% 866 + 6.4% Including 313m from ACS 2001 2002 excl. ACS 2002 incl. ACS 42

CropScience: Comparable OPI Development million OPI affected by situation in Argentina and Brazil: 60m in 1H 1H 375 Q2 162 212-43.5% First-time integration of ACS dilutive by 50m. Amortization 80m in Q2 Acquisition / Carve-out / Integration costs of 40m in 1H 68-58.0% 164 20-56.3% - 87.7% Q1 213 144-32.4% 144-32.4% 2001 2002 excl. ACS pre-exceptionals 2002 incl. ACS 43

Polymers Quarterly Performance million Sales 2,650 2,467 2,648 2,765 5,466 Weak demand from key customer industries YoY -5.6% -13.9% -7.0% -4.1% -5.6% Selling prices under continuing pressure OPI (pre-except.) 81 92 139 228 Raw material prices rising but still below previous year YoY -68.0% -134.6% -60.0% -29.1% -46.7% Fibers reclassified as continuing but remain non-core Except. -63-46 -102-128 -230 Q3'01* * as reported -79 Q4'01* Q1'02 Q2'02 1H'02 44

Polymers Raw material and selling price development 142 145 140 121 132 134 118 123 Raw materials 100 100 98 113 108 110 107 107 106 104 105 102 101 99 Prices 1999 2000 Q1 2000 Q2 2000 Q3 2000 Q4 2001 Q1 2001 Q2 2001 Q3 2001 Q4 2002 Q1 2002 Q2 45

Chemicals Quarterly Performance million Sales 866 833 847 853 1,700 YoY OPI (pre-except.) YoY Except. +3.5% 7-91.8% -2-7.6% 9-87.8% +8-17.2 77-41.7% -6-16.9 30-75.6% -17-17.1% 107-58.0% -23 Weak demand from key customer industries Caustic soda prices under severe pressure Top line affected by divestments of ChemDesign (- 41) and Covexx (- 42) during 1H Specialty Products significantly up YoY Q3'01* * as reported Q4'01* Q1'02 Q2'02 1H'02 46

1H Comparable Operating Income million 2002 2001 % OPI reported 1,088 1,671 34.9 Segments 724 1,449 Reconciliation 321 (150) Discontinuing operations 43 372 H&R 43 38 Erdölchemie (OPI + Sale) 334 OPI continuing 1,045 1,299 19.6 Exceptional items (cont.) 237 (151) OPI underlying 808 1,450 44.3 continuing operations 47

2002 Quarterly OPI Development million 2002 2001 % 1st half* H & R EC (OPI + Sale) Exceptional items OPI underlying - continuing operations 1,088 43 237 808 1,671 38 334 (151) 1,450-34.9-44.3 2nd quarter* H & R EC (OPI + Sale) Exceptional items OPI underlying - continuing operations 248 21 (91) 318 823 14 319 (46) 536-69.9-40.7 1st quarter H & R EC Fibers Exceptional items OPI underlying - continuing operations 840 22 (3) 328 493 848 24 15 2 (105)** 912-0.9-45.9 *) restated, Fibers in cont. operations **) incl. (17) from Fibers 48

1H Exceptional Items million 2002 2001 Charge Gain Net Charge Gain Net HealthCare -35 +76 +41-26 +22-4 +45 CropScience 0 0 0 0 0 0 0 Polymers* -230 0-230 -55 0-55 -175 Chemicals -23 0-23 -87 +14-73 +50 Reconciliation -4 +453 +449-19 0-19 +468 Continuing -292 +529 +237-187 +36-151 +388 Discontinuing* 0 0 0 0 +317 +317-317 Total -292 +529 +237-187 +353 +166 +71 *) Restated, (17) in Q1/2001 for Fibers in Polymers 49

Q2 Exceptional Items million 2002 2001 Charge Gain Net Charge Gain Net HealthCare -21 +76 +55-12 +22 +10 +45 CropScience 0 0 0 0 0 0 0 Polymers -128 0-128 -20 0-20 - 108 Chemicals -17 0-17 -36 +14-22 + 5 Reconciliation -2 +1-1 -14 0-14 +13 Continuing -168 +77-91 -82 +36-46 -45 Discontinuing 0 0 0 0 +317 +317-317 Total -168 +77-91 -82 +353 +271-362 50

1H'02 Sales by Region Total 14,737 million, - 7.7 % Continuing operations: 14,281 million, - 6.6 % Germany -9.5 % 4,059 4,588 North America -8.5 % 6.720 Europe -6.0 % 1,023 1,950 Latin America -9.7 % Far East/ Asia/ Pacific -2.3 % point of origin 51

1H Non-Operating Result million 1H 02 1H 01 % Non-operating result 109 230 + 52.6 Income (expenses) from affiliated companies net + 234 + 42 Interest expense net 178 189 + 5.8 Interest portion pension provisions 137 134 2.2 Exchange gain net 2 + 21 Miscellaneous net 26 + 30 52

Q2 Non-Operating Result million Q2 02 Q2 01 % Non-operating result 48 104 Income (expenses) from affiliated companies net + 231 + 11 Interest expense net 116 101 14.9 Interest portion pension provisions 70 66 6.1 Exchange gain net + 8 + 4 Miscellaneous net 5 + 48 53

1H'02 Overview by New Reporting Segments Sales. (Euro million) Q1/2001 Q2/2001 H1/2001 Q1/2002 % yoy Q2/2002 % yoy 1H/2002 % yoy Pharma CC + DS Animal Health HealthCare 1,422 964 180 2,566 1,510 1,033 232 2,775 2,932 1,997 412 5,341 1,257 950 203 2,410-11.6-1.5 12.8-6.1 1,167 971 212 2.350-22.7-6.0-8.6-15.3 2.424 1.921 415 4.760-17.3-3.8 0.7-10.9 Crop Protection 814 866 1.680 866 6.4 1.083 25.1 1.949 16.0 KA + KU PU + LS * Polymers 1,522 1,324 2,846 1,467 1,416 2,883 2,989 2,803 5,792 1,308 1,340 2,648-14.1 +1.2-7.0 1,415 1,350 2,765-3.5-4.7-4.1 2.723 2.743 5.466-8.9-2.1-5.6 Chemicals 1,023 1,027 2,050 847-17.2 853-16.9 1.700-17.1 OPE pre except. (Euro million) Q1/2001 Q2/2001 H1/2001 Q1/2002 % yoy Q2/2002 % yoy 1H/2002 % yoy Pharma CC + DS Animal Health HealthCare 285 73 22 380 30 57 56 143 315 130 78 523 131 63 50 244-54.0-13.7 127.3-35.8 38 112 43 193 26.7 96.5-23.2 35.0 169 175 93 437-46,3 34,6 19,2-16.4 Crop Protection KA + KU PU + LS * Polymers Chemicals 213 185 45 230 132 162 131 65 196 123 375 316 112 428 255 144 24 68 92 77-32.4-87.0 51.1-60.0-41.7 * FS included in Polymers (PU + LS) effective April 1, 2002 20 98 41 139 30-87.7-25.2-36.9-29.1-75.6 164 122 106 228 107-56.3-61.4-5.4-46.7-58.0 54