Merck KGaA · XETR:MRK

Merck KGaA — Virtual European Technology, Media & Telecom Conference 2020

115 slides from Merck KGaA's conference presentation, Nov 22, 2020

1. Slide 1: Virtual European Technology, Media & Telecom Conference

   MeRck Virtual European Technology, Media & Telecom Conference 22 November 2020 Anand Nambiar, Head Of Semiconductor Materials Ilja Doering, Director Investor Relations

2. Slide 2: Disclaimer

   Disclaimer Cautionary Note Regarding Forward-Looking Statements and financial indicators This communication may include “forward-looking statements.” Statements that include words such as “anticipate,” “expect,” “should,” “would,” “intend,” “plan,” “project,” “seek,” “believe,” “will,” and other wor

3. Slide 3: Agenda

   Agenda Business overview Transforming the company Healthcare – Funding for success Life Science – Focusing on profitable growth Performance Materials – Maintaining leadership and innovation Sustainability Executive summary and guidance 3

4. Slide 4: Business overview

   Business overview 01

5. Slide 5: Three high-tech businesses competing in attractive markets

   Merck Group Three high-tech businesses competing in attractive markets Performance Healthcare Life Science Materials Leading in specialty Leading life science Leading company in pharma markets company high-tech solutions • Biologics and small-molecule • Tools and services for biotech • High-tech sol

6. Slide 6: Merck today – three strong pillars as basis for profitable growth

   Merck Group Merck today – three strong pillars as basis for profitable growth 9M 2020 contribution to Sales EBITDA pre Global specialty innovator poised for above-industry growth  Resilient core business backed by excellent life cycle management 1. 38% 41% Healthcare  Strong growth from new produc

7. Slide 7: The 2016 vision – a strategic agenda until 2022

   Merck Group The 2016 vision – a strategic agenda until 2022 2012-2015 2016-2018 2019-2022 Efficiency Turnaround Fully leverage First pipeline program in pipeline potential launches Healthcare Portfolio Above- optimization 3 strong pillars market growth in LS and PM Portfolio in Life Science Sigma ma

8. Slide 8: 2021 and beyond – poised for growth in a challenging environment

   Merck Group 2021 and beyond – poised for growth in a challenging environment Trade Wars Group-wide: Profitable Growth & Cost Discipline Healthcare Life Science Performance Materials • Drive profitable growth • Continue to outperform • Accelerate top-line China China Auto VBP through pipeline the mar

9. Slide 9: Transforming the company

   Transforming the company 02

10. Slide 10: We have added scale and strengthened the attractiveness of our portfolio

    Merck Group We have added scale and strengthened the attractiveness of our portfolio 2007: ~€7 bn sales Transformation volume 2019: ~€16 bn sales Allergopharma - Consumer Health1 - + Healthcare Serono merged 4 Ethicals 3 ~€10 bn ~€36 bn - + Generics Life Science Millipore & Sigma-Aldrich 2 Life Scie

11. Slide 11: Continue to transform to a science and technology focused company

    Merck Group Continue to transform to a science and technology focused company Divesture of Acquisition of Consumer Health Versum Materials Acquisition of Sigma-Aldrich Margins [€m] Acquisition of AZ 1 Electronic Materials 16.152 40% Acquisition of Millipore 16.000 15.024 15.327 3 14.836 Acquisition

12. Slide 12: All three business sectors delivering on their strategic priorities

    Merck Group All three business sectors delivering on their strategic priorities Healthcare Life Science Performance Materials  Accelerating organic growth  Above-market organic growth  Significant portfolio change with rising contribution from paired with industry-leading towards higher growth ®

13. Slide 13: Clear set of priority goals

    Merck Group Clear set of priority goals Performance Healthcare Life Science Materials ~41% ~41% ~18% EBITDA EBITDA EBITDA pre* pre* pre*  Deliver on ambition to keep  Strengthen position as  Deliver ambition of 3-4% CAGR* core business at least stable differentiated player in a  Implement 5-year

14. Slide 14: Three-pillar structure – positioned to win in high-growth markets

    Group Three-pillar structure – positioned to win in high-growth markets Global economy1 End markets1 Focus market areas1 Global pharma industry Oncology: ~10% ~4% to 5% Immunology: ~5% to 9% Global life science industry Biologics: ~10% to 12% ~5% to 6% Services: ~7% to 8% Global electronics industry

15. Slide 15: Three main drivers of growth to 2022 and beyond

    Group Three main drivers of growth to 2022 and beyond poised for low-teens org. growth deliver ~€2 bn pipeline poised for >80% of ambition mid to high single-digit growth org. growth from “BIG3” 1 2019 Healthcare Process Semiconductor Other 2022 >>> Pipeline Solutions Solutions 2 Businesses Beyond 2

16. Slide 16: Portfolio strategy – from transformation to evolution

    Group Portfolio strategy – from transformation to evolution Deleveraging and organic growth investments in focus until 2022  Primarily organic growth from ”BIG3“ Higher likelihood of  Selective bolt-ons possible if budget allows regular bolt-ons Reduced probability of larger acquisitions post 2022

17. Slide 17: Healthcare – Funding for success

    Healthcare Funding for success 03

18. Slide 18: Creating optionality through focused pipeline approach

    Healthcare Creating optionality through focused pipeline approach Pipeline and launch progress supported by strong core Mid-term outlook Healthcare • Early stage pipeline fueled by in-house innovation Pipeline quality • Potentially transformative late-stage pipeline assets (Evobrutinib, Bintrafusp a

19. Slide 19: Confirming ambition to keep core business at least stable to 2022

    Healthcare Confirming ambition to keep core business at least stable to 2022 Healthcare core business net sales until 2022  Maintain solid track record of patient retention Rebif®  Integrate into joint franchise with Mavenclad® Decline in line with  Explore new treatment options (COVID-19) interf

20. Slide 20: Mavenclad and Bavencio launches on track for ~€2 bn pipeline ambition

    Healthcare Mavenclad and Bavencio launches on track for ~€2 bn pipeline ambition in 2022  Approved in Japan on March 25, 2020 (Sakigake and ODD granted in 2018 & 2019)  Filing accepted by US FDA on August 25, 2020 (granted priority review under RTOR), US approval Tepotinib expected in Q1 2021  Mu

21. Slide 21: Launch Update: Mavenclad recovering; Bavencio 1L UC driving inflection

    Launch Update: Mavenclad® recovering and gaining share; Bavencio 1L UC USA launch driving strong inflection Mavenclad® Bavencio® UC 1L Regaining momentum globally 3 months into launch, a clear inflection  New data at 2020 ACTRIMS-ECTRIMS highlight rapid onset of  Strong early launch performance, a

22. Slide 22: Healthcare catalysts – Significant progress expected in 2021

    Healthcare catalysts – Significant developmental progress across Oncology and Immuno-Oncology portfolio expected in 2021 Oncology Immuno-Oncology Immunology Q1 2021 Q2 2021 H2 2021 Tepotinib (c-Met–inhibitor) METex14: Expected FDA approval Bavencio® (Avelumab/Anti-PD-L1) 1L UC: Expected approval by

23. Slide 23: Life Science – Focusing on profitable growth

    Life science Focusing on profitable growth 04

24. Slide 24: Building growth momentum with focus on attractive market segments

    Life Science Building growth momentum with focus on attractive market segments Total Life Science Market1 Mid-term outlook ~€170-180 bn; ~5-6% CAGR Life Science Research Process Applied ~30%; ~2-3% ~35%; ~8-9% ~35%; ~4-5% Consumables ~55%; ~5-6% 6-9% Organic sales Instruments ~15%; ~4-5% CAGR Servic

25. Slide 25: Improved mid-term outlook driven by market and portfolio focus

    Life Science Improved mid-term outlook driven by market and portfolio focus ~€170-180 bn ~6-9% ~5-6% +50-150 +50-150 bps CAGR 1 1 bps CAGR Market outlook improving further, mainly due to Process segment Above-market growth set to continue due to portfolio advantage and outperformance 1 Company estim

26. Slide 26: All business units contributing to above-market growth

    Life Science All business units contributing to above-market growth 1 Sales split 2 3 Mid-term outlook Customer Split Fundamental growth drivers  Biologics: global mAbs4 production growing by ~11-15% p.a. for 2020- Process Solutions 20245 driven by new molecules and biosimilars Low-teens  Diversif

27. Slide 27: Critical offering in the fight against COVID-19

    Life Science Critical offering in the fight against COVID-19 PrODUCTS feed into... www.sigmaaldrich.com/covid-19 VIRUS VIRUS VACCINE & THERAPY DETECTION CHARACTERIZATION PRODUCTION • Leading critical component • Offering is among largest biologic • Supporting global COVID-19 provider for Molecular a

28. Slide 28: Significant upside potential for Process Solutions; Research and Applied recovering

    Life Science: Significant upside potential for Process Solutions; Research and Applied started recovering Organic growth versus LY by Quarter  Strong tailwinds in Process Solutions 27%  Order intake accelerating to >50% Process Solutions  Sustainable increase in 20% underlying demand 16% 16% 16%

29. Slide 29: Performance Materials – Maintaining leadership and innovation

    Performance Materials Maintaining leadership and innovation 05

30. Slide 30: Electronics focus leads to greater resilience and accelerated growth

    Performance Materials Electronics focus leads to greater resilience and accelerated growth # of customers Performance Materials sales split Mid-term outlook [that make up 80% of Sales] [% of total] Performance Materials 85% ~ x 2.6 50% Semiconductor Solutions 2013 2020E 2014 2016 2018 H1 3-4% 2020 #

31. Slide 31: Targets attractive markets – especially in the electronics space

    Performance Materials targets attractive markets – especially in the electronics space Automotive Performance Materials Market • Driven by world GDP Electronics growth Market sales by end market • Increasing demand in emerging markets Market size: ~€2,000 bn Market size: as of ~€1,450 bn >89% <11% C

32. Slide 32: Three high-tech pillars serving a diverse customer base

    Performance Materials Three high-tech pillars serving a diverse customer base 1 Business allocation within Performance Materials % of sales Products  Dielectrics, colloidal silica, lithography materials, yield enhancers, edge-bead removers Semiconductor Solutions ~56%  Polyimide raw materials, pri

33. Slide 33: Refocus on electronics drives mid-term guidance upgrade

    Performance Materials refocus on electronics drives mid-term guidance upgrade: 3 to 4% CAGR overall Mid term outlook  Continued market growth due to technological advances (Artificial intelligence, 5G, Big Data and cloud, Internet of Things) serving customers in Logic, Memory, Packaging and others

34. Slide 34: 5-year transformation program Bright Future is well on track

    Performance Materials 5-year transformation program Bright Future is well on track 2018 2019 2020 2021 2022+ Back to organic Growth 3-4% CAGR1 Resource allocation & process excellence ~30% Margin Site closures in Atsugi, Japan (2021) and Chilworth, UK (2019) announced Outsourcing progressing; reduct

35. Slide 35: Strategic roadmap materializing

    Performance Materials Strategic roadmap materializing Measures for a bright future Darmstadt  In Darmstadt focus on R&D and  Leading supplier of high-purity process production chemicals, gases and equipment  Immediate bottom line contribution serving semiconductor manufacturers from 2019 onwards

36. Slide 36: Synergy upgrade driven by fast 2020 execution and top-line synergies

    Performance Materials Synergy upgrade driven by fast 2020 execution and top-line synergies EBITDA pre impact of synergy ramp-up [€ m] Sources of synergies ~30 ~47 ~83 8 Business • Transform country setup Additional from top-line synergies Optimization • Streamline duplicate structures Accelerated co

37. Slide 37: Technology trends drive exponential data growth

    Technology trends inevitably drive exponential data growth… …more chips needed to generate, transfer, process & store data Data created worldwide All segments of data application Technology trends strongly impact is growing +30% annually are affected by global data growth relevance of data applicati

38. Slide 38: COVID-19 has vaulted the digital transformation by ~5 years

    Semiconductor Solutions COVID-19 has vaulted the “digital transformation” by ~5 years1 2 Expected COVID-19 impact on global datasphere [zetabytes] COVID-19 impact on data growth expected to be 180 positive  Adobe: US consumers in COVID-19 June 2020 spent US$73.2 data bump  Work-from-home/stay-at-h

39. Slide 39: Unique comprehensive products and services portfolio offers end-to-end solutions

    Unique comprehensive products and services portfolio offers end-to-end solutions, well-placed in high growth segments Deposition Steps of Merck customers in manufacturing integrated circuits Patterning Planarization Wafer processing offers highest value creation potential in Prototyping value chain

40. Slide 40: Industry spanning customer base supplying various end markets

    Beyond a comprehensive portfolio Semiconductor Solutions also has an industry spanning customer base, supplying various end markets 1 2 2019 wafer capacity by region Selected customers per region Taiwan 19% Semiconductor Solutions has over 100 S. Korea 19% Customers Japan 18% supplying all top 10 ch

41. Slide 41: Only a few companies run volume production ≤10nm

    Only 3 companies are currently running volume production ≤10nm These companies have the largest market shares across all nodes 1 Number of companies currently running volume production per logic chip node 20 19 14 10 6 4 4 3 2 130nm 90nm 65nm 45/40nm 32/28nm 22/20nm 16/14nm 10/7nm 5/3nm CN EU JP KR

42. Slide 42: Set to outgrow highly attractive semiconductor materials market

    Semiconductor Materials Set to outgrow highly attractive semiconductor materials market Semiconductor Solutions sales guidance vs. market [Indexed 2020 = 100%] Market  Technological trends inevitably drive exponential data growth  More data requires more chips 140% Semiconductor Solutions: and hig

43. Slide 43: Sustainability

    Sustainability 07

44. Slide 44: Enhanced sustainability strategy leverages our strengths

    Enhanced sustainability strategy leverages our strengths and manifests the company’s commitment Who we are Targets Integration Innovation Power Target #1: Dedicated to human progress Linked  Merck is a leading science and In 2030, we will advance human progress for more than  Part of the overall s

45. Slide 45: Potential to increase sustainable value for business and society

    Potential to increase sustainable value for business and society High Impact SDGs High-Impact Where MeRck’s MeRCK contribution can contribute and benefit Target Business opportunities Good Health  Merck is able to contribute with dedicated 1 and products, know-how, partnerships and  Develop a new

46. Slide 46: Next steps towards the ESG targets

    Next steps towards the ESG targets 0  Analysis of requirements: Strategy, business, regulation, stakeholders (done and institutionalized) Target 1 1 Dedicated  Build an effective data platform for internal steering to human progress 2  Develop ESG-KPIs for reporting and integrate in compensation

47. Slide 47: Executive summary and guidance

    Executive summary and guidance 06

48. Slide 48: Successful crisis management increasingly mitigates pandemic impact

    Successful crisis management increasingly mitigates pandemic impact Quarterly Net Sales in €m* Underlying developments  Life Science well positioned for new COVID-19 driven demand trends COVID-19 Impact  Process business rapidly addressing new market needs, fueling net upside  Research and Applie

49. Slide 49: 2020 – strong resilience in times of global crisis

    Merck Group 2020 – strong resilience in times of global crisis 1 Growth and COVID-19 impact by business 2020 guidance confirmed; recovery started in June 2020E organic sales growth   Most businesses growing despite COVID-19 Process  Largest business growing and positively affected  Smallest busi

50. Slide 50: Life Science highly resilient and well positioned for mid-term upside from COVID-19

    Life Science highly resilient and well positioned to participate in potential mid-term upside from COVID-19 2020 heatmap of COVID-19 impact by customer segment H1 2020 monthly sales* by customer segment Pharma/ Industrial & Pharma / Biotech Industrial & Testing Academia Diagnostics Biotech Testing P

51. Slide 51: Full-year 2020 guidance

    Merck Group Full-year 2020 guidance Net sales: Organic: +4% to +5% YoY Versum growth contribution in the mid-single digits % FX: -2% to -3% YoY ~€17.1 – 17.5 bn EBITDA pre: Organic: +14% to +16% YoY (ex Biogen1: +6% to +8%) Mid-single digit % growth from Versum FX: -3% to -5% YoY ~€5.05 – 5.25 bn (t

52. Slide 52: Executive Summary

    Executive Summary Steady earnings Growth with high margins and a low risk profile Group Successfully driving transformation Setup Growth Engines Execution into a leading science and Three-pillar structure Healthcare pipeline, Process Delivery on strategic priorities technology strengthened further a

53. Slide 53: Appendix

    Appendix

54. Slide 54: Group

    Group

55. Slide 55: 2020 business sector guidance

    Merck Group 1 2020 business sector guidance Net sales EBITDA pre Healthcare  Organic: +2% to +3%  Organic:+25% to +27% YoY  COVID-19 impacting fertility (ex Biogen2: +6% to +8%) performance  FX: -7% to -9% YoY  Continued Mavenclad® recovery after  ~€2,220 – 2,290 m June and solid uptake of Bav

56. Slide 56: Additional financial guidance 2020

    Additional financial guidance 2020 Further financial details Corporate & Other EBITDA pre ~ -440 to -460 m Interest result ~ -280 to -310 m Effective tax rate ~24% to 26% Capex on PPE ~1.2 bn to 1.3 bn FY 2020 hedge ratio ~70% Hedging/USD assumption at EUR/USD ~1.16 2020 Ø EUR/USD assumption ~1.13 t

57. Slide 57: Key earnings drivers to remember for 2020

    Merck Group Key earnings drivers to remember for 2020 EBITDA pre - supporting factors EBITDA pre - reducing factors  €365 m Biogen litigation provision release  No more benefit from Pfizer deferred income (€191 m in 2019)  Increasing sales contribution from Mavenclad® and Bavencio®  Lower income

58. Slide 58: Key earnings drivers to remember for 2021

    Group Key earnings drivers to remember for 2021 EBITDA pre - supporting factors EBITDA pre - reducing factors ® ®  Increasing Mavenclad & Bavencio contribution • Glucophage impacted by VBP in China ®  Ongoing strength in Life Science with above-market • Continued decline of liquid crystals and Reb

59. Slide 59: Environmental Targets until 2020

    Environmental Targets until 2020 Emissions, Water, Waste reduced despite growing business Emission-Target: Water-Target: Waste-Target:  Growth-independent reduction of  At 24 sites with relevant water  We reduce waste and recycle Group‘s greenhouse gas emissions use in areas of high water stress

60. Slide 60: Sustainability Rankings

    Sustainability Rankings External stakeholders valuate our engagement MSCI rated Merck AAA In 2020, ISS Oekom (Leader) according to rated Merck a “B-” rating its exposure to ESG which means Merck has risks and how well they Sustainalytics put us Since 2008, Merck is part once more achieved manage tho

61. Slide 61: Focus on organic growth and deleveraging to 2022

    Group Focus on organic growth and deleveraging to 2022 Proven swift deleveraging Net debt / EBITDA pre track record & outlook after major acquisitions 4.0  Deleverage to <2x net debt/EBITDA pre in 2022 3.5  M&A on hold until 2022; only 2.8 smaller deals to be realized if budget available 1.8 1.8 

62. Slide 62: Sustainable dividend growth

    Sustainable dividend growth Dividend1 development 2011-2019 2019 dividend • Dividend of €1.30 (+4% YoY) per share proposed2 for 2019 1.30 1.25 1.25 • Payout ratio of 23.4% of EPS pre in 1.20 2019; we aim at 20–25% of EPS pre 1.05 3 1.00 • Dividend yield of 1.2% 0.95 0.85 0.75 1 1 1 2 2011 2012 2013

63. Slide 63: Regular portfolio review remains key to success

    Group Regular portfolio review remains key to success Strong Defining portfolio Clear financial track record guard rails M&A criteria  Acquisitions and divestments are  Three strong pillars with no  Supporting profitable growth part of Merck’s history business marginalized strategy  Licensing an

64. Slide 64: Nearly all regions resumed growth despite persisting pandemic impacts

    Nearly all regions resumed growth despite persisting pandemic impacts Regional breakdown of net sales [€m] Regional organic development Europe +7.9%  APAC: double-digit growth in Life org. Science and Semiconductor Solutions 28% overcompensates for declines in Display, Surface Solutions and Fertili

65. Slide 65: 7% organic sales growth driven by swift recovery from COVID-19

    7% organic sales growth driven by swift recovery from COVID-19 in most businesses including “BIG 3” (HC pipeline, Process & Semi Solutions) Q3 YoY Net Sales Q3 YoY EBITDA pre Organic Currency Portfolio Total 52.6% 8.2% €1,701 m Healthcare 3.2% -5.1% -1.2% -3.1% €1,111 m -7.8% Life Science 15.6% -4.2

66. Slide 66: Very strong performance in Life Science and Healthcare drive 4% organic growth

    Very strong performance in Life Science and quick Q3 recovery in Healthcare drive 4% organic growth in the first 9 months of 2020 9M YoY Net Sales 9M YoY EBITDA pre Organic Currency Portfolio Total 18.5% 9.2% €3,956 m Healthcare 3.2% -2.7% -0.7% -0.2% €3,179 m -3.3% Life Science 9.2% -1.3% 0.0% 7.9%

67. Slide 67: Balanced maturity profile: lower refinancing risks

    Financial Update Balanced maturity profile: lower refinancing risks & higher flexibility Maturity profile as of September 30, 2020 Coupon 3.250% [€ m/US $] 0.125% 2.950% 1.375% 1,600 1.625% 3.375% 1.625% 2.875% 1,000 0.875% 0.500% 0.005% 500 0.375% 2.625% 1.000 1,000 750 750 800 550 600 500 600 317

68. Slide 68: 9M 2020: Overview

    9M 2020: Overview Key figures (Excl. Biogen provision release) Comments [€m] 9M 2019 9M 2020 Δ Q3 2020 Δ  A strong Q1, Versum portfolio effect and Net sales 11,771 12,936 9.9% accelerating growth in Process and Semiconductor Solutions drive sales EBITDA pre 3,179 3,956 24.4% 3,591 13.0% above last

69. Slide 69: Reported figures

    Reported figures Reported results Comments [€m] 9M 2019 9M 2020 Δ  EBIT increase driven by Versum 1,605 2,374 47.9% portfolio effect and Life Science EBIT growth, partially offset by lower non- Financial result -309 -302 -2.0% recurring income, higher depreciation & amortization from Versum PPA and

70. Slide 70: Cash flow statement

    Cash flow statement 9M 2020 – cash flow statement Cash flow drivers [€m] 9M 2019 9M 2020 Δ  Higher EBIT Profit after tax 1,002 1,553 551  Higher depreciation & amortization from Versum PPA and impairments in PM D&A 1,391 1,442 51  Changes in provisions reflect reduced Changes in provisions 134 -2

71. Slide 71: Adjustments in 9M 2020

    Adjustments in 9M 2020 Adjustments in EBIT [€m] 9M 2019 9M 2020 Adjustments thereof D&A Adjustments thereof D&A Healthcare 5 0 -8 2 Life Science 44 0 15 0 Performance Materials 81 8 194 112 Corporate & Other 58 0 56 0 Total 188 8 256 114 71 From: Merck Q3 20 Results Presentation | Nov 12th, 2020

72. Slide 72: Financial calendar

    Financial calendar Date Event March 4, 2021 FY 2020 Earnings release April 23, 2021 Annual General Meeting May 12, 2021 Q1 2021 Earnings release August 5, 2021 Q2 2021 Earnings release November 11, 2021 Q3 2021 Earnings release 72

73. Slide 73: Healthcare

    Healthcare

74. Slide 74: China's VBP: Round 3 completed, base business at least stable

    China‘s VBP: Round 3 completed with implementation expected before year end, sustained confidence in keeping base business at least stable Round 1 Round 2 Round 3 2019 2020 2021 March: 4+7 pilot initiated in December: Official 4 municipalities1 and 7 key announcement of Round 2 July: Official announ

75. Slide 75: Merck pipeline October 31, 2020

    Merck pipeline October 31, 2020 Phase I Phase II Phase III berzosertib (M6620) bintrafusp alfa peposertib (M3814) avelumab avelumab ATR inhibitor TGFbeta trap/anti- DNA-PK inhibitor anti-PD-L1 mAb anti-PD-L1 mAb Solid tumors1 PD-L1 Rectal cancer Solid tumors6 Non-small cell lung cancer 1L peposertib

76. Slide 76: Mavenclad's attractive label in Europe supports integrated franchise strategy

    Mavenclad Mavencladꞌs attractive label in Europe supports integrated franchise strategy Mavenclad label covers 1 60-70% of patients with RRMS Merck’s overall NDD franchise Integrated franchise 1 within the MS patient population will cover a broad MS patient pool strategy in Europe 2 3 MS patient pop

77. Slide 77: FDA approved Mavenclad for RRMS and active SPMS

    Mavenclad On March 29, the FDA approved Mavenclad for the treatment of adults with relapsing-remitting (RRMS) and active secondary progressive disease (SPMS) Mavenclad addresses Treated RMS patients in US Dynamic RMS treated patients clear medical needs • Previously treated patients New 257k 54k rep

78. Slide 78: Tepotinib: First-in-class launch in MET Exon14

    1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Tepotinib (MET kinase inhibitor) First-in-class launch in MET Exon14 sets foundation for EGFRm/ METamp opportunity and exploration in other tumor types • Highly competitive data set presented at ASCO 2020 and published in New England Journal

79. Slide 79: Tepotinib: Tapping into EGFRmut/METamp market – INSIGHT 1 data

    1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Tepotinib (MET kinase inhibitor) Tapping into the rapidly evolving EGFRmut/METamp market - Encouraging INSIGHT 1 data INSIGHT 2 – Tepotinib + Osimertinib in A solid foundation - Encouraging INSIGHT 1 data Osimertinib Relapsed METamp NSCLC (18

80. Slide 80: Bavencio approved by FDA as UC 1L maintenance treatment

    1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Bavencio® (Avelumab) Approved by FDA as UC 1L maintenance treatment on June 30 2020, transformative OS data recently published in NEJM „Avelumab Maintenance Therapy for Advanced ESMO 2020 – Additional analyses support the use of or Metastatic

81. Slide 81: Bavencio – Urothelial Carcinoma: urgent need for 1L strategy

    1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Bavencio® (Avelumab) – Urothelial Carcinoma (UC 1L) There is an urgent need for a 1L treatment strategy that maintains and reinforces the initial benefit of induction chemotherapy Durable responses to standard of care (1L chemotherapy) are ra

82. Slide 82: Bintrafusp alfa: first-in-class bifunctional fusion protein

    1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Bintrafusp alfa1 An innovative first-in-class bifunctional fusion protein discovered in-house leading the TGF-β immuno-oncology field • Innovative first-in-class bifunctional fusion protein designed to simultaneously target two immune suppres

83. Slide 83: Bintrafusp alfa: Development Strategy

    1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Bintrafusp alfa: Development Strategy Program overview: Multiple shots-on-goal (10 ongoing studies) to evaluate co- localized inhibition of TGF-β / PD-L1 hypotheses Tumor biology / RT combo to counteract Impact on CT combo to initiate Target

84. Slide 84: Bintrafusp alfa: INTR@PID LUNG 037

    1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Bintrafusp alfa: INTR@PID LUNG 0371 Having passed futility during a planned interim analysis, the Phase III study continues and will read out on clinically relevant endpoints PFS/OS Interim • The IDMC reviewed preliminary safety and efficacy

85. Slide 85: Bintrafusp alfa: 2L Biliary Tract Cancer

    1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Bintrafusp alfa: Developmental Progress 2L Biliary Tract Cancer (BTC) monotherapy data read-out exp. in Q1 2021 M7824 BTC data presented at ESMO 2018 INTR@PID BTC 047 • Need: Few available treatment options (no 2L standard of care)1 • Results

86. Slide 86: Bintrafusp alfa: NSCLC Stage III cCRT Combo trial

    1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Bintrafusp alfa: Developmental Progress NSCLC Stage III cCRT Combo trial NSCLC 2L data presented at ESMO 2018 INTR@PID LUNG 005 • Need: NSCLC accounts for 80-85% of all cases of lung cancer1 • Results: Encouraging efficacy comparing favorably

87. Slide 87: Bintrafusp alfa: HPV-related cancers

    1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Bintrafusp alfa: Developmental Progress Data shown at AACR 2019 highlights opportunity in HPV-related cancers HPV-associated HPV+* Prevalence: >630,000 new cases of HPV-related cancer are Efficacy variable reported worldwide annually1 cancer

88. Slide 88: DNA Damage Response: Leading DDR portfolio

    1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology 4 DNA Damage Response (DDR) Leading DDR portfolio with a broad clinical program • Only ATR-inhibitor with a POC from an RCT Strategy presented at R&D (Ovarian cancer, Berzosertib +/- Gem) Berzosertib/M6620 Update Call 2019 (formerly VX-970) •

89. Slide 89: Evobrutinib: BTK inhibitor with a dual mode of action

    Evobrutinib Evobrutinib (BTK-inhibitor)c BTK inhibitor with a dual mode of action Involvement of BTK in Dual Mechanism of Action immune cell function • Bruton’s tyrosine kinase inhibitors (BTKi’s) (antibody secreting are traditionally used in oncology but are now white blood cell) also being evaluat

90. Slide 90: Evobrutinib: Leading in a novel class with growth potential

    Evobrutinib Evobrutinib (BTK-inhibitor)c Leading in a novel class with significant growth potential Unmet need in Multiple Sclerosis (MS) – Worldwide MS B-Cell Targeting + Market [€ bn]1 High-Efficacy (HE) Orals Need for new mechanisms to represent >60% of MS sales control disease 20 19 • ~50% of pa

91. Slide 91: Evobrutinib: Most extensive efficacy and safety data among BTKis in MS

    Evobrutinib Evobrutinib (BTK-inhibitor)c Most extensive efficacy and safety data among BTKis in MS Efficacy and Safety CNS Effect on Profile Maintained Optimal Dose Selection Highly Selective Progression Long Term (Ph II) Phase II: 108 weeks OLE Evobrutinib may impact The largest and most Evobrutini

92. Slide 92: M5049 (TLR7/8 antagonist): drivers of SLE and possibly COVID-19

    Evobrutinib M5049 (TLR7/8 antagonist) (BTK-inhibitor)c TLR7/8 are drivers of SLE pathology and possibly of COVID-19 2 • M5049 (discovered in-house) is a potentially first-in class small molecule that blocks activation of Toll-like receptors TLR7 and TLR8, two innate immune sensors that detect single

93. Slide 93: M5049: Similarities between SLE and COVID-19

    Evobrutinib M5049 (TLR7/8 antagonist) (BTK-inhibitor)c Similarities between SLE and COVID-19 Similarities between SLE and COVID-191 Phase II study started in July 2020 Rational: • Investigate if M5049 intervention at critical point in course of COVID-19 disease may prevent or ameliorate hyper- infla

94. Slide 94: Healthcare: Organic growth based on strong Q1 and swift Q3 recovery

    Healthcare: Organic growth based on a strong Q1 and a swift recovery in Q3 while EBITDA pre further elevated by €365 m Biogen provision release Healthcare P&L Net sales bridge [€m] IFRS Pre €4,913 m 3.2% €4,901 m 9M 2019 9M 2020 9M 2019 9M 2020 -2.7% -0.7% Net sales 4,913 4,901 4,913 4,901 M&S * -1,

95. Slide 95: Healthcare organic growth by franchise/product

    Healthcare organic growth by franchise/product Q3 2020 organic sales growth [%] 9M 2020 organic sales growth [%] by key product [€m] by key product [€m] 279 864 -9% -8% 318 947 226 686 +3% +10% 235 653 217 +2% 636 +3% 222 633 192 -2% 471 -15% 206 565 127 -5% 407 +10% 143 384 115 +14% 344 +21% 108 29

96. Slide 96: Neurology & Immunology: back to 9% organic growth in Q3

    ® Neurology & Immunology: back to 9% organic growth in Q3 as Mavenclad ramp-up clearly recovers starting June  Highest quarterly sales since launch Sales development NDI, [€m] Mavenclad® TRx1  US: continued market share gains in both dynamic high org. org. org. org. org. efficacy segment (+2%-poin

97. Slide 97: Oncology: Bavencio showing strong growth; Erbitux resilient

    Oncology: Bavencio® showing strong YoY and sequential growth; Erbitux® also resilient, growing vs. Q2 and YoY during COVID-19 pandemic ® Sales development Oncology, [€m] Erbitux net sales, [€m]  Absolute sales of €217 m reflect resilient growth of 2% 250 222 237 in Q3 org. org. org. org. org. 211 2

98. Slide 98: Fertility: visible recovery to pre COVID-19 levels

    Fertility: visible recovery to pre COVID-19 levels across Fertility portfolio, however still differentiated picture across geographies during pandemic ® Sales development Fertility, [€m] Gonal-f net sales, [€m] 250 org. org. org. org. org. 206 [€m] 9.0% 3.3% -3.5% -38.9% -1.3% 192 200 178 167 400 15

99. Slide 99: General Medicine growing organically, Endocrinology up vs. Q2

    General Medicine growing organically, Endocrinology up vs. Q2 2020 and flat vs. Q3 2019 Sales evolution Q3 2020 organic drivers [€m] Endocrinology Organic 99 95 100 91 83 87 -0.2% org. 80  Endocrinology impacted in the U.S. 60 and to minor extent in Europe amid 40 20 COVID-19 pandemic; stable to 0

100. Slide 100: Life Science

     Life Science

101. Slide 101: Strategic direction – innovate and invest to continue above market growth

     Strategic direction – innovate and invest today to continue above market growth in the future Modality TRADITIONAL ALL NOVEL Revenue Near term Mid term Long term driver Offering Products Services Products Portfolio Single Use Manufacturing novel therapies Perfusion Bioreactor Gene transfer w/ Cellic

102. Slide 102: Capitalizing on three key life science trends

     Life Science Capitalizing on three key life science trends 1 COMPLEX BIOLOGICS 2 DIGITAL UNIVERSE 3 ASIA Single Use / End to End #1 eCommerce Manufacturing/Distribution Nantong, Wuxi Single use Opened Wuxi site in 2018, site in Life and expanded Danvers facility Science1 Viral Vectors Commercial exp

103. Slide 103: COVID-19 demands align with our strengths but increase supply chain pressure

     COVID-19 demands align with our strengths but increase supply chain pressure Unit COVID-19 Outlook Operations Cell culture media Type Implications Biopharm mAb materials 65 programs • Universal templates Chromatography Bind and block • A leading position for 8 virus from entering out of 9 unit ops c

104. Slide 104: Next-generation bioprocessing on the cards

     Process Solutions Next-generation bioprocessing on the cards process & portfolio Launched 2018 Launched 2018 Today’s CHOZN Ex-Cell® Mobius® Clarisolve® Eshmuno® Viresolve® ProSep® Opticap® Pellicon® Durapore® Millipak® Cell Line Advanced™ bioreactor Depth Filters Chrom. resin Pro Solution Ultra Plus

105. Slide 105: Single-use technologies drive flexibility in modern bioprocessing

     Process Solutions Our single-use technologies drive flexibility in modern bioprocessing 30,000 l 500 l stain-less single-use steel tank tank Traditional multi-use facility Innovative Single-use facility CAPEX* required ~$500 m to $1 bn CAPEX required $20 m to $100 m Time to construct 5 to 10 years T

106. Slide 106: Democratization of mAbs market will drive diversification

     Life Science Democratization of mAbs market will drive diversification, change, variability mAb volume projections 2018 to 2024 CAGR ~11-15% Market 35 development 30 • Overall mAbs market will grow ~11-15% CAGR 25 Volume [metric tons] • Top 10 originator mAbs represent ~ 60% of market volume today a

107. Slide 107: Process Solutions: Growth opportunities beyond mAbs

     Life Science Proccess Solutions: Growth opportunities beyond mAbs Growth potential by segment Accessible market [€m], 2019-2023 CAGR1 Growth market - China • Diversifying products and services 2019-2023 36,817 in line with the new modalities coming • Half of world-wide early stage CAGR: +10% Vaccine

108. Slide 108: Applied Solutions: Broad offering across cell and gene therapy value chain

     Applied Solutions Broad offering across the dynamic cell and gene therapy value chain Understand Prove Deliver Merck offering Develop cutting-edge tools Create cell lines and cell models • Offer cGMP clinical and for scientists to for testing safety and efficacy commercial manufacturing, e.g. • Unco

109. Slide 109: Life Science: Strong YTD performance with Process Solutions double-digit growth

     Life Science: Strong YTD performance with Process Solutions double-digit growth; Research & Applied recovering from COVID-19 impacts Life Science P&L Net sales bridge [€m] IFRS Pre adjustments €5,082 m 9.2% 0.0% €5,485 m 9M 2019 9M 2020 9M 2019 9M 2020 -1.3% Net sales 5,082 5,485 5,082 5,485 M&S * -

110. Slide 110: Performance Materials

     performance rmv~aterials

111. Slide 111: Business portfolio management drives capital allocation

     Performance Materials Business portfolio management drives capital allocation and enables future value creation Profitability Invest for growth  Strong and sustainable market growth  Leading positions and attractive growth Invest for opportunities Manage for growth cash Semiconductor Manage for ca

112. Slide 112: Expanding the limits of how small you can go

     Expanding the limits of how small you can go Pattern collapse AZ® rinse materials As lines get narrower and closer together in advanced chip generation, lines tend to “stick” due to surface tension. Lithography limitation Directed self-assembly (DSA) Block copolymer can generate small lines or conta

113. Slide 113: Display Solutions – OLED material market to exceed LC material market by 2022

     Performance Materials Display Solutions - OLED material market to exceed LC material market by 2022 x% OLED shipment area / addressable material market [in % of total] Liquid Crystals OLED Display shipment area1 Addressable material market2 [km²] [€m] +22% -7% +2% +7% 247 242 1,606 1,339 1,164 1,246

114. Slide 114: Versum portfolio effect and organic Semiconductor growth outweigh declining Display

     Performance Materials: Versum portfolio effect and continued organic Semiconductor growth far outweigh declining Display and Surface Performance Materials P&L Net sales bridge [€m] IFRS Pre adjustments 51.3% €2,550 m 9M 2019 9M 2020 9M 2019 9M 2020 €1,776 m 0.5% Net sales 1,776 2,550 1,776 2,550 -8.

115. Slide 115: Investor Relations contacts

     CONSTANTIN FEST SVENJA BUNDSCHUH SARA HOFMANN Head of Investor Relations Assistant Investor Relations Assistant Investor Relations +49 6151 72-5271 +49 6151 72-3744 +49 6151 72-3321 [email protected] [email protected] [email protected] ILJA DOERING GUNNAR ROMER A

Merck KGaA — Virtual European Technology, Media & Telecom Conference 2020 on 6ix