Merck KGaA · XETR:MRK
Merck KGaA — Commerzbank German Investment Seminar 2021
115 slides from Merck KGaA's conference presentation, Jan 11, 2021
Slide 1: Commerzbank German Investment Seminar 2021
MeRck commerzbank German investment seminar 2021 Marcus Kuhnert, CFO January 11, 2021
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
Slide 3: Agenda
Agenda Business overview Transforming the company Healthcare – Global specialty innovator poised for above-industry growth Life Science – Diversified industry leader poised for above-market growth Performance Materials – Leading electronics player poised for accelerating growth Sustainability Execut
Slide 4: Business overview
Business overview 01
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
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
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 optimization 3 strong Above- in LS and PM pillars Portfolio market growth Sigma in Life Science ma
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
Slide 9: Transforming the company
Transforming the company 02
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
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
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 ®
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
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
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
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
Slide 17: Healthcare
Healthcare Global specialty innovator poised for above-industry growth 03
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
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
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 ▪ Global peak sales: €1.0–1.4 bn ▪ Approved in 81 countries, including USA, EU, Canada and Australia ▪ Global launch continuing to make progress ▪ Recovery from peak COVID impact visible as of June ▪ Approved fo
Slide 21: Mavenclad launch update: renewed momentum globally
Healthcare Mavenclad launch update: Showing renewed momentum globally ▪ New data at 2020 ACTRIMS-ECTRIMS highlight Gains in High Efficacy Dynamic share (R3W)1 rapid onset of action and reassuring post-approval safety on malignancy, viral infections, and COVID-19 8% 5,7% COVID-19 outcomes 4,4% 4% ▪ Q
Slide 22: Bavencio launch update: 1L UC US launch driving strong inflection
Healthcare Bavencio launch update: 1L UC US launch driving strong inflection ▪ Strong launch performance, and reception in Leading Share of Voice within the IO class – community validates significance of OS advantage Relevance of approach and data1 ▪ Encouraging data points discussed in September 80
Slide 23: Healthcare catalysts – Significant developmental 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
Slide 24: Life Science
Life Science Diversified industry leader poised for above-market growth 04
Slide 25: 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
Slide 26: 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
Slide 27: All business units contributing to above-market growth
Life Science All business units contributing to above-market growth 1 2 3 Sales split 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
Slide 28: 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
Slide 29: 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 27% ▪ Strong tailwinds in Process Solutions ▪ Order intake accelerating to >50% Process Solutions ▪ Sustainable increase in 20% underlying demand 16% 16% 16%
Slide 30: Performance Materials
Performance Materials Leading electronics player poised for accelerating growth 05
Slide 31: 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 #
Slide 32: Mid term outlook
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
Slide 33: 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
Slide 34: 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
Slide 35: 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
Slide 36: Sustainability
Sustainability 07
Slide 37: 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
Slide 38: 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
Slide 39: Next steps towards the ESG targets
Next steps towards the ESG targets 0 ➢ Analysis of requirements: Strategy, business, regulation, stakeholders (done and institutionalized) 1 Target 1 Dedicated ➢ Build an effective data platform for internal steering to human 2 progress Target ➢ Develop ESG-KPIs for reporting and integrate in compen
Slide 40: Executive summary and guidance
Executive summary and guidance 06
Slide 41: 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
Slide 42: 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 2020E organic 2020 guidance confirmed; recovery started in June sales growth ▪ ▪ Most businesses growing despite COVID-19 Process ▪ Largest business growing and positively affected ▪ Smallest busi
Slide 43: Life Science highly resilient and positioned for COVID-19 upside
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
Slide 44: 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
Slide 45: 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
Slide 46: Slide 46
Slide 47: 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
Slide 48: 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
Slide 49: 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
Slide 50: 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 Rebif®
Slide 51: 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 ▪
Slide 52: 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
Slide 53: Strong Life Science and quick Q3 Healthcare recovery 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%
Slide 54: 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
Slide 55: 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
Slide 56: 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
Slide 57: China's VBP: Round 3 completed
China‘s VBP: Round 3 completed, sustained confidence in keeping base business at least stable until 2022 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 announcement of Round 3 cities in other
Slide 58: Merck pipeline
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
Slide 59: 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
Slide 60: FDA approval of Mavenclad in March 2019
Mavenclad In March 2019, 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 r
Slide 61: Tepotinib: Lay the Foundation in NSCLC – 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
Slide 62: Tepotinib: EGFRmut/METamp market and INSIGHT 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
Slide 63: 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
Slide 64: Bavencio – Urothelial Carcinoma (UC 1L)
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
Slide 65: Bintrafusp alfa: mode of action and clinical development
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
Slide 66: 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
Slide 67: 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
Slide 68: 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
Slide 69: 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
Slide 70: 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
Slide 71: DNA Damage Response: leading DDR portfolio
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology DNA Damage Response (DDR) 4 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) •
Slide 72: Evobrutinib: Merck pioneered BTKi development for MS
Evobrutinib (BTK-inhibitor) Merck pioneered BTKi development for MS with Evobrutinib Potential to have 3 complementary MS branded products by 2025 Unmet need in Multiple B-Cell Targeting + Worldwide MS Sclerosis (MS) – High-Efficacy (HE) Orals Need for new mechanisms to Market [€ bn]1 represent >60%
Slide 73: Evobrutinib stands out amongst BTK inhibitors
Evobrutinib (BTK-inhibitor) Evobrutinib stands out amongst BTK inhibitors under development Uniquely positioned both in terms of clinical evidence and mode of action Fenebrutinib## Tolebrutinib** Evobrutinib Long-term* efficacy on relapses (1) Clinical Evidence (1) Long-term* safety Convenience BID
Slide 74: Evobrutinib tackles Multiple Sclerosis directly in the brain
Evobrutinib (BTK-inhibitor) Evobrutinib has the potential to tackle Multiple Sclerosis directly in the brain ▪ Evobrutinib was quantifiable in CSF of 9 of 9 clinically stable RMS patients administered the efficacious 75 mg BID dose in the RMS Phase 2 OLE study* ‒ Plasma PK were at steady-state and c
Slide 75: Evobrutinib targets inflammation and progression
Evobrutinib (BTK-inhibitor) Evobrutinib targets inflammation and progression Dual mechanism of action offers an innovative oral approach to MS therapy MOA on B-cells and Evobrutinib shifts Evobrutinib reduces macrophage/microglia cells is Evobrutinib is a CNS macrophage phenotypes CNS B cells and an
Slide 76: Evobrutinib optimally dosed for BTK inhibition
Evobrutinib Evobrutinib is optimally dosed to offer best-in-class BTK inhibition (BTK-inhibitor) Optimized dose selection & targeted covalent binding results in sustained BTK inhibition that is necessary for robust efficacy Sustained BTK inhibition in CNS-resident and CNS-migrating cells resulting f
Slide 77: Evobrutinib holds unmatched long-term data among BTKi
Evobrutinib Evobrutinib holds unmatched Long-Term Data among BTKi class in MS (BTK-inhibitor) Best-in-disease efficacy & favorable safety over 2 years in largest Phase II study in MS Very high, Early and substantial impact ▪ Evobrutinib is the only BTKi to have demonstrated very high, sustained sust
Slide 78: M5049: TLR7/8 drivers of SLE pathology and COVID-19
M5049 (TLR7/8 antagonist) 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-stranded (ss) RNA from virus
Slide 79: M5049: Similarities between SLE and COVID-19
M5049 (TLR7/8 antagonist) 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- inflammatory response in patients
Slide 80: Strategic direction – innovate and invest today for future 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
Slide 81: 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 Opened Wuxi site in 2018, Nantong, Wuxi Single use site in Life and expanded Danvers facility Science1 90% Viral Vectors Commercial
Slide 82: 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
Slide 83: 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
Slide 84: Single-use technologies drive flexibility in 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
Slide 85: Democratization of mAbs market
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
Slide 86: 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
Slide 87: Broad offering across the 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
Slide 88: Performance Materials targets attractive markets in electronics
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
Slide 89: 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 Polyimide raw materials, printing materials
Slide 90: 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
Slide 91: 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
Slide 92: Over 100 customers in Semiconductor Solutions
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
Slide 93: Only three companies run volume production below 7nm
Only three companies are currently running volume production <7nm 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
Slide 94: 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
Slide 95: 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
Slide 96: COVID-19 impact on data growth expected to be positive
Semiconductor Solutions COVID-19 has vaulted the “digital transformation” by ~5 years1 COVID-19 impact on data 2 Expected COVID-19 impact on global datasphere growth expected to be [zetabytes] 180 positive ▪ Adobe: US consumers in COVID-19 June 2020 spent US$73.2 data bump 1 ▪ Work-from-home/stay-at
Slide 97: 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
Slide 98: 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
Slide 99: Nearly all regions resumed growth despite 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
Slide 100: 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
Slide 101: 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,
Slide 102: 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
Slide 103: 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
Slide 104: Oncology: Bavencio showing strong YoY and sequential growth
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
Slide 105: 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% 200 192 178 167 400 15
Slide 106: 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
Slide 107: 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 * -
Slide 108: Performance Materials: Versum portfolio effect and Semiconductor growth
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.
Slide 109: 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
Slide 110: 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
Slide 111: 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 8 256 114 111 From: Merck Q3 20 Results Presentation | Nov 12th, 2020
Slide 112: 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
Slide 113: 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
Slide 114: 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 114
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 — Commerzbank German Investment Seminar 2021 on 6ix