Merck KGaA · XETR:MRK
Merck KGaA — Merck KGaA, Darmstadt, Germany — Jefferies Healthcare Conference 2020
108 slides from Merck KGaA's conference presentation, June 2020
Slide 1: Jefferies Healthcare Conference 2020
MERCK KGAA, DARMSTADT, GERMANY JEfferies Healthcare Conference 2020 Udit Batra, CEO Life Science June 2020
Slide 2: Disclaimer
Disclaimer Publication of Merck KGaA, Darmstadt, Germany. In the United States and Canada the group of companies affiliated with Merck KGaA, Darmstadt, Germany operates under individual business names (EMD Serono, Millipore Sigma, EMD Performance Materials). To reflect such fact and to avoid any mis
Slide 3: Disclaimer: Forward-Looking Statements
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 4: Agenda
Agenda Business overview Transforming the company Healthcare – Funding for success Life Science – Focusing on profitable growth Performance Materials – Maintaining leadership and innovation Executive summary and guidance 4
Slide 5: Strategic Roadmap
STRATEGIC ROADMAP
Slide 6: Three high-tech businesses competing in attractive markets
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 solutions
Slide 7: Diverse businesses posting attractive margins and strong growth
Group Diverse businesses posting attractive margins and strong growth Q1’20 % of net sales Q1’20 Organic growth rate Q1’20 % of EBITDA pre (€1,181 m1) €4,370 m QoQ net sales and EBITDA pre margin2 40% 39% +15.3% Healthcare margin: 27.8% 47% 41% +5.6% Life Science margin: 31.2% 24% Performance 21% -5
Slide 8: 2019–2022: Entering the Growth & Expansion Phase
Group 2019 – 2022: Entering the Growth & Expansion Phase Group: Sustainable profitable growth and 2012-2015 2016-2018 2019-2022 2019-2022 regular portfolio evaluation Healthcare: Turnaround Fully leverage Efficiency First pipeline in Healthcare pipeline potential program launches Fully leveraging pi
Slide 9: 2020 and beyond: Growth amid a challenging environment
Group 2020 and beyond: Growth amid a challenging environment Trade COVID- Wars 19 World Group-wide: Economy Profitable Growth & Cost Discipline Healthcare Life Science Performance Materials • Sustain profitable • Continue • Return to growth at growth driven by outperformance of 2-3% CAGR, ~30% China
Slide 10: Executive Summary
SO Group Group Executive Summary Group: Driving the profitable growth and expansion phase of our 2016 – 2022 strategic agenda Healthcare: Reaping the fruit of the investment phase, while keeping the base business at least stable, driving growth and managing costs Life Science: Sustaining profitable
Slide 11: Transforming the Company
O2 TRANSFORMING THE COPAPANY Sa aan
Slide 12: Added scale and strengthened portfolio attractiveness
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 Science So
Slide 13: Transforming to a science and technology focused company
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 of Ser
Slide 14: Clear set of priority goals
Group Clear set of priority goals Performance Healthcare Life Science Materials ~40% ~44% ~17% EBITDA EBITDA EBITDA pre* pre* pre* Deliver on ambition to keep Strengthen position as Deliver ambition of 2-3% CAGR* core business at least stable differentiated player in a Implement 5-year trans
Slide 15: Strategic capital allocation until 2022
Group Strategic capital allocation until 2022 newly defined Illustration Group’s sales Three balanced pillars with no business marginalized and earnings drivers Portfolio Guardrails Leading market positions in attractive markets Clear portfolio roles assigned Market attractiveness & capabili
Slide 16: Healthcare
HEALTHCARE Fully leveraging pipeline potential
Slide 17: Mavenclad global launch continues to progress
Mavenclad® - Global launch continues to make progress, with Q1 showing initial impact of COVID; regaining of momentum expected in H2 2020 Global: First signs of COVID-19 related slow-down visible as of March, impacting Q1 2020 • Approved in 78 countries • Launches progressing well, with net sales, [
Slide 18: Bavencio in GU cancers: JAVELIN Bladder 100
Bavencio® - Enhancing its foundation in GU cancers with transformative OS data from JAVELIN Bladder 100 trial featured at ASCO 2020 plenary session • First immunotherapy to significantly prolong OS vs standard of care in 1L locally advanced or Urothelial metastatic urothelial carcinoma, and first to
Slide 19: Ambition to keep core business sales stable until 2022
Healthcare Ambition to keep core business sales organically stable until 2022 Healthcare core business net sales until 2022 Rebif® • Maintaining solid track record of patient retention Decline in line • Integration into joint franchise with interferon market 5 years of organic strategy with Mavencla
Slide 20: Core business Q1 growth and COVID-19 impact
Core business - Q1 growth rates reflect initial effects of COVID-19 and indicate future developments Q1 2020 net sales contribution1 & Expected Impact of COVID-19 org. growth (%) in Q1 2020 (FY 2019) • Q1 supported by COVID-19 related moderate stocking effects across the General globe, suggesting ph
Slide 21: Pipeline 2020 developmental progress
Pipeline - 2020 characterized by developmental progress of innovative Oncology, Immuno-Oncology and Neurology assets Q1 2020 Q2 2020 H2 2020 ASCO 2020 Bavencio®: Late-breaking JAVELIN Bladder 100 data (1L urothelial carcinoma) presented at the Plenary Session on May 31 May 29 – Jun 2 Tepotinib: Prim
Slide 22: Life Science
LIFE SCIENCE Focus on profitable growth
Slide 23: Life Science tools market is attractive and dynamic
The Life Science tools market is attractive and dynamic Attractive market… …with robust trends Research • Increase in NIH Funding and Pharma R&D1,2 €170 Bn • Increase in novel technologies3 ~€45-50 bn • Increase in research outsourcing4 ~2-3% CAGR9 4-6% 10 CAGR Process • Increase in biologics pipeli
Slide 24: On track to deliver above-market organic growth
Life Science Business is on track to deliver above-market organic growth Life Science 1 Market Long-term growth drivers 2 Research activity: >3,000 projects in research pipelines , rising Research Solutions number of experiments and newly emerging therapies/technologies 3 Low single digit growth b
Slide 25: Above-market growth driven by portfolio focus
Life Science Above-market growth continues to be driven by portfolio focus ~€170 bn ~5-8% ~4-6% +50-100 bps +50-100 bps CAGR CAGR1 1 Company estimate based on industry forecast over 5 year horizon 25
Slide 26: Setting the benchmark for industry performance
Life Science Continuing to set the benchmark for industry performance 2 35 31.2 EBITDA pre 30.4 29.8 31.0 margin, 29.2 30 % of sales 25.6 24.5 (actual) 8.8 9.0 24.2 24.1 24.2 24.9 23.2 24.6 24.9 25.1 25.3 25 25.5 22.2 8.0 20 6.5 1 6.3 Organic sales 6.0 6.0 6.0 5.3 5.6 growth, 5.2 15 4.5 4.8 YoY % 4.
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
Slide 28: Performance Materials
PERFORMANCE MATERIALS Maintaining leadership and innovation
Slide 29: Capturing value in the electronics market
Performance Materials Strong setting to capture attractive value in the electronics market 1 Electronic materials competitor landscape ~€1,450 bn ~€390 bn Electronics market2 Semiconductor market2 ~€44 bn C4 CAGR 19-24: ~4% CAGR 19-24: ~7% Materials market C6 CAGR 19-24: ~4% C7 C11 C1 C3 + Versum ~€
Slide 30: Attractive market trends to deliver turnaround
Performance Materials: Attractive underlying market trends and business conditions to deliver the turnaround in 2020 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, Pack
Slide 31: Bright Future transformation program on track
Performance Materials 5-year transformation program Bright Future is well on track 2018 2019 2020 2021 2022+ Back to organic Growth 2-3% CAGR Resource allocation & process excellence ~30% Margin Site closures in Atsugi, Japan (2021) and Chilworth, UK (2019) announced Outsourcing progressing; reducti
Slide 32: Strategic roadmap starting to materialize
Performance Materials Strategic roadmap starting to materialize… 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 20
Slide 33: Versum integration and synergy realization
Performance Materials: Versum integration and synergy realization in focus Cost synergies on Source of Synergies EBITDA pre ~€75 m Business • Transform country setup Optimization • Streamline duplicate structures ~€40 m ~€20 m • Optimize production and Procurement supply chain network and Supply Cha
Slide 34: Executive Summary and Guidance
EXECUTIVE SUMMARY AND GUIDANCE
Slide 35: Changed COVID-19 assumptions
Our assumptions regarding the development of COVID-19 have changed significantly post pandemic classification by WHO and subsequent events Previous Assumptions (disclosed in March) Current assumptions (disclosed in May) • Impact mainly in China • Impact across all regions • Outbreak peaks in Q1 • Ca
Slide 36: COVID-19 update: financial impact assumptions
Group COVID-19 Update: new assumptions on financial impact of COVID-19 ▪ Mid single-digit percentage Sales impact Group ▪ Global impact across many businesses ▪ Strong Q2 impact, also from Q1 pull-in ▪ Lasting until at least Q3 ▪ Highest anticipated impact in absolute terms Healthcare ▪ Biggest impa
Slide 37: Contributions to the global COVID-19 response
Beyond focusing on the health & safety of our employees and on business continuity, we have contributed to help face global COVID-19 pandemic • Our Business: • Collaborations: • Research Grants: • Donations: • Supplying critical raw • Part of pharma and Life • 2019: €1 m Future • 290,000 units of ma
Slide 38: Key earnings drivers for 2020
Group Key earnings drivers to remember for 2020 EBITDA1-supporting factors EBITDA1-reducing factors • Increasing sales contribution from Mavenclad® and • No more support from Pfizer deferred income (€191 m Bavencio® in 2019) • Stringent M&S and R&D cost management in HC • Lower income from pipeline
Slide 39: Full-year 2020 guidance
Group Full-year 2020 guidance Net sales: Slight to moderate organic sales growth, Versum growth contribution in the mid-single digits % FX between +1% to -2% YoY ~€16.8 – 17.8 bn EBITDA pre: Organically about stable, mid-single digit % growth from Versum FX headwinds of 0% to -3% YoY 1 ~€4,350 – 4,8
Slide 40: 2020 business sector guidance
Group 1 2020 business sector guidance Net sales EBITDA pre Healthcare ▪ Organically about stable ▪ Slight organic decline ▪ COVID-19 significantly impacting due to COVID-19 fertility performance ▪ Slight to moderate ▪ Sustained performance of new adverse FX impact products Net sales EBITDA pre Life
Slide 41: Slide 41
Slide 42: Additional financial guidance 2020
Additional financial guidance 2020 Further financial details Corporate & Other EBITDA pre slightly higher than last year Interest result ~ -245 to -275 m Effective tax rate ~24 % to 26% Capex on PPE ~1.1 bn to 1.2 bn FY 2020 hedge ratio ~50% Hedging/USD assumption at EUR/USD ~1.18 2020 Ø EUR/USD ass
Slide 43: Maturity profile
Maturity profile reflects Sigma-Aldrich and Versum financing transactions Maturity profile as of March 31, 2020 Coupon 3.250% [€ m/US $] 0.125% 2.950% 1.375% 1 600 1.625% 2.625% 3.375% 2.875% 1 000 0.875% 0.500% 0.005% 500 0.375% 1 000 1000 750 750 800 550 600 500 600 2020 2021 2022 2023 2024 2025 2
Slide 44: 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 45: Clinical Pipeline April 30, 2020
Clinical Pipeline April 30, 2020 Phase I Phase II Phase III berzosertib (M6620) bintrafusp alfa peposertib (M3814) bintrafusp alfa avelumab ATR inhibitor TGFbeta trap/anti-PD-L1 DNA-PK inhibitor TGFbeta trap/anti-PD-L1 anti-PD-L1 mAb Solid tumors Solid tumors Rectal cancer Non-small cell lung cancer
Slide 46: Tepotinib: Significant unmet need
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Tepotinib: Significant unmet need Tepotinib is a highly selective oral, once daily, MET TKI that blocks MET-mediated signaling pathways • Preclinical and clinical evidence support MET activation as a primary oncogenic driver in lung cancer su
Slide 47: Tepotinib: Program overview
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Tepotinib: Program overview Development focused on biomarker enriched patient populations Est. primary 2017 2018 2019 2020 2021 2022 completion1 • Clinical activity demonstrated NSCLC MET Exon 14 Skipping Jun + follow-up2 (interim) Alteration
Slide 48: Data presented at ASCO 2019: VISION
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Data presented at ASCO 2019 Promising data from VISION (NSCLC, MET Exon 14 cohort) study Durable clinical activity across treatment lines2 Favorable safety profile2 Other leading MET VISION (tepotinib)2 Grade 3 TRAEs reported in 19% of pati
Slide 49: Clinical efficacy in MET-amp EGFR-mutant population
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Clinical Efficacy in Met-amp EGFR-mutant Population INSIGHT 2 study follows from encouraging INSIGHT 1 data Data from INSIGHT 1 study INSIGHT 2 study (18-months follow-up presented at WCLC 2019)1 MET-amp population: Study Design: • Locally
Slide 50: Biomarker focused development program in NSCLC
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Biomarker focused development program in NSCLC with potential beyond NSCLC MET exon-14; Met-amp; and EGFR-mutant populations NSCLC MET exon-14 alterations (VISION study) • SAKIGAKE designation awarded by Japanese Ministry of Health, Labour an
Slide 51: Avelumab: Program overview
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Avelumab: Program overview Ongoing studies –Javelin Bladder 100 data (UC 1L) presentation confirmed for ASCO 2020 plenary session 2018 2019 2020 2021 Est. primary completion1 Jun 2020 + approx. 1 NSCLC 1L (mono/high-intensity) half a year Lev
Slide 52: Avelumab: NSCLC 1L
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Avelumab: NSCLC 1L Assessing potential efficacy upside in mono-therapy1 NSCLC 2L+: exposure NSCLC 1L: testing hypothesis of higher efficacy/intensity response correlation • Hypothesis: higher drug intensity may result in greater efficacy (pot
Slide 53: Avelumab: UC 1L
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Avelumab: UC 1L Transformative OS data featured a ASCO 2020 plenary session JAVELIN Bladder 100 Study Design – Primary objective of superior OS versus standard of Phase III switch-maintenance1 care met at planned IA in January 2020 • First im
Slide 54: Bintrafusp alfa (M7824)
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Bintrafusp alfa1 (M7824) 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
Slide 55: Strategic Alliance with GSK
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Strategic Alliance with GlaxoSmithKline (GSK) Attractive payment terms rewarding developmental success Total deal volume: €3.7 bn Milestone payments: €3.4 bn Upfront & Upfront Milestone payment: Development Approval Commercial Payment €300 m
Slide 56: Bintrafusp alfa development strategy
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Development Strategy Program overview: Five pivotal studies on track, several safety and signal finding studies recently initiated or in planning Est. primary completion 1 2019 2020 2021 2022 2023 2024 Leverage strong signal Lung 037: NSCLC 1
Slide 57: 2L Biliary Tract Cancer trial
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Developmental Progress 2L Biliary Tract Cancer (BTC) monotherapy trial recently initiated M7824 BTC data presented at ESMO 2018 INTR@PID BTC 047 • Need: Few available treatment options (no 2L standard of care)1 • Results: Encouraging activity
Slide 58: NSCLC Stage III cCRT combo trial
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Developmental Progress NSCLC Stage III cCRT Combo trial recently initiated 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 favorab
Slide 59: Opportunity in HPV-related cancers
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology 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 (n=43) (n=36) Res
Slide 60: DNA Damage Response (DDR)
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology DNA Damage Response (DDR) Leadership in next generation assets beyond PARP • DDR defects are an “achilles heel” of cancer cells • ATR, ATM and DNA-PK are the trinity of targets that orchestrate cellular response DNA damage and replication str
Slide 61: DDR development focused on three foundations
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology 4 DNA Damage Response (DDR) Development is focused on three foundations Monotherapy Differentiating aspects of 1 DDRi + DDRi cancer DDR that can be targeted therapeutically1: (incl. PARP) Increased Immunogenicity Grow the DDR class, building
Slide 62: DDR clinical program
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology DNA Damage Response (DDR) Clinical program targets three major DDR pathways, in mono- and combination (incl. Avelumab) … 2017 2018 2019 2020 2021 … Estimated primary completion1 M6620 M6620 CT combinations in various settings M4344 Jun ATR-i
Slide 63: Neurology & Immunology: Multiple Sclerosis portfolio
Neurology & Immunology Broad portfolio positions Merck KGaA, Darmstadt, Germany as a growing Multiple Sclerosis player Core portfolio Launch Development Evobrutinib (BTK-inhibitor) Stable market share: within Growth: Continued growth Advancing on benefit- declining interferon class within the high e
Slide 64: Mavenclad could change the MS treatment paradigm
Mavenclad Mavenclad could change the MS treatment paradigm • 58% reduction in annualized Unique Consistent relapse rate2 posology: efficacy: High • 47% reduction in 6-month Weight-based, efficacy1 across all confirmed disability progression3 max. 20 days of relevant clinical • 86% reduction in T1 Gd
Slide 65: Mavenclad label supports integrated franchise strategy
Mavenclad Mavencladꞌs attractive label in Europe supports integrated franchise strategy Mavenclad label covers 1 60-70% of patients with RRMS Group’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 66: FDA approval of Mavenclad
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
Slide 67: Dosing regimen and revenue recognition
Mavenclad Dosing regimen and revenue recognition Year 1 Year 2 Year 3 Year 4 Maximum of 20 days of oral treatment spread over 2 years (# of tablets weight-based) Treatment Week 1: max. 10 tablets Week 1: max. 10 tablets No treatment Week 2-4: no treatment Week 2-4: no treatment Week 5: max. 10 table
Slide 68: Capitalizing on waitlisted patient opportunity
Mavenclad Aiming to capitalize on “waitlisted” patient opportunity amid COVID-19 pandemic HE MS market: Mavenclad® : Significant opportunity for rebound in H2 Profile suited to evolved choice drivers • Diverse guidelines published – KOL debate ongoing • Lack of continuous immunosuppression3 • Infect
Slide 69: Evobrutinib development plan
Evobrutinib (BTK-inhibitor) Evobrutinib Comprehensive development plan across immune-mediated diseases Phase I/ Robust phase II program to Est. primary Iia safety data-set enable differentiated phase III completion • Randomized, double-blind, placebo- • 48 wks data presented at AAN 2019 controlled s
Slide 70: Evobrutinib: dual mode of action
Evobrutinib (BTK-inhibitor) Evobrutinib 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 evaluate
Slide 71: Unmet medical need in RMS
Evobrutinib (BTK-inhibitor) Evobrutinib in RMS Significant unmet medical need remains in RMS Unmet needs in RMS … … addressed by Evobrutinib in RMS Need for new mechanisms to control disease • Approx. 50% of patients with RMS continue to • Well Tolerated, no new safety signals identified up to have
Slide 72: ~96 weeks Phase II data
Evobrutinib (BTK-inhibitor) Evobrutinib ~96 weeks data from Phase II confirms potential for mAb like efficacy with a rapid onset of action Direct CNS and “mAb like” Efficacy4 Rapid Onset of Action Peripheral Effects • Impacts B-Cells and 1,20 1.20 1% Myeloid Cells, which play a 1 1 1,00 1.00 key rol
Slide 73: Modified Phase III study design
Evobrutinib (BTK-inhibitor) Evobrutinib mAb like efficacy data drives modification of Phase III study design Initial Design Modified Design • Evobrutinib 48 wk data • Evobrutinib ~96 wk data • No data from H2H studies vs. Aubagio® • Data from 2 H2H studies vs. Aubagio® CIS + RRMS + aSPMS CIS + RRMS
Slide 74: 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 75: Only company spanning the entire value chain
Process Solutions We are the only company to span the entire value chain of our customers 1 2018 Market share position estimate Other Cell Culture Media Single-Use Hardware Life Science Chromatography has a leading position in Buffers and Chemicals 8 out of 9 critical steps Clarification Aseptic Mem
Slide 76: Next-generation bioprocessing
Process Solutions Next-generation bioprocessing on the cards make purify 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 Solutio
Slide 77: Single-use technologies drive flexibility
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 78: 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 79: Process Solutions growth 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 80: Cell and gene therapy value chain offering
Applied Solutions Broad offering across the dynamic cell and gene therapy value chain Understand Prove Deliver Group 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 81: Performance Materials targets attractive markets
Performance Materials targets attractive markets – especially in the electronics space Automotive Market • Driven by world GDP Electronics Performance Materials growth Market sales by end market • Increasing demand in emerging markets Market size: ~€2,000 bn Market size: as of ~€1,450 bn >85% <15% C
Slide 82: Three high-tech pillars serving diverse customers
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 83: Business portfolio management and 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 84: Semiconductor Solutions with Versum and Intermolecular
Performance Materials Semiconductor Solutions even stronger with Versum and Intermolecular Newly combined Wafer processing portfolio offers Deposition offers highest value End2End creation potential solutions with along the Patterning Planarization leading positions semiconductor value in high growt
Slide 85: Data explosion driving secular growth
Performance Materials Semiconductor Solutions – Data explosion driving secular growth End-market – Silicon wafer area shipments– Data driving growth of electronics industry1 Sustainable long-term growth2 1 Silicon wafer area shipments (MSI) growth GDP growth Size of global data sphere in zettabytes
Slide 86: Expanding the limits of how small you can go
Expanding the limits of how small you can go Pattern collapse AZ FIRM® 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
Slide 87: OLED material market to exceed LC by 2022
Performance Materials Display Solutions - OLED material market to exceed LC material market by 2022 Liquid Crystals OLED Display shipment area1 Addressable material market2 Portfolio Role [km²] [€m] +22% -7% +2% 247 +7% 242 1,606 1,339 1,164 1,246 214 958 816 27 18 7 2018 2022 2025 2018 2022 2025 3%
Slide 88: Organic growth by region
Organic growth driven by North America, Europe and Latin America Regional breakdown of net sales [€m] Regional organic development Europe +9.7% • About stable APAC due to double-digit org. growth of General Medicine, more than offsetting COVID-19 related flat Life 30% Science and decline in Display
Slide 89: Strong organic top- and bottom-line performance
Healthcare and Life Science fuel strong organic top- and bottom-line performance; significant portfolio effect from Versum Q1 YoY Net Sales Q1 YoY EBITDA pre Organic Currency Portfolio Total 10.7% 1,181 Healthcare 15.3% -0.4% 0.0% 14.9% 14.5% 2.0% 929 Life Science 5.6% 0.9% 0.0% 6.5% Performance Mat
Slide 90: Q1 2020: Overview
Q1 2020: Overview Key figures Comments [€m] Q1 2019 Q1 2020 Δ • Net sales driven by organic growth of Net sales 3,746 4,370 16.7% Healthcare and Life Science, further fueled by portfolio effect from Versum EBITDA pre 929 1,181 27.2% Margin (in % of net sales) 24.8% 27.0% • EBITDA pre & margin increa
Slide 91: Healthcare Q1 2020 results
Healthcare: Strong General Medicine supported by COVID-19 pull-in effect ® and ongoing Mavenclad uptake; improved margins from top line leverage Healthcare P&L Net sales bridge 15.3% -0.4% 0.0% €1,701 m [€m] Q1 2019 Q1 2020 €1,481 m Net sales 1,481 1,701 Marketing and selling -550 -423 Q1 2019 Organ
Slide 92: Healthcare organic growth by franchise
Healthcare organic growth by franchise/product Q1 2020 organic sales growth [%] by key franchise/products [€m] Organic 295 -3% 299 234 +32% 180 211 +7% 199 167 -1% 168 150 +29% 117 123 +184% 43 114 +28% 91 33 +50% 22 Q1 2020 Q1 2019 92
Slide 93: Neurology & Immunology Q1 2020
® Neurology & Immunology: Paused Mavenclad ramp up amid Covid-19 ® uncertainties offset by slower than anticipated organic Rebif decline ® ® Rebif sales of €295 m in Q1 ‘20 Sales development NDI, [€m] Rebif net sales, [€m] reflect lower organic decline of - 3.4%, further mitigated by FX 331 318 32
Slide 94: Oncology Q1 2020
Oncology: High double-digit growth in Bavencio®, while Erbitux® is impacted by interruption of infusion treatment protocols due to COVID-19 Sales development Oncology, [€m] Erbitux ® net sales, [€m] Absolute sales of €211 m reflect 6.1% growth in Q1 300 237 (org. 7.1%; FX -1.0%) org. org. org. org
Slide 95: Fertility Q1 2020
Fertility: As anticipated, strongest COVID-19 impact among all franchises particularly pronounced in China, Central and Western Europe ® Sales development Fertility, [€m] Gonal-f net sales, [€m] 250 206 191 200 168 178 167 org. org. org. org. org. 350 7.9% 3.5% 9.0% 3.3% -3.5% 150 Entire Fertility
Slide 96: General Medicine and Endocrinology
General Medicine and Endocrinology: Strong growth further accelerated by stocking effects more than offsetting negative COVID-19 impact in China Sales evolution Q1 2020 organic drivers [€m] Endocrinology Organic 150 91 +16.0% org. 100 83 90 99 95 • Endocrinology reflects strong ® demand for Saizen
Slide 97: Life Science Q1 2020 results
Life Science: Showing strong resilience, Process Solutions with double-digit growth, Research and Applied flat Life Science P&L Net sales bridge 5.6% 0.9% 0.0% €1,769 m [€m] Q1 2019 Q1 2020 €1,661 m Net sales 1,661 1,769 Marketing and selling -470 -498 Q1 2019 Organic Currency Portfolio Q1 2020 Admi
Slide 98: Performance Materials Q1 2020 results
Performance Materials: Strong Semi more than offset by LC’s accelerated underlying negative trajectory and declining Surface amid COVID-19 Performance Materials P&L Net sales bridge 52.1% €900 m [€m] Q1 2019 Q1 2020 €604 m -5.4% 2.4% Net sales 604 900 Marketing and selling -66 -136 Administration -2
Slide 99: Balance sheet
Balance sheet Assets [€bn] Liabilities [€bn] 43.8 44.7 44.7 43.8 Cash & cash equivalents 0.8 1.5 3.5 3.7 Receivables 3.3 3.4 Inventories 18.6 17.9 Net equity Intangible Assets 26.3 26.5 13.9 13.2 Financial debt 2.4 2.6 Payables/refund liabilities Property, plant 3.1 3.3 Provisions for employee benef
Slide 100: Versum balance sheet effects
Versum balance sheet effects [€bn] 6 ~5.4 5 ~0.04 4 ~0.7 ~3.1 3 ~2.3 ~0.5 ~0.1 ~0.06 2 1 0 Excess purchase Trademarks Customer Technology, R&D, PPE Inventories Deferred tax Goodwill price relationships Licenses liabilities Amortization of intangible assets from Versum PPA*: ~€230 – 250 m p.a. Totals
Slide 101: Reported figures
Reported figures Reported results Comments [€m] Q1 2019 Q1 2020 Δ • Higher EBIT driven by strong top line growth in Healthcare and Life Science EBIT 379 716 89.0% as well as consolidation of Versum and Financial result -113 -98 -12.5% divestment gain from Allergopharma* Profit before tax 266 617 131
Slide 102: Cash flow statement
Cash flow statement Q1 2020 – cash flow statement Cash flow drivers [€m] Q1 2019 Q1 2020 Δ • Profit after tax driven by higher EBIT Profit after tax 190 458 268 and Allergopharma disposal* gain, neutralized in other operating activities D&A 474 431 -42 ® • D&A lower mainly from expired Rebif Changes
Slide 103: Adjustments in Q1 2020
Adjustments in Q1 2020 Adjustments in EBIT [€m] Q1 2019 Q1 2020 Adjustments thereof D&A Adjustments thereof D&A Healthcare 3 0 -27 2 Life Science 9 0 11 0 Performance Materials 35 0 35 0 Corporate & Other 28 0 17 0 Total 76 0 36 2 Totals may not add up due to rounding 103
Slide 104: ESG: ambitious goals
ESG We are working on ambitious goals Environment Social Governance Climate Product safety Growth & Profit sharing We endeavor to reduce Product safety is one of our Our growth results from innovations and direct and indirect top priorities: From safe acquisitions strengthening our position in emiss
Slide 105: Emissions, water, waste reduced despite growing business
ESG 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 as much as possible - we aim
Slide 106: External stakeholders evaluate our engagement
ESG External stakeholders valuate our engagement In 2019, Our share was In 2019 we have been Since 2008, Our shares In 2019, ISS-Oekom 2018, Sustainalytics again included in STOXX constituents of the have been included in the gave us a “B-” rating awarded us 79 out of Global ESG Leaders Euronext Vig
Slide 107: Financial calendar
Financial calendar Date Event May 14, 2020 Q1 2020 Earnings release May 28, 2020 Virtual Annual General Meeting August 6, 2020 Q2 2020 Earnings release November 12, 2020 Q3 2020 Earnings release 107
Slide 108: Investor Relations contacts
CONSTANTIN FEST SVENJA BUNDSCHUH ALESSANDRA HEINZ 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] AMELIE SCHRADER EVA STERZ
Merck KGaA, Darmstadt, Germany — Jefferies Healthcare Conference 2020 on 6ix