Merck KGaA · XETR:MRK
Merck KGaA — Goldman Sachs Tenth German Corporate Conference 2021
122 slides from Merck KGaA's conference presentation, Sep 20, 2021
Slide 1: Goldman Sachs Tenth German Corporate Conference
MeRck Goldman Sachs - Tenth German Corporate Conference Belén Garijo, CEO Marcus Kuhnert, CFO September 20, 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 01 Business overview 02 Transforming the company 03 Healthcare – Executing on the earnings phase 04 Life Science – Focusing on profitable growth 05 Electronics – Leveraging portfolio shift 06 Sustainability 07 Guidance & executive summary 3
Slide 4: Business overview
BuUSsINeSS overview
Slide 5: Leading positions in fastest growing science & technology markets
Merck Group Leading positions in fastest growing science & technology markets Share of Share of net sales EBITDA pre Strong portfolio & performance drive above-market growth Leading positions and capabilities in core business areas (esp. BioP) 42% 45% New high-growth segments (e.g. novel modalities,
Slide 6: Supporting pillars
Merck Group Accelerated science & tech leadership driving growth New Strategic Framework Core pillars Direction Mobilize for growth Focus on profitable top line growth in the BIG3 in BIG3 Frame Accelerating science & Innovation as key driver for technology leadership sustainable growth Foundation Fo
Slide 7: 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 Life Science Healthcare Electronics ▪ Continued strong mid- ▪ Drive profitable growth ▪ Accelerate top-line China Auto term outlook through pipeline growth Sustain
Slide 8: Transforming the company
Transforming the company
Slide 9: Added scale and strengthened attractiveness of portfolio
Merck Group Added scale and strengthened attractiveness of portfolio Growth trajectory Transformation volume5 ~€10 bn ~€36 bn Divestments Acquisitions - divested + acquired 1 2 3 Included since 2 May 2014; 2007 and 2014 EBITDA pre margin adjusted for comparability; 2018 net sales reflect Consumer He
Slide 10: Well positioned to win in high-growth focus areas
Merck Group Well positioned to win in high-growth focus areas Global economy1 End markets1 Focus market areas1 BIG3 Global pharma industry Oncology ~9% to 12% New HC ~4% to 5% Neurology ~3% to 6% Products Global life science industry Biologics >10% Process ~5% to 7% Services >10% Solutions Global el
Slide 11: #25by25: delivering €5 bn+ organic additional sales by 2025
Merck Group #25by25: delivering €5 bn+ organic additional sales by 2025 >€1 bn organic sales growth per annum ~80% of each year from 2021 to 2025 >€1 bn growth from ~€25 bn1 BIG3 and > 6% organic CAGR >€1 bn Process illustration Solutions >€1 bn Healthcare New Products* >€1 bn Semiconductor Solution
Slide 12: Portfolio strategy – from transformation to evolution
Merck 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 pos
Slide 13: Committing to record investments targeted at BIG3 growth engines
Merck Group Committing to record investments - targeted @BIG3 growth engines Leading positions in growth markets fuel Targeted, disciplined & focused capital allocation significant boost in investment capacity across >20 enterprise planning units Investment [in € bn] Life Science Healthcare Electron
Slide 14: Optimized capital allocation through distinct portfolio roles
Merck Group Optimized capital allocation through distinct portfolio roles Roles determined by thorough analysis of Investment focus on businesses with greatest markets and competitive positions strengths and attractive opportunities Competitive position illustration ▪ Segmentation in planning units
Slide 15: Portfolio roles provide clear guidance to resource allocation
Merck Group Portfolio roles provide clear guidance to resource allocation Simplified portfolio unit life cycle Invest for Manage Evaluate Growth Leadership for Cash ▪ Build/partner ▪ Back on track 1 ▪ Consider divestment Top-line growth Margin focus Transforma- tional M&A Bolt-on ( ) Invest (Capex/R
Slide 16: Financial flexibility fueling investment capacity
Merck Group Financial flexibility fueling investment capacity Accelerated deleveraging to <2x net debt Abundant growth opportunities make strategic capital to EBITDA pre ratio enables allocation more important than ever unprecedented financial flexibility Investment € bn share ▪ Strong operating cas
Slide 17: Life science
Life science Focusing on profitable growth
Slide 18: Attractive secular drivers across segments create opportunities
Life Science Market Attractive secular drivers across segments create opportunities Life Science market 1 2021: ~€190 bn ex COVID, growing 5 to 7% Portfolio Customer Geography Pharma largest (high single-digit) China fastest (double-digit) • Rising mAbs volume (11%) • Local mAb approvals Process 9 t
Slide 19: Driving growth and expanding leadership in Process Solutions
Life Science Driving growth and expanding leadership in Process Solutions Robust market with diverse growth Life Science will be fully equipped to capture growth pockets, elevated during pandemic opportunities with a focus on Process Solutions ▪ Major capacity and network expansion to fuel growth of
Slide 20: Strong growth and improved mid-term outlook
Life Science Strong growth and improved mid-term outlook Life Science mid-term sales outlook Drivers of strong mid-term outlook [in € m] ▪ LS-wide: Above-market performance with continued positive YoY growth rates despite expected fading 7 to 10% CAGR COVID-19 demand1 Research ▪ Process: Driving ~80
Slide 21: All business units contributing to strong mid-term outlook
Life Science All business units contributing to strong mid-term outlook 1 2 3 Sales split Mid-term outlook Customer Split Fundamental growth drivers ▪ Biologics: rising mAbs volume (11% CAGR4), growing adoption of single Process Solutions use, and shift to next-gen bioprocessing (intensified, digiti
Slide 22: Life Science Strategy
Life Science Strategy Focus on strengthening the core and expanding in high-growth areas Productivity New Business Gains Models Expand in high growth Network & segments Holistic Capacity Expansion Offering Strengthen the core Go-To-Market Emerging Optimization Regions eCommerce ● Digital Solutions ●
Slide 23: Process Solutions – the largest of the BIG3
Process Solutions – the largest of the BIG3 Fueling the growth engine to accelerate further in a dynamic market Strategic Growth pillar Selected initiatives focus Products NA EU APAC ▪ Proactive capacity expansions for traditional Single Use Danvers Molsheim Wuxi ▪ Regionalization modalities ▪ Drivi
Slide 24: Leveraging strong positions for durable growth in robust markets
Leveraging strong positions for durable growth in robust markets Selected initiatives Research Solutions Strategic focus Selected initiatives Applied Solutions ✓ Building on strengths in research ✓ Lab Water instrument platform chemistry innovation ✓ Expanding Pharma QC testing ✓ Capitalizing on evo
Slide 25: Innovation, digital and portfolio
Innovation, digital and portfolio Key supporting pillars of strategy for value creation Innovation Digital Resource allocation Addressing evolving market … Internal Focus on organic growth… Sensing unmet customer Data & AI driven decisions Capex increasing ~2.5x1 needs and trends Building on tech st
Slide 26: Process Solutions upside materializing; Research Solutions gaining momentum
Life Science: Upside potential for Process Solutions materializing amid increasing capacity; Research Solutions gaining momentum as well Organic growth versus LY by Quarter ▪ Successful capacity ramp-up 38% 34% continuing ▪ Roughly half of growth since Q2 27% 31% 27% 2020 has been COVID-19 related 2
Slide 27: Healthcare
Healthcare Executing on the earnings phase
Slide 28: Well positioned in a dynamic environment, focused leadership in R&D
Healthcare Well positioned in a dynamic environment, focused leadership in R&D Existing market trends unchanged... Focused leadership in R&D driven by recent launches & pipeline ▪ High growth in largest TA Oncology ✓ From correlated to distinct ▪ Precision medicines to further increase share SCCHN u
Slide 29: Growth driven primarily by innovation
Healthcare Growth driven primarily by innovation, augmenting a solid established portfolio foundation Mid single-digit Positioned to accelerate CAGR science & technology leadership contribute to Profitable sales growth above global ~75% of growth pharmaceutical market (4.6% across TAs until 2025)1 N
Slide 30: Healthcare: Base Business
Healthcare: Base Business Ambition to keep base business ~stable throughout 2021 and 2022 Healthcare base business net sales until 2022 Rebif® ▪ Maintain solid track record of patient retention Decline in line with ▪ Integrate into joint franchise with Mavenclad® interferon market ▪ Drive EM1 growth
Slide 31: Mavenclad US patients growing QoQ
Healthcare: Mavenclad® US Q2 Y1 patients growing QoQ with expanded prescriber base New patient volume growing 23% QoQ, now comprising over 60% of total patient volume Mavenclad® US Y1/Y2 patients ▪ New patients growing QoQ both in terms of volume and % of total patients ▪ New prescribers growing QoQ
Slide 32: Strengthening our leadership in Fertility
Healthcare Strengthening our leadership in Fertility Global Gonadotropin market in € bn 1 Strategies to expand our leadership position GONAL-f The world’s most prescribed r-hFSH treatment3 +6,4% 2,4 ▪ Growing prevalence of infertility driven by delayed 2,3 2,2 parenthood and lifestyle habits 2,0 ▪ I
Slide 33: Bavencio UC 1L launch
Bavencio® UC 1L launch: Increasing the adoption of 1L maintenance therapy in both U.S. and ex-U.S. U.S. – 1 year into launch, continued progress across the entire treatment flow: Newly diagnosed Platinum PT-based chemo1 Maintenance 1L Maintenance metastatic 85% eligble ~75% 1L treatment ~70% therapy
Slide 34: Healthcare catalysts
Healthcare catalysts Q3 2021 Q4 2021 Q1 2022 Tepotinib (c-Met–inhibitor) EMA: Filing accepted in Q4 2020, review ongoing Bavencio® Bintrafusp alfa (Avelumab/Anti-PD-L1) (TGFbeta trap/anti-PD-L1) 1L NSCLC (JAVELIN 100): 2L Cervical (INTR@PID 017): Expected data read-out1 Expected data read-out Xevina
Slide 35: Electronics
Electronics Shifting gears to growth execution
Slide 36: Electronics industry has clear roadmaps with vast market potential
Electronics industry has clear roadmaps with vast market potential and substantial need for materials innovation More applications than ever before to fuel Growth expected to accelerate… Semiconductor growth …with reduced upward cyclicality 12% Automotive 7% Server / Storage / Communication infrastr
Slide 37: Building on leading positions in semiconductor materials
Electronics Building on leading positions in semiconductor materials External trends drive strong demand Electronics well positioned to capture it Connected World IoT Big Data One of the strongest portfolios – providing solutions necessary to enable industry growth 5G Enabling breakthrough technolog
Slide 38: Shifting gears from transformation to growth execution
Electronics Shifting gears from transformation to growth execution From building a platform… …to executing on growth Successful “Bright Future” transformation 3 to 6% CAGR ▪ Superior business composition ~80% of 1 ▪ ~10 equally sized, differentiated tech platforms growth ▪ Wider customer base than e
Slide 39: Portfolio refocus drives mid-term guidance upgrade to 3 to 6% CAGR
Electronics Portfolio refocus drives mid-term guidance upgrade to 3 to 6% CAGR 1 2 3 Sales split Mid-term outlook Business Split Fundamental growth drivers ▪ Continued market growth due to technological advances (Artificial Semiconductor Solutions intelligence, 5G, Big Data and cloud, Internet of Th
Slide 40: Successful transformation, ready for accelerated growth
Electronics: Successful transformation, ready for accelerated growth An integrated electronics innovation leader Delivering on promises and above with one of strongest industry portfolios Bright Future program key deliverables & savings Surface Conducting Solutions thin films €3.3 bn sales with Acti
Slide 41: Level Up
“Level Up” - Shifting gears from transformation to growth execution Level up scale Enabling ambition Level up tech ▪ Capacity investments of 3 to 6% org. CAGR ▪ Further sharpen focus on synchronized to customers’ 2021 to 2025+ profitable innovation, addressing expansion plans key inflection points ▪
Slide 42: Successful integration drives substantial synergy upgrade
Electronics Successful integration drives substantial synergy upgrade and acceleration EBITDA pre impact of synergy ramp-up [€ m] Sources of synergies ~50 ~83 ~95 10 Business • Transform country setup 8 10 Optimization • Streamline duplicate structures 35 30 75 • Optimize production and ~75 Procurem
Slide 43: Sustainability
Sustainability
Slide 44: Accelerating positive impact on environment and society
Merck Group Accelerating positive impact on environment and society Positive impact through our products Our sustainability goals ▪ Provide access to medicine 1 Dedicated to human progress ▪ Enable cutting-edge technologies In 2030, we will advance human progress for >1 billion people through sustai
Slide 45: Reduce our environmental footprint
Reduce our environmental footprint: Environmental targets 2020 have been achieved, new targets set Achievements 2020 New targets from 2021 ▪ Aiming for climate neutrality Reduce scope 1+2 emissions Emissions target 2020 achieved! (scope 1 to 3 emissions) by 2040 ✓ 25% overall reduction for ▪ Lower s
Slide 46: Clear set of tasks to enable our 2030 ESG goals
Merck Group Clear set of tasks to enable our 2030 ESG goals Tasks Development In place Results and next steps Analysis of requirements: Strategy, Ongoing due to developing field of ESG business, regulation, stakeholders stakeholder expectations and regulation Build effective data platform for Feed i
Slide 47: Guidance and Executive summary
Guidance and Executive summary
Slide 48: Full-year 2021 guidance
Full-year 2021 guidance Net sales: Organic: +12% to +14% YoY FX: -2% to -4% YoY ~€18.8 – 19.7 bn EBITDA pre: Organic: +21% to +25% YoY (excl. Biogen1) FX: -2% to -4% YoY ~€5.6 – 6.0 bn EPS pre: ~ €7.80 – 8.50 1 Q3 20 reversal of the provisions for the patent litigation proceedings for Rebif in the a
Slide 49: Executive Summary
Executive Summary 4 key priorities to deliver on Our science & tech ambitions Focusing on Sustainability Mobilizing for Driving Efficient growth Culture & Leadership Leveraging Innovation in the BIG3 49 From: Merck Capital Markets Day 2021 – 2021.09.09
Slide 50: Appendix
Appendix RPAQGRTK
Slide 51: Group
Group
Slide 52: 2021 business sector guidance
2021 business sector guidance1 Net sales EBITDA pre Healthcare ▪ Organic: +7% to +10% ▪ Organic:+15% to +18% YoY ▪ Mainly driven by ® (excl Biogen2) Mavenclad , Bavencio® and recovery ▪ FX: -5% to -7% YoY of Fertility ▪ ~€2,050 – 2,150 m ▪ Base business organically around stable Net sales EBITDA pre
Slide 53: Additional financial guidance 2021
Additional financial guidance 2021 Further financial details Corporate & Other EBITDA pre ~ €-450 to -500 m Interest result ~ €-220 to -245 m Effective tax rate ~22% to 24% Capex on PPE ~€1.4 to 1.5 bn FY 2021 hedge ratio ~70% Hedging/USD assumption at EUR/USD ~1.17 2021 Ø EUR/USD assumption ~1.19 t
Slide 54: Effective tax rate guidance lowered to 22% to 24%
Effective tax rate guidance lowered to new range of 22% to 24% Tax rate development 2018-2020 and from 2021 onwards Rationale for update 40.0% Strong profit growth in Old guidance range ~24 - 26% New guidance range ~22 - 24% Life Science results in different profit 30.0% Q1 2021 contributions worldw
Slide 55: Focus on organic growth and further deleveraging
Merck Group Focus on organic growth and further deleveraging Proven swift deleveraging Net debt / EBITDA pre track record & outlook after major acquisitions 4.0 ▪ Deleveraged to ~2x net 3.5 debt/EBITDA pre already in 2020 2.8 ▪ M&A on hold until 2022; only smaller deals to be realized if 2.1 budget
Slide 56: Sustainable dividend growth
Sustainable dividend growth Dividend development 2014 - 2020 2020 dividend ▪ Dividend of €1.40 (+8% YoY) per share approved1 by Annual General Meeting 1.40 2 1.25 1.25 1.30 ▪ Payout ratio of 23.1% of EPS pre in 1.20 2020; aiming for 20-25% of EPS pre 1.00 1.05 3 ▪ Dividend yield of 1.0% 1April 28, 2
Slide 57: Merck's ownership structure
Governance Merck‘s ownership structure Shareholders E. Merck KG: of Merck KGaA Partners‘ Meeting & Family Board ▪ Shareholders hold ~30% of Merck KGaA’s total capital ▪ E. Merck KG (99.9% Merck Family) holds ~70% of Merck ▪ Share capital is divided into 129,242,252 bearer shares KGaA’s total capital
Slide 58: Executive board compensation
Executive board compensation Pay for performance reflecting the company’s long-term strategy Long-Term Incentive Merck Long-Term Plan Plan Incentive ▪ Reflecting the long-term strategy for Merck’s growth and (from 2022) sustainability ambition Performance of Merck 50% share price vs. the DAX ▪ 4 yea
Slide 59: External stakeholders assess our engagement
External stakeholders assess our engagement As of 2021, Merck received 2021, we received an ESG Since 2008, Merck is part In 2020, Merck has once an MSCI ESG* Rating Risk Rating of 19.5 and of FTSE4Good Index, more achieved prime status of AAA. Sustainalytics: low risk of measuring the performance b
Slide 60: Expanding KPIs to monitor and steer sustainability
Merck Group Expanding KPIs to monitor and steer sustainability comprehensively Target Exemplary KPIs to be implemented in 2021 1 # of people positively impacted by Merck technologies/products Our sustainability ambition is Human Progress % of new patent families with positive sustainability impact i
Slide 61: Regular portfolio review remains key to success
Merck 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 ▪ Licens
Slide 62: Regional breakdown of net sales
Life Science demand and Healthcare recovery drive particularly strong growth in North America and Europe Regional breakdown of net sales [€m] Regional organic development Europe +26.4% ▪ APAC: Strong growth across all sectors org. 29% particularly in Process Solutions, Fertility and Semiconductor So
Slide 63: Q2 sales and EBITDA pre organic growth
Strong Life Science demand and robust Healthcare recovery drive 23% sales and 52% EBITDA pre organic growth Q2 YoY Net Sales Q2 YoY EBITDA pre Organic Currency Portfolio Total 52.0% €1,576 m Healthcare 23.6% -4.3% 0.0% 19.2% -5.2% -0.1% €1,074 m Life Science 28.2% -5.0% 0.0% 23.2% Electronics 10.3%
Slide 64: H1 organic net sales and EBITDA pre growth
Strong performance across all sectors drives 17% organic net sales growth and 44% organic EBITDA pre growth against COVID-19-impacted H1 2020 H1 YoY Net Sales H1 YoY EBITDA pre Organic Currency Portfolio Total 43.8% €3,087 m Healthcare 12.9% -5.2% -0.6% 7.1% €2,256 m -6.8% -0.1% Life Science 27.5% -
Slide 65: Credit details
Credit details Maturity profile as of June 30, 2021 Credit rating information Coupon [€m / USDm] 3.250% 0.125% LT ST Since Outlook Rating Rating 2.950% 1.375% Baa1 12.12.14 Stable P-2 1,600 1.625% 3.375% 1.625% 2.875% 1,000 0.875% 0.500% A 29.05.13 Stable A-1 0.005% 500 0.375% 1.000 1.000 750 750 80
Slide 66: Q2 2021: Overview
Q2 2021: Overview Key figures Comments [€m] Q2 2020 Q2 2021 Δ Net sales 4,119 4,870 18.2% ▪ EBITDA pre & margin increase, driven by operating leverage in Life Science and EBITDA pre 1,074 1,576 46.7% Healthcare vs. LY COVID-19 burden Margin (in % of net sales) 26.1% 32.4% 6.3pp ▪ EPS pre increase dr
Slide 67: H1 2021: Overview
H1 2021: Overview Key figures Comments [€m] H1 2020 H1 2021 Δ ▪ Strong performance across all sectors Net sales 8,489 9,501 11.9% drives +12% growth despite -6% FX EBITDA pre 2,256 3,087 36.9% ▪ EBITDA pre & margin increase, driven by Margin (in % of net sales) 26.57% 32.49% 5.919% operating leverag
Slide 68: Q2 2021: Reported figures
Q2 2021: Reported figures Reported results Comments ▪ EBIT more than doubles, driven by [€m] Q2 2020 Q2 2021 Δ strong performance across all sectors EBIT 491 1,049 113.6% vs. Q2 2020 COVID-19 burden Financial result -102 -95 -7.3% ▪ Improved financial result largely driven by lower interest expense
Slide 69: H1 2021: Reported figures
H1 2021: Reported figures Reported results Comments [€m] H1 2020 H1 2021 Δ ▪ EBIT increase driven by strong growth and operating leverage in all business EBIT 1,207 2,092 73.3% sectors, particularly Life Science Financial result -201 -154 -23.3% ▪ Improved financial result largely Profit before tax
Slide 70: Cash flow statement Q2 2021
Cash flow statement Q2 2021 – Cash flow statement Cash flow drivers [€m] Q2 2020 Q2 2021 Δ ▪ Operating cash flow up €386 m driven Profit after tax 289 747 458 primarily by higher profit after tax in all three sectors, particularly Life Science D&A 559 419 -140 ▪ Delta in D&A driven by COVID-19 Chang
Slide 71: Cash flow statement H1 2021
Cash flow statement H1 2021 – cash flow statement Cash flow drivers ▪ Operating cashflow more than doubles [€m] H1 2020 H1 2021 Δ as strong profit after tax is further Profit after tax 747 1,495 748 boosted by favorable working capital D&A 991 843 -148 ▪ Lower depreciation & amortization vs. H1 2020
Slide 72: Adjustments in Q2 2021
Adjustments in Q2 2021 Adjustments in EBIT [€m] Q2 2020 Q2 2021 Adjustments thereof D&A Adjustments thereof D&A Healthcare 15 0 11 3 Life Science -15 0 -6 0 Electronics 131 112 10 5 Corporate & Other 8 0 97 0 Total 138 112 112 8 72 Merck Q2 2021 Results Presentation | August 5, 2021 From: Merck Q2 2
Slide 73: Adjustments in H1 2021
Adjustments in H1 2021 Adjustments in EBIT [€m] H1 2020 H1 2021 Adjustments thereof D&A Adjustments thereof D&A Healthcare -12 2 21 3 Life Science -4 0 8 0 Electronics 165 112 27 7 Corporate & Other 25 0 103 1 Total 174 114 159 11 73 Merck Q2 2021 Results Presentation | August 5, 2021 From: Merck Q2
Slide 74: Financial Calendar
Financial Calendar Date Event August 5, 2021 Q2 2021 Earnings release September 9, 2021 Virtual Capital Markets Day November 11, 2021 Q3 2021 Earnings release April 22, 2022 Annual General Meeting August 4, 2022 Q2 2022 Earnings release 74 Merck Q2 2021 Results Presentation | August 5, 2021 From: Me
Slide 75: Life science
7 Life science
Slide 76: Therapies are evolving from treatments to cures
Process Solutions: Therapies are evolving from treatments to cures Advancing traditional is critical as novel modalities develop TRADITIONAL MODALITIES NOVEL MODALITIES Uses small molecules, Uses DNA, RNA, Cells peptides, proteins HP-API Gene & Viral Chronic, Plasma ADCs Potentially curative manages
Slide 77: Moving from today's technology to BioPharma 4.0
Process Solutions Moving from today’s technology to BioPharma 4.0 Unit Operations Intensified, integrated, digitally-enabled Cell culture media mAbs templated Next generation 30 years ago bioprocessing Biopharm materials Intensified Processing Chromatography > > > Value for customers Perfusion Natri
Slide 78: COVID demands align with existing strengths
Process Solutions COVID demands align with existing strengths COVID-19 Outlook Product offering Type & Global Doses Implications Capabilities in all unit operations Nucleic Acid Vaccines • Leveraging human 4.8 Billion Gov. contracted factory 4.3 Billion 2021 manuf. • Emerging manuf. process CCM & Pl
Slide 79: Process Solutions: Strategic direction
Process Solutions: 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 t
Slide 80: Opportunities in services to accelerate double-digit growth
Process Solutions Opportunities in services to accelerate double-digit growth Accessible Market (€ bn) mAbs dominate; Novels fastest Importance of services and novel modalities increases +13% 5 2021 10 19 2 31 7 50 3 31 4 2025 17 28 5 50 2021 Small Other mAbs & Cell & gene 2025 1 2 Molecules biologi
Slide 81: 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 82: 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 83: mAbs market democratization will drive diversification
Process Solutions mAbs market democratization will drive diversification, change & variability mAb volume projections 2021 to 2025 45 CAGR ~11% Market 40 Biosimilars1 development 35 • mAbs market will grow ~11% CAGR • Top 10 originator mAbs represent Volume [metric tons] 30 ~45% (11mT) of volume tod
Slide 84: Process Solutions: Continued strong double-digit growth
BIG 3 - Process Solutions: Continued strong double-digit growth, moderating as expected against rising comps Sales development [€ m] - org. growth [%] 1,145 1,054 ▪ Continued double-digit growth in the core business paired with rising COVID-19 975 926 contributions (mainly vaccine related) 892 38.3%
Slide 85: Research Solutions: Record organic growth
Research Solutions: Record organic growth amid ongoing business recovery and soft comps Sales development [€ m] - org. growth [%] 644 631 602 ▪ Strong double-digit growth, accelerating 566 546 further on soft comps (Q2-20 with biggest 30.9% impact from lockdowns) 501 24.0% ▪ Ongoing core business re
Slide 86: Applied Solutions: Growth accelerating
Applied Solutions: Growth accelerating as recovery is gaining traction Sales development [€ m] - org. growth [%] 453 449 421 432 413 418 ▪ Growth accelerating to double-digits as recovery continues amid still easy comps (H1-20 with flat growth due to lockdowns) ▪ Core business as main driver with br
Slide 87: Life Science Q2: Strong core business and COVID-19 demand
Life Science Q2: Strong core business and COVID-19 demand fuel record growth, mainly driven by Process and Research Solutions Life Science P&L Net sales bridge [€m] IFRS Pre 28.2% 0.0% €2,225 m €1,806 m Q2 2020 Q2 2021 Q2 2020 Q2 2021 -5.0% Net sales 1,806 2,225 1,806 2,225 M&S * -488 -505 -488 -505
Slide 88: Healthcare
7 Healthcare
Slide 89: China's VBP: Round 4 implementation near completion
China‘s VBP: Round 4 implementation near completion, confidence in approx. stable base business through 2021 and 2022 sustained Round 1 Round 2 Round 3 Round 4 2019 2020 2021 March: First December: April: Round 2 July: Round 3 Jan: Round 4 announced (incl. round Round 2 winners granted announced cal
Slide 90: Healthcare pipeline
Healthcare pipeline August 5, 2021 Phase I Phase II Phase III M1231 bintrafusp alfa berzosertib bintrafusp alfa xevinapant Bispecific MUC1xEGFR TGFbeta trap/anti-PD-L1 ATR inhibitor TGFbeta trap/anti-PD-L1 IAP inhibitor ADC Cervical cancer 1L Small-Cell Lung Cancer4 Biliary tract cancer 1L Locally a
Slide 91: Xevinapant: Potential to become standard of care
Xevinapant Potential to become standard of care in core area for Merck Chart originally presented in 2020 R&D update call; selected, non-exhaustive examples Worldwide Selected DDR assets M9831 xevinapant in-licensing External (incl. M6620/Berzosertib) (formerly Xevinapant VX984)3 builds on leadershi
Slide 92: Xevinapant (Debio 1143)
Xevinapant (Debio 1143) Potentially first in class oral IAP antagonist with FDA BTD Compelling Phase 2 data2 published in The Lancet Oncology, Mode of Action1 and presented at ESMO 2020 ▪ Improvement in OS statistically significant and clinically meaningful: HR 0.49 (0.26–0.92); p=0.0261 ▪ Clinicall
Slide 93: Xevinapant deal terms
Xevinapant Total deal-volume of up to ~ €900 m and industry-typical sales royalties Payment type Amount (in €) Accounting treatment2 Upfront payment ~ €190 m Largest part to be capitalized as an intangible asset Approval To be paid and capitalized as an intangible asset upon approval and to be Up to
Slide 94: Two Phase III studies are designed
Xevinapant (Potentially first in class oral IAP antagonist) Two Phase III studies are designed to target the majority of unresectable LA SCCHN patients receiving systemic therapy + RT 2020 2021 2022 … 2025 … 1 Registrational ▪ Cisplatin-eligible LA SCCHN Phase III Initiated in September 2020; ▪ Xevi
Slide 95: Mavenclad: Independent real-world data
Healthcare: Mavenclad® Independent real-world data (RWD) differentiates Mavenclad® ▪ A high-efficacy DMT that demonstrates full antibody response to COVID-19 vaccination ▪ Differentiated vs. other high-efficacy therapies in light of COVID-19 vaccinations for MS patients Total Protective humoral Pati
Slide 96: Tepotinib (MET kinase inhibitor)
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 Lay the Foundation in Journal of Medicine in May 2020 (99 patients
Slide 97: Tepotinib: EGFRmut/METamp market
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-months follow-up presented at WCLC 2019)2 • Study design
Slide 98: Bavencio UC 1L maintenance treatment
Bavencio® (Avelumab) – Urothelial Carcinoma (UC 1L) UC 1L maintenance treatment achieving transformative OS benefit (31% reduction in risk of death, 7 months increase in median overall survival) Durable responses to standard of care (1L chemotherapy) are rare with most patients experiencing progress
Slide 99: Bintrafusp alfa: INTR@PID Program Upcoming Readouts
Bintrafusp alfa INTR@PID Program: Upcoming Readouts Registrational potential 2021 2022 2023 2024 Lung 024 - 1L Ph I/II CT/CRT Q1 combo CT combo Lung 005 – Stage* III Ph II cCRT + IO combo followed by IO Q1 Cervical 046 - 1L Ph I Q2 HPV driven/ Precision IO CT, +/- bevacizumab combo Cervical 017 - 2L
Slide 100: Leading DDR portfolio with a broad clinical program
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) Update Call 2019 ▪ Promising Ph II POC data from NCI study recently Berzosertib/M6620 published in Cancer Cell (
Slide 101: We pioneered BTKi development for MS with Evobrutinib
We 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% of MS sales control disease 20
Slide 102: Evobrutinib stands out amongst BTK inhibitors
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 BID QD (oral) Exposure in (2
Slide 103: Evobrutinib targets inflammation and progression
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 innovative oral penetrant B
Slide 104: Evobrutinib is optimally dosed
Evobrutinib is optimally dosed to offer best-in-class BTK inhibition 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 from covalent binding MOA and
Slide 105: Evobrutinib holds unmatched long-term data
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 106: M5049 (TLR7/8 antagonist)
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 107: 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 108: Healthcare Q2: Strong Fertility recovery & Bavencio performance
® Healthcare Q2: Strong Fertility recovery & Bavencio performance; ® Mavenclad returns to sequential growth as dynamic market picks up Healthcare P&L Net sales bridge [€m] IFRS Pre 23.6% €1,788 m €1,499 m Q2 2020 Q2 2021 Q2 2020 Q2 2021 -4.3% 0.0% Net sales 1,499 1,788 1,499 1,788 * M&S -409 -391 -4
Slide 109: Electronics
7 electronics
Slide 110: Targets attractive markets in the electronics space
Electronics Targets attractive markets – especially in the electronics space Automotive Electronics Market • Driven by world GDP Electronics growth Market sales by end market • Increasing demand in emerging markets Market size: ~€2,000 bn Market size1: 2020A ~€1,800 bn ~89% ~11% CAGR 20-25: Sales ~5
Slide 111: Semiconductor Solutions – integrated materials player
Semiconductor Solutions – integrated materials player, well positioned to serve the need of customers in semiconductor fabrication Electronics 1 [in € bn] Semiconductors 2 [in € bn] Semiconductor Solutions 1,800 368 Semiconductor 47 Semiconductor Silicon wafers 370 Materials components 54 Patterning
Slide 112: Unique comprehensive products and services portfolio
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 113: Over 100 customers
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 114: Only 3 companies running 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
Slide 115: 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 116: Level Up Scale - Expanding in synch with customer demand
“Level Up” Scale - Expanding in synch with customer demand A partner of choice, in step for higher demand Smart localization, investing close to customers Semiconductor industry CAPEX p.a.1 [bn€] Share of semi > 2X material market1 Key investments ? Investing in lock-step with Taiwan ▪ Additional la
Slide 117: Level Up Tech
“Level Up” Tech – delivering today and enabling tomorrow Strong portfolio of silicon & optical technologies And enabling tomorrow’s empowering today’s applications leading-edge technologies Solutions empowering customers to make Selected future Our smaller, faster, more energy efficient & more susta
Slide 118: Expanding the limits of how small you can go
Electronics 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 li
Slide 119: OLED material market to exceed LC material market
Electronics Display Solutions - OLED material market to exceed LC material market already in 2021 x% OLED shipment area / addressable material market [in % of total] Liquid Crystals OLED Display shipment area1 Addressable material market2 [km²] [€m] +20% -8% +4% +7% 264 246 1,694 1,450 1,109 1,139 1
Slide 120: Strategic roadmap materializing
Electronics 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 Track re
Slide 121: Electronics Q2: Strong performance in Semi
Electronics Q2: Strong performance in Semi, recovery in Surface, and stabilizing Display Solutions drive double-digit organic sales growth Electronics P&L Net sales bridge [€m] IFRS Pre €814 m 10.3% 0.0% €857 m Q2 2020 Q2 2021 Q2 2020 Q2 2021 -5.0% Net sales 814 857 814 857 M&S * -134 -137 -131 -136
Slide 122: Investor Relations contacts
CONSTANTIN FEST SVENJA DJAVAHERI 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 — Goldman Sachs Tenth German Corporate Conference 2021 on 6ix