Merck KGaA · XETR:MRK
Merck KGaA — Non-Deal Roadshow (November 2019)
106 slides from Merck KGaA's roadshow presentation, November 2019
Slide 1: Merck – Q3 2019 Roadshow
MERCK – Q3 2019 ROADSHOW Investor Relations November 2019
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 – Funding for success Life Science – Focusing on profitable growth Performance Materials – Maintaining leadership and innovation Executive summary and guidance 3
Slide 4: Business Overview
oO} BUSINESS OVERVIEW Sa aan DARREK
Slide 5: 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 6: Strong businesses with attractive margins
Group Strong businesses with attractive margins % of sales Margin1 % of EBITDA pre 42% 37% 24.9% FY 2018 FY 2018 Sales: EBITDA pre2: €14,836 m €3,800 m 44% 42% 29.8% 16% 32.7% 19% Healthcare Life Science Performance Materials 1 2 EBITDA pre margin in % of net sales; Including Corporate/Others (-€382
Slide 7: Transforming the Company
Sa aan O2 TRANSFORMING THE COMPANY DARREK
Slide 8: Strategic roadmap 2016-2022
Group Strategic roadmap 2016-2022 Group: Sustainable profitable growth and 2012-2015 2016-2018 2019-2022 2019-2022 regular portfolio evaluation Fully leverage Efficiency program Turnaround in Healthcare First pipeline pipeline potential Healthcare: launches Fully leveraging pipeline potential Portfo
Slide 9: Executive Summary
SO Group Executive Summary Group: Entering 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 above
Slide 10: We have added scale and strengthened the attractiveness of our portfolio
Group We have added scale and strengthened the attractiveness of our portfolio 2007: ~€7 bn sales Transformation volume 2018: ~€15 bn sales Consumer Health1 - merged + Healthcare 4 Ethicals Serono Generics - ~€10 bn 3 ~€36 bn + Life Science Millipore & 2 Life Science Solutions Sigma-Aldrich merged L
Slide 11: Continue to transform to a science and technology focused company
Group Continue to transform to a science and technology focused company Acquisition of Divesture of Sigma-Aldrich Consumer Health Acquisition of AZ 1 Electronic Materials [€m] Margins Acquisition of Millipore 16.000 15.024 15.327 3 35% 14.836 Acquisition of Serono 14.000 Divestment of Generics 12.84
Slide 12: Clear set of priority goals
Group Clear set of priority goals Performance Healthcare Life Science Materials ~37% ~44% ~19% EBITDA EBITDA EBITDA pre* pre* pre* Deliver on ambition to keep Strengthen position as Deliver on growth ambition of core business at least stable differentiated player in a highly 2-3% CAGR until 20
Slide 13: Strategic capital allocation until 2022 newly defined
Group Strategic capital allocation until 2022 newly defined Illustration Merck’s sales Three balanced pillars with no business marginalized and earnings drivers Portfolio Guardrails Leading market positions in attractive markets Clear portfolio roles assigned PM Defining Market attractivenes
Slide 14: Healthcare
HEALTHCARE Fully leveraging pipeline potential
Slide 15: Ambition to keep core business sales organically 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 16: Mavenclad and Bavencio launches on track for €2 bn pipeline sales ambition
Healthcare Mavenclad® and Bavencio® launches on track for €2 bn pipeline sales ambition Filing in Japan and USA in 2020 (Sakigake designation in JP, Tepotinib BTD in USA) • FY 2019E: ~ €100 m (Jan - Sep 2019: €74 m) • Approved for aRCC (FDA & EMA), mMCC (50 countries incl. USA and EU), and UC 2L (
Slide 17: Mavenclad continuing to make launch progress
Healthcare Mavenclad® continuing to make launch progress USA Ex-USA Approved on March 29, 2019 • Positive, early payer acceptance: • Approved in 69 countries (reimbursed in ~50%) 100% = total • Continuous improvement of clinical perception1 ~200 M lives with no USA population NDC block • Continuous
Slide 18: Bavencio recently approved for advanced Renal Cell Carcinoma
Healthcare Bavencio® recently approved for advanced Renal Cell Carcinoma Approved by US FDA for 1L treatment of advanced Renal Cell Carcinoma (RCC) on May 15, 2019 Regulatory Submitted to Japanese authorities in January 2019 Achievements Approved by European Commission on October 28, 2019 1L New Pat
Slide 19: Upcoming pipeline catalysts mark progress of Oncology and IO portfolio
Healthcare Upcoming pipeline catalysts mark progress of the Oncology and IO portfolio1 Q4 2019 H1 2020 H2 2020 Bavencio® Evobrutinib Bavencio® (Avelumab/Anti-PD-L1) (BTK-inhibitor) (Avelumab/Anti-PD-L1) Expected EMA feedback Expected presentation of PhIII data Expected presentation of Phase II data
Slide 20: Life Science
LIFE SCIENCE Focus on profitable growth
Slide 21: The 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 22: Business is on track to deliver above-market organic growth
Life Science Business is on track to deliver above-market organic growth Merck Life Science Market 1 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 gr
Slide 23: 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 23
Slide 24: We continue to set the benchmark for industry performance
We continue to set the benchmark for industry performance 2 31,1 30,4 29,8 EBITDA pre 29,2 margin, % of sales 25,1 (actual) 25.5 24,9 25,1 25,3 24,2 24,1 24,2 23,1 24,6 22.2 9,4 Organic sales 8,8 growth, 8,0 YoY % 6.51 6,3 6,4 6,0 5,3 5,5 5,2 4,8 4,2 3,0 3,0 3,3 2015 2016 2017 2019 2018 2015 2016 20
Slide 25: Investing into innovation for future profitable growth
Life Science Investing into innovation for future profitable growth External recognition New product sales doubled in the past 5 years 2019: Exhibitor Award for Best 2018: Excellence in New Product (Pellicon® Capsule innovation Parteck® MXP with Ultracel® Membrane) x~2 Excipient & modified 2018: Exh
Slide 26: Leveraging both organic and inorganic levers for growth
Life Science Leveraging both organic and inorganic levers for growth Inorganic – Transformative M&As Organic – and bolt-ons for strategic growth Global capacity expansion 2010: Millipore (US$7 bn) Asia: e.g. manufacturing and 2015: Sigma-Aldrich (US$17 bn) distribution centers in South Korea, 2017:
Slide 27: Strengthening the #1 eCommerce site in Life Science
Life Science Strengthening the #1 eCommerce site in Life Science through increased agility and greater customer-centricity Continued enhancements driven by focus on … Best-in-class eCommerce Content – Informative content with easy access Geographic fit – Tailored to local preferences Scalability – B
Slide 28: Performance Materials
PERFORMANCE MATERIALS Maintaining leadership and innovation
Slide 29: A leading player in the electronic materials market
Performance Materials A leading player in the electronic materials market 1 ~€1,250 bn ~€380 bn Electronic materials competitor landscape Electronics market Semiconductor market CAGR 18-25: ~4% CAGR 18-25: ~5% ~€38 bn C4 Materials market CAGR 18-25: ~3% C6 C7 C11 C1 + C3 ~€125 bn Versum Display mark
Slide 30: Performance Materials targets attractive markets
Performance Materials targets attractive markets – especially in the electronics space Automotive Performance Materials Market Electronics • Driven by world GDP growth Market sales by end market • Increasing demand in emerging markets Market size: ~€2,000 bn Market size: Pro ~€1,250 bn >85% <15% for
Slide 31: 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 ~50% Polyimide raw materials, printing mate
Slide 32: 5-year transformation program Bright Future is well on track
Implement 5-year transformation program 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) an
Slide 33: Strategic roadmap starting to materialize
Performance Materials Strategic roadmap starting to materialize… Measures for a bright future Darmstadt The focus in Darmstadt will be on R&D and production Leading supplier of high-purity process chemicals, gases and equipment serving Immediate bottom line contribution semiconductor manufactu
Slide 34: Return to organic growth as of 2020
Performance Materials The business is expected to return to organic growth as of 2020 Sales (€m) EBITDApre (€m) Contribution by business 2,500 CAGR: 800 786 +~2-3% Semiconductor Solutions Mid- to high-single digit 2,406 2,400 growth 2,230 750 – 2,380 2,300 Surface Solutions Low single digit growth 6
Slide 35: Executive Summary and Guidance
EXECUTIVE SUMMARY AND GUIDANCE
Slide 36: Key earnings drivers to remember for 2019
Merck Group Key earnings drivers to remember for 2019 1 1 EBITDA -supporting factors EBITDA -reducing factors • Strong sales contribution from Mavenclad® ramp-up and Bavencio® • Healthcare underlying margins negatively impacted by product mix • Ongoing strength in Life Science with 8% to 9% organic
Slide 37: Full-year 2019 guidance
Merck Group Full-year 2019 guidance Merck guidance for 2019, including Versum for 86 days Net sales: Organic +3% to +5% YoY FX +1% to +2% YoY ~ €15.7 – 16.3 bn thereof Versum: ~ €270 m EBITDA pre: 1 Organic +10% to +13% YoY FX 0% to +2% YoY ~ €4,230 – 4,430 m thereof Versum: ~ €80 – 90 m EPS pre: ~
Slide 38: Slide 38
Slide 39: 2019 business sector guidance without Versum
Merck Group 1 2019 business sector guidance without Versum 2 Net Sales EBITDA pre Healthcare Solid organic growth +4% to +6% Organic +19% to +23% YoY Base business at least stable FX 0% to +2% YoY organically ~ €1,830 – 1,940 m Strong contributions from launches including Mavenclad 2 Net
Slide 40: Additional financial guidance 2019
Additional financial guidance 2019 Further financial details Corporate & Other EBITDA pre* ~ -€460 – -490 m Interest result ~ -€260 – -280 m Effective tax rate ~ 24% to 26% Capex on PPE ~ €1.0 bn – 1.1 bn FY 2019 hedge ratio ~60% Hedging/USD assumption at EUR/USD ~1.20 2019 Ø EUR/USD assumption ~ 1.
Slide 41: Maturity profile reflects Sigma-Aldrich and Versum financing
Maturity profile reflects Sigma-Aldrich and Versum financing transactions Maturity profile as of Sept. 30, 2019 Coupon 2.400% 4.500% [€ m/US $] 2.950% 750 1.375% 3.250% 1.625% 2.625% 3.375% 2.875% 1.000 0.875% 0.005% 1.600 0.375% 1.350 500 1.000 1000 800 4.250% 550 600 500 600 70 2019 2020 2021 2022
Slide 42: Stable dividend amid lower EPS pre
Stable dividend amid lower EPS pre Dividend1 development 2011-2018 2018 dividend • Dividend of €1.25 per share for 2018 • Increase in payout ratio to 24.5% of 2 1.25 1.25 EPS pre in 2018 vs. 20.3% in 2017 1.20 3 1.05 • Dividend yield of 1.4% 1.00 0.95 0.85 0.75 1 1 1 2 2011 2012 2013 2014 2015 2016
Slide 43: Merck Pipeline
Merck Pipeline November 8, 2019 Phase I Phase II Phase III M3258 avelumab tepotinib avelumab avelumab LMP7 inhibitor anti-PD-L1 mAb MET kinase inhibitor anti-PD-L1 mAb anti-PD-L1 mAb Multiple myeloma Solid tumors Non-small cell lung cancer Merkel cell cancer 1L Non-small cell lung cancer 1L M3541 bi
Slide 44: 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 45: 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 June + follow-up2 (interim) Alteratio
Slide 46: 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 47: 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 Recently posted INSIGHT 2 study (18-months follow-up presented at WCLC 2019)1 MET-amp population: Study De
Slide 48: 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 49: Avelumab: Program overview
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Avelumab: Program overview Ongoing studies – Five Phase III trials 2018 2019 2020 2021 Est. primary completion1 1 NSCLC 1L (mono/high-intensity) Jun Leverage potential of unique molecular characteristics (ADCC) Gastric 1L (SW-MN) Sep 2 Urothe
Slide 50: 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 51: Avelumab: Renal Cell Carcinoma 1L
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Avelumab: Renal Cell Carcinoma (RCC) 1L Extensive biomarker data set released at ASCO 2019 from Javelin Renal 101 Core data presented at Significant contribution to understanding of ESMO 2018 and ASCO GU 20191 biomarkers presented at ASCO 201
Slide 52: 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 leading the TGF-β immuno-oncology field • Innovative first-in-class bifunctional fusion protein designed to simultaneously target two immune suppressive pathway
Slide 53: Strategic Alliance with GlaxoSmithKline
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 €300 m Approval Commercial Payment
Slide 54: Development Strategy
1 2 3 4 Targeted IO bi- DDR Avelumab functionals DDR Oncology Development Strategy Several studies ongoing with additional studies expected to commence in the upcoming months Explorative Registrational 1L NSCLC all-comers 1L NSCLC in PD-L1 (CT combo) high vs pembrolizumab (mono) NSCLC Stage III unre
Slide 55: Development Strategy: Two additional studies recently started
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Development Strategy Program overview: Two additional studies recently started 2019 2020 2021 2022 2023 2024 Est. primary completion1 Leverage strong signal NSCLC 1L mono vs Pembrolizumab (in PD-L1 high) Q4 observed in 2L NSCLC PD-L1 high pat
Slide 56: 2L Biliary Tract Cancer monotherapy 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 57: 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 58: Data shown at AACR 2019: 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 59: 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 60: DDR development focused on three foundations
60 1 Targeted 2 3 IO bi- 4 Avelumab functionals DDR Oncology DNA Damage Response (DDR) 4 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, buildi
Slide 61: DDR clinical program
61 1 Targeted 2 3 IO bi- 4 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 … Estimated primary completion1 M6620 M6620 CT combinations in various settings ATR-i M4344 Sep Ph
Slide 62: Mavenclad could change the MS treatment paradigm
Immunology Mavenclad Mavenclad could change the MS treatment paradigm …followed by Selective reconstitution Unique immune posology: reconstitution max. 20 days therapy of oral (SIRT)1 Selective reduction treatment3 in B & T lymphocytes… 100 Proportion of Patients Qualifying Relapse Free (%)2 80 4 ye
Slide 63: Mavenclad's attractive label in Europe
Immunology 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
Slide 64: FDA approval of Mavenclad
Immunology 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 2
Slide 65: Evobrutinib - Unmet needs remain in RMS
Immunology Evobrutinib - Unmet needs remain in the treatment of RMS patients First BTK-inhibitor to show clinical proof-of-concept in RMS1 Unmet needs in RMS Evobrutinib in RMS Need for new mechanisms to control disease • Novel Dual mechanism – thought to address the • Approx. 50% of patients with R
Slide 66: Evobrutinib 48 week Phase II data
Immunology Evobrutinib 48 week data from Ph II randomized placebo-controlled trial robustly inform Ph III trial design1,2 48 week data: Primary endpoint Safety1,2 (T1 Gd+ lesion reduction) maintained1,2 Generally well tolerated over 52 weeks: • Transaminase elevations predominantly mild: Some grade
Slide 67: Evobrutinib Phase III trial
Immunology Evobrutinib Phase III trial recently started, with goal to rapidly advance BTKi into clinical practice RMS Phase III trial design Evobrutinib Evobrutinib n=950 Interferon beta-1a Q1W EOS or OLE OLE EOS Day 1 Week 96 OLE Day 1 Week 144 Week 148 Screening Treatment period Safety follow-up O
Slide 68: Evobrutinib development plan
Immunology Evobrutinib Comprehensive development plan across immune-mediated diseases Robust phase II program to Est. primary Phase I/Iia safety data-set enable differentiated phase III completion • Randomized, double-blind, placebo-controlled • 48 wks data study in patients with RMS presented at RM
Slide 69: Process Solutions spans 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 70: 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 71: 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 72: 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 73: 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 74: Applied Solutions: cell and gene therapy value chain
74 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. • U
Slide 75: Research Solutions: e-Commerce and operational excellence
Research Solutions Leading e-Commerce and operational excellence to serve customers Unique Highly reputable Impeccable Customer Experience e-commerce platform Supply chain #1 in Life Science for web traffic >300K products Hundreds of thousands of products Ranking of websites:* sigmaaldrich.com No. 1
Slide 76: Business portfolio management drives capital allocation
Performance Materials Business portfolio management drives capital allocation and enables future value creation Profitability Invest for growth Invest for Strong and sustainable market growth Manage for growth Leading positions and attractive growth cash opportunities Semiconductor Solutions; Ma
Slide 77: Semiconductor Solutions even stronger 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 leading positions Patterning Planarization semiconductor value in high growt
Slide 78: Data explosion driving secular growth
To complete the acquisition of Versum Materials 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
Slide 79: 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 80: Overcoming technology barriers
Semiconductor Solutions Overcoming technology barriers – supporting continued progression of technological mega trends Market drivers and technological trends Feature sizes in memory market develop 1 as predicted by Moore‘s law Miniaturization: Devices are becoming smaller with better performance
Slide 81: OLED material market to exceed LC by 2022
Implement 5-year transformation program 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
Slide 82: OLED – A major driver of topline growth
Implement 5-year transformation program Performance Materials OLED – A major driver of topline growth with significant potential Market share (value) nearly Maintaining global top 3 position through … quadrupled in 5 years1 •Continuous portfolio development: 100% 20 Merck Leading competitor 1 0 2012
Slide 83: Solid organic growth driven by all regions
Solid organic growth driven by all regions Regional breakdown of net sales [€m] Regional organic development +4.0% Europe org. • Solid APAC due to double-digit growth of Life ® ® Science, Glucophage and Erbitux offset by decline in PM amid strong OLED 29% • Europe solid growth reflects strong demand
Slide 84: Life Science and Healthcare drive organic growth
Life Science and Healthcare drive organic growth of top- and bottom-line, supported by FX tailwinds Q3 2019 YoY net sales Organic Currency Portfolio Total Q3 YoY EBITDA pre 1 5.8% -0.1% €1,111 m 9.8% Healthcare 8.0% 2.0% 0.0% 10.0% €963 m Life Science 10.0% 3.0% -0.7% 12.3% Performance Materials -10
Slide 85: Q3 2019: Overview
Q3 2019: Overview Key figures Comments [€m] Q3 2018 Q3 2019 Δ • Net sales growth driven by Healthcare and 4,054 8.1% Life Science, offsetting Performance Materials Net sales 3,749 decline EBITDA pre 963 1,111 15.4% • EBITDA pre & margin reflect GSK deferred Margin (in % of net sales) 25.7% 27.4% inc
Slide 86: Healthcare results
® ® Healthcare: Prominent contribution from Mavenclad and Bavencio ; solid core business Healthcare P&L Net sales bridge 8.0% 2.0% 0.0% €1,756 m [€m] Q3 20181 Q3 2019 €1,596 m Net Sales 1,596 1,756 Marketing and selling -573 -561 Q3 2018 Organic Currency Portfolio +0.0% Q3 2019 Administration -81 -8
Slide 87: Healthcare organic growth by franchise/product
Healthcare organic growth by franchise/product Q3 2019 organic sales growth [%] 9M 2019 organic sales growth [%] by key product [€m] by key product [€m] 318 -15% 947 -16% 363 1.094 235 +22% 653 +25% 188 517 222 +5% 633 +4% 212 615 206 +10% 565 +5% 182 532 143 +20% 384 +14% 116 335 108 297 +17% +12%
Slide 88: Neurodegenerative Diseases: Mavenclad offsets Rebif decline
Neurodegenerative Diseases: Strong growth of Mavenclad® starts to offset Rebif® decline ® Rebif net sales, [€m] ® Rebif sales of €318 m in Q3 Sales development NDI, [€m] 400 363 344 331 2019 reflects organic decline of 350 299 318 300 -15.1% mitigated by org. org. org. org. org. 450 0.4% -1.9% -7.
Slide 89: Mavenclad launch continues to make progress
Multiple Sclerosis: Mavenclad® launch continues to make progress with sales +41% Q2 vs Q1 2019 Improved clinical perception Global Launch Update versus leading HE oral (Germany)4 • Approval in 61 countries with reimbursement in ~50% to Deviation vs leading HE Oral date, consistent with expectations
Slide 90: Mavenclad gaining momentum in the USA
Multiple Sclerosis: Mavenclad® gaining momentum in the first 13 weeks of launch in the USA Payer & Physician Source of Feedback Prescription5 • Positive, early payer acceptance: 100% = total USA population 60M lives1 with preferred access ~170M lives with Injectables no NDC block2 Orals 25% • Strong
Slide 91: Oncology: Erbitux and Bavencio
Oncology: Solid organic growth reflects strong demand for Erbitux® in China and Bavencio® ramp up ® Absolute sales of €222 m reflect Erbitux net sales, [€m] solid growth (org. 5.1%; FX 0.0%) Sales development Oncology, [€m] 250 212 202 199 212 222 Strong APAC mainly driven by China 200 reimburse
Slide 92: Fertility: Strong organic growth
Fertility: Strong organic growth driven by ongoing demand for Gonal-f in the U.S. and China ® Gonal-f net sales, [€m] Sales development Fertility, [€m] 250 206 182 191 200 175 168 org. org. org. org. org. 350 17.9% 10.7% 7.9% 3.5% 9.0% 150 100 300 Fertility posts strong organic 50 growth driven by
Slide 93: General Medicine double-digit growth
China, Europe and LATAM fuel double-digit growth of General Medicine Sales evolution Q3 2019 organic drivers Endocrinology [€m] Organic 150 • Endocrinology with solid organic growth +4.2% org. 100 87 96 83 90 91 driven by all major regions, especially LATAM 50 0 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 20
Slide 94: Life Science: double-digit growth
Life Science: All major businesses and regions fuel double-digit growth Life Science P&L Net sales bridge 10.0% 3.0% -0.7% €1,715 m [€m] Q3 20181 Q3 2019 €1,527 m Net Sales 1,527 1,715 Marketing and selling -443 -474 Q3 2018 Organic Currency Portfolio Q3 2019 Administration -85 -83 EBITDA pre bridge
Slide 95: Life Science: Process, Applied and Research Solutions
Life Science: Ongoing strong demand driving Q3 performance of Process, Applied and Research Solutions Net sales by BU, v Research +5.2 % Solutions org. in % Lab Separation and Workflow Tools driving growth, +15.6 % v Process org. especially with filtration based products in protein Solutions resea
Slide 96: Acting to capitalize on three life science trends
Acting to capitalize on three 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 Commercial expansion Viral Vectors Ex
Slide 97: Performance Materials: Expected LC decline starts to materialize
Performance Materials: Expected LC decline starts to materialize amid continued market slowdown in Semiconductor and Surface Performance Materials P&L Net sales bridge €626 m -10.6% €583 m [€m] Q3 20181 Q3 2019 3.7% 0.0% +5.2% Net Sales 626 583 +0.7% Marketing and selling -62 -61 Q3 2018 Organic Cur
Slide 98: Balance sheet
Balance sheet – Reflecting bond placements and IFRS 16 adoption Assets [€ bn] Liabilities [€ bn] 42.1 42.1 36.9 36.9 5,1 Cash & cash equivalents 2,2 3,5 18,2 Receivables 3,2 3,1 Net equity 2,8 17,2 Inventories Intangible assets 21,0 21,0 12,5 Financial debt 8,9 2,3 2,2 Payables/Refund Liabilities Pr
Slide 99: Reported figures
Reported figures Reported results Comments [€m] Q3 2018 Q3 2019 Δ • Higher EBIT due to strong top-line EBIT 491 608 23.8% contribution from LS and HC, cost consciousness, and GSK deferred income Financial result -56 -135 141.1% • Increase in financial result reflects higher 2 Profit before tax 435 4
Slide 100: Cash flow statement
Cash flow statement Q3 2019 – cash flow statement Cash flow drivers [€m] Q3 2018 Q3 2019 Δ • D&A increase mainly due to IFRS 16 reclassification Profit after tax 345 342 -3 • Changes in other assets/liabilities driven ® D&A 428 464 37 by Bavencio milestone payment; last years’ low base due to neutra
Slide 101: Adjustments in Q3 2019
Adjustments in Q3 2019 Adjustments in EBIT [€m] Q3 2018 Q3 2019 Adjustments thereof D&A Adjustments thereof D&A Healthcare 9 0 -3 0 Life Science 16 5 20 0 Performance Materials 1 0 16 8 Corporate & Other 23 0 13 0 Total 49 5 47 8 Totals may not add up due to rounding 101
Slide 102: ESG: We are working on 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 103: Emissions, Water, Waste reduced
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 104: External stakeholders valuate our engagement
ESG External stakeholders valuate our engagement In 2018, Our share was We were ranked on 4th Since 2008, Our shares In 2018, Oekom 2018, Sustainalytics again included in STOXX place at Vigeo Eiris have been included in the research AG gave us a awarded us 79 out of Global ESG Leaders among its peer
Slide 105: Financial calendar
Financial calendar Date Event March 5, 2020 FY 2019 Earnings release April 24, 2020 Annual General Meeting May 14, 2020 Q1 2020 Earnings release August 6, 2020 Q2 2020 Earnings release 105
Slide 106: 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 PAT