Merck KGaA · XETR:MRK
Merck KGaA — Merck KGaA, Darmstadt, Germany — Q2 2021 Earnings Presentation
119 slides from Merck KGaA's earnings presentation, August 2021
Slide 1: Q2 21 Roadshow
Merck KGaA, Darmstadt, Germany Q2 21 Roadshow Investor Relations August 2021
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: Agenda
Agenda Business overview Transforming the company Healthcare – Executing on the earnings phase Life Science – Focusing on profitable growth Electronics – Leveraging portfolio shift Sustainability Guidance & executive summary 3
Slide 4: Business overview
Business overview 01
Slide 5: Three high-tech businesses competing in attractive markets
Group Three high-tech businesses competing in attractive markets Healthcare Life Science Electronics 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 and mater
Slide 6: Group today – three strong pillars as basis for profitable growth
Group Group today – three strong pillars as basis for profitable growth FY 2020 contribution to1 Sales EBITDA pre Global specialty innovator poised for above-industry growth 36% ▪ Resilient base business backed by excellent life cycle management 1. 38% Healthcare ▪ Strong growth from new products, l
Slide 7: The 2016 vision – a strategic agenda until 2022
Group The 2016 vision – a strategic agenda until 2022 2012-2015 2016-2018 2019-2022 Efficiency Turnaround Fully leverage First pipeline program in pipeline potential launches Healthcare Portfolio optimization 3 strong Above- in LS and EL pillars Portfolio market growth Sigma in Life Science manageme
Slide 8: 2021 and beyond – poised for growth in a challenging environment
Group 2021 and beyond – poised for growth in a challenging environment Trade Wars Group-wide: Profitable Growth & Cost Discipline Healthcare Life Science Electronics • Drive profitable growth • Continue to outperform • Accelerate top-line China China Auto VBP through pipeline the market growth launc
Slide 9: Transforming the company
Transforming the company 02
Slide 10: We have added scale and strengthened portfolio attractiveness
Group We have added scale and strengthened the attractiveness of our portfolio 2007: ~€7 bn sales Transformation volume 2020: ~€18 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 11: Continue to transform 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 17 534 40% 18 000 Acquisition of Millipore 16 152 16 000 Acquisition of Serono 15 32
Slide 12: Clear set of priority goals
Group Clear set of priority goals Electronics Healthcare Life Science ~40% ~42% ~18% EBITDA EBITDA EBITDA pre* pre* pre* ▪ Deliver on ambition to keep ▪ Strengthen position as ▪ Deliver ambition of 3-4% CAGR core business at least stable differentiated player in a until 2022 highly attractive market
Slide 13: Three-pillar structure – positioned to win in high-growth markets
Group Three-pillar structure – positioned to win in high-growth markets Global economy1 End markets1 Focus market areas1 Global pharma industry Oncology: ~10% ~4% to 5% Immunology: ~5% to 9% Global life science industry Biologics: ~10% to 12% ~5% to 6% Services: ~7% to 8% Global electronics industry
Slide 14: Three main drivers of growth to 2022 and beyond
Group Three main drivers of growth to 2022 and beyond poised for low-teens org. growth deliver ~€2 bn pipeline poised for >80% of ambition mid to high single-digit growth org. growth from “BIG3” 1 2019 Healthcare Process Semiconductor Other 2022 >>> Pipeline Solutions Solutions 2 Businesses Beyond 2
Slide 15: Portfolio strategy – from transformation to evolution
Group Portfolio strategy – from transformation to evolution Deleveraging and organic growth investments in focus until 2022 ▪ Primarily organic growth from ”BIG3“ Higher likelihood of ▪ Selective bolt-ons possible if budget allows regular bolt-ons Reduced probability of larger acquisitions post 2022
Slide 16: Healthcare
Healthcare Executing on the earnings phase 03
Slide 17: Ambition to keep base business ~stable throughout 2021 and 2022
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 18: Mavenclad US: Q2 Y1 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 19: Independent real-world data differentiates Mavenclad
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 20: 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 21: Healthcare catalysts
Healthcare catalysts Oncology Immuno-Oncology Immunology 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 rea
Slide 22: Life science
Life science Focusing on profitable growth 04
Slide 23: Building growth momentum with focus on attractive market segments
Life Science Building growth momentum with focus on attractive market segments Total Life Science Market1 Mid-term outlook ~€170-180 bn; ~5-6% CAGR Life Science Business Sector Research Process Applied ~30%; ~2-3% ~35%; ~8-9% ~35%; ~4-5% Consumables ~55%; ~5-6% 6-9% Organic sales Instruments ~15%; ~
Slide 24: Improved mid-term outlook driven by market and portfolio focus
Life Science Improved mid-term outlook driven by market and portfolio focus ~€170-180 bn ~6-9% ~5-6% +50-150 +50-150 bps CAGR 1 1 bps CAGR Market outlook improving further, mainly due to Process segment Above-market growth set to continue due to portfolio advantage and outperformance 1 Company estim
Slide 25: All business units contributing to above-market growth
Life Science All business units contributing to above-market growth 1 2 3 Sales split Mid-term outlook Customer Split Fundamental growth drivers ▪ Biologics: global mAbs4 production growing by ~11-15% p.a. for 2020- Process Solutions 20245 driven by new molecules and biosimilars Low-teens ▪ Diversif
Slide 26: 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 27: Upside potential for Process Solutions materializing amid increasing capacity
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 28: Electronics
Electronics Leveraging the portfolio shift 05
Slide 29: Portfolio shift leads to greater resilience and accelerated growth
Electronics Portfolio shift leads to greater resilience and accelerated growth # of customers Electronics sales split Mid-term outlook [that make up 80% of Sales] [% of total] Electronics 85% Display ~ x3 Solutions 50% Semiconductor Solutions 2013 2020E 2014 2016 2018 H1 3-4% 2020 # of product group
Slide 30: Portfolio refocus drives mid-term guidance upgrade to 3 to 4% CAGR
Electronics Portfolio refocus drives mid-term guidance upgrade to 3 to 4% 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 31: 5-year transformation program Bright Future is well on track
Electronics 5-year transformation program Bright Future is well on track 2018 2019 2020 2021 2022+ Back to organic Growth 3-4% CAGR1 Resource allocation & process excellence ~30% Margin Site closures in Atsugi, Japan (2021) and Chilworth, UK (2019) announced Outsourcing progressing; reduction of LC
Slide 32: 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 33: 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 34: Sustainability
Sustainability 06
Slide 35: Sustainability strategy enhanced with clear commitment to new targets
Sustainability strategy enhanced, leveraging strengths with clear commitment to new targets Who we are Targets Integration Innovation Power Goal #1: Dedicated to human progress Integrated ▪ We are a leading science and In 2030, we will advance human progress for more than ▪ Part of the overall strat
Slide 36: Potential to increase sustainable value for business and society
Potential to increase sustainable value for business and society High Impact SDGs High-Impact MeRck’s Where we contribution can contribute and benefit Goal Business opportunities Good Health ➢ We are able to contribute with dedicated 1 and products, know-how, partnerships and ▪ Develop a new range o
Slide 37: 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 38: Next steps towards achieving ESG targets
Next steps towards achieving ESG targets AGENDA 2020-2022 2030 Analysis of requirements: Strategy, business, regulation, stakeholders targets 01 Goal Develop SBV tool2 to measure product sustainability value Dedicated to human Link ESG1 to progress board compensation 02 Goal Build effective data pla
Slide 39: Guidance and Executive summary
Guidance and Executive summary 07
Slide 40: 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 41: Looking beyond 2021
Group Looking beyond 2021 Life Science Healthcare Electronics Upgrading the Updating Further upgraded COVID-19 PS floor 2022 pipeline sales to guidance also positive for 2022 to €700 m €1.6 bn to €1.8 bn signal for 2022 and beyond ▪ Higher 2021 overall COVID- ▪ Mavenclad® peak sales of ▪ Continued s
Slide 42: Executive Summary
Executive Summary Steady earnings Growth with high margins and a low risk profile Group Successfully driving transformation Setup Growth Engines Execution into a leading science and Three-pillar structure Healthcare pipeline, Process Delivery on strategic priorities technology strengthened further a
Slide 43: Appendix
Appendix
Slide 44: Group
Group
Slide 45: FX sensitivity per business sector
FX sensitivity per business sector Healthcare Life Science Electronics Sales Sales Sales • Global presence • Balanced regional sales split • ~75% of sales in Asia-Pacific between EU, NA and RoW • ~35% of sales in Europe • Industry is USD-driven Costs Costs Costs • High cost base in EUR from main • E
Slide 46: Acquisition history - Strengthening leadership positions
Acquisition history - Strengthening leadership positions Year Company Volume Sector 2021 Amptec n/a Life Science 2020 Resolutions Spectra Systems n/a Life Science FloDesign Sonics n/a Life Science 2019 Versum Materials Inc., USA €5.8 bn Electronics Intermolecular Inc., USA €62 m Grzybowski Scientifi
Slide 47: Divestment history - Focusing on profitable core areas
Divestment history - Focusing on profitable core areas Year Company Volume Sector Litec-LLL GmbH €3 m Electronics 2020 Allergopharma n/a Healthcare 2018 Consumer Health €3.4 bn Healthcare 2018 Flow Cytometry business €62.5 m Life Science 2017 Biosimilars €656 m Healthcare 2016 Pakistan Healthcare bu
Slide 48: Successful crisis management increasingly mitigates pandemic impact
Successful crisis management increasingly mitigates pandemic impact Quarterly Net Sales in €m* Underlying developments ▪ Life Science well positioned for new COVID-19 driven demand trends COVID-19 Impact ▪ Process business rapidly addressing new market needs, fueling net upside ▪ Research and Applie
Slide 49: 2020 – strong resilience in times of global crisis
Group 2020 – strong resilience in times of global crisis 1 Growth and COVID-19 impact by business 2020E organic 2020 guidance confirmed; recovery started in June sales growth ▪ ▪ Most businesses growing despite COVID-19 Process ▪ Largest business growing and positively affected ▪ Smallest businesses
Slide 50: 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 51: 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 52: Effective tax rate guidance lowered to new range
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 53: Focus on organic growth and further deleveraging
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 availa
Slide 54: 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 55: Merck KGaA ownership structure
Governance Merck‘s KGaA, Darmstadt, Germany ownership structure Shareholders E. Merck KG, Darmstadt, Germany: of Merck KGaA, Darmstadt, Germany Partners‘ Meeting & Family Board ▪ Shareholders hold ~30% of Group’s total capital ▪ E. Merck KG, Darmstadt, Germany (99.9% The Family) ▪ Share capital is d
Slide 56: 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 Company’s growth and (from 2022) sustainability ambition Performance of Group 50% share price vs. the DAX ▪ 4 y
Slide 57: External stakeholders assess our engagement
External stakeholders assess our engagement As of 2021, we received an 2021, we received an ESG Since 2008, Group is part In 2020, Group has once 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 by I
Slide 58: Regular portfolio review remains key to success
Group Regular portfolio review remains key to success Strong Defining portfolio Clear financial track record guard rails M&A criteria ▪ Acquisitions and divestments are ▪ Three strong pillars with no ▪ Supporting profitable growth part of Company’s history business marginalized strategy ▪ Licensing
Slide 59: 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 60: 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 61: 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 62: 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 63: 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 64: 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 65: 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 66: 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 67: Q2 2021 cash flow statement
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 68: H1 2021 cash flow statement
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 69: 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 69 Merck KGaA, Darmstadt, Germany Q2 2021 Results Presentation | August
Slide 70: 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 70 Merck KGaA, Darmstadt, Germany Q2 2021 Results Presentation | Augu
Slide 71: 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 71 Merck KGaA, Darmstadt, Germany Q2 2021 Results Presentation
Slide 72: Healthcare
Healthcare
Slide 73: 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 74: 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 75: Xevinapant: potential to become standard of care
Xevinapant Potential to become standard of care in core area for the Group 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 leade
Slide 76: 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 77: 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 78: Xevinapant Phase III studies
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 79: 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 80: Tepotinib: EGFRmut/METamp market, INSIGHT 1 data
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 81: Bavencio – Urothelial Carcinoma (UC 1L)
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 82: Bintrafusp alfa
Bintrafusp alfa1 An innovative first-in-class bifunctional fusion protein discovered in-house leading the TGF-β immuno-oncology field • Innovative first-in-class bifunctional fusion protein designed to simultaneously target two immune suppressive pathways (blocking PD-L1 and reducing TGF-β signaling
Slide 83: Bintrafusp alfa INTR@PID Program: Upcoming Readouts
Bintrafusp alfa INTR@PID Program: Upcoming Readouts Registrational potential 2021 2022 2023 2024 combo BTC 055 - 1L CT Ph II/III CT combo (Gemcitabine Plus Cisplatin) Q4 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
Slide 84: DNA Damage Response (DDR)
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 85: 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 86: 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 87: 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 88: Evobrutinib is optimally dosed for BTK inhibition
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 89: Evobrutinib long-term data in MS
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 90: 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 91: 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 92: Healthcare Q2 results
® 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 93: Life Science
Life Science
Slide 94: Capitalizing on three key life science trends
Life Science Capitalizing on three key life science trends 1 COMPLEX BIOLOGICS 2 DIGITAL UNIVERSE 3 ASIA Single Use / End to End #1 eCommerce Manufacturing/Distribution Opened Wuxi site in 2018, Nantong, Wuxi Single use site in Life and expanded Danvers facility Science1 90% Viral Vectors Commercial
Slide 95: 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 96: COVID demands align with our strengths
Process Solutions COVID demands align with our strengths but increase supply chain pressure Unit COVID-19 Outlook Operations Cell culture media Type Implications Biopharm mAb materials 65 programs • Universal templates Chromatography Bind and block • A leading position for 8 virus from entering out
Slide 97: Opportunities in services to accelerate double-digit growth
Process Solutions Opportunities in services to accelerate double-digit growth Accessible Market (€ bn) Origins of biologics pipeline mAbs dominate; Novels fastest Emerging biotechs drive novels 10% 3 Traditional therapies Novel therapies 5 3 41 15% 28 3 Company type 50% 50% Established 2020 Small Ot
Slide 98: 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 99: 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 100: 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 101: mAbs market democratization will drive diversification
Process Solutions mAbs market democratization will drive diversification, change & variability mAb volume projections 2020 to 2024 35 CAGR ~11-15% Market development 30 • Overall mAbs market will grow 25 ~11-15% CAGR Volume [metric tons] • Top 10 originator mAbs represent 20 ~ 50% of market volume t
Slide 102: BIG 3 - Process Solutions sales development
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 103: 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 rec
Slide 104: 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 bro
Slide 105: Life Science Q2 results
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 106: Electronics
Electronics
Slide 107: Targets attractive markets – especially in electronics
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 108: Expected mid-term portfolio split
Electronics Expected mid-term portfolio split Surface Solutions Deposition / Spin-On Dielectrics OLED Patterning/Cleans Mid-term the Electronics portfolio will consist of ~10 equally sized LC Specialty Gases businesses >60% of them serving chip makers Other Planarization Display DS&S Packaging INDIC
Slide 109: 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 110: Comprehensive products and services portfolio offers end-to-end solutions
Unique comprehensive products and services portfolio offers end-to-end solutions, well-placed in high growth segments Deposition Steps of Company customers in manufacturing integrated circuits Patterning Planarization Wafer processing offers highest value creation potential in Prototyping value chai
Slide 111: 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 112: 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 113: Semiconductor Solutions Market
Semiconductor Materials Set to outgrow highly attractive semiconductor materials market Semiconductor Solutions sales guidance vs. market [Indexed 2020 = 100%] Market ▪ Technological trends inevitably drive exponential data growth ▪ More data requires more chips 140% Semiconductor Solutions: and hig
Slide 114: 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 115: COVID-19 impact on data growth expected to be positive
Semiconductor Solutions COVID-19 has vaulted the “digital transformation” by ~5 years1 COVID-19 impact on data 2 Expected COVID-19 impact on global datasphere growth expected to be [zetabytes] 180 positive ▪ Adobe: US consumers in COVID-19 June 2020 spent US$73.2 data bump 1 ▪ Work-from-home/stay-at
Slide 116: 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 117: 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 118: Electronics Q2 results
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 119: Investor Relations contacts
CONSTANTIN FEST SVENJA BUNDSCHUH SARA HOFMANN Head of Investor Relations Assistant Investor Relations Assistant Investor Relations +49 6151 72-5271 +49 6151 72-3744 +49 6151 72-3321 constantin.fest@emdgroup.com svenja.bundschuh@emdgroup.com sara.hofmann@emdgroup.com ILJA DOERING GUNNAR ROMER AMELIE
Merck KGaA, Darmstadt, Germany — Q2 2021 Earnings Presentation on 6ix