Merck Kgaa · XETR:MRK
Merck Kgaa — Non-Deal Roadshow (June 2021)
119 slides from Merck Kgaa's roadshow presentation, Jun 22, 2021
Slide 1: Q1 21 Tech Roadshow
MeRck Q1 21 Tech Roadshow Kai Beckmann, CEO Electronics June 22, 2021
Slide 2: Disclaimer
Disclaimer Cautionary Note Regarding Forward-Looking Statements and financial indicators This communication may include “forward-looking statements.” Statements that include words such as “anticipate,” “expect,” “should,” “would,” “intend,” “plan,” “project,” “seek,” “believe,” “will,” and other wor
Slide 3: Agenda
Agenda Business overview Transforming the company Healthcare – 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
Merck 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
Slide 6: Merck today – three strong pillars as basis for profitable growth
Merck Group Merck 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 core business backed by excellent life cycle management 1. 38% Healthcare ▪ Strong growth from new produ
Slide 7: The 2016 vision – a strategic agenda until 2022
Merck Group The 2016 vision – a strategic agenda until 2022 2012-2015 2016-2018 2019-2022 Efficiency Turnaround Fully leverage First pipeline program in pipeline potential launches Healthcare Portfolio optimization 3 strong Above- in LS and EL pillars Portfolio market growth Sigma in Life Science ma
Slide 8: 2021 and beyond – poised for growth in a challenging environment
Merck Group 2021 and beyond – poised for growth in a challenging environment Trade Wars Group-wide: Profitable Growth & Cost Discipline Healthcare Life Science Electronics • Drive profitable growth • Continue to outperform • Accelerate top-line China China Auto VBP through pipeline the market growth
Slide 9: Transforming the company
Transforming the company 02
Slide 10: We have added scale and strengthened the attractiveness of our portfolio
Merck Group We have added scale and strengthened the attractiveness of our portfolio 2007: ~€7 bn sales Transformation volume 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 Scie
Slide 11: Continue to transform to a science and technology focused company
Merck Group Continue to transform to a science and technology focused company Divesture of Acquisition of Consumer Health Versum Materials Acquisition of Sigma-Aldrich Margins [€m] Acquisition of AZ 1 Electronic Materials 17 534 40% 18 000 Acquisition of Millipore 16 152 16 000 Acquisition of Serono
Slide 12: All three business sectors delivering on their strategic priorities
Merck Group All three business sectors delivering on their strategic priorities Healthcare Life Science Electronics ▪ Accelerating organic growth ▪ Above-market organic growth ▪ Significant portfolio change with rising contribution from paired with industry-leading towards higher growth ® ® launches
Slide 13: Clear set of priority goals
Merck Group Clear set of priority goals Electronics Healthcare Life Science ~40% ~42% ~18% EBITDA EBITDA EBITDA pre* pre* pre* ▪ Deliver ambition of 3-4% CAGR ▪ Deliver on ambition to keep ▪ Strengthen position as ▪ Implement 5-year transformation core business at least stable differentiated player
Slide 14: Three-pillar structure – positioned to win in high-growth markets
Merck 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 in
Slide 15: Three main drivers of growth to 2022 and beyond
Merck 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 Be
Slide 16: 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 17: Healthcare
Healthcare Executing on the earnings phase 03
Slide 18: Creating optionality through focused pipeline approach
Healthcare Creating optionality through focused pipeline approach Pipeline and launch progress supported by strong base Mid-term outlook Healthcare • Early stage pipeline fueled by in-house innovation Pipeline quality • Potentially transformative late-stage pipeline assets (Evobrutinib, Bintrafusp a
Slide 19: Confirming ambition to keep base business at least stable to 2022
Healthcare: Base Business Confirming ambition to keep base business at least stable to 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 grow
Slide 20: Mavenclad and Bavencio launches on track for ~€2 bn pipeline ambition
Healthcare: Sales from Pipeline Mavenclad and Bavencio launches on track for ~€2 bn pipeline ambition in 2022 ▪ Global peak sales: €1.0–1.4 bn ▪ Approved in >80 countries, including USA, EU, Canada and Australia ▪ Dynamic market volume still lags pre pandemic levels by ~20% but increased vaccination
Slide 21: Independent real-world data differentiates 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 Patient population N=125 im
Slide 22: Bavencio UC 1L launch update
Bavencio® UC 1L launch update: Significant opportunity to drive further growth by increasing the adoption of 1L maintenance therapy U.S. - ~10 months into launch, on track to changing the SOC: Newly diagnosed Platinum PT-based chemo1 Maintenance 1L Maintenance metastatic 85% eligble ~70% 1L treatmen
Slide 23: Healthcare catalysts expected in 2021
Healthcare catalysts – Significant developmental progress across Oncology and Immuno-Oncology portfolio expected in 2021 Oncology Immuno-Oncology Immunology Q2 2021 Q3 2021 Q4 2021 Q1 2022 Tepotinib (c-Met–inhibitor) EMA: Filing accepted in Q4 2020, review ongoing Bavencio® Bintrafusp alfa (Avelumab
Slide 24: Life science
Life science Focusing on profitable growth 04
Slide 25: Building growth momentum with focus on attractive market segments
Life Science Building growth momentum with focus on attractive market segments Total Life Science Market1 Mid-term outlook ~€170-180 bn; ~5-6% CAGR Life Science 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 26: Improved mid-term outlook driven by market and portfolio focus
Life Science Improved mid-term outlook driven by market and portfolio focus ~€170-180 bn ~6-9% ~5-6% +50-150 +50-150 bps CAGR 1 1 bps CAGR Market outlook improving further, mainly due to Process segment Above-market growth set to continue due to portfolio advantage and outperformance 1 Company estim
Slide 27: All business units contributing to above-market growth
Life Science All business units contributing to above-market growth 1 2 3 Sales split Mid-term outlook Customer Split Fundamental growth drivers ▪ Biologics: global mAbs4 production growing by ~11-15% p.a. for 2020- Process Solutions 20245 driven by new molecules and biosimilars Low-teens ▪ Diversif
Slide 28: Critical offering in the fight against COVID-19
Life Science Critical offering in the fight against COVID-19 PrODUCTS feed into... www.sigmaaldrich.com/covid-19 VIRUS VIRUS VACCINE & THERAPY DETECTION CHARACTERIZATION PRODUCTION • Leading critical component • Offering is among largest biologic • Supporting global COVID-19 provider for Molecular a
Slide 29: Upside potential for Process Solutions materializing
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% accelerated further ▪ Roughly half of additional growth 27% since Q2 2020 has been COVID-19 2
Slide 30: Electronics
Electronics Leveraging the portfolio shift 05
Slide 31: Electronics targets attractive markets
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 19-242: Sales ~
Slide 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: Sustainability
Sustainability 06
Slide 39: 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 ▪ Merck is a leading science and In 2030, we will advance human progress for more than ▪ Part of the overall str
Slide 40: Potential to increase sustainable value for business and society
Potential to increase sustainable value for business and society High Impact SDGs High-Impact Where MeRck’s MeRCK contribution can contribute and benefit Goal Business opportunities Good Health ➢ Merck is able to contribute with dedicated 1 and products, know-how, partnerships and ▪ Develop a new ra
Slide 41: 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 42: 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 43: Guidance and Executive summary
Guidance and Executive summary 07
Slide 44: Latest COVID-19 assumptions for 2021
Latest COVID-19 assumptions for 2021 Overarching assumptions ▪ Increasing vaccination penetration across large populations in all major regions as of summer ▪ Global gradual easing of lockdowns to continue; vaccination efforts expected to keep up with virus mutations ▪ Overall improvement in the cou
Slide 45: Full-year 2021 guidance
Full-year 2021 guidance Net sales: Organic: +10% to +12% YoY FX: -2% to -4% YoY ~€18.5 – 19.5 bn EBITDA pre: Organic: +16% to +20% YoY (excl Biogen1) FX: -2% to -4% YoY ~€5.4 – 5.8 bn EPS pre: ~€7.50 – 8.20 1 Q3 20 reversal of the provisions for the patent litigation proceedings for Rebif in the amo
Slide 46: 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 47: Appendix
Appendix
Slide 48: Group
Group
Slide 49: 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 50: Acquisition history
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 51: Divestment history
Divestment history - Focusing on profitable core areas Year Company Volume Sector 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 Merck Pakistan Healthcare business n/a Healthcare 2014
Slide 52: 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 53: 2020 – strong resilience in times of global crisis
Merck Group 2020 – strong resilience in times of global crisis 1 Growth and COVID-19 impact by business 2020E organic 2020 guidance confirmed; recovery started in June sales growth ▪ ▪ Most businesses growing despite COVID-19 Process ▪ Largest business growing and positively affected ▪ Smallest busi
Slide 54: 2021 business sector guidance
2021 business sector guidance1 Net sales EBITDA pre Healthcare ▪ Organic: +7% to +10% ▪ Organic:+12% to +15% YoY ▪ Mainly driven by ® ® (excl Biogen2) Mavenclad , Bavencio and recovery ▪ FX: -5% to -7% YoY of Fertility ▪ ~€2,000 – 2,100 m ▪ Base business organically around stable Net sales EBITDA pr
Slide 55: Additional financial guidance 2021
Additional financial guidance 2021 Further financial details Corporate & Other EBITDA pre ~ €-440 to -490 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 56: Underlying tax rate guidance lowered
Underlying tax rate guidance lowered to new range of 22% to 24% Tax rate development 2018-2020 and from 2021 onwards 40.0% Old guidance range ~24 - 26% New guidance range ~22 - 24% Rationale for update 30.0% Strong profit growth in Life Science results in 25.2% 25.4% 24.2% 24.0% different profit 20.
Slide 57: Focus on organic growth and deleveraging to 2022
Merck Group Focus on organic growth and deleveraging to 2022 Proven swift deleveraging Net debt / EBITDA pre track record & outlook after major acquisitions 4.0 ▪ Deleverage to <2x net debt/EBITDA pre in 2022 3.5 ▪ M&A on hold until 2022; only 2.8 smaller deals to be realized if budget available 1.8
Slide 58: Sustainable dividend growth
Sustainable dividend growth Dividend1 development 2014 -2020 2020 dividend ▪ Dividend of €1.40 (+8% YoY) per share proposed1 for 2020 2 1.40 ▪ Payout ratio of 23.1% of EPS pre in 1.25 1.25 1.30 2020; aiming for 20-25% of EPS pre 1.20 3 1.05 ▪ Dividend yield of 1.0% 1.00 1Final decision is subject to
Slide 59: 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 60: 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 61: External stakeholders assess our engagement
External stakeholders assess our engagement As of 2020, 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 62: 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 63: Life Science demand drives strong growth in North America and Asia-Pacific
Life Science demand drives particularly strong growth in North America and Asia-Pacific Q1 2020 Regional breakdown of net sales [€m] Regional organic development Europe +4.7% ▪ APAC: strong Life Science and org. Healthcare growth while Electronics 29% ~ stable with Semi offsetting Display ▪ Europe:
Slide 64: 27% organic growth in Life Science drives strong Group growth
27% organic growth in Life Science, moderate Healthcare growth & stable Electronics drive very strong organic Group sales and EBITDA pre growth Q1 YoY Net Sales Q1 YoY EBITDA pre Organic Currency Portfolio Total 36.3% €1,511 m Healthcare 3.5% -5.9% -1.2% -3.6% €1,181 m -8.3% -0.1% Life Science 26.7%
Slide 65: Balanced maturity profile
Balanced maturity profile: Lower refinancing risks & higher flexibility Maturity profile as of March 31, 2021 Coupon 3.250% [€ m/US $ m] 0.125% 2.950% 1.375% 1,600 1.625% 3.375% 1.625% 2.875% 1,000 0.500% 0.875% 0.005% 500 0.375% 2.625% 1 000 1,000 750 750 800 550 600 500 600 317 2021 2022 2023 2024
Slide 66: Q1 2021: Overview
Q1 2021: Overview Key figures Comments [€m] Q1 2020 Q1 2021 Δ ▪ Net sales growth of 6% driven by 12% Net sales 4,370 4,631 6.0% organic growth and FX burden of -6% EBITDA pre 1,181 1,511 27.9% ▪ EBITDA pre increase, driven particularly Margin (in % of net sales) 27.0% 32.6% by operating leverage in
Slide 67: Q1 2021: Reported figures
Q1 2021: Reported figures Reported results Comments [€m] Q1 2020 Q1 2021 Δ ▪ Strong performance across all sectors EBIT 716 1,043 45.7% particularly in Life Science drives 46% Financial result -98 -59 -40.0% EBIT growth Profit before tax 617 984 59.4% ▪ Reduced interest expense and lower LTIP provis
Slide 68: Cash flow statement
Cash flow statement Q1 2021 – cash flow statement Cash flow drivers [€m] Q1 2020 Q1 2021 Δ ▪ Strong increase in profit after tax driven particularly by Life Science, further Profit after tax 458 748 290 ® boosted by Bavencio milestones D&A 431 424 -7 ▪ Provisions largely reflect various favorable de
Slide 69: Adjustments in Q1 2021
Adjustments in Q1 2021 EBIT Adjustments [€m] Q1 2020 Q1 2021 Adjustments thereof D&A Adjustments thereof D&A Healthcare -27 2 10 0 Life Science 11 0 14 0 Electronics 35 0 17 3 Corporate & Other 17 0 6 0 Total 36 2 47 3 69
Slide 70: Financial calendar
Financial calendar Date Event May 12, 2021 Q1 2021 Earnings release 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 70
Slide 71: Healthcare
Healthcare
Slide 72: China's VBP: Round 4 bidding completed
China‘s VBP: Round 4 bidding recently completed, sustained confidence in keeping base business approx. stable through 2021 and 2022 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
Slide 73: Healthcare pipeline
Healthcare pipeline May 12, 2021 Phase I Phase II Phase III M1231 bintrafusp alfa berzosertib bintrafusp alfa xevinapant Bispec. MUC1xEGFR ADC TGFbeta trap/anti-PD-L1 ATR inhibitor TGFbeta trap/anti-PD-L1 IAP inhibitor Solid tumors Cervical cancer 1L Small-Cell Lung Cancer3 Biliary tract cancer 1L L
Slide 74: 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 75: Xevinapant potentially first in class oral IAP antagonist
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 76: Xevinapant deal volume and royalties
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 77: 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 78: Tepotinib first-in-class launch in MET Exon14
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 79: 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 80: Bavencio UC 1L maintenance treatment OS benefit
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 81: 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 82: 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 83: Bintrafusp alfa NSCLC Stage III cCRT Combo trial
Bintrafusp alfa: Developmental Progress NSCLC Stage III cCRT Combo trial NSCLC 2L data presented at ESMO 2018 INTR@PID LUNG 005 • Need: NSCLC accounts for 80-85% of all cases of lung cancer1 • Results: Encouraging efficacy comparing favorably to Experimental Arm: M7824 (up to 1 year established PDx-
Slide 84: Bintrafusp alfa: HPV-related cancers
Bintrafusp alfa: Developmental Progress Data shown at AACR 2019 highlights opportunity in HPV-related cancers HPV-associated HPV+* Prevalence: >630,000 new cases of HPV-related cancer are Efficacy variable reported worldwide annually1 cancer (n=43) (n=36) Response Rates: Confirmed BOR, n (%) • Bintr
Slide 85: 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 (Ovarian cancer, Berzosertib +/- Gem) Strategy presented at R&D Berzosertib/M6620 • Multiple NCI studies in various tumor types Update Call 2019 (formerly VX-970) • Promising P
Slide 86: 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 87: 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 88: Evobrutinib has the potential to tackle MS directly in the brain
Evobrutinib has the potential to tackle Multiple Sclerosis directly in the brain ▪ Evobrutinib was quantifiable in CSF of 9 of 9 clinically stable RMS patients administered the efficacious 75 mg BID dose in the RMS Phase 2 OLE study* ‒ Plasma PK were at steady-state and consistent with other RMS Pha
Slide 89: 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 90: 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 91: Evobrutinib holds unmatched long-term data among BTKi in MS
Evobrutinib (BTK-inhibitor) Evobrutinib holds unmatched Long-Term Data among BTKi class in MS 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 92: 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 93: M5049: Similarities between SLE and COVID-19
M5049 (TLR7/8 antagonist) Similarities between SLE and COVID-19 Similarities between SLE and COVID-191 Phase II study started in July 2020 Rational: • Investigate if M5049 intervention at critical point in course of COVID-19 disease may prevent or ameliorate hyper- inflammatory response in patients
Slide 94: Healthcare: strong Fertility & Oncology performance
® Healthcare: strong Fertility & Oncology performance, while Mavenclad remains impacted by depressed dynamic market Healthcare P&L Net sales bridge [€m] IFRS Pre €1,701 m 3.5% €1,639 m Q1 2020 Q1 2021 Q1 2020 Q1 2021 -5.9% -1.2% Net sales 1,701 1,639 1,701 1,639 * M&S -423 -370 -423 -365 Q1 2020 Org
Slide 95: Life Science
Life Science
Slide 96: 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 97: Highly resilient and well positioned to participate in COVID-19 upside
Life Science Highly resilient and well positioned to participate in COVID-19 upside 2020 heatmap of COVID-19 impact by customer segment H1 2020 monthly sales* by customer segment Pharma/ Industrial & Pharma / Biotech Industrial & Testing Academia Diagnostics Biotech Testing Process Solutions +++ COV
Slide 98: 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 99: 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 100: 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 101: 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 102: 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 103: 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 104: 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 105: BIG 3 - Process Solutions: upside potential continues
BIG 3 - Process Solutions: upside potential continues to materialize Sales development [€m] - org. growth [%] 1,054 ▪ COVID-19 related projects in BioP Single Use and Downstream remain key drivers of 975 926 ~ 50% additional pandemic-related growth 892 802 38.3% ▪ Unprecedented growth across all reg
Slide 106: Research Solutions: additional COVID-19 demand
Research Solutions: additional COVID-19 demand has gained momentum Sales development [€m] - org. growth [%] 644 ▪ Ongoing core business recovery boosted by 602 additional COVID-19 related demand 566 546 24.0% ▪ Unprecedented growth across all regions 501 particularly strong in Asia (>30% org.) and 1
Slide 107: Life Science: record growth
Life Science: strong core business and rising COVID-19 demand fuel record growth, particularly in Process and Research Solutions Life Science P&L Net sales bridge [€m] IFRS Pre 26.7% 0.0% €2 131 m €1 769 m Q1 2020 Q1 2021 Q1 2020 Q1 2021 -6.2% Net sales 1,769 2,131 1,769 2,131 M&S * -498 -501 -497 -
Slide 108: Electronics
Electronics
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: 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 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: Only 3 companies run 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: Set to outgrow highly attractive semiconductor materials market
Semiconductor Materials Set to outgrow highly attractive semiconductor materials market Semiconductor Solutions sales guidance vs. market [Indexed 2020 = 100%] Market ▪ Technological trends inevitably drive exponential data growth ▪ More data requires more chips 140% Semiconductor Solutions: and hig
Slide 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: Q1 results
Electronics: year-over-year and vs. Q4 2020 Semi growth as well as recovering Surface compensate Display Solutions decline Electronics P&L Net sales bridge [€m] IFRS Pre €900 m 0.2% 0.0% €861 m Q1 2020 Q1 2021 Q1 2020 Q1 2021 -4.5% Net sales 900 861 900 861 M&S * -136 -135 -134 -135 +0.0% Q1 2020 Or
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@merckgroup.com svenja.bundschuh@merckgroup.com sara.hofmann@merckgroup.com ILJA DOERING GUNNAR ROMER A