Merck & Company, Inc. · NYSE:MRK
Merck & — Q4 2020 Earnings Presentation
21 slides from Merck &'s earnings presentation, February 2021
Slide 1: Merck Q4 2020 Earnings
Merck Q4 2020 Earnings
Slide 2: Forward-looking statement of Merck & Co., Inc.
Forward-looking statement of Merck & Co., Inc., Kenilworth, N.J., USA This presentation of Merck & Co., Inc., Kenilworth, N.J., USA (the “company”) includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The
Slide 3: Q4 performance highlights
Q4 performance highlights • Invested $2.6B in research and development, making Created Delivered significant progress in advancing our pipeline and across shareholder $12.5B our key growth pillars worldwide • Returned $1.5B to shareholders through dividends value sales +5% • Continued to capitalize
Slide 4: Driving value for patients and shareholders by progressing our pipeline
Driving value for patients and shareholders by progressing our pipeline Key 2020 regulatory milestones • In the U.S.: • Received FDA approvals across oncology (KN-204, KN-158, KN-177, KN-629 R/M, TMB-H, Q6W dosing, PAOLA-1, PROfound, NF-1, KN-057, KN-355, KN-146), vaccines (GARDASIL9), hospital (REC
Slide 5: COVID-19 research efforts: advanced therapeutic candidates
COVID-19 research efforts: advanced therapeutic candidates Treatment candidates Molnupiravir MK-7110 (MK-4482) (CD24Fc) Collaboration with Ridgeback Bio to develop molnupiravir (MK-4482), an MK-7110, a potentially first-in-class recombinant fusion protein acquired orally available antiviral candidat
Slide 6: Oncology: strong growth across broad portfolio
Oncology: strong growth across broad portfolio +27% YOY • KEYTRUDA sales of $4.0B increased 27% year- over-year, reflecting continued leadership in lung and strong growth across a broad number of additional indications o In the U.S., sales of $2.2B driven by growth across all key tumor types, includ
Slide 7: Vaccines: GARDASIL underlying demand remains intact
Vaccines: GARDASIL underlying demand remains intact • GARDASIL sales of $1.0B increased year-over- year and reflect continued strong underlying demand o In the U.S., sales grew year-over-year largely due to $240M of benefit from CDC +41% YOY borrowing and repayment o Ex-U.S., sales declined year-ove
Slide 8: Hospital: solid BRIDION growth despite reduced surgical procedures
Hospital: solid BRIDION growth despite reduced surgical procedures • BRIDION sales of $355M increased 13% +13% YOY year-over-year driven by increased market share gains, partially offset by lower elective surgery procedures • In 2020, Bridion grew 7%, representing higher demand globally • Continued
Slide 9: Animal Health: strong growth across innovative portfolio
Animal Health: strong growth across innovative portfolio • Animal Health sales increased 6% to $1.2B o Companion Animal sales increased 9%, +6% YOY reflecting strength in vaccines and parasiticides o Livestock sales increased 4%, reflecting an additional month of sales related to the 2019 acquisitio
Slide 10: 2020: key pillars driving growth the past four years
2020: key pillars driving growth the past four years +30% YOY $14,380 +62% YOY +43% YOY $725 $580 $11,084 $404 $444 $7,171 $20 $187 N/A $149 $3,809 2017 2018 2019 2020 2017 2018 2019 2020 2017 2018 2019 2020 KEYTRUDA Performance Lynparza Performance Lenvima Performance +10% YOY $4,703 $4,393 +6% YOY
Slide 11: Growth across most global markets in 2020 despite ongoing pandemic impact
Growth across most global markets in 2020 despite ongoing pandemic impact Canada +1% Europe2 +6% +13% -8% United +3% States $343M China Japan +12% -4% Eastern Europe / Middle East Asia Pacific +6% Africa Global Latin pharmaceutical America sales +4%1 1. All growth rates exclude the impact of foreign
Slide 12: Q4 2020 financial results summary: Delivering leverage in the P&L
Q4 2020 financial results summary: Delivering leverage in the P&L $ in billions, except EPS amounts Change Q4 2020 Q4 2019 Change Ex-FX Sales $12.5 $11.9 +5% +5% GAAP Gross Margin 55.8% 69.1% -13% -13% Non-GAAP Gross Margin2 73.0% 72.6% +0% +1% GAAP net (loss) income1 $(2.1) $2.4 ->100% ->100% Non-G
Slide 13: 2020 financial results summary: Solid growth despite pandemic headwinds
2020 financial results summary: Solid growth despite pandemic headwinds $ in billions, except EPS amounts Change 2020 2019 Change Ex-FX Sales $48.0 $46.8 +2% +4% GAAP Gross Margin 67.7% 69.9% -2% -2% Non-GAAP Gross Margin2 74.3% 74.9% -1% -0% GAAP net income1 $7.1 $9.8 -28% -25% Non-GAAP net income
Slide 14: Merck full-year 2021 guidance
Merck full-year 2021 guidance1 Guidance Key Assumptions • Assumes ~2% positive FX impact $51.8B to $53.8B Revenue • Assumes ~2% negative impact due to the COVID-19 +8% to +12% (+6% to 10% ex-FX) pandemic, particularly during the first half of 2021 Non-GAAP Gross Margin Rate2 ~77.0% Non-GAAP • Reflec
Slide 15: Momentum leading up to the spinoff of Organon & Co.
Momentum leading up to the spinoff of Organon & Co. Remain confident the transaction will deliver significant benefits for both Merck Creating two companies and Organon, and create value for Merck with enhanced strategic shareholders and operational focus, Organon will be well positioned for growth
Slide 16: Updated high level 2021 Organon guidance
Updated high level 2021 Organon guidance Guidance Additional Comments 2020 Revenue $6.5B • Products that will comprise Organon • Expected low to mid-single digit annual revenue 2021 Revenue $6.0B to $6.5B growth off of a 2021 base year • Expected to increase over time Non-GAAP Mid-30% range as a sta
Slide 17: Balanced approach to capital allocation
Balanced approach to capital allocation: Investing in the business and creating value for shareholders Commitment to the Dividend Capital Investments 2020 to 2024 +7% +11% >$20B Dollars per share $2.30 +15% $2.00 +2% $2.60 Over 5 years, including expanding manufacturing +2% +2% $2.44 +11% +2% +2% ca
Slide 18: Merck has actively supplemented its pipeline and portfolio with strategic business development
Merck has actively supplemented its pipeline and portfolio with strategic business development Oncology Cardiovascular, Animal Health Neurosciences & Other Bolt-on acquisitions Strategic collaborations & licensing Completed 120 business development transactions in 2020 18
Slide 19: Creating long-term value for patients, employees and shareholders
Creating long-term value for patients, employees and shareholders Next 5 Years 5-10 Years 10+ Years Strong execution driving Rich pipeline addressing Revitalized discovery efforts and sustainable revenue growth, areas of high unmet need to increased expertise in biology to meaningful margin expansio
Slide 20: Continuing to make progress on our ESG commitments
Continuing to make progress on our ESG commitments Increasing access to health to advance Merck’s efforts to serve more patients • History of making medicines and vaccines accessible and affordable through responsible pricing practices • Implemented refreshed Access to Health Guiding Principles to e
Slide 21: Recast of 2020 non-GAAP P&L presentation
Recast of 2020 non-GAAP P&L presentation1 $ in millions, except EPS amounts Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Sales $12,057 $10,872 $12,551 $12,514 $47,994 COGS $2,837 $2,533 $3,020 $3,222 $11,613 PGM $9,220 $8,339 $9,531 $9,292 $36,381 Other (income) / $169 $74 $35 $95 $376 expense Net income