Merck Kgaa · XETR:MRK
Merck Kgaa — Non-Deal Roadshow (August 2022)
130 slides from Merck Kgaa's roadshow presentation, August 2022
Slide 1: Q2 22 Roadshow
MeRck Q2 22 Roadshow Investor Relations August 2022
Slide 2: Disclaimer
Disclaimer Cautionary Note Regarding Forward-Looking Statements and financial indicators This communication may include “forward-looking statements.” Statements that include words such as “anticipate,” “expect,” “should,” “would,” “intend,” “plan,” “project,” “seek,” “believe,” “will,” and other wor
Slide 3: Agenda
Agenda 01 Business overview 02 Transforming the company 03 Life Science – Rising to new heights 04 Healthcare – Focused leadership driving long-term growth 05 Electronics – Leveraging portfolio shift 06 Sustainability 07 Guidance & executive summary 3
Slide 4: Business overview
BuUSsINeSS overview
Slide 5: Leading positions in fastest growing science & technology markets
Merck Group Leading positions in fastest growing science & technology markets Share of Share of net sales EBITDA pre1 Strong portfolio & performance drive above-market growth Leading positions and capabilities in core business areas (esp. BioP) 46% 50% New high-growth segments (e.g. novel modalities
Slide 6: Accelerated science & tech leadership driving growth
Merck Group Accelerated science & tech leadership driving growth New Strategic Framework Core pillars Direction Mobilize for growth Focus on profitable top line growth in the BIG3 in BIG3 Frame Accelerating science & Innovation as key driver for technology leadership sustainable growth Foundation Fo
Slide 7: 2022 and beyond – poised for growth in a challenging environment
Merck Group 2022 and beyond – poised for growth in a challenging environment Trade Wars Group-wide: Profitable Growth & Cost Discipline Life Science Healthcare Electronics ▪ Continued strong mid- ▪ Drive profitable growth ▪ Accelerate top-line China Auto term outlook through pipeline growth Sustain
Slide 8: Transforming the company
Transforming the company
Slide 9: Added scale and strengthened attractiveness of portfolio
Merck Group Added scale and strengthened attractiveness of portfolio Growth trajectory Transformation volume5 ~€10 bn ~€36 bn Divestments Acquisitions - divested + acquired 1 2 3 Included since 2 May 2014; 2007 and 2014 EBITDA pre margin adjusted for comparability; 2018 net sales reflect Consumer He
Slide 10: Well positioned to win in high-growth focus areas
Merck Group Well positioned to win in high-growth focus areas Global economy1 End markets1 Focus market areas1 BIG3 Global pharma industry Oncology ~9% to 12% New HC ~4% to 5% Neurology ~3% to 6% Products Global life science industry Biologics >10% Process ~5% to 7% Services >10% Solutions Global el
Slide 11: #25by25: delivering €5 bn+ organic additional sales by 2025
Merck Group #25by25: delivering €5 bn+ organic additional sales by 2025 >€1 bn organic sales growth per annum ~80% of each year from 2021 to 2025 >€1 bn growth from ~€25 bn1 BIG3 and > 6% organic CAGR >€1 bn Process illustration Solutions >€1 bn Healthcare New Products* >€1 bn Semiconductor Solution
Slide 12: Portfolio strategy – from transformation to evolution
Merck Group Portfolio strategy – from transformation to evolution Deleveraging and organic growth investments in focus until 2022 ▪ Primarily organic growth from ”BIG3“ Higher likelihood of ▪ Selective bolt-ons possible if budget allows regular bolt-ons Reduced probability of larger acquisitions pos
Slide 13: Committing to record investments
Merck Group Committing to record investments - targeted @BIG3 growth engines Leading positions in growth markets fuel Targeted, disciplined & focused capital allocation significant boost in investment capacity across >20 enterprise planning units Investment [in € bn] Life Science Healthcare Electron
Slide 14: Optimized capital allocation through distinct portfolio roles
Merck Group Optimized capital allocation through distinct portfolio roles Roles determined by thorough analysis of Investment focus on businesses with greatest markets and competitive positions strengths and attractive opportunities Competitive position illustration ▪ Segmentation in planning units
Slide 15: Portfolio roles provide clear guidance to resource allocation
Merck Group Portfolio roles provide clear guidance to resource allocation Simplified portfolio unit life cycle Invest for Manage Evaluate Growth Leadership for Cash ▪ Build/partner ▪ Back on track 1 ▪ Consider divestment Top-line growth Margin focus Transforma- tional M&A Bolt-on ( ) Invest (Capex/R
Slide 16: Financial flexibility fueling investment capacity
Merck Group Financial flexibility fueling investment capacity Accelerated deleveraging to <2x net debt Abundant growth opportunities make strategic capital to EBITDA pre ratio enables allocation more important than ever unprecedented financial flexibility Investment € bn share ▪ Strong operating cas
Slide 17: Life science
Life science Rising to new heights
Slide 18: Life Science - Market
Life Science - Market Attractive secular drivers across segments create opportunities Life Science market 1 2022: ~€200 bn ex COVID, growing 5 to 7% Portfolio Customer Geography (growth across all dimensions) Pharma largest (high 1-digit growth) China fastest (2-digit growth) Process • Rising mAbs v
Slide 19: Life Science – Business Sector Overview
Life Science – Business Sector Overview New organizational structure provides customer and portfolio focus Process Solutions (PS) Life Science Services (LSS) Science & Lab Solutions (SLS) Best in class technologies for Focused multimodality contract testing, Broad portfolio of fit for purpose pharma
Slide 20: Life Science - Outlook
Life Science - Outlook Strong growth and robust mid-term outlook Life Science mid-term sales outlook Drivers of strong mid-term outlook [in € m] ▪ LS-wide: Above-market performance with continued positive YoY growth rates despite expected fading 7 to 10% CAGR COVID-19 demand1 Science & Lab ▪ Process
Slide 21: Life Science - Strategy
Life Science - Strategy Focus on strengthening the core and expanding in high-growth areas Productivity New Business Gains Models Expand in high growth Network & segments Holistic Capacity Expansion Offering Strengthen the core Go-To-Market Emerging Optimization Regions eCommerce ● Digital Solutions
Slide 22: Process Solutions – Strategic Priorities
Process Solutions – Strategic Priorities Strengthening local infrastructure and innovating to sustain leadership Strategic Highlights focus Key Portfolios NA EU APAC Capacity ▪ Serve regional demand Single Use ✓ ✓ ✓ Expansion & ▪ Improve customer proximity Filtration ✓ ✓ Regionalization ▪ Reduce net
Slide 23: Life Science Services – Strategic Priorities
Life Science Services – Strategic Priorities Building focused end to end multimodality CTDMO Strategic Highlights focus Innovating for Shaping testing ▪ Leading player with regulatory/ speed & quality paradigm technical expertise & track record CTO BlazarTM alongside drug ▪ Differentiated technology
Slide 24: Science & Lab Solutions – Strategic Priorities
Science & Lab Solutions – Strategic Priorities Capturing durable growth across diverse market segments Strategic Highlights focus Chemistry Lab Water Biology & BioM ▪ Future-proofing established podium positions Portfolio • Green chemistry • Remote access & • Next-generation enhancements • Photo-cat
Slide 25: Innovation, Digital and Portfolio
Innovation, Digital and Portfolio Key supporting pillars of strategy for value creation Innovation Digital Resource allocation Addressing evolving market … Internal Focus on organic growth… Sensing unmet customer Data & AI driven decisions Capex increasing ~2.5x1 needs and trends Building on tech st
Slide 26: Healthcare
Healthcare Focused leadership driving long-term growth
Slide 27: Well positioned to deliver significant long-term growth
Healthcare Well positioned to deliver significant long-term growth Early- to mid-stage pipeline NRA Healthy risk profile Xevinapant Cis-ineligible NRA Xevinapant Cis-eligible NRA Evobrutinib BTKi NRA Resilience of our commercialized Recent Launches products1 across all TAs Established Portfolio NRA
Slide 28: Well positioned in a dynamic environment, focused leadership in R&D
Healthcare Well positioned in a dynamic environment, focused leadership in R&D Existing market trends unchanged... Focused leadership in R&D driven by recent launches & pipeline ▪ High growth in largest TA Oncology ✓ From correlated to distinct ▪ Precision medicines to further increase share SCCHN u
Slide 29: Growth driven primarily by innovation
Healthcare Growth driven primarily by innovation, augmenting a solid established portfolio foundation Mid single-digit Positioned to accelerate CAGR science & technology leadership contribute to Profitable sales growth above global ~75% of growth pharmaceutical market (4.6% across TAs until 2025)1 N
Slide 30: Commercialized products foundation for growth until 2025
Today’s commercialized products foundation for growth until 2025, fueled by recent launches; not yet reflecting further pipeline potential Commercialized products1 N&I Mavenclad® ▪ On its way to become a blockbuster product. In the MS short-term, headwind as suppressed dynamic market Rebif® ▪ Declin
Slide 31: Strengthening our leadership in Fertility
Healthcare Strengthening our leadership in Fertility Global Gonadotropin market in € bn 1 Strategies to expand our leadership position GONAL-f The world’s most prescribed r-hFSH treatment3 +6,4% 2,4 ▪ Growing prevalence of infertility driven by delayed 2,3 2,2 parenthood and lifestyle habits 2,0 ▪ I
Slide 32: Neurology & Immunology: Q2 Mavenclad sales up +27% organically
Neurology & Immunology: Q2 Mavenclad® sales up +27% organically, driven by consistent performance ® Sales development N&I, [€m] Mavenclad Y1+Y2 patients1 ® ▪ Mavenclad most prescribed oral HE drug in U.S. and EU-4 org. org. org. org. org. in dynamic market segment2 [€m] 15.3% 0.9% -5.2% 0.8% -1.2% ®
Slide 33: Merck pipeline
Merck pipeline August 4, 2022 Healthcare pipeline Phase 1 Phase 2 Phase 3 Registration Marketed6 evobrutinib (BTK inhibitor) Relapsing multiple sclerosis enpatoran (TLR7/8 antagonist) Cutaneous lupus erythematosus enpatoran (TLR7/8 antagonist) Systemic lupus erythematosus xevinapant (IAP inhibitor)
Slide 34: Healthcare catalysts
Healthcare catalysts Q1 2022 Q2 2022 Q3 2022 Q4 2022 Tepotinib Tepotinib (c-Met–inhibitor) (c-Met–inhibitor) EC approval in NSCLC METex14 Based on evaluation of data from Decision on PhIII confirmatory February 2022 PhII study, planned for H2 2022. study for EGFRm METamp in NSCLC Bintrafusp alfa (TG
Slide 35: Pipeline with uncorrelated risk and significant potential
Pipeline with uncorrelated risk and significant potential to drive topline growth from 2025 PROMISE INDICATION EARLIEST SUBMISSION Tepotinib Overcoming resistance of Osimertinib 2L EGFR+ NSCLC 2023 (MET inhibitor) (third gen. EGFR inhibitor) post Tagrisso Timeline visibility Evobrutinib Addressing c
Slide 36: Electronics
Electronics Shifting gears to growth execution
Slide 37: Electronics industry has clear roadmaps with vast market potential
Electronics industry has clear roadmaps with vast market potential and substantial need for materials innovation More applications than ever before to fuel Growth expected to accelerate… Semiconductor growth …with reduced upward cyclicality 12% Automotive 7% Server / Storage / Communication infrastr
Slide 38: Building on leading positions in semiconductor materials
Electronics Building on leading positions in semiconductor materials External trends drive strong demand Electronics well positioned to capture it Connected World IoT Big Data One of the strongest portfolios – providing solutions necessary to enable industry growth 5G Enabling breakthrough technolog
Slide 39: Shifting gears from transformation to growth execution
Electronics Shifting gears from transformation to growth execution From building a platform… …to executing on growth Successful “Bright Future” transformation 3 to 6% CAGR ▪ Superior business composition ~80% of 1 ▪ ~10 equally sized, differentiated tech platforms growth ▪ Wider customer base than e
Slide 40: Portfolio refocus drives mid-term guidance upgrade to 3 to 6% CAGR
Electronics Portfolio refocus drives mid-term guidance upgrade to 3 to 6% CAGR 1 2 3 Sales split Mid-term outlook Business Split Fundamental growth drivers ▪ Continued market growth due to technological advances (Artificial Semiconductor Solutions intelligence, 5G, Big Data and cloud, Internet of Th
Slide 41: Electronics: Successful transformation, ready for accelerated growth
Electronics: Successful transformation, ready for accelerated growth An integrated electronics innovation leader Delivering on promises and above with one of strongest industry portfolios Bright Future program key deliverables & savings Surface Conducting Solutions thin films €3.3 bn sales with Acti
Slide 42: Level Up - Shifting gears from transformation to growth execution
“Level Up” - Shifting gears from transformation to growth execution Level up scale Enabling ambition Level up tech ▪ Capacity investments of 3 to 6% org. CAGR ▪ Further sharpen focus on synchronized to customers’ 2021 to 2025+ profitable innovation, addressing expansion plans key inflection points ▪
Slide 43: Sustainability
Sustainability
Slide 44: Our sustainability goals
Boundaries of human progress today will become reality tomorrow: Our sustainability goals Dedicated to human progress 01 Positive impact through our products In 2030, we will advance human progress for ▪ Ensure global access to medicines >1 bn people through sustainable science & technology ▪ Enable
Slide 45: Clear Metrics to drive execution and progress towards 2030 ambition
Clear Metrics to drive execution and progress towards 2030 ambition Goal Metric 2021 (2020) Target 1 Percentage of newly published patent families with positive sustainability impact from 2022 n.a. People treated with our Healthcare products* 165 mio (183 mio) 1 bn people ambition1: HC Percentage of
Slide 46: Diverse human capital
Merck Group Diverse human capital: Thinking, talking, and leading differently Indicator Status Focus areas Aspirations 2021 (2020) Gender parity Gender Percentage of women in leadership globally 36% (35%) until 2030 Percentage of underrepresented ethnic Increase to 30% 21% (20%) colleagues in US lea
Slide 47: Reduce our environmental footprint
Reduce our environmental footprint: Emissions, Water and Waste Goal Climate neutrality Enhance water Reduce waste 3 by 2040 efficiency & purity impact ▪ Lower scope 1+2 GHG3 ▪ Enhancing water ▪ Based on the Merck Waste emissions by -50%4 efficiency: improve Merck Score, we have set water intensity s
Slide 48: Merck confirmed as 1.5°C Company by SBTi
Merck confirmed as “1.5°C Company” by SBTi SBTi certification of Work on SBTi roadmap towards Aiming for Scope 1-3 targets climate targets 2030 climate neutrality by 2040 Scope 1+2 Scope 3 Renewable energy Absolute reduction of Intensity reduction of kg Scope 3 Cover 80% of purchased Scope 1+2 GHG1
Slide 49: Guidance and Executive summary
Guidance and Executive summary
Slide 50: Well positioned to navigate operating challenges amid geopolitical situation
Well positioned to navigate operating challenges amid highly dynamic geopolitical situation Input price pressures & War in Ukraine COVID-19 lockdowns supply chain disruptions ▪ High degree of uncertainty ▪ Inflation rates rising worldwide ▪ Global trend: shift to endemic ▪ Russia sanctions might inc
Slide 51: Full-year 2022 guidance
Merck Group Full-year 2022 guidance Net sales: Organic: +6% to +9% YoY FX: 5% to 8% YoY ~€21.90 – €23.00 bn EBITDA pre: Organic: +5% to +9% YoY FX: 6% to 10% YoY ~€6.75 – €7.25 bn EPS pre: ~ €9.85 – €10.75 51 From: Q2 2022 Results Presentation – 2022.08.04
Slide 52: 2022 business sector guidance
2022 business sector guidance1 Net sales EBITDA pre Life Science ▪ Organic: +7% to +10%; FX: 5% to 8% YoY ▪ Organic:+7% to +10% YoY ▪ ~€10,150 m to €10,750 m ▪ FX: 4% to 7% YoY ▪ Strong core business, PS main growth driver ▪ ~€3,700 m to €3,900 m ▪ COVID-19 sales of up to ~€450 m in PS and up to ~€2
Slide 53: Additional financial guidance 2022
Additional financial guidance 2022 Further financial details Corporate & Other EBITDA pre ~ -€560 m to -€610 m Interest result ~ -€140 m to -€180 m Effective tax rate ~22% to 24% Capex on PPE1 ~€1.6 bn to €1.7 bn FY 2022 hedge ratio ~50% Hedging/USD assumption at EUR/USD ~1.16 2022 Ø EUR/USD assumpt
Slide 54: Executive Summary
Executive Summary 4 key priorities to deliver on Our science & tech ambitions Focusing on Sustainability Mobilizing for Driving Efficient growth Culture & Leadership Leveraging Innovation in the BIG3 54 From: Merck Capital Markets Day 2021 – 2021.09.09
Slide 55: Appendix
Appendix RPAQGRTK
Slide 56: Group
Group
Slide 57: Focus on organic growth and further deleveraging
Merck Group Focus on organic growth and further deleveraging Proven swift deleveraging Net debt / EBITDA pre track record & outlook after major acquisitions 4.0 ▪ Deleveraged to ~1.4x net 3.5 debt/EBITDA pre in 2021 2.8 ▪ M&A on agenda from 2022; higher likelihood for small & 2.1 medium sized deals
Slide 58: Strong company performance drives all time high payment to shareholders
Strong company performance drives all time high payment to shareholders Dividend1 development 2015 - 2021 2021 dividend ▪ Dividend of €1.85 (+32% YoY) per share proposed1 for 2021 1.85 ▪ Payout ratio of 21.2% of EPS pre in 2021; aiming for 20% to 25% 2 1.40 ▪ Dividend yield of 0.8% 1.25 1.25 1.30 1.
Slide 59: Merck's ownership structure
Merck Group 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 capita
Slide 60: Executive board compensation
Merck Group: 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. th
Slide 61: Executive Board long-term incentive linked to sustainability
Executive Board long-term incentive linked to sustainability ▪ Starting from fiscal year 2022, our sustainability strategy will be even more firmly embedded in the compensation system for the members of the Executive Board ▪ The sustainability factor encompasses three performance criteria according
Slide 62: Strategic focus areas in sustainability
Merck Group Strategic focus areas in sustainability Sustainability innovation and technology Sustainability culture & values for our customers Diversity & inclusion activities Sustainability as integral part of product design Sustainability mindset: Communication, trainings, Enable customers
Slide 63: External stakeholders assess our engagement
Merck Group External stakeholders assess our engagement As of 2021, Merck received In September 2021, we Since 2008, Merck is part In 2020, Merck has once an MSCI ESG* Rating improved our ESG Risk of FTSE4Good Index, more achieved prime status of AAA. Rating to 18,3 and were measuring the performanc
Slide 64: 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 65: Europe fastest growing major region in Q2
Europe fastest growing major region in Q2 with strong performance across all three sectors Regional breakdown of net sales [€m] Regional organic development Europe +12.2% org. ▪ APAC: Semiconductor Solutions main 29% growth driver, further supported by Bavencio® in Japan ▪ Europe: Process Solutions,
Slide 66: All sectors contribute to 6.6% organic sales growth
All sectors contribute to 6.6% organic sales growth; Sales and EBITDA pre further supported by significant positive FX effects Q2 YoY Net Sales Q2 YoY EBITDA pre Organic Currency Portfolio Total 9.5% 0.3% €1,782 m Life Science 10.4% 7.4% 1.1% 19.0% €1,576 m 3.2% Healthcare 1.4% 6.2% 0.0% 7.6% Electr
Slide 67: Credit details
Credit details Maturity profile as of June 30, 2022 Credit rating information Coupon [€m / $m] 3.250% 0.125% LT LT ST Rating Outlook Rating Rating Since 1.625% 1.875% 1,600 A3 21.10.21 Stable P-2 1.625% 3.375% 2.875% 1.000 0.500% 0.875% 0.005% 500 0.375% A 29.05.13 Stable A-1 2.375% 1.000 750 750 80
Slide 68: Q2 2022: Overview
Q2 2022: Overview Key figures Comments [€m] Q2 2021 Q2 2022 Δ ▪ Sales up +14%, driven by FX tailwinds on top of strong organic performance Net sales 4,870 5,568 14.3% ▪ Life Science drives organic EBITDA pre EBITDA pre 1,576 1,782 13.1% growth, boosted by FX tailwinds Margin (in % of net sales) 32.4
Slide 69: H1 2022: Overview
H1 2022: Overview Key figures Comments [€m] H1 2021 H1 2022 Δ ▪ Sales up +13%, driven by strong organic Net sales 9,501 10,766 13.3% performance and FX tailwinds EBITDA pre 3,087 3,411 10.5% ▪ Life Science drives organic EBITDA pre Margin (in % of net sales) 32.5% 31.7% -0.8pp growth, boosted by FX
Slide 70: Q2 2022: Reported figures
Q2 2022: Reported figures Reported results Comments ▪ Life Science primary organic driver of [€m] Q2 2021 Q2 2022 Δ +12% EBIT growth, further boosted EBIT 1,049 1,177 12.2% by favorable FX effects amid inflationary pressures Financial result -95 -55 -41.9% ▪ Improved financial result primarily Profi
Slide 71: H1 2022: Reported figures
H1 2022: Reported figures Reported results Comments ▪ Life Science primary organic driver of [€m] H1 2021 H1 2022 Δ +12% EBIT growth, further boosted EBIT 2,092 2,350 12.3% by favorable FX effects amid inflationary pressures Financial result -154 -89 -41.9% ▪ Improved financial result primarily Prof
Slide 72: Cash flow statement
Cash flow statement Q2 2022 – Cash flow statement Cash flow drivers [€m] Q2 2021 Q2 2022 Δ ▪ +17% profit after tax; growth driven by Profit after tax 747 870 123 strong business performance in Life Science, further boosted by favorable FX D&A 422 532 110 and improved financial result ▪ Delta in chan
Slide 73: Cash flow statement
Cash flow statement H1 2021 – cash flow statement Cash flow drivers [€m] H1 2021 H1 2022 Δ ▪ +17% profit after tax growth driven by Profit after tax 1,495 1,754 259 strong business performance in Life D&A 846 962 116 Science further boosted by favorable FX and improved financial result Changes in pr
Slide 74: Adjustments in Q2 2022
Adjustments in Q2 2022 Adjustments in EBIT [€m] Q2 2021 Q2 2022 Adjustments thereof D&A Adjustments thereof D&A Life Science -6 0 30 0 Healthcare 11 3 91 90 Electronics 10 5 11 0 Corporate & Other 97 0 30 0 Total 112 8 163 90 74 From: Q2 2022 Results Presentation – 2022.08.04
Slide 75: Adjustments in H1 2022
Adjustments in H1 2022 Adjustments in EBIT [€m] H1 2021 H1 2022 Adjustments thereof D&A Adjustments thereof D&A Life Science 8 0 37 1 Healthcare 21 3 95 91 Electronics 27 7 22 0 Corporate & Other 103 1 37 0 Total 159 11 191 93 75 From: Q2 2022 Results Presentation – 2022.08.04
Slide 76: Changes in FX rates impact top and bottom line
Changes in FX rates impact top and bottom line Sensitivities* of top 2 foreign currencies - Merck Group, unhedged Currency management Deviation Impact Group Sales: Exposure from booked revenues 0.01 U.S. Dollar increase by ~€55 m and invoices, receivables and liabilities, are hedged 100% US apprec
Slide 77: Financial Calendar
Financial Calendar Date Event August 4, 2022 Q2 2022 Earnings release October 6, 2022 Capital Markets Day November 10, 2022 Q3 2022 Earnings release March 2, 2023 Q4 2022 Earnings release May 11, 2023 Q1 2023 Earnings release August 3, 2023 Q2 2023 Earnings release 77 From: Q2 2022 Results Presentat
Slide 78: Life Science Appendix
Life Science Appendix
Slide 79: Process Solutions – Business Overview
Process Solutions – Business Overview Comprehensive product portfolio and diversified customer base Portfolio Snapshot Addressing full value chain from upstream to drug product Business in numbers1 BioProcessing Portfolio Upstream Downstream Fill & Finish single use systems & assemblies, aseptic fil
Slide 80: Process Solutions – Market
Process Solutions – Market Participating in the attractive biopharma market Novels driving growth Diversified customer base Process products market in € bn (excl. COVID-19) By type, geography, modality mAbs, Vax, Plasma, R-Pro, Small Mol Customer split ADC, VGT, CT, mRNA 9-10% Emerging biotechs incr
Slide 81: Process Solutions – Strategy
Process Solutions – Strategy Positioning the business to secure leadership as the market evolves Network Expansion Customer Focus Innovation Ensure robust supply via Differentiate along the Enable Factory of the Future capacity expansion and customer life cycle and capture (intensified, digital) and
Slide 82: Process Solutions – Network Expansion
Process Solutions – Network Expansion Investing >€700 m1 to increase capacity and create regional network Guiding principles Investing to expand global network Key growth portfolios Expansion plans across geographies Increase capacity NA EU APAC Single Use Expand regionally Danvers, MA (US) Molsheim
Slide 83: Process Solutions – Customer Focus
Process Solutions – Customer Focus Differentiating along the customer life cycle and capturing feedback to guide innovation Training & support • Tech service in every major language • Customer training for product selection Product development Quality expertise • ~500 FTEs in R&D • 5 validation labs
Slide 84: Process Solutions – Innovation
Process Solutions – Innovation Enabling customers’ transformation towards Factory of the Future Today Future Customer goals mAbs: Templated process Facility of the Future Innovation examples Novels: Need for template (mAbs leading, finally all modalities) Execute Batch mode Intensified/ Cellvento th
Slide 85: Life Science Services – Footprint and Capabilities
Life Science Services – Footprint and Capabilities Global network with the ability to offer services across all stages of the molecules value chain Global footprint Service offering Overview of current CTDMO network Overview of services across the molecules value chain CTO Preclinic Phase 1 Phase 2
Slide 86: Life Science Services – Business Overview
Life Science Services – Business Overview A multi-modality service offering across traditional and novel modalities Capabilities Snapshot Serving customers along their molecule journey Business in numbers1 CDMO CTO Dev. DS DP Testing Focus Value proposition Small Complex and Flow chemistry and molec
Slide 87: Life Science Services – Market
Life Science Services – Market Growing end-market with emerging biotechs driving the increasing pipeline of novel modalities Pharma market Customer type Novel modalities Pharmaceutical market: # of customers: emerging biotechs # of molecules: pipeline of novel out- growing steadily at 8% growing fas
Slide 88: Life Science Services – Ambition
Life Science Services – Ambition Existing business the foundation for growth, ambition based on technology leadership across modalities Short term Mid term Long term “Emerging multi-modality “Full-service & focused “Leading full-service & Vision CDMO & leading CTO” multi-modality CTDMO” multi-modali
Slide 89: Life Science Services – Priorities
Life Science Services – Priorities Focusing on operations, investments and new markets to strengthen our position for growth Streamline operations Execute investments Increase global reach Leverage customer order book and sales channels Continue CAPEX expansions Ensure reliable delivery and Rapidly
Slide 90: Science & Lab Solutions – Portfolio
Science & Lab Solutions – Portfolio Broad portfolio consisting of five specialized portfolio units and franchises enabling a presence across workflows Chemistry Biology DxRm BioM Lab Water Full value chain offers across segments enabled by technology-centric portfolio units • Specialty chemicals • M
Slide 91: Science & Lab Solutions – Customers and Value Chains
Science & Lab Solutions – Customers and Value Chains Serving full value chains of diverse customer segments with key customers including global leaders in their fields Customer segments & value chains served Customer universe R&D Manufact. QA/QC Example customers per segment Pharma & Biotech1 Academ
Slide 92: Science & Lab Solutions – Market and Performance
Science & Lab Solutions – Market and Performance Serving a large, resilient and growing market ─ delivering stable revenue performance Growing market (€120 bn, 3-5% CAGR) Revenue stability Market size (€ bn) FY organic revenue growth (YoY, %)1 Diagnostics Durable growth through COVID and geopolitica
Slide 93: Science & Lab Solutions – Key Trends and Initiatives
Science & Lab Solutions – Key Trends and Initiatives Addressing key industry & macroeconomic trends with innovative solutions and targeted investments Industry trends Macroeconomic trends Secular trends Digitalization & Regulatory Sustainability Population growth Localization in persistent high Auto
Slide 94: Science & Lab Solutions – One-Stop Shop Approach
Science & Lab Solutions – One-Stop Shop Approach Holistic offering to meet customer needs on their journey Established customer needs Emerging drivers of change Science & Lab Solutions offering Products A leading portfolio including • Full workflow solutions • Rapid innovation of new tech. digital t
Slide 95: Process Solutions: Double-digit growth despite fading COVID-19 demand
Process Solutions: Double-digit growth despite fading COVID-19 demand Sales development [€m] - org. growth [%] 1,149 ▪ Acceleration of core business drives double- digit organic sales growth in Q2 1 1 1,050 962 1 993 991 ▪ COVID-19 sales significantly down YoY, sequentially about stable ▪ Strong gro
Slide 96: Life Science Services: Robust performance drives double-digit growth
Life Science Services: Robust performance drives double-digit growth Sales development [€m] - org. growth [%] 1 262 266 ▪ Core business main driver of double-digit 27% organic sales growth in Q2; supported by strong demand and positive phasing in 1 189 1 196 25% CDMO business, and continuously robus
Slide 97: Science & Lab Solutions: Healthy growth despite fading COVID-19 demand
Science & Lab Solutions: Healthy growth despite fading COVID-19 demand Sales development [€m] - org. growth [%] 1,199 1,233 1 1 1 1,133 ▪ Strong core business drives mid single- 1,086 1,067 digit growth in Q2, supported by pricing ▪ COVID-19 business significantly down YoY, also declining sequential
Slide 98: Life Science Q2: Core business drives another record quarter
Life Science Q2: Core business drives 9th consecutive quarter of sequential growth and another record quarter Life Science P&L Net sales bridge [€m] IFRS Pre 10.4% 7.4% 1.1% €2,648 m €2,225 m Q2 2021 Q2 2022 Q2 2021 Q2 2022 Net sales 2,225 2,648 2,225 2,648 M&S * -505 -609 -505 -598 +0.0% Q2 2021 Or
Slide 99: Healthcare
7 Healthcare
Slide 100: Evobrutinib
Healthcare Pioneering patient benefit in MS for > 30 years Evobrutinib BTKi ▪ Designed for best-in-class efficacy5 ▪ Full covalent binding and dosing regimen expected to enable ▪ Oral high-efficacy therapy with unique constant, near complete BTK posology & mode of action2,3 occupancy6 ▪ Blockbuster
Slide 101: Building focused leadership positions in Oncology
Healthcare Building focused leadership positions in Oncology 1 Building leadership in mUC Defining leadership Expanding leadership in MET-driven tumors in SCCHN ▪ Bavencio redefined SoC in mUC with ▪ Tepmetko - discovered and ▪ Xevinapant5 focuses on a novel unique 1L maintenance Tx. Since developed
Slide 102: China's VBP: Rounds 5 and 6 with no impact on Merck
China‘s VBP: Rounds 5 and 6 with no impact on Merck. Confidence in approx. stable established portfolio business in 2022 Round 1 Round 2 Round 3 Round 4 Round 5 Round 6 Round 7 2019 2020 2021 2022 No Merck April: August: Feb: No Merck No Merck Q1 (est.): products Concor® not Glucophage® Invokana®, p
Slide 103: Five focus assets with FIC potential
Pipeline with uncorrelated risk and significant potential Five focus assets with FIC potential FIC POTENTIAL COMPETITION PROMISE Evobrutinib Tackling unmet need for patients in RMS: (BTK inhibitor) Addressing chronic inflammation and progression between relapses, in addition to reducing acute inflam
Slide 104: Focused Leadership: Leveraging and extending deep expertise
Focused Leadership Leveraging and extending deep expertise EVOBRUTINIB XEVINAPANT BERZOSERTIB1 M1231 ENPATORAN MS leadership SCCHN leadership NCSLC Lung Cancer Depth & breadth (Likely indication) of clinical trial Disease insights/ experience and data Wealth of data Immune receptor & Apoptosis DNA d
Slide 105: Potential FIC BTK inhibitor, designed for BIC efficacy
EVOBRUTINIB ENPATORAN XEVINAPANT BERZOSERTIB M1231 Potential FIC12 BTK inhibitor, designed for BIC13 efficacy REMIBRUTINIB16/ EVOBRUTINIB TOLEBRUTINIB14 FENEBRUTINIB15 FIC BTK INHIBITOR ORELABRUTINIB17 EVOBRUTINIB ARR at 48 weeks 0.111 0.177 No PhII conducted No PhII conducted • Pioneering program,
Slide 106: Evobrutinib BTK occupancy and ARR
EVOBRUTINIB ENPATORAN XEVINAPANT BERZOSERTIB M1231 Protein turnover of BTK requires BID1 dosing to achieve optimal BTK occupancy for best efficacy 98% of patients receiving 75mg BID Patients achieving >95% BTKO Food effect enables a achieved >95% trough BTKO2 experienced greatest ARR reduction3 lowe
Slide 107: First clinical evidence of impact on brain lesions
EVOBRUTINIB ENPATORAN XEVINAPANT BERZOSERTIB M1231 First clinical evidence of impact on brain lesions associated with chronic inflammation5,6 ECTRIMS 2021 SELs – A BIOMARKER FOR CHRONIC oral presentation TISSUE LOSS IN THE ABSENCE OF ACUTE EVOBRUTINIB REDUCED SEL VOLUME IN A DOSE-DEPENDENT MANNER AT
Slide 108: Summary: Potential FIC BTK inhibitor designed for BIC efficacy
EVOBRUTINIB ENPATORAN XEVINAPANT BERZOSERTIB M1231 Summary Potential FIC BTK inhibitor designed for BIC efficacy • Pioneering development of breakthrough MoA with potential to rewrite SoC in RMS • Aiming to address chronic inflammation and progression between relapse in addition to reducing acute in
Slide 109: Targeted inhibition of important lupus mediator
EVOBRUTINIB ENPATORAN XEVINAPANT BERZOSERTIB M1231 Targeted inhibition of important lupus mediator aiming for improved efficacy with low infection risk • For lupus patients, precise intervention for improved efficacy at low infection risk remains an unmet need in lupus • Enpatoran is an oral small m
Slide 110: Maximizing chances for cure in LA SCCHN
EVOBRUTINIB ENPATORAN XEVINAPANT BERZOSERTIB M1231 Maximizing chances for cure in LA SCCHN PhII: Consistent benefit across primary & secondary endpoints first presented at 3-year update, ESMO 2019 presented at ESMO 2020 PRIMARY ENDPOINT LCR SUBSTANTIAL IMPROVEMENT OF PFS AND OS LCR at 2 years PRIMAR
Slide 111: Leveraging market-leading expertise in SCCHN
EVOBRUTINIB ENPATORAN XEVINAPANT BERZOSERTIB M1231 Leveraging market-leading expertise in SCCHN LA SCCHN SIMPLIFIED TREATMENT PARADIGM AND EPIDEMIOLOGY Leveraging our Erbitux heritage TrilynX • LA SCCHN is a curative setting that requires a multi-disciplinary approach SoC: SoC: Chemoradiation Chemor
Slide 112: Tepotinib: Lay the Foundation in NSCLC – MET Exon14
Tepotinib (MET kinase inhibitor) First-in-class launch in MET Exon14 sets foundation for EGFRm/METamp opportunity • Strong and long-lasting efficacy results presented at WCLC 2021 (in both first line Lay the Foundation in and later lines; total of 275 patients), additionally, at ASCO 2021, Tepmetko
Slide 113: Tepotinib: Encouraging INSIGHT 1 data
Tepotinib (MET kinase inhibitor) Tapping into the rapidly evolving EGFRm/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 Endpoint Tepotini
Slide 114: Healthcare Q2: Bavencio and Mavenclad growth offsets established portfolio decline
Healthcare Q2: Bavencio® and Mavenclad® growth more than offsets decline in established portfolio against elevated comps Healthcare P&L Net sales bridge [€m] IFRS Pre €1,788 m 1.4% 6.2% 0.0% €1,924 m Q2 2021 Q2 2022 Q2 2021 Q2 2022 Net sales 1,788 1,924 1,788 1,924 * M&S -391 -417 -389 -415 Q2 2021
Slide 115: Electronics
7 electronics
Slide 116: 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 117: 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 118: 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 119: 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 120: 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 121: Level Up Scale - Expanding in synch with customer demand
“Level Up” Scale - Expanding in synch with customer demand A partner of choice, in step for higher demand Smart localization, investing close to customers Semiconductor industry CAPEX p.a.1 [€bn] Share of semi > 2X material market1 Key investments ? Investing in lock-step with Taiwan ▪ Additional la
Slide 122: Level Up Tech – delivering today and enabling tomorrow
“Level Up” Tech – delivering today and enabling tomorrow Strong portfolio of silicon & optical technologies And enabling tomorrow’s empowering today’s applications leading-edge technologies Solutions empowering customers to make Selected future Our smaller, faster, more energy efficient & more susta
Slide 123: 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 124: Semiconductor Solutions: Partner of choice for semiconductor manufacturers
Semiconductor Solutions Partner of choice for semiconductor manufacturers globally 1 Fab material market 3 Semiconductor +4.6% Materials Winning in the fab with process owners 20E 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 2 Fab equipment market Delivery systems 3 & services +4.5% Winning in th
Slide 125: DS&S - Delivery Systems & Services
DS&S - Delivery Systems & Services: a trusted global player in safe and reliable delivery of hazardous materials to semiconductor industry Gas & chemical MEGASYS & Fab projects in-fab service delivery ▪ Designing bulk spec gas delivery ▪ Design and manufacture delivery systems ▪ Provide delivery sys
Slide 126: DS&S Key strengths
DS&S - Delivery Systems & Services Winning in the fab equipment market Key strengths ✓ Operational and project execution excellence with 99.9997% uptime of our equipment ✓ 30 years of experience with a flawless safety record and full interoperability ✓ Global footprint with flexible capacity where t
Slide 127: Display Solutions - OLED material market to exceed LC
Electronics Display Solutions - OLED material market to exceed LC material market already in 2022 x% OLED shipment area / addressable material market [in % of total] Liquid Crystals OLED Display shipment area1 Addressable material market2 [km²] [€m] +21% +4% -9% +9% 270 237 1,694 1,547 1,028 1,117 1
Slide 128: Electronics 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 129: Electronics Q2: Strong Semi performance amid inflationary environment
Electronics Q2: Strong Semi performance amid inflationary environment Electronics P&L Net sales bridge 7.4% 8.9% 0.0% €996 m [€m] IFRS Pre €857 m Q2 2021 Q2 2022 Q2 2021 Q2 2022 Net sales 857 996 857 996 M&S * -137 -163 -136 -162 +0.0% Q2 2021 Organic Currency Portfolio Q2 2022 Admin -30 -33 -28 -31
Slide 130: Investor Relations contacts
CONSTANTIN FEST SVENJA DJAVAHERI PETRA HOLTZ 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.djavaheri@merckgroup.com petra.holtz@merckgroup.com ADRIAN GORSKI GUNNAR ROMER FL