Merck Kgaa · XETR:MRK
Merck Kgaa — Non-Deal Roadshow (March 2020)
104 slides from Merck Kgaa's roadshow presentation, March 2020
Slide 1: Merck – Q4 19 Roadshow
MERCK – Q4 19 ROADSHOW Stefan Oschmann, CEO Marcus Kuhnert, CFO March 2020
Slide 2: Disclaimer
Disclaimer Cautionary Note Regarding Forward-Looking Statements and financial indicators This communication may include “forward-looking statements.” Statements that include words such as “anticipate,” “expect,” “should,” “would,” “intend,” “plan,” “project,” “seek,” “believe,” “will,” and other wor
Slide 3: Agenda
Agenda Business overview Transforming the company Healthcare – Funding for success Life Science – Focusing on profitable growth Performance Materials – Maintaining leadership and innovation Executive summary and guidance 3
Slide 4: Strategic Roadmap
to) STRATEGIC ROADMAP Sa aan BARREK
Slide 5: Three high-tech businesses competing in attractive markets
Group Three high-tech businesses competing in attractive markets Performance Healthcare Life Science Materials Leading in specialty Leading life science Leading company in pharma markets company high-tech solutions • Biologics and small-molecule • Tools and services for biotech • High-tech solutions
Slide 6: Diverse businesses posting attractive margins and strong growth
Merck Group Diverse businesses posting attractive margins and strong growth % of net sales Organic growth rate % of EBITDA pre (€4,385 m1) €16,152 m YoY net sales and EBITDA pre margin2 40% +6.2% Healthcare 42% margin: 28.6% 44% +9.0% margin: 31.0% Life Science 43% 17% Performance -6.5% 15% margin:
Slide 7: 2019 – 2022: Entering the Growth & Expansion Phase
Merck Group 2019 – 2022: Entering the Growth & Expansion Phase Group: Sustainable profitable growth and 2012-2015 2016-2018 2019-2022 2019-2022 regular portfolio evaluation Healthcare: Turnaround Fully leverage Efficiency First pipeline in Healthcare pipeline potential program launches Fully leverag
Slide 8: 2020 and beyond: Growth amid a challenging environment
Merck Group 2020 and beyond: Growth amid a challenging environment Trade COVID- Wars 19 World Group-wide: Economy Profitable Growth & Cost Discipline Healthcare Life Science Performance Materials • Sustain profitable • Continue • Return to growth at growth driven by outperformance of 2-3% CAGR, ~30%
Slide 9: Steady earnings growth at high margins and a low risk profile
SO Group Executive Summary Group: Driving the profitable growth and expansion phase of our 2016 – 2022 strategic agenda Healthcare: Reaping the fruit of the investment phase, while keeping the base business at least stable, driving growth and managing costs Life Science: Sustaining profitable above-
Slide 10: Transforming the Company
Sa aan O2 TRANSFORMING THE COPAPANY BARREK
Slide 11: We have added scale and strengthened the attractiveness of our portfolio
Group We have added scale and strengthened the attractiveness of our portfolio 2007: ~€7 bn sales Transformation volume 2019: ~€16 bn sales Consumer Health1 - merged + Healthcare 4 Ethicals Serono Generics - ~€10 bn 3 ~€36 bn + Life Science Millipore & 2 Life Science Solutions Sigma-Aldrich merged L
Slide 12: 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 16,152 40% Acquisition of Millipore 16,000 15,024 15,327 3 14,836 Acquisition of Ser
Slide 13: Clear set of priority goals
Group Clear set of priority goals Performance Healthcare Life Science Materials ~40% ~44% ~17% EBITDA EBITDA EBITDA pre* pre* pre* Deliver on ambition to keep Strengthen position as Deliver on growth ambition of core business at least stable differentiated player in a highly 2-3% CAGR until 20
Slide 14: Strategic capital allocation until 2022 newly defined
Group Strategic capital allocation until 2022 newly defined Illustration Merck’s sales Three balanced pillars with no business marginalized and earnings drivers Portfolio Guardrails Leading market positions in attractive markets Clear portfolio roles assigned PM Defining Market attractivenes
Slide 15: Healthcare
HEALTHCARE Fully leveraging pipeline potential
Slide 16: Ambition to keep core business sales organically stable until 2022
Healthcare Ambition to keep core business sales organically stable until 2022 Healthcare core business net sales until 2022 Rebif® • Maintaining solid track record of patient retention Decline in line • Integration into joint franchise with interferon market 5 years of organic strategy with Mavencla
Slide 17: Mavenclad and Bavencio launches on track for €2 bn pipeline sales ambition
Healthcare Mavenclad® and Bavencio® launches on track for €2 bn pipeline sales ambition Filed in Japan in Q4 2019 (Sakigake and ODD) Tepotinib Filing in the USA in H1 2020 (BTD) • FY 2019: €103 m • Approved for aRCC (USA, EU, Japan), mMCC (50 countries incl. USA and EU), and UC 2L (USA, Canada,
Slide 18: Mavenclad - Triple digit YoY growth
Healthcare Mavenclad® - Triple digit YoY growth (+ €230 m, x3.5 vs FY 2018) USA: Continued growth within Ex-USA: Strong launch High Efficacy and Oral market1 progress globally • Approved in 75 countries2 • Leading clinical perception among oral class in key markets (Germany, UK, Italy and Spain)3 •
Slide 19: Bavencio - Enhancing its foundation in GU cancers
Healthcare Bavencio® - Enhancing its foundation in GU (genitourinary) cancers with positive first line data from the JAVELIN 100 Bladder study • JAVELIN Bladder 100 study: Met primary endpoint of prolonging overall survival (OS) as 1L Urothelial maintenance treatment vs standard of care, announced o
Slide 20: Upcoming Healthcare catalysts mark progress across all therapeutic areas
Pipeline: Upcoming Healthcare catalysts mark progress across all therapeutic areas Q4 2019 H1 2020 H2 2020 Bavencio® (Avelumab/Anti-PD-L1) Bavencio® (Avelumab/Anti-PD-L1) Expected EMA feedback Expected in-house availability of (advanced Renal Cell Carcinoma) Phase III data (NSCLC 1L) Expected PMDA f
Slide 21: Life Science
LIFE SCIENCE Focus on profitable growth
Slide 22: The Life Science tools market is attractive and dynamic
The Life Science tools market is attractive and dynamic Attractive market… …with robust trends Research • Increase in NIH Funding and Pharma R&D1,2 €170 Bn • Increase in novel technologies3 ~€45-50 bn • Increase in research outsourcing4 ~2-3% CAGR9 4-6% 10 CAGR Process • Increase in biologics pipeli
Slide 23: Business is on track to deliver above-market organic growth
Life Science Business is on track to deliver above-market organic growth Merck Life Science Market 1 Long-term growth drivers 2 Research activity: >3,000 projects in research pipelines , rising Research Solutions number of experiments and newly emerging therapies/technologies 3 Low single digit gr
Slide 24: Above-market growth continues to be driven by portfolio focus
Life Science Above-market growth continues to be driven by portfolio focus ~€170 bn ~5-8% ~4-6% +50-100 bps +50-100 bps CAGR CAGR1 1 Company estimate based on industry forecast over 5 year horizon 24
Slide 25: Continuing to set the benchmark for industry performance
Life Science Continuing to set the benchmark for industry performance 2 31.0 30.4 29.8 EBITDA pre 29.2 margin, % of sales 25.6 24.9 (actual) 25.5 24.9 25.1 25.3 24.2 24.1 24.2 24.6 22.2 Organic sales 8.8 9.0 growth, 8.0 YoY % 6.51 6.3 6.0 6.0 6.0 5.3 5.2 4.8 4.2 3.0 3.0 3.3 2015 2016 2017 2018 2019
Slide 26: 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% Commercial expansion Vir
Slide 27: Performance Materials
PERFORMANCE MATERIALS Maintaining leadership and innovation
Slide 28: Strong setting to capture attractive value in the electronics market
Performance Materials Strong setting to capture attractive value in the electronics market ~€390 bn 1 ~€1,450 bn Electronic materials competitor landscape Electronics market2 Semiconductor market2 Driven byCAGR digital disruptions and ~€44 bn 19-24: ~4% CAGR 19-24: ~7% C4 megatrends Materials market
Slide 29: Attractive underlying market trends to deliver the turnaround in 2020
Performance Materials: Attractive underlying market trends and business conditions to deliver the turnaround in 2020 Mid term outlook Continued market growth due to technological advances (Artificial intelligence, 5G, Big Data and cloud, Internet of Things) serving customers in Logic, Memory, Pack
Slide 30: 5-year transformation program Bright Future is well on track
Implement 5-year transformation program Performance Materials 5-year transformation program Bright Future is well on track 2018 2019 2020 2021 2022+ Back to organic Growth 2-3% CAGR Resource allocation & process excellence ~30% Margin Site closures in Atsugi, Japan (2021) and Chilworth, UK (2019) an
Slide 31: Strategic roadmap starting to materialize
Performance Materials Strategic roadmap starting to materialize… Measures for a bright future Darmstadt The focus in Darmstadt will be on R&D and production Leading supplier of high-purity process chemicals, gases and equipment serving Immediate bottom line contribution semiconductor manufactu
Slide 32: Versum integration and synergy realization in focus
Performance Materials: Versum integration and synergy realization in focus Cost synergies on Source of Synergies EBITDA pre ~€75m Business • Transform country setup Optimization • Streamline duplicate structures ~€40m ~€20m • Optimize production and Procurement supply chain network and Supply Chain
Slide 33: The business is expected to return to organic growth as of 2020
Performance Materials The business is expected to return to organic growth as of 2020 Sales (€m) EBITDApre (€m) Contribution by business 2,500 CAGR: 800 786 +~2-3% Semiconductor Solutions Mid- to high-single digit 2,406 2,400 growth 2,230 750 – 2,380 2,300 Surface Solutions Low single digit growth 6
Slide 34: Executive Summary and Guidance
EXECUTIVE SUMMARY AND GUIDANCE
Slide 35: COVID-19 Update
Merck Group Assumptions as of mid February COVID-19 Update If COVID-19 outbreak peaks in Q1, eases in Q2 and the situation is back to normal in H2, the impact on Merck and its sectors is estimated to be the following: ▪ Around -1% on full year net sales mainly Group from China ▪ Impact in Q1, improv
Slide 36: Full-year 2020 guidance
Merck Group Full-year 2020 guidance Net sales: Solid organic sales growth, Versum growth contribution in the mid-single digits and slight FX headwinds of 0% to -3% YoY EBITDA pre: Strong organic growth, mid-single digit growth from Versum Slight FX headwinds of 0% to -3% YoY 36
Slide 37: Key earnings drivers to remember for 2020
Merck Group Key earnings drivers to remember for 2020 EBITDA1-supporting factors EBITDA1-reducing factors • Increasing sales contribution from Mavenclad® and Bavencio® • No more support from Pfizer deferred income (€191 m in 2019) • Stringent M&S and R&D cost management (decrease YoY as % of • Lower
Slide 38: Slide 38
Slide 39: 2020 business sector guidance
Merck Group 1 2020 business sector guidance Net sales EBITDA pre Healthcare ▪ Solid organic growth ▪ Solid organic growth ▪ Driven by Mavenclad and Bavencio ▪ Base business organically stable contribution and continued cost ▪ New products with strong contribution discipline ▪ Moderate adverse FX imp
Slide 40: Additional financial guidance 2020
Additional financial guidance 2020 Further financial details * Corporate & Other EBITDA pre ~ -€400 – -€440 m Interest result ~ -235 – -260 m Effective tax rate ~24 % – 26% Capex on PPE ~1.1 bn – 1.2 bn FY 2020 hedge ratio ~ 50% Hedging/USD assumption at EUR/USD ~1.18 2020 Ø EUR/USD assumption ~ 1.1
Slide 41: Maturity profile reflects Sigma-Aldrich and Versum financing transactions
Maturity profile reflects Sigma-Aldrich and Versum financing transactions Maturity profile as of Mar. 5, 2020 Coupon [€m/US $] 3.250% 0.125% 2.400% 4.500% 2.950% 1.375% 750 1,600 1.625% 2.625% 3.375% 2.875% 1,000 0.500% 0.875% 0.005% 500 0.375% 1,350 1,000 1000 750 750 800 550 600 500 600 2 2 2020 2
Slide 42: Sustainable dividend growth
Sustainable dividend growth Dividend1 development 2011-2019 2019 dividend • Dividend of €1.30 (+4% YoY) per share proposed2 for 2019 1.30 1.25 1.25 • Payout ratio of 23.4% of EPS pre in 1.20 2019; we aim at 20–25% of EPS pre 1.05 3 1.00 • Dividend yield of 1.2% 0.95 0.85 0.75 1 1 1 2 2011 2012 2013
Slide 43: Merck Pipeline
Merck Pipeline December 31, 2019 Phase I Phase II Phase III M3258 avelumab tepotinib avelumab avelumab LMP7 inhibitor anti-PD-L1 mAb MET kinase inhibitor anti-PD-L1 mAb anti-PD-L1 mAb Multiple myeloma Solid tumors Non-small cell lung cancer Merkel cell cancer 1L Non-small cell lung cancer 1L peposer
Slide 44: Tepotinib: Significant unmet need
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Tepotinib: Significant unmet need Tepotinib is a highly selective oral, once daily, MET TKI that blocks MET-mediated signaling pathways • Preclinical and clinical evidence support MET activation as a primary oncogenic driver in lung cancer su
Slide 45: Tepotinib: Program overview
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Tepotinib: Program overview Development focused on biomarker enriched patient populations Est. primary 2017 2018 2019 2020 2021 2022 completion1 • Clinical activity demonstrated NSCLC MET Exon 14 Skipping June + follow-up2 (interim) Alteratio
Slide 46: Data presented at ASCO 2019
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Data presented at ASCO 2019 Promising data from VISION (NSCLC, MET Exon 14 cohort) study Durable clinical activity across treatment lines2 Favorable safety profile2 Other leading MET VISION (tepotinib)2 Grade 3 TRAEs reported in 19% of pati
Slide 47: Clinical Efficacy in Met-amp EGFR-mutant Population
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Clinical Efficacy in Met-amp EGFR-mutant Population INSIGHT 2 study follows from encouraging INSIGHT 1 data Data from INSIGHT 1 study INSIGHT 2 study (18-months follow-up presented at WCLC 2019)1 MET-amp population: Study Design: • Locally
Slide 48: Biomarker focused development program in NSCLC
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Biomarker focused development program in NSCLC with potential beyond NSCLC MET exon-14; Met-amp; and EGFR-mutant populations NSCLC MET exon-14 alterations (VISION study) • SAKIGAKE designation awarded by Japanese Ministry of Health, Labour an
Slide 49: Avelumab: Program overview
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Avelumab: Program overview Ongoing studies –UC 1L data presentation expected in mid-2020 2018 2019 2020 2021 Est. primary completion1 1 NSCLC 1L (mono/high-intensity) Jun Leverage potential of unique molecular characteristics (ADCC) Gastric 1
Slide 50: Avelumab: NSCLC 1L
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Avelumab: NSCLC 1L Assessing potential efficacy upside in mono-therapy1 NSCLC 2L+: exposure NSCLC 1L: testing hypothesis of higher efficacy/intensity response correlation • Hypothesis: higher drug intensity may result in greater efficacy (pot
Slide 51: Avelumab: Renal Cell Carcinoma 1L
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Avelumab: Renal Cell Carcinoma (RCC) 1L Extensive biomarker data set released at ASCO 2019 from Javelin Renal 101 Core data presented at Significant contribution to understanding of ESMO 2018 and ASCO GU 20191 biomarkers presented at ASCO 201
Slide 52: Bintrafusp alfa (M7824)
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Bintrafusp alfa1 (M7824) An innovative first-in-class bifunctional fusion protein discovered in-house leading the TGF-β immuno-oncology field • Innovative first-in-class bifunctional fusion protein designed to simultaneously target two immune
Slide 53: Strategic Alliance with GlaxoSmithKline (GSK)
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Strategic Alliance with GlaxoSmithKline (GSK) Attractive payment terms rewarding developmental success Total deal volume: €3.7 bn Milestone payments: €3.4 bn Upfront & Upfront Milestone payment: Development Approval Commercial Payment €300 m
Slide 54: Development Strategy
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Development Strategy Program overview: Five pivotal studies on track, several safety run-in and signal finding studies recently initiated or in planning 2019 2020 2021 2022 2023 2024 Est. primary completion1 Lung 037: NSCLC 1L mono vs Leverag
Slide 55: 2L Biliary Tract Cancer monotherapy trial recently initiated
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Developmental Progress 2L Biliary Tract Cancer (BTC) monotherapy trial recently initiated M7824 BTC data presented at ESMO 2018 INTR@PID BTC 047 • Need: Few available treatment options (no 2L standard of care)1 • Results: Encouraging activity
Slide 56: NSCLC Stage III cCRT Combo trial recently initiated
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Developmental Progress NSCLC Stage III cCRT Combo trial recently initiated NSCLC 2L data presented at ESMO 2018 INTR@PID LUNG 005 • Need: NSCLC accounts for 80-85% of all cases of lung cancer1 • Results: Encouraging efficacy comparing favorab
Slide 57: Opportunity in HPV-related cancers
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology Developmental Progress Data shown at AACR 2019 highlights opportunity in HPV-related cancers HPV-associated HPV+* Prevalence: >630,000 new cases of HPV-related cancer are Efficacy variable reported worldwide annually1 cancer (n=43) (n=36) Res
Slide 58: DNA Damage Response (DDR)
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology DNA Damage Response (DDR) Leadership in next generation assets beyond PARP • DDR defects are an “achilles heel” of cancer cells • ATR, ATM and DNA-PK are the trinity of targets that orchestrate cellular response DNA damage and replication str
Slide 59: DDR development is focused on three foundations
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology DNA Damage Response (DDR) 4 Development is focused on three foundations Monotherapy Differentiating aspects of 1 DDRi + DDRi cancer DDR that can be targeted therapeutically1: (incl. PARP) Increased Immunogenicity Grow the DDR class, building
Slide 60: DDR clinical program targets three major pathways
1 2 3 4 Targeted IO bi- Avelumab functionals DDR Oncology DNA Damage Response (DDR) Clinical program targets three major DDR pathways, in mono- and combination (incl. Avelumab) … 2017 2018 2019 2020 2021 … Estimated primary completion1 M6620 M6620 CT combinations in various settings M4344 Jun ATR-i
Slide 61: Broad portfolio positions Merck as a growing Multiple Sclerosis player
Neurology & Immunology Broad portfolio positions Merck as a growing Multiple Sclerosis player Core portfolio Launch Development Evobrutinib (BTK-inhibitor) Stable market share: within Growth: Continued growth Advancing on benefit- declining interferon class within the high efficacy and risk in high
Slide 62: Mavenclad could change the MS treatment paradigm
Mavenclad Mavenclad could change the MS treatment paradigm • 58% reduction in annualized Unique Consistent relapse rate2 posology: efficacy: High • 47% reduction in 6-month Weight-based, efficacy1 across all confirmed disability progression3 max. 20 days of relevant clinical • 86% reduction in T1 Gd
Slide 63: Mavenclad's attractive label supports integrated franchise strategy
Mavenclad Mavencladꞌs attractive label in Europe supports integrated franchise strategy Mavenclad label covers 1 60-70% of patients with RRMS Merck’s overall NDD franchise Integrated franchise 1 within the MS patient population will cover a broad MS patient pool strategy in Europe 2 3 MS patient pop
Slide 64: FDA approved Mavenclad for RRMS and active SPMS
Mavenclad On March 29, the FDA approved Mavenclad for the treatment of adults with relapsing-remitting (RRMS) and active secondary progressive disease (SPMS) Mavenclad addresses Treated RMS patients in US Dynamic RMS treated patients clear medical needs • Previously treated patients New 257k 54k rep
Slide 65: Dosing regimen and revenue recognition
Mavenclad Dosing regimen and revenue recognition Year 1 Year 2 Year 3 Year 4 Maximum of 20 days of oral treatment spread over 2 years (# of tablets weight-based) Treatment Week 1: max. 10 tablets Week 1: max. 10 tablets No treatment Week 2-4: no treatment Week 2-4: no treatment Week 5: max. 10 table
Slide 66: Comprehensive development plan across immune-mediated diseases
Evobrutinib (BTK-inhibitor) Evobrutinib Comprehensive development plan across immune-mediated diseases Phase I/ Robust phase II program to Est. primary Iia safety data-set enable differentiated phase III completion • Randomized, double-blind, placebo- • 48 wks data presented at AAN 2019 controlled s
Slide 67: BTK inhibitor with a dual mode of action
Evobrutinib (BTK-inhibitor) Evobrutinib BTK inhibitor with a dual mode of action Involvement of BTK in Dual Mechanism of Action immune cell function • Bruton’s tyrosine kinase inhibitors (BTKi’s) (antibody secreting are traditionally used in oncology but are now white blood cell) also being evaluate
Slide 68: Evobrutinib in RMS
Evobrutinib Evobrutinib in RMS (BTK-inhibitor) Significant unmet medical need remains in RMS Unmet needs in RMS … … addressed by Evobrutinib in RMS Need for new mechanisms to control disease • Approx. 50% of patients with RMS continue to • Well Tolerated, no new safety signals identified up to have
Slide 69: ~96 weeks data from Phase II confirms potential for mAb like efficacy
Evobrutinib (BTK-inhibitor) Evobrutinib ~96 weeks data from Phase II confirms potential for mAb like efficacy with a rapid onset of action Direct CNS and “mAb like” Efficacy4 Rapid Onset of Action Peripheral Effects • Impacts B-Cells and 1.20 1.20 1% Myeloid Cells, which play a 1 1 1.00 1.00 key rol
Slide 70: Modified Phase III study design
Evobrutinib (BTK-inhibitor) Evobrutinib mAb like efficacy data drives modification of Phase III study design Initial Design Modified Design • Evobrutinib 48 wk data • Evobrutinib ~96 wk data • No data from H2H studies vs. Aubagio® • Data from 2 H2H studies vs. Aubagio® CIS + RRMS + aSPMS CIS + RRMS
Slide 71: We span the entire value chain of our customers
Process Solutions We are the only company to span the entire value chain of our customers 1 2018 Market share position estimate Other Cell Culture Media Single-Use Hardware Life Science Chromatography has a leading position in Buffers and Chemicals 8 out of 9 critical steps Clarification Aseptic Mem
Slide 72: Next-generation bioprocessing on the cards
Process Solutions Next-generation bioprocessing on the cards make purify process & portfolio Launched 2018 Launched 2018 Today’s CHOZN Ex-Cell® Mobius® Clarisolve® Eshmuno® Viresolve® ProSep® Opticap® Pellicon® Durapore® Millipak® Cell Line Advanced™ bioreactor Depth Filters Chrom. resin Pro Solutio
Slide 73: Single-use technologies drive flexibility in modern 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 74: Democratization of mAbs market will drive diversification
Life Science Democratization of mAbs market will drive diversification, change, variability mAb volume projections 2018 to 2024 CAGR ~11-15% Market 35 development 30 • Overall mAbs market will grow ~11-15% CAGR 25 Volume [metric tons] • Top 10 originator mAbs represent ~ 60% of market volume today a
Slide 75: Process Solutions: Growth opportunities beyond mAbs
Life Science Proccess Solutions: Growth opportunities beyond mAbs Growth potential by segment Accessible market [€m], 2019-2023 CAGR1 Growth market - China • Diversifying products and services 2019-2023 36,817 in line with the new modalities coming • Half of world-wide early stage CAGR: +10% Vaccine
Slide 76: Broad offering across the cell and gene therapy value chain
Applied Solutions Broad offering across the dynamic cell and gene therapy value chain Understand Prove Deliver Merck offering Develop cutting-edge tools Create cell lines and cell models • Offer cGMP clinical and for scientists to for testing safety and efficacy commercial manufacturing, e.g. • Unco
Slide 77: Performance Materials targets attractive markets
Performance Materials targets attractive markets – especially in the electronics space Automotive Market Electronics Performance Materials • Driven by world GDP growth Market sales by end market • Increasing demand in emerging markets Market size: ~€2,000 bn Pro Market size: ~€1,450 bn >85% <15% for
Slide 78: Three high-tech pillars serving a diverse customer base
Performance Materials Three high-tech pillars serving a diverse customer base 1 Business allocation within Performance Materials % of sales Products Dielectrics, colloidal silica, lithography materials, yield enhancers, edge-bead removers Semiconductor ~50% Polyimide raw materials, printing mate
Slide 79: Business portfolio management drives capital allocation
Performance Materials Business portfolio management drives capital allocation and enables future value creation Profitability Invest for growth Invest for Strong and sustainable market growth Manage for growth Leading positions and attractive growth cash opportunities Semiconductor Solutions; Ma
Slide 80: Semiconductor Solutions even stronger with Versum and Intermolecular
Performance Materials Semiconductor Solutions even stronger with Versum and Intermolecular Newly combined Wafer processing portfolio offers Deposition offers highest value End2End creation potential solutions with along the leading positions Patterning Planarization semiconductor value in high growt
Slide 81: Semiconductor Solutions – Data explosion driving secular growth
To complete the acquisition of Versum Materials Performance Materials Semiconductor Solutions – Data explosion driving secular growth End-market – Silicon wafer area shipments– Data driving growth of electronics industry1 Sustainable long-term growth2 1 Silicon wafer area shipments (MSI) growth GDP
Slide 82: Expanding the limits of how small you can go
Expanding the limits of how small you can go Pattern collapse AZ FIRM® rinse materials As lines get narrower and closer together in advanced chip generation, lines tend to “stick” due to surface tension. Lithography limitation Directed self-assembly (DSA) Block copolymer can generate small lines or
Slide 83: All regions drive organic growth
All regions drive organic growth Regional breakdown of net sales [€m] Regional organic development Europe +3.9% • Europe with solid growth driven by strong org. ® Life Science; Mavenclad ® ramp-up offsetting Rebif decline 29% • North America reflects strong Life Science; ® ® Mavenclad , Fertility an
Slide 84: Life Science and Healthcare fuel organic growth
Life Science and Healthcare fuel organic growth of top- and bottom-line, supported by Versum Portfolio and FX tailwinds Q4 2019 YoY net sales Organic Currency Portfolio Total Q4 YoY EBITDA pre Healthcare 8.4% 2.0% 0.0% 10.4% 1 2.6% 6.7% €1,206 m 17.7% €950 m Life Science 7.8% 2.3% -0.6% 9.5% Perform
Slide 85: Q4 2019: Overview
Q4 2019: Overview Key figures Comments [€m] Q4 2018 Q4 2019 Δ • All business sectors drive net sales growth Net sales 3,888 4,381 12.7% • EBITDA pre & margin reflect strong top-line growth, GSK deferred income, milestone EBITDA pre 950 1,206 27.0% payments, cost consciousness, strong Margin (in % of
Slide 86: Healthcare: Mavenclad and Bavencio deliver guidance
® ® Healthcare: Mavenclad and Bavencio deliver guidance; moderate growth of core business Healthcare P&L Net sales bridge 8.4% 2.0% 0.0% €1,800 m [€m] Q4 20181 Q4 2019 €1,630 m Net sales 1,630 1,800 Marketing and selling -634 -595 Q4 2018 Organic Currency Portfolio +0.0% Q4 2019 Administration -89 -
Slide 87: Healthcare organic growth by franchise/product
Healthcare organic growth by franchise/product Q4 2019 organic sales growth [%] FY 2019 organic sales growth [%] by key product [€m] by key product [€m] 326 -8% 1,273 -14% 344 1,438 237 +15% 877 +19% 202 733 224 +3% 871 +7% 216 816 178 0% 743 +3% 175 708 146 +3% 530 +10% 140 475 127 402 >100% +10% 3
Slide 88: Neurology & Immunology: Strong ramp up of Mavenclad
® Neurology & ®Immunology: Strong ramp up of Mavenclad more than offsets Rebif decline ® ® Rebif sales of €326 m in Q4 Rebif net sales, [€m] 2019 reflect organic decline of Sales development NDI, [€m] 400 344 -7.6%, mitigated by FX effect 331 318 326 350 299 of +2.2% 300 org. org. org. org. org. 5
Slide 89: Mavenclad Launch Update
® Neurology & Immunology: Mavenclad Launch Update Triple digit YoY growth (+ €230 m, x3.5 vs FY 2018) USA: Continued growth within Ex-USA: Strong launch High Efficacy and Oral market1 progress globally • Approved in 75 countries2 • Leading clinical perception among oral class in key markets (Germany
Slide 90: Oncology: Double-digit growth reflects strong Erbitux demand in China
® Oncology: Double-digit growth reflects strong demand for Erbitux in China ® Absolute sales of €237 m reflect Erbitux net sales, [€m] double-digit growth in Q4 Sales development Oncology, [€m] 300 (org. 14.5%; FX 3.1%) 237 250 202 199 212 222 Strong APAC fueled by China org. org. org. org. org.
Slide 91: Fertility: Organic growth driven by other Fertility products
Fertility: Organic growth driven by other Fertility products ® Gonal-f net sales, [€m] Sales development Fertility, [€m] 250 206 191 200 175 168 178 org. org. org. org. org. 350 10.% 7.9% 3.5% 9.0% 3.3% 150 Fertility posts moderate organic growth driven by Europe and 100 300 North America 50 ® 250
Slide 92: Euthyrox drives General Medicine growth
® Ongoing strong demand for Euthyrox drives General Medicine growth Sales evolution Q4 2019 organic drivers Endocrinology [€m] Organic 150 • Endocrinology reflects strong demand in +0.1% org. 100 96 83 90 91 99 South Korea, offsetting weaker North America and Europe 50 0 Q4 2018 Q1 2019 Q2 2019 Q3
Slide 93: Life Science with strong operating leverage
Life Science with strong operating leverage Life Science P&L Net sales bridge 7.8% 2.3% -0.6% €1,783 m [€m] Q4 20181 Q4 2019 €1,628 m Net sales 1,628 1,783 Marketing and selling -473 -490 Q4 2018 Organic Currency Portfolio Q4 2019 Administration -106 -102 EBITDA pre bridge Research and development -
Slide 94: Performance Materials: Expected LC decline has materialized
Performance Materials: Expected LC decline has materialized amid continued market slowdown in Semiconductor and Surface Performance Materials P&L Net sales bridge €798 m 39.7% €629 m -15.2% [€m] Q4 20181 Q4 2019 2.3% +5.2% Net sales 629 798 +0.7% Marketing and selling -72 -136 Q4 2018 Organic Curren
Slide 95: Balance sheet – Reflecting Versum acquisition
Balance sheet – Reflecting Versum acquisition Assets [€bn] Liabilities [€bn] 43.8 43.8 0.8 3.5 36.9 3.3 36.9 Cash & cash equivalents 2.2 17.9 3.2 Receivables 2.8 Inventories 17.2 Net equity 26.3 Intangible assets 13.2 21.0 8.9 Financial debt 2.6 Payables/Refund liabilities 2.2 Property, plant & equi
Slide 96: Versum balance sheet effects
Versum balance sheet effects [€bn] 6 ~5.4 5 ~0.04 4 ~0.7 ~3.1 3 ~2.3 ~0.5 ~0.1 ~0.06 2 1 0 Excess purchase Trademarks Customer Technology, R&D, PPE Inventories Deferred tax Goodwill price relationships Licenses liabilities Amortization of intangible assets from Versum PPA*: ~€230 – 250 m p.a. Totals
Slide 97: Reported Figures
Reported Figures Reported results Comments [€m] Q4 2018 Q4 2019 Δ • Higher EBIT due to strong top-line contribution from Life Science and EBIT 341 515 51.0% Healthcare as well as cost consciousness Financial result -84 -76 -9.7% • Last years net income and EPS reflect Consumer Health disposal Profit
Slide 98: Cash Flow Statement
Cash Flow Statement Q4 2019 – cash flow statement Cash flow drivers [€m] Q4 2018 Q4 2019 Δ • Last year’s profit after tax driven by Consumer Health disposal, neutralized in Profit after tax 2,458 321 -2,137 other operating activities D&A 508 552 45 • D&A increase mainly due to IFRS 16 reclassificati
Slide 99: Adjustments in Q4 2019
Adjustments in Q4 2019 Adjustments in EBIT [€m] Q4 2018 Q4 2019 Adjustments thereof D&A Adjustments thereof D&A Healthcare 23 11 21 1 Life Science 54 2 15 0 Performance Materials 28 20 93 -1 Corporate & Other 34 0 10 0 Total 138 33 139 1 Totals may not add up due to rounding 99
Slide 100: We are working on ambitious goals
ESG We are working on ambitious goals Environment Social Governance Climate Product safety Growth & Profit sharing We endeavor to reduce Product safety is one of our Our growth results from innovations and direct and indirect top priorities: From safe acquisitions strengthening our position in emiss
Slide 101: Emissions, Water, Waste reduced despite growing business
ESG Emissions, Water, Waste reduced despite growing business Emission-Target: Water-Target: Waste-Target: ➢ Growth-independent reduction of ➢ At 24 sites with relevant water ➢ We reduce waste and recycle Group‘s greenhouse gas emissions use in areas of high water stress as much as possible - we aim
Slide 102: External stakeholders valuate our engagement
ESG External stakeholders valuate our engagement In 2018, Our share was We were ranked on 4th Since 2008, Our shares In 2018, Oekom 2018, Sustainalytics again included in STOXX place at Vigeo Eiris have been included in the research AG gave us a awarded us 79 out of Global ESG Leaders among its peer
Slide 103: Financial calendar
Financial calendar Date Event March 5, 2020 FY 2019 Earnings release April 24, 2020 Annual General Meeting May 14, 2020 Q1 2020 Earnings release August 6, 2020 Q2 2020 Earnings release 103
Slide 104: Investor Relations contacts
CONSTANTIN FEST SVENJA BUNDSCHUH ALESSANDRA HEINZ Head of Investor Relations Assistant Investor Relations Assistant Investor Relations +49 6151 72-5271 +49 6151 72-3744 +49 6151 72-3321 constantin.fest@merckgroup.com svenja.bundschuh@merckgroup.com alessandra.heinz@merckgroup.com AMELIE SCHRADER PAT