Q1 20 Earnings - Analyst call, May 14, 2020, 2:00 pm CET

GOOD START TO THE YEAR DESPITE FIRST COVID-19 IMPACT

Merck KGaA, Darmstadt, Germany Q1 2020 results

Stefan Oschmann, CEO

Belén Garijo, CEO Healthcare

Marcus Kuhnert, CFO

May 14, 2020

DISCLAIMER

Publication of Merck KGaA, Darmstadt, Germany. In the United States and Canada the group of companies affiliated with Merck KGaA, Darmstadt, Germany operates under individual business names (EMD Serono, Millipore Sigma, EMD Performance Materials). To reflect such fact and to avoid any misconceptions of the reader of the publication certain logos, terms and business descriptions of the publication have been substituted or additional descriptions have been added. This version of the publication, therefore, slightly deviates from the otherwise identical version of the publication provided outside the United States and Canada.

2	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

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 words of similar meaning in connection with future events or future operating or financial performance are often used to identify forward-looking statements. All statements in this communication, other than those relating to historical information or current conditions, are forward-looking statements. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond control of Merck KGaA, Darmstadt, Germany, which could cause actual results to differ materially from such statements.

Risks and uncertainties include, but are not limited to: the risks of more restrictive regulatory requirements regarding drug pricing, reimbursement and approval; the risk of stricter regulations for the manufacture, testing and marketing of products; the risk of destabilization of political systems and the establishment of trade barriers; the risk of a changing marketing environment for multiple sclerosis products in the European Union; the risk of greater competitive pressure due to biosimilars; the risks of research and development; the risks of discontinuing development projects and regulatory approval of developed medicines; the risk of a temporary ban on products/production facilities or of non-registration of products due to non-compliance with quality standards; the risk of an import ban on products to the United States due to an FDA warning letter; the risks of dependency on suppliers; risks due to product-related crime and espionage; risks in relation to the use of financial instruments; liquidity risks; counterparty risks; market risks; risks of impairment on balance sheet items; risks from pension obligations; risks from product-related and patent law disputes; risks from antitrust law proceedings; risks from drug pricing by the divested Generics Group; risks in human resources; risks from e-crime and cyber attacks; risks due to failure of business-critical information technology applications or to failure of data center capacity; environmental and safety risks; unanticipated contract or regulatory issues; a potential downgrade in the rating of the indebtedness of Merck KGaA, Darmstadt, Germany; downward pressure on the common stock price of Merck KGaA, Darmstadt, Germany and its impact on goodwill impairment evaluations, as well as the impact of future regulatory or legislative actions.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included elsewhere, including the Report on Risks and Opportunities Section of the most recent annual report and quarterly report of Merck KGaA, Darmstadt, Germany. Any forward-looking statements made in this communication are qualified in their entirety by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us or our business or operations. Except to the extent required by applicable law, we undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

This presentation contains certain financial indicators such as EBITDA pre exceptionals, net financial debt and earnings per share pre exceptionals, which are not defined by International Financial Reporting Standards (IFRS). These financial indicators should not be taken into account in order to assess the performance of Merck KGaA, Darmstadt, Germany in isolation or used as an alternative to the financial indicators presented in the consolidated financial statements and determined in accordance with IFRS. The figures presented in this statement have been rounded. This may lead to individual values not adding up to the totals presented.

3	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Agenda

Executive summary

Financial overview

Guidance

4	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

EXECUTIVE SUMMARY

Beyond focusing on the health & safety of our employees and on business continuity, we have contributed to help face global COVID-19 pandemic

• Our Business:
• Supplying critical raw

materials, components, and manufacturing products for vaccine production & diagnostics

• Life Science continues to keep global supply chain operational by implementing additional safety precautions to provide indispensable products and services to aid COVID-19response

•	Collaborations:	• Research Grants:	•	Donations:
• Part of pharma and Life	• 2019: €1 m Future	•	290,000 units of
	Science consortium	Insight Prize for		interferon (Rebif ®) to
	together with the Bill	outstanding research in		WHO for global
	& Melinda Gates	field of pandemic		SOLIDARITY trial,
	Foundation	preparedness		investigating therapies
•	Life Science actively	• 2020: up to €500,000		for treating COVID-19
	Liquid Handling
	collaborating with	p.a. for 3 years and	•
	leading institutions, to	extension option for		Center of Life Science,
	speed up development,	technological		increasing capacity to
	production & delivery of	solutions for		produce and donate
	diagnostics, vaccines	pandemic outbreak		250,000 liters of
	and treatment of	preparedness and		disinfectant
	COVID-19.	fighting viral infections	•	Donated 2,000,000
				FFP2-Masksto local
				communities in U.S. and
				Europe

6	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Highlights

Operations

Healthcare: double-digit growth fueled by Mavenclad® ramp-up and General Medicine

Life Science: Process Solutions with double digit growth while Academia and Applied end markets reflect temporary demand slow down in Asia due to COVID-19

Performance Materials: Strong uptake of Semiconductor Solutions offset by Display and Surface Solutions decline; Versum integration on track

7	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Financials

Q1 organic sales growth of +7.6%;

Q1 organic EBITDA pre growth of +14.5%

Guidance:

Net sales: €16.8 - 17.8 bn

EBITDA pre: €4,350 - 4,850 m

EPS pre: €5.50 - 6.35

Net financial debt to EBITDA pre at 2.6 on March 31, 2020 - continued focus on deleveraging

Healthcare and Life Science fuel strong organic top- and bottom-line performance; significant portfolio effect from Versum

Q1 YoY Net Sales
Organic	Currency	Portfolio	Total
Healthcare	15.3%	-0.4%	0.0%	14.9%
Life Science	5.6%	0.9%	0.0%	6.5%
Performance Materials	-5.4%	2.4%	52.1%	49.0%
Group	7.6%	0.6%	8.4%	16.7%

• Healthcare with double-digit growth from strong General Medicine (in parts supported by COVID-19 driven pull-in effect), continued Mavenclad® ramp-up, and strong demand for Oncology
• Life Science reflects double-digit growth of Process Solutions overcompensating temporarily lower demand for Applied and Research Solutions amidst COVID-19 pandemic
• Performance Materials shows expected strong uptake of Semiconductor Solutions offset by declining market demand in Display and in Surface Solutions impacted by COVID-19

Q1 YoY EBITDA pre

	14.5%	2.0%	10.7%	1,181
929
Q1 2019	Organic	Currency	Portfolio	Q1 2020

• EBITDA pre growing twice as fast as net sales organically fueled by strong top-line growth, and cost management further benefitting from reduced travel & events during COVID-19 pandemic
• Positive FX tailwinds on EBITDA pre mainly from U.S. dollar and major Asian currencies

8

Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Totals may not add up due to rounding

Organic growth driven by North America, Europe and Latin America

Regional breakdown of net sales [€ m]

Regional organic development

Europe +9.7%

org.

• About stable APAC due to double-digit growth of General Medicine, more than offsetting COVID-19 related flat Life

North America +12.0%

org.

26%

Latin America +21.6%

org.

30%

Q1 2020
Net sales:
€4,370 m	35%	Asia-Pacific

6%

3%

Middle East & Africa -4.0%

org.

+1.2%

org.

Science and decline in Display Solutions

• Strong Europe driven by double-digit growth in General Medicine and Process Solutions and support from Mavenclad®

• North America reflects robust demand in Life Science and strong uptake of Mavenclad®

• Double-digit growth in LATAM from strong Healthcare & Life Science demand

• Middle East and Africa with moderate decline due to phasing in Healthcare

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FINANCIAL OVERVIEW

Q1 2020: Overview

Key figures

[€m]	Q1 2019	Q1 2020
Net sales	3,746	4,370	16.7%
EBITDA pre	929	1,181	27.2%
Margin (in % of net sales)	24.8%	27.0%
EPS pre	1.13	1.50	32.7%
Operating cash flow	493	516	4.9%

[€m]	Dec. 31, 2019	March 31, 2020
Net financial debt	12,363	12,285	-0.6%
Working capital	3,944	4,392	11.3%
Employees	57,071	57,451	0.7%

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Comments

• Net sales driven by organic growth of Healthcare and Life Science, further fueled by portfolio effect from Versum
• EBITDA pre & margin increase due to strong operating leverage in Healthcare and Life Science
• EPS pre growing faster than EBITDA pre supported by better financial result
• Higher operating cash flow reflects strong business performance partially compensated by trade account receivables build-up due to COVID-19
• Working capital follows business activity

Totals may not add up due to rounding

Reported figures

Reported results

[€m]	Q1 2019	Q1 2020
EBIT	379	716	89.0%
Financial result	-113	-98	-12.5%
Profit before tax	266	617	131.9%
Income tax	-67	-159	137.4%
Effective tax rate (%)	25.2%	25.8%
Net income	189	456	141.9%
EPS (€)	0.43	1.05	144.2%

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Comments

• Higher EBIT driven by strong top line growth in Healthcare and Life Science as well as consolidation of Versum and divestment gain from Allergopharma*
• Financial result benefits from comparison with last years' revaluation of F-Star purchase option (-€45 m) partially offset by the current year higher interest expense related to Versum financing
• Effective tax rate within guidance range of ~24-26%
• Higher net income and EPS reflects higher EBIT and better financial result

* closed March 31st ,2020

Totals may not add up due to rounding

Healthcare: Strong General Medicine supported by COVID-19pull-in effect and ongoing Mavenclad® uptake; improved margins from top line leverage

Healthcare P&L
[€m]	Q1 2019	Q1 2020
Net sales	1,481	1,701
Marketing and selling	-550	-423
Administration	-88	-79
Research and development	-380	-417
EBIT	128	422
EBITDA	329	501
EBITDA pre	332	472
Margin (in % of net sales)	22.4%	27.8%

Net sales bridge

15.3% -0.4% 0.0% €1,701 m

€1,481 m

Q1 2019	Organic	Currency	Portfolio	Q1 2020
				+0.0%

EBITDA pre bridge

40.9% 1.3% 0.0% €472 m

€332 m

Q1 2019

Organic

Currency

Portfolio

Q1 2020

Comments

• Strong demand in General Medicine supported by COVID-19pull-in and phasing
• Mavenclad® growth vs. Q1 2019, especially in U.S.; however about flat vs. Q4 2019 due to COVID-19, while Rebif® posts less pronounced decline explained by U.S. inventory effects, and Russia tender phasing
• Strong growth of Erbitux® particularly in Europe offsetting weaker China amidst COVID-19; Bavencio® developing as expected

• Moderate Fertility decline from COVID-19 impact most pronounced in China; strong first quarter in U.S.
• M&S decrease due to stringent cost management, resource prioritization across franchises and expired amortization of Rebif ®
• R&D cost control offset by Avelumab H&N study termination accrual (-€15 m)
• Higher EBITDA pre driven by strong top-line performance and rigorous cost management

13

Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Totals may not add up due to rounding

Mavenclad® - Global launch continues to make progress, with Q1 showing initial impact of COVID; regaining of momentum expected in H2 2020

Global: First signs of COVID-19 related slow-down

visible as of March, impacting Q1 2020

net sales, [€m]

140					127	123
120
		CAGR +43.1%
100				89
80			61
60
	43
40
20
0
	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020

• Approved in 78 countries
• Launches progressing well, with momentum into early Q1 across the U.S. and EU4
• Number of prescribers increasing +70% in the US, with average depth increasing +50%1
• COVID-19has restricted HCP access and forced pivot to digital engagement only
• Significant decline of patient consults with neurologists, leading to fewer treatment initiations and fewer treatment switches

	1: MSLL SRF data; Internal data on file/March 2020; Acronyms: HCP = Healthcare Professional; EU4 = Germany, UK, Spain, Italy
14	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Mavenclad® - Aiming to capitalize on "waitlisted" patient opportunity amid COVID-19 pandemic

HE MS market:

Significant opportunity for rebound in H2

• Diverse guidelines published - KOL debate ongoing
• Infection risk number 1 choice driver
• 15% of HE patient starts put on hold and a further 5% "bridged" to platform therapies1

Mavenclad® :

Profile suited to evolved choice drivers

• Lack of continuous immunosuppression3
• Transient preferential targeting of B and T lymphocytes4

US dynamic market2:	•	Specifically important for viral defense …
15.0%	"Waitlisted" HE Patients	• Moderate T cell reduction with lower impact on
		CD8+4
High Efficacy		• Minimal impact on innate immunity5-7
	• Mavenclad® is easy to use, with short-course
5.0%	"Bridged" INJ Patients	at-home oral dosing and a low monitoring
Platform		burden3

• High efficacy that is sustained beyond total

		lymphocyte recovery3
Pre COVID	Current

1. "Monitoring the Impact of COVID-19 on the Pharmaceutical Market", IQVIA; 2: IQVIA weekly data; 3: Mavenclad® EU SmPC, 2020; 4: Comi G, et al. Mult Scler Relat Disord. 2019;29:168-174;

1. Rieckmann P, et al. ECTRIMS 2009 [P816]; 6: Sorensen PS et al. ECTRIMS-ACTRIMS 2017 [P1141]; 7: Giovannoni G et al. N Engl J Med 2010;362:416-26 (and suppl. info).;

Acronyms: HE = High Efficacy, INJ = Injectables, KOL = Key Opinion Leader

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Bavencio® - Enhancing its foundation in GU cancers with transformative OS data from JAVELIN Bladder 100 trial featured at ASCO 2020 plenary session

Urothelial

Cancer 1L (UC)

(~90% of bladder

cancers,

10th most prevalent

cancer globally)

Renal Cell

Carcinoma 1L

(RCC)

NSCLC 1L

• First immunotherapy to significantly prolong OS vs standard of care in 1L locally advanced or metastatic urothelial carcinoma, and first to demonstrate OS benefit regardless of PD-L1 status
• Breakthrough Therapy Designation, completion of sBLA submission, and review under the FDA's Real-Time Oncology Review (RTOR) program announced on April 9, 2020
• New treatment paradigm offered by the unique JAVELIN Bladder 100 Regimen, potential to be practice changing, offering benefit beyond chemotherapy, the standard of care for the last 20+ years
• Launch to leverage existing RCC resources and experiences
• Approved by U.S. FDA in May 2019, by the European Commission in October 2019, and by the Japanese PMDA in December 2019
• Participating in the establishment of IO-TKI as the leading class in 1L mRCC
• Expected to benefit from strong 1L UC data:
• • Enhanced overall brand value (first demonstrated OS benefit for Bavencio®)
  • Greater efficiency (75-80% overlap with UC and RCC prescribers in key markets)
• Ph III data read-out expected in 2021
• Core tumor for IO, 1L NSCLC remains a large indication
• Highly competitive landscape - Complex study design (e.g. multiple arms) might provide differentiated data in patient subgroups

Acronyms: EMA = European Medicines Agency, FDA = Food and Drug Administration, GU = genitourinary, IO = Immuno-Oncology, mRCC = Metastatic Renal Cell Carcinoma, OS = Overall Survival, PMDA = Pharmaceuticals and Medical Devices Agency, sBLA = supplemental Biologics License Application, TKI = Tyrosine Kinase Inhibitor

16	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Core business - Q1 growth rates reflect initial effects of COVID-19 and indicate future developments

Q1 2020 net sales contribution1 &	Expected Impact of COVID-19
org. growth (%) in Q1 2020 (FY 2019)

+7.1%			-3.5%
							(+5.9% FY 2019)
		(+6.7% FY 2019)
			Erbitux®;	Fertility;
					14%
					19%
			Rebif®;
20%
-3.4%
					General Medicine &
(-13.9% FY 2019)
Endocrinology; 47%

+20.9%

GENERAL

MEDICINE &

ENDOCRINOLOGY

FERTILITY

REBIF®

• Q1 supported by COVID-19 related moderate stocking effects across the globe, suggesting phasing impact in upcoming quarters
• Rx duration for Glucophage® and Concor® extended in most Chinese provinces to reduce frequency of hospital visits
• Chinese VBP roll out expected to continue despite COVID-19
• Medical societies issued guidance for suspension of new, non-urgent treatments2 in late Q1, leading to temporary closure of clinics globally
• Situation now improving, >90% of Chinese centers reopened at reduced capacity, several APAC and EMEA clinics reopening in line with newly published guidance on recommencing of ART3
• Catch-upeffects expected post-recovery
• Potential benefit from changed treatment patterns:
  o Decreased switches from Rebif® to High-Efficacy drugs due to guidelines and less frequent patient visits
  o Increased new patient numbers due to greater preference for platform therapies

(+8.3% FY 2019)

®	• Decreased diagnosis rates due to lower physician/hospital
ERBITUX	access given prioritization of COVID-19 treatment

1. Net sales contribution reflected in pie chart; 2:https://www.asrm.org/news-and-publications/news-and-research/press-releases-and-bulletins/asrm-issues-new-guidance-on-fertility-care-during-covid-19-pandemiccalls-for-suspension-of-most-treatments/,3: published by ESHRE and ASRM on April 23 2020,https://www.eshre.eu/Press-Room/ESHRE-News;Acronyms: ART = Assisted Reproductive Technology, ASRM = American Society for Reproductive Medicine, ESHRE = European Society of Human Reproduction and Embryology, VBP = Volume Based Procurement

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Pipeline - 2020 characterized by developmental progress of innovative Oncology, Immuno-Oncology and Neurology assets

Q2 2020

H2 2020

ASCO 2020

May 29 - Jun 2

(Virtual)

Tepotinib (c-Met-inhibitor)

Bavencio®: Late-breaking JAVELIN Bladder 100 data (1L urothelial carcinoma) presented at the Plenary Session on May 31

Tepotinib: Primary efficacy & biomarker analyses from VISION study for first-in-class tepotinib1 in NSCLC with METex14 skipping alterations

• • METex14: Approved in Japan on March 25, 2020
• METex14: Expected filing in the USA in H1 2020 (BTD granted in 2019)

Bavencio® (Avelumab/Anti-PD-L1)

• JAVELIN Bladder 100 (1L urothelial carcinoma): Expected FDA decision & potential launch

Bintrafusp alfa (Anti-PD-L1/TGF-ß-Trap)

• Initiation of further studies (incl. TNBC)

Evobrutinib (BTK-inhibitor)

• RMS: Recruitment in the modified studies to start shortly

Oncology Immuno-Oncology

Neurology

1. not yet approved in any markets outside of Japan; Acronyms: BTD = Breakthrough Therapy Designation, EMA = European Medicines Agency, FDA = U.S. Food and Drug Administration, NSCLC = Non-Small- Cell Lung Carcinoma, RMS = Relapsing Multiple Sclerosis, RTOR = Real-Time Oncology Review, sBLA = Supplemental Biologics License Application, TNBC = Triple-Negative Breast Cancer, UC = Urothelial Cancer

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Life Science: Showing strong resilience, Process Solutions with double-digit growth, Research and Applied flat

Life Science P&L
	[€m]	Q1 2019	Q1 2020
	Net sales	1,661	1,769
	Marketing and selling	-470	-498
	Administration	-88	-89
	Research and development	-62	-75
	EBIT	313	345
	EBITDA	507	541
	EBITDA pre	516	553
	Margin (in % of net sales)	31.0%	31.2%

Net sales bridge

	€1,661 m	5.6%				0.9%	0.0%		€1,769 m

Q1 2019

Organic

Currency

Portfolio

Q1 2020

EBITDA pre bridge

		€516m	8.2%				-0.5%	-0.5%				€553 m

Q1 2019

Organic

Currency

Portfolio

Q1 2020

Comments

• Double-digitgrowth of Process Solutions mainly driven by downstream and single use, with COVID-19 demand contributing
• About stable Applied Solutions reflects high comps and decline in lab water due to inaccessibility of labs
• Research Solutions flat: increased demand of bulk chemicals offset by temporary slowdown in academia due to COVID-19

• Higher M&S reflecting increased logistics cost

• Increased R&D driven by investments in strategic projects
• EBITDA pre reflects operational leverage from strong top-line growth

19

Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Totals may not add up due to rounding

Performance Materials: Strong Semi more than offset by LC's accelerated underlying negative trajectory and declining Surface amid COVID-19

Performance Materials P&L
	[€m]	Q1 2019	Q1 2020
	Net sales	604	900
	Marketing and selling	-66	-136
	Administration	-23	-38
	Research and development	-72	-71
	EBIT	95	116
	EBITDA	157	251
	EBITDA pre	193	286
	Margin (in % of net sales)	31.9%	31.7%

	Net sales bridge	52.1%	€900 m
	€604 m	-5.4%	2.4%

Q1 2019 Organic Currency Portfolio Q1 2020

	EBITDA pre bridge	52.1%	€286 m
€193 m	-8.8%	5.1%

Q1 2019

Organic

Currency

Portfolio

Q1 2020

Comments

• Sales growth of nearly 50% reflects portfolio effect from Versum and positive FX, overcompensating organic decline
• Display Solutions: LC's negative underlying trajectory with high comps, not yet significantly impacted by COVID-19; OLED impacted

• Surface Solutions decline driven by impact of COVID-19 on the Automotive and Cosmetics industries
• M&S reflects consolidation of Versum acquisition and diligent underlying cost management in framework of Bright Future transformation

• Semiconductor Solutions showing strong growth, both organically as well • R&D staying flat due to Bright Future related provisions in Q1 2019,

	as for Versum portfolio; recovery started already in Q1	while Q1 2020 includes Versum consolidation
		• Increase in EBITDA pre largely reflects consolidation effect from Versum
20	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020	Totals may not add up due to rounding

Balance sheet

			Assets [€ bn]	Liabilities [€ bn]
	43.8		44.7		44.7	43.8
	1.5
Cash & cash equivalents			0.8
3.5		3.7
Receivables
	3.3	3.4
Inventories			18.6	17.9	Net equity

Intangible Assets	26.3	26.5
				13.9	13.2	Financial debt
Property, plant			2.4	2.6	Payables/refund liabilities
6.2	6.1	3.1	3.3	Provisions for employee benefits
& equipment	6.7	6.8	Other liabilities
Other assets	3.6	3.5
		Dec. 31, 2019	Mar. 31, 2020	Mar. 31, 2020	Dec. 31, 2019

• Balance sheet reflects consolidation of Versum since Dec. 31 2019
• Higher cash (+€750 m) is driven by securing liquidity given the COVID-19 pandemic

• Increase in equity mainly driven by profit after tax and FX translations (equity ratio of 41.6%)
• Financial debt increase reflects new bonds (€1.5 bn) and utilization of available credit lines partially offset by due bonds repayment (€2.0 bn)

21

Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Totals may not add up due to rounding

Cash flow statement

Q1 2020 - cash flow statement

[€m]	Q1 2019	Q1 2020
Profit after tax	190	458	268
D&A	474	431	-42
Changes in provisions	100	16	-84
Changes in other assets/liabilities	-89	-23	66
Other operating activities	-4	-10	-6
Changes in working capital	-178	-356	-178
Operating cash flow	493	516	24
Investing cash flow	-329	-288	41
thereof Capex on PPE	-209	-341	-132
Financing cash flow	-3	542	545

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Cash flow drivers

• Profit after tax driven by higher EBIT and Allergopharma disposal* gain, neutralized in other operating activities
• D&A lower mainly from expired Rebif ® amortization, compensated by Versum
• Changes in provisions reflect last year's build up for transformation programs
• Increased working capital driven by trade accounts receivables in Life Science partially impacted by COVID-19
• Higher financing cash flow reflecting new bond issuance (€1.5 bn) and utilization of available credit lines, partially offset by repayment of due bonds (€2.0 bn)
• • closed March 31st

Totals may not add up due to rounding

GUIDANCE

Our assumptions regarding the development of COVID-19 have changed significantly post pandemic classification by WHO and subsequent events

Previous Assumptions (disclosed in March)	Current assumptions (disclosed in May)

• Impact mainly in China
• Outbreak peaks in Q1
• Situation eases in Q2
• Situation normal in H2

• Impactacross all regions

• Cases expected to peak in Q2

• Situation eases in H2

• Pandemic crisis lasts for FY

+

• Stressed health systems

• Some countries have a less

effective response than China

• However, no major resurgences

24	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Group

COVID-19 Update: new assumptions on financial impact of COVID-19

GROUP

HEALTHCARE

LIFE SCIENCE

PERFORMANCE

MATERIALS

• Mid single-digit percentage Sales impact
• • Global impact across many businesses
  • Strong Q2 impact, also from Q1 pull-in
  • Lasting until at least Q3
• Highest anticipated impact in absolute terms
• Biggest impact anticipated in Fertility due to discretionary nature of treatment
• Lowest anticipated impact in absolute terms
• Process Solutions largely unaffected, main impact in Applied and Research Solutions
• Semiconductor expected to show strong growth despite COVID-19
• COVID-19additionally weighs on Display decline
• High impact on Surface's end markets

We assume a top-line impact of

around mid single digit and thereof 50% to 60% hitting EBITDA pre

25	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Group

Key earnings drivers to remember for 2020

EBITDA1-SUPPORTING FACTORS

EBITDA1-REDUCING FACTORS

• Increasing sales contribution from Mavenclad® and Bavencio®
• Stringent M&S and R&D cost management in HC (decrease YoY absolute and as % of sales)
• Ongoing strength in Life Science with above-market sales growth
• Recovery of Semiconductor Solutions and cost savings from Bright Future program related initiatives
• High level of cost consciousness and prioritization
• Four quarters of Versum

• No more support from Pfizer deferred income (€191 m in 2019)
• Lower income from pipeline management
• Continued decline of Liquid Crystals and Rebif®
• COVID-19related sales and earnings effect

1EBITDA pre

26	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Group

Full-year 2020 guidance

Net sales:

Slight to moderate organic sales growth, Versum growth contribution in the mid-single digits %

FX between +1% to -2% YoY

~€16.8 - 17.8 bn

EBITDA pre:

Organically about stable, mid-single digit % growth from Versum

FX headwinds of 0% to -3% YoY ~€4,350 - 4,850 m1

EPS pre: ~€5.50 - 6.35

1CO guidance 2020: Slightly higher than last year

27	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Group

2020 business sector guidance1

		Net sales
Healthcare		Organically about stable
		COVID-19 significantly impacting
		fertility performance
		Sustained performance of new
		products

EBITDA pre

• Slight organic decline due to COVID-19
• Slight to moderate adverse FX impact

Life Science

Net sales

EBITDA pre

• Strong organic growth
• Process Solutions strength offsets weakness in academic and applied end markets

• Strong organic growth
• Neutral to moderate adverse FX impact

Performance

Materials

Net sales

EBITDA pre

1Divisional guidances are only support to the group guidance and do not have to add up

• Moderate to strong organic decline
• COVID-19weighing on Display and Surface, while Semiconductor Solutions growing strongly
• Display declining, driven by LC
• Low to mid-thirties % contribution from Versum

• Low- to mid-teens % organic decline
• Moderate support from FX
• Low to mid-thirties % contribution from Versum

28	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

APPENDIX

Additional financial guidance 2020

Further financial details

Corporate & Other EBITDA pre	slightly higher than last year
Interest result	~ -245 to -275 m
Effective tax rate	~24 % to 26%
Capex on PPE	~1.1 bn to 1.2 bn
Hedging/USD assumption	FY 2020 hedge ratio ~50%
at EUR/USD ~1.18
2020 Ø EUR/USD assumption	~1.08 to 1.12

31	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Maturity profile reflects Sigma-Aldrich and Versum financing transactions

Maturity profile as of March 31, 2020

Coupon

								3.250%
[€ m/US $]								0.125%
		2.950%
		1.375%
								1 600
	2.625%					1.625%								2.875%
	1 000				3.375%
													0.500%			0.875%
						500
	1 000		0.005%						0.375%		1000
		750				750		800
	550	600			500				600
2020	2021	2022	2023	2024	2025	2026	2027	2028	2029	2030	2031
						EUR bonds		USD bonds			Hybrids (first call dates)

Balanced maturity profile in upcoming years avoids refinancing risks;

Merck KGaA, Darmstadt, Germany will become a more frequent issuer

32

Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Totals may not add up due to rounding

Healthcare organic growth by franchise/product

Q1 2020 organic sales growth [%] by key franchise/products [€ m]

												295
												299
					234
		180
					211
		199
				167
		168
			150
		117
				123
43
			114
		91
	33
22								Q1 2020			Q1 2019

Organic

-3%

+32%

+7%

-1%

+29%

+184%

+28%

+50%

33	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Neurology & Immunology: Paused Mavenclad® ramp up amid Covid-19 uncertainties offset by slower than anticipated organic Rebif® decline

Sales development NDI, [€m]

500	org.	org.	org.	org.	org.
-7.2%	-5.1%	2.3%	17.2%	20.3%

450

400

350

300

250

200

150

100

50

0

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020

Rebif		Mavenclad

Rebif® net sales, [€m]

350		299	331	318	326	295
300
250
200
150
100
50
0

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020

Mavenclad® net sales, [€m]

160		127	123
140
120		89
100

1. 61

1. 43

0 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020

• Rebif ® sales of €295 m in Q1 '20 reflect lower organic decline of - 3.4%, further mitigated by FX effect of +2%
• Slower than anticipated U.S. decline from inventory effect while ex-U.S. remains stable
• Q-o-Qdecline more pronounced against exceptionally strong Q4 '19 from rebate provision releases

Mavenclad® nearly tripling vs. Q1 '19 but flattish vs. Q4 '19 amid COVID-19 uncertainties in Europe and U.S.

34	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Oncology: High double-digit growth in Bavencio®, while Erbitux is impacted by interruption of treatment protocols with infusions due to COVID-19

Sales development Oncology, [€m]

	org.	org.	org.	org.	org.
300	2.7%	6.8%	8.8%	16.9%	14.3%

250

200

150

Erbitux® net sales, [€m]							Absolute sales of €211 m reflect
															6.1% growth in Q1
300					222	237							(org. 7.1%; FX -1.0%)
250		199	212	211
200
														Erbitux: COVID-19 related
150
														slowdown in APAC (org. +0.6%)
100
														offset by double-digit growth in
50
														Europe due to tender phasing
0
	Q1 2019		Q2 2019		Q3 2019		Q4 2019		Q1 2020

100

50

0

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020

Others Erbitux Bavencio

Bavencio® net sales, [€m]

35			29	33
		29
30		22	23
25
20
15
10
5
0

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020

Recent Bavencio® approvals for RCC in U.S., Europe and Japan fuel 50,3% growth in Q1 (org. 49.8%; FX -0.5%)

35	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Fertility: As anticipated, strongest COVID-19 impact among all franchises particularly pronounced in China, Central and Western Europe

Sales development Fertility, [€m]

350	org.	org.	org.	org.	org.
7.9%	3.5%	9.0%	3.3%	-3.5%

300

250

200

150

100

50

0

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020

Other Fertility products		Gonal-f

Gonal-f® net sales, [€m]

250			191	206
200			178
168		167
150
100
50

0 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020

Other Fertility net sales, [€m]

150		119	123	128	135	111
100
50

0 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020

• Entire Fertility portfolio shows a moderate organic decline of - 3.5% primarily due to COVID-19
• COVID-19triggering nearly 50% sales decline in China, offset partially by strong growth in North America
• Milder decline in Gonal-f® (org. -1.2%; FX 0.4%) explained by different quarterly phasing in North America

36	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

General Medicine and Endocrinology: Strong growth further accelerated by stocking effects more than offsetting negative COVID-19 impact in China

Sales evolution

[€m]			Endocrinology																		Organic
150
	83					90	91	99				95				+16.0% org.
100
50
0
			Q1 2019	Q2 2019				Q3 2019		Q4 2019		Q1 2020
[€m]			General Medicine*
								601	588				593
600,0			489					583								Organic
400,0																								+21.7% org.
200,0
0,0
		Q1 2019	Q2 2019				Q3 2019		Q4 2019		Q1 2020

Q1 2020 organic drivers

• Endocrinology reflects strong demand for Saizen® particularly in APAC and Latin America partially explained through competitor stockout
• Continuously strong demand for Glucophage® further accelerated in APAC (org. +39%), Latin America (org. +33%), and Europe (org. +18%) due to COVID-19 related trends

37	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Clinical Pipeline

April 30, 2020

Phase I

berzosertib (M6620)		bintrafusp alfa
ATR inhibitor		TGFbeta trap/anti-PD-L1
Solid tumors		Solid tumors
peposertib (M3814)		M9241 (NHS-IL12)
DNA-PK inhibitor		Cancer immunotherapy
Solid tumors1		Solid tumors1
M1774
ATR inhibitor		M5049
Solid tumors		TLR7/8 antagonist
M3258		Immunology
LMP7 inhibitor		M6495
Multiple myeloma		anti-ADAMTS-5 nanobody
M4344		Osteoarthritis
ATR inhibitor
Solid tumors		M5717
M8891
	PeEF2 inhibitor
MetAP2 inhibitor		Malaria

Solid tumors

Phase II

peposertib (M3814) DNA-PK inhibitor

Rectal cancer

tepotinib

MET kinase inhibitor

Non-small cell lung cancer

abituzumab

pan-αν integrin inhibiting mAb

Colorectal cancer 1L

avelumab anti-PD-L1 mAb

Merkel cell cancer 1L

avelumab anti-PD-L1 mAb

Solid tumors2

avelumab anti-PD-L1 mAb

Non-small cell lung cancer2

avelumab anti-PD-L1 mAb

Urothelial cancer2

bintrafusp alfa

TGFbeta trap/anti-PD-L1

Non-small cell lung cancer 1L

bintrafusp alfa

TGFbeta trap/anti-PD-L1

Non-small cell lung cancer 1L/2L

bintrafusp alfa

TGFbeta trap/anti-PD-L1

Locally advanced non-small cell lung cancer

bintrafusp alfa

TGFbeta trap/anti-PD-L1

Biliary tract cancer 1L

bintrafusp alfa

TGFbeta trap/anti-PD-L1

Biliary tract cancer 2L

bintrafusp alfa

TGFbeta trap/anti-PD-L1

Cervical cancer 2L

atacicept anti-BlyS/APRIL fusion protein

Systemic lupus erythematosus

Phase III

avelumab anti-PD-L1 mAb

Non-small cell lung cancer 1L

evobrutinib BTK inhibitor

Multiple sclerosis

Registration

tepotinib

MET kinase inhibitor

Non-small cell lung cancer, METex14 skipping4

avelumab anti-PD-L1 mAb

Urothelial cancer 1L-M5

1L, first-line treatment; 1L-M,first-line maintenance treatment; 2L, second-line treatment.

1 Includes studies in combination with avelumab. 2 Avelumab combination studies with talazoparib, axitinib, ALK inhibitors, cetuximab, or chemotherapy. 3 As announced on March 30 2017, in an agreement with Avillion, anti-IL-17 A/F nanobody will be developed by Avillion for plaque psoriasis and commercialized by Merck KGaA, Darmstadt, Germany. 4 As announced on March 25 2020, tepotinib was approved in Japan for the treatment of patients with non-small cell lung cancer harboring METex14 skipping. 5 As announced on April 09 2020, a supplemental Biologics License Application (sBLA) has been submitted to the U.S. Food and Drug Administration (FDA) for avelumab for first-line maintenance treatment of patients with locally advanced or metastatic urothelial carcinoma.

Pipeline products are under clinical investigation and have not been proven to be safe and effective. There is no guarantee any product will be approved in the sought-after indication.

38	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

atacicept anti-BlyS/APRIL fusion protein

IgA nephropathy

sprifermin

fibroblast growth factor 18

Osteoarthritis

M1095 (ALX-0761)3 anti-IL-17 A/F nanobody

Psoriasis

Oncology

Immuno-Oncology

Immunology

Neurology

Global Health

Adjustments in Q1 2020

Adjustments in EBIT

[€m]	Q1 2019	Q1 2020
	Adjustments	thereof D&A	Adjustments	thereof D&A
Healthcare	3	0	-27	2
Life Science	9	0	11	0
Performance Materials	35	0	35	0
Corporate & Other	28	0	17	0
Total	76	0	36	2

39

Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

Totals may not add up due to rounding

Financial calendar

Date	Event
May 14, 2020	Q1 2020 Earnings release
May 28, 2020	Virtual Annual General Meeting
August 6, 2020	Q2 2020 Earnings release
November 12, 2020	Q3 2020 Earnings release

40	Merck KGaA, Darmstadt, Germany Q1 20 Results Presentation | May 14th, 2020

CONSTANTIN FEST

Head of Investor Relations

[phone] [e-mail]

AMELIE SCHRADER

Institutional Investors / Analysts

[phone] [e-mail]

SVENJA BUNDSCHUH

Assistant Investor Relations

[phone] [e-mail]

EVA STERZEL

ESG / Institutional & Retail Investors / AGM

[phone] [e-mail]

ALESSANDRA HEINZ

Assistant Investor Relations

[phone] [e-mail]

GUNNAR ROMER

Institutional Investors /

Analysts

[phone] [e-mail]

EMAIL:[e-mail]

WEB:www.emdgroup.com/investors

FAX: [phone]