QUARTERLY STATEMENT - MERCK KGAA
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Q U A R T E R LY S TAT E M E N T 1 QUARTER ST 2020
2
Quarterly Statement as of March 31, 2020 Table of Contents
Table of Contents
03 Merck – In brief
04 Developments within the Group and R&D
09 Course of Business and Economic Position
09 Merck
16 Healthcare
20 Life Science
23 Performance Materials
27 Corporate and Other
28 Outlook
33 Supplemental Financial Information
34 Consolidated Income Statement
35 Statement of Comprehensive Income
36 Consolidated Balance Sheet
37 Consolidated Cash Flow Statement
38 Consolidated Statement of Changes in Net Equity
40 Information by Business Sector
43 Significant events during the reporting period
44 Subsequent events
45 Effects of disclosure changes
46 Financial Calendar
This document is a quarterly statement pursuant to section
53 of the Exchange Rules for the Frankfurt Stock Exchange.
This quarterly statement contains certain financial indicators
such as operating result (EBIT), EBITDA, EBITDA pre, busi-
ness free cash flow (BFCF), free cash flow, net fi
nancial debt
and earnings per share pre, which are not defined by Inter-
national Financial Reporting Standards (IFRS). These finan-
cial indicators should not be taken into account in order to
assess the performance of Merck in isolation or used as an
alternative to the financial indicators presented in the con-
solidated financial statements and determined in accordance
with IFRS.
The figures presented in this quarterly statement have been
rounded. This may lead to individual values not adding up to
the totals presented.
The Annual Report for 2019 has been optimized
for mobile devices and is available on the Web at
ar.merckgroup.com/2019/.3
Quarterly Statement as of March 31, 2020 M e rck – I n bri e f
Merck – In brief
M ER C K G R O U P
Key figures
€ million Q1 2020 Q1 2019 Change
Net sales 4,370 3,746 16.7%
Operating result (EBIT )1 716 379 89.0%
Margin (% of net sales)1 16.4% 10.1%
EBITDA 2 1,148 853 34.6%
Margin (% of net sales)1 26.3% 22.8%
EBITDA pre 1,181 929 27.2%
Margin (% of net sales)1 27.0% 24.8%
Profit after tax 458 190 > 100.0%
Earnings per share (€) 1.05 0.43 > 100.0%
Earnings per share pre (€)1 1.50 1.13 32.7%
Business free cash flow1 661 545 21.4%
1 Not defined by International Financial Reporting Standards (IFRS ).
MER C K G R O U P
Net sales by quarter
€ million
4,370 2020
Q1
3,746 2019
3,971
Q2
3,971
4,054
Q3
4,054
12,845
Q4
4,381
Jan.-Dec. 16,152
MER C K G R O U P
EBITDA pre1 by quarter
€ million
1,181 2020
Q1
929 2019
1,139
Q2
1,139
1,111
Q3
1,111
12,845
Q4
1,206
Jan.-Dec. 4,385
1 Not defined by International Financial Reporting Standards (IFRS).4
Quarterly Statement as of March 31, 2020 Developments within the Group and R&D
Developments
within the Group and R&D
Merck This section of the present quarterly statement summarizes
the highlights of the first quarter of 2020 at Merck includ-
Summary of the first quarter of 2020 ing those in research in development. A detailed descrip-
tion of Merck and its business sectors can be found in our
We are Merck, a vibrant science and technology company. Annual Report for 2019. https://www.merckgroup.com/en/
Science is at the heart of everything we do. It drives the discov- annualreport/2019.
eries we make and the technologies we create. Our work makes
a positive difference to millions of people’s lives every day.
In Healthcare, we discover unique ways to treat the most Healthcare
challenging diseases such as multiple sclerosis and cancer.
Our Life Science experts empower scientists by develop- BIOPHARMA
ing tools and solutions that help deliver breakthroughs more Oncology and Immuno-Oncology
quickly. • On January 6, we and our alliance partner Pfizer Inc. reported
And in Performance Materials, we develop science that sits that the Phase III JAVELIN Bladder 100 study met its primary
inside technologies and changes the way we access and dis- endpoint of overall survival (OS) at the planned interim
play information. analysis. In this study, patients with previously untreated
Everything we do is fueled by a belief in science and tech- locally advanced or metastatic urothelial carcinoma whose
nology as a force for good. A belief that has driven our work disease did not progress on induction chemotherapy and who
since 1668, and will continue to inspire us to find more joyful were randomized to receive first-line maintenance therapy
and sustainable ways to live. We are curious minds dedicated with Bavencio® (avelumab) and best supportive care (BSC)
to human progress. We hold the global rights to the Merck lived significantly longer than those who received BSC only.
name and brand. The only exceptions are Canada and the A statistically significant improvement in OS was demon-
United States. In these countries, we operate as EMD Serono in strated in the avelumab group in each of the co-primary
the Biopharma business, as MilliporeSigma in the Life Science populations: all randomized patients and patients with
business and as EMD Performance Materials in the high-tech PD-L1–positive tumors. The safety profile for avelumab in
materials business. the trial was consistent with that in the JAVELIN monother-
We had 57,451 employees worldwide on March 31, 2020, apy clinical development program. The results of the study
compared with 52,140 employees on March 31, 2019. will be submitted for presentation at an upcoming medical
M ERC K G R O U P M E RC K GROUP
Net sales by business sector – Q1 2020 EBITDA pre1 by business sector2 – Q1 2020
€ million / in % of net sales € million / in %
21% 22%
Performance Materials Performance Materials
900 286
39% 36%
Healthcare Healthcare
1,701 472
40% 42%
Life Science Life Science
1,769 553
1 Not defined by International Financial Reporting Standards (IFRS).
2 Not presented: Decline in Group EBITDA pre by € –129 million
due to Corporate and Other.5
Quarterly Statement as of March 31, 2020 Developments within the Group and R&D
congress and shared with the U.S. Food and Drug Adminis- These changes were not data-driven as no results were avail-
tration (FDA) and other health authorities. able for the 037 study at the time.
• On March 2, Erbitux® (cetuximab) was granted approval by Bintrafusp alfa is being studied in a variety of solid tumors,
the National Medical Products Administration (NMPA) of including non-small cell lung cancer (NSCLC) (INTR@PID
China for the first-line treatment of patients with recurrent LUNG 005, INTR@PID LUNG 024, INTR@PID LUNG 037) and
and/or metastatic squamous cell carcinoma of the head and biliary tract cancer (BTC) (INTR@PID BTC 055, INTR@PID
neck (SCCHN) in combination with platinum-based therapy BTC 047). In the first quarter of 2020, we initiated a new
plus fluorouracil. Evidence from the pivotal Phase III CHANGE clinical study for an HPV-associated tumor, cervical cancer
II study, on which the approval is based, shows the efficacy (INTR@PID CERVICAL 017). Additional studies are in plan-
and safety of the EXTREME regimen (cetuximab + cisplatin ning and will be communicated in the coming months. In
+ 5-FU, followed by cetuximab maintenance) versus plati- December 2018, bintrafusp alfa was granted orphan drug
num-based chemotherapy (cisplatin + 5-FU) alone for first- designation by both the FDA as well as the European Medi-
line treatment in Chinese patients with recurrent and/or cines Agency in BTC.
metastatic SCCHN. The data showed that the addition of • On March 25, we announced that the Japanese Ministry of
cetuximab to platinum-based chemotherapy improved pro- Health, Labour and Welfare (MHLW) approved Tepmetko®
gression-free survival (PFS), OS and overall response rate (tepotinib) for the treatment of patients with unresectable,
(ORR), confirming the relevance of the EXTREME regimen advanced or recurrent NSCLC with MET exon 14 (METex14)
specifically in this patient population. skipping alterations. Tepmetko® is administered at a dose of
• On March 13, we and our alliance partner Pfizer Inc. provided 500 mg once daily as two 250 mg tablets. This is the first
an update from the Phase III JAVELIN Head and Neck 100 regulatory approval globally for an oral MET inhibitor indi-
study evaluating Bavencio® in addition to chemoradiother- cated for the treatment of advanced NSCLC harboring MET
apy (CRT) versus standard-of-care CRT in patients with gene alterations. Tepotinib was previously granted SAKI-
untreated locally advanced SCCHN. The alliance accepted GAKE ‟fast-track” designation and orphan drug designation
the recommendation of the independent Data Monitoring by the MHLW. The approval of Tepmetko® in Japan is sup-
Committee to terminate the JAVELIN Head and Neck 100 ported by data from 99 patients with NSCLC with METex14
trial, as the study was unlikely to show a statistically signif- skipping alterations enrolled in the ongoing single-arm Phase
icant improvement in the primary endpoint of PFS based on II VISION study. In September 2019, the FDA granted
a preplanned interim analysis. A detailed analysis of the Breakthrough Therapy designation for tepotinib in patients
Phase III JAVELIN Head and Neck 100 study is being con- with metastatic NSCLC harboring METex14 skipping alter-
ducted and study findings will be shared with the scientific ations who progressed following platinum-based cancer ther-
community. apy. We intend to file tepotinib for regulatory review with
• On March 13, we announced that we and our alliance partner the FDA in 2020.
GlaxoSmithKline decided to proactively amend the protocol
of the bintrafusp alfa INTR@PID Lung 037 study versus pem- Neurology and Immunology
brolizumab. The changes include: • On February 20, we communicated our decision to change
–a
n adaptive trial design based on pre-specified rules to deter- the comparator in our Phase III studies of evobrutinib to
mine whether to expand to Phase III or stay as Phase II Aubagio (EVOLUTION RMS 1 and 2). Evobrutinib is an oral,
– a change to study endpoints from ORR/PFS to PFS/OS, highly selective Bruton’s tyrosine kinase inhibitor being
thus confirming the registrational intent and incorporat- investigated in adult patients with relapsing multiple sclero-
ing the guidance from health authorities sis (MS). Evobrutinib was developed in our own laboratories
MER C K G R O U P M E RC K GROUP
Business free cash flow1 by business sector2 – Q1 2020 Employees by region as of March 31, 2020
€ million / in % Number / in%
6% 2%
23% Latin America Middle East and Africa (MEA )
Performance Materials
3,458 1,347
184
47%
Healthcare 22%
Asia-Pacific (APAC ) 47%
377 Europe
12,913
26,790
30%
Life Science 23%
North America
246
12,943
1 Not defined by International Financial Reporting Standards (IFRS).
2 Not presented: Decline in Group business free cash flow by € –146 million
due to Corporate and Other.6
Quarterly Statement as of March 31, 2020 Developments within the Group and R&D
and demonstrates our commitment to improving the lives • The successful global launches of our Pergoveris® Pen con-
of people with MS and other chronic progressive diseases. tinued in early 2020 with Indonesia, Panama and Slovakia,
• On March 19, we announced that as part of the global effort so that patients in 27 countries now have access to this
to investigate potential therapeutics for Covid-19 and our convenient and ready-to-use fertility combination treatment
support of independent research, we donated a supply of option for women with severe follicle-stimulating hormone
interferon beta-1a (Rebif®) to the French Institut National and luteinizing hormone deficiency. Additional launches in
de la Santé et de la Recherche Médicale (INSERM) following other countries are planned.
a request for use in a clinical trial (DISCOVERY). The trial is
sponsored by INSERM and its launch was announced by the ALLERGOPHARMA
French Health authorities on March 11. To date, our inter- • On February 19, we signed an agreement to sell our allergy
feron beta-1a has not been approved by any regulatory business Allergopharma to Dermapharm Holding SE
authority for the treatment of Covid-19 or for use as an (‟Dermapharm”). The transaction closed on March 31. By
antiviral agent. divesting Allergopharma, we are further sharpening the
• During the first quarter, we continued to gain regulatory focus of the Healthcare business sector on the development
approvals for our oral MS medicine Mavenclad® (cladribine of innovative medicines for difficult-to-treat diseases. The
tablets), including in Morocco, Thailand, Oman, Russia, and divestment to Dermapharm will sustainably strengthen the
Macau. These approvals of Mavenclad® follow its approvals business of Allergopharma, a leader in allergen-specific
in more than 70 other countries, including the United States immunotherapy of type 1 allergies such as hay fever or
in March 2019 and the 28 countries of the European Union allergic asthma. Allergopharma products are available in
including the United Kingdom, as well as in Norway, 18 countries worldwide.
Liechtenstein and Iceland in August 2017.
General Medicine and Endocrinology Life Science
• Glucophage®, containing the active ingredient metformin, is
now approved in 56 countries for prediabetes when lifestyle • IIn the first quarter of 2020, we continued to focus on meet-
intervention is not enough to control the condition. ing customer needs by launching more than 4,000 products
• In early 2020, the number of new patients using the across the Research Solutions, Process Solutions and Applied
Easypod® electromechanical injection device for treatment Solutions business units, including those launched through
with Saizen® (somatropin) continued to grow, bringing the our ‟faucet program” for antibodies, reference materials,
total number of patients enrolled on Easypod® Connect to chemicals and nanomaterials.
almost 21,000. In addition to that, an innovative mobile app • In January, we opened a non-profit, high-tech skill develop-
called Easypod® AR was launched in Taiwan and Hong Kong, ment center in collaboration with the Council of Scientific
with global rollout to additional markets planned during 2020 and Industrial Research’s Institute of Microbial Technology
and 2021. Easypod® AR uses augmented reality technology (CSIR-IMTECH), an organization under the government of
to support patients learning how to operate the Easypod® India’s Ministry of Science and Technology. Located in
device, offering an innovative, interactive and engaging Chandigarh, India, the center is equipped with genome-
learning experience. Saizen® is our main endocrinology editing, single-molecule biomarker detection and other tech-
product and is indicated for the treatment of growth hormone nologies to help local students build life science skills.
deficiency in children and adults. • In February, we introduced the BrightLab™ platform, our
cloud-based software solution bringing inventory manage-
Fertility ment and instrument connectivity functionalities to research
• To date, an estimated 3.6 million babies have been born with scientists. The tool brings Internet of Things (IoT) integra-
the help of our Fertility portfolio. tions to R&D, meeting an increasing demand for data auto-
• On January 22, we reported that the European Commission mation and accessible, real-time monitoring of centralized
granted marketing authorization for our new Gonal-f (folli- and synched lab data.
tropin alfa) 150 IU pen injection device. This means we now • Also in February, we announced that our business was
offer an even more comprehensive range of best-in-class selected by Elypta, a molecular diagnostics firm in Sweden,
pens, supporting patients from the beginning to the end of as the contract manufacturer for their Research Use Only
their fertility stimulation cycle, when lower doses are (RUO) clinical diagnostic liquid biopsy kits. Once validated
required. and commercialized, the kits will be intended to improve the7
Quarterly Statement as of March 31, 2020 Developments within the Group and R&D
accuracy of cancer diagnoses by analyzing metabolites every major step in the wafer manufacturing process –
deregulated in several cancer types. The kits will be manu- including doping, lithography, patterning, deposition, pla-
factured at the Life Science facility in St. Louis, Missouri, USA. narization, etching, and cleaning. Specialty cleans,
• In addition, we announced a global licensing agreement with photoresists and conductive pastes for semiconductor pack-
ReForm Biologics, a pharmaceutical technology company in aging round off the portfolio.
Woburn, Massachusetts, USA, for excipient development and • Delivery Systems & Services (DS&S) develops and deploys
commercialization. The collaboration will accelerate R&D equipment that enables our Semiconductor Materials
activities and GMP manufacturing for ReForm’s excipients, business to manage safe and reliable delivery of hazardous
making them available to our customers for use in biologic materials to our customers. This unit also supports the
formulations. installation of our equipment and the safe handling of our
• In March, we launched the LANEXO™ system for lab inven- materials through MEGASYS® Gas and Chemical Services,
tory, safety and compliance management. This first-to-mar- which celebrated 30 years in business last year.
ket digital lab informatics solution offers radio-frequency • DS&S launched two new models within our CHEMGUARD
identification (RFID) labels, cloud-based integration, mobile family, which are high purity, liquid delivery systems. These
and web applications for easily accessible digital data cap- newest product offerings enable and align with our thin film
ture and real-time documentation. molecules. The CHEMGUARD CG600 is developed for primar-
• As part of our response to the Covid-19 pandemic, in March, ily handling our product TDMAT (TetrakisDiMethylAmino
we launched a dedicated Covid-19 webpage on our e-Com- Titanium), which is enjoying wider adoption in high volume
merce platform, providing a one-stop-shop of approximately manufacturing (HVM) with increased volumes. The CG600
200 products and corresponding information for academic integrates our innovative delivery system into bulk appli
labs and biopharmaceutical companies working to combat cations to ensure low vapor pressure, highly reactive mole-
the virus. This consolidated offering of our products, services cule integrity during cannister changes, without the use of
and necessary raw materials empowers scientists and heat or solvent. The CHEMGUARD CG350 has been adopted
researchers to detect and characterize viruses and to develop in some of the latest advanced chemical vapor deposition
vaccines and therapies. (CVD) applications, which utilizes increasingly challenging
molecules that DS&S delivers.
• In Semiconductor Materials, our thin film solutions business
Performance Materials continues to make progress in all our technology platforms
- organosilanes, organometallics and liquid phase silicon for-
• Our Performance Materials business sector comprises the mulations for processes with low resistance and improved
specialty chemicals business of Merck and consists of three dielectric characteristics for faster or better processors, serv-
business units: Semiconductor Solutions, Display Solutions ers and data storage density.
and Surface Solutions. • Our planarization business developed new products in dielec-
• We are well on track in the execution of our five-year Bright tric polishing and copper metal polishing for advanced logic
Future transformation program announced in 2018, with and memory. The new products have been a key accelerator
which we are adapting to new market realities and customer to sustain momentum in the market through continued inno-
requirements. vation and improving defect reduction.
• With the completion of the acquisitions of Intermolecular and • In the photoresists business we are continuously developing
Versum Materials, we reached two major milestones on our new products to address the needs of the growing market,
Bright Future journey to transform Performance Materials e.g. for 3D NAND, sensors and radio frequency filters. Fur-
into a strong solutions provider and leading player in the thermore, customer interest in directed self-assembly tech-
electronic materials market. We are making good progress nology remains strong.
with the integration, ensuring a seamless transition and • In the 5G space, our Transient Liquid Phase Sintering (TLPS)
business continuity. conductive pastes are enabling high-yield production of
advanced antenna applications. Our mid- to back-end
Semiconductor Solutions photolithography resist materials used in electronic packag-
• Semiconductor Solutions is the largest business within ing applications continue to drive miniaturization and
Performance Materials. It consists of two dedicated units: heterogeneous integration for small-form factor devices.
Delivery Systems & Services as well as Semiconductor Mate- • Intermolecular, our R&D services offering, achieved signifi-
rials. Our Semiconductor Materials unit supplies products for cant breakthroughs in Ovonic Threshold Switch selectors,8
Quarterly Statement as of March 31, 2020 Developments within the Group and R&D
which are crucial for the development of next-generation 3D Surface Solutions
Phase Change Memories, a key memory technology. We are • The core markets for Surface Solutions are automotive coat-
currently working with our partners to develop the materials ings, cosmetics, and, to a smaller extent, industrials. We are
and integration processes required for their commercial serving them with functional and decorative solutions. Our
introduction. focus is on expanding our portfolio through innovation in all
areas.
Display Solutions • For the automotive market, we continue to expand our capa-
• Our Display Solutions business unit consists of our Liquid bilities for silica flake production with the focus on Color-
Crystals, Organic Light-Emitting Diodes (OLED), Photo stream® Lava Red, which offers both chromatic effects and
resists, and Liquid Crystal Windows businesses. high hiding power. Another focus is on promoting the intense
• In Liquid Crystals, we are facing a declining market as sparkle effects that our Xirallic® NXT pigments Amur Black
expected. Our newest materials are helping us maintain our and Tigris Blue can achieve in automotive stylings.
position as the technology leader. With our XtraBright™ • We have launched several new laser additives under the
products, we were able to win new projects for large area brand name Iriotec® as well as a new high luster pigment
displays as well as high-resolution mobile devices. Biflair® 81 which offers unique brilliancy in printing applica-
• With our OLED materials, the business unit is contributing tions.
to the fast-growing market of flexible displays, which • In the area of cosmetics, we have completed our Ronastar®
includes foldable smartphones and rollable TVs. Our OLED Lights series with two further elements to achieve unique
materials have qualified in all upcoming free form display sparkle effects. Ronacare® Balmance is a new active ingre-
based products that will enter the market this year. dient addressing the claims of anti-itching, redness reduction
• Our Photoresist materials are also contributing to the flexible and soothing, which can be, for example, of particular impor-
displays market. Our low-temperature processable positive tance for users of face masks.
tone photoresists are widely used to pattern on-cell touch • In response to the postponement of the industry fair
sensors. These sensors enable a thinner display structure ‟in-cosmetics,” we launched the ‟Live Cosmetics Conference”
which is crucial for foldable devices. as an online alternative to our physical appearance at the
• For Liquid Crystal Window modules, we successfully com- exhibition. The two-day web-based event attracted more
pleted the installation phase of two architectural lighthouse than 2,200 participants to interact with our experts and learn
projects: one with crane manufacturer Kirow in Leipzig, about new products and industry trends.
Germany; and another project with consulting, controlling
and planning company FC Group in Karlsruhe, Germany.9
Quarterly Statement as of March 31, 2020 Course of Business and Economic Position M er c k
Course of Business
and Economic Position
Merck
Overview – Q1 2020
• All business sectors contribute to double-digit increase • Group EBITDA pre up by 27.2% to € 1,181 million;
(16.7%) in Group sales to € 4,370 million EBITDA pre margin improves to 27.0% (Q1 2019: 24.8%)
• Group net sales show organic growth of 7.6%, insignifi- • Net financial debt amounts to € 12.3 billion on March 31,
cantly supported by positive exchange rate effects (0.6%) 2020 (December 31, 2019: € 12.4 billion)
MER C K G R O U P
Key figures
€ million Q1 2020 Q1 2019 Change
Net sales 4,370 3,746 16.7%
Operating result (EBIT )1 716 379 89.0%
Margin (% of net sales)1 16.4% 10.1%
EBITDA 2 1,148 853 34.6%
Margin (% of net sales)1 26.3% 22.8%
EBITDA pre 1,181 929 27.2%
Margin (% of net sales)1 27.0% 24.8%
Profit after tax 458 190 > 100.0%
Earnings per share (€) 1.05 0.43 > 100.0%
Earnings per share pre (€)1 1.50 1.13 32.7%
Business free cash flow1 661 545 21.4%
1 Not defined by International Financial Reporting Standards (IFRSs).
DE V EL O P M EN T O F NET SA LES Materials, Inc., USA, (Versum), which closed on October 7,
AN D R ES U L T S O F O PER A TIO NS 2019, as well as the acquisition of Intermolecular, Inc., USA,
In the first quarter of 2020, the Merck Group generated net sales (Intermolecular), which closed on September 20, 2019. Both
of € 4,370 million (Q1 2019: € 3,746 million). This r epresented businesses are now part of the Semiconductor Solutions busi-
a year-on-year increase of around € 624 million or 16.7%. ness unit of our Performance Materials business sector.
Organic sales growth for the Group amounted to € 286 million In the first quarter of 2020, all business sectors increased
or 7.6% in the first quarter of 2020. While the two top-selling net sales in comparison with the year-earlier quarter. In the
business sectors Life Science and Healthcare generated organic first quarter of 2020, the Healthcare business sector gener-
sales increases of 5.6% and 15.3%, respectively, Performance ated a double-digit sales increase of 14.9% to € 1,701 million
Materials saw an organic sales decline of –5.4%. At 0.6%, the (Q1 2019: € 1,481 million), which was mainly due to organic
impact of foreign exchange on Group sales was insignificant. sales growth (15.3%). Healthcare’s share of Group net sales
Portfolio changes increased Group net sales by € 315 million declined slightly to 39% (Q1 2019: 40%). In the first quarter of
or 8.4%. This primary stemmed from the acquisition of Versum 2020, net sales of the Life Science business sector increased by10
Quarterly Statement as of March 31, 2020 Course of Business and Economic Position M er c k
6.5% to € 1,769 million (Q1 2019: € 1,661 million). Account- (Q1 2019: € 604 million) owing to the successful acquisitions
ing for a 40% (Q1 2019: 44%) share of Group net sales in of Versum and Intermolecular. The percentage contribution
the first quarter of 2020, Life Science was the Group’s largest of the P
erformance Materials business sector to Group net
business sector in terms of sales. Net sales of the Performance sales correspondingly rose by five percentage points to 21%
Materials business sector increased by 49.0% to € 900 million (Q1 2019: 16%).
MERC K G R O U P
Net sales by business sector
Organic Exchange rate Acquisitions/
€ million Q1 2020 Share growth1 effects divestments Total change Q1 2019 Share
Healthcare 1,701 39% 15.3% –0.4% – 14.9% 1,481 40%
Life Science 1,769 40% 5.6% 0.9% – 6.5% 1,661 44%
Performance Materials 900 21% –5.4% 2.4% 52.1% 49.0% 604 16%
Merck Group 4,370 100% 7.6% 0.6% 8.4% 16.7% 3,746 100%
1 Not defined by International Financial Reporting Standards (IFRSs).
In the first quarter of 2020, the regional sales development of
the Merck Group was as follows:
MERC K G R O U P
Net sales by region
Organic Exchange rate Acquisitions/
€ million Q1 2020 Share growth1 effects divestments Total change Q1 2019 Share
Europe 1,310 30% 9.7% 0.3% 1.4% 11.3% 1,177 32%
North America 1,150 26% 12.0% 3.2% 7.9% 23.1% 934 25%
Asia-Pacific (APAC ) 1,536 35% 1.2% 1.3% 16.9% 19.4% 1,287 34%
Latin America 252 6% 21.6% –12.4% 0.2% 9.4% 230 6%
Middle East and
Africa (MEA ) 121 3% –4.0% 1.1% 5.9% 3.0% 118 3%
Merck Group 4,370 100% 7.6% 0.6% 8.4% 16.7% 3,746 100%
1 Not defined by International Financial Reporting Standards (IFRSs).11
Quarterly Statement as of March 31, 2020 Course of Business and Economic Position M er c k
The consolidated income statement of the Merck Group is as
follows:
MER C K G R O U P
Consolidated Income Statement
€ million Q1 2020 Q1 2019 Change
Net sales 4,370 3,746 16.7%
Cost of sales –1,654 –1,384 19.5%
Gross profit 2,716 2,362 15.0%
Marketing and selling expenses –1,059 –1,091 –2.9%
Administration expenses –289 –283 1.9%
Research and development costs –579 –527 10.0%
Impairment losses and reversals of impairment losses on financial assets (net) 6 –4 > 100.0%
Other operating expenses and income –80 –79 0.9%
Operating result (EBIT )1 716 379 89.0%
Financial result –98 –113 –12.5%
Profit before income tax 617 266 > 100.0%
Income tax –159 –67 > 100.0%
Profit after tax from continuing operations 458 199 > 100.0%
Profit after tax from discontinued operation – –10 –
Profit after tax 458 190 > 100.0%
Non-controlling interests –2 –1 99.8%
Net income 456 189 > 100.0%
1 Not defined by International Financial Reporting Standards (IFRSs).
In the first quarter of 2020, the positive development of Group The 89.0% increase in the operating result (EBIT) to € 716 mil-
sales led to an increase of 15.0% in gross profit to € 2,716 mil- lion (Q1 2019: € 379 million) was due mainly to the positive
lion (Q1 2019: € 2,362 million). The resulting gross margin of development of gross profit.
the Group, i.e. gross profit as a percentage of sales, slipped Despite higher interest expenses, the financial result
slightly to 62.2% (Q1 2019: 63.1%). improved to € –98 million (Q1 2019: € –113 million) since
The 10.0% increase in research and development costs the year-earlier quarter was burdened by expenses from the
to € 579 million (Q1 2019: € 527 million) was due mainly to revaluation of the existing option to acquire F-star Delta Ltd.
the Healthcare business sector. In the first quarter of 2020, the Income tax expenses of € 159 million (Q1 2019: € 67 mil-
Group research spending ratio (research and development costs lion) led to an effective tax rate of 25.8% (Q1 2019: 25.2%).
as a percentage of net sales) was 13.3% (Q1 2019: 14.1%). Net income, i.e. profit after tax attributable to Merck KGaA
Accounting for a 74% (Q1 2019: 74%) share of research and shareholders, rose by € 268 million to € 456 million
development expenses of all business sectors, Healthcare is the (Q1 2019: € 189 million), yielding earnings per share of € 1.05
most research-intensive business sector of Merck. (Q1 2019: € 0.43).12
Quarterly Statement as of March 31, 2020 Course of Business and Economic Position M er c k
The following table presents the composition of EBITDA pre for The IFRS figures have been modified to reflect the elimination of
the reporting period in comparison with the year-earlier quarter. adjustments included in the respective functional costs.
MERC K G R O U P
Reconciliation EBITDA pre1
Q1 2020 Q1 2019 Change
Elimination of Elimination of
€ million IFRS adjustments Pre1 IFRS adjustments Pre1 Pre1
Net sales 4,370 – 4,370 3,746 – 3,746 16.7%
Cost of sales –1,654 20 –1,633 –1,384 16 –1,368 19.4%
Gross profit 2,716 20 2,736 2,362 16 2,378 15.1%
Marketing and selling expenses –1,059 2 –1,057 –1,091 3 –1,088 –2.9%
Administration expenses –289 16 –272 –283 37 –246 10.5%
Research and development costs –579 –1 –580 –527 16 –511 13.6%
Impairment losses and reversals of impairment losses
on financial assets (net) 6 – 6 –4 – –4 > 100.0
Other operating income and expenses –80 –2 –82 –79 4 –75 9.2%
Operating result (EBIT )1 716 379
Depreciation/amortization/impairment losses/reversals
of impairment losses 431 –2 430 474 – 474 –9.4%
EBITDA 1 1,148 853
Restructuring expenses 15 –15 – 61 –61 –
Integration expenses / IT expenses 22 –22 – 13 –13 –
Gains (–) / losses (+) on the divestment of businesses –30 30 – 2 –2 –
Acquisition-related adjustments 19 –19 – – – –
Other adjustments 8 –8 – –1 1 –
EBITDA pre1 1,181 – 1,181 929 – 929 27.2%
thereof: organic growth1 14.5%
thereof: exchange rate effects 2.0%
thereof: acquisitions/divestments 10.7%
1 Not defined by International Financial Reporting Standards (IFRSs).
EBITDA pre, the most important financial indicator used to in EBITDA pre in the first quarter of 2020. Relative to net
steer operating business, increased by 27.2% to € 1,181 mil- sales, the EBITDA pre margin was 27.0% in the first quarter of
lion (Q1 2019: € 929 million). The organic increase in this 2020 (Q1 2019: 24.8%). Earnings per share pre (earnings per
key performance indicator amounted to 14.5% and was sup- share after net of tax effect of adjustments and amortization
ported by positive foreign exchange effects (2.0%). The acqui- of purchased intangible assets) improved by 32.7% to € 1.50
sitions of Versum and Intermolecular led to a 10.7% increase (Q1 2019: € 1.13).13
Quarterly Statement as of March 31, 2020 Course of Business and Economic Position M er c k
NE T A S S ET S A N D FINA NCIA L PO SITIO N
MER C K G R O U P
Balance sheet structure
March 31, 2020 Dec. 31, 20191 Change
€ million in % € million in % € million in %
Non-current assets 34,730 77.6% 34,808 79.4% –77 –0.2%
thereof:
Goodwill 17,376 17,141 235
Other intangible assets 9,089 9,175 –86
Property, plant and equipment 6,110 6,213 –103
Other non-current assets 2,155 2,278 –123
Current assets 10,013 22.4% 9,003 20.6% 1,009 11.2%
thereof:
Inventories 3,443 3,342 101
Trade and other current receivables 3,690 3,488 202
Other current financial assets 81 57 24
Other current assets 1,268 1,336 –68
Cash and cash equivalents 1,530 781 750
Total assets 44,743 100.0% 43,811 100.0% 932 2.1%
Equity 18,600 41.6% 17,914 40.9% 686 3.8%
Non-current liabilities 15,379 34.4% 14,056 32.1% 1,323 9.4%
thereof:
Non-current provisions for employee benefits 3,060 3,194 –133
Other non-current provisions 252 254 –1
Non-current financial debt 10,137 8,644 1,493
Other non-current liabilities 1,929 1,965 –36
Current liabilities 10,764 24.1% 11,842 27.0% –1,077 –9.1%
thereof:
Current provisions 904 933 –29
Current financial debt 3,717 4,550 –834
Trade and other current payables/Refund liabilities 2,434 2,618 –184
Other current liabilities 3,710 3,740 –30
Total equity and liabilities 44,743 100.0% 43,811 100.0% 932 2.1%
1 Previous year’s figures have been adjusted, see ‟Effects of disclosure changes” under ‟Supplemental Financial Information”.14
Quarterly Statement as of March 31, 2020 Course of Business and Economic Position M er c k
In the first three months of 2020, total assets of the Merck 2019: € 3,944 million), mainly owing to an increase in trade
Group increased by 2.1% to € 44,743 million (December 31, accounts receivable and inventories.
2019: € 43,811 million). Since the beginning of 2020, working The composition and the development of net financial debt
capital has risen by 11.3% to € 4,392 million (December 31, were as follows:
MERC K G R O U P
Net financial debt1
March 31, 2020 Dec. 31, 2019 Change
€ million € million € million in %
Bonds and commercial paper 9,576 10,059 –483 –4.8%
Bank loans 2,786 1,587 1,199 75.6%
Liabilities to related parties 775 809 –34 –4.2%
Loans from third parties and other financial liabilities 99 97 2 2.2%
Liabilities from derivatives (financial transactions) 83 76 7 9.5%
Lease liabilities 534 567 –33 –5.8%
Financial debt 13,853 13,194 659 5.0%
less:
Cash and cash equivalents 1,530 781 750 96.0%
Current financial assets2 38 50 –12 –24.0%
Net financial debt1 12,285 12,363 –79 –0.6%
1 Not defined by International Financial Reporting Standards (IFRSs).
2 Excluding current derivatives (operational).
MERC K G R O U P
Reconciliation of net financial debt1
€ million 2020
January 1 12,363
Currency translation difference 70
Dividend payments/Profit withdrawals2 63
Acquisitions2 1
Payments from other divestments2 –56
Free cash flow1 –167
Other 12
March 31 12,285
1 Not defined by International Financial Reporting Standards (IFRSs).
2 According to the Consolidated Cash Flow Statement.
Equity rose in the first quarter of 2020 by 3.8% to € 18,600 mil- More information on the development of equity can be found
lion (December 31, 2019: € 17,914 million). Consequently, in the Consolidated Statement of Changes in Net Equity under
the equity ratio rose to 41.6% (December 31, 2019: 40.9%). ‟Supplemental Financial Information”.15
Quarterly Statement as of March 31, 2020 Course of Business and Economic Position M er c k
The composition of free cash flow as well as the development
of the relevant items are presented in the following table:
MER C K G R O U P
Free cash flow1
€ million Q1 2020 Q1 2019 Change
Cash flow from operating activities as reported in the consolidated cash flow statement 516 493 4.9%
Payments for investments in intangible assets –18 –9 95.0%
Proceeds from the disposal of intangible assets 6 17 –64.9%
Payments for investments in property, plant and equipment –341 –209 63.3%
Proceeds from the disposal of property, plant and equipment 3 3 20.0%
Free cash flow1 167 295 –43.2%
1 Not defined by International Financial Reporting Standards (IFRSs).
Business free cash flow of the Merck Group improved in the first investments and receivables adversely affected business free
quarter of 2020 to € 661 million (Q1 2019: € 545 million). The cash flow.
increase in EBITDA pre had a positive effect whereas higher
MER C K G R O U P
Business free cash flow 1
€ million Q1 2020 Q1 2019 Change
EBITDA pre1 1,181 929 27.2%
Investments in property, plant and equipment, software as well as advance payments
for intangible assets –175 –126 39.4%
Changes in inventories –101 –173 –41.4%
Changes in trade accounts receivable and receivables from royalties and licenses –161 –59 > 100.0%
Lease payments2 –36 –26 39.8%
Elimination of changes in consolidations –45 – –
Business free cash flow1 661 545 21.4%
1 Not defined by International Financial Reporting Standards (IFRSs).
2 Excluding payments for low-value leases and interest components included in lease payments.16
Quarterly Statement as of March 31, 2020 Course of Business and Economic Position H eal t h c a r e
Healthcare
HEALT H C AR E
Key figures
€ million Q1 2020 Q1 2019 Change
Net sales 1,701 1,481 14.9%
Operating result (EBIT )1 422 128 > 100.0%
Margin (% of net sales)1 24.8% 8.6%
EBITDA 1 501 329 52.3%
Margin (% of net sales)1 29.5% 22.2%
EBITDA pre1 472 332 42.2%
Margin (% of net sales)1 27.8% 22.4%
Business free cash flow1 377 222 69.9%
1 Not defined by International Financial Reporting Standards (IFRSs).
DE V EL O P M EN T O F NET SA LES
AND R ES U L T S O F O PER A TIO NS
In the first quarter of 2020, the Healthcare business sector the positive impact of the increase in value of the U.S. dollar
generated above-average organic sales growth of 15.3%. and the Russian ruble against the euro, which was lowered by
Amid neutral foreign exchange effects (–0.4%), net sales rose the development of individual Latin American currencies.
by € 220 million to € 1,701 million in the first quarter of 2020 Sales of the key product lines and products developed in
(Q1 2019: € 1,481 million). Foreign exchange effects reflect the third quarter of 2019 as follows:
HEALT H C AR E
Net sales by major product lines /products
Organic Exchange rate
€ million Q1 2020 Share growth1 effects Total change Q1 2019 Share
Oncology 260 15% 14.3% –0.9% 13.5% 229 16%
thereof: Erbitux® 211 12% 7.1% –1.0% 6.1% 199 13%
thereof: Bavencio® 33 2% 49.8% 0.5% 50.3% 22 1%
Neurology & Immunology 418 25% 20.3% 1.7% 22.1% 342 23%
thereof: Rebif® 295 17% –3.4% 2.0% –1.4% 299 20%
thereof: Mavenclad® 123 7% > 100.0% 0.1% > 100.0% 43 3%
Fertility 278 16% –3.5% 0.1% –3.4% 287 19%
thereof: Gonal-f® 167 10% –1.2% 0.4% –0.8% 168 11%
General Medicine & Endocrinology 680 40% 20.9% –1.6% 19.3% 570 38%
thereof: Glucophage® 234 14% 31.7% –2.0% 29.7% 180 12%
thereof: Concor® 150 9% 29.1% –0.9% 28.2% 117 8%
thereof: Euthyrox® 114 7% 27.7% –2.4% 25.4% 91 6%
thereof: Saizen® 65 4% 21.7% –3.9% 17.8% 55 4%
Other 65 4% 52 4%
Healthcare 1,701 100% 15.3% –0.4% 14.9% 1,481 100%
1 Not defined by International Financial Reporting Standards (IFRSs).17
Quarterly Statement as of March 31, 2020 Course of Business and Economic Position H eal t h c a r e
The oncology drug Erbitux® (cetuximab) generated favorable remained difficult owing to the competitive environment.
organic sales growth of 7.1%, thus continuing the positive Nevertheless, positive effects from tenders won led to favor-
trend from 2019. Including negative foreign exchange effects, able organic growth of 12.3% for the region as a whole. Sales
global net sales of Erbitux® increased in the first quarter of amounted to € 111 million (Q1 2019: € 98 million).
2020 by 6.1% to € 211 million (Q1 2019: € 199 million). The Within Immuno-Oncology, sales of the oncology drug
Asia-Pacific region could not maintain the high growth rates of Bavencio® (avelumab) grew organically by 49.8% amid stable
the previous year, which were mainly driven by the inclusion foreign exchange rates to € 33 million (Q1 2019: € 22 million).
of Erbitux® in the National Reimbursement Drug List (NRDL) in The marketing authorizations in the United States, Europe
China. Consequently, sales in this region stagnated at € 77 mil- and Japan in 2019 for the first-line treatment of patients with
lion (Q1 2019: € 75 million). The moderate development in advanced renal cell carcinoma were key drivers of this sales
Asia is due in particular to the initial impacts of the C
ovid-19 growth.
pandemic. In the core markets within Europe, the situation
H EALT H C AR E
Product sales and organic growth1 of Rebif®, Glucophage® and Erbitux® by region – Q1 2020
Asia-Pacific Middle East and
Total Europe North America (APAC ) Latin America Africa (MEA )
€ million 295 105 171 3 6 9
Rebif® Organic growth1 in % –3.4% 4.7% –7.0% –9.8% 3.5% –18.5%
% of sales 100% 36% 58% 1% 2% 3%
€ million 234 35 – 147 35 17
Glucophage® Organic growth1 in % 31.7% 18.3% – 39.0% 33.2% 5.2%
% of sales 100% 15% – 63% 15% 7%
€ million 211 111 – 77 17 6
Erbitux® Organic growth1 in % 7.1% 12.3% – 0.6% 42.9% –42.3%
% of sales 100% 53% – 36% 8% 3%
1 Not defined by International Financial Reporting Standards (IFRSs).
Mavenclad®, a medicine for oral short-course treatment of The decline in the other regions, where Rebif® generated sales
highly active relapsing multiple sclerosis, contributed sub- of € 19 million (Q1 2019: € 23 million), was mainly attributable
stantially to the positive development of the Healthcare busi- to the organic sales decline in the Middle East & Africa region as
ness sector, delivering organic growth of € 80 million. Sales well as to negative foreign exchange developments stemming
of € 123 million were generated (Q1 2019: € 43 million). In from individual Latin American currencies.
particular, this reflects the regulatory approval of Mavenclad® Gonal-f®, the leading recombinant hormone used in the
in the United States on March 29, 2019. treatment of infertility, generated a moderate organic sales
The drug Rebif®, which is used to treat relapsing forms of decline of –1.2%. This was partly mitigated by slightly positive
multiple sclerosis, posted an organic decline of –3.4%, thus exchange rate effects of 0.4%. Globally, sales thus stagnated
slowing down the negative trend of previous quarters. Thanks at € 167 million (Q1 2019: € 168 million). The sharp decline
to positive foreign exchange effects of 2.0%, it was possible in demand from China, driven by the Covid-19 pandemic, was
to maintain net sales of € 295 million at the year-earlier level mainly responsible for this development.
(Q1 2019: € 299 million). In North America, the largest sales The General Medicine & Endocrinology franchise (includ-
market for Rebif®, the continued difficult competitive situa- ing CardioMetabolic Care), which commercializes products
tion in the interferon market as well as competition from oral to treat cardiovascular diseases, thyroid disorders, diabetes
dosage forms were responsible for the organic sales decline and growth disorders, among other things, delivered organic
of –7.0%. Including currency tailwinds of 2.7%, sales amounted growth of 20.9%. Including a negative exchange rate effect of
to € 171 million (Q1 2019: € 179 million). In Europe, a tender –1.6%, net sales totaled € 680 million (Q1 2019: € 570 mil-
award in Russia led to organic sales growth of 4.7%. Including lion). The products Concor®, Euthyrox® and Saizen® contrib-
positive foreign exchange effects of 2.7%, net sales of Rebif® in uted to this positive development with double-digit organic
this region amounted to € 105 million (Q1 2019: € 98 million). growth rates.18
Quarterly Statement as of March 31, 2020 Course of Business and Economic Position H eal t h c a r e
In terms of sales, the diabetes treatment Glucophage® from the To some extent, the strong demand for medicines from the
General Medicine franchise, became the second-leading medi- General Medicine & Endocrinology franchise in the first quarter
cine in the product portfolio of the Healthcare business sector. of 2020 was also due to the Covid-19 pandemic and mainly
In comparison with the year-earlier quarter, sales increased represented advance effects.
by € 54 million to € 234 million (Q1 2019: € 180 million). Net sales of the business sector by region developed in the
This corresponds to organic growth of 31.7%, which was only first quarter of 2020 as follows:
slightly lowered by negative foreign exchange effects of –2.0%.
In particular, this was mainly driven by positive performance in
China and Latin America.
HEALT H C AR E
Net sales by region
Organic Exchange rate Acquisitions/
€ million Q1 2020 Share growth1 effects divestments Total change Q1 2019 Share
Europe 622 37% 15.5% 0.1% – 15.6% 538 36%
North America 370 22% 18.0% 3.4% – 21.3% 305 21%
Asia-Pacific (APAC ) 442 26% 13.3% 0.3% – 13.6% 389 26%
Latin America 177 10% 26.1% –12.8% – 13.3% 157 11%
Middle East and
Africa (MEA ) 89 5% –5.0% 1.5% – –3.5% 92 6%
Healthcare 1,701 100% 15.3% –0.4% – 14.9% 1,481 100%
1 Not defined by International Financial Reporting Standards (IFRSs).
The following table presents the composition of EBITDA pre for ter. The IFRS figures have been modified to reflect the elimina-
the reporting period in comparison with the year-earlier quar- tion of adjustments included in the respective functional costs.
HEALT H C AR E
Reconciliation EBITDA pre1
Q1 2020 Q1 2019 Change
Elimination of Elimination of
€ million IFRS adjustments Pre1 IFRS adjustments Pre1 Pre1
Net sales 1,701 – 1,701 1,481 – 1,481 14.9%
Cost of sales –393 – –393 –325 – –325 21.0%
Gross profit 1,307 – 1,307 1,156 – 1,156 13.1%
Marketing and selling expenses –423 1 –423 –550 – –550 –23.2%
Administration expenses –79 1 –78 –88 2 –86 –8.6%
Research and development costs –417 – –417 –380 – –380 9.8%
Impairment losses and reversals of impairment losses
on financial assets (net) 5 – 5 –4 – –4 > 100.0%
Other operating income and expenses 31 –29 2 –6 1 –5 > 100.0%
Operating result (EBIT )1 422 128
Depreciation/amortization/impairment losses/reversals
of impairment losses 79 –2 77 201 – 201 –61.7%
EBITDA 1 501 329
Restructuring expenses 2 –2 – – – –
Integration expenses/IT expenses 1 –1 – 2 –2 –
Gains (–)/ losses (+) on the divestment of businesses –32 32 – 1 –1 –
Acquisition-related adjustments – – – – – –
Other adjustments – – – – – –
EBITDA pre1 472 – 472 332 – 332 42.2%
thereof: organic growth1 40.9%
thereof: exchange rate effects 1.3%
thereof: acquisitions/divestments –
1 Not defined by International Financial Reporting Standards (IFRSs).19
Quarterly Statement as of March 31, 2020 Course of Business and Economic Position H eal t h c a r e
In the first quarter of 2020, gross profit of the Healthcare busi- alliance entered into last year with GlaxoSmithKline plc., United
ness sector increased to € 1,307 million (Q1 2019: € 1,156 mil- Kingdom, to co-develop and co-commercialize bintrafusp alfa
lion). The resulting gross margin was 76.9% (Q1 2019: 78.1%). had a positive effect on other operating expenses and income
The main drivers of the decline in gross margin were changes in the first quarter of 2020. This was offset by the expiration
to the product mix. of income streams from the upfront cash payment from Pfizer
After eliminating adjustments, marketing and selling Inc., USA, dating back to 2014. In the year-earlier quarter,
expenses declined by 23.2% to € 423 million in comparison other operating expenses and income were negatively impacted
with the year-earlier quarter (Q1 2019: € 550 million). This by an impairment loss on an intangible asset in connection
resulted primarily from the end of amortization in connec- with the immuno-oncology collaboration with F-star Delta Ltd.
tion with the purchase price allocation from the acquisition of EBITDA pre grew to € 472 million in the first quarter of
Serono in 2006. 2020 (Q1 2019: € 332 million). Organic growth of 40.9% was
Research and development costs reflected continued invest- supported by slightly positive foreign exchange effects of 1.3%.
ments in the Biopharma development pipeline and amounted The EBITDA pre margin rose to 27.8% (Q1 2019: 22.4%).
to € 417 million (Q1 2019: € 380 million). This item also
includes expenses from the termination of the JAVELIN Head DEVELOP MEN T OF BUSIN ESS FREE CASH FLO W
and Neck 100 study. In the first quarter of 2020, business free cash flow amounted
The change in other operating expenses and income was to € 377 million (Q1 2019: € 222 million). The increase was due
attributable to several factors. The gain on the divestment mainly to the growth of EBITDA pre and the positive develop-
of Allergopharma, which was eliminated in the calculation ment of inventories in comparison with the year-earlier quarter.
of EBITDA pre, as well as income from the global strategic Higher investments had an opposing effect.
H EALT H C AR E
Business free cash flow1
€ million Q1 2020 Q1 2019 Change
EBITDA pre1 472 332 42.2%
Investments in property, plant and equipment, software as well as advance payments
for intangible assets –73 –47 56.0%
Changes in inventories –5 –66 –92.6%
Changes in trade accounts receivable and receivables from royalties and licenses 22 13 61.9%
Lease payments2 –12 –10 18.3%
Elimination Allergopharma divestment –26 – –
Business free cash flow1 377 222 69.9%
1 Not defined by International Financial Reporting Standards (IFRSs).
2 Excluding payments for low-value leases and interest components included in lease payments.20
Quarterly Statement as of March 31, 2020 Course of Business and Economic Position Life Scienc
Life Science
LIF E SC IEN C E
Key figures
€ million Q1 2020 Q1 2019 Change
Net sales 1,769 1,661 6.5%
Operating result (EBIT )1 345 313 10.2%
Margin (% of net sales)1 19.5% 18.9%
EBITDA 1 541 507 6.8%
Margin (% of net sales)1 30.6% 30.5%
EBITDA pre1 553 516 7.2%
Margin (% of net sales)1 31.2% 31.0%
Business free cash flow1 246 268 –8.2%
1 Not defined by International Financial Reporting Standards (IFRSs).
DE V EL O P M EN T O F SA LES
AND R ES U L T S O F O PER A TIO NS
In the first quarter of 2020, the Life Science business sector main contribution to organic growth came from the Process
generated solid organic sales growth of 5.6% accompanied by Solutions business unit. Taking these effects into account,
a favorable foreign exchange effect of 0.9%, resulting in total Life Science net sales increased overall to € 1,769 million
net sales growth of 6.5% over the year-earlier quarter. The (Q1 2019: € 1,661 million).
LIF E SC IEN C E
Net sales by business unit
Organic Exchange rate Acquisitions/
€ million Q1 2020 Share growth1 effects divestments Total change Q1 20192 Share
Process Solutions 802 45% 13.2% 1.3% – 14.5% 700 42%
Research Solutions 546 31% – 0.8% – 0.8% 542 33%
Applied Solutions 421 24% – 0.4% – 0.4% 419 25%
Life Science 1,769 100% 5.6% 0.9% – 6.5% 1,661 100%
1 Not defined by International Financial Reporting Standards (IFRSs).
2 Previous year’s figures have been adjusted owing to an internal realignment.
The Process Solutions business unit, which markets products and from academic laboratories in connection with the Covid-19
services for the entire pharmaceutical production value chain, crisis had a negative impact here. Including a favorable foreign
generated organic sales growth of 13.2%, which was the highest exchange effect of 0.8%, sales totaled € 546 million in Q1 2020
rate within the Life Science business sector. Amid a favorable (Q1 2019: € 542 million). Research Solutions thus accounted
foreign exchange effect of 1.3%, sales totaled € 802 million for 31% of Life Science net sales. In regional terms, North
in the first quarter of 2020 (Q1 2019: € 700 million). Process America and Latin America were the strongest growth drivers,
Solutions thus accounted for 45% of Life Science net sales. however they were offset by weaker performance in Asia-Pacific
Geographically, all regions delivered double-digit growth within and Europe.
Process Solutions. The Applied Solutions business unit with its broad range
The Research Solutions business unit, which provides prod- of products for researchers as well as scientific and indus-
ucts and services to support life science research for pharma- trial laboratories accounted for a 24% share of Life Science
ceutical, biotechnology and academic research laboratories, did net sales. Organically, net sales of Applied Solutions were
not achieve organic sales growth in Q1 2020. Weaker demand at the same level as in the year-earlier quarter. Lab Water21
Quarterly Statement as of March 31, 2020 Course of Business and Economic Position Life Scienc
Solutions saw initial negative effects from the Covid-19 pan- demand in North America and Europe was canceled out by the
demic. Assisted by a favorable foreign exchange effect of 0.4%, net sales decrease in Asia-Pacific.
sales increased to € 421 million in the first quarter of 2020 Net sales of the business sector by region developed as
(Q1 2019: € 419 million). In regional terms, slightly stronger follows:
LI F E SC IEN C E
Net sales by region
Organic Exchange rate Acquisitions/
€ million Q1 2020 Share growth1 effects divestments Total change Q1 2019 Share
Europe 614 35% 5.2% 0.5% – 5.7% 581 35%
North America 644 36% 8.9% 3.2% – 12.1% 575 35%
Asia-Pacific (APAC ) 422 24% 0.4% 0.5% – 0.9% 418 25%
Latin America 66 4% 14.2% –12.6% – 1.6% 65 4%
Middle East and
Africa (MEA ) 23 1% 2.3% –0.3% – 2.0% 22 1%
Life Science 1,769 100% 5.6% 0.9% – 6.5% 1,661 100%
1 Not defined by International Financial Reporting Standards (IFRSs).
The following table presents the composition of EBITDA pre for elimination of adjustments included in the respective functional
the first quarter of 2020 in comparison with the year-earlier costs.
quarter. The IFRS figures have been modified to reflect the
LI F E SC IEN C E
Reconciliation EBITDA pre1
Q1 2020 Q1 2019 Change
Elimination of Elimination of
€ million IFRS adjustments Pre1 IFRS adjustments Pre1 Pre1
Net sales 1,769 – 1,769 1,661 – 1,661 6.5%
Cost of sales –744 – –744 –719 1 –718 3.6%
Gross profit 1,024 – 1,025 942 1 943 8.7%
Marketing and selling expenses –498 – –497 –470 1 –469 6.1%
Administration expenses –89 9 –80 –88 6 –81 –1.9%
Research and development costs –75 – –75 –62 – –62 22.2%
Impairment losses and reversals of impairment losses
on financial assets (net) – – – – – – –
Other operating income and expenses –18 2 –16 –10 1 –8 88.8%
Operating result (EBIT )1 345 313
Depreciation/amortization / impairment losses / reversals
of impairment losses 196 – 196 193 – 193 1.3%
EBITDA 1 541 507
Restructuring expenses 2 –2 – 1 –1 –
Integration expenses/IT expenses 10 –10 – 7 –7 –
Gains (–) / losses (+) on the divestment of businesses – – – 1 –1 –
Acquisition-related adjustments – – – – – –
Other adjustments – – – – – –
EBITDA pre1 553 – 553 516 – 516 7.2%
thereof: organic growth1 8.2%
thereof: exchange rate effects –0.5%
thereof: acquisitions/divestments –0.5%
1 Not defined by International Financial Reporting Standards (IFRSs).You can also read
