2 nd Quarter 2009 Results

Transcription

1 2 nd Quarter 2009 Results Dr. Michael Becker General Partner and Chief Financial Officer Elmar Schnee General Partner and Member of the Executive Board, Head of Pharmaceuticals July 24, 2009

2 Disclaimer Remarks All comparative figures relate to the corresponding last year s period. From 2007 the Generics business is reported in discontinued operations. With the divestiture of Electronic Chemicals in Q this division and the remaining toll manufacturing business are allocated to Corporate & Other. Return on Sales (ROS) calculation is based on total revenues. Important Information This presentation does not constitute an offer of securities for sale or a solicitation of an offer to purchase securities in the United States. The shares referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act ), and may not be offered or sold in the United States absent registration under the Securities Act or an available exemption from such registration. Note regarding forward-looking statements The information in this document may contain forward-looking statements. Forward-looking statements may be identified by words such as expects, anticipates, intends, plans, believes, seeks, estimates, will or words of similar meaning and include, but are not limited to, statements about the expected future business of Merck KGaA resulting from the proposed transaction. These statements are based on the current expectations of management of Merck KGaA and E. Merck KG, and are inherently subject to uncertainties and changes in circumstances. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are factors relating to satisfaction of the conditions to the proposed transaction, and changes in global, political, economic, business, competitive, market and regulatory forces. Merck KGaA and E. Merck KG do not undertake any obligation to update the forward-looking statements to reflect actual results, or any change in events, conditions, assumptions or other factors. Page 2

3 Table Of Contents 1 Merck Executive Summary and Business Strategies 2 Group Financial Details 3 Divisional Developments 4 Outlook Page 3

4 Merck Group Business Strategies Merck Serono Focus on innovative, specialist drugs in prescription markets Build therapeutic core areas, seize opportunities in emerging fields Strengthen leading market positions in established areas Improve R&D efficiency and leverage biopharmaceutical expertise Consumer Health Care Focus on over-the-counter pharma products in four health themes Grow key brands through regional expansion Strengthen business in established markets Liquid Crystals Focus on innovation in display technologies to sustain market leadership Capitalize on excellent reputation in quality and reliability Broaden application basis long-term with penetration into new markets Performance & Life Science Chemicals Focus on specialty chemicals solutions Leverage strong expertise in regulated markets with high entry barriers Strengthen position in growth focus regions: India and China [ 1 ] Merck - Executive Summary and Business Strategies Page 4

5 Merck Group Q Progress in Strategy Merck Serono Development of potentially first oral MS drug cladribine tablets progressing: Positive Phase III results announced at AAN and ENS Marketing authorization application filed with EMEA in July Start of additional Phase III trials in Parkinson s Disease and breast cancer Consumer Health Care 6 out of 7 strategic brands organically growing Ongoing investments into R&D as well as Marketing & Selling Liquid Crystals Customer migration to new technology PS-VA progressing Technology leadership supported by ongoing investments into R&D Performance & Life Science Chemicals Successful continuation of business expansion in India Launch of new solutions for regulated markets [ 1 ] Merck - Executive Summary and Business Strategies Page 5

6 Merck Group Q Group Key Financials m Total Revenues Sales Core Operating Result *) Core ROS (Core Return on Revenues) Core EPS **) in Q , , % 1.10 Q , , % 1.53 Δ in % Exceptionals - - Free Cash Flow (before acquisitions and divestitures) Underlying Tax Rate (excl. Exceptionals) 25.9% 26.5% Net Financial Debt (as of June 30) * Core Operating Result = Operating Result less costs related to the purchase of Serono (amortization and impairments of intangible assets, and integration costs) and excl. Generics. ** Core EPS = EPS from continuing operations less costs related to the purchase of Serono (amortization and impairments of intangible assets, and integration costs) and exceptionals and excl. Generics. [ 1 ] Merck - Executive Summary and Business Strategies Page 6

7 Merck Group Q by Division Revenues by Division m Operating Result by Division m +6.0% 1,237 1,312 Q Q % % % 107 Q Q % % % % Merck Serono Consumer Health Care Liquid Crystals Performance & Life Science Chemicals Merck Serono* * Core Operating Result Consumer Health Care Liquid Crystals Performance & Life Science Chemicals [ 2 ] Group Financial Details Page 7

8 Merck Group Q Revenue Growth Analysis Nominal Organic Currency Acquisitions/ Divestitures Merck Serono 6.0% 4.7% 1.3% 0.0% Consumer Health Care -2.7% -0.3% -4.1% 1.8% Liquid Crystals -20.6% -21.3% 0.6% 0.1% Performance & Life Science Chemicals -7.5% -9.5% 2.0% 0.0% Merck Group -0.1% -1.3% 1.0% 0.1% [ 2 ] Group Financial Details Page 8

9 Merck Group Key Balance Sheet Data m Jun. 30, 2009 in % of total assets Dec. 31, 2008 Total Assets 16, ,645 Equity 9, ,563 Cash and Financial Debt up following 750m bond in March Cash Intangible Assets 7, ,203 Financial Debt 2, ,346 Pension Provisions 1, ,144 Net Financial Debt [ 2 ] Group Financial Details Page 9

10 Merck Group Key Cash Flow Data m Q Q Δ Profit After Tax Depreciation/Amortization Changes in Working Capital Capital Expenditures Other Free Cash Flow Free Cash Flow (before acquisitions and divestitures) [ 2 ] Group Financial Details Page 10

11 Merck Serono Key Financials m Q Q Δ in % Total Revenues 1, , Sales 1, , Marketing & Selling Research & Development Core Operating Result * Core ROS (Return on Revenues) 20.7% 26.3% Free Cash Flow (before acquisitions and divestitures) Organic revenue growth +4.7%; additional +1.3% tailwind from FX Royalty income down 15% to 70m Marketing & selling up due to increased commission expenses as well as product launches (Kuvan, RebiSmart) and pre-launches (cladribine tablets) Higher R&D investments driven by new study starts and increasingly maturing pipeline Strong free cash flow mainly due to lower changes in working capital (oneoff in 2008: factoring in Italy stopped in Q2 2008) * Core Operating Result = Operating Result less costs related to the purchase of Serono (amortization and impairments of intangible assets, and integration costs) and excl. Generics. [ 3 ] Divisional Developments Page 11

12 Merck Serono Operational Developments Sales by Therapeutic Area m Neurodegen. Diseases Oncology AIID Fertility Endocrinology CMC/local Rebif Er bitux Gonal-f Concor Glucophage % % +16% Q Q Sales by Top 5 Products m % -6.6% -3.1% +18% +21% +21% +3.7% Q Q Rebif with continued strong growth: 11% in Europe 45% in the USA driven by higher volumes, favorable pricing environment and positive FX impacts Erbitux performance driven by: increasing penetration in 1 st line mcrc and recurrent/metastatic head&neck cancer further growth from 2 nd /3 rd line mcrc usage in countries without 1 st line approval Market withdrawal of Raptiva (AIID) ongoing Revenues in Fertility stable softer Gonal-f sales partially offset by better Pergoveris performance Strong growth in Endocrinology benefiting from double digit growth from Saizen and market launch of Kuvan [ 3 ] Divisional Developments Page 12

13 Merck Serono NDD Developments since Q Rebif Introduction of RebiSmart in June, the first electronic injection device in MS offering improved ease of usage and potential for improved treatment adherence Cladribine Tablets: Potentially the 1 st oral MS treatment Results from CLARITY study presented at AAN in April and ENS in June: Primary endpoint met: reduction in annualized relapse rate > 50% vs. placebo All key secondary endpoints met ~90% of patients completed treatment in each group, indicating overall a favourable tolerability Frequencies of adverse events comparable between treatment and placebo groups - Observed malignancies were isolated cases across different organ systems Marketing authorization application submitted to EMEA in July Safinamide Results from Study 016 presented at MDS in June Primary and secondary efficacy endpoints met significant improvement of motor symptoms by increasing ON time [ 3 ] Divisional Developments Page 13

14 Merck Serono Oncology Developments since Q Erbitux NICE: positive recommendation for 1 st line use in mcrc patients with KRAS wild-type tumors and liver limited disease; Erbitux is the only targeted therapy endorsed by NICE for mcrc treatment ASCO 2009: Personalizing cancer care in line with Merck Serono s strategy in oncology now approved for mcrc in 76 countries (Brazil added in Q2), for SCCHN in 71 countries Cilengitide Merck Erbitux Sales m ASCO 2009: increased overall survival in 1 st line glioblastoma patients in a randomized Phase II study Stimuvax Initiation of Phase III study (STRIDE) with Stimuvax added to hormone therapy in advanced breast cancer ASCO 2009: long-term safety in advanced NSCLC patients receiving treatment for up to 8.2 years in randomized Phase II trial 145 Q Q % 141 Q Q Q [ 3 ] Divisional Developments Page 14

15 Merck Serono Pipeline Development since Q Topic Gonal-f approval for ovulation induction in infertile woman in Japan Detailed Phase III study data (CLARITY) from cladribine tablets in relapsing MS Submission of dossier for cladribine tablets in relapsing MS in EU Submission of dossier for Tesamorelin in HIV patients with lipodystrophy in the USA Detailed Phase III study data (Study 016) from safinamide + levodopa in advanced PD Inititation of Phase III study (SETTLE) to evaluate safinamide + levodopa in mid- to late-stage PD Inititation of Phase III study (STRIDE) to evaluate Stimuvax in breast cancer Target not disclosed Q2 mid of 2009 not disclosed Apr.-Jul not disclosed not disclosed Timeline Delivery Q3 Q2 Q3 Q2 Q2 Q2 Q2 [ 3 ] Divisional Developments Page 15

16 Merck Serono Pipeline Portfolio as per July 24, 2009 Phase I Phase II Phase III in Registration Aurora Kinase Inhibitor (AS703569) Solid tumors and hematological malignancies NHS-IL2-LT, immunocytokine Solid tumors DI17E6, integrin inhibitor, antiangiogenic Solid tumors Eg 5 inhibitor Solid tumors and hematological malignancies Survivac, therapeutic cancer vaccine Solid tumors MEK Inhibitor (AS703026) Solid tumors IMO-2055, TLR9 immunomodulator Solid tumors Sonepcizumab (ASONEP TM )anti- S1P monocolnal antibody Solid tumors Fibroblast Growth Factor 18 Osteoarthritis Atacicept, anti-blys/anti-april fusion protein Multiple Sclerosis Erbitux (cetuximab) Breast cancer Tucotuzumab celmoleukin, huks-il2, immunocytokine Small cell lung cancer (SCLC) Cilengitide, integrin inhibitor, anti-angiogenic SCCHN Cilengitide, integrin inhibitor, anti-angiogenic NSCLC Adecatumumab, anti-epcam monoclonal antibody Colorectal Cancer Atacicept, anti-blys/anti-april fusion protein Rheumatoid Arthritis ARX 201, long acting GH Growth hormone deficiencies Rebif New Formulation in CIS (REFLEX) Cladribine tablets in CIS (ORACLE) Safinamide (MOTION) Early stage Parkinson s Safinamide (SETTLE) Mid-to-late stage Parkinson s Erbitux (cetuximab) (PETACC-8*) Adj Colon Cancer Erbitux (cetuximab) (EXPAND) Gastric Cancer Cilengitide, integrin inhibitor, anti-angiogenic (CENTRIC) Glioblastoma Stimuvax, therapeutic cancer vaccine (START) NSCLC Stimuvax, therapeutic cancer vaccine (STRIDE) Breast Cancer Atacicept, anti-blys/anti-april fusion protein (APRIL SLE) Lupus Rebif New Formulation Relapsing forms of MS FDA: Submission filed Cladribine tablets Relapsing forms of MS EMEA: Submission filed FDA: Submission to be filed in Q3 09 Erbitux (cetuximab) NSCLC 1 st line therapy EMEA: Submission filed Tesamorelin HIV patients with lipodystrophy (US only) Oncology Neurodegenerative Diseases Autoimmune & Inflammatory Diseases Endocrinology *Sponsored and coordinated by the Fédération Francophone de Cancérologie Digestive (FFCD) Appendix Page 16

17 Merck Serono Pipeline Catalysts 12 Months Rolling CHMP opinion for Erbitux in 1 st line NSCLC US filing cladribine tablets in relapsing MS Q1-Q3: Phase III data from Rebif in CIS (REFLEX) Q2/Q3: FDA Action Letter expected for cladribine tablets in relapsing MS Completion of Phase II studies for atacicept Oncology Neurodegenerative Diseases Autoimmune & Inflammatory Diseases Endocrinology Q Q4 Q Q2 [ 3 ] Divisional Developments Page 17

18 Consumer Health Care Key Financials m Q Q Δ in % Total Revenues Marketing & Selling Research & Development Operating Result Organic revenue growth -0.3%, FX impact of -4.1% Drop in operating result influenced by 4m base line effect from settlement with raw material supplier in Q Free cash flow impacted by favourable working capital development ROS (Return on Revenues) 10.0% 14.3% Free Cash Flow (before acquisitions and divestitures) [ 3 ] Divisional Developments Page 18

19 Consumer Health Care Operational Developments Sales by Health Theme m Mobility Woman's and Children's Health Everyday protection Cough & Cold % % % Q Q % Development of strategic brands: organic growth of 5%, especially boosted by Femibion (+12%; Launch in Spain and good development in Poland) Cebion (+29%, in particular Venezuela) and Diabion (+112%, driven by Mexico) now contributing to >50% of the total business (excl. Mailorder) Others % [ 3 ] Divisional Developments Page 19

20 Liquid Crystals Key Financials m Q Q Δ in % Total Revenues Marketing & Selling R&D Operating Result ROS (Return on Revenues) 27.4% 45.0% Free Cash Flow (before acquisitions and divestitures) Business continued to pick up Organic revenues down 21%; FX impact negligible Increasing investments into R&D Operating result recovered significantly from low in Q1 due to higher capacity utilization and favourable product mix Improved inventory management partly offsets the impact of reduced operating result on free cash flow [ 3 ] Divisional Developments Page 20

21 Liquid Crystals Business Dynamics Industry comments for Q3 encouraging Ongoing price pressure Merck s exclusive technology PS-VA gaining further market share [ 3 ] Divisional Developments Page 21

22 Performance & Life Science Chemicals Key Financials m Q Q Δ in % Total Revenues Marketing & Selling R&D Operating Result ROS (Return on Revenues) 6.0% 12.4% Free Cash Flow (before acquisitions and divestitures) Organic revenue growth -9.5%, dampened by +2.0% tailwind from FX Weak demand from automotive and cosmetics industries continued Solid Laboratory business, resisting weak global economy Operating result mainly impacted by softer sales and lower capacity utilization in Pigments Strong free cash flow driven by improvements in working capital management [ 3 ] Divisional Developments Page 22

23 Performance & Life Science Chemicals Operational Developments Sales by Region m Europe % Q Q Ongoing weakness in Pigments weighed on Europe sales Business in North America benefitting from favourable FX development and Crop Bioscience business North America % Asia: Strong growth in India and Life Science Solutions business Latin America % Asia % Rest of World % [ 3 ] Divisional Developments Page 23

24 Merck Group Outlook Update FY2009 Outlook FY 2009 Revenues* Actual H Revenues* Outlook FY 2009 ROS Actual H ROS Merck Serono Consumer Health Care Liquid Crystals Performance & Life Science Chemicals + 6-9% + 8.4% 20-25%** 22.6% ** + 3-6% (old: + 5-9%) 20-25% (old: 20-30%) 2.8% 32% 5-10% 20-30% 8.6% 20.1% unchanged 6.9% 5-10% 7.0% Corporate & Others Operating Result unchanged (H1 2009: 7.0%) Merck Group + 0-5% 0.1% 15-20%** 18.0%** * Compared to 2008 ** Core ROS [ 4 ] Outlook Page 24

25 Investor Relations Events DATE EVENT Oct 26, 2009 Publication of business results for Q Conference Call More details can be found on: Page 25

26 Investor Relations Your Contact Dr. Thomas Kornek Claudia Nickolaus Alessandra Heinz Assistant Investor Relations Merck KGaA Investor Relations Frankfurter Str Darmstadt Germany Fax: Page 26

27 2 nd Quarter 2009 Appendix >> Page 27

28 Merck Group Reconciliation to Core Figures Core Operating Result ( million) Q Q Δ in % Operating Result (excl. Generics) Amortization of Intangibles Impairments of Serono Intangible Assets Following PPA Restructuring/Special Integration Costs Serono Core Operating Result Core Earnings Per Share ( million) Q Q Δ in % Net Income (Continuing Operations excl. Generics) Amortization of Intangibles 1 Impairments of Serono Intangible Assets Following PPA Restructuring/Special Integration Costs Serono Exceptionals./. Tax Adjustments Core Net income Core EPS Only Merck Serono assets are considered. 2 According to IAS 33 EPS is calculated on the average weighted number of shares (Q2 2009: m; Q2 2008: 217.4m). Appendix Page 28

29 Merck Group Income Statement million Q Q Δ in % Sales 1, , Royalty Income Total Revenues 1, , SG&A R&D Amortization of Intangibles Operating Result Exceptionals - - EBIT Financial Result Profit Before Tax Income Tax Profit After Tax (Continuing Operations) Profit After Tax (Discontinued Operations) Minorities Net Income Earnings Per Share ( ) 1 Reported According to IAS 33 EPS is calculated on the average weighted number of shares (Q2 2009: 217.4m; Q2 2008: 217.4m). Appendix Page 29

30 Merck Group Costs million Q Q Δ in % Sales 1, , Royalty Income Total Revenues 1, , Cost of Sales Gross Margin 1, , Marketing & Selling Administration Other Expenses/Income R & D Amortization of Intangible Assets All Others Operating Result Appendix Page 30

31 Merck Group Administration Expenses m Q Q Q Q Q Q Appendix Page 31

32 Financial Figures Detailed figure sheet available for direct download: Appendix Page 32