Dear ladies and gentlemen, a very warm welcome to this Merck 2022 Capital Markets Day. My name is Constantin Fest. I'm Head of Investor Relations here at Merck, and I'd like to welcome all of you who are joining us online via the webcast, as well as all of you who are here in the room with us today. Now, the first item is a legal one. I'd like to mention to all of you that parts of this event will be recorded in terms of audio and video. If there are any questions or concerns on that, please contact the IR team in the back. Now, today, we will start with the CEO, as well as Markus Kuhnert, Group Chair Belén, to start with the event and an update on the strategy, followed by Markus' presentations on the financial perspective. With this, I welcome you, Belén, on stage. Over to you, Belén. Good morning. Good morning, everyone. I hope you did enjoy our dinner last night. I did enjoy our dinner last night and seeing you once again. It's really exciting also for me to be here with you today on stage together with Markus, and finally having the chance to meet many of you in person. A very warm welcome also from my side to the 2022 Capital Markets Day. Once again, thank you so much for joining this live event in Darmstadt, and as Konstantin mentioned, virtually from all over the world. I will kick it off with a strategy update, followed by the financial perspective that Markus will provide. Then we look forward to a very lively Q&A following our presentations. After this, Q&A, Matthias, Peter, and Kai will come to the stage for the fireside chats with some members of their team. Let me kick it off with a strong statement that would not surprise you. We believe we are strongly positioned for growth. Even in an increasingly uncertain macro environment, we are very well on track to executing our strategy with tons of vigor. Significant capacity expansions are progressing swiftly, and regionalization efforts will even further support our midterm growth ambition. We remain very confident in our ability to create attractive and sustainable value for our owners, for our investors, customers, employees, and the society at large. Last year, we introduced a new strategic framework. Today, I would like to provide you with further insights on this framework and how do we continue to build on it to leverage our business model. Then I will close my part with the outlook that probably you have already seen in the press release. Let me start with a brief introduction and share with you where do we stand on the promises that we made to you last year. Merck is a growth company, and it will be even more so in the future, I repeat. Let me show you why. First of all, as many of you know, we are very well positioned in rapidly growing end markets. With all our three business sectors, we tap into highly attractive areas, and this is not at all a coincidence. I believe that it strongly underlines our portfolio management, capabilities, coupled with our ability to execute on our organic growth initiatives. Let me be very, very clear. Growth can come in different forms. However, we at Merck are focusing on sustainable growth. What does this mean? Well, we focus on diversified growth in areas with a strong upward underlying dynamics. Example, novel modalities in Life Science. Think of antibody drug conjugates, viral vectors, and mRNA. Or think about the demand in the global semiconductor market driven by the automotive data storage and wireless industries. At this stage, some of you may be wondering, are we walking away from the notion of efficient growth that we prominently featured last year? The answer is definitely not. Rest assured that cost discipline in light of the growth opportunities, but also the many challenges that confronting us, will remain a critical pillar for Merck, and we will not at all compromise on this. Hence, we will stay very, very focused on growing efficiently, and I will come back to this, so will do Markus. For those of you who may be less familiar with our portfolio, let me further illustrate what is inside our multi-industry business model. Life Science is a diversified industry leader in a global podium position. In Process Solutions, we address the full value chain from upstream to downstream bioprocessing. In Life Science Services, we leverage and further build our presence in the attractive contract testing, development, and manufacturing markets. In what we call SLS, science and lab solutions, we offer one of the industry's broadest portfolio of consumables for R&D and quality testing. In healthcare, we continue to strengthen our global specialty innovator approach. We are a global player with focused leadership position in metastatic colorectal cancer, head and neck, and metastatic UC, urothelial cancer, as well as in multiple sclerosis. Our R&D activities for the next generation of innovative drugs are anchored in oncology, MS, and immunology. We are expanding our expertise in fields like DNA damage and importantly ADC technologies. We are the world market leader in fertility treatments. In electronics, we are a leading player in semiconductor solutions with one of the strongest portfolios of materials and related equipment and services. We supply nearly every player in the semiconductor industry, which has clear roadmaps with vast market potential and substantially need for materials innovation. Our solutions help customers create the next generation of faster, smaller, and more energy-efficient devices. We are very well on track to deliver on the commitments we communicated at the CMD in 2021. 2025 is nearly around the corner, so let me share a few important proof points to raise confidence in our midterm outlook. As you will hear from Markus in more detail, we are rigorously executing our CapEx plan with a record amount of projects initiated in the past 12 months. Our 2022 guidance is well ahead of our above EUR 1 billion organic sales per annum that we introduced last year. Despite the macroeconomic challenges, we feel stronger than before. The core business in Life Science handily overcompensates for a fading COVID business. Within healthcare, our two phase III assets have a strong potential, as discussed with many of you last night, to be first and best in class. In electronics, we are on track to deliver above market growth in semiconductor solutions. As a reminder from the previous year, our focus remains on the big three, as they will represent around 80% of the group organic sales growth over the years to come, and this is not going to change. The big three represent the growth engines of this group and have obviously top priority in terms of capital allocation. I touched already on the walking the talk a moment ago, and the new operating model for Life Science that Matthias has announced a few weeks ago supports our ambition for targeted scaling of high-value contract testing, development, and manufacturing services that we shared already with you in 2021. Therefore, both process solutions and life science services are part of the big three. With this in mind, let us take a look at what is ahead of us and how we will continue to leverage this multi-industry business model that I have further detailed to continuously raise the bar. Last year, I introduced to you our new strategic framework. Today, I would like to share with you how we are executing on this flawlessly. Let me start with our foundation, a strongly resilient business model. This foundation is absolutely key as it is highly cash generative. Reliable and sustainable cash flows will enable us to make bold moves to grow the big three, both organically and inorganically. In short, this is the way we leverage our business model for long-term growth. as I touch on long-term growth, we are clearly targeting sustainable and efficient growth in the fields that we are operating in. This requires focus and dedication to drive our innovation power across sectors with the goal to continue to push boundaries, while at the same time reinforcing our sustainability efforts. No news, the world is in turmoil. let me emphasize that we are clearly facing an unprecedented situation, and you know that better than me. It is unprecedented, mainly due to the combination of factors at different levels. To be very clear, we are at the brink of a global recession. Supply chains are truly under strain. Rising interest rates, in light of surging inflation will be a burden for the economy. Major political conflicts and increasing challenges coming from climate change will add to this picture. It doesn't take a lot of imagination to understand the impact or the potential impacts that this will have on globalization, and ultimately how we will shape our businesses, to better operate in this new environment, because we believe this is here to stay for a while. In a dynamic and predictable and unpredictable business environment, key principles, main principles count. Business model will have to adapt to a new reality, and ultimately, we believe it comes down to resilience. What is resilience? Simply put, it's about the capacity to thrive in difficult circumstances. Resilient organizations have the ability to respond and to adapt rapidly to new conditions. Resilient organizations properly understand the strengths and the gaps, and do address this while maintaining a growth mindset. Resilient organizations are thinking in alternative and disruptive scenarios while always being aware of relevant leading indicators for the business. The question is: what about Merck? How well are we prepared to face this unprecedented time? Is it enough to say, "Look, we.re 354 years old, and we have seen it all." I don't believe so. It's not that simple. Resilience has to be built on an ongoing basis. Looking at the current environment, you are better placed to understand how you are positioned. In that context, we conducted an in-depth analysis across all our enterprise units, leveraging an outside in view assessment on critical dimensions that you have on the slide and comparing our situation versus relevant peers. Marcus will further detail the elements of our resilience framework during his part, but for now, let me focus on the outcome and speak to some of the proof points that we believe set us apart. First of all, the company has an exceptionally strong financial backbone. That is illustrated not only by the results we have been communicating, but also by very high-quality credit ratings. I will come back to cash generation and our internal guardrails. As a group, we operate in markets with overall lower business cyclicality. This is obviously a balance. In healthcare and life science, obviously less exposed when compared with electronics, because the field of semiconductors is a bit more cyclical. If you keep in mind the contribution of semiconductors to the overall group, the cyclicality is nicely balanced out by the two other sectors. Second, you will not be surprised to hear that our customers' diversification scores high, because we leverage different geographies, different industries, different segments, and importantly, different channels. On the other hand, we are cognizant of those areas that we further need to shape. I'm speaking here mostly about our supply chain operations, where we are in the process of expanding and regionalizing even further, if you see all the announcement that we have made recently. Zooming out for the bigger picture, in a macroeconomic downturn scenario, we see overall limited demand exposure backed by life science and healthcare. Let's take healthcare as one example. The fertility franchise might be, in the short term, more sensitive, right, to certain environmental conditions, whereas the oncology, multiple sclerosis, and CM&E portfolio would be more defensive in nature. When it comes to adaptability and compensated for inflationary impacts, we see ourselves in a very strong positions. We have levers to mitigate rising input cost, both on the pricing side to varying extent, but also on the cost side as our strict cost discipline shows. I said that I wanted to highlight just a few items. You see where I'm headed. It's a clear signal we want to send. Merck is a resilient company. We are in a privileged position in the markets in which we operate. We will become even stronger as we develop our key enablers further, and I cited supply chains, but also digital and other enablers are being managed at the same time. Is our strong position and resilience preventing us from delivering growth? No, it does not. It's the opposite. I spoke about sustainable growth earlier, and we have not only proven that we are a reliable cash generator, we have also significantly improved our operating cash flows to sales ratio over the past years. Cash generation has a top priority within the executive board. Cash is king. Cash will enable us to execute our strategy, is the base for all our growth ambitions, both organically and inorganically. A testimony to Merck's approach to portfolio management. Let me explain briefly by taking a retrospective look of what has driven us so far, and it boils down to rigor and discipline. Merck masters inorganic capital allocation. We were never shy of bold moves ahead of time, if it fits our innovation-driven strategy. In terms of portfolio management, execution of the deal also includes a successful integration where our track record speaks for itself. We create long-term value by focusing on strategy, execution, and tight integration, never compromising one for the other. This is how we have proven our ability to create long-term value in all our three sectors. What should you expect when it comes to inorganic moves? Over the past years, we repeatedly said that bolt-on acquisitions were in focus until the end of 2022. We are almost there. We have remained humble. As I already mentioned earlier this year, I would like to take this opportunity to put a few stakes in the ground on how do we think for 2023 and beyond. First of all, you will not be surprised to hear that inorganic moves will mostly focused, if not totally focused on the big three. We will clearly invest for growth, building on our well-established strategic direction. As you know, we value life science. We value the life science sector because it comes at attractive and predictable growth and solid margins. However, we will not neglect the other two sectors, healthcare with distinct opportunities, and you have seen that xevinapant came from in licensing from Debiopharm, and innovative technologies in electronics. Ultimately, of course, any deal needs to make not only strategic sense, but it also needs to maximize shareholder value creation. All in all, we are approaching a financial capacity of EUR 15 billion-EUR 20 billion. Bear in mind, it is a capacity I'm talking about here. We will decide, obviously, based on opportunities, how and to what extent this capacity is optimally utilized. It might be in full, it may be in part, it may be a combination of deals, it may be larger transactions and additional bolt-ons, and you will understand that we keep that flexibility. To be crystal clear, Marcus will further add to this point later, we are conscious of the high uncertainties in the financial markets. These times can offer attractive opportunities as and when multiples come down. At the very same time, we will stay prudent by always having a close eye on our overall leverage, in particular, in context of the evolving interest rates environment and what this could mean, for example, for EPS impacts from refinancing in the mid to longer term. Let me also underline very quickly that Merck's sustainability guardrails, which you will hear about more later this afternoon, are in focus at all times with no compromise. Leading over to the third point, to the strategic framework, our DNA and how this pairs with long-term thinking. I am convinced in continuously boosting our innovation power. By investing further in R&D, mainly in Electronics and Life Science, leveraging our existing capabilities, we will ensure long-term growth. I want to show you a few examples how long-term orientations goes hand-in-hand with innovation in and even across sectors. In process solution, we continue to drive innovation across the mAbs manufacturing workflows, including automation, real-time monitoring, and digitalization solutions of the Biocontinuum platform. In healthcare, we aim to bring precision medicines to the next level and inform next-generation modalities. For electronics, we have integrated solutions for EUV and new environment-friendly solutions such as etch and chamber clean gases. Operating in life science, healthcare, and electronics put Merck at the sweet spot of bioconvergence. Leveraging our capabilities related to digital and material science, as well as biotechnologies, is a major competitive advantage that we need to exploit. A good example is mRNA and the LNP synthesis, targeted delivery and artificial intelligence to enable the development of smarter LNPs. As another example, our early progress in developing digital twins in smart manufacturing to optimize time, cost and quality. Innovative products will be the key prerequisites to improve people lives and increase sustainability in productions. Our products have a positive impact on human progress, more sustainable value chains, and a reduced ecological footprint. An illustration of this include the improved treatment scheme in multiple sclerosis enabled by Mavenclad and our mRNA technologies to fight COVID. Our innovations are important steps to overcome environmental challenges in our operations, but also follow demand from our customers for more sustainable products. For example, our green solvents in life science and semiconductor solutions are helping our customers to reduce their ecological footprint. Our life science business has provided a great blueprint by using the concept of design for sustainability, with an increase of 30% in the number of alternatives already in 2021. This concept has demonstrated visible success by using sustainability metrics to steer the R&D pipeline. Based on this lighthouse project, in 2022, we developed R&D sustainability scorecard for all the three business, and the rollout is expected to be completed by the end of the year. The individual targets are currently under development. We aim on significantly increasing the number of sustainable products in all sectors in coming years. Now, how does all this translate into numbers, which I know is as important to you as it is for us? Let me show you. Turning to the group guidance, to the group outlook, last year, we introduced our target to deliver 25 by 25. Today, I share with you that we are not just confirming that, we are also making this target more robust. We stick to the promises with increasing confidence that 25 by 25 can now be achieved, excluding limited contributions from BAVENCIO or M&A. Since the launch of 25 by 25 last year, we have seen major currency tailwinds, which you may argue put us in a more comfortable position to achieve this target. However, we are acutely aware that this will continue to be volatile. The big three will grow and generate the largest share of our sales in 2025. Allow me to give you some additional flavor in the next slide of the sectors. Amid significant macroeconomic turbulence, we expect 2023 to be a challenging and very demanding year. However, you can rest assured that we are prepared for this, and at the same time, we remain very confident in our midterm guidance for all the sectors. In fact, we are even strengthening it with a favorable outlook for the big three. For Life Science, we reiterate a midterm CAGR of 7%-10% organic sales growth. As said in the past, this includes unexpected fading of the COVID business. We are now confident to deliver the target corridor, even in a scenario where COVID sales would fall to zero over time, thanks to the demonstrated strength in our core business. For healthcare, we stay excited with a mid-single-digit CAGR, leveraging the growth coming from new products on top of a solidly growing established portfolio. For electronics, we have continued confidence expressed in a 3%-6% midterm CAGR linked to the upward cyclicality of semi and our ability to outperform the market. Closing, let me wrap it up very quickly because I know I am already exceeding a bit my time. Summarizing, first, we shape our unique and strongly resilient positioning in fast-growing markets, which is the result of rigorous portfolio management. We grow despite macroeconomic challenges, and you can expect us to deliver efficient and sustainable growth. We innovate and will push boundaries by leveraging our multi-industry operations business setup. We enable ourselves and also our customers to unfold the potential of innovation to drive sustainability and create value for society. With this, let me thank you for your attention and let me invite Markus to replace me on the stage. Thank you very much. Thank you very much, Belén, and good morning from my side. A very warm welcome, and let me reiterate again, said it yesterday evening already during the dinner, how happy I am that we have, after three years, a Capital Markets Day today again, where we are all together and where we can, let's say, have personal interactions. Highly appreciated. Going now into the financial perspective. Here you see the agenda of my presentation, and starting basically with one of the key messages that Belén has delivered. We have three strong business sectors and all of the three actually playing in very attractive high-growth markets. We are set up for future growth. We have plenty of growth opportunities ahead of us. The question, of course, is, and that is being tackled in my first chapter: What does it take to enable that growth? What do we have to do finally to deliver? Let me work a little bit or walk you a little bit through that. First of all, what I think is important is track record and mindset. Let's spend a minute or so just looking back. Here you can see our track record over the last five years, so from 2018 to 2022, and you will see the following things. First of all of our 3 business sectors are positioned for rapid growth. I don't want to go too much through the details here. I will save that time rather for my last chapter, where I do a little bit more deep dive into the midterm outlook, and there we go a little bit more into the sector specifics. Here, the only message is all of the three sectors are in a strong position for ongoing and efficient growth. The second key message is we have very healthy and strong margins. As you can see, we are meanwhile with all the three sectors at an EBITDA margin of more than 30%. The third message is that already in the past, the big three have been the major growth drivers in all of our three sectors. There are a couple of specificities. The big three are here marked in the strong colors. You will notice that, for example, in healthcare, the base business in 2020 and in the first half of 2022 was negative. That means in those two periods of time, the entire growth was contributed by the big three. That is not supposed to be a permanent condition, let's say. That was basically due to COVID. As you remember, in 2020, COVID had a very strong impact on our fertility business with an organic sales decline of 40%. We also saw quite some effects in the first half of 2022. In addition, with high comparables from the temporary supply agreement with Abitox with Eli Lilly. In the future, and we will see that later, the base business is supposed to grow to contribute positively. The second thing I would want to draw your attention is we have not made this differentiation in electronics. Reason is we have undergone here a major portfolio shift over the last couple of years. Meanwhile, two-thirds of our portfolio is semiconductor solutions, and the simple truth is basically the entire growth in electronics comes from the big three. That is why we have actually not made this differentiation. Another very important driver actually is, and Belén has mentioned it, is the CapEx spend. This will secure growth over the period until 2025 and even beyond. At the last Capital Markets Day, we have actually announced to you that we are planning to increase our CapEx spend from a level of roundabout EUR 1.5 billion in 2021 towards EUR 2 billion in 2023 and reaching a EUR 1.6 billion-EUR 1.7 billion level this year. As you can see, since the last 12 months, a lot has happened. A lot of investments, and what you would also notice is predominantly in Life Science and in Electronics. That is, by the way, also what is going to remain. Life Science and Electronics will be the major sources for future increased CapEx spend, while the Healthcare CapEx levels will remain more or less stable over the next couple of years. You will also notice when you sum up the numbers, that the Electronics investment is quite significant. Even bigger here on the slide than what we have seen or what we are currently investing in Life Science. The Life Science number, when you add them up, it's close to EUR 1 billion. Electronics is roundabout EUR 2 billion. The reason is, first of all, opportunity. We see articulated customer demand on the Electronics side. The big guys like TSMC, Samsung, they're investing currently $ billions in new capacity and ask us as their strategic supplier actually to also build own capacity to support them on their future growth path. The second reason is that simply the electronics investments in general are stretching over a longer period of time than the life science investments. As I said, we are strongly committed to drive CapEx to sales ratios further up over the next couple of years in order to prepare for strong growth opportunities that we see, especially in those two sectors. On the other hand, of course, we continue also to invest in growth opportunities in healthcare. Here, however, it will be more in the R&D line. Another slide on CapEx. Of course, what we are also thinking about is how or what can we do in order to de-risk our investments. This is especially important in the light of an increasing or a higher likelihood of an increasing degree of de-globalization. What can we do actually to de-risk our investments? First of all, what you notice here, we have a pretty balanced regional footprint when it comes to big CapEx investments. Secondly, what is also important, we continue investing in major growth markets like China. That is very important statement. We do not think that it is reasonable to lay our strategic planning on some kind of really worst case scenarios. We continue investing in China. You have seen that on the slide before. Shanghai and Kaohsiung in Taiwan, for example, semiconductor materials, also Shanghai for biologics testing. Very importantly, we are also broadening our supply footprint for single-use materials. In addition to our Denver site in the U.S. with our investments in Molsheim, France, but also again in Wuxi, in China. That's a very important topic. However, of course, what we are looking for is de-risking the investments by a stronger and ongoing progress in regionalization of production networks and supply chains. Belén has mentioned this also as a very important dimension which is driving our resilience. Going to the next chapter, expanding a little bit on our solid foundation. Here you can see a couple of macroeconomic indicators which just highlight we are indeed living in unprecedented times. I think nobody of us has seen such a, I would say, toxic cocktail of macroeconomics over the last couple of years, maybe even decades, huh? Of course, I do not want to take you here through all of the macroeconomic indicators. Let me just highlight what we currently see most in our P&L, what exposes us most at the moment. This is, of course, the mounting inflation. In Germany, we had 10% inflation rate in September. Even, or also the core inflation, that means if you take out energy and food, is meanwhile in the high single digits. That gives pressure, especially on raw materials. We expect also salaries come up gradually step by step. This is one thing which is visible in the P&L. Then we have, of course, mounting energy costs and also freight and logistics costs. However, the latter one, we see it a little bit, let's say, on a plateau now. No further increases, even slight relief very recently. This cocktail, all in all, puts quite some stress on the P&L. The message here is we are aware of the situation. We do not live in la-la land, so we understand the challenges, and we are doing something against it. Belén made a very important comment, which I want to reiterate and dive a little bit deeper into. This is the notion of resilience. We believe resilience is critically important for us in order to weather these critical circumstances. You have seen the key messages in Belén's presentation. Let me now, over the next 90 minutes, go with you through all of the. No, just kidding. What I want to do is I just want to say we have a very robust framework behind. We have one of the leading consultancy firms, which provides to or provided to us a proven and comprehensive methodology in order really to assess resilience on a fact and number-based way in order to come to sound conclusions. We are talking about, in total, six execution levers, which you can see in the circle. For example, financial resilience, operational resilience, digital technology resilience, and so on. Added by two capabilities, namely adaptation and foresight. As you can see, 30 sub-dimensions, more than 150 resilience practices. It's quite granular. It really goes deep. With that, I already want to go to the results. What I will show you now, so we have certain areas of dedicated strength, and I'll spend a minute explaining them to you. However, of course, we are not perfect. Yeah. That means there are also areas where we still continue to work on, where we have to work on in order to get better. Last but not least, our strong and solid position enables us at the same time also or maybe especially in difficult times like these, to also play offense. That means we see also some opportunities in the currently challenging conditions, and that will be the third point that I want to make. Let's start with the strengths. You have seen already in Belén's presentation, one strength clearly is a good financial position, a strong balance sheet, sufficient liquidity, a big financial headroom, big financial flexibility. That is clearly a strength in these times. I would also want to make or to reiterate the point, a diversified portfolio, broad regional coverage and not very cyclical business and three businesses which are falling in a way different economic cycles. Of course also a broad regional footprint and a, I would say, effective process of strategic capital allocation. Last but not least, strong commitment to ESG. That means, we have, as you know, an ESG strategy in place. We have defined KPIs. We have linked top management remuneration to ESG topics. This topic we can leverage now in the future from a position of strength. There are areas which we are currently further working on, and here, most importantly for sure, supply chain. Let me start this with a very positive comment. So far during the entire COVID times, we did not have any major supply chain disruptions. There's clearly more we can do. We have continuously working on localization of supply networks and production networks. That is something which is, I would say, an ongoing task over the next couple of years. We are working on, let's say, improving our foresight capabilities by adding simply more scenario planning on the one hand and also more stress testing on the other hand. Last but not least, we also work on culture, on organizational resilience. Keywords here are talent management and talent development as well as strategic workforce planning. Now, where do we think we can play offense going forward? I want to highlight here briefly three areas. The one thing is M&A, based obviously on the strength of a very sound and strong balance sheet. I'll come to that in a minute, a little bit more in detail. The second area is digitalization, and here I want to stress two topics. The first topic is increasing our capability to generate insights with data. Ultimately it comes down to better decision-making based on data and analytics. The second area is improving our digital go-to-market opportunities across the sectors. Last but not least, leveraging ESG beyond just having or providing a license to operate, beyond just having a good reputation. But turning our ESG strengths into countable advantages, green products, competitive advantages, so play also more offensive. These are the three areas where we are working to leverage our strengths. Now, taking the M&A topic for a minute. You have seen in Belén's presentation, or you have taken the message, that while we continue to screen the market for bolt-on acquisitions, we are more open now also to consider bigger M&A moves if they are fitting. If the strategy, if they're fitting strategically, and if we get a reasonably good financial case. Why do we believe we are completely ready to let's say bring M&A back on stage? First of all, we have a proven track record of fast and swift deleveraging. You can see this here on the slide. After the last big acquisitions, Serono, Sigma-Aldrich, Versum, so all of them are proof of our ability to quickly deleveraging. Secondly, and Belén mentioned it, we have a couple of very resilient and strong sources of cash across all of our businesses. That gives us also. That, I mean, that is a prerequisite, obviously, for fast deleveraging. That provides resilience but also flexibility when it comes to M&A. Of course, when we look in. Let's say, if we do not do an acquisition, even in the currently high interest environment, we have a relatively, I would say, evenly balanced maturity profile over the next couple of years. That means usually we will be able to pay down our maturities with our operating cash flow. There's only one exception in 2025, where we have EUR 2.35 billion to repay. Here we will have to refinance, but you can do the math yourself. Even when the interest rates would rise further, that would be possible without a bigger strain on our P&L and without a bigger strain on our financial result. When we look a little bit further into the M&A framework, let me first clearly renew our commitment to a conservative financial policy. That means a strong investment-grade credit rating is, for us, mandatory at all times, so there is no way around this. However, still, that translates into a quite significant financial headroom that Belén already mentioned. When we take a net debt to EBITDA pre corridor of between 2 and 3.5, so that is a corridor which I would expect us to be after an acquisition, yeah? The 2, you may remember from the past, is usually, in a way, a borderline. When we go below 2, our financial headroom and flexibility, I would say, rises almost exponentially, yeah? 3.5 is a little bit the upper limit. That was by and large the level we had after the Sigma-Aldrich acquisition, yeah? I would expect reasonably expect us to be within that corridor when we do an M&A deal. With our EBITDA guidance of this year, between EUR 6.75 billion and EUR 7.25 billion, that would translate in the EUR 15-20 billion financial flexibility that Belén has mentioned in her presentation. At the same time, I want to take the opportunity to confirm our dividend payout ratio, 25% of EPS pre. When we finance acquisitions, we would go with a combination of cash and debt. We are committed to hybrid bonds as an important piece of our balance sheet structure. We would also, let's say, utilize divestments in case they come. Please do not misunderstand me, yeah. We would not divest in order to finance an acquisition. Of course, we would use the proceeds if a divestment comes to finance it, but we would only divest if we are no longer the best strategic owner of a respective business. Think about four years ago, when we were divesting Consumer Health, and then the Versum opportunity came along, and we, of course, were using the proceeds, but that was definitely not the driver of the divestment of CH. Very briefly, sustainability goals are an important part, meanwhile, of our strategy. I want to just briefly make three points here. Point number one, this R&D sustainability scorecard is already the first step in the direction of using more proactively sustainability to generate green products. Because in the future, we want to prioritize R&D projects more also towards their contribution to sustainable to green products. We have meanwhile integrated sustainability thinking and also KPIs in the evaluation and identification of potential M&A targets, predominantly during the due diligence phase. Secondly, also in big, or in general, in capital investment decisions. To give you maybe two quick examples. In electronics, one major driver to bring our CO2 emissions down will be to get away from the so-called NF3 technology. We have meanwhile identified a so-called abatement technology, which will allow us to significantly reduce our CO2 footprint going forward, and we will now be implementing this technology over the next couple of years. Secondly, we have entered into a so-called VPPA agreement. VPPA stands for Virtual Power Purchase Agreement. That is basically a contribution in a wind park in Texas, US, which covers 65% of our energy consumption in North America with renewable sources of energy. At the same time, as energy prices have gone up, and it is a fixed price agreement, also with, on top of that, a very nice financial benefit. I would stop here. We have a sustainability session in the afternoon for further deep dives, but just to highlight, that we are doing things here also. Coming to the last chapter, steering towards 25 by 25. I want to start with a short-term view. We confirm the most important message. We confirm our guidance for 2022, 6%-9% organic sales growth, 5%-9% organic EBITDA pre-growth. We have a minor portfolio impact from Exelead. We have strong tailwind from currencies, and we will see an acceleration of organic growth in the second half over the first half. Main reason of that acceleration is predominantly in healthcare, because in healthcare we have much stronger comparables in the first half of this year. Think about the BAVENCIO milestone of EUR 50 million. Think about the deferred income from bintrafusp alfa, so from the collaboration with GSK. Think about the contribution from the temporary supply agreement with Eli Lilly. Comparables in healthcare get easier in the second half, especially in Q4. Also, Life Science, Belén has said it, is building on a continued strength in the core business going forward. In Electronics, we have a continued fast growth in semi materials. On the margin side, however, it becomes meanwhile noticeably more difficult to manage this business this year for positive EBITDA pre-growth. However, let me also reiterate at this point in time, even if there are some short-term pressures on the margins in Electronics, the group guidance is completely intact and not affected by that at all. Short, deep dive into the three sectors. Life Science, we confirm the 7%-10%. As Belén said, we believe we will even get in the corridor in the case that COVID sales would be declining faster. There is a slightly different dynamic than a year ago at the Capital Markets Day. We have now a stronger dynamic in the base business and a slightly accelerated decline of COVID sales. We were providing to you for the first time a midterm guidance for the three new segments in Life Science. For Process Solutions, we assume a low-teens growth, organic growth over the next couple of years. Please note this is. not a downgrade. Process Solutions new is without Life Science services, and that means one very fast-growing business now is out of scope. Now it is basically the same growth dynamic as before, but now in a slightly different organizational unit. Low teens% for Process, low to high teens% for Life Science Services. This is a quite big range, but please note this business is still in a ramp-up mode. It's still a bit more volatile. For the time being, we feel good with a slightly bigger range. Last but not least, a low to mid-single digit% growth in Science and Lab Solutions. I also want to give you for the first time a guidance on COVID sales for 2023. While we confirm our guidance for this year, around EUR 800 million for Life Science in total, for next year we will have a decline for at least 50% of that. The decline will hit LSS percentage-wise on relative terms, stronger than Process Solutions, which means that next year we will likely fall short in terms of growth in LSS compared to this midterm guidance here, low- to high-teens%. However, please note still on the back of a very strongly developing business. On Healthcare, the major growth is delivered, as you would expect, by the new products. However, a very important message here is the established portfolio will continue to deliver growth over the next couple of years. That is super important. That means each and every euro of additional sales from the new products will be accretive to our growth rate. Wave one are the products which are supposed to make the major growth contribution until 2025, which is BAVENCIO, MAVENCLAD, TEPMETKO. Wave two are the new pipeline candidates, evobrutinib and xevinapant, both with blockbuster potential, who are then supposed to take over to drive the growth from 2025 onwards. I want to make a short announcement here. Our R&D update call on November 21st, where we will be facing predominantly DNA damage repair and ADC technologies. Switching over finally to Electronics. In Electronics, as you can see, not a big surprise. The growth over the next couple of years will come from semiconductor solutions. Here we will be growing 200-300 basis points ahead of the market. Display with low single-digit decline and surface with low single-digit increase or growth will basically balance each other out over the midterm, and that is supposed to deliver the growth. Midterm, we think that we will be able to deliver attractive margins around 30%. When we look, however, a little bit more short-term in the light of very difficult macroeconomic conditions right now, impact on growth and margins is more difficult to predict. As I said, for 2022, it will become noticeably more difficult to manage a positive EBITDA pre-growth. For 2023, we have to see how the current macroeconomic environment is going, let's say, to work out in terms of margin impact in Electronics. However, let me reiterate again, the group will not be affected by that. It's too small the effect. The group absolutely stays completely intact. With that, I come to the end of my presentation. The executive summary. Focus is on execution. In current times, focusing on margin protection, the realization of our ambitious CapEx growth plan, and of course, bringing M&A back on stage, because that will be an important growth driver and also value contributor going forward based on a strong track record and tons of experience within the company. Diversification is key to keep resilience up and also to protect our strong profile of cash flows. We want to ensure that sustainability plays a role in future capital allocation, and that big investments are within the sustainability guardrails, and we reconfirm finally our passion and hopefully also our ability to deliver efficient growth. Thank you very much. Constantin, back to you. Thank you very much, Markus. Thank you very much, Belén. Belén, I would like to ask you to join us here on stage, and we are ready now for the Q&A part of this morning. So, we kindly ask to prepare for the first questions. Already see many hands being raised. Use, please, the button in front of you to activate the microphone. First question comes from Matthew. Thank you, Constantin. Good morning. It's Matthew Weston from Credit Suisse. Two questions from me, and I am gonna focus on M&A and the statements about large deals, but not trying to dig into specific issues. Belén, your largest shareholder is the family. Historically, they've been very committed to three balanced pillars. What was clear from your commentary is that life science remains a very important and attractive part of the Merck business model. I'd just be very interested in your discussions with the family and whether this idea of three balanced pillars is no longer a real commitment or focus for them, and that we could see a Merck business which has still got three very important businesses but is heavily skewed towards life science. Then, Marcus, you made the comment that any deal would need to be value-creating. Can you remind us how you define that? What metrics are important to you, and what are the guardrails there? Thank you. Let me take your first question, Matthew. Listen, the family, you asked about the family. The family has no dogma on what could be the relative weight of the different businesses, right? As long as we continue to create value for the enterprise, right? For the owners, for our investors, for our customers, employees and society. There is no percentage written in stone in terms of the weight each and every sector should have. The guardrail that we have is that we should not neglect any sector. Meaning, you know, we need to basically serve the sectors in order to make those sectors grow sustainably and profitably. On your second question, Matthew. When we look on M&A, there are two main dimensions. The first one is there needs to be a clear strategic fit, and this follows very strongly the outlined approach to strategic capital allocation. Remember, 30 planning units. We have clearly defined roles in the portfolio, and some are eligible for M&A money, for example, the big three, and some are not. They are there to deliver cash. First statement. Secondly, on the financial part, the most important criterion or single KPI is the internal rate of return. That means we have an M&A target identified. We build a business plan, that means a business plan, cash flow plan over the next 5-10 years. We complement this with a terminal value calculation. Let's say an ad infinitum growth rate beyond that detail planning phase. We have our WACC. We think, are there any, let's say, country risk premiums to be added, et cetera. That all goes into a model which basically then tells us. Of course, not to forget synergy assumptions. What reasonably we can expect as synergies. Usually, we start with an outside-in perspective, and that then, over the course of the process, will be step-by-step refined when we get better insights into the target. That all then gives you, gives us a good understanding on, let's say, purchase price ranges with which are acceptable in order to create a good financial case. Let me make one more comment. In the light now of a raising interest rate environment where financing obviously gets potentially more expensive going forward, that would be then, of course, simply part of the business case. That means compared to two or three or five years ago, interest expenses would be higher, but that is part of the business case. Let's say that still then would lead to, or would have to lead to a very positive IRR. Secondly, we are aiming for an immediate EPS pre-accretion. That was honestly very simple in a low interest environment. Even in the future when interest rates rise, I would think we would definitely not go longer than three years. Ideally as fast as possible, so really quickly, EPS pre-accretive. The last topic I would say, payback period. My personal, in a way, threshold is max 10 years. 10 years is a bit borderline. Life Science, Sigma-Aldrich back then was nine years in the business plan, seven years finally in reality. Yeah. These are the three criteria we are looking at. Could I just have one quick follow-up? Are you prepared to share the WAC or a WAC range that you use? Let's say, we have external WACCs which we use for impairment testing. They are published in the annual report. Internally, we believe it makes a lot of sense, let's say, not each and every year to switch for 0.3 or 0.4 percentage points. Internally, we are operating with a WACC of 7%. Thank you. Michael? Thank you. It's Michael Leuchten from UBS. Just sticking with the capital allocation theme, your message is very clear on sort of what changed from the last CMD and why, but it's not quite clear to me, does that apply to healthcare as well? Is your approach to healthcare now different from what it was a year ago? Do you look at a business the same way, or is there a strategically slightly different way to look at it? I think we look at healthcare definitely as we were looking at last year. I think the clear inflection point will be made by lowering our internal R&D spend as we have been doing in the last few years, but also ramping up external innovation, which we need to generate increasing optionality for our pipeline, but this is definitely not new. This is something that we have done already last year, and I gave the example of xevinapant. We continue to look at the business exactly with the same eyes and we continue to explore in licensing opportunities to generate additional optionality for the pipeline, as long as opportunities to increase our internal productivity in R&D. Gary? Thank you. I'm Gary Steventon from BNP Paribas Exane. You've talked to a kind of a more robust conviction in the top-line outlook, but on margins, the phrase kind of efficient growth still stands. I guess we're a year on, Life Science outlook maybe looks a bit more robust despite the COVID headwinds. Particularly looking at Electronics, there are the inflationary pressures that are impacting the division there. I was really just wondering how those dynamics impact that efficient growth outlook and whether you've got kind of any change in optimism on that phrase over the last 12 months. I mean, 2022 has already confronted us with two challenges, and you have seen the way we have delivered two quarters. We will communicate Q3 in November. 2023, I mentioned already on the stage, we anticipate challenging, right? The environment will continue to be in turmoil. All the factors that I mentioned are being managed. Life Science, and I also mention our ability to mitigate some of the inflationary pressures and the increasing input costs through pricing and cost management. Obviously, the exposure is higher in Electronics than in the other two sectors, and I repeat what Marcus said. The conviction and the confidence that we have for delivering on our midterm perspective have not changed, but actually has been reinforced. Perhaps Sachin and- If we go in order, Holger, you raised your hand. Florent, Sachin. Let's start with you, Holger. Thank you. A question on electronics. When you mentioned the pressure short-term, but nonetheless without being forced, you raise or give a higher midterm margin guidance. What is the reason for taking the risk of above 30% margin when you have short-term more- I said around 30% midterm. Still, it sounded like a commitment not to stay below 30, even though you are now having more headwinds than you have Around 30% means fluctuating around 30%. The second question on maybe the twenty-five outlook. Obviously, it benefits a great deal from the currency situation that you have. Shouldn't we strive for EUR 26 billion and EUR 25 billion adjusted for currency? If you guarantee me that the currencies will remain that level we can discuss. Good. I think Florent. We were expecting that question. Florent? Good morning. Florent Cespedes from Société Générale. Two questions on your M&A strategy. First of all, on Life Science, when we look across your different sub-segments, Life Science Services is the smallest contributors. It seems that, is it fair to assume that it's an area where we should see some potential transactions here? If you could give some colors on the opportunities or the strengths of this sub-segment. My second areas a little bit outside or adjacent areas from oncology and neurology, where you could expand your your let's say your product portfolio via acquisitions, or would you stick to the existing areas? Thank you, Florent Cespedes. In CDMO is a top priority when it comes not only to organic investments, which we have already announced several, but also to M&A, which is broad enough to explore and identify those priority areas in which we can win, you know, in which we have expertise, capabilities, and we can win. The team later today can further give you more detail on the direction of travel, but at this point in time, we are not considering expanding from there. You raise your hand, Sachin. Thank you. Sachin Jain from Bank of America. Two questions. One, just to dig into electronics macro pressure that you referenced. Is that predominantly display and surface, or are you beginning to see any impact in semis? And if you could just give us a sense of the semis cycle as you see it. You've been clear that 2022 you're gonna struggle to grow, macro pressure seen towards the end of the year. Does that mean that 2023 growth for electronics specifically is potentially challenging and 2023 electronics could decline? That's first question. The second question is a repeat of a question I asked on the 2Q call, which is, and we discussed this last night, but underlying PS growth ex-COVID is running north of 20%. The midterm guide is low teens. Excluding COVID, could you just talk to the drivers that mean that growth normalizes over your midterm? Thank you. Let me start with electronics. I mean, the simple answer, Sachin, is we are very confident on our top line details. I mean, obviously 2023, 2022 is the one we noticed the pressure on the margins and this is mainly related to the increasing input cost, starting by distribution and some other items that Markus mentioned. We see. I mean, you have seen the quarters, I cannot tell you further, right? On what we have delivered on semiconductors. We don't see signals yet of volatility in the semiconductor markets. We see challenges in the market of display. However, there we continue to enjoy a solid market share, but a strongly declining market, related to the customer demand, right? For our customers as well, mainly in Asia and mainly in China. It's display. Sachin, maybe one comment from my side. Please understand, so today we don't give 2023 guidance. Said there are some challenges to get positive EBITDA pre-growth in 2022. We will provide first guidance for 2023, beginning of next year. Peter? Process Solutions. Oh, sorry. There was a second part of your question. There was a process question, sorry. Thank you. There is a second part? Process solutions. Process- Um, currently- Sorry, Sachin, I didn't get the second part. Currently above 20% and low teens% is the midterm guidance. That was the question. The question is, do we have, do we see- Sorry, the question is simply that you're currently running above 20%, the guidance remains low teens%. If you just discuss the factors that are driving the normalization of that growth rate, and over what timeframe we should expect that. Thanks. I mean, we have already mentioned that we are right now already noticing the decline in COVID demand. As Marcus mentioned, we are not going to give guidance for sectors or a specific business beyond what you have seen already. Marcus anticipated already that we see the strength of our process solution business coming from our core business rather than COVID, which will continue to decline. How fast this is going to be declining, we don't know, basically. We have assumptions, right? We cannot say much more. I mean, I think the team can provide further context in the Life Science session this afternoon and give further color on the way we see things happening and the assumptions we have. I think I saw you, Peter, and after that it was Falko. Peter, you. Thanks. Peter Verdult. Just two questions. Firstly for Marcus Kuhnert, can you just remind us ballpark how the EUR 800 million of COVID-related sales splits between vaccines, antibodies, and testing? I'm assuming you're expecting all three to decline next year. For Belén Garijo, you spent a lot of time making it clear that Merck's ready to deal with the changing environment, the challenges. What about valuation expectations from potential targets? Are management teams also adjusting to the changing outlook? When you look at potential targets, do they still want the same valuations they want from last year when things were booming? Or do you see valuation expectations getting normalized? First question very, very quickly. Out of my mind, Matthias of course you will know it better. The major part is vaccines. I would think testing is max EUR 100 million from the EUR 800 in total. Matthias, is that correct direction? Yeah, that's correct. I think your question was also in the mAbs. Yeah. Indeed, when we talk about the 700 for PS, the vast majority is vaccine, right? The mAbs business is a relatively small portion of that. Peter, your question on valuation, have we seen any changes in. I think this is something that, you know, obviously we are monitoring. It is diverse, right? When we look at the different targets. We have seen some declines, mainly in Life Science, in the Life Science sector. You know, this is extremely volatile, as you know. Is this going to stay and become a trend? We need to further observe the way this moves. Next question. All right. Richard? Thanks. Richard Vosser at JP Morgan. Markus, you mentioned about portfolio moves in terms of divestments. You know, just thinking about, you know, the current macro backdrop, is now not really a good time for divestments? Should we not think of divestments in the next couple of years? That's the first question. Second question is just the growth potential of BAVENCIO, MAVENCLAD, TEPMETKO. You know, how much of the healthcare growth do you actually see in the next two, three years coming from those products versus some of the other growth drivers in healthcare? Thanks very much. Yeah. Starting with your first question, Richard. For sure, I mean, this is not the best environment for a divestment, obviously, so when the overall economy turns down. On the other hand, I mean, this is one input factor. Let's say from time to time, as you know, we are checking our portfolio whether we are still the best strategic owner of our businesses, and then a second consideration would be timing. There then, I would say, comprehensive considerations behind. For example, I mean, if we look on a specific business, for example, how strong is it susceptible, for example, to an economic downturn? Yeah. How strong is it affected by that? It's difficult to. I would not go so far to make a statement that bad economic conditions per se would prevent any divestments from happening. Yeah. That would be, of course, a factor that we would take explicitly into consideration before we move in any direction. I think on your second question, Richard, I mean, it was in Markus' presentation that 75% of the midterm growth for healthcare is driven by new products and you can assume that for 2025, BAVENCIO and MAVENCLAD will represent a big chunk of this. Peter will also give you further color in this, in the healthcare session today. Falko, you raised your hand earlier. Thank you. It's Falko Friedrichs from Deutsche Bank. 2 questions, please. Firstly, on a group level, how should we think about potential EBITDA pre-margin expansion on a group level until 2025 with all of these moving parts you laid out today? Secondly, what CapEx ratio as% of sales can we expect until 2025? Thank you. The first question is very easy. We never guide on margins, so, I think we will not be able to provide too much details into this. Yeah. CapEx to sales ratio, as I said, moderate increase over the next couple of years. We also give no precise guidance, and we have also to look on it sector by sector, because the sector ratios are quite, let's say, different from each other. What I can also tell you is we do regular benchmarking also. From time to time we check how are we positioned compared to our, let's say, most important peers, and does the overall picture fit? In light of the growth opportunities we have in front of us, I believe we will see increasing, moderately increasing CapEx ratios over the next couple of years. However, of course, each and every capital investment, that's also maybe important to mention again, like for M&A, is going through very rigid criteria, similar like what I just outlined for M&A. There's a business case behind every investment. They are clear, there's a clear understanding on market potentials, on pricing, on volumes, how this is going to develop in the respective markets where we invest. We invest only if there is a reasonable, a good business case behind. Okay. Wimal? Thanks very much. Wimal Kapadia from Bernstein. So just coming back to your earlier comments, Belén Garijo, on healthcare and how you think about internal versus external. So we did the bus tour today of the site, and you're, you know, investing in new R&D facilities. So I'm just curious, you know, how happy are you today with the capability that you have in R&D? And actually, where do you think the gaps are that you're actually going to invest internally with this investment, and where would you like to invest externally from? I'm thinking from an R&D perspective, not an asset or a license perspective. Then just tied to that, has management. You know, you mentioned lowering of R&D and more external. Has management ever considered a major change in tactic, as in that EUR 2 billion R&D, let's take it down substantially and let's really, really focus on external to drive growth? That's the first question. Then Markus, maybe just very quickly on wage inflation. It's coming up more and more in conversations with healthcare companies. I'm just curious, you know, how big are wages, you know, in terms of the cost line? And is there anything there that you can do to moderate that impact? And if there's any regions in particular you would like to point out, I'd be interested to hear. Thank you. Let me take the happiness question, right? With the capabilities, and then I will definitely defer to Peter Guenter and the healthcare session for the rest of the session. Look, over the years we have transformed R&D at different levels and at this time we understand that transformation for gaining productivity. It's almost a never-ending journey, right? Am I happy with the leadership that we have in R&D and the competence and the talent? Yes. Indeed, yes. Over the last two years, our global head of R&D, Danny Bar-Zohar, has been significantly upgrading the talent, integrating technology into the way we research and develop, clinically develop our products. The progress is very. The progress is very remarkable, I have to say. We are very well prepared internally, which is also, for me, a condition to accelerate external innovation and get it right. Right? That's addressing your first question. Is this addressing your full question? The second question was? The second part of the question. Has management ever really considered? Have we considered? the R&D big drop? Bold scenarios. We have considered bold scenarios. When we think strategically, obviously we consider bold scenarios, right? At the end, we have decided to stay on track, to further focus our efforts both in research and development. You will hear the full story, at beginning of November when you have the R&D discussions with the teams and not only on what we have reinforced and how are we focusing our research efforts, but also how are we planning to increase our productivity. On salaries, wage increases. I do not give you a precise number. It's a triple-digit million EUR amount, so it's a significant, obviously, cost position in the group. I mean, with 60,000 employees, that's, I would say quite normal. Wages usually are, let's say, quite linked to inflationary developments. That means there is some pressure on this cost line right now. The good thing, however, is that, for example, in Europe, the inflation so far has been more coming from a supply shock driven by the high energy prices. It is now actually, or when this stays for a longer period of time, there's a high likelihood that this is now spreading over into broader parts of the economy, which would then eventually or potentially start this price-wage spiral. So far, the impacts have been still relatively moderate. That is one of the factors we have to closely observe over the next couple of months, how this is going to develop. So far it is manageable. Yeah. I saw you, James, and then after that, Peter. Great. Thank you. James Quigley from Morgan Stanley. Just two quick ones from me. Firstly, on the COVID impact, you mentioned 50% down next year, so in the region of EUR 400 million or so. Just trying to get a sense of what backs that estimate. Is it backed by contracts or discussions with customers? Just trying to think, should we think of the EUR 400 million or 50% down as a floor, or is there potentially some risk around that? That's question number one. Question number two, sort of linked to inflation, sort of the offset is price. Could you give us an idea of how much price you're managing to take across the different divisions? Now, obviously, healthcare has been more difficult to take price than maybe life sciences and electronics, but how much of price is offsetting inflation? I mean, I think the first question will be absolutely discussed during the Life Science session this afternoon, and I defer the question to Matthias and the team. I think on your second question, we, as I mentioned already, see more opportunity to compensate or to pass on the input cost to our customers in Life Science, definitely in Healthcare, having regulated prices, inflation-related price increases may be possible in selected markets. You know, it's tough to undertake given also the pressure on the Healthcare business overall in markets like the U.S. In Electronics, it's also diverse. You know, in Life Science, what we have seen in the recent years, and we have communicated this in the quarterly call, is that we have moved from a range of 1%-2% to almost double that range. From 2% to 3.5%-4%. Once again, this is something that you will further discuss with the different sectors. Peter? Thank you for taking my question. Peter Spengler, DZ Bank. For clarification on your M&A announcement or a target, you said it is, or is it meant that it is in the big three, the target, or is it in all three segments? And the second one is 2023, does it mean announcement or a closing? Because when you look at the figures, you can digest it already in 2022, it looks like so. Maybe you can add a comment on that. Yeah, I can add some color to the comments. You know, as you very well know, we are permanently scouting for opportunities and prioritizing, as Markus has detailed. It's opportunity driven, right? We cannot plan precisely for when announcements are going to happen or anything like this, and you shouldn't think of our M&A strategy as that. You know? We keep it open, we keep it flexible until we find that particular target that will allow us to accelerate our growth on one of those three pillars and create financial value at the same time. You know, we have a differentiated approach, right? Opportunities may compete, right, across enterprise units. Right? This is not that we are kind of going to spread ourselves thin, right, to keep everybody happy. Right? We will make choices on the basis of the board will make choices and the family will make choices on the basis of what is creating value for the group. Okay. Thank you. Next question. Simon. Simon? Thank you. Simon Baker from Redburn. Just really continuing on the M&A theme, you obviously have capacity and desire to do a reasonable size deal. You also have a lot of discipline. If you don't find anything, what is the likely outcome? I'm guessing it's that the lower level of leverage just goes down. Are there any other outcomes that could happen if a deal is not apparent? Kind of related to that, on the divestment side of things and portfolio optimization, going round the Darmstadt site this morning, it's very noticeable how integrated the site is. If you were to divest elements of some of these divisions, how easy is that to do in practice? If one of the things that people talk about is, "Well, wouldn't it be nice if liquid crystals was no longer part of the portfolio," how practical would it be to excise that from the group structure at the moment? Just a second question, a broader one, really tied into what you were saying, Belén, about resilience. We've seen a lot of change at Merck over the last few years, you know, partly under the umbrella of resilience, but just also organizational improvement. How much of that is done? Are we beginning to enter a period where most of the big change has happened and we're into a sort of more steady state? Or is there still a lot more to come? And if you could give us any examples of that would be great. Thank you. Let me start by the third question, which is, I frequently say change is a constant, right? The current environment is actually a proof point of that statement, right? This doesn't necessarily mean that I believe that the most destructive scenario is basically the status quo. Having said this, we are expecting our team to continue to work together to build and to keep and to retain our talent pools that we have enriched over the years. We are very focused on advancing our culture, which is one of the topics that Marcus has mentioned in the framework, to really mind our people towards impact, right? We are really progressing on that. We have been progressing on that together with the board for the last year and a half, and I feel that we are making significant progress. This is the way we understand stability, right? And we are expecting to continue to be moving, right, as the environment and our business requires to stay competitive. This is one thing. On your second question, Simon, on the liquid crystals Structure. The carve-out. MC. The carve-out. Look, yeah, let me take an example of what I experience directly, right, with consumer health. I mean, the carve-out of consumer health was very complex. Very complex, I can tell you. We actually delivered on time because we simply have the capabilities. Carve-out would be business specific because, you know, legal entities structure may be different from one to the other and this obviously will be taken into consideration, but will not make a go, no-go criteria. Markus, would you agree with that? Same. Absolutely same. Yeah. I would say in a really short notice, difficult but possible. Difficult but possible. Exactly. Your first question, Simon, was, if you can remind me. What do we do if we don't find anything? That's an interesting question. I mean, we are heavily investing in organically already, and Marcus has detailed our CapEx plan. Let me take a different angle. We are very confident on our organic outlook. This is what you have heard from us today, right? 25 by 25 is not in question, actually is reinforced. To deliver on that, we believe we don't need any additions from inorganic moves, right? From that perspective, we hope, because the market is very dynamic, that obviously in a reasonable period of time, we will be able to find options. Yeah. If I may, can I? Yes, please. Two short comments to it. First of all, our teams are working day and night screening the markets for opportunities. We are also in markets where in many of them consolidation is happening and where there are plenty of opportunities. I would say there's a certain likelihood that despite a very disciplined approach, we will find good opportunities going forward. Let's say in case we really would find nothing, I mean, then we re-discuss. Yeah. But from today's perspective, I would go so far to say I would exclude a share buyback from today's perspective, but all other things then we would have to really rethink and re-discuss. But that is not the scenario we believe is likely. I think we have time for one more question, please. Hi. Rajesh Kumar from HSBC. Just thinking through the points you made about pricing power earlier, where healthcare is, you know, a bit more regulated, yeah, a bit more negotiated, but in life sciences you're able to, you know, sort of move with pricing. When we read the medium-term growth targets and guidance you're thinking about, what sort of pricing assumptions have you made within that? Have you made, you know, the pricing remains as it was in the last five years, and most of it is driven by volume? Or have you assumed that pricing comes to a major rescue? The second question is on, you know, your earlier point about earnings accretion. Appreciate that EPS accretion is an, you know, useful metric. A lot of investors actually look for return accretion. I know that's changing, interest rates are higher, so EPS accretion actually becomes meaningful going forward. But it has been semi-meaningless in the last cycle with very low interest rates. When you think of accretion on returns, what is the duration you're thinking there? The third one is largely on your purchasing power. You're one, you know, you're spending a lot of money on CapEx. You know, you must be one of the most important customers for all your suppliers. What sort of pricing negotiations have you managed there, and does that give you an advantage in terms of the cost of your assets? I'm just thinking from a returns perspective, can that purchasing power be beneficial? Marcus? Yeah. Okay. Your first question, life science pricing, I mean, Matthias can go into that in the afternoon. The midterm guidance of 7%-10% basically assumes that our pricing goes back to historical levels. Yeah. Currently, as Belén said, we are on an elevated level. In order to counter inflation, the midterm guidance has more a normalized picture actually underlying. On EPS pre-accretion, I honestly believe so that has been important all times, because we see over years a super high correlation between EPS development and share price. I think that has been important also in a low interest environment. Yeah, my comment would be, it just continues to be important for us going forward. On purchasing power, I mean, yes, of course, we do a lot of CapEx, but I also have to say our procurement department is doing a very good job here, but I would not, let's say, in terms of, for, let's say, overall margin impact, I would not overestimate this. Yeah. Of course, I mean, they are doing hard negotiations. They do a good job. Overall, I would not overestimate that this is a big driver for margins going forward. I think that's not the case. Yeah. They just have to do their job and make efficient capital procurement deals. Yeah. That is a conditio sine qua non, but it will not be a major margin driver. No, I fully appreciate your comment on EPS accretion. I'm not trying to say that it's not an achievement to get the EPS accretion. What I'm saying is, going forward, the market might look more for return accretion. Mm-hmm. What are you thinking, what is your thinking on that? As I said, EPS accretion has been important for us, will be important for us, and we believe that our operating strengths together with a strong balance sheet and a well-managed effective tax rate for the group will translate into EPS accretion over the next couple of years. Thank you. Excellent. Thank you all very much for all your questions. We are now coming to the fireside chats. They will give you firsthand insights on selected topics from the three sectors with our business leaders and also members of the extended leadership team. Now, we will need about one minute to rearrange the stage, and we will be right after to proceed with the event. Just one minute. Thank you. Dear ladies and gentlemen, very warm welcome back to the Merck 2022 Capital Markets Day. My name is Constantin Fest. I'm Head of Investor Relations, and it's my pleasure to now host the first of three fireside chat sessions. This is a new format that will give you a deeper insight on selected special topics, and that will be presented to you from our business leaders and also members of the extended leadership team. The first session will focus on Life Science and especially Life Science Services. As you know, Life Science Services, together with Process Solutions, is one of the Merck Big Three. With this, I would like to ask the colleagues from Life Science to join me on stage, please. All right. Before we start, let me introduce the speakers of this session. We have Matthias Heinzel, Member of the Executive Board, CEO of Life Science, as well as Dirk Lange, Head of Life Science Services, business, and Ania Payne, Global Head of Marketing, Strategy and R&D of our contract testing business within Life Science Services. Matthias, I'd like to start with you. If you look back at the last 12 months reflecting, what are the highlights from your perspective? Yeah. Thank you, Constantin. First of all, I really wanna say thanks to the group here. We really look forward to the discussion, and good to see you all in person. Obviously, many things to highlight over the last 12 months. Maybe I just mention a few, starting with our performance. We've delivered a strong performance in 2021. Had a record-breaking year, certainly supported by the COVID tailwind. More importantly, that performance continued in 2022, and that's obviously a result of our strong base business. Secondly, talking about strategy, we have been advancing our strategic growth agenda. We continued our progress around the CDMO offering. We completed, integrated our acquisition of Exelead. Secondly, we are also expanding capacity and capabilities in our business. You've seen on Markus' chart this morning, more than EUR 800 million investment we're announcing and now executing. Thirdly, we established a new organization, right, with our SLS business, our Process Solutions business, and Life Science Services, where Dirk and Anja is representing here. Thank you. Before we go deeper into the service topic, now, Matthias, if you would look towards the next 12 months, what are the priorities from your perspective? Yeah, sure. I mean, first of all, we're very much committed to our midterm guidance, right? You heard it. We are confirming our 7%-10% organic growth despite the fading COVID business. We are very confident about the underlying growth in the market, right? If you look at biologics pipeline, clinical development. We have a clear strategic growth agenda, which is focused on strengthening our core and then expanding into high growth areas. Again, just to mention a few, we are transforming our core bioprocessing manufacturing supply network to go from a more center of excellence concept to an in-region, for-region model. I mentioned here single use. Investments in Molsheim in France, in Wuxi in China. We do the same in membranes, in filtration. That's certainly a big growth driver. We talk about our CDMO business, and we will progress there substantially with a very dedicated management team. Capturing growth is I would say the third agenda item for us to really drive and increase our penetration in Asia. Certainly innovation. You will later in the afternoon also see the new CTO we have brought into our business to really accelerate our innovation. We also consider digital and sustainability as a core part of our business to help drive our growth. Okay. Now zooming in on the services. Why was the decision made to have a service business? Yeah, look, I mean, we feel we have the right to win in that space, and I felt it's important to really have a dedicated experience management team to really drive that growth, and it has a testing component. We obviously, Anja is the expert in, and our CDMO business, which we want to accelerate, and have a very dedicated customer-centric organization. At the same time, and I wanna highlight that, and then hand over to Dirk to provide more comment, we will have a strong collaboration between the process solutions product business and the service business. Because customers come to us because we have this product know-how, which we now can leverage towards our customers in offering the service as well. But Dirk, why don't you provide some more color? Sure, yeah. Thank you very much, Matthias, and great pleasure to be here with you today. Very much looking forward to the discussion now and also later in the afternoon. My name is Dirk Lange. I run the Life Science service business. Joined earlier this year externally to build and run LSS. I've spent the last 25 years building CDMO businesses and building and operating them around the globe. Life Science services really represent a significant growth opportunity for Merck, but one that requires a dedicated focus in order to achieve our ambition in this space. Now with having all the services businesses under one organizational roof, right, and controlling sales and operations in this space, it really allows us to maximize the synergies across those businesses. Matthias touched on the CTS, so testing business and the CDMO business, but also across the individual modalities. With that, we can maximize synergies, create more flexibility for our clients, create visibility for external stakeholders in terms of performance and growth, and it creates a really defined interface, as Matthias mentioned as well, between the products business and the service business, and that allows us to drive innovation exactly at that intersection. Thank you. Let me follow up on this. What is the range of services that are offered by this new LSS business unit? Do you see any gaps that are to fill, to be filled? We aspire to provide the full range of services along the entire value chain across multiple modalities. With that, we're really able to engage early with our clients in the early development phase, support them through clinical development and into commercial supply as well, right? We're already seeing that this is resonating with our clients. In terms of gaps in this space, we've some defined gaps, for example, fill-finish capabilities in some of the modalities, but we're also rounding out our global footprint by adding certain capabilities and capacity to the global network as well. Then we double down on innovation, right? Because that's really important for us as well as we continue to see a shift towards novel modalities. Maybe Ania, if you could add to that. Well, thank you for having me, first of all. It's nice to be here with all of you today. For our BioReliance contract testing services, we really have a best-in-class portfolio, both for traditional modalities like monoclonal antibodies, as well as for novel modalities like cell and gene therapy. We engage with our clients really early on in their development and take them all the way through development and manufacturing, and we innovate alongside them so that they have all of the services they need to both characterize and then release their molecules. Just following up on the customers, as you mentioned them, who are your customers? If you can talk about that. Which modalities do they serve? How do you expect that to evolve over time? Sure, yeah. With our value proposition around accelerating speed into clinic and to the market, we're really attracting both large pharmaceutical companies, but also small and emerging biotech companies. Today, that split is about 50/50 in terms of revenues, but we do expect that to change and really shift since emerging biotech companies are really fueling the development pipeline here. In terms of modalities, about 60% of the revenues are already coming from novel modalities, and we also expect that number to go up over time, because we're already seeing that shift towards gene and cell-based therapies and also specifically in our testing part of the business where that shift has already occurred. Maybe you could add to that as well. Yeah. In our testing business, we really have a quite diverse customer base as well, like Dirk was saying, all the way from small biotechs to large biopharma companies, but also including CDMOs. We really have a best-in-class portfolio that can be customized based on the needs of these various customer types. We again engage really early in the customer development cycle, and so we're able to actually get exposure to novel modalities right as they're emerging. Okay. Why do customers choose then Merck? Because, you know, there's a range of competitors in the market. Secondly, what is the value of combining CTO and CDMO for you and your customers? Right. Loaded question, why us, right? Absolutely. With our newly launched Millipore CTDMO service businesses, we're really doubling down on integration and innovation. That's for the sake of reducing the complexity in the supply chain for our customers and accelerating the development of new drugs. We're already seeing that this is well appreciated in the industry. About 40% of our CDMO clients today already rely on our best-in-class testing services as well, and we expect that to continue over time. In general, you know, when clients pick CDMOs as their long-term strategic partner, they really look for a reliable, high-quality partner with expertise in regulatory technology and just driving that overall reliability that they can engage with long term. Yeah. Our customers really choose us based on our position in the market as scientific and regulatory experts, as well as our broad multimodality portfolio. Innovation is also a point of differentiation for us. We are really innovating not just in our portfolio, but also in our service delivery. With that, it really allows us to have a fully one-stop shop in our CTDMO. One example of that is for our ADCs or antibody drug conjugates. As you know, we provide raw materials. We can also manufacture the monoclonal antibody, the payload and the linker, perform the conjugation, and then provide the testing services along the entire value chain to enhance the value for our customers. Yeah. That's a great example. Another great example is our mRNA value chain, where we also cover the entire value chain from lipids manufacturing through the mRNA payload itself, lipid nanoparticle formulation, fill finish services, and the testing. In addition to that, we also deploy proprietary technologies to drive that acceleration of drug development. For example, on the viral side, we have VirusExpress, which is a proprietary technology that can cut the development time of those modalities in half, and the same actually on the ADCs as well. With ADC Express, we can literally drive development times down in half. Last but not least, in terms of differentiation there, obviously with our best-in-class product business and our ability to not only control our own supply chain, but also to push the boundaries and innovate together, that's a clear differentiation in the market. Thank you. What does it all mean for your outlook? How should we be thinking about your growth profile? Yeah. I'll start with the testing business because it's the most established, and I think we have a really well-established market leadership position that we've been able to use to leverage some of the market shifts, right? We have a very varied customer base, which allows us to weather some of the downturns like COVID, for example, by indexing really on the high growth parts of the market, like cell and gene therapies. Yeah. Maybe to add to that, on the CDMO part of the business, we're at an earlier stage of that growth and at an earlier part of the maturity curve, right? We also see some market volatility similar to other CDMOs in the space, right? We're really confident in the long-term success for each one of the modalities that we're serving. In the short and mid-term, we're certainly expecting some variability in revenues as we continue to build the pipeline and really fill up to get each one of the businesses to critical mass. Maybe just to add on that's why in the morning session, Marcus showed a bit of a wider range, right? We said low to high teens, especially to acknowledge, right, the bigger volatility compared to a PS product business. How do your capacity investments compare to peers? What's your perspective on that? How should we be thinking about the mix of organic versus inorganic, if you can talk about that? Indeed. We're absolutely seeing lots of investment happening in this space by some of our competitors, and that really highlights the attractiveness in that space. Year to date, more than EUR 2 billion have been committed to the services space with about a 50/50 split in organic and inorganic. Yet we're still seeing very long lead times for GMP manufacturing slots. For traditional modalities, we're seeing up to 12 months to get into a GMP facility. For novel modalities, up to 18 months. We believe that we're really well-positioned with our differentiated offering so that even if the supply and demand situation normalizes here over time, we continue to capture the growth. Well, thank you very much for all of these insights. I am aware of time. I think we need to wrap it up here. Let me hand it back to all of you for any closing remarks. Maybe, Anja, we start with you. Yeah. Thanks, Constantin, and thanks all of you for having us here today. It's a real pleasure to be with you. I wanna just close by saying that the CTDMO space is a really exciting place to be, and we're really excited about the work that we can do, both with novel modalities as well as the second wave of biologics and the impact that we can have on patient lives. Mm-hmm. Dirk? Yeah, absolutely. As Ania mentioned, first of all, also thank you for your time. It's a great opportunity to shed some light on the service business. As you can see, the opportunities to really drive health and life and health with science are vast. We, as a fully integrated CTDMO backed with an industry-leading product business, have a crucial role to play in bringing new cures to patients. We're very committed to collaborating with our clients and to continue to push the boundaries of life and science to advance the industry. Thank you. Yeah. Look, thanks a lot for your interest in Life Science. I really look forward to our dialogue later this afternoon. We have a clear strategic growth agenda. We are executing well. We're very much committed to our midterm guidance. As you'll see here, we have a very dedicated, well-experienced and passionate team, and you will see other team members in the session this afternoon. Really looking forward to continue the dialogue. Thank you very much. This concludes our first session. Thank you. All right. With this, we are now ready for the second fireside chat of the day, which is our healthcare sector. I would ask the colleagues to join me on stage, please. Hi. Welcome. Let me first introduce the speakers of the session. We have Peter Günter, Member of the Executive Board, CEO Healthcare, and Danny Bar-Zohar, global head of R&D in Healthcare, Victoria Zazulina, Global Head of Development for Oncology. Peter, I'd like to start with you. Pharma is a pretty broad field. Let's start by taking a look back at the previous CMD, 2021, and you introduced the concept of focused leadership. Where do you see where we are 12 months later? Well, thanks, and great to be with you and see so many familiar faces again after a couple of years, and happy to see you live. To answer your question, Constantin, I think that if I would summarize it in one sentence, I think we say what we do, and we do what we say. If I look back at the last 12 months, and let me give you some proof points of that. First, in clinical development and we have two distinguished teams here of the R&D teams, right? So think about evobrutinib clinical development. Of course, we have faced significant headwinds with the Ukraine situation, and our teams have been able to do a fantastic job in keeping the integrity of the data. Not only that, changing the protocol to an event-driven protocol, and as a result, we are confident we will keep the initial timeliness. It's just one example. Xevinapant, the drug that we licensed from Debiopharm, great progress in the cisplatin-eligible population with the TrilynX study and also now the starting up of the second study, which is the X-ray Vision. I would say on the clinical development front, some great proof points that indeed we are building that focused leadership paradigm. I would also say that we have been quite active on the M&A and licensing front. Xevinapant is of course a case in point, which fits extremely well with Erbitux. Not only that, right? We have regained the rights on cladribine to develop it in myasthenia gravis with the Chord Therapeutics acquisition at the end of last year and only two weeks ago, we announced the option deal to in-license a new generation or next generation PARP1 inhibitor from Nerviano Medical Sciences, which fits extremely well again within our DDR portfolio. These are a couple of proof points, I think, on the progress we have been doing in the last 12 months. Of course, it doesn't stop there, right? We also have to be very active and successful in the commercialization of our products. You will have seen that with BAVENCIO, we have been able to establish really the new standard of care in metastatic bladder cancer. We are delivering quarter after quarter with nice progress in a very uniform way between U.S., Japan and Europe. Mavenclad, granted with different dynamics at both sides of the Atlantic because the labels are different, but also there, very strong positions in Europe and even in the U.S. where we have a first line label that is difficult. We are actually still gaining market share in the second line in MS. I think overall, great progress on the focused leadership concept. Thank you. What does this all mean for the established portfolio? Well, you have seen also in the introduction that established products remains a substantial part of our products. Yeah. Basically, what qualifies as established products is it's a lot, right? Because it's everything except the launches. You have seen that it's a very solid foundation, and when indeed we are successful with the launches, it really augments that very solid and resilient platform of the established products. A couple of comments there. Fertility, worldwide market leader, significant tailwinds that will remain in that business. Belén mentioned it in her speech, probably a little bit more volatile. We have seen that, for example, with the lockdowns in China with that had some impact on the Q2 results for fertility. Fundamentally, we remain convinced that delayed parenthood, increasing access to treatments is indeed going to continue to drive that business, right? The CM&E business is kind of a diversified business within the diversified business, right? It is geographically diversified. There is cardiovascular in there is diabetes in there. There is also thyroid business, for example, in there. In the second quarter, we kind of started to communicate a little bit more in detail on a product that is doing extremely nicely called Euthyrox for thyroid disease. Then last but not least, Erbitux. Erbitux is much more than the supply or not supply to Lilly in the U.S. It is a very dynamic brand if you normalize it for that supply. We are very active with that brand and having Victoria with us today, I'm sure you would like to expand a little bit on that, Victoria. Thank you so much, Peter, for the opportunity to add to this conversation and share some excitement about the good old Erbitux, as well as some newer kids on the block. As you know, Erbitux has been on the market for 18 years now, believe it or not. The core indications where we have played and where we have really impacted so many lives are still there, locally advanced and metastatic adenocarcinoma cancer, as well as KRAS wild type colorectal cancer. Erbitux, and that's the amazing story about it, doesn't stop there. In fact, if you look at the clinicaltrials.gov portal where we track all of the ongoing clinical trials industry-wide and also academia-wide, you will see more than 200 active trials with Erbitux today. This is the tribute, the scientific tribute to the excitement around the EGFR inhibition that can, if sustainably delivered, can be really a great effort and a great benefit for the patients with cancer to control directly cancer, but also to control the resistance mechanisms. There we have already seen some interesting data leading to expansion of the indications for Erbitux as well. For example, with a BRAF inhibitor in BRAF V600E mutant colorectal cancer, novel combination. Recently we have seen the data coming from KRAS inhibitor, KRAS G12C inhibitor plus Erbitux, where together they're doing much better in terms of response rate and duration of response compared to KRAS G12C inhibitor alone. This is just the start of it, and we are obviously walking the talk and entering into these partnerships and collaborations to further expand on the strength and opportunity that Erbitux can bring as an EGFR inhibitor in order to establish more novel and chemo-free regimens and expand the footprint for Erbitux clearly. Well, thank you, both of you. Over to you, Danny. You have been with Merck now two years, about. What does focused leadership mean to you? Well, Konstantin, I think that it has four dimensions. The first dimension is what actually Peter alluded to, which is the indications that we choose. Multiple sclerosis started with Rebif, Mavenclad, now with evobrutinib. You heard about the Chord deal. Why did we do the Chord deal in myasthenia gravis and NMOSD? Because this is neuroinflammation, and neuroinflammation is something that we're strong in. Xevinapant, we don't need to elaborate on that. The second dimension is the biology. Again, you heard about the deal with Nerviano on the PARP1, strengthening the DDR portfolio. This biological path does not stop here because it could cross talk not just with ATR inhibition, which we feel very strongly about, but also with inhibition of apoptosis, xevinapant and alike, and antibody drug conjugates. There are a lot of combination potential with that. The third one is actually the modalities, the technologies. We have a proven track record in NCEs and NBEs. That's great. It gives us a very easy pivot to go to new areas such as antibody drug conjugates, and we'll be very excited to tell you about it in our R&D update call, and on protein degradation. On top of that, together with our life science colleagues, we are working on AI in drug discovery from discovery, design, and synthesis all the way. The last point is actually how we manage risk. I think that you heard that you heard us last year talking about correlated risk. Now, this is not a binary thing, yeah. We will take the risk, the overall risk of the portfolio very, very seriously. We will try not to put all the eggs in the same basket. On the other hand, we will not shy away from pipeline in a compound, for example, Enpatoran. The most important thing will be to get into the most robust proof of concept and then in parallel think about partnering options, as we have already alluded to. I can tell you that during the last year and a half with the latest acquisitions in BD&L, we actually increased the overall POS of the pipeline, so I'm very happy about it. Thank you. A follow-up, and if I may zoom out again. From your perspective, what's the ambition for R&D at Merck? More medicines to more patients faster. Look, I am very happy. We're actually carried by tailwinds of the success of the momentum with MAVENCLAD. There is no other MAVENCLAD in terms of mechanism of action, of how we change the textbooks with BAVENCIO in urothelial cancer. Many firsts with TEPMETKO. Evobrutinib is home grown, and Enpatoran is. You know, it gives us all a very good reason to smile. I'm not satisfied, okay? We are clearly aiming higher in order to make Merck Healthcare R&D the most agile and productive R&D engine. How we'll do that? First of all, we'll focus on execution. When it comes to the Russia-Ukraine conflict with evobrutinib, we started working on that before the first shot was made, unfortunately. Okay? We are very proactive on that. We finished recruitment ahead of competition, and we are handling it, I would say, quite nicely. Same with lockdowns with China for xevinapant. Same with MET amplification post Tagrisso with tepotinib. The gap two years ago was 18 months. Now it's around maybe a quarter between us and AstraZeneca. Very strong focus on execution. We'll continue actually focusing on the great science that we come up with, but we will be cold and laser-focused on the decisions that we take and on the risk that we put on ourselves. The other one is reloading the pipeline. You will hear in the R&D update call how we are confident and excited about the DDR portfolio, ADCs and Enpatoran and much more. Now, we will continue relying on the internal research and discovery capabilities, but this will unlikely bring us to the productivity that we aspire to. You will hear more. You have started hearing. You will hear much more about external innovation and bringing more assets, particularly at the... our ambition is in the pre-POC area, but not only. I think that I need to be crisp here because we'll keep it to the R&D update call November 21st. Well, thank you. On our assets, and if we look at the two phase III assets, if we could dive into xevinapant first, and this would be for both of you, Peter, Victoria, what's the status? Well, xevinapant is really, extremely interesting. We took the license when I was three months at the company. We had as a base case scenario that EON had failed and would continue to fail, which came true. You have all seen the ESMO data, right? The five years, more than 50% of patients still alive. That's typically when in oncology, once would start to talk about a curative effect. We know that space extremely well with Erbitux. Victoria, you are the specialist. Yes. Thank you, Peter. You've said it all. You know. I'm sorry. When we talk about overall survival. That's what excites us in oncology, because ultimately every therapy that we are developing is with the aim to improve survival. We have achieved that on the basis of the phase II data with xevinapant. Not only that, it's also all of the endpoints, efficacy-wise, that we are looking at, they're consistently going in the same direction. With the addition of xevinapant to chemo-radiotherapy as a backbone, we are seeing consistent improvement in how the patients perform and which outcomes they have. That, by the way, doesn't come at the cost of any extra burden of toxicity, which is also important in the context of the quality of life of those patients. The reason why we are excited as well as the broad academic community is excited, having seen those data just recently in Paris in one of the medical congresses, is because for the last couple of decades, there was nothing new happening to this population of locally advanced head and neck cancer. If you think about the beginning of 2000, it was actually the cisplatin itself in high doses that was introduced, not necessarily as a breakthrough, but something new to add to their armamentarium of treatment. 20 years on, some of the failed trials, including immunotherapy trials in this setting, and here we come with the phase II data, which seem to be robust from this replication of result. Looking forward and referring to the discussants of the abstract that we presented at ESMO, at the conference that I've referred to already, this is the largest achievement in the area of locally advanced head and neck cancer. If this signal replicates in the phase III, and this is confirmatory trial well underway already now, we are talking about the next standard of care. That's not me saying this to you. That's, again, I'm referring to the discussants of the data at the congress. The reason why xevinapant could be more successful than other drugs tested in this area is down to probably its unique mode of action. It has the potential to be first in class. It's well-positioned to synergize and work together with chemo and radiotherapy. Even going beyond that, we have talked about the DNA-damaging agents, and this is where xevinapant or the agents like xevinapant could work well as well. That provides a great synergy and strategy for our own portfolio as well. We'll talk more about that at the update for the R&D when we are talking on the 21st of November. Thank you. I'm conscious of time. I think we have to speed up a little bit. Still, I want to ask this last question because we have a lot of interest on the topic. The second phase III evobrutinib. Danny, very quickly, what's the status? Maybe Peter, if you want to add and also already have some closing words. Look, it's been a rollercoaster. You know that, Russia, Ukraine, we managed it. We're very confident with the data. We had recently a very good dialogue with the FDA regarding the quality of the data that comes from there, and we are strongly committed to the readout before the end of next year. That's one thing. These are the technicalities. Wanna emphasize what we believe, not just what we believe is the residual unmet need in multiple sclerosis. You know, I've touched a couple of RMS drugs in my life, and it is very clear that beyond the relapse rate of 0.1 relapse every 10 years, there is not so much to add. What there is much to add is this progression that is not related to relapses. This fatigue, loss of your, you know, occupation, cognitive decline. This is the smoldering inflammation. With evobrutinib, which is a brain-penetrant drug that addresses the culprit cells, microglia and B cells inside the central nervous system, with evidence on reduction of slowly expanding lesions and neurofilaments, we have all reasons to believe that it has the potential to address this on top of its great anti-inflammatory properties. Peter? Just to conclude, of course, I share the excitement of Danny on evobrutinib. We are in full pre-launch mode. You know, we have regular launch steering committees, and I personally participate in those. We have, by the way, a lot of inbound interests of people to join those teams, which is kind of an external validation, I think, of the interest that the community takes into BTKI. Just as a conclusion, I would say that we have drilled down a little bit on the phase III assets. There's a lot more, and we will create a lot more in the near future. Having two phase III assets with very strong POC, both with blockbuster potential for a company of our size in healthcare, I think is a good place to be in, and I'll conclude with that. Well, thank you very much. That concludes the second session. Thank you. Thank you. With this, it's now my pleasure to come to the last fireside chat of today, and the colleagues are already coming on stage. This session is about electronics and the semiconductor business, representing also one of our major growth drivers. Now, before we get started, let me introduce the speakers for this session. Kai Beckmann, Member of the Executive Board, CEO of Electronics. Then we have Kate Dei Cas, Head of Delivery Systems & Services, and also Wiebke Dondras, Head of Procurement for the same business. Now, again, I would like to start now with you, Kai. Last year you announced significant investment in the electronics sector. If you think back, since this announcement of your strategy update, did you meet your expectations? I thank you, Constantin. First of all, happy to be back on stage at an in-person Capital Markets Day. Such a pleasure to see all of you in person in this room. Just recap, when we met last time in 2019, this was still a couple of weeks shy of the closing of the Versum acquisition. That is the timing. Since then, we integrated Versum successfully. We were able to take advantage of that semiconductor boom that happened, not only in the news and every newspaper writing about semiconductors. I think it was a real development, a step change for the semiconductor industry in the past years. With that, we were able then, referring to your question, Constantin, to switch gears from integration to building additional capacity and leveling up our capabilities as an organization. We already announced another acquisition with the Mecaro's chemical business that we wanna close still this year. It shows all these kind of bits and pieces fit nicely together, take advantage of the enormous opportunity we have in front of us. The team has accomplished all that by now. Mm-hmm in record time without traveling and integration. I think we haven't seen that happening in the industry so far. Our customers do appreciate kind of this substantial portfolio. It's an industry-leading portfolio that we offer across materials and related delivery systems, equipment, and services. Thank you very much. Now, what is your view on 2023, and also the years beyond? Also the key priorities for the electronics business in order to successfully continue the growth path that we just talked about? I learned during dinner yesterday the visibility of the next years, of course, in everybody's mind right now. When just remember, when we announced last year our upgraded midterm guidance of 3%-6%, many of you said, "Aren't you too conservative? Isn't there more?" Guys, there is always a bit of uptake here, and sometimes there is a bit of a dip. Our midterm guidance includes, of course, the perspective that there will be at some point maybe a bit more modest development of the industry. This is built in, so we don't have to change that, unlike probably others that have already adjusted for that. We have said this is a midterm guidance. Typically, we try to offer a high level of predictability of what we do. Of course, the current economic circumstances aren't a pleasure for any of us. This is part of our midterm guidance. As already mentioned in the morning session, these swings, of course, are factored into our full company picture and are absolutely unimportant for the group picture. That is more kind of a sectoral view. As you saw in Q2 reporting, already, and kind of an early indicator is the reduced consumer demand that we already saw happening in the display businesses. In semi, so far our customers are ordering a lot, so it's not that we already see that happening. Of course, we all are cautious enough, and we have experienced, many of us, quite a number of ups and downs in the industry, cautious enough to get prepared, if things get a bit more modest. Long-term growth perspective in the semiconductor industry is absolutely phenomenal because these investments, at some point, they will all produce chips, and we are in line with their investments with our capacity. Thank you for this overview, this introduction. Now let's shift a little bit gears and go into the semiconductor solutions business. I'd like to start with you, Kate. Can you help the audience understand a little bit better what the delivery systems and services business is all about? Also, why is it at the core of the ongoing semi CapEx expansion that we are seeing? Our business is really about providing a solution for safe and reliable delivery of specialty materials to the semiconductor manufacturing process. We really do that in three different ways. We do that with the equipment that we design and manufacture. We've been doing that now for almost 40 years, and we have 10,000 pieces of equipment installed globally. We also do it with our MEGASYS services brand, and that's our brand that's 24/7 support at our customer locations, where our technicians are there operating equipment in the sub-fab, supporting semiconductor manufacturing. The third aspect of it really builds upon the equipment and the services support, where we're participating in large construction projects on our customer site when they're building semiconductor fabs. Thank you for that overview. The large project business that you just mentioned, in our earnings calls, the quarterly earnings calls, we often refer to them as a growth boost to semiconductor solutions in the past quarters. Can you elaborate a little bit more about what is it exactly that we do there for our semi customers? Sure. The semiconductor industry right now, the growth is driven by large customers like Intel, Samsung, TSMC, building semiconductor fabs. What we're doing is now engaging much earlier in the process with these construction projects, where we're engaging early at the very start of these projects, doing design, the construction and facilitation of equipment, and then utilizing our services team to provide the support for the startup and commissioning of that equipment. Our team is there turning gas on for the first time to support these semiconductor facilities. Thanks, Kate. Very clear. Now, if you had to describe the overall value of delivery systems. Mm-hmm services business to Merck Electronics, but also more importantly to your customers. Mm-hmm. Yeah. How would you put this in your own words? Absolutely, I'll start with customers. Really, it's about safety and reliability. This is what we do. We provide the solutions to allow our customers to ensure that their factories are up and running continuously. How we participate and the value that delivery systems and services brings to Merck overall is that we bring that different perspective. Kai talked about the fact that there are cycles to this industry. Delivery systems, we engage with the same customers as the materials side of the business, but we engage with different partners. We engage with folks that are working in the sub-fab, and our MEGASYS team is there on site 24/7. They're there. They can see when our customers are speeding up or slowing down wafer production. By engaging in these large construction projects early, we're able to then really understand what's happening from a very different perspective than the materials side. The combination of both of those is what makes it really powerful for the electronics industry. Is there a way how the Delivery Systems & Services business can flexibly respond to the semiconductor cycles that are typical for the industry? Yeah. These cycles are happening and it's really about how we respond with that flexibility. It's the flexibility in our manufacturing capacity, how we're utilizing our plants. We have three plants now. We're adding a fourth in Taiwan by the end of this year, and we're adding a fifth in Arizona in the first half of next year. Having maximum flexibility in our manufacturing capacity is really quite important. Now, thank you, Wiebke. If I can come back a little bit to what we just heard from Kate, the supply chain is a key role also supporting location flexibility. Can you talk about how that plays together? Sure. Yes, indeed. I think one of our biggest advantages is really our operating model. You heard Kate emphasizing that soon we will operate across five plants in three major and distinct regions. That's definitely giving us access to a diverse supply network, so we have a global manufacturing base with a balanced local and global supply. This is in particular giving us advantage over other pure regional equipment provider. Let me give you a very precise example. Special valves are being used to equip and manufacture our products. Mm-hmm. These exact type of valves are being used in any kind of investment for the semiconductor industry, so supply has been very tight and challenging. However, we've been able, as I just described, to tap into different geographies, leverage multiple supply base, that equipped us with a robust supply chain and enabled us with flexibility also short to midterm, despite facing longer lead times. Moreover, I think another key to our success from a supply chain basis is really that early engagement. You heard Kate emphasizing the early insights into the market, and that transparency is really shared with our vendors, and this gives us successful preparedness when it comes to capacity expansions like we're facing. Ensuring that the vendor grows as much as we grow, and that in a true partnership. We treat our suppliers as strategic partners. Thank you. Kate, I'd like to come back to a point you made earlier. You mentioned that the one of the values that the delivery system service business has for electronics is this additional foresight in the semi industry. Could you just talk a little bit more about that and explain? Right. You heard Wiebke mention that we treat our suppliers as a true partner. Really what we've done with our customers is work the same way. We've worked to provide trust and transparency on when we have challenges with valves. We can work with our customers to really get their help to switch to an alternate vendor quickly, which helps us keep our factories loaded. By doing that and developing that trust, we're able to then get a very long-term plan from our customers, not just the projects that they're working on now, but projects that are three to five years out. Being able to do that really helps us with the visibility and being able to respond quickly. Okay. Back to you, Wiebke. What is it that we do exactly to manage the supply chain risk, and particularly in the current environment? Which is challenging. To build up on what Kate just said, is the visibility and the foresight. We help our customers to build their capacity. We have a very long-term and strategic direction, and with this, access to all investments and plans in the semiconductor industry. This is then translating into orders we have on our book that reach out into 2024 and 2025. That knowledge is then used from our side to drive the supply chain proactively. We can anticipate raw material demand. We share that in a joint effort with our vendors. For example, we can hedge raw material naturally in advance, and that also helps us to foster that strategic partnership with our vendors. Moreover, I think where we differentiate from others is in picking up what Kai said earlier, is our customer proximity, also from a supply chain basis. We proactively discuss with our customers on business continuity plans and focus on driving alternates. With the acceptance of these alternate equipment, that is then also giving us the flexibility and the resilience we are discussing also during challenging times. Well, thank you to all three of you. Kai, any closing remarks after what we've heard today? Important takeaway message in tough times is: How do we deal with foresight and flexibility in the organization? I think that what Wiebke and Kate clearly brought across is how we build that foresight. How do we understand what our customers are doing, and how do we build flexibility in our production and supplier network in order to be more resilient if there are swings in demand? I think these are the most important components of today's Fireside Chat. That combined with our broadest industry-leading portfolio, in the materials space, world-class R&D, and the capacity buildup that we do in the frame of Level Up, and that should give you confidence on how we kind of maneuver these huge opportunities we have in the industry while, of course, the economic environment is where it is right now. That is the picture we wanted to get across in today's Fireside Chat. Well, thank you very much. With this, I'd like to remind all of our virtual participants that the program will continue at 1:30 P.M. with the last webcast session for today, the ESG session. With this, we are now closing the morning session. Digital ethics. He will present our strategy for access to medicine and global health. How we are integrating sustainability into our supply chains will be the topic of Bianca Harnischfeger, Head of Procurement Governance and Solutions. Last but definitely not least, our Chief Diversity, Equity and Inclusion Officer, Renee Connolly. She will report on ambitions and achievements in this area. With that, I would kindly ask Petra Wicklandt to come on stage, and I will hand over this one to you. Sustainability, this is definitely an enterprise priority for Merck, and this is why we have tightly included this and integrated this in our business strategy. For those of you who are not familiar with our sustainability strategy, just a very short recap. On our corporate level, we have three overarching targets. The first one is, until 2030, we want to create human progress for more than 1 billion people by sustainable science and technology. Here we are focusing on innovations for our customers, but also on health and well-being of our patients. The second goal focuses on our value chains. We want to integrate until 2030, sustainability in all our value chains. This is about culture, values, it's about transparent supply chain, and we will focus on all geographic regions. The third goal focus on climate and on resource consumption. Until 2040, we will be climate neutral, and we will significantly reduce our water and resource consumption. Our strategy is based on five of the 17 sustainable development goals. We have in the last couple of years developed our governance, and here you see the result. The overall responsibility is with our CEO and one additional executive board member. The two are the sponsors for this enterprise priority. The executive board is, of course, responsible for the approval of the sustainability strategy and also any changes to this strategy. The board has established the so-called Merck Sustainability Board, and I'm the chair of this board, and here we are tracking and reviewing the implementation of our strategy. Then we have the business sectors and also the enabling functions, for example, procurement. That's actually quite a key function, especially to reach our third sustainability target. In this area, we have the responsibilities really for the implementation of the single targets and KPIs. Of course, we adhere to the main codes and principles. For example, the UN Global Compact and UN Guiding Principles on Business and Human Rights. We have also established our own internal guidelines and policies, for example, our human rights charter. We are not only internally discussing sustainability, but we are also regularly exchanging with external experts. We have here three separate external expert panels. One is an expert panel with sustainability experts, but we also have an expert panel with ethical experts and with digital ethics experts. Yeah. Where do we stand in terms of execution? At the moment, we are in phase I. That means our corporate strategy has been cascaded to the business sectors and each business sector has meanwhile developed their own business sustainability strategy. We have implemented the governance, as I explained it to you. We have clear metrics and KPIs, and we also have increased the transparency of our reporting, and we will further increase that. We have a lot of tools that are newly developed, and one of these tools was already mentioned this morning. This is our R&D sustainability scorecard, which will help us to drive and continuously improve the sustainability of our R&D portfolio. In phase II, we will build or continue to build our sustainable culture and mindset. We will also focus on modeling and steering sustainability rather than just measuring it. In the end, we will decouple business growth from any negative environmental impact. This was a short introduction. I will now hand over to the first expert, which is, Andreas Polomski, speaking about climate action. Thank you, Petra. Update on climate action at Merck. My name is Andreas Polomski. Merck is fully committed to reach climate neutrality by 2040, and on our journey to do so, we just recently have set a near term science-based target for 2030. With this, we want to reduce our emissions under scope one and two by 50% from a baseline 2020 until 2030. We also have set an intensity target of reducing scope three emissions per euro gross profit by 52%. On our journey to 2040, we then intend to reduce emissions even further to the maximum way we could. The residual emissions we would offset at this point in time. You might have heard, end of last year, the Science Based Targets initiative also concluded a framework around net zero. This is, in our mind, the most ambitious definition of net zero. Merck is currently evaluating the possibilities whether we could sign up for a target like this and then to offset residual emissions via carbon capture thereafter. Where do we stand to reach our science-based target, the near term target, and what are the decisive levers we already have been identifying? Under scope one, the main lever is around process emissions and mainly stemming from the electronic industry, a product we manufacture, NF3. We already have piloted technical solutions to reduce NF3 emissions. We are fully committed to retrofit the existing plants with the solutions we have found for NF3, and we are also committed for any future capacity expansion that this would only go online with built-in abatement solutions as well. Under scope three, it is all around renewable energy. We have set a target to cover 80% of our purchased electricity with renewables by 2030, and we are well underway. In 2021, last year, we already reached 30% coverage with renewables. Scope 3, it is all about collaboration with customers and suppliers. Last year, we have set a so-called supplier decarbonization program where we reached out to our suppliers to see where they stand with respect to their decarbonization journey. In the first wave, we covered around 50% of the respective emissions in that category, and we have a tailored follow-up this year to even better understand where these suppliers stand. We enlarged the supplier base, which we reached out in a second wave this year as well, covering even more suppliers for transparency reasons. The second biggest lever within Scope 3 is the use of our products, and here again with respect to the semiconductor industry. Here, it's about collaboration. One example being the work we are doing together with Micron in order to develop alternative etchant gases with significantly lower warming potential. How to anchor really the decarbonization in our organization? Here are some enablers of our decarbonization. For example, in our investment processes, CapEx investments, we integrated climate targets. We established a carbon price for transparency reasons so that we understand prior to approving an investment, what is the potential footprint in the future? We're also giving guidance to our project teams in terms of technical requirements where we implemented greenhouse gas reduction targets as well, and we look, for example, also for climate risk assessment of new buildings. An even larger area is around new products and new product portfolios. Here, we really want to establish and making sustainability part of the R&D processes so that this is already been thought of in the design phase accordingly. Last but not least, we linked climate targets to executive compensation. Here we really want to anchor and make sure that we have a continuous and coordinated action towards our climate targets, and anchoring the decarbonization journey within our existing processes. With this, I finish and like to hand over to Jeff, who is going to talk about sustainable product portfolios. Thank you very much for your attention. Please, Jeff. Andreas Polomski, thank you. Hello, everyone. I get to talk to you about how we bring what you just heard Andreas Polomski talk about come to life, and this is really the development and advancement of the product portfolio. As you can imagine, you heard Andreas Polomski talk about scope three and the supply chain where a significant amount of the emissions sit. It's imperative that we not only do the work with the supply chain, but also think about where is the carbon within the products. One of the things that we want to do is to be able to bring that through across all three of our businesses. You heard Belén Garijo mention this today about how we were using design for sustainability within our product development teams to be able to start to capture what it meant to decarbonize, to dematerialize. This is really the first step in seeing that evolution of our product portfolio. You heard Markus talk about this as well, about really having a competitive advantage when we think about greener alternative products. Now I want to give you practical examples of what that looks like and how our teams are bringing this to life. Let's take the first example. This was the pilot project that started the official Design for Sustainability process within Life Science. Here you see the Stericup at the bottom. You'll notice that there is a slight difference between those two pictures. There is less plastic. In the bottom unit, you would pour the media directly into that Stericup filtration. It would filter down and then collect in the bottom container. In the new model, you can see that you actually take the media bottle, screw it directly onto the filter itself, turn it over, and then eliminate that plastic. Now, this is good, but the important part is the data that sits behind it. How do we capture and be able to quantify those improvements? Because this is where the pull-through to the customer becomes extremely important. When we're able to quantify these types of improvements, we help speak to and address the goals that our customers have, as well as the goals that we have as an organization. You can see here that there's up to 26% less plastic. There are a variety of SKUs, and so that's why you see the up to 26%. We also have reduced packaging, so we need less plastic packaging, less corrugated packaging to be able to ship that. In 2021 alone, there was a 10.5-ton reduction of CO2 because of this dematerialization that is captured in material use as well as packaging and transportation. Now, you may also sit back and say 10.5 tons is not that much in consideration of some of the numbers you just saw. But in life science, if you think about the product portfolio of 300,000 products, you start to see how a lot of a little adds up to a lot, and that's really the direction that we want to go. Another example, our Milli-Q water filtration systems. So one of the gold standards within the industry for water filtration. The new generation of this machine, the IQ 7000, which was introduced last year, brings to our customers a system that has been dematerialized again. Once again, the decrease of system weight by 18%, helping to decrease emissions. We have reduced the amount of plastic used in the purification cartridges. If you think a very sophisticated Brita cartridge, except for very high-end water filtration for scientists' use in labs. That has been reduced. Then also contributing to things like Scope 2 emissions, the amount of electricity required to run the system. All of these things, once again, can be quantified for our customers so that they can see the benefits. One final example, which is the styrene solvent. One of the things that we realized, specifically in the sciences, solvents are a significantly used material, and they hold a lot of carbon because of the raw material that is used. Here, it's generally fossil fuels. The question is: How do we transform this part of the portfolio? This is where you see us work externally and internally to develop products that are bio-based, that use waste or waste raw materials instead of using virgin materials. In this instance, you have a CO2 footprint that is almost five times smaller than that of what it's replacing. All of this happens because of a systematic implementation of design for sustainability for R&D teams. It provides them with a framework that is clear, it's measured, and reports out what happens. Through the systematic implementation, we're able to expand and evolve the portfolio, both new and existing products, in a way that helps us bring these greener alternatives to our customers on a more consistent basis. With that, I'm gonna hand it over to Manfred to take us into the next section. Thank you, Jeff. Good afternoon, everyone here in the room, and good afternoon, everyone who joins us online. I'm going to talk about global health and access to health, our major activities in this area. We have three strategic priorities in global health. We fight against schistosomiasis and neglected tropical disease. We catalyze innovations for health needs in low and middle-income countries. We want to expand our access to our healthcare portfolio in low and middle-income countries. Let me explain to you what we believe makes us unique in how we approach these areas. Let's start off with our approach to schistosomiasis and malaria. Here we follow an integrated approach, a holistic approach. What do we mean by that? Let's take schistosomiasis as an example. This is a parasitic worm disease, maybe not well known, but it affects over 240 million people worldwide, most of them young children. It represents a terrible public health burden for poor and developing countries. To fight this disease, we could have set up a normal drug donation program and left it at that. We felt this wasn't enough. We wanted to do more. We're doing a drug donation program, of course, but we're also doing a drug development program. We're doing a diagnostics program, a behavior change program, because we believe that several elements need to come together to overcome this very complex disease. Let me tell you how this works. Taking our drug donation program as an example starting point, we donate over 250 million tablets a year to treat up to 70 million school-age children in Africa every year. I focus on school-age children because preschool-age children are excluded from this because there's no formulation for these children. Of course, they also contract the disease. We developed a child-friendly formulation that allows exactly treatment of this population. We've completed a phase III trial, preparing a dossier for submission. In many areas, we also offer wash programs, behavior change programs. We want to help people understand how they contract the disease and how they pass it on, because this is absolutely crucial to break the transmission cycle. Lastly, we also support the development of a rapid diagnostic test because this will help us focus our donation program, our treatment, in a more targeted and efficient way to really focus resources where they're most needed. These resources are scarce in these countries. I hope this helps to show how the individual elements build up and reinforce each other and build on each other to really help us achieve this goal and become a recognized partner in this area. It's also a sign of our long-term sustained commitment to fight this disease. We started in this area more than 10 years ago, and we committed to continue the fight until this disease has been eliminated as a public health program. I've taken schistosomiasis as an example, but we follow a very similar approach in malaria, a disease that you probably know much better. In our access to health strategy, we follow our focused leadership approach. You probably heard about this principle earlier on in one of our sessions today. We aim for leadership in areas where we have strong knowledge, where we have expertise, where our product make a unique difference. We translated this approach into what we call a go wider, go faster, go deeper, go smarter approach. Let me tell you what this means. Starting off with go faster, we want to make sure that we shorten the gap between the first launch, usually in a developed country, and the next launch in a low and middle-income country. The gaps are too long at the moment, we want to shorten them. In our go broader approach, we want to make sure more countries have access to our portfolio in low and middle-income countries. Our go deeper approach looks at individual countries where we're already present with our products, but we want to reach additional segments of the population, moving away from urban areas into more remote areas. Lastly, in our go smarter approach, which focuses on praziquantel, our donation program, this is really to make our donation program more effective, more efficient, and also look for novel and sustainable financing mechanisms to make sure the burden of fighting this disease is equally distributed and shared among everyone who is fighting this disease. In conclusion, I've shown you how our integrated holistic approach to fight malaria and schistosomiasis sets us apart and is also a sign of our long-term commitment to fight these diseases. In our access to health strategy, I've shown you that our focus leadership approach is really tailored to our product, tailored to the needs of the patients in low and middle income countries to ensure we deliver maximum impact to help these patients get better lives. Thank you for your attention. I hand over to Bianca. Hello, everyone, here in the room and online. I would like to talk about sustainable supply chain management. Yeah, here we go. As Petra said, this is mainly anchored in our goal number two, to achieve sustainable and transparent supply chains. When we look at procurement or the supplier landscape overall, we have to acknowledge that we have a broad supplier base, which is 60,000 suppliers worldwide that make up around EUR 8 billion purchasing volume. How to tackle this mass of suppliers, this is really the challenge for us. We continuously strive to set up our strategies, processes, and our guidelines to prevent those violations and, improve our standards that we have set. One example is, for example, the Supplier Code of Conduct, which was previously the Responsible Sourcing Principles, as well referenced on a slide that Petra showed. The Responsible Sourcing Principles had to be updated to meet those new expectations. The Supplier Code of Conduct is then as well the expectation that we address to our suppliers and will be rolled out in 2023. We are member of Together for Sustainability since 2015, so quite some time, and we have recently added our partnership to the Pharmaceutical Supply Chain Initiative, PSCI, which we joined, as I said, last year. Together for Sustainability has an own audit program, but they're using as well EcoVadis for performing assessments of suppliers on a paper-based basis. All those initiative, their approach, is to share those results in the community. One example that I brought for you is how do we meet those changing legislations and regulations that are out there? One is, for example, the German Supply Chain Due Diligence Act, for which we prepare, for us at Merck, but as well for our supply chain. The why and the reason why we do this is basically the same in the same lines, and what we have to do, you will see on the slide, is kind of a risk analysis, setting up preventive measures, set up mitigation actions, and a compliant system, kind of a grievance mechanism. What we need to do is, or what is the basis of this, is kind of the human rights, respect the human rights in social and environmental aspects for our own business area, that means Merck internally, and as well for our supply chain. This is a German law, but it's not a German problem or topic only. This is a global need to have this transparency available. We have set an internal working group, which is working since 2021. A cross-functional team staffed with all the colleagues needed, including business representatives, to prepare us for the needs of this law. We aim to build on existing processes, and we have found in our gap analysis that we have quite much in place, so there are few elements that need to be added, and we are right now preparing for those. The first achievements that we have made in that regard are, for example, exactly this Supplier Code of Conduct I talked about, and we have appointed a human rights officer. How do we measure this particularly going forward? We have introduced a KPI that should help us to demonstrate as well our achievements towards this transparency. We have basically two indicators that we have set. One is focusing on the purchasing volume and the other one of the number of suppliers. Basically both are calculated in a similar manner. When we look at this broad supplier base, we need to have a filtering system that allows us to say, where do we focus our activities on and where do we look at? We call those the relevant suppliers. We have said we have a risk-based approach, so we look at country and industry risk and to our top suppliers that are contributing to 50% or more of our purchasing volume. With this filtering logic, then we can measure again the purchasing volume, and the number of suppliers in terms of those suppliers that have done a sustainability assessment or audit. When we compare this, then we get our concrete KPI. Message for you is mainly we aim to measure as well towards our transparency target, and those targets are set. You see the indicators on the bottom of the slide. Our starting point from 65% in 2021 and 21% in terms of number of suppliers. We expect a steady improvement towards those into the near-term future. With this, I hand over to Renee for our final slot. Thanks a lot. Thank you. Thanks so much, Bianca. Well, I have the great privilege to talk about one of our most critical assets, our people. As the Chief Diversity, Equity & Inclusion Officer, my job and as an employee, but as our job as leaders here is to really look at what do we mean when we talk about diversity, equity, and inclusion. Here at Merck, when we talk about it, we're talking about diversity in the sense that the rich tapestry of our employee base, everyone's invited to the party. We embrace the rich mix of our people. When we talk about equity, which is a new concept that we added about a year ago, it's this idea that everyone can contribute to this playlist and to us really working to identify and eliminate barriers that prevent people to feel like they belong here. When we talk about inclusion, which is a critical piece of all this, everyone is welcome to celebrate, and together we really are building one Merck. Although three very distinct businesses, we really have one Merck and one goal. I think it's important for us to think about it, and you heard Belén and Marcus refer to it this morning. It's not just a topic. We have to be credible. We have to walk the talk. I think it's very important that we look at this as it's not just an issue or a hobby. For us at Merck, DE&I is a business imperative. I'm very proud that about a year ago, we were transparent and disclosed our aspirations through 2030 to drive the business forward as it relates to DE&I. Additionally, a major milestone that was made last year was the fact that we kind of expanded the focus that we've had over the past beyond just gender. Now we look at this in three dimensions: inclusion, culture and ethnicity, and in gender. On an inclusion front, we talk about offering people training. We have mindset shifts. People are deeply rooted in the cultures and experiences they have had. How do you really bring that organization along, especially an organization of 65,000 people across the globe? Secondly, we're focusing a little bit on listening to the feedback of our employee base. We added into our engagement survey an inclusion index, and we look very carefully at individuals and how they feel included at Merck and able to excel and perform in their job. When we look at culture and ethnicity, we have so many cultures, and that's the richness of what makes our company so wonderful. I think it's important that we're talking about how do we expand our leadership levels, which we call L4s and above, in the areas in Asia, MEA, and of course, in LATAM. Additionally, our underrepresented communities. With such a big business and customer base in the United States and such a big footprint from an employee base, we're looking to increase our underrepresented communities. From a gender perspective, we have really doubled down and said that we will achieve gender parity between females and males by 2030. Purposeful actions, and I think there's a very critical concept there. We do surveys, of course. We listen to feedback both internally and externally. We do regional networking because it's different by country, and we're really looking to share best practices and making sure we're not reinventing the wheel and we're maximizing our opportunities. Additionally, we have employee networks, which I'll talk about in just a second, and we talk about funding underserved communities, which I am proudly announced earlier this week. We just recently announced, and today for the first time, you'll see that we're announcing other disclosure of our gender pay equity analysis gap, which is less than 1.5%, quite an enviable position for a company of our magnitude. We have leadership in women that is north of 36% and tracking that against our balanced scorecard. Very nice progress there. You'll see in the culture and ethnicity space that we have over 142 nationalities that make up our organization, which really does demonstrate how broad a base of the cultures that we have here. We did make the CNote investment earlier this week and announced that from an investment portfolio perspective to support the communities and bring economic viability to the areas in which we work in the U.S. market, a growing market for us. We've almost trained 50% of our people leaders as it relates to inclusive leadership. Very proud of the progress there. That goal and objective, we want to get all of our people leaders trained by the end of next year. Last but not least, we have over 60 communities within our organization, international communities, ERGs, which allow people of like-minded purpose and mission, whether or not sexual orientation, ethnicity and culture, women in leadership, kinds of organizations that we have here. When those employee networks really give people a place to go and belong and be able to encourage and live and breathe every single day the work that we're doing in this space. Very proud of our organization, and I think we can proudly say that many of us feel like we belong here at Merck, and we're gonna continue to drive that forward in support of our business imperatives and goals. With that, I'm gonna hand it over back to Eva. Thank you very much, Katie. Thank very much, Katie. Thank you very much to all of our speakers. Thanks for the insights you shared with us, with me. Now we are coming to the Q&A section. The people in the room, I kindly ask to prepare for questions. Just raise your hand, use the mic, and my colleagues, yes, please join me here on stage. Any questions from the audience so far? If not, I will start with a warm-up question maybe, and some others might follow. Maria, maybe, I have a question for you. Can you please give us some insights on how Merck is thinking about future reporting standards? Because we didn't cover that in the presentation, so it would be great if you could outline a little bit. Well, a trend that we are seeing is that the financial and non-financial reporting is coming closer and closer together. We reflected this already by integrating our non-financial statement in our annual report this year for the first time. In addition, in our sustainability report, we are reporting against the SASB standard and also TCFD report. Besides that, what we already do, we are also looking in what is developing with regards to transparency and reporting. We all see the development in the European Union with the corporate sustainability reporting directive being drafted, and the standards that are developed on specific reporting requirements. We also see what is happening with the International Sustainability Standards Board on reporting requirements. Well, what we need to do now is to integrate and adjust our reporting to those requirements to make sure that we fulfill our stakeholders' information needs. Thank you very much, Maria. Yes, please go ahead. Ralph Nieder, Zogenix. When you talk about reporting related to that on M&A, which earlier this morning we indicated that you might go for big moves also, how will you take into account your KPIs when considering M&A? Basically, your targets are before M&A, and then you adjust your targets or, excuse me, how are you going to do that? You're talking about the three sustainability goals, right? Yep. They stay as they are currently. We created a catalog of criteria, ESG criteria that we are considering in the M&A due diligence. Those criteria cover, for example, sustainability strategy, reporting, greenhouse gas emissions, supply chain standards, and so on. During the M&A process, the targets are evaluated according to these criteria, and this might have an impact on the price of the target and also maybe result in implementation recommendations. Our sustainability's goals stay the same, but we are considering sustainability criteria in our M&A due diligence. Yes, please. Hi, Rajesh Kumar from HSBC. How much voice do you really have when, you know, a division manager decides and suppose, for discussion's sake, it's a very flamboyant division manager, very successful, you know, driving the business growth. You say, "You know what? If we buy this, we're going to miss on our sustainability goals. These guys have not a single, you know, female manager in the top leadership there. Carbon footprint is absolutely rubbish. If we change it, the profits won't be the same. Maybe I- Do, do you- Yes, absolutely. Have any influence on that decision-making or is it, you know, that thing is bought and then you're brought in to fix it? I mean, this is the examples you just made, like no diversity in leadership or so. These are things that then go into the recommendations for the integration process. Then our- You fix it. We can see if we can fix it, yes. I mean So- It's a cost-benefit analysis, and you need to see can you fix it or is it too expensive? How expensive is it to fix it? Okay. Maybe we can give an example from Versum. Yeah. Maybe I give you a concrete example because when talking about climate action, that's topics we discussed, of course, right? In my presentation, I tried to outline that we build decisions in existing processes, and the example would be CapEx investments, for example. Mm-hmm. Larger CapEx investments now need statements concerning what is the future footprint of that respective piece of investment. If the footprint is not in line with our goals, the investment is just not getting approved. We had these examples in the company with significant investments, and now there is abatement coming. Okay. You know of examples where. Yes Investments were stopped because of this. That's excellent. No, not stopped, but not approved until the abatement measures delivering the goals, also the GHG goals, are met. I think what is important is that before you make a deal, you have the transparency. Yeah. you evaluate what would it cost to fix this. If these costs then are not anymore fitting into the business case, then you should not do it. This transparency, this is the first step. You need it. What will it cost us to fix the gaps in sustainability? This is the important question. I would say maybe just on the people side of the house, from a diversity perspective, as Maria said, the due diligence we do post-acquisition normally from an integration perspective, we've become very methodical about having diverse slate candidates, so there's no assumption that there's gonna be any one party that stays or goes, having lived through the Serono and the Sigma-Aldrich acquisition myself. Okay. That process is extremely diligent. I think we've done a really excellent job of putting that M&A process in place. Because there is something from a competency and capability perspective that some individuals, regardless of their background, they are bringing something very important to Merck. We go through that process, I think, very diligently. I don't know if it would be a deciding factor on the people side to buy or not to buy, but I can assure you that when we get to the part of integration, that is very much closely looked after and a factor in decision-making of the hiring. Okay. That, that's it. It's just trying to get a sense of the psychology in the room. Absolutely. One other question, which is a slightly more philosophical one, and you know. You guys are a whole board of intellectuals looking at a very difficult problem. The stock markets are very fickle-minded. They are, you know. We've had a lot of noise around ESG. A lot of capital has been, you know, allocated towards ESG. Put up the interest rate, discount rate, inflation and put up, you know. I remember before 2009, we had a similar trend around ESG, and then that whole thing got derailed for another six, seven, eight years. That's mainly because a lot of the benefits you're talking about, you know, putting an explicit cost of carbon, which makes all the sense because, you know, sooner or later, the carbon will have a real price, and it will impact your operating margin. Because it's a 5-10-year-out problem and, you know, discount rates have gone up, which means that the contribution to present value, NPV, of that problem is much smaller, you know, the decision-making weight of it goes down. Mm-hmm. How would you convince your board not to take that route? Because I know ESG can be fashionable and unfashionable depending on business cycle, but at the end of the day, 80% of capital raised in the last year had some form of ESG linked to it. It will structurally be more fashionable. That's why I'm asking that question to you, that how do you think about engaging with your management on that. Maybe I can take that question. For us, sustainability is certainly not a fashion. I mean, we deeply believe that, sustainability is a prerequisite to be profitable in the future. We also often hear the question, well, with all these crises happening outside, geopolitical crisis, COVID, inflation, how can you still invest in sustainability? I mean, it's very easy. First, we think if we are not investing in sustainability, we will not be profitable in the future. That's the first thing. The second thing is when we do investments, and I really talk about investments not about costs, because for us, these are investments like other investments. When we make an investment into sustainability, we also look at a business case, right? This is why we have established an internal carbon price, and we take this into consideration when we invest. Sometimes it can be that investments in sustainability will not have an immediate payback, but we are deeply believing that there is definitely a long-term payback. Take another example, water. I mean, scarcity of water. Water will become more expensive in the future, this is very sure. When we invest into water saving investments today, this will certainly pay back in the future. If I may ask, what is the price for carbon? EUR 100. Okay, you're set at EUR 100? Yes. Which is higher than what it's trading today. Yes. Basically you put a mark and. Exactly. Okay. Yeah. Okay. Thank you. Thank you. You have to look in the future, and that's why we have a little higher internal carbon price than the recent price. No, I appreciate that. Maybe you can add something on that question. Yeah From an opportunity perspective. Yeah. We talked a lot about risks, but. I think that's the other side of the equation, that it's not just the return on the investment, it's the competitive advantage and the swap that you potentially see. We are seeing that as we have these discussions with customers. You know, I spend multiple times a week meeting with customers, talking about these specific examples, and then it is figuring out how do we provide a case to them that is compelling enough that helps them achieve their goals so that they choose us as their partner of choice more frequently. We are seeing that come to light, and I think that's the upside that we're not maybe taking into account in the risk-based solution or scenario. That's where we do see a lot of potential upside because of how long we've been doing this, and leading with data and transparency, it does provide us with a competitive advantage. Just on the customer side, obviously every customer has got their, you know, carbon targets, and we sort of had a period where between 2015 to 2017, everyone reported Scope 1 and 2, and they were done with. Mm. Now Scope 3 is becoming the standard, so they are going to compare Millipore or Sigma-Aldrich with every other supplier and say, "This is the landed cost of carbon." You need to sort of provide them with a figure on each of the product. Is that what you're talking about? Correct. Exactly. Yeah. Those examples that I showed with like Stericup and some of the other products. Mm-hmm that is the competitive differentiation, is the ability to take all of the things that are happening, so like the work that Andreas is doing. Yeah ...that we partner with him on climate action. How we pull through things like the VPPA, which Mark has talked about. Mm-hmm that directly affects what the Scope 2 footprint looks like for any product now manufactured in the United States, because that's now zeroed out for Life Science products. That's where you start to see and pull and connect these things to translate the benefits of all this work, because if we do not capture the work that's happening in the supply chain, the work that's happening in climate action, the work that we're doing across the board and make sure that the reporting of this comes through, we lose that benefit in terms of how we can turn that into the competitive advantage. No, that's super interesting. Thank you. Maybe, Andreas Polomski, you can just add a little bit on product carbon footprint, what it means for us as a customer, but also as a supplier. I think. Also for us, what is important that what Jeff just said, that we establish a product carbon footprint for every single Merck product. We are about to do that step by step, so we started that process to get that transparency. It goes both ways. It gives customers a better choice of where we stand, but it also helps us to really manage our own products and portfolios accordingly. That's a vital element to steer portfolios within the Merck group as well. Then to link that to our suppliers, we are also within the supplier decarbonization program, pushing slowly suppliers to also establish product carbon footprint so that we get the full transparency along the whole value chain. Thank you. In relation to that, can you quantify how this translates into pricing power or incremental pricing? You can ask if a product is more sustainable than from competition. Is this quantifiable? I think I would hand over to Jeff because they are. Yeah, I think one of the difficult things that we need to maybe change our perspective on is the green premium. I think that's a tough conversation to have. Naturally, these products are actually more expensive, not because of the environmental characteristics per se, but because of the scale at which they're manufactured. Because if you think about some of these solvents that we have, for instance, they're produced in hundreds of metric tons a year, and these newer substances are coming in on smaller scale, maybe 1,000 to, you know, 5,000 metric tons per year. The important thing that we're thinking about is how do we build the book of business that sends the market signals that this is a good place to invest so that there is more capacity built in this space, so that we can then take that price curve to make it closer to parity? I think there will still be some type of premium that exists, but we've got to make it realistic because it's, you know, if it's 5x the cost of what it is today, that's not gonna take hold. It's really imperative that we think about how we can extract that benefit. I think this is where we're looking at, you know, kind of volume of business transition over maybe incremental price on a greener alternative. Can I just, I think you mentioned this at the beginning of your talk. Carbon offsets, you would that would only come at the end of the process, right? I mean, initially, this is really just carbon reduction, Scope 1, 2, and 3, and then the offsets more at the end or is that an integral part of the entire process? It's a little bit both. What we are currently doing, we want to establish. If we're talking about offsets, we are not talking about avoidance certificates, for example. We really are talking about to remove critical gases out of the atmosphere. That technology is, as of today, not developed in a scalable means. That's why we are looking at a later stage in doing offsets. If there's something available, I'm sure we would look at this in the meantime. Maybe to follow up on that perspective. You're talking primarily about CCS basically when offsetting that. Correct. Are you part of initiatives also to make that possible in Germany, which is still very sort of much opposed to that being a possibility? The second question is, you talked about those CO2 reduction measures, or you mentioned earlier this morning, one where you had a PPA, I think in the U.S. it was, basically to purchase green power as compared to power from conventional sources. Are you planning to make that also in other geographic areas of your business? Would you go as far as, I'm thinking of BASF, to also consider equity investment, who, as you may have seen, are sort of buying into wind parks? Correct. I mean, we obviously try to reach our goal to reach 80% coverage there for procured e-electricity, and we are well on our way, I would say, to do that. You have seen last year, 30%, and we will, of course, evaluate every possibility which makes really sense, to do that. That's clear, I think. In terms of what are the next steps, I mean, there are steps out there in the next months to come, so, to move the needle up, I would say. I think we have time for one more question. If nobody is going to, I might as well. One of the things is slightly left field to you, Jeff. You know, you showed the Milli-Q water system, right? You know, I was a very rubbish chemist once upon a time, and I used one of those, but because I was as bad, I didn't use it enough, but I did drink a lot of water. You know, thinking of it, an innovation like that for the lab, the scale potential for something like that can be quite massive. Have you ever, as an organization, thought of, "Hey, we just developed it for the labs, but what if we did it for people, in a general market?" I can tell you that as we think about expansion opportunities, we throw out a lot of kind of wild ideas. Mm-hmm. Now, that's not something we're focused in on. We do focus about what our business is, and that's focused- Yeah. In the labs. I think we do look and see where are potential adjacencies. That's where a lot of, to be honest, my ideas come from is my lived life. That helps bring a different perspective because I am not a scientist, but I interact with scientists on a daily basis. That's a really interesting kind of synergy of creativity that happens that can bring new ideas to market. I think you look at the technologies and certainly I'm sure our technical teams would be, you know, kind of like a little bit, "Ugh, this is ultra-pure water that would kill you if you drink it." I think this is where they would. There's that curiosity about, well, what could happen if? Are there specific markets which are underserved? I think those are the areas where we're more interested in going into because there's other people who do, you know, that space probably better, but there could be broader markets that we could look at, with, you know, water purification technologies, but then also some of the new products that we're going into. Could those technologies be translated into some of the processes that support? Because if we're taking raw materials, waste raw materials, is there ways that we could potentially clean that up for other purposes? That's where our technologies come into play. Yeah. Thank you very much, Jeffrey. Thank you. Thank you very much to the panel. Thank you very much to all of you for your attention, these questions. Yes, I hope we will stay into the discussion with you to increase value for Merck, for both for society and for business. Yes, thank you very much. We will close this session for our online participants now. Thank you very much and have a nice day. For our people in the room, we will now proceed to the other side of the street again to join the other side.