Dear ladies and
gentlemen,
welcome
to
the
Merck
Investor
and
Analyst
Conference
Call
on
Fourth
Quarter
2021.
As
a
reminder,
all
participants
will
be
in
a
listen-only
mode.
May
I
now
hand
you
over
to
Constantin
Fest,
Head
of
Investor
Relations,
who
will
lead
you
through
this
conference.
Please
go
ahead,
sir.
C
Constantin Fest
Head-Investor Relations, Merck KGaA
Thank
you,
John.
Dear
ladies
and
gentlemen,
a
very
warm
welcome
from
my
side
to
this
Q4 2021
earnings
results
call
of
Merck.
My
name
is
Constantin
Fest,
I'm
Head
of
Investor
Relations
here
at
Merck.
And
I'm
delighted
to
have
here
today
with
me
Belén
Garijo,
CEO
of
the
Merck
Group,
as
well
as
Marcus
Kuhnert,
CFO
of
the
Merck
Group.
For
the
Q&A,
we
will
also
be
joined
by
Matthias
Heinzel,
CEO
of
Life
Science;
as
well
as
Peter
Guenter,
CEO
of
Healthcare;
and
Kai
Beckmann,
CEO
of
Electronics.
We
would
like
to
first
run
you
through
the
key
slides
of
this
presentation.
And
then,
we'll
be
happy
to
take
all
of
your
questions
during
the
Q&A.
Having
said
this,
I'd
like
to
now
hand
over
to
Belén
to
kick
off
the
presentation.
B
Belén Garijo López
Thanks,
Constantin,
and
welcome,
everybody,
to
our
full
year
earnings
call.
We
have
invited
you
to
discuss
our
annual
results
today.
But
given
the
incomprehensible
violence
happening
right
now
at
the
very
heart
of
Europe,
business
events
like
this
need
to
be
put
into
perspective.
The
war
in
Ukraine
is
a
painful
cut
to
any
regularity.
And
to
me,
personally,
and
to
all
of
us
at
Merck,
it
is
devastating
to
witness.
It
saddens
me,
especially,
to
see
the
heartbreaking
images
every
day,
what
we
know
to
be
a
truth
in
world that
women
and
children
suffer
disproportionately.
Hence,
to
support
humanitarian
aid
in
Ukraine,
Merck,
as
a
company,
will
donate
€2
million
to
the
German
Red
Cross. €1
million
of
this
amount
will
be
contributed
by
the
Merck
family.
In
addition,
we
have
set
up
a
donation
platform
to
enable
everyone
at
Merck
to
contribute.
Donations
made
here
will
be
matched
by the
company.
As
you
know,
we
are
dedicated
to
advancing
human
progress,
and
the
health
and
wellbeing
of
people
will
always
be
at
the
center
of
our
actions.
We
live up
to
this
responsibility
by
continuing
to
do
everything
in
our
power
to
ensure
the
supply
of
medicines,
some
products
to
patients
and
customers,
of
course,
in
full
compliance
with
the
existing
sanctions.
What
makes
me
very
proud
is
to
see
how
Merck
colleagues
across
the
company,
particularly
in
countries
bordering
on
Ukraine,
such
as
Poland,
are
volunteering
to
support
in
this
operation,
preparing
to
welcome
Ukrainian
refugees
to
their
homes,
organizing
the
transportation
of
care
packages
with
food
and
hygiene
products,
and
connecting
on
our
intranet,
as
well
as
locally
to
share
information
about
ways
to
help
and
donate.
And
this is
the
very
team
that
delivered
our
2021
results.
And
in
face
of
other
considerable
challenges,
such
just
COVID, they
did
a
fantastic
job.
Now,
let's
go
to
slide
number
5
of
the
presentation
for
the
highlights. Overall,
as
you
have
seen
in
the
press
release
already,
2021
was
an
outstanding
year
for
Merck
operationally,
strategically,
and
financially.
And
thanks
to
the
commitment
and
dedication
of
our
more
than
60,000
employees,
we
delivered
strong
operational
performance
in
what
continues
to
be
a
highly
challenging
environment.
We
made
progress
with
our
strategic
agenda,
accelerated
our
science
and
technology
leadership through
cutting-edge
innovation,
and
launching
major
investments
for
profitable
growth
in
the
years
ahead.
We
delivered very
strong
financial
results.
Organically,
group
sales
increased
by
14%,
and
EBITDA
pre rose
27%
on
an
underlying
basis.
That
is
excluding
the
Biogen
provision
reversal
in
2020.
Operating
cash
flow
soared
by
over
30%,
and
we
have
strengthened
our
balance
sheet
further
through
rapid
deleveraging.
Close
to
80%
of
our
total
sales
growth
was
driven
by
the
so-called
Big
3,
and
all
three
of
our
business
sectors
posted
double-digit
earnings
growth
with
– which
clearly
speaks
of
the
strength
of
our
portfolio.
Life
Science
was
the
star
performer
with
very
strong
growth
in
the
core
business
and
a
significant
upside
from
our
contribution
in
the
response
to
COVID-19.
We
increased
capacities
significantly
in
2021
and
further
boosted
our
capabilities
to
expand
in
the
attractive
CDMO
space.
In
Healthcare,
we
continue
to
advance
our
pipeline
and
drove
significant
growth
from
the
further
ramp-up
of
Mavenclad
and
Bavencio
on
top
of
a
very
highly
resilient,
established
portfolio.
In
Electronics,
we
accelerated
our
growth
trajectory
by
capitalizing
on
our
strong
position
as
a
leading
supplier
in
the
semiconductor
industry.
As
we
look
to
2022
and
ahead
to
2025,
we
expect
to
achieve
continued
strong
growth
following
rigorous
execution
of
our
strategic
priorities.
And
as
usual,
at
this
time
of
the
year,
we
are
introducing
qualitative
guidance
for
2022.
This
calls
for
strong
organic
growth
of
group
sales
and
EBITDA
pre
supported,
once
again,
by
all
three
business
sectors.
We
are
confident
that
2022
will
mark
another
successful
year
for
Merck,
and
we
will
provide
more
color
later
and
in
the
Q&A.
Let
me
now
move
into
the
next
slide,
slide
number
6,
to
take
a
quick look
at
how
we
performed
against
our
targets
in
2021.
As
you
can
see,
we
delivered
on
all
of
our
headline
promises.
In
fact,
if
you
recall,
we
upgraded
our
guidance
three
times
last
year,
mainly
owing
to
the
very
dynamic
environment
generated
by
COVID
in
Life
Science.
On
slide
number
7, you
will
find
the
sales
breakdown
and
growth
by
region.
Having
generated
almost
€20 billion
sales
in
2021,
we
also
generated
double-digit
growth
in
all
major
regions,
a
strong
testament
to
the
global relevance
of
our
diversified
portfolio.
Growth
in
Life
Science
was
very
strong
and
very
similar
across
our
three
main
regions,
while
in
Healthcare
and
Electronics,
it
was
strong,
but
it's
slightly
skewed
towards
North
America.
Above
all,
it
is
important
to
note
that
our
footprint
remains
nicely
balanced
with
significant
exposure
to
strategically
important
growth
markets
in
Asia-Pacific
at
36%
of
sales,
followed
by
Europe
at
29%
and
North
America
at
27%.
On
slide
number
8,
you
have
the
dividend.
And
as
you
have
seen
from
our
press
release
this
morning,
we
have
proposed
a
dividend
of
€1.85
per
share.
We
will
propose
that
to
the
AGM
on
April
22.
This
is
a
32%
increase
over
2020
and
a
payout
ratio
of
21.2%
of
EPS
pre,
and
fully
consistent
with
our
well-known
dividend
policy
aimed
at
continuous
dividend
growth
in
line
with
our
earnings
developments.
Let
me
now
provide
a
more
detailed
view
of
2021,
starting
with
Life
Science
in
slide
number
10.
Once
again,
Life
Science
had
a
fantastic
year.
Organically,
sales
and EBITDA
pre
rose
21%
and
38%,
respectively.
All
three
business
units
delivered
record
organic
revenue
growth
with
Process
Solutions
being
in
the
lead
at
an
outstanding
31%,
followed
by
Research
Solutions
at
a
very
strong
15%
and
Applied
at
a
very
good
9%.
Also
note
that
we
posted
double-digit
growth
across
all
regions
and
customer
segments. Lightly
more
than
half
of
the
growth
was
attributable
to
our
strong
core
business.
Here,
we
got
the
benefit
from
a
recovery
against
soft
comparables
in
H1
and
more
normal
dynamics
in
H2,
with
very
robust
fundamentals
across
the
board.
On
top
of
this,
we
continued
to
make
critical
contributions
in
the
response
to
COVID-19,
supporting
more
than
80
vaccines
projects,
over
35
testing
solutions,
and
more
than
50 treatments.
Total
COVID-related
sales
in
Life
Science
amounted
to
about
€1.15
billion
last
year,
of
which
close
to
€1
billion
came
from
Process
Solutions,
and
around
€150
million
from
Research
Solutions.
Looking
ahead,
we
expect
continued
strength
in
the
core
business,
which
is
our
key
value
driver.
And
we
also
expect
significant
demand
related
to
COVID,
although
likely
failing
and
potentially
increasingly
volatile,
as
we
will
explain
to
you
later.
Turning
to
profitability,
2021
was
exceptional.
The
EBITDA
pre
margin
in
Life
Science
came
in
at
a
record
36.6%
on
sales,
supported
by
a
positive
mix,
favorable
pricing,
and
a
strong
operating
leverage.
We
have
seen
a
slightly
lower
margins
in
H2
mainly
due
to
investment,
basically,
accelerated
recruitment
of
people
that
we
need
for
the
factory
and
the
ramp-up
of
other
strategic
investments.
Talking
about
strategic
investment,
our
direction
is
clear.
We
aim
to
strengthen
our
core
and
expand
in
high growth
segments.
And
we
have
made
great
strides, again,
in
our
strategy
in
2021.
First,
we
have
maximized
the
output
in
bottleneck
areas
through
productivity
gains
first,
and
adding
significant
new
capacity
in
Danvers
and
Molsheim
for
single-use
and
in
Jaffrey
for
filtration.
We
have
successfully
launched
our
upgraded
e-commerce
platform
of
more
than
20,000
new
products
across
our
broad
portfolio.
The
highlights
include
important
new
features
to
our
Bio4C
platform
and
SyntheChol,
a
high-purity
synthetic
cholesterol
for
use
in
mRNA
therapeutics.
Also
in
Life
Science,
we
increased
R&D
in
the
double-digit
percentage
range,
and
we
will
put
even
greater
emphasis
on
innovation,
digital,
and
emerging
markets,
mainly
China
going
forward.
We
entered
important
strategic
partnership,
for
example,
with
BioNTech,
and
we
significantly
accelerated
our
multimodality
CDMO
strategy
through
organic
and
inorganic
investments,
including
the
acquisition
of
AmpTec,
and
most
recently,
Exelead.
In
summary,
2021
was
a
great
year
for
Life
Science,
and
we
remain
confident
about
the
outlook.
The
new
organization
of
our
Life
Science
sector
that
Matthias
recently
announced
is
aimed
at
enhancing
our
focus
and
capabilities
in
the
service
business,
while
fully
exploiting
the
synergies
between
Research
Solutions
and
Applied
Solutions
at
the
customer
level,
and
we
are
convinced that
it
will
better
serve
the
realization
of
our
ambition
– of
our
ambitious
growth
plan
in
the
coming
decade.
Turning
to
Healthcare
on
slide
number
11,
Healthcare
had
also
a
strong
year
overall.
Organically,
sales
were
up
9%,
and
EBITDA
pre
increased
17%,
excluding
the
Biogen
provision
reversal
in
2020.
Our
established
portfolio
remained
highly
resilient,
delivering
organic
sales
growth
of
3%
despite
VBP
impact
in
China.
On
top
of
this,
sales
from
new
launches,
in
particular,
Mavenclad,
Bavencio,
and Tepmetko,
rose
sharply
at
more
–
adding
more
than
60%
year-on-year.
By franchise,
Oncology
increased
almost
30%,
reflecting
double-digit
growth
of
Erbitux,
supported
by, you
may
remember,
the
temporary
supply
agreement
with
Eli
Lilly
and
the
strong
uptake
of
Bavencio
in
first-line
metastatic
UC,
urothelial
cancer,
with
sales
more
than
doubling.
Our
N&I
franchise
was
up
with
the
ongoing
decline
of
Rebif
more
than
offset
by
significant
growth
of
Mavenclad,
which
was
up
over
30%
despite
a
very
challenging
high-efficacy
dynamic
market
environment.
Another
clear
highlight
of
Healthcare
was
the
very
robust
performance
of
our
Fertility
franchise,
which
posted
remarkable
growth
of
more
than
25%,
amid a
broad-based
recovery
following
the
pandemic-related
dip
in
2020.
Our
Cardiometabolic
and
Endocrinology
franchise,
CM&E,
was
down
slightly
due
to
the
temporary
impacts
on
China
VBP on
Glucophage.
In
fact,
Glucophage
outside
of
China
and
the
rest
of
the
CM&E
portfolio
delivered
very
solid
growth.
In
terms
of
profitability,
and
excluding
the
Biogen
provision
reversal
in
2020,
the
EBITDA
pre margin
in
Healthcare
increased
to
30.4%
on
sales,
supported
by
revenue
growth,
milestone
income
from
Bavencio,
and
a
very
disciplined
cost
management.
Looking
more
strategically,
our
priorities
have
further
evolved
and
we
are
confident
that
our
focused
leadership
approach
is
providing
solid
basis
for
longer-term
growth.
Our
pipeline
has
significant
potential,
and
we
advanced
it
further
in
2021.
In
total,
as
you
can
see
on
the
slide,
we
have
now
14
clinical
development
programs
underway,
including
compounds
with
novel
mechanism
that
could
redefine
the
standard
of
care
in
major
therapeutic
areas.
We
completed
the
Phase
III
recruitment
for
our
blockbuster
candidate,
evobrutinib
in
MS,
and
we
are
on
track
with
the
development
of
Xevinapant,
our
late-stage
blockbuster
candidate
in
head
and
neck
cancer.
We
also
remain
committed
to
our
other
focus
assets
and
will
initiate
Phase
II
for
enpatoran
in
SLE
and
CLE
surely.
With
regard to
our
recent
launches, Mavenclad
is
holding
or
gaining
market
share
in
most
markets,
while
we
see
a
suppressed
dynamic
–
high-efficacy
dynamic
market
in
terms
of
volume.
Bavencio
is
poised
for
continued
strong
growth,
from
rising
uptake
in
first-line
metastatic
UC
and
the
launch
of
tepotinib
in
MET exon 14
will
benefit
from
the
recent
approval
in
Europe.
Our
established portfolio
continues
to
be
providing
a
robust
base,
and
we
have
further
strengthened
our
leading
position
in
Fertility
and
returned
to
growth
in
China
in
Q4.
All
in
all,
we
feel
good
about
our
positioning
in
Healthcare.
And
we
will
remain
very
focused
on
the
stringent
execution
of
our
strategy
to
deliver
efficient
growth.
Let's
move
into
Electronics
on
slide
number
12.
And
here
as
well,
2021
was
a
very
strong
year
for
Electronics.
Organic
sales
increased
by
8% –
by a
strong
8%,
and
EBITDA
pre
even
faster
at
10%.
The
key
driver
of
growth
was
Semiconductor
Solutions
with
revenues
up
15%,
once
again
significantly
ahead
of
our
mid-term
guidance.
Double-digit
growth
in
Semi
was
supported
by
strong
demand
across
key
markets
including
China,
as
well
as
new
business
wins
in
Patterning,
Thin
Film,
and
Specialty
Gases.
On
top
of
these,
our
DS&S
business
benefited
from
significant
project
contributions,
as
our
customers
are
executing
on
major
investments
in
capacity
expansion
to
address
the
well-known
chip
shortages
and
the
future
demand.
Display
was
down
6%
organically,
fully
aligned
with
our
expectations,
as
the
ongoing
decline
of
liquid
crystals
was
mitigated
by
high
growth
in
OLED
materials.
Surface
increased
13%
organically
on
the
back
of
a
strong
market
recovery
following,
as
you
recall,
pandemic-related
impacts
in
2020.
The
EBITDA
pre
margin
in
Electronics
increased
to
a
very
solid
31.3%,
supported
by
the
Versum
synergies
and
despite
rising
input
costs
pressure
in
the
second
half
of
the
year.
Bigger
picture, we
have
successfully
delivered
on
our
Bright
Future
transformation
ahead
of
time
and
launched
our
growth
initiative,
Level
Up,
to
drive
growth
in
the
years
ahead. Of
note,
the
integration
of
Versum
has
been
very
smooth.
And
I'm
very
pleased
to
inform
that
we
have
already
achieved
our
upgraded
cost synergy
target
of
€85
million
for
2022
in
the
year
2021,
so
one
year
in
advance.
Looking
at
our
end
markets,
we
see
fast
growth
potential
and
a
substantial
need,
not
only
for
more
materials
and
solutions,
but
also
for
cutting-edge
innovation
to
enable
the
next
generation
of
chips.
And
we
are
highly
confident
that
Level
Up
will
help
ensure
that
we
address
our
customers'
ongoing
capacity
expansion
as
well
as
the
innovation
needs.
Today,
we
are
focusing
on
additional
scale in
key
semiconductor
regions
on
supporting
leading-edge
technology,
a broad
and
relevant
portfolio,
and
importantly,
the
right
people
and
capabilities
to
cater
to
our
customers'
needs.
To
sum
up,
once
again,
2021
was
a
good
year,
great
year
for
Electronics,
I
should
say,
and
we
have
everything
in
place
to
continue
to
execute
on
our
accelerated
growth
ambitions.
And
with
this,
let
me
hand
it
over
to
Marcus
for
a
more
detailed
review
of
our
financials
and
Q4.
M
Marcus Kuhnert
Thanks,
Belén,
and
welcome
also
from
my
side.
I
move
on
to
slide
number
14
for
an
overview
of
our
key
figures.
Overall,
we
are
very
pleased
with
our
performance,
delivering
very
strong
results
in
2021.
On
a
reported
basis,
group
net
sales
increased
12.3%
to
€19.7
billion.
EBITDA
pre
was
up
17.3%
at
€6.1
billion,
and
EPS
pre
rose
30.1%
to
€8.72.
Excluding
the
Biogen
provision
reversal
in
2020,
EBITDA
pre
and
EPS
pre
increased
even
faster
by
26.2%
and
43.7%,
respectively.
Portfolio
effects
were
minimal
and
FX
was
a
slight
headwind
for
the
full
year,
but
turned
positive
in
H2.
Operating
cash
flow
was
very
strong,
up
32.7%
at
€4.6
billion,
given
strong
earnings
growth
paired
with
sound
working
capital
management.
As
a
result,
we
were
able
to
deleverage
quickly,
lowering
our
net
financial
debt
by
around
about
€2
billion.
Moving
on
to
slide
15
for
a
summary
of
our
performance
by
business
sector.
Group
organic
sales
growth
was
very
strong
at
13.8%.
This
was
fueled
by
all
three
business
sectors,
with
Life
Science
as
the
largest
contributor,
followed
by
Healthcare
and
Electronics.
EBITDA
pre
growth
exceeded
sales
growth
in
all
three
business
sectors.
And
corporate
and
other
costs
were
down
year-on-year
mainly
due
to
an
improved
hedging
result.
As
such,
the
group
EBITDA
pre
margin
came
in
at
a
remarkable
31%.
Compared
with
2020,
this
corresponds
to
an
increase
of
130
basis
points,
and
even
as
much
as
340
basis
points
when
excluding
the
Biogen
provision
reversal.
Other
non-recurring
income
items
in
Healthcare
did
not
make
a
big
difference
in
the
year-on-year
comparison
and
were
fully
in
line
with
our
latest
guidance.
In
other
words,
the
strong
underlying
margin
expansion
is
primarily
a
reflection
of
significant
operating
leverage
in
Life
Science
and
disciplined
cost
management
across
the
entire
company.
Before
I
move
on
to
a
review
of
our
performance
in
Q4,
let's
have
a
look
at
our
reported
earnings
figures
for
2021.
As
you
can
see
on
slide
16,
EBIT
increased
40%
year-on-year
or
by
close
to
€1.2
billion
in
absolute
terms.
Please
note
that
this
number
would
have
been
even
€365
million
higher
without
the
Biogen
provision
reversal
in
2020. EBIT
growth
exceeded
EBITDA
pre
growth
by
close
to
€300
million,
mainly
due
to
lower
adjustments,
fewer
impairments,
and
reduced
amortization
of
purchased
intangibles.
The
financial
result
improved
by
close
to
€100 million
on
the
back
of
ongoing
swift
deleveraging,
hence,
significantly
lower
interest
expenses.
The
effective
tax
rate
was
21.9%,
in
line
with
the
lower
end
of
our
guidance
range.
And
as
a
result,
the
reported
net
income
surged
54%
to
€3.1
billion,
and
reported
EPS
came
in
at
€7.03.
That
said,
let's
now
take
a
closer
look
at
Q4.
Before,
however,
I
go
into
the
details
by
business
sector,
let
me
briefly
share
some
headline
figures
for
the
group,
which
you
will
find
in
the
appendix
to
this
deck.
Organically,
group
net
sales
increased
9.9%
in
Q4,
and
EBITDA
pre
rose
by
11%.
As
such,
momentum
moderated
further
compared
with
previous
quarters.
However,
this
was
fully
in
line
with
our
expectations
amid
tougher
comparables,
and
performance
overall
was
still
very
strong
led
by
Life
Science
and
Electronics.
Please
also
note
that
reported
numbers
were
boosted
by
significant
FX
tailwinds
in
the
fourth
quarter,
adding
over
3%
to
group
sales
and
close
to
7%
to
EBITDA
pre.
EPS
pre
increased
sharply
by
31%.
And
with
that,
let's
now
take
a
closer
look
to
our
three
business
sectors,
starting
with
Life
Science,
on
slide
number 17.
While
growth
moderated
further
due
to
rising
comps,
Life
Science
delivered
yet
another
record
quarter
in
terms
of
absolute
sales
and
earnings.
Organically,
sales
increased
14.2%
in
Q4,
still
well
above
our
mid-term
guidance.
The
core
business
contributed
almost
two-thirds
to
this
growth,
expanding
at
a
very
healthy
pace
of
around
about
10%.
COVID-related
sales
made
up
the
rest,
growing
significantly
year-over-year,
but
declining
slightly
quarter-over-quarter,
which
supports
our
view
that
we
have
reached
or
even
past
the
peak
by
now.
From
a
portfolio
perspective,
Process
Solutions
remains
a
key
engine
of
growth
with
sales
up
25.5%
organically.
About
half
of
this
was
attributable
to
the
core
business
with
mid-teens
growth,
reflecting
robust
end
markets,
especially
in
biopharma.
COVID-related
sales
in
Process
Solutions
still
contributed
positively
to
the
growth
in
the
fourth
quarter
and
came
in
at
around
€950
million
for
the
full
year,
slightly
shy
of
our
latest
guidance
due
to
supply
challenges.
All
business
lines
grew
double-digit,
with
bioprocessing
as
the
main
driver
and
strong
growth
in
Services.
We
continued
to
make
good
progress
with
our
capacity
expansions.
In
turn,
a
key
enabler
of
yet
another
strong
sequential
sales
increase.
Order
intake
growth
was
slightly
positive
against
tough
comps
and
the
order
book
continued
to
increase
quarter-over-quarter.
Moving
on
to
Research
Solutions,
here,
the
sales
were
up
1.5%
organically
against
tough
comps.
Growth
was
entirely
driven
by
the
core
business,
with
lab
activity
at
or
close
to
pre-pandemic
levels.
COVID-related
sales
in
Research
Solutions
were
down
year-on-year
for
the
first
time
and
continued
to
fade
sequentially,
coming
in
at
close
to
€200
million
for
the
full
year
and
thus
exceeding
our
latest
guidance
due
to
higher
testing
activity
at
year-end. Last but
not
least,
Applied
Solutions
reported
very
robust
growth
of
6.9%
organically,
with
diagnostics
as
a
key
driver
and
negligible
COVID-related
sales.
Geographically,
we
saw
double-digit
growth
in
all
major
regions.
And
in
terms
of
customer
segments,
Pharma
and
Biotech
was
the
strongest,
followed
by
Industrial
and
Testing
and
diagnostics,
all
showing
double-digit
growth,
while
academia
was
slightly
down
against
tough
comparables.
With
regard
to
earnings,
EBITDA
pre
surged 25.4%
organically,
implying
a
margin
expansion
of
300
basis
points,
driven
by
positive
mix,
favorable
pricing
and
operating
leverage.
Similar
to
Q3,
we
saw
a
further
modest
margin
decline
on
a
sequential
basis,
as
we
are
stepping
up
strategic
investments,
and
as
Belén
mentioned,
we
make
progress
in
hiring
people,
which
is
essential
to
bring
capacities
up.
And
with
that,
let's
move
on
to
Healthcare,
on
slide
number
18.
Healthcare
delivered
solid
top
line
growth
in
Q4,
with
sales
up
4.7%
organically.
The
established
portfolio
was
stable
against
tough
comps,
and
recently
launched
products
showed
strong
growth
with
combined
sales
up
more
than
40%.
By
franchise,
Oncology
was
up
21%,
entirely
driven
by
continued
strong
uptake
of
Bavencio
at
a
plus
of
132%,
in
turn
supported
by
the
ongoing
first-line
metastatic
urothelial
cancer
launch
in
Europe.
Erbitux
was
flat
against
tough
comps
related
to
the
temporary
supply
agreement
with
Eli
Lilly.
As
a
reminder,
this
agreement
generated
initial
sales
of
€32
million
in
Q4
2020
versus
the
final
booking
of €10
million
in
Q4 2021.
Excluding
this
effect,
performance
of
Erbitux
was
very
strong
with
a
double-digit
growth.
Our
N&I
franchise
was
down
5%
organically
as
the
ongoing
decline
of
Rebif
at
a
level
of
minus
12%
may
be
partly
offset
by
growth
of
Mavenclad
at
5%.
On
a
positive
note,
we
were
able
to
keep
market
share
stable
for
Mavenclad
in
the
high
efficacy
dynamic
market.
However,
this
market
was
clearly
impacted
by
the
Omicron
wave.
Fertility
performed
strongly
again,
up
8%
organically
against
slightly
soft
comps.
With
the Fertility
market
back
at
pre-pandemic
levels,
we
do
not
foresee
further
catch-up
effects,
but
solid
growth
on
robust
market
fundamentals,
including
rising
prevalence
and
awareness
of
infertility.
And
last
but
not
least,
our
CM&E
franchise
returned
to
growth
of
3%
in
the
fourth
quarter,
as
the
China
VBP
impact
on
Glucophage
started
to
fade
and
the
remainder
of
the
portfolio
continues
to
be
in
a
good
shape.
Other
highlights
include
the
recent
approval
of
Tepmetko
in
Europe
and
the
acquisition
of Chord
at
the
end
of
last
year.
With
regard
to
earnings,
EBITDA
pre
declined
12%
organically
with
the
margin
down
360
basis
points,
mainly
due
to
tough
comps
in
terms
of
non-recurring
income
in
the
last
year
and
fluctuations
in
manufacturing
yields,
I
should
say,
temporary
fluctuations
in
manufacturing
yields.
On
non-recurring
income,
please
note
that
Q4
2020
included
around
€30
million
from
GSK
and
a
mid-double-digit
million
euro
amount
from
active
portfolio
management,
while
Q4
2021
did
not
contain
any
non-recurring
income
as
guided.
Looking
into
2022,
we
expect
income
from
active
portfolio
management
in
the
low-to-mid
double-digit
million
euros
for
the
full
year,
of
which
we
expect
a
low-double-digit
million
euro
amount
in
the
first
quarter.
With that,
let's
continue
with
Electronics
from
slide
number
19.
Electronics
performed
also
very
strongly
in
the
fourth
quarter
with
sales
growing
at
10.4%
organically.
Semiconductor
Solutions
was
again
the
key
driver
and
is
firing
on
all
cylinders
with
a
record
organic
sales
growth
of
24%.
This
is
significantly
ahead
of
our
mid-term
guidance
and
should
not
be
extrapolated.
Our
Semi
Materials
business
accelerated
further
despite
rising
comps,
delivering
broad-based
performance
across
the
portfolio
and
growth
of
over
20%
in
a
strong
market.
On
top
of
this,
we
continued
to
capitalize
on
important
projects
in
our
Delivery
Systems
and
Services
business,
helping
customers
to
realize their
investments
in
new
fab
capacity,
and
we
expect
these
project
contributions
to
last
throughout
all
of
2022.
Sales
in
Display
Solutions
were
down
10%
organically
with
the
usual
pattern
of
a
continued
decline
in
liquid
crystals,
partly
offset
by
strong
performance
of
OLED
materials.
Surface
Solutions
posted
a
slight
growth
of
1%
against
rising
comp.
EBIDTA
pre
increased
12.1%
organically,
translating
into
a
very
solid
margin
of
31.5%.
This
corresponds
to
an
increase
of
160
basis
points
with
operating
leverage,
favorable
yield
fluctuations
and
Versum synergies
more than
offsetting
rising
input
cost
pressure.
Turning
to
slide
20 for
a
few
remarks
on
our
balance
sheet
at
year-end
2021.
In
summary,
the
€3.6
billion
expansion
over
2020
mainly
reflects
the
strong
business
performance
and
FX.
Cash
and
cash
equivalents
increased
due
to
strong
operating
cash
flow.
Goodwill
rose
due
to
FX,
and
net
working
capital
increased
less
than
sales.
Property,
plant
and
equipment
increased
on
the
back
of
investments
to
support
our
growth
ambitions
and
also
again
FX
effects.
Financial
debt
was
reduced
by
over
€1
billion
amid
significant
net
repayments.
And
as
a
result,
our
equity
ratio
strengthened
from
41%
to
47%,
while
net
debt-to-EBITDA
pre
improved
from
2.1
times to
1.4
times.
Let
me
also
briefly
comment
on
cash
flow
performance
in
Q4.
As
you
can
see
on
slide
21,
operating
cash
flow
was
down
€243
million
year-over-year,
mainly
due
to
tax
prepayments
and
increased
working
capital
to support
sales
and
supply
security
in
Life
Science
and
Electronics.
Cash
out
for
investing
activities
was
higher
than
last
year,
although
CapEx
on
PP&E
was
lower.
Keep
in
mind
that
investing
cash
flow
in
the
first
quarter
of
last
year
was
positively
impacted
by
the
reversal
of
temporary
investment
of
excess
cash.
At
the
same
time,
CapEx was
elevated
last
year
by
the
opportunistic
purchase
of
buildings
at
our
Burlington
and
Tempe
sites.
But
by
contrast,
cash
out
for
CapEx
in
Q4
2021
was
low
due
to
phasing
of
payments.
In
fact,
gross
additions
to
PP&E
on
the
balance
sheet
were
broadly
in
line
with
our
latest
CapEx
guidance
of
around
€1.4
billion
in
2021.
Also
note
that
for
2022,
we
are
guiding
to
CapEx
in
a
range
between
€1.6
billion
and
€1.7
billion,
fully
in
line
with
our
goal
to
increase
CapEx
to
around
a
level
of
€2
billion
by
2023
to
support
our
accelerated
organic
growth
ambitions.
Last
but
not
least,
the
significant
decline
in
cash
out
for
financing
activities
can
be
explained
by
significant
net
debt
repayments
here,
especially
of
bank
liabilities
and
commercial
papers
in
the
prior-year
period.
And
with
that,
let
me
hand
back
to
Belén
for
an
update
on
ESG
and
for
guidance.
B
Belén Garijo López
Thank
you,
Marcus.
So
briefly
on ESG,
I'm
pleased
to
report
that
we
have
accomplished
all
goals
that
we
set
ourselves
in
2021. The
Merck
ESG
database
is
in
place,
and
we
have
implemented
and
tested
the
sustainable
business
value
methodology
in
several
pilots.
We
have
developed
a
set
of
KPIs
that
we
are
introducing
to
you
today.
The
14
metrics
and
corresponding
targets,
as
far
as
they
have
been
disclosed
today,
can
be
found
in
the
appendix
of
this
deck.
For
the
majority
of
the
KPIs,
we
will
report
numbers
as
of
2021,
while
the
remainder
will
follow
next
year.
We
have
incorporated
ESG
frameworks
in
major
processes
across
important
functions,
including
R&D,
procurement,
controlling,
and
M&A.
And
we
have
already
defined
a
list
of
priority
projects
and
approved
the
corresponding
budgets
to
fund
those.
One
of
the
projects
relates
to
our
group-wide
supply
chain
with
the
objective
of
increasing
the
percentage
of
relevant
suppliers
that
are
covered
by
a
valid
sustainability
assessment. Other
projects,
to
mention
some,
growing
the
share
of
greener
products
in
Life
Science,
as
well
as
establishing
a
sustainability
scorecard
for
Healthcare
R&D
and
portfolio
assessment
in
Electronics.
In
Healthcare,
we
are
also,
for
example,
building
programs
for
access
to
medicine
in
low
and
middle-income
countries.
Moving
on to
24,
our
initiatives
are
coupled
with
increased
transparency
on
ESG. And
starting
with
the
fiscal
year
2021,
we
integrated
the
non-financial
statements
into
the
Annual
Report.
We
also
added
reporting
on
EU
taxonomy
in
line
with
the
recent
regulations.
And
this
shows
that
our
share
in
taxonomy
eligible
net
sales,
CapEx,
and
OpEx
in
connection
with
the
environmental
objective
on
climate
change
mitigation
is
low.
However,
this
is
due
to
limited
conformity
of
the
Merck's
business
activities
as
defined
in
the
regulations
so
far
and
will
evolve,
will
change
with
the
next
steps
of
the
EU
taxonomy
reporting.
As discussed,
we
are
introducing
a
set
of
14
sustainability
metrics,
including
those
which
are
relevant
for
the
compensation
of
the
Executive
Board.
Looking
ahead,
we
are
planning
to
publish
our
comprehensive
sustainability
report
in
April
as
usual,
and
this
will
contain
the
Task
Force
on
Climate-related
Financial
Disclosure (sic) (Disclosures] (00:39:03)
reporting
for
the
first
time.
And
in
addition,
we
will
extend
it
to
our Sustainability
Accounting
Standards
Board
reporting
from
the
Pharma
and
Biotech
to
the
Medical
Supply
and
the
Semiconductor
Industry
Standards
to
reflect
all
three
business
sectors.
The
analysis
of
ESG
requirements
will
be
ongoing
as
the
stakeholder
expect,
mean
will
be
dynamic
as
the
stakeholder
expectations
and
regulations
continue
to
evolve.
And
we
will
adjust our
plans
as
necessary
and
continue
to
be
very
focused
on
execution.
To
sum
it
up,
significant
progress
in
2021
convinced
that
this
will
help
us
to
further
accelerate
the
contributions
that
we
make
to
solving
more
of
the
greatest
sustainability
issue
facing
the
world,
resulting
in
mutual
benefits
for
society,
for
the
environment,
and
importantly,
for
our
competitive
advantage
and
business
performance.
Let
me
conclude
with
the
guidance
for
2022.
As
you
can
see
on
the
slide
26,
we
are
providing
qualitative
targets
as
usual
at
this
time
of
the
year,
and
this
will
be
followed
by
more
detailed
targets
as
part
of
our
Q1
reporting
in
May.
For
group
net
sales,
we
are
guiding
to
a strong
organic
growth
and
currency
tailwinds
in
a
range
of
1%
to
4%.
For
group
EBITDA
pre,
we
are
also
guiding
to
strong
organic
growth
and
even
slightly
higher
FX
tailwinds
in
a
range
of
2%
to
5%,
and
this
is
mainly
linked
to
the
USD
and
the
Chinese
renminbi.
With
regard
to
the
situation
in
Russia
and
Ukraine,
please
note
that
our
business
exposure
is
limited
and
our
forecast
currently
doesn't
assume
a
meaningful
impact.
However,
we
are,
of
course,
carefully
monitoring
the
situation
and
will
provide
you
with
further
updates
as
the
year
progresses
and
we
have
more
transparency
on
the
evolution
of
the
war.
Moving
into
the
next
one, some color
by
business
sector.
And
there,
as
you
can
see,
we
expect
sales
and
earnings
growth
to
be
supported
by
all
three
business
sectors,
as
it
was
the
case
in
2021.
Life
Science
will
continue
to
be
the
fastest
growing
sector,
followed
by
Electronics
and
Healthcare.
Please
note
that
you
should
think
about
qualitative
guidance
in
ranges.
These
ranges
could
be
overlapping
and
the
sector
guidance
are
to
support
the
group
guidance
and
do
not
have
to
adapt.
For
Life
Science,
we
expect
growth
to
be
driven
by
continued
strength
in
the
core
business
and
Process
Solutions
as
the
key
driver
of
growth.
COVID-related
sales
will
be
slightly
dilutive
to
growth.
In
particular,
we
now
expect
COVID-related
sales
in
Process
Solutions
of
up
to
€900
million,
which
is
slightly
more
cautious
compared
with
our
previous
guidance
of
around
€900
million.
For
Research,
we
continue
to
expect
COVID-related
sales
below
€100 million
and
negligible
contributions
in
Applied.
In
terms
of
the
margin,
our
qualitative
guidance
may suggest
a
stable
margin
in
Life
Science.
We
continue
to
believe
that
slight
margin erosion
is
the
most
likely
scenario,
consistent
with
the
trend
in
recent
quarters
and
reflecting
increasing
strategic
investments.
Let
me
also
give
a
sense
of
phasing.
In
the
past
couple
of
weeks,
we
have
observed
increased
volatility
around
COVID-related
demand
in
Process
Solutions
due
to
Omicron,
that
is
certain
type
of
vaccines
and
treatments
are
working
better
than
others,
and
there
are
signs
for
a
potentially
accelerated
transition
into
the
endemic
phase.
In
addition,
we
are
facing
increased
supply
chain
related
to
Omicron,
including
staffing
and
raw
materials,
which
are
temporarily
weighing
on
output
in
key
manufacturing
sites.
So
bear
this
in
mind
when
you
build
your
models
for
Q1.
For
Healthcare,
we
expect
growth
to
be
mainly
driven
by
the
launches,
mainly
Mavenclad
and
Bavencio.
And
in
Electronics,
semiconductors
will
stay
the
key
growth
engine
with
the
OLED
materials
to
continue
with
a
strong
performance.
Last
but
not
the least,
we
believe
that
we
are
very
well
positioned
to
manage
profitability
amid
rising
input
costs,
although
the
situation
has
become
slightly
more
challenging
in
the
past
couple
of
months.
And
we
can
further
discuss
all
these
topics
during
the
question-and-answer
session.
This
is
concluding
my
presentation,
and
over
to
you,
Constantin.
C
Constantin Fest
Head-Investor Relations, Merck KGaA
Thank
you
very
much,
Belén,
for
this
presentation –
Belén
and
Marcus.
Now,
John,
if
we
could
start
the
Q&A,
please.
I
would
like
to
remind
everybody
to
kindly
limit
yourselves
to
a
maximum
of
two
question
– two
questions.
This
will
allow
more
of
you
to
ask
questions.
With
this,
John,
please,
let's
kick
off
the
Q&A.
Operator
Thank
you.
We
will
now
begin
our
question-and-answer
session.
[Operator Instructions]
We'll
take
our
first
question
from
Matt
Weston.
Please
go
[audio gap]
(00:45:28).
M
Matthew Weston
Analyst, Credit Suisse Securities (Europe) Ltd.
Thank
you
very
much.
It's
Matt
Weston
from
Credit
Suisse.
Two
questions,
if
I
can.
The
first,
please,
is
on
Mavenclad.
And
obviously,
you
had
a
challenging
performance
during
the
Omicron
wave
in
4Q,
but
it's
also
clear
that
it's
a
very
major
driver
of
your
Healthcare
growth
guidance
in
2022.
So,
we're
already
into
March.
I
would
be
very
interested
in
understanding
the
trends
that
you
are
seeing
in
Mavenclad
recovery
in
the
dynamic
MS
market,
as
the
Omicron
wave
wanes
in
major
markets
around
the
world?
And
then the
second
question
is
on
Life
Science.
There
was
a
lot
of
discussion
during
2021
about
whether
customers
were
overstocking
their
non-COVID
orders,
because
they
were
just
concerned
about
constraints
on
supply
chain.
And
during
those
discussions,
Merck
always
expressed
confidence
that
this
wasn't
the
case
with
your
products
and
you're
managing
customers
very
carefully
because
of
the
limited
inventory
you
have.
There
are
clearly
concerns
at
some
of
your
peers
that
we
may
see
a
significant
unwind
of
customer
base
stocking
in
2022.
Can
you
reiterate
your
confidence
that
you
think
you
don't
have
customers
with
a
lot
of
stock
in
the
channel?
B
Belén Garijo López
Matthias,
do
you
want
to
start
with
that?
M
Matthias J. Heinzel
Yeah.
Hey,
Matt.
It's
Matthias
here.
If
I
may,
I'll
start
with
your
second
question.
And
indeed,
I
confirm
what
we
talked
about
in
the
past,
right.
We
stay
very
close
to
our
customers,
and
we
do
not
see,
by
and
large,
especially
in
the
high
demand
products
a
major
overstocking,
right.
And
here
I talk
especially
about
the
single-use
products,
which
are
really
made
to
order,
right,
so for
specific
needs
of
customers
and
as
well
as
the
filtration
products.
So
yeah,
by
and
large,
we
still
see
a
very
high
demand
and
we
do
not
see
a
major
overstocking.
B
Belén Garijo López
Peter, go ahead.
P
Peter Guenter
Yeah.
So,
Matt,
thanks
for
the
question.
It's
Peter.
So,
you
remember
that
in
Q3,
I
hinted
to
further
volatility
in
Q4,
which
is
related
indeed
to
the
impact
on
the
high
efficacy
market
due
to
Omicron.
And
as
you
know,
I'm
not the
only
one
in
the
high
efficacy
sector
having
mentioned
those
issues.
I
think
my
colleagues,
[ph]
of
course,
in (00:47:58)
Novartis
hinted
towards
the
same
continued
depression
of
the
high
efficacy
market.
I
would
say,
though,
that
the
impact
of
Omicron
is
definitely
bigger
in
the
US
than
it
is
in
Europe.
And
I
think
that
if
you
would
take
all
these
things
into
account,
you
also
remember
that
we
had
a
one-off
in
Q3
that
actually
Q4
would
have
been
in
line
with
Q3
sales
normalized
for
this
one-off
of
Q3.
The
other
point
I
think
it's
important
to
mention
is
that
our
market
share
remains
stable
in the
US,
continues
to
grow
in
some
of
the
key
European
markets.
So
basically,
I'm
confident
that
if
we
can
consolidate
that
market
share
position
and
the
high
efficacy
market
indeed
recovers
once
we
go
out
of
Omnicom
that
you
should
see
a
recovery
of
the
growth
of
Mavenclad.
I
would
say,
though,
that
in
the
first
months
of
this
year,
we
are
still
not
out
of
the
Omicron
wave,
as
you
know,
especially
in
the
US.
So
I
would
expect
some
more
volatility
in
Q1
and
then
a
more
clear
trajectory
moving
forward.
M
Matthew Weston
Analyst, Credit Suisse Securities (Europe) Ltd.
Many
thanks,
indeed. I'll
jump
back
in
the
queue.
[Operator Instructions]
Operator
We'll
now
take
our
next
question
from
Gary
Steventon.
Please
go
ahead.
You're
line
is
open.
G
Gary Steventon
Analyst, Exane SA (United Kingdom)
Thank
you for
taking
the
question.
So
I
guess
just
going
to
your
CDMO
and
CTO
offerings, they've
been
getting
a
bit
more
airtime
in
recent
quarters
and
it's going
to
be
split
out
with
Life
Science
going
forward.
Could
you
just
talk
a
bit
here
to your
aspirations
for
this
business
as
well
as
kind
of
the
current
profile in
terms
of
growth
and
margin
contribution
within
Life
Science
and
Process
Solutions?
And
then
just,
on
the
slides,
you
noted
that
you
intend
to
scale
up
to
become
the
leading
CDMO.
So,
I'm
just
wondering
kind of
what
this
means
in
terms
of
size
and
over
what
time
period?
And
then
just
a
follow-up
question
on
Mavenclad,
please.
So,
you
gave
us
an
update
in
terms
of
your
patent
term
extensions
on
the
Capital
Markets
Day. And
I
think
you
mentioned
you
were
appealing
a
decision
in
the
US
and
that
an extension has
already
been
granted
in
France,
Italy
and
Spain,
I
think
in
Europe
taking
you
through
to
2030,
but
other
decisions
were
pending.
So,
just
an
update
here
on
any
progress
will
also
be
helpful.
Thank
you.
P
Peter Guenter
Yeah.
Gary,
let
me
start
by
the
Mavenclad
question.
There
is
no
update
since
our
last
communication
on
that.
So,
our
appeal
is
pending
in
the
US
and
the
SPC
situations
in
the
US
are
identical
actually
to
the
update
that
we
gave
you.
Indeed,
we
have
some
key
European
countries
where
we
have
an
SPS
obtained
– an
SPC
obtained,
sorry,
and
we
are
continuing
to
try
to
get
those
SPCs
in
those
European
countries
where
we
haven't
got
it
yet.
[indiscernible]
B
Belén Garijo López
(00:51:00).
M
Matthias J. Heinzel
Yeah.
Hey,
Gary.
It's
Matthias.
So
to
your
question
around
CDMO
and
CTO,
currently, it's
about
15%
of
our
Process
Solutions
business.
And
our
strategy
is,
clearly,
as
we've
outlined
at
the CMD,
to
rebuild
a
multimodality
CDMO
business
based
on
our
existing
presence,
which
is
mainly
around
mAbs,
high
potency
APIs,
viral
vectors
and,
obviously,
mRNA,
where
we
recently
also
added
significantly
with
an
acquisition
of
Exelead.
So,
our
goal
is
clearly
to
really
further
accelerate
that
business,
investing
into
R&D.
We're
investing
into
capacity
to
rebuild
it
up.
And
probably,
you
have seen
that
we
also
announced reorganization
effective
April
1.
And
to
really
support
that
growth
and
really
accelerate
it,
we
are
creating
a
Life
Science
Services
unit.
So
basically, we
are
splitting
out
all
the
service-related
businesses,
namely
CDMO
and
CTO.
And
then,
post
Q2,
we
will
actually
report
that
business,
the
new
Life
Science
Services
business,
so
you
will
also
get
greater
transparency
on
that
business
going
forward.
G
Gary Steventon
Analyst, Exane SA (United Kingdom)
Okay.
Thank
you.
Operator
We
will
now
take
our
next
question
from
James
Quigley.
Please
go
ahead.
Your
line
is
open.
J
James P. Quigley
Analyst, Morgan Stanley & Co. International Plc
Hi,
there.
Thank
you
for taking
my
questions.
So,
I
have
two.
First
one
is
on
Bavencio
in
bladder.
It's
now
been
on
the
market
for
quite
a
while.
So,
where
is
the
average
stay
time
landing
during
the
maintenance
setting? And
can
you
give
us
a
bit
more
details
on
the
new
combination
trials
with
novel
therapies?
I
think
it's
start – due
to
start
in
the
second
quarter.
So,
in
these
trials,
will
Bavencio
still
be
used
as
a
maintenance
or
you'll
sort of
push
it
up
in
the
treatment
setting as
part
of
those
combinations?
And
secondly,
on
Russia
and
Ukraine,
you
mentioned
that
your
business
exposure
is
quite
low.
From
a
clinical
trials
perspective,
there's
been
some
reports
that
there's
been
a
number
of
clinical
trials
that
are
currently
ongoing
and
enrolling
in
Russia
and
Ukraine.
I
think
I
noticed
that
one
of
your –
or
both
of
the
evobrutinib trials
have
some
reasonable
exposure
in
Ukraine.
So,
have
you
done
an
analysis
of
what
that
could
mean
in
terms
of
timing
of
readouts,
or
how
that
could
impact
any
of
your
trials,
particularly
the evobrutinib trial?
Thank
you.
B
Belén Garijo López
So,
Peter
can
build
on
this,
but
of
course,
we
have
deeply
analyzed
the
multiple
dimensions
of
the
implication
of
the
situation
in
that
region.
We
have
around
13
–
we
have
conducted
around
13
clinical
studies
in
Russia
and
Ukraine.
And
I
think
the
team
has
done
a
marvelous
job
to
anticipate
the
dynamics
of
the
trial
in
preparation
for
what
was
to
come.
So,
it's
too
early
to
say
at
this
time.
But
definitely,
the
team
is
very
well
prepared
to
protect
the
safety
of
the
patients,
to
secure
the
continuity
of
the
follow-up
to
the
extent
that
we
can
control
that.
And
we
will keep
you
informed
on
the
–
on
future
developments.
Peter,
I
don't
want –
do you want to add anything?
P
Peter Guenter
No, I
think,
Belén,
you
captured
it
perfectly.
I
think
we
did
everything
we
could
what
is
within
our
power
to
try
to
mitigate
the
impact. For
example,
we
increased,
of
course,
the
investigational
product
stock
in
the
countries
and
the
sites.
We
were
looking
into
moving
into
local
labs
instead
of
central
labs
for
the
biologies,
et cetera,
et cetera.
But
as
you
know,
it's
a
very
dynamic
situation,
I
would
say,
and
we
have
to
navigate
it
as
things
unfold.
And
on
Bavencio,
we
continue
to
make
progress,
both
sides
of
the
Atlantic,
and
you
can
see
that
also
in
the
sales.
I
think
your
question
was
around
to
the
percentage
of
maintenance
therapy
now
in
the
US.
So,
we
are
making
progress
continuously.
We
are
now
at
75%
of
patients
given
indeed
chemo
– or platinum-based
treatment,
if
they
are
platinum
eligible.
And
we
started
at
50%
at
the
launch
of
Bavencio.
So,
really,
we
are
able
to
change
the
treatment
paradigm
there.
And
then,
I
would
say
that
in
the
use
of
first-line
maintenance
therapy
with
Bavencio,
we
are
at
50%
at
the
end
of
last
year,
so
also
making
continuous
progress.
And
the
share
of
countries
like
Japan
and
some
key
countries
in
Europe
should
not
be
underestimated
in
the total
Bavencio
sales.
So,
we
have
very
good
performance
with
Bavencio
in
Japan.
In
countries
like
France,
like
Germany,
and
we
are
still,
I
would
say,
in
the
probably
final
stages
of
getting
reimbursement
for
Bavencio
in
countries
like
Italy
and
Spain,
for
example.
So,
I
think
we
can
be
relatively
optimistic
to
see
that
growth
continue.
A
last
piece
of
news
is
that
the
extension
of
the
JAVELIN
Bladder
trial
in
metastatic
UC,
we
have
now
over
30
months
of
follow-up.
And
actually,
we
have
seen
that
the
survival
benefit
further
increased
now
to
8.8
months,
where
it
was
7.1
months
in
the
pivotal
data.
So,
we
remain
very
optimistic
and
very
bullish
on
Bavencio.
On
the
clinical
trials,
so
the
so-called
Medley
trial,
I
can
tell
you
that
these
trials
are
actually
focused
on
reinforcing
the
position
in
the
maintenance
segment.
So
we
are
not
moving
up
in,
for
example,
the
adjuvant
setting.
And
I
think
we
have
talked
more
about
this
in detail
in
the
R&D
update
call.
J
James P. Quigley
Analyst, Morgan Stanley & Co. International Plc
Thank
you.
Operator
We
will
now
take
our
next
question
from
Falko
Friedrichs.
Please
go
ahead.
Your
line
is
open.
F
Falko Friedrichs
Analyst, Deutsche Bank AG
Thank
you.
And I
also
have
two
questions,
please.
Firstly,
what
are
your
latest
thoughts
on
M&A?
And
are
you
open
to
make
a
bigger
step
this
year,
or
is
that
rather
unlikely?
Then
secondly
on
your
Electronics
business,
my
question
is
how
much
longer
can
this
higher
demand
due
to
the
semiconductor
shortage
last?
And
do
you
expect
this
to
normalize
again
at
some
point
this
year,
or
do
you
rather
think
you
can
benefit
from
it
throughout
the
entire
year?
Thank
you.
B
Belén Garijo López
So let's
start
by the
semiconductors
question.
Kai?
K
Kai Beckmann
Yeah. Falko,
this
is
Kai
speaking.
Thanks
for
your
question.
You're
asking
about
the –
how
long
can
that
additional
demand
last.
Our
customers
are
investing
like
never
before.
So
there
is
a
strong
expectation
in
the
industry
that
demand
is
not
just
short
term,
it's
a
mid
to
long-term
demand.
And
the
investments
point clearly
in
this
direction. This
doesn't
come
from
only
one
source,
it
comes
from
very
different
sources
of
developments
and
all
kinds
of
areas
that
digitize
and
require
more
chips
and
more
sophisticated
chips
going
forward.
And
the
current
data
clearly
supports
the
mid-term
guidance
that
we
have
given
last
year
at
the
Capital
Markets
Day,
and
we
see
a
similar
development
confirming
this
year's
growth
trajectory.
MSI
growth
is
projected
at
mid-to-high
single
digit
for
2022,
confirming
our
mid-term
assumptions.
B
Belén Garijo López
Falko,
on
the
M&A
front,
not
too
many
things
new
to
report.
I
think
we
have
been
very
disciplined
in
executing
on
our
strategy.
As
I
mentioned
before,
we
have
recently
closed
Exelead,
which
is
very
centric
to
further
developing
our
mRNA
offering
as
a
CDMO
in
our
Life
Science
sector.
And
we
will
continue
to
move
on
primarily
on
bolt-on
acquisitions
this
year,
which
is
exactly
your
questions,
although,
of
course,
we
are
not
excluding
or
close
to
looking
at
more
transformative
options
as
of
2023,
as
our
cash
position
continues
to
significantly
improve.
F
Falko Friedrichs
Analyst, Deutsche Bank AG
Okay.
Thank
you.
Operator
We
will
now
take
our
next
question
from
Daniel
Wendorff.
Please
go
ahead.
Your
line
is
open.
D
Daniel Wendorff
Analyst, ODDO BHF AG
Thanks
for
taking
my
questions,
and
good
afternoon
also
from
my
side.
Two,
if
I
may.
The
first
one
on
Semiconductor
Solutions,
if
I
may.
So
according
to
my
understanding,
the
Ukraine
supplies
70%
of
the
world's
neon
gas,
which
is
an
important
step
for
semiconductor
manufacturing.
So
how
much
of
a
risk
is
the
war
here
really
for
the
recovery
of
this
market?
And
maybe
for
your
guidance,
any
more
color
you
can
provide
here
would
be
much
appreciated.
And
my
second
question,
it
would
be
on
Life
Science,
and
in
particular,
on
Applied
and
Research
Solutions.
So
how
should
we
think
about
these
businesses
going
into
2022?
According
to
my
understanding
and
the
business
environment
or
spending
environment
from
Life
Science,
research
institutions
looks
actually
quite
healthy.
And,
yeah,
any
more
color
you
can
provide
here,
I
would
appreciate.
Thank
you.
K
Kai Beckmann
Yeah,
Daniel,
this
is
Kai
speaking.
So,
Merck
has
no
supplies
from
Russia
or
Ukraine
as
direct
supplies.
We're
currently
in
contact
with
our
suppliers,
whether there are
any
indirect
effects
that
could
harm
us,
but
we
do
not
expect
anything
which
is
significant
on
our
side.
Of course,
your
data
is
correct,
and
we
need
to
check
with
our
customers
whether
they
have
other
sources
than
Merck
that
would
impact
their
factory
output.
This
is
largely
unknown
at
this
point
in
time,
and
we
will check
going
forward.
M
Matthias J. Heinzel
Yeah, hello,
Daniel.
It's Matthias
here.
So
to
address
your
question
about
Research
and
Applied,
yeah, first
of
all,
as
we
look
at
2021,
we
are
coming
from
very
strong
growth
rates
for
Research
with
15%,
Applied
with
9%,
that
partially
due
to
also
the
softer
comps
against
2020.
Now
as
we
move
into
2022,
I
think
we
are
on
the
path
towards
our
mid-term
guidance,
which
we
provided,
which
was
for
Research
in
the
low-single
digit
and
in
Applied
in
the
mid-single
digit.
Again,
I
would
keep
in
mind
that
especially
with
Research,
as
you're
rightly
pointing
out,
the
spending
levels
are
increasing,
the
labs
are
getting
more
occupied,
but
given the
extremely
strong
comp
versus
2021,
I
think
the
view
around
what
we
provide
for
the
mid-term
guidance
gives
you a
good
indication.
D
Daniel Wendorff
Analyst, ODDO BHF AG
Thank
you.
Maybe
a
follow-up
on
Research
Solutions,
is
that
excluding
the
COVID
sales
you
mentioned,
or
should
we
think
about
this
also
taking
into
account
COVID
sales?
M
Matthias J. Heinzel
Yeah.
This
includes
COVID
sales,
right?
I
mean,
we
indicated
already
before
that
we
expect
–
so
first
of
all,
in
2021,
we
had
COVID
close
to
€200
million
for
Research,
and
we
were
indicating
that
it
will
be
below
€100
million. The
question
will
be
how
much
below
€100
million,
so
keep
that
in
mind
when
I
provided
the
low-single
digit.
D
Daniel Wendorff
Analyst, ODDO BHF AG
Okay.
Thank
you.
C
Constantin Fest
Head-Investor Relations, Merck KGaA
I
think
we
have
time
for
one
more
question,
please.
Operator
We
will
take
our
final
question
from
Michael
Leuchten.
Please
go
ahead.
Your
line
is
open.
M
Michael Leuchten
Analyst, UBS AG (London Branch)
Oh,
thank
you very
much. It's
Michael
Leuchten
from
UBS.
Just
one
quick
question
going
back
to
the
order
book
and
maybe
related
to
the
slight
wording
change
on
COVID
contribution,
just
wondering
why
you
have
softened
that
wording
and
what
you're
seeing
in
the
order
intake
in
Process
Solutions.
And
then
a
quick
follow-up
on
evobrutinib,
please.
Looking
at
the
number
of
sites
that
are
located
in
Russia
and
Ukraine
for
Evolution
RMS
I
and
RMS
II,
it's
about
15%.
It's
a
meaningful
enough
number.
Given
those
trials
are
fully
recruited,
if
you
cannot
follow
up
with
those
patients
as
planned,
what
happens
then?
Are
they
just
censored
from
the
study
and
you
have
to
run
with
the
patients
that
you've
got?
Or
would
you
be
able
to
re-recruit
more
patients
elsewhere
should
that
be
needed?
Thank
you.
M
Matthias J. Heinzel
Yeah, Michael.
Hello.
It's
Matthias. Let me
address
your
first
two
question.
Indeed,
we
made
a
careful
wording
change,
and
based
on
our
view
of
the
market,
our
very
close
discussions
with
our
customers,
we
believe
that
the
€900 million
we
put
out
for
Process
Solutions
is
still
possible.
But
at
this
point
in
time,
we
will
see
that
rather
at
the
upper
end
of
the
range.
And
that
is,
of
course,
based
on
a
view
on
the
different
COVID
drivers.
We
look
at
target
vaccination
rates,
especially
the
boosters
and
also
as
we
see
now
Omicron
still
being
highly
contagious
but
with
milder
symptoms.
The
question
is, what's
the
booster
adoption
rate
going
forward?
So,
at
the
end
of
the
day,
it's
still
very
volatile.
But
we
believe
the
indication
we
provide
to
you
is
very
important
and, yeah,
we
believe
it's
more
in
the
upper
end
of
the
range.
To
your
question
on
order
book
or
usually,
we
talk
here
about
order
intake.
So
first
of
all,
we
see
the
order
intake,
the
growth
rates
coming
down
over
the
quarters.
The
growth
is
still
higher
than
prior
year
for
Q4,
but
it's
certainly
coming
down
significantly
like
you've
seen
also
from
other
market
players.
Nevertheless,
the
book-to-bill
ratio
is
still
above
1,
meaning
our
order
intake
is
still
above
the
sales
we
have.
And
then
tying
that
answer
to
my
first
point,
what
we
see
indeed
in
the
order
intake
is
that
the
COVID
share
is
significantly
coming
down.
On
the
other
hand,
the
base
business
order
intake
share
is
significantly
increasing.
But
again,
given
the
order
intake
for
COVID
coming
down,
that's
yet
another
evidence
for
our
more
cautionary
statement
on
the
€900 million
for
this
year.
B
Belén Garijo López
Peter?
P
Peter Guenter
Yeah.
Michael,
on
the
evobrutinib,
as
Belén
had
mentioned
before,
it's
really
a
moving
target.
We
are
looking
at
different
scenarios.
We
are
in,
I
would
say,
daily
contact
with
our
CRO
to
have
the
[ph]
pills (01:06:56) on
what's
happening.
And
in
function
thereof,
we
have
to
look
at
different
alternatives
if
necessary.
I
remind
you,
of
course,
that
countries
like
Russia
and
Ukraine
are
traditionally
countries
where
there's
a
lot
of
clinical
trials
ongoing
by
the
whole
pharmaceutical
market.
So,
it's
not
like
we
are
in
a
specific
position
here.
But
if
there's
more
news,
of
course,
we
will
update
you.
C
Constantin Fest
Head-Investor Relations, Merck KGaA
Thank
you
very
much
for
all
your
questions.
With
this,
I'd
like
to
hand
over
to
Belén
for
some
closing
remarks.
B
Belén Garijo López
Very
briefly, because
we
are
running
out
of
time.
Thank
you,
Constantin,
and
thank
you
for
your
continued
interest
in
our
company.
2021
was
clearly
a
record
year
in
terms
of
growth
and
margin
expansion.
And
as
we
have
discussed
today,
we
have
a
very
solid
position
to
deliver
another
successful
year
in
2022. We
look
forward
to
meeting
many
of
you
at
the
upcoming
road shows
and
conferences.
And
obviously,
we
will be
updating
you
whenever
is
necessary
as
the
year
progresses.
Thanks,
again,
and
have
a
good
evening.
Operator
Ladies
and
gentlemen,
thank
you
for
your
attendance.
This
call
has
been
concluded.
You
may
now
disconnect.
Dear ladies and gentlemen, welcome to the Merck Investor and Analyst Conference Call on Fourth Quarter 2021. As a reminder, all participants will be in a listen-only mode.
May I now hand you over to Constantin Fest, Head of Investor Relations, who will lead you through this conference. Please go ahead, sir.
Thank you, John. Dear ladies and gentlemen, a very warm welcome from my side to this Q4 2021 earnings results call of Merck. My name is Constantin Fest, I'm Head of Investor Relations here at Merck. And I'm delighted to have here today with me Belén Garijo, CEO of the Merck Group, as well as Marcus Kuhnert, CFO of the Merck Group.
For the Q&A, we will also be joined by Matthias Heinzel, CEO of Life Science; as well as Peter Guenter, CEO of Healthcare; and Kai Beckmann, CEO of Electronics. We would like to first run you through the key slides of this presentation. And then, we'll be happy to take all of your questions during the Q&A.
Having said this, I'd like to now hand over to Belén to kick off the presentation.
Thanks, Constantin, and welcome, everybody, to our full year earnings call. We have invited you to discuss our annual results today. But given the incomprehensible violence happening right now at the very heart of Europe, business events like this need to be put into perspective.
The war in Ukraine is a painful cut to any regularity. And to me, personally, and to all of us at Merck, it is devastating to witness. It saddens me, especially, to see the heartbreaking images every day, what we know to be a truth in world that women and children suffer disproportionately. Hence, to support humanitarian aid in Ukraine, Merck, as a company, will donate €2 million to the German Red Cross. €1 million of this amount will be contributed by the Merck family. In addition, we have set up a donation platform to enable everyone at Merck to contribute. Donations made here will be matched by the company.
As you know, we are dedicated to advancing human progress, and the health and wellbeing of people will always be at the center of our actions. We live up to this responsibility by continuing to do everything in our power to ensure the supply of medicines, some products to patients and customers, of course, in full compliance with the existing sanctions.
What makes me very proud is to see how Merck colleagues across the company, particularly in countries bordering on Ukraine, such as Poland, are volunteering to support in this operation, preparing to welcome Ukrainian refugees to their homes, organizing the transportation of care packages with food and hygiene products, and connecting on our intranet, as well as locally to share information about ways to help and donate. And this is the very team that delivered our 2021 results. And in face of other considerable challenges, such just COVID, they did a fantastic job.
Now, let's go to slide number 5 of the presentation for the highlights. Overall, as you have seen in the press release already, 2021 was an outstanding year for Merck operationally, strategically, and financially. And thanks to the commitment and dedication of our more than 60,000 employees, we delivered strong operational performance in what continues to be a highly challenging environment. We made progress with our strategic agenda, accelerated our science and technology leadership through cutting-edge innovation, and launching major investments for profitable growth in the years ahead.
We delivered very strong financial results. Organically, group sales increased by 14%, and EBITDA pre rose 27% on an underlying basis. That is excluding the Biogen provision reversal in 2020. Operating cash flow soared by over 30%, and we have strengthened our balance sheet further through rapid deleveraging.
Close to 80% of our total sales growth was driven by the so-called Big 3, and all three of our business sectors posted double-digit earnings growth with – which clearly speaks of the strength of our portfolio. Life Science was the star performer with very strong growth in the core business and a significant upside from our contribution in the response to COVID-19. We increased capacities significantly in 2021 and further boosted our capabilities to expand in the attractive CDMO space.
In Healthcare, we continue to advance our pipeline and drove significant growth from the further ramp-up of Mavenclad and Bavencio on top of a very highly resilient, established portfolio. In Electronics, we accelerated our growth trajectory by capitalizing on our strong position as a leading supplier in the semiconductor industry.
As we look to 2022 and ahead to 2025, we expect to achieve continued strong growth following rigorous execution of our strategic priorities. And as usual, at this time of the year, we are introducing qualitative guidance for 2022. This calls for strong organic growth of group sales and EBITDA pre supported, once again, by all three business sectors. We are confident that 2022 will mark another successful year for Merck, and we will provide more color later and in the Q&A.
Let me now move into the next slide, slide number 6, to take a quick look at how we performed against our targets in 2021. As you can see, we delivered on all of our headline promises. In fact, if you recall, we upgraded our guidance three times last year, mainly owing to the very dynamic environment generated by COVID in Life Science.
On slide number 7, you will find the sales breakdown and growth by region. Having generated almost €20 billion sales in 2021, we also generated double-digit growth in all major regions, a strong testament to the global relevance of our diversified portfolio. Growth in Life Science was very strong and very similar across our three main regions, while in Healthcare and Electronics, it was strong, but it's slightly skewed towards North America. Above all, it is important to note that our footprint remains nicely balanced with significant exposure to strategically important growth markets in Asia-Pacific at 36% of sales, followed by Europe at 29% and North America at 27%.
On slide number 8, you have the dividend. And as you have seen from our press release this morning, we have proposed a dividend of €1.85 per share. We will propose that to the AGM on April 22. This is a 32% increase over 2020 and a payout ratio of 21.2% of EPS pre, and fully consistent with our well-known dividend policy aimed at continuous dividend growth in line with our earnings developments.
Let me now provide a more detailed view of 2021, starting with Life Science in slide number 10. Once again, Life Science had a fantastic year. Organically, sales and EBITDA pre rose 21% and 38%, respectively. All three business units delivered record organic revenue growth with Process Solutions being in the lead at an outstanding 31%, followed by Research Solutions at a very strong 15% and Applied at a very good 9%.
Also note that we posted double-digit growth across all regions and customer segments. Lightly more than half of the growth was attributable to our strong core business. Here, we got the benefit from a recovery against soft comparables in H1 and more normal dynamics in H2, with very robust fundamentals across the board. On top of this, we continued to make critical contributions in the response to COVID-19, supporting more than 80 vaccines projects, over 35 testing solutions, and more than 50 treatments. Total COVID-related sales in Life Science amounted to about €1.15 billion last year, of which close to €1 billion came from Process Solutions, and around €150 million from Research Solutions.
Looking ahead, we expect continued strength in the core business, which is our key value driver. And we also expect significant demand related to COVID, although likely failing and potentially increasingly volatile, as we will explain to you later.
Turning to profitability, 2021 was exceptional. The EBITDA pre margin in Life Science came in at a record 36.6% on sales, supported by a positive mix, favorable pricing, and a strong operating leverage. We have seen a slightly lower margins in H2 mainly due to investment, basically, accelerated recruitment of people that we need for the factory and the ramp-up of other strategic investments.
Talking about strategic investment, our direction is clear. We aim to strengthen our core and expand in high growth segments. And we have made great strides, again, in our strategy in 2021. First, we have maximized the output in bottleneck areas through productivity gains first, and adding significant new capacity in Danvers and Molsheim for single-use and in Jaffrey for filtration. We have successfully launched our upgraded e-commerce platform of more than 20,000 new products across our broad portfolio. The highlights include important new features to our Bio4C platform and SyntheChol, a high-purity synthetic cholesterol for use in mRNA therapeutics.
Also in Life Science, we increased R&D in the double-digit percentage range, and we will put even greater emphasis on innovation, digital, and emerging markets, mainly China going forward. We entered important strategic partnership, for example, with BioNTech, and we significantly accelerated our multimodality CDMO strategy through organic and inorganic investments, including the acquisition of AmpTec, and most recently, Exelead.
In summary, 2021 was a great year for Life Science, and we remain confident about the outlook. The new organization of our Life Science sector that Matthias recently announced is aimed at enhancing our focus and capabilities in the service business, while fully exploiting the synergies between Research Solutions and Applied Solutions at the customer level, and we are convinced that it will better serve the realization of our ambition – of our ambitious growth plan in the coming decade.
Turning to Healthcare on slide number 11, Healthcare had also a strong year overall. Organically, sales were up 9%, and EBITDA pre increased 17%, excluding the Biogen provision reversal in 2020. Our established portfolio remained highly resilient, delivering organic sales growth of 3% despite VBP impact in China. On top of this, sales from new launches, in particular, Mavenclad, Bavencio, and Tepmetko, rose sharply at more – adding more than 60% year-on-year.
By franchise, Oncology increased almost 30%, reflecting double-digit growth of Erbitux, supported by, you may remember, the temporary supply agreement with Eli Lilly and the strong uptake of Bavencio in first-line metastatic UC, urothelial cancer, with sales more than doubling. Our N&I franchise was up with the ongoing decline of Rebif more than offset by significant growth of Mavenclad, which was up over 30% despite a very challenging high-efficacy dynamic market environment.
Another clear highlight of Healthcare was the very robust performance of our Fertility franchise, which posted remarkable growth of more than 25%, amid a broad-based recovery following the pandemic-related dip in 2020. Our Cardiometabolic and Endocrinology franchise, CM&E, was down slightly due to the temporary impacts on China VBP on Glucophage. In fact, Glucophage outside of China and the rest of the CM&E portfolio delivered very solid growth.
In terms of profitability, and excluding the Biogen provision reversal in 2020, the EBITDA pre margin in Healthcare increased to 30.4% on sales, supported by revenue growth, milestone income from Bavencio, and a very disciplined cost management.
Looking more strategically, our priorities have further evolved and we are confident that our focused leadership approach is providing solid basis for longer-term growth. Our pipeline has significant potential, and we advanced it further in 2021. In total, as you can see on the slide, we have now 14 clinical development programs underway, including compounds with novel mechanism that could redefine the standard of care in major therapeutic areas.
We completed the Phase III recruitment for our blockbuster candidate, evobrutinib in MS, and we are on track with the development of Xevinapant, our late-stage blockbuster candidate in head and neck cancer. We also remain committed to our other focus assets and will initiate Phase II for enpatoran in SLE and CLE surely.
With regard to our recent launches, Mavenclad is holding or gaining market share in most markets, while we see a suppressed dynamic – high-efficacy dynamic market in terms of volume. Bavencio is poised for continued strong growth, from rising uptake in first-line metastatic UC and the launch of tepotinib in MET exon 14 will benefit from the recent approval in Europe. Our established portfolio continues to be providing a robust base, and we have further strengthened our leading position in Fertility and returned to growth in China in Q4. All in all, we feel good about our positioning in Healthcare. And we will remain very focused on the stringent execution of our strategy to deliver efficient growth.
Let's move into Electronics on slide number 12. And here as well, 2021 was a very strong year for Electronics. Organic sales increased by 8% – by a strong 8%, and EBITDA pre even faster at 10%. The key driver of growth was Semiconductor Solutions with revenues up 15%, once again significantly ahead of our mid-term guidance.
Double-digit growth in Semi was supported by strong demand across key markets including China, as well as new business wins in Patterning, Thin Film, and Specialty Gases. On top of these, our DS&S business benefited from significant project contributions, as our customers are executing on major investments in capacity expansion to address the well-known chip shortages and the future demand. Display was down 6% organically, fully aligned with our expectations, as the ongoing decline of liquid crystals was mitigated by high growth in OLED materials. Surface increased 13% organically on the back of a strong market recovery following, as you recall, pandemic-related impacts in 2020.
The EBITDA pre margin in Electronics increased to a very solid 31.3%, supported by the Versum synergies and despite rising input costs pressure in the second half of the year. Bigger picture, we have successfully delivered on our Bright Future transformation ahead of time and launched our growth initiative, Level Up, to drive growth in the years ahead. Of note, the integration of Versum has been very smooth. And I'm very pleased to inform that we have already achieved our upgraded cost synergy target of €85 million for 2022 in the year 2021, so one year in advance.
Looking at our end markets, we see fast growth potential and a substantial need, not only for more materials and solutions, but also for cutting-edge innovation to enable the next generation of chips. And we are highly confident that Level Up will help ensure that we address our customers' ongoing capacity expansion as well as the innovation needs.
Today, we are focusing on additional scale in key semiconductor regions on supporting leading-edge technology, a broad and relevant portfolio, and importantly, the right people and capabilities to cater to our customers' needs. To sum up, once again, 2021 was a good year, great year for Electronics, I should say, and we have everything in place to continue to execute on our accelerated growth ambitions.
And with this, let me hand it over to Marcus for a more detailed review of our financials and Q4.
Thanks, Belén, and welcome also from my side. I move on to slide number 14 for an overview of our key figures. Overall, we are very pleased with our performance, delivering very strong results in 2021. On a reported basis, group net sales increased 12.3% to €19.7 billion. EBITDA pre was up 17.3% at €6.1 billion, and EPS pre rose 30.1% to €8.72. Excluding the Biogen provision reversal in 2020, EBITDA pre and EPS pre increased even faster by 26.2% and 43.7%, respectively. Portfolio effects were minimal and FX was a slight headwind for the full year, but turned positive in H2.
Operating cash flow was very strong, up 32.7% at €4.6 billion, given strong earnings growth paired with sound working capital management. As a result, we were able to deleverage quickly, lowering our net financial debt by around about €2 billion.
Moving on to slide 15 for a summary of our performance by business sector. Group organic sales growth was very strong at 13.8%. This was fueled by all three business sectors, with Life Science as the largest contributor, followed by Healthcare and Electronics. EBITDA pre growth exceeded sales growth in all three business sectors. And corporate and other costs were down year-on-year mainly due to an improved hedging result. As such, the group EBITDA pre margin came in at a remarkable 31%.
Compared with 2020, this corresponds to an increase of 130 basis points, and even as much as 340 basis points when excluding the Biogen provision reversal. Other non-recurring income items in Healthcare did not make a big difference in the year-on-year comparison and were fully in line with our latest guidance. In other words, the strong underlying margin expansion is primarily a reflection of significant operating leverage in Life Science and disciplined cost management across the entire company.
Before I move on to a review of our performance in Q4, let's have a look at our reported earnings figures for 2021. As you can see on slide 16, EBIT increased 40% year-on-year or by close to €1.2 billion in absolute terms. Please note that this number would have been even €365 million higher without the Biogen provision reversal in 2020. EBIT growth exceeded EBITDA pre growth by close to €300 million, mainly due to lower adjustments, fewer impairments, and reduced amortization of purchased intangibles. The financial result improved by close to €100 million on the back of ongoing swift deleveraging, hence, significantly lower interest expenses. The effective tax rate was 21.9%, in line with the lower end of our guidance range. And as a result, the reported net income surged 54% to €3.1 billion, and reported EPS came in at €7.03.
That said, let's now take a closer look at Q4. Before, however, I go into the details by business sector, let me briefly share some headline figures for the group, which you will find in the appendix to this deck. Organically, group net sales increased 9.9% in Q4, and EBITDA pre rose by 11%. As such, momentum moderated further compared with previous quarters. However, this was fully in line with our expectations amid tougher comparables, and performance overall was still very strong led by Life Science and Electronics. Please also note that reported numbers were boosted by significant FX tailwinds in the fourth quarter, adding over 3% to group sales and close to 7% to EBITDA pre. EPS pre increased sharply by 31%.
And with that, let's now take a closer look to our three business sectors, starting with Life Science, on slide number 17. While growth moderated further due to rising comps, Life Science delivered yet another record quarter in terms of absolute sales and earnings. Organically, sales increased 14.2% in Q4, still well above our mid-term guidance. The core business contributed almost two-thirds to this growth, expanding at a very healthy pace of around about 10%. COVID-related sales made up the rest, growing significantly year-over-year, but declining slightly quarter-over-quarter, which supports our view that we have reached or even past the peak by now.
From a portfolio perspective, Process Solutions remains a key engine of growth with sales up 25.5% organically. About half of this was attributable to the core business with mid-teens growth, reflecting robust end markets, especially in biopharma. COVID-related sales in Process Solutions still contributed positively to the growth in the fourth quarter and came in at around €950 million for the full year, slightly shy of our latest guidance due to supply challenges. All business lines grew double-digit, with bioprocessing as the main driver and strong growth in Services. We continued to make good progress with our capacity expansions. In turn, a key enabler of yet another strong sequential sales increase. Order intake growth was slightly positive against tough comps and the order book continued to increase quarter-over-quarter.
Moving on to Research Solutions, here, the sales were up 1.5% organically against tough comps. Growth was entirely driven by the core business, with lab activity at or close to pre-pandemic levels. COVID-related sales in Research Solutions were down year-on-year for the first time and continued to fade sequentially, coming in at close to €200 million for the full year and thus exceeding our latest guidance due to higher testing activity at year-end. Last but not least, Applied Solutions reported very robust growth of 6.9% organically, with diagnostics as a key driver and negligible COVID-related sales. Geographically, we saw double-digit growth in all major regions.
And in terms of customer segments, Pharma and Biotech was the strongest, followed by Industrial and Testing and diagnostics, all showing double-digit growth, while academia was slightly down against tough comparables.
With regard to earnings, EBITDA pre surged 25.4% organically, implying a margin expansion of 300 basis points, driven by positive mix, favorable pricing and operating leverage. Similar to Q3, we saw a further modest margin decline on a sequential basis, as we are stepping up strategic investments, and as Belén mentioned, we make progress in hiring people, which is essential to bring capacities up.
And with that, let's move on to Healthcare, on slide number 18. Healthcare delivered solid top line growth in Q4, with sales up 4.7% organically. The established portfolio was stable against tough comps, and recently launched products showed strong growth with combined sales up more than 40%. By franchise, Oncology was up 21%, entirely driven by continued strong uptake of Bavencio at a plus of 132%, in turn supported by the ongoing first-line metastatic urothelial cancer launch in Europe.
Erbitux was flat against tough comps related to the temporary supply agreement with Eli Lilly. As a reminder, this agreement generated initial sales of €32 million in Q4 2020 versus the final booking of €10 million in Q4 2021. Excluding this effect, performance of Erbitux was very strong with a double-digit growth. Our N&I franchise was down 5% organically as the ongoing decline of Rebif at a level of minus 12% may be partly offset by growth of Mavenclad at 5%. On a positive note, we were able to keep market share stable for Mavenclad in the high efficacy dynamic market. However, this market was clearly impacted by the Omicron wave.
Fertility performed strongly again, up 8% organically against slightly soft comps. With the Fertility market back at pre-pandemic levels, we do not foresee further catch-up effects, but solid growth on robust market fundamentals, including rising prevalence and awareness of infertility.
And last but not least, our CM&E franchise returned to growth of 3% in the fourth quarter, as the China VBP impact on Glucophage started to fade and the remainder of the portfolio continues to be in a good shape. Other highlights include the recent approval of Tepmetko in Europe and the acquisition of Chord at the end of last year.
With regard to earnings, EBITDA pre declined 12% organically with the margin down 360 basis points, mainly due to tough comps in terms of non-recurring income in the last year and fluctuations in manufacturing yields, I should say, temporary fluctuations in manufacturing yields. On non-recurring income, please note that Q4 2020 included around €30 million from GSK and a mid-double-digit million euro amount from active portfolio management, while Q4 2021 did not contain any non-recurring income as guided. Looking into 2022, we expect income from active portfolio management in the low-to-mid double-digit million euros for the full year, of which we expect a low-double-digit million euro amount in the first quarter.
With that, let's continue with Electronics from slide number 19. Electronics performed also very strongly in the fourth quarter with sales growing at 10.4% organically. Semiconductor Solutions was again the key driver and is firing on all cylinders with a record organic sales growth of 24%. This is significantly ahead of our mid-term guidance and should not be extrapolated.
Our Semi Materials business accelerated further despite rising comps, delivering broad-based performance across the portfolio and growth of over 20% in a strong market. On top of this, we continued to capitalize on important projects in our Delivery Systems and Services business, helping customers to realize their investments in new fab capacity, and we expect these project contributions to last throughout all of 2022.
Sales in Display Solutions were down 10% organically with the usual pattern of a continued decline in liquid crystals, partly offset by strong performance of OLED materials. Surface Solutions posted a slight growth of 1% against rising comp. EBIDTA pre increased 12.1% organically, translating into a very solid margin of 31.5%. This corresponds to an increase of 160 basis points with operating leverage, favorable yield fluctuations and Versum synergies more than offsetting rising input cost pressure.
Turning to slide 20 for a few remarks on our balance sheet at year-end 2021. In summary, the €3.6 billion expansion over 2020 mainly reflects the strong business performance and FX. Cash and cash equivalents increased due to strong operating cash flow. Goodwill rose due to FX, and net working capital increased less than sales. Property, plant and equipment increased on the back of investments to support our growth ambitions and also again FX effects. Financial debt was reduced by over €1 billion amid significant net repayments. And as a result, our equity ratio strengthened from 41% to 47%, while net debt-to-EBITDA pre improved from 2.1 times to 1.4 times.
Let me also briefly comment on cash flow performance in Q4. As you can see on slide 21, operating cash flow was down €243 million year-over-year, mainly due to tax prepayments and increased working capital to support sales and supply security in Life Science and Electronics. Cash out for investing activities was higher than last year, although CapEx on PP&E was lower. Keep in mind that investing cash flow in the first quarter of last year was positively impacted by the reversal of temporary investment of excess cash.
At the same time, CapEx was elevated last year by the opportunistic purchase of buildings at our Burlington and Tempe sites. But by contrast, cash out for CapEx in Q4 2021 was low due to phasing of payments. In fact, gross additions to PP&E on the balance sheet were broadly in line with our latest CapEx guidance of around €1.4 billion in 2021.
Also note that for 2022, we are guiding to CapEx in a range between €1.6 billion and €1.7 billion, fully in line with our goal to increase CapEx to around a level of €2 billion by 2023 to support our accelerated organic growth ambitions. Last but not least, the significant decline in cash out for financing activities can be explained by significant net debt repayments here, especially of bank liabilities and commercial papers in the prior-year period.
And with that, let me hand back to Belén for an update on ESG and for guidance.
Thank you, Marcus. So briefly on ESG, I'm pleased to report that we have accomplished all goals that we set ourselves in 2021. The Merck ESG database is in place, and we have implemented and tested the sustainable business value methodology in several pilots. We have developed a set of KPIs that we are introducing to you today. The 14 metrics and corresponding targets, as far as they have been disclosed today, can be found in the appendix of this deck.
For the majority of the KPIs, we will report numbers as of 2021, while the remainder will follow next year. We have incorporated ESG frameworks in major processes across important functions, including R&D, procurement, controlling, and M&A. And we have already defined a list of priority projects and approved the corresponding budgets to fund those.
One of the projects relates to our group-wide supply chain with the objective of increasing the percentage of relevant suppliers that are covered by a valid sustainability assessment. Other projects, to mention some, growing the share of greener products in Life Science, as well as establishing a sustainability scorecard for Healthcare R&D and portfolio assessment in Electronics. In Healthcare, we are also, for example, building programs for access to medicine in low and middle-income countries.
Moving on to 24, our initiatives are coupled with increased transparency on ESG. And starting with the fiscal year 2021, we integrated the non-financial statements into the Annual Report. We also added reporting on EU taxonomy in line with the recent regulations. And this shows that our share in taxonomy eligible net sales, CapEx, and OpEx in connection with the environmental objective on climate change mitigation is low. However, this is due to limited conformity of the Merck's business activities as defined in the regulations so far and will evolve, will change with the next steps of the EU taxonomy reporting.
As discussed, we are introducing a set of 14 sustainability metrics, including those which are relevant for the compensation of the Executive Board. Looking ahead, we are planning to publish our comprehensive sustainability report in April as usual, and this will contain the Task Force on Climate-related Financial Disclosure (sic) (Disclosures] (00:39:03) reporting for the first time. And in addition, we will extend it to our Sustainability Accounting Standards Board reporting from the Pharma and Biotech to the Medical Supply and the Semiconductor Industry Standards to reflect all three business sectors.
The analysis of ESG requirements will be ongoing as the stakeholder expect, mean will be dynamic as the stakeholder expectations and regulations continue to evolve. And we will adjust our plans as necessary and continue to be very focused on execution.
To sum it up, significant progress in 2021 convinced that this will help us to further accelerate the contributions that we make to solving more of the greatest sustainability issue facing the world, resulting in mutual benefits for society, for the environment, and importantly, for our competitive advantage and business performance.
Let me conclude with the guidance for 2022. As you can see on the slide 26, we are providing qualitative targets as usual at this time of the year, and this will be followed by more detailed targets as part of our Q1 reporting in May. For group net sales, we are guiding to a strong organic growth and currency tailwinds in a range of 1% to 4%. For group EBITDA pre, we are also guiding to strong organic growth and even slightly higher FX tailwinds in a range of 2% to 5%, and this is mainly linked to the USD and the Chinese renminbi.
With regard to the situation in Russia and Ukraine, please note that our business exposure is limited and our forecast currently doesn't assume a meaningful impact. However, we are, of course, carefully monitoring the situation and will provide you with further updates as the year progresses and we have more transparency on the evolution of the war.
Moving into the next one, some color by business sector. And there, as you can see, we expect sales and earnings growth to be supported by all three business sectors, as it was the case in 2021. Life Science will continue to be the fastest growing sector, followed by Electronics and Healthcare. Please note that you should think about qualitative guidance in ranges. These ranges could be overlapping and the sector guidance are to support the group guidance and do not have to adapt.
For Life Science, we expect growth to be driven by continued strength in the core business and Process Solutions as the key driver of growth. COVID-related sales will be slightly dilutive to growth. In particular, we now expect COVID-related sales in Process Solutions of up to €900 million, which is slightly more cautious compared with our previous guidance of around €900 million. For Research, we continue to expect COVID-related sales below €100 million and negligible contributions in Applied. In terms of the margin, our qualitative guidance may suggest a stable margin in Life Science. We continue to believe that slight margin erosion is the most likely scenario, consistent with the trend in recent quarters and reflecting increasing strategic investments.
Let me also give a sense of phasing. In the past couple of weeks, we have observed increased volatility around COVID-related demand in Process Solutions due to Omicron, that is certain type of vaccines and treatments are working better than others, and there are signs for a potentially accelerated transition into the endemic phase. In addition, we are facing increased supply chain related to Omicron, including staffing and raw materials, which are temporarily weighing on output in key manufacturing sites. So bear this in mind when you build your models for Q1.
For Healthcare, we expect growth to be mainly driven by the launches, mainly Mavenclad and Bavencio. And in Electronics, semiconductors will stay the key growth engine with the OLED materials to continue with a strong performance. Last but not the least, we believe that we are very well positioned to manage profitability amid rising input costs, although the situation has become slightly more challenging in the past couple of months. And we can further discuss all these topics during the question-and-answer session.
This is concluding my presentation, and over to you, Constantin.
Thank you very much, Belén, for this presentation – Belén and Marcus. Now, John, if we could start the Q&A, please. I would like to remind everybody to kindly limit yourselves to a maximum of two question – two questions. This will allow more of you to ask questions. With this, John, please, let's kick off the Q&A.
Thank you. We will now begin our question-and-answer session. [Operator Instructions] We'll take our first question from Matt Weston. Please go [audio gap] (00:45:28).
Thank you very much. It's Matt Weston from Credit Suisse. Two questions, if I can. The first, please, is on Mavenclad. And obviously, you had a challenging performance during the Omicron wave in 4Q, but it's also clear that it's a very major driver of your Healthcare growth guidance in 2022. So, we're already into March. I would be very interested in understanding the trends that you are seeing in Mavenclad recovery in the dynamic MS market, as the Omicron wave wanes in major markets around the world?
And then the second question is on Life Science. There was a lot of discussion during 2021 about whether customers were overstocking their non-COVID orders, because they were just concerned about constraints on supply chain. And during those discussions, Merck always expressed confidence that this wasn't the case with your products and you're managing customers very carefully because of the limited inventory you have. There are clearly concerns at some of your peers that we may see a significant unwind of customer base stocking in 2022. Can you reiterate your confidence that you think you don't have customers with a lot of stock in the channel?
Matthias, do you want to start with that?
Yeah. Hey, Matt. It's Matthias here. If I may, I'll start with your second question. And indeed, I confirm what we talked about in the past, right. We stay very close to our customers, and we do not see, by and large, especially in the high demand products a major overstocking, right. And here I talk especially about the single-use products, which are really made to order, right, so for specific needs of customers and as well as the filtration products. So yeah, by and large, we still see a very high demand and we do not see a major overstocking.
Peter, go ahead.
Yeah. So, Matt, thanks for the question. It's Peter. So, you remember that in Q3, I hinted to further volatility in Q4, which is related indeed to the impact on the high efficacy market due to Omicron. And as you know, I'm not the only one in the high efficacy sector having mentioned those issues. I think my colleagues, [ph] of course, in (00:47:58) Novartis hinted towards the same continued depression of the high efficacy market. I would say, though, that the impact of Omicron is definitely bigger in the US than it is in Europe. And I think that if you would take all these things into account, you also remember that we had a one-off in Q3 that actually Q4 would have been in line with Q3 sales normalized for this one-off of Q3.
The other point I think it's important to mention is that our market share remains stable in the US, continues to grow in some of the key European markets. So basically, I'm confident that if we can consolidate that market share position and the high efficacy market indeed recovers once we go out of Omnicom that you should see a recovery of the growth of Mavenclad. I would say, though, that in the first months of this year, we are still not out of the Omicron wave, as you know, especially in the US. So I would expect some more volatility in Q1 and then a more clear trajectory moving forward.
Many thanks, indeed. I'll jump back in the queue. [Operator Instructions]
We'll now take our next question from Gary Steventon. Please go ahead. You're line is open.
Thank you for taking the question. So I guess just going to your CDMO and CTO offerings, they've been getting a bit more airtime in recent quarters and it's going to be split out with Life Science going forward. Could you just talk a bit here to your aspirations for this business as well as kind of the current profile in terms of growth and margin contribution within Life Science and Process Solutions? And then just, on the slides, you noted that you intend to scale up to become the leading CDMO. So, I'm just wondering kind of what this means in terms of size and over what time period?
And then just a follow-up question on Mavenclad, please. So, you gave us an update in terms of your patent term extensions on the Capital Markets Day. And I think you mentioned you were appealing a decision in the US and that an extension has already been granted in France, Italy and Spain, I think in Europe taking you through to 2030, but other decisions were pending. So, just an update here on any progress will also be helpful. Thank you.
Yeah. Gary, let me start by the Mavenclad question. There is no update since our last communication on that. So, our appeal is pending in the US and the SPC situations in the US are identical actually to the update that we gave you. Indeed, we have some key European countries where we have an SPS obtained – an SPC obtained, sorry, and we are continuing to try to get those SPCs in those European countries where we haven't got it yet. [indiscernible]
(00:51:00).
Yeah. Hey, Gary. It's Matthias. So to your question around CDMO and CTO, currently, it's about 15% of our Process Solutions business. And our strategy is, clearly, as we've outlined at the CMD, to rebuild a multimodality CDMO business based on our existing presence, which is mainly around mAbs, high potency APIs, viral vectors and, obviously, mRNA, where we recently also added significantly with an acquisition of Exelead. So, our goal is clearly to really further accelerate that business, investing into R&D. We're investing into capacity to rebuild it up.
And probably, you have seen that we also announced reorganization effective April 1. And to really support that growth and really accelerate it, we are creating a Life Science Services unit. So basically, we are splitting out all the service-related businesses, namely CDMO and CTO. And then, post Q2, we will actually report that business, the new Life Science Services business, so you will also get greater transparency on that business going forward.
Okay. Thank you.
We will now take our next question from James Quigley. Please go ahead. Your line is open.
Hi, there. Thank you for taking my questions. So, I have two. First one is on Bavencio in bladder. It's now been on the market for quite a while. So, where is the average stay time landing during the maintenance setting? And can you give us a bit more details on the new combination trials with novel therapies? I think it's start – due to start in the second quarter. So, in these trials, will Bavencio still be used as a maintenance or you'll sort of push it up in the treatment setting as part of those combinations?
And secondly, on Russia and Ukraine, you mentioned that your business exposure is quite low. From a clinical trials perspective, there's been some reports that there's been a number of clinical trials that are currently ongoing and enrolling in Russia and Ukraine. I think I noticed that one of your – or both of the evobrutinib trials have some reasonable exposure in Ukraine. So, have you done an analysis of what that could mean in terms of timing of readouts, or how that could impact any of your trials, particularly the evobrutinib trial? Thank you.
So, Peter can build on this, but of course, we have deeply analyzed the multiple dimensions of the implication of the situation in that region. We have around 13 – we have conducted around 13 clinical studies in Russia and Ukraine. And I think the team has done a marvelous job to anticipate the dynamics of the trial in preparation for what was to come. So, it's too early to say at this time. But definitely, the team is very well prepared to protect the safety of the patients, to secure the continuity of the follow-up to the extent that we can control that. And we will keep you informed on the – on future developments.
Peter, I don't want – do you want to add anything?
No, I think, Belén, you captured it perfectly. I think we did everything we could what is within our power to try to mitigate the impact. For example, we increased, of course, the investigational product stock in the countries and the sites. We were looking into moving into local labs instead of central labs for the biologies, et cetera, et cetera. But as you know, it's a very dynamic situation, I would say, and we have to navigate it as things unfold.
And on Bavencio, we continue to make progress, both sides of the Atlantic, and you can see that also in the sales. I think your question was around to the percentage of maintenance therapy now in the US. So, we are making progress continuously. We are now at 75% of patients given indeed chemo – or platinum-based treatment, if they are platinum eligible. And we started at 50% at the launch of Bavencio. So, really, we are able to change the treatment paradigm there. And then, I would say that in the use of first-line maintenance therapy with Bavencio, we are at 50% at the end of last year, so also making continuous progress.
And the share of countries like Japan and some key countries in Europe should not be underestimated in the total Bavencio sales. So, we have very good performance with Bavencio in Japan. In countries like France, like Germany, and we are still, I would say, in the probably final stages of getting reimbursement for Bavencio in countries like Italy and Spain, for example. So, I think we can be relatively optimistic to see that growth continue.
A last piece of news is that the extension of the JAVELIN Bladder trial in metastatic UC, we have now over 30 months of follow-up. And actually, we have seen that the survival benefit further increased now to 8.8 months, where it was 7.1 months in the pivotal data. So, we remain very optimistic and very bullish on Bavencio.
On the clinical trials, so the so-called Medley trial, I can tell you that these trials are actually focused on reinforcing the position in the maintenance segment. So we are not moving up in, for example, the adjuvant setting. And I think we have talked more about this in detail in the R&D update call.
Thank you.
We will now take our next question from Falko Friedrichs. Please go ahead. Your line is open.
Thank you. And I also have two questions, please. Firstly, what are your latest thoughts on M&A? And are you open to make a bigger step this year, or is that rather unlikely? Then secondly on your Electronics business, my question is how much longer can this higher demand due to the semiconductor shortage last? And do you expect this to normalize again at some point this year, or do you rather think you can benefit from it throughout the entire year? Thank you.
So let's start by the semiconductors question. Kai?
Yeah. Falko, this is Kai speaking. Thanks for your question. You're asking about the – how long can that additional demand last. Our customers are investing like never before. So there is a strong expectation in the industry that demand is not just short term, it's a mid to long-term demand. And the investments point clearly in this direction. This doesn't come from only one source, it comes from very different sources of developments and all kinds of areas that digitize and require more chips and more sophisticated chips going forward. And the current data clearly supports the mid-term guidance that we have given last year at the Capital Markets Day, and we see a similar development confirming this year's growth trajectory. MSI growth is projected at mid-to-high single digit for 2022, confirming our mid-term assumptions.
Falko, on the M&A front, not too many things new to report. I think we have been very disciplined in executing on our strategy. As I mentioned before, we have recently closed Exelead, which is very centric to further developing our mRNA offering as a CDMO in our Life Science sector. And we will continue to move on primarily on bolt-on acquisitions this year, which is exactly your questions, although, of course, we are not excluding or close to looking at more transformative options as of 2023, as our cash position continues to significantly improve.
Okay. Thank you.
We will now take our next question from Daniel Wendorff. Please go ahead. Your line is open.
Thanks for taking my questions, and good afternoon also from my side. Two, if I may. The first one on Semiconductor Solutions, if I may. So according to my understanding, the Ukraine supplies 70% of the world's neon gas, which is an important step for semiconductor manufacturing. So how much of a risk is the war here really for the recovery of this market? And maybe for your guidance, any more color you can provide here would be much appreciated.
And my second question, it would be on Life Science, and in particular, on Applied and Research Solutions. So how should we think about these businesses going into 2022? According to my understanding and the business environment or spending environment from Life Science, research institutions looks actually quite healthy. And, yeah, any more color you can provide here, I would appreciate. Thank you.
Yeah, Daniel, this is Kai speaking. So, Merck has no supplies from Russia or Ukraine as direct supplies. We're currently in contact with our suppliers, whether there are any indirect effects that could harm us, but we do not expect anything which is significant on our side. Of course, your data is correct, and we need to check with our customers whether they have other sources than Merck that would impact their factory output. This is largely unknown at this point in time, and we will check going forward.
Yeah, hello, Daniel. It's Matthias here. So to address your question about Research and Applied, yeah, first of all, as we look at 2021, we are coming from very strong growth rates for Research with 15%, Applied with 9%, that partially due to also the softer comps against 2020.
Now as we move into 2022, I think we are on the path towards our mid-term guidance, which we provided, which was for Research in the low-single digit and in Applied in the mid-single digit. Again, I would keep in mind that especially with Research, as you're rightly pointing out, the spending levels are increasing, the labs are getting more occupied, but given the extremely strong comp versus 2021, I think the view around what we provide for the mid-term guidance gives you a good indication.
Thank you. Maybe a follow-up on Research Solutions, is that excluding the COVID sales you mentioned, or should we think about this also taking into account COVID sales?
Yeah. This includes COVID sales, right? I mean, we indicated already before that we expect – so first of all, in 2021, we had COVID close to €200 million for Research, and we were indicating that it will be below €100 million. The question will be how much below €100 million, so keep that in mind when I provided the low-single digit.
Okay. Thank you.
I think we have time for one more question, please.
We will take our final question from Michael Leuchten. Please go ahead. Your line is open.
Oh, thank you very much. It's Michael Leuchten from UBS. Just one quick question going back to the order book and maybe related to the slight wording change on COVID contribution, just wondering why you have softened that wording and what you're seeing in the order intake in Process Solutions.
And then a quick follow-up on evobrutinib, please. Looking at the number of sites that are located in Russia and Ukraine for Evolution RMS I and RMS II, it's about 15%. It's a meaningful enough number. Given those trials are fully recruited, if you cannot follow up with those patients as planned, what happens then? Are they just censored from the study and you have to run with the patients that you've got? Or would you be able to re-recruit more patients elsewhere should that be needed? Thank you.
Yeah, Michael. Hello. It's Matthias. Let me address your first two question. Indeed, we made a careful wording change, and based on our view of the market, our very close discussions with our customers, we believe that the €900 million we put out for Process Solutions is still possible. But at this point in time, we will see that rather at the upper end of the range. And that is, of course, based on a view on the different COVID drivers. We look at target vaccination rates, especially the boosters and also as we see now Omicron still being highly contagious but with milder symptoms. The question is, what's the booster adoption rate going forward? So, at the end of the day, it's still very volatile. But we believe the indication we provide to you is very important and, yeah, we believe it's more in the upper end of the range.
To your question on order book or usually, we talk here about order intake. So first of all, we see the order intake, the growth rates coming down over the quarters. The growth is still higher than prior year for Q4, but it's certainly coming down significantly like you've seen also from other market players. Nevertheless, the book-to-bill ratio is still above 1, meaning our order intake is still above the sales we have.
And then tying that answer to my first point, what we see indeed in the order intake is that the COVID share is significantly coming down. On the other hand, the base business order intake share is significantly increasing. But again, given the order intake for COVID coming down, that's yet another evidence for our more cautionary statement on the €900 million for this year.
Peter?
Yeah. Michael, on the evobrutinib, as Belén had mentioned before, it's really a moving target. We are looking at different scenarios. We are in, I would say, daily contact with our CRO to have the [ph] pills (01:06:56) on what's happening. And in function thereof, we have to look at different alternatives if necessary. I remind you, of course, that countries like Russia and Ukraine are traditionally countries where there's a lot of clinical trials ongoing by the whole pharmaceutical market. So, it's not like we are in a specific position here. But if there's more news, of course, we will update you.
Thank you very much for all your questions. With this, I'd like to hand over to Belén for some closing remarks.
Very briefly, because we are running out of time. Thank you, Constantin, and thank you for your continued interest in our company. 2021 was clearly a record year in terms of growth and margin expansion. And as we have discussed today, we have a very solid position to deliver another successful year in 2022. We look forward to meeting many of you at the upcoming road shows and conferences. And obviously, we will be updating you whenever is necessary as the year progresses. Thanks, again, and have a good evening.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may now disconnect.