Merck Stock

Dear ladies and gentlemen, welcome to the Merck Investor and Analyst Conference Call on Second Quarter 2026. [Operator Instructions] I am now handing over to Florian Schraeder, Head of Investor Relations, who will lead you through this conference. Please go ahead, sir.

Thank you very much, Heidi. Good afternoon, good morning, everyone, and welcome to our Q2 '26 results call. Thank you for joining us today. My name is Florian Schraeder, and I'm the Head of Investor Relations at Merck.

In our Q2 call today, Kai Beckmann, Group CEO, will begin with sharing an update on first steps since we announced our new strategic direction in May. Kai will then provide a brief overview of our business performance and key developments in the second quarter as part of his executive summary. Helene von Roede, Group CFO, will guide you through the detailed financial overview.

Before we move into the Q&A session, where we will be joined by Jean-Charles Wirth, CEO of Life Science; Darren Verlenden, CEO of Healthcare; and Benjamin Heim, CEO of Electronics, Kai will share our updated outlook and guidance with you.

With that, I'm pleased to hand it over to Kai to kick us off.

Thank you, Florian, and good afternoon, good morning, and thanks to you all for joining us today. So before we get to the numbers, let me first give you a sense of where we stand strategically and highlight the milestones we have achieved in recent months since announcing our strategic direction in May.

Each of these milestones addresses the evolving expectations of our customers and patients in an increasingly complex world. Geopolitical tensions, shifting trade dynamics, active policy debate and accelerating AI-driven technology rates are all shaping the environment in which we operate. In this context, only a clear plan and disciplined execution will move us closer to the sustainable profitable growth we are building for our company.

Allow me to share a few early proof points. Let me start with the signing of a definitive agreement to acquire Bio-Techne Corporation on June 25. Subject to regulatory approval and closing, Bio-Techne's complementary portfolio of high-quality reagents, analytical instruments and diagnostic systems for precision medicine is expected to be immediately accretive to sales growth and margins. In parallel, we continue to invest in the capacity required to scale our manufacturing and R&D in electronics, delivering precise, reliable and scalable solutions across the semiconductor value chain.

In June, we opened a new metrology and inspection site near Ko, France. This EUR 20 million investment will expand our capacity for M&I tools in a key semiconductor hub. Our rare diseases portfolio continues to show strong momentum, and our pipeline has also advanced and GOMACli both delivered quarter-over-quarter and year-over-year growth. In addition, pimicotinib generated first sales in China and preparations for a U.S. launch are underway. The FDA granted breakthrough therapy designation for enpatiran for the treatment of lupus with active cutaneous manifestations. And the first patient was dosed in a Phase III trial evaluating our anti-CEACAM5 antibody drug conjugate, preRSMTCT for the third-line treatment of metastatic colorectal cancer.

So I stop here for today. Going forward, we will continue to share further proof points demonstrating that we are focusing investments where we see the strongest growth opportunities. We will make it easier for customers to work with us through more integrated solutions, and we will share capabilities more effectively across the company. And we will continue to use partnerships and acquisitions where they accelerate progress.

And with that, let me turn to our operational and financial performance in the second quarter. So Q2 was a pretty robust quarter. Following a solid start into the year, we continue to build growth momentum in the second quarter. Organic sales growth accelerated to 4.1%, supported by strong contributions from Life Science and Electronics. In Life Science, growth was broad-based across all regions. Process Solutions again delivered strong growth with sales up 15% organically. And as a reminder, we expect the growth profile to normalize in the second half of the year.

Advanced Solutions also contributed solid growth, while Discovery Solutions showed slight growth in a still muted market environment. In Healthcare, as I pointed out, rare diseases continued to make a meaningful contribution. To better align with our operational structures, we have reorganized the remaining franchises. Cardiometabolic is now reported on a stand-alone basis, while Fertility and Endocrinology has been established as a newly created franchise. Both were broadly stable in the quarter. Specialty Care, which comprises of neurology and oncology assets, drove the overall organic decline in Healthcare, mainly reflecting the impact from Mavenclad in the U.S. and continued competition for Bavencio.

In Electronics, organic growth accelerated significantly to 12% in Q2. Semiconductor Solutions delivered very strong organic growth of 17%, fueled by continued momentum in advanced nodes. Optronics remained broadly stable, while headwinds in consumer electronics end markets are expected to increase further. As a result, we delivered on our ambition to generate profitable organic growth for the group while continuing to invest in innovation.

EBITDA pre margin expanded year-over-year by 1.6 percentage points to 29.4%. And based on these robust results, we are raising our full year guidance, and I will share the details with you later in this call.

Looking now at the group bridge in more detail on Page 6. Reported net sales increased by 3.4% year-over-year in Q2. Organic sales growth reached 4.1%, driven by Life Science and Electronics. A negative currency impact amounted to minus 1.1% and portfolio effects contributed 0.4%. In Q1, organic growth of 2.9% was more than offset by disproportionate foreign exchange headwinds and negative portfolio effects. This quarter, the entire mix of organic growth, FX and portfolio effects improved visibly, leading to an accelerated growth momentum. Organic EBITDA pre growth was pleasing 9.3%, also driven by favorable comps in Electronics in Q2 2025.

I'm handing over to Helena now to share further details.

Thank you very much, Kai, and a warm welcome also from my side. And with that, let's dive into the overview of key financials on Page 8. Net sales increased from EUR 5.255 billion in Q2 '25 to EUR 5.434 billion in Q2 '26. As mentioned already, this was driven by solid organic growth and easing currency headwinds, while portfolio effects in Healthcare and Electronics largely balanced each other out.

EBITDA pre increased from EUR 1.46 billion to EUR 1.6 billion. The organic increase by 9.3% was driven primarily by Life Science and Electronics, while foreign exchange and portfolio effects were close to neutral, leading to reported growth of 9.4%.

EPS pre increased by 6.9% to EUR 2.16. And this is achieved despite a visible increase in interest costs related to the financing of SpringWorks acquisition. However, for the full year, we slightly reduced our interest cost guidance, as you can see in the appendix.

Operating cash flow increased moderately by 6.7% to EUR 605 million, which does not tell the full story. Temporary effects are partially offsetting structural improvement, and I will come back to this in a minute.

Net financial debt increased to EUR 9.2 billion as of June 30, mainly due to the dividend payment. The increase in working capital is largely a Q1 effect with smaller increases in Q2, essentially relating to foreign exchange effects.

Now one housekeeping item, which I would like to flag already today is the potential impact of the implementation of IFRS 18. IFRS 18 will become effective as of January 2027. Currently, the calculation of EBITDA pre is based on EBIT. The future EBITDA pre will be based on the newly defined IFRS 18 operating profit or loss to which we will add depreciation and amortization as well as adjustable items.

Without going into the details at this stage, our simulations suggest that the deviation of past and future EBITDA pre is less than 2%.

With the introduction of IFRS 18, some definitions of some adjustments will be changing. We've prepared a slide in the appendix of this deck, which explains these changes.

Now we will share more insights as we get closer to the implementation of IFRS 18. And with that, let us move on to the performance analysis of the 3 businesses. And I'm starting with Life Sciences on Page 9. Life Science sales grew organically by 8% in Q2. Once again, Process Solutions was the key driver. As we already highlighted in Q1, the business is benefiting from strong underlying demand, supported by temporarily stronger purchasing activity in APAC and new customer projects. We saw this already towards the end of Q1 and the temporary uplift continued into early Q2. As anticipated, however, it started to normalize over the course of the quarter. Beyond that, we do not see any unusual effects. We have neither experienced significant delays in customer projects nor do we see a dependency on specific product groups. Our performance remains broad-based.

That said, the assumption, which we shared with you in our May call, namely a normalization of the second half -- in the second half of '26, does remain valid. As expected, the Process Solutions order book normalized in Q2.

Advanced Solutions and Discovery Solutions are on track. Advanced Solutions grew 4% organically with the research spending environment gradually improving. And Discovery Solutions grew 2% organically despite a muted market environment, including continued softness in China.

EBITDA pre increased to EUR 700 million with the margin expanding by 50 basis points to 29%. At the same time, we continue to invest in R&D as a key driver of our future growth and differentiation. Examples of such investments include the launch of [indiscernible] solution, which is a virus filtration solution designed to be more sustainable and to improve throughput for complex and high concentration monoclonal antibodies. We also introduced our first bio-based high-performance liquid chromatography, HPLC solvents, which emit around 26% less CO2 equivalent on average without compromising on performance.

And zooming out, there are 2 more topics. First, tariff refunds. Effects from tariff refunds to customers were not material in Q2. For the full year, these effects are reflected in our updated guidance, which Kai will explain in detail in a few minutes. And second, of course, our plans to acquire Bio-Techne. No news is good news. We are on track.

Regarding the accounting treatment of the pending acquisition of Bio-Techne, let me remind you that we will see material effects such as recognition of transaction costs only after closing, which is expected by the end of this year or in early '27. Following closing, we would expect immediate EBITDA premargin accretion. We estimate the run rate cost synergies to amount to approximately EUR 140 million by year 3 after closing the year, in which we also expect to see EPS pre accretion on group level.

Now over to Healthcare, which is on Page 10. Reported Healthcare sales increased by 2.4% to EUR 2.2 billion. Organically, sales declined by 3.4%, but that was more than offset by positive portfolio effects from our rare disease portfolio at 5.4%. In rare diseases, OGSIVEO and [indiscernible] delivered a combined sales of EUR 207 million in H1, which is fully in line with our guidance. We also saw initial sales of pimicotinib following the private market launch in China. Cardiometabolic sales increased 1% organically amid ongoing constraints in the Middle East and partial reversal of the positive phasing in China, which we flagged to you in Q1.

Fertility and Endocrinology sales were about stable. [indiscernible] pricing in the U.S. started normalizing, but peboverus continued to deliver double-digit growth and Sizen was slightly up against tough comps.

Specialty Care declined 6% organically, mainly reflecting Mavenclad's loss of market exclusivity in the U.S. and the competitive environment for Bavencio. Notably, Erbitux sales increased 5% organically.

We also have seen progress in the late phases of our pipeline. We have dosed the first patient in our Phase III study of PRESEM-CT, which is our first-in-class anti-CCAM5 ADC in third-line metastatic colorectal cancer. Also, FDA has granted breakthrough therapy designation to Ipatiran for the treatment of lupus with active cutaneous manifestations. And we also have recently filed -- and we also recently received file acceptance from the FDA for Pergovoverus. However, uncertainty remains.

Healthcare EBITDA pre was EUR 747 million with a still strong margin of 34.7%. This is supported by a favorable product mix and disciplined cost management, partially offsetting higher R&D investments, reflecting the ramp-up of our Phase III pipeline projects as well as launch investments in rare diseases.

And let's move to Electronics. Electronics delivered a strong quarter with organic sales growth accelerating to 11.7%. Reported sales were EUR 871 million, reflecting the portfolio effect from the divestment of Surface Solutions. Semi Solutions grew 17% organically, fueled by continued demand in semi materials, driven by advanced nodes in both logic and memory. Overall, growth was supported by all parts of the portfolio.

Delivery Systems & Services also had a better quarter due to the finalization of a large project and against a low base. Therefore, I would caution against extrapolating this trend. Optronics remained around stable. However, the business continues to face headwinds from softer demand for consumer electronics influenced by high memory prices. This could result in a year-over-year decline in net sales in the second half.

EBITDA pre increased to EUR 244 million with the margin expanding to 28%. This represents a sequential increase versus the underlying EBITDA pre margin in Q1 of around 200 basis points. As a reminder, the EBITDA pre margin in Q2 '25 of 15.1% was suppressed by one-offs. Adjusted for these effects, the year-over-year underlying margin increase would have still been significant.

So turning briefly to key developments in our balance sheet. Total assets stood at EUR 52.7 billion at the end of June. Cash and cash equivalents decreased mainly due to repayment of euro-denominated bonds. Receivables increased due to continued strong sales performance, while inventories increased mainly in Life Science and Healthcare to support future growth. Worth noting is that we saw the main uplift of receivables and inventories in Q1. The incremental increase was basically driven by FX effects in Q2.

Intangible assets increased mainly due to foreign exchange effects.

On the liability side, financial debt increased compared with year-end '25 as the repayment of euro-denominated bonds was offset by an increase of financial liabilities to related parties and by the U.S. dollar bond increased to foreign exchange effects. The equity ratio increased slightly to 57%.

And I would like to round off with a few remarks on cash flow. Operating cash flow in Q2 was EUR 605 million, up from EUR 567 million in the prior year quarter despite a decrease in profit after tax. Profit after tax was lower due to reorganization provisions, higher R&D expenses as well as increased depreciations and amortizations mainly due to the acquisition of SpringWorks. Most categories in the cash flow statement showed favorable underlying improvements, and I want to highlight net working capital optimization in particular. These effects were offset by temporary changes in the tax balance and paid bond interest. The underlying cash generation has visibly improved in recent months and will remain a strong focus going forward as we strive for fast deleveraging after closing of the planned Bio-Techne acquisition.

Investing cash flow was higher, driven by short-term investments and payments for the acquisition of the JSI chromatography business. Financing cash flow reflected the repayment of the euro-denominated bonds.

And with that, back to Kai.

So thanks a lot, Helena. And let me now round it off with guiding you through our raised guidance for 2026 on Slides 15 and 16. So we now expect organic growth in group net sales of 1% to 3% compared with 0% to 3% previously. Compared to the previous guidance, we see easing headwinds from foreign exchange rates. Foreign exchange impact is now expected to amount to minus 2% to 0% after minus 3% to minus 1% previously. Hence, group net sales are expected to reach around EUR 21 billion to EUR 21.8 billion. The midpoint of this range equals the high end of our previous net sales guidance of EUR 20.4 billion to EUR 21.4 billion.

For EBITDA pre, we now expect EUR 5.9 billion to EUR 6.3 billion compared with EUR 5.7 billion to EUR 6.1 billion previously. This reflects an organic development of 0% to 3% compared with minus 2% to plus 2% before.

EPS pre is expected to be in the range of EUR 7.90 to EUR 8.60, a 5% increase compared to the previous range of EUR 7.50 to EUR 8.20. At the business sector level, you can see how the numbers come together. For Life Science, we are raising the lower end of our expected organic net sales growth range from 4% to now 5%. The new range of 5% to 7% organic sales growth also includes a potential headwind from tariff refunds to customers of around EUR 40 million.

EBITDA pre organic growth in Life Science is now expected in a range of 5% to 8% compared with 4% to 8% previously. The range of around EUR 2.6 billion to EUR 2.8 billion remains unchanged.

For Healthcare, we now expect organic net sales development of minus 4% to minus 2% compared with minus 6% to minus 3% in May. This is driven by our assumptions on Mavenclad U.S., now assuming 0 sales as of August and slightly better performance in the other parts of the business. Our assumptions continue to exclude the potential [indiscernible] launch in the U.S. in 2026. And as of July 1, OGSIVEO and GOMEKLI will be recognized as organic sales. The related portfolio effect is therefore limited to the first half of the year and amounts to plus 2.4% or EUR 207 million in absolute terms.

EBITDA pre in Healthcare is expected to be around EUR 2.8 billion to EUR 3 billion compared with EUR 2.6 billion to EUR 2.8 billion previously.

For Electronics, we are raising our organic net sales growth guidance to 6% to 9% from 3% to 7% previously and the portfolio effect from Surface Solutions divestment amounts to minus EUR 245 million. EBITDA pre for Electronics is now expected to be around EUR 1 billion compared with the previous range of around EUR 0.9 billion to EUR 1 billion. The respective range for organic growth moves from 21% to 27% to 25% to 29%, reflecting the recovery and operating leverage in Semi Solutions.

With that, allow me to conclude with a brief summary before we open the lines for Q&A. We delivered a robust second quarter with accelerating organic sales growth and even stronger organic EBITDA pre growth. The first half of the year confirms the resilience of our broad portfolio and the relevance of the strategic priorities we outlined earlier this year.

We are encouraged by the continued momentum in Life Science and Electronics, and we remain disciplined in Healthcare as we invest in our launches and pipeline. Our increased full year guidance reflects these positive developments. And we will remain focused on executing our strategic agenda, including a potential start of the integration of Bio-Techne following a successful closing potentially at the end of this year or early next year. Cost discipline will remain a priority, while at the same time, we continue to invest in innovation to sustain profitable growth in the future.

So with that, I will now hand it back to Heidi to open the lines for questions.

[Operator Instructions] Your first question comes from the line of Peter Verdult from BNP

Paribas.

Peter, BNP Paribas. Two questions to kick off for Kai or Helena. The stock has done well this year, but the key debate in the market is quickly turning to 2027 and the ability for Merck to post organic growth given the Mavvencladd and Life Science customer stocking tailwinds you've enjoyed this year. So I realize you're not going to give guidance per se on a Q2 conference call, but would like to kick the tires with you and gauge your current level of confidence about organic growth prospects in 2027.

And then secondly, more sort of nary for Danny, good to hear that Pergovirus has been filed. Potential uncertainties were flagged in the prepared remarks. Can you confirm these comments relate to the label you get rather than the approvability of Pergovirus? And if that is correct, can you just remind us what the best case scenario would look like with respect to the label -- the FDA label should the product get approved?

So Peter, thanks for the 2027 question. And we upgraded our guidance twice this year. Life Science Electronics showing pretty robust growth and healthcare is holding up reasonably well amid the generic competition we're seeing. And as we look at the 2027 fundamentals and the underlying trends are very well intact for Life Science and Electronics. And Healthcare is focused on executing the strategic agenda in next year. And basically, 2027 should be well in line with our projections from last year's CMD. Just as a first highlight, will be very much in line with our projections from last year's CMD.

Obviously, of course, the comps will be tough for Mavenclad, no doubt. And Process Solutions will have a high comparison base in the first half of 2027 as we compare with a very strong first half in 2026. And looking at the proposed transaction to acquire Bio-Techne, if closed in line with our plans, it would add close to 5% to group sales growth and about 10% to Life Science alone. And also, the transaction would be immediately accretive to group EBITDA pre margin, and we are committed to EPS pre accretion in year 3 post closing. That should give you some color on how we look into 2027 from today's perspective. And as you rightly said, of course, we're not providing any 2027 guidance at this time of the year, but just some color on the question you were asking. And I hand it to Danny for the second question.

Yes. Thanks Kai. Peter. So yes, the FDA has notified us late last week of the acceptance of the full BLA submission. This is per se, this is good news, yes. It's a good milestone. [indiscernible] is a great product. As Helena said, however, the uncertainty remains over the potential approval, and I will give you a little bit more color on that. First of all, just to frame it, parvovirus is the only recombinant FSH LH combination in the market. And I would say, an important innovation for patients who need that. The product is approved in 116 countries around the globe, including China since February this year. It's been growing and taking share in every market where available, underpinning the value that it brings to women struggling to have a baby. As a matter of fact, over 6 million babies have been born worldwide with our fertility medicines. In 2026 only year-to-date, parvovirus generated sales of over EUR 300 million, 5 years CAGR of over 20%.

Now of course, we are keen to bring parvovirus also to the U.S. one of the largest and most innovative pharma markets. We were, I would say, delighted to have received the CMPV as part of our agreement with the White House at the end of last year. However, as we told you before, the procedure as itself is quite new, and the submission is based on a lot of legacy data, mostly generated outside of the United States.

So you also need to keep in mind that in the past years, we have already had intense discussions with the FDA regulator and could not agree on a path forward. Hence, we feel there is considerable uncertainty to Helena's point about whether the package now is sufficient for the FDA to approve. You also asked how could a best case label look like. So here, I would easily refer you to the EU label or the Canadian label, so you can get a sense. That's where we are now.

Your next question comes from Matthew Weston from UBS.

Two questions, please. The first on Process Solutions and this comment on normalizing over the quarter. I think I understand, but I'm going to ask you to spell it out. Are we saying that the extra demand has stopped, but the extra inventory remains with the customer, and therefore, customers -- and therefore, at some point in time going forward, we should expect that inventory to unwind. And I guess, previously, you've said no customer is greater than 5% of TS sales, but I assume we can't say something similar for the inventory. It will be more concentrated.

And then secondly, on atacicept royalties. There's been a lot of debate about their leverage to Merck in the market. I know you've said it before. Can you please remind us how much of the royalty you receive and how much you have to pass on?

[indiscernible] speaking. I hope you're doing fine. So let me try to clarify the situation. I will start with the Q2. So in Q2, in Process Solutions, we grew organically 15%. And I would like to give you some background behind. We have 5 key drivers. The first one, the market demand remains healthy. The second driver, we continue to benefit from our new go-to-market model. And a few months ago, I mentioned that we are improving our sales level, which have a positive impact on our overall performance. The third element is linked to what I said back in May when I mentioned that we have observed, especially in March, special buyer patterns from a few -- very few Asian customers linked to our ongoing geopolitical, let's call it, Middle East conflict. The fourth driver was exceptional growth in China, mainly due to the fact that some customer order equipment in order to build new plan. And the last element is related to the fact that we enjoy some boost on order intake and sales from nonrepeat order, which are related to our integrated workflow solution offering.

To answer your question, from the 5 drivers, the last 3 are the one who are boosting our performance in Q2. To your question concerning the inventory destocking, we do not anticipate any destocking effect in 2026. But you should assume in your model that if we have some inventory destocking effect, it may take place in 2027.

So regarding atacicept, so yes, the drug received approval for IgA nephropathy several weeks ago. And to your question, Matthew, it's fair to assume that there remains a meaningful obligation from Merck to BMS when it comes to potential milestones and royalties. And as we are expecting a launch here, in virtually every scenario, the net royalty rate, the net royalty rate upside would remain for us in the single-digit percentage range.

Can I just push you? I know there were about EUR 600 million of milestones in the original out-licensing agreement. Is it fair to assume that there will be milestones also to Merck over the course of the launch and commercial revenue hits?

The answer is yes.

We will take our next question. Your question comes from Sachin Jain from Bank of America.

Just a few questions for me. So just a follow-on on the process. So could you confirm that process for the full year is still in the upper end of the 8% to 12% you referenced on the last call? Or does the 1H strength take you slightly above that, just given what would be implied for the second half? Second question on semis is around sustainability of the mid-teens for materials and what's assumed within the guide? And then I just -- I wonder if I could just clarify the '27 comment, Kai, apologies. It sounded to me like the Bio-Techne was the main offset to the tougher comps in the base? Or are you confirming mid-single-digit organic growth, which is what you said at the '25 CMD? [indiscernible].

I take the '27 question first, Sachin, just to clarify. So the comment on the commitment from the CMD is organic, of course. And the second comment on Bio-Techne then is, of course, the reported effect. Just these 2 elements I wanted to highlight. But important is the comment from CMD is the organic part.

And Sachin, [indiscernible] speaking. Let me answer the first question concerning Process Solutions. First of all, I would like to take the opportunity to talk about our book-to-bill ratio. If you look at our book-to-bill ratio year-to-date June, so I'm talking about H1, our book-to-bill ratio is above 1. And what we assume now, we expect a normalization of our Process Solutions growth during the second half, but our book-to-bill ratio should remain above 1. In this context, we see a strong underlying of our growth. And if you think about the range we gave 8% to 12%, we are thinking to land in the upper range of the guidance for the full year.

Sachin, this is Ben speaking. Thank you very much for your question on semi. So just to recap, Semi Solutions grew 17% in Q2, and this business is the growth driver for the broader electronics business, both in this year as well as in the midterm. Just as a reminder, Semi Solutions consists of semiconductor materials, which is around 65% of overall electronics sales as well as the delivery systems and services business in short, DSS, which accounts for less than 15% of the total electronics sales. So regarding semiconductor materials coming to your question, sales were up in the low double-digit percentage points organically. Why? Because it's driven pretty much by the AI-related applications in advanced nodes, both on logic as well as memory.

It's also good to see that all parts of the portfolio contribute to this growth. And as you remember, over the past 10 quarters, we have seen an average of low teens growth in this business. So in addition, in Q2, we also saw DS&S contributing to Semi Solutions growth that's unlikely to repeat. Our expectations for DS&S only moderately improved. We see a broad stable outlook for the remaining quarters in this year.

And just to take a step back, by and large, especially the leading-edge customers that contribute to the AI-driven growth remain capacity constrained, both this year into the second half as well as well into 2027.

Sachin, Jean-Fanc speaking. Just to avoid any misunderstanding, when I mentioned the 8% to 12% organic growth for the full year, I was talking of the Process Solutions portfolio. And just to give you some flavor, I confirm that we still have now ongoing interaction with customers. We are tracking our book-to-bill ratio, order intake, order book and end. What I tried to tell you is we feel very confident for 2026 on Process Solutions.

We will take our next question, your question comes from the line of James Quigley from Goldman Sachs.

I've got 2, please, and I think both for JC. And first one, no surprise, following up on the PF stocking. So you gave a fairly big if when you're thinking about the destocking potential impact in 2027. So how much visibility do you have there over the customers' inventory? Is there a scenario where the higher inventory levels could actually be the new normal for those customers or could reverse or destock on a pretty slow cadence so that the headwind in 2027 is actually pretty minimal?

And then second of all, we've heard a lot in the last sort of 18 months or so about the CapEx investments by your pharma customers in the U.S. Have you started to see any progress with respect to the planned significant capacity expansions? Presumably, as a consumables-focused portfolio, it will take a bit of time before it will flow through to Merck. But have you started any discussions or pitches or RFPs or anything like that with customers as they start to assess their CapEx plan? And how are you ensuring that Merck will get its fair share of that capacity as it comes online?

So to your first question about the PS stocking, I would say, as of now, keep in mind that in July, we have limited visibility for 2027. That said, what I can tell you is from a quality of our order, we are back to pre-COVID level in terms of order lead time. So we feel very comfortable with, call it, maybe inventory impact only in 2027, not in 2026.

To your second question concerning CapEx by large pharma customer, the answer is yes, we have ongoing discussion with the large pharma customer. Actually, I visited one a few weeks ago, and I had one important meeting, which is scheduled in September with one of our largest customer. I take the opportunity to mention back to the question of Matthew that our largest customer is less than 1% to 2% of our total revenue in any business unit, call it Process Solutions, Advanced Solutions or Discovery. On CapEx, yes, we have exchange. Yes, we are meeting, but it's too early to say to move forward with a clear view. We have ongoing discussion. And my last comment, keep in mind that most of our portfolio is consumable driven, not equipment. So I expect that we'll see some benefit at some stage, but short term, no.

We will take our next question, the next question comes from Richard Vosser from JPMorgan.

A couple, please. First of all, on the [indiscernible]. There was some interesting data at ASCO in another tumor pancreatic. So just thinking about the potential development in further indications, further tumors beyond third-line colorectal cancer. Are you still looking for a partner to further increase investment in the product? How are you thinking about this going forward?

Second question, sorry to belabor point on Process Solutions. Just second half, it seems that you're pointing towards an underlying growth rate, something like 10% to 12%, but we should deduct tariff returns of about EUR 40 million from that. But are there any other headwinds that we should think about in the second half?

And then just one final little bit on Process Solutions. The new market model you referenced, should we think about this actually allowing you to be more competitive, maybe dare I say, gain some market share against some of your competitors here? Is this something we should see or a little bit early for this?

Okay. Richard, it's Danny. I'll take the first question on the [indiscernible], the SECAM 5. Yes, we are very proud of this first-in-class ADC with data presented at ASCO first in colorectal cancer that keeps on very encouraging. So you're right. At the CMD last year, we told you that we would be looking into the opportunity to partner this ADC. And indeed, we have had very good discussions with several interested parties over the past couple of months, I would say. What we also said at the CMD, I said that personally, including David, is that we will be super disciplined in allocating capital and concentrating around single assets with a lot of correlated risk. All in all, we concluded that we will not pursue partnering of PRISMTCT at that point. We will continue developing the compound in third-line metastatic colorectal cancer. This is a huge global Phase III study. It's a meaningful opportunity for us, and we can do so on our own without compromising on our strategic imperative to, as I said, to reduce high capital intensity on correlated risk.

When it comes to earlier lines of treatment as well as the data that you mentioned for pancreatic cancer, we will -- first of all, we are committed to extract the value of this compound, but we will do it in a stage-gated and I would say, very disciplined manner. So we will need to see how the colorectal cancer study progresses, and then we will take additional decisions on combinations and other tumors. The data in pancreatic cancer is indeed positive. It says that the drug is active, still cautious, and we will update as data comes.

[indiscernible] speaking. So on your first question concerning Process Solutions for H2, if you look H1, we are currently off to a very, very good start. And I said that for Process Solutions for the full year, we expect to be within the range of 8% to 12%. And if you peel the onion and you go one level deeper in the high range of this guidance. So if you do the math, you know exactly what should be our organic growth for H2. And as of now, we don't see any headwinds or anticipate headwinds. Again, I would like to talk about normalization for H2.

Concerning the process market model, the go-to-market, overall, we are making good progress. We are completely done with the redesign. Everything is set, sales incentive, territory mapping and the feedback of our customer is extremely positive. I'm very pleased with where we stand today. Too early to say that we are more competitive or we are gaining market share. But you should assume that I have a big smile and I'm very, very happy where we stand.

Your next question comes from Charles Pitman from Barclays.

Two for me, please. Firstly, for Danny. Just thinking about Mavenclad and the U.S. strategy and outlook. I mean, based on the IQVIA data, it looks like broader U.S. prescription volumes of cladriribine have actually been declining despite typical generic competition driving volumes up. So just wondering if you can confirm that this is because of an intentional reduction in the marketing efforts of Merck and increased share loss to competition or illustrative of just a poor capture rate for IQVIA? And if you could just give us a few more details around how you're currently defending on price or volume, and how you expect erosion to take place from August '27 when the European patent goes?

And then just the second question, please, on electronic margins in DS&S. So just obviously noting that DS&S has been a bit lumpy. I'm wondering if you could give us a bit more insight into how close we are to reaching a more normalized growth rate, noting you're saying it's going to moderate in the second half of this year. Just trying to think also what the impact has been on margins in 2Q from the DS&S project and how we should think about margins into 2H given 1H came in around 31% versus the full year implied 29% to 30%, implying that's greatly derisked?

Charles, it's Danny. I'll start with the question on Mavenclad. So yes, when it comes to Mavenclad in the U.S., Q2 sales were, I would say, almost on par with Q1, albeit the trend started weakening towards the end of the quarter, just as an FY. Indeed, Mavenclad is showing slower generic erosion versus prior analogs given the slower generic registration and limited penetration. We have 2 generics approved. However, more generics are lined up for approval in due course, 2 of them potentially entering the market according to our assumptions still in this quarter, in the third quarter.

So as such, if we're talking about our ability to guide, we will stay with this guidance methodology.

Now when it comes -- just as an FYI, when it comes to Mavenclad outside of the U.S., the growth has been very strong. Europe, for example, up 32% in Q2, very strong commercial execution, significant uptake of year 1 patients. So now if we are talking about the full year 2026 outside of the U.S., we expect a double-digit growth for Mavenclad.

Now as you said, the loss of -- or the expiration of the regulatory exclusivity in Europe is expected in August 2027. We do have SPCs. However, I would strongly recommend that for modeling purposes, you would take the August 2027.

Charles, it's Ben. Thank you very much for your questions. Let me start with DS&S. So when you look at Q2, we actually saw DS&S contributing to Semiconductor Solutions growth, specifically due to a finalization of a large project in that quarter. As you know, it comes after a period of relatively weak performance, after which the growth for DS&S has normalized towards the end of last year, and as we reported last time was flat quarter-over-quarter in Q1. Our expectation for DS&S only moderately improves. So we see broadly stable outlook in the second half of this year compared to the second half of last year.

Just as a reminder, DS&S has 3 components. One is the large projects business, which we manage opportunistically, so don't put it in your base. The second one is equipment for gas delivery, but also chemical delivery. And the third element is the recurring service model.

On the margin question itself, we've done a good job in Q2 on managing our margin. We have committed to you that we will work on margin expansion quarter-over-quarter, year-over-year. We've delivered on that commitment. We saw around 200 basis points increase quarter-over-quarter from Q1. So it's a solid expansion. When you look at it, we stand at 28% EBITDA pre margin in Q2, which is up significantly from the 15.1% in Q2 last year. I have to say it's a clean quarter, so don't account for any significant onetime effects in Q2 this year. However, as you remember, Q2 last year was suppressed due to mainly 2 onetime effects that we highlighted.

On the reported EBITDA pre margin, it's might be supported, as Helena said, by FX backwinds of roughly 1% and as well as the portfolio effect, which we've seen of around minus 6% from the divestment of Surface Solutions. So overall, the EBITDA pre was up 87.5% organically year-over-year. So we see expanding margins.

We continue to work on structural margin progression. And what's behind that is, of course, the portfolio effect from Surface Solutions with roughly 100 basis points annualized benefit. Second, from increased volumes, we see operational leverage. Third, we actively manage our cost position, as highlighted earlier. And then last, but definitely not the least, we also see a positive mix effect due to the strong demand driven by AI applications in the market, especially data center build-outs.

Your next question comes from Falko Friedrichs from Deutsche Bank.

Two questions, please. The first one is on the Discovery Solutions business within Life Science. Could you provide a bit more color on the end market trends outside of China and especially in the U.S. that you've witnessed in the second quarter? And my second question is on the semi materials business again. Is there a positive inflection of this AI-related demand for your products that you're starting to notice?

Jean-Charles speaking. So let me start with your question on lab related to Discovery Solutions. So first of all, I would like to mention that we are going now for 4 consecutive quarters. And back to the comment I made on the go-to-market, we are now fully leveraging our multichannel approach. What I mean by multichannel approach, we are selling directly. We are using our e-commerce platform. We are also selling the dealers, and we see the benefit to have a better focus on this portfolio.

Concerning the customer segments, all segments are improving, except academia, which remained quite soft, mainly in 2 countries, U.S.A. and China. That said, talking about China, I also mentioned a few weeks ago that we have just promoted a new Head of China. This person reports to me. He is part of the executive team, and we are currently in the process to assessing what could we do in China strategically in order to make sure that we are going to win in this market.

Falko, it's Ben. Let me take the AI-related question. So as we said earlier, we already participate today from AI-driven growth. When you look at the end market, overall data center build-outs continue to be strong. At the same time, consumer electronics remains a bit muted. So we are seeing the growth mainly coming from the AI-driven segment. And here, when you break it down, it's both memory as well as advanced logic processing. So that's not a new phenomenon, but definitely, it's an ongoing driver.

We've also updated our guidance, as Kai said earlier today, to 6% to 9% sales growth for the year to account for that demand growth. But again, I want to remind us to mind the capacity constraints of our customers, especially in the AI segment, which are already happening today and which we believe will extend well into the next year as well as we debottleneck as an industry.

We will take our next question. The question comes from the line of Rajesh Kumar from HSBC.

Just on the Process Solutions first half growth, the effects you have talked about, can you help us understand how that might have impacted or hampered your operating margins for the Life Sciences division, i.e., was the incremental cost of delivery significantly higher than normal or lower and the incremental drop-through margin so that when we are modeling our first half for '27, we are anchoring it off the right kind of run rate assumptions on drop-through margin? That's the first question.

Second question, just on the book-to-bill side. I know you have historically tracked the duration of order books. It might be a bit more subjective than objective in terms of numbers. But when you think of your book-to-bill, are you seeing any meaningful duration changes in the order book, i.e., are the order lead times getting much longer or shorter compared to the prior quarter or long-term averages? Any color there would be much appreciated.

Kumar, let me try to answer the line was bad. So I'm not sure I catch your first question well. But to my understanding, it's about our profit margin evolution. So as you can imagine, we are marching towards quality growth P&L where we want the bottom line to grow faster than the top line. However, you need to keep in mind that we still face some absorption or extra absorption linked to the start-up costs related to our region for region initiatives where we just opened, or we are in the process to open new manufacturing sites. And just to name a few, last year, we opened Blareinork for Process Solutions. And you should assume that now we are in the ramp-up phase, means that we have more cost than last year. And in the near future, actually in October, we are going to open a new manufacturing site in Asia, in South Korea, [indiscernible], again for bioprocessing, and we are currently in the ramp-up phase as we speak.

What I mean, we are adding headcount without [indiscernible] production. So it's extra cost for us. On top, based on the current performance of Labs and Process Solutions, we are also increasing on purpose R&D investments. I mean earlier in the call, Helena mentioned 2 new products launched, [indiscernible] and HPLC green solvent for Discovery. I could add the [indiscernible] for lab water. So what we try to do based on the current performance, we want to accelerate our innovation engine to make sure that we improve the way we supply our customer, the way we offer full solution in their workflow and so forth. So this is on your first question.

Concerning the book-to-bill structure, in the past, I mentioned that we rebuilt our book-to-bill structure back to 2019 pre-COVID. We call it the [ Rainbow ] report. What I can tell you is roughly 75% to 80% of our order have a lead time of 1 to 6 months, and this is exactly where we stand at the end of June 2026.

Your next question comes from the line of Simon Baker from Rothschild & Co Redburn.

Two, if I may, please. Firstly, a broader question on M&A and business development post the Bio-Techne deal. I just wonder if you could remind us about your capacity focus and appetite for transactions following the Bio-Techne deal.

And then moving to Semiconductor Solutions. Kai, you mentioned metrology in the -- in your opening comments and another company specifically called out growth from AI-related metrology. I just wanted to see if you were seeing any effects from that. And then more broadly, I wonder if you could update us on the outlook for memory capacity. We've seen some early signs that maybe capacity from a very constrained position is beginning to expand, but you've probably got better oversight than anyone else really across that. So any update there would be really helpful.

Simon, let me take the M&A question. And of course, we are diligently working on Bio-Techne right now that requires all focus on our preparation in line with what we can already prepare what we are allowed to prepare and working on the execution of that deal. That's our top-notch focus. Then of course, I shared in the strategy update our very strong intent to replenish our early phase pipeline in health care and as an important strategy. And of course, overall, we are and we continue to be committed in strengthening our growth drivers, Electronics and Life Science overall. And that is what we work on. We shared with you in the financing of the current deal. I think you can do the math on what could go beyond that. But of course, most importantly, we have to be able to execute on these deals diligently. Integration is key. So that gives you a frame of what we want to do, what we need to do, of course, limited by what we are able to do at the end of the day. But it's a very clear and straightforward plan on our priorities.

I will hand over for metrology inspection to Ben, he will focus on this one.

Yes. Thank you very much, Kai. Thanks, Simon, for the question. So let me recap on metrology and inspection. So we acquired that capability and metrology tools measure critical parameters in chip manufacturing, such as depth, step heights and thickness, and they really enable real-time adjustments that improve process control. That becomes really important, especially in advanced semiconductor manufacturing, where quality and purity requirements get tighter and tighter, especially as we move towards advanced packaging.

Inspection tools, on the other hand, detect a wide array of defect types, ensuring the highest quality standards as well. So together, these technologies really enhance manufacturing yields, reduce production costs and accelerate time to market for the next generation of semiconductor innovation with our customers. So it's a relatively small business for us. The integration is going extremely well. As Kai and Helena mentioned earlier today, we just opened a new facility to be able to support our customers from a capacity, but also from a capability point of view.

Regarding memory, the reality today is there is a shortage of memory chips. Prices for advanced memory chips are very high. We expect this trend or the situation to continue at least until the second half of 2027. We work very hard day and night with our customers on debottlenecking this capacity, but it's not going to go away tomorrow.

We will take our next question, and the question comes from Peter Spengler from DZ Bank.

First, on Electronics. You reported a 17% organic growth in Semiconductor Solutions, but only 12% for Electronics division overall. What explains the 5% gap? And the second question is on the bioprocessing market dynamics. A major American competitor reported low single-digit growth in bioprocessing for Q2 due to different reasons. Are you benefiting from this softer competitor performance? Or are you facing the same customer shipment delays?

Yes. Thank you very much. Let me start with the Electronics question. So when we recap the different businesses, Semiconductor Solutions grew 17%. Overall, as you rightly stated, we are around 12% sales growth in electronics in Q2. What explains the difference is that optronics is largely flat in this quarter.

Yes. And concerning your question about the bioprocessing market, look, linked to the go-to-market reorganization, we move back the customer in the center of what we do. So we have increased the number of interactions we have with customers. And while I will not comment on the competition, what I can tell you is, concerning Merck and bioprocessing per se, it's business as usual. We don't see any variance or any trend which are unnormal.

And your final question comes from the line of Oliver Metzger from ODDO BHF.

First one is on -- for JC. On Process Solutions, just you flag the strong buying pattern in APAC. You mentioned also some stocking effects from Middle East conflict, but is there also some, say, improving fundamental demand?

Second question for Ben on DS&S, in H2 last year, you reported some shifts of projects. So would you describe the earlier-than-expected return to growth in Q2 as a result that some of these projects have come back? Or do you still see them as part of your pipeline and just where timing is unknown?

And the last one quickly on -- for Dennis on fertility. So it was stable development. And yes, we saw due to some volatility over the last quarters. But can you share more insights what's currently holding the business back?

Yes. Let me start with Process Solutions. So JC speaking. We still believe the market for bioprocess remains very attractive, growing 9% to 10%. And we believe that we are performing extremely well now for 2 quarters. And let me repeat what I said in terms of key trends, strong healthy demand in the market. nice benefits from our go-to-market model where we improve our service level and we move back and put back the customer in the center of what we do. And then we observe, as I said, special buyer pattern from few Asian customers, exceptional growth in China and finally, some onetime boost coming from order that we received in order to improve the full workflow of our customers.

Oliver, it's Ben. I'll cover the DS&S question. So in Q2 2026, the main driver of the sales performance in DS&S is the finalization of one major large project that we already had in the pipeline. So that was already in execution. And in H2 this year, we expect to be roughly flat compared to H2 last year.

Oliver, it's Danny. Regarding fertility, as you remember, we are -- with the new structure, we are lumping fertility and endocrinology and [indiscernible], but I will try to give you the separate colors. So with fertility and endocrinology momentum improved, as Helene said, sequentially from minus 5% in Q1 to minus 1% in Q2, this was mainly driven by, I would say, the fading headwinds of the Gonal-f related to pricing in the U.S. And as we told you before, we had a price reduction in Q2 last year, which started annualizing.

We also see slight rebalancing of the channel mix in light of MFN or the TumpRx channel that we initiated. However, MFN also gives us a better visibility on the price going forward. So this is one of the good things in this deal. Parvovirus, on the other hand, continued to grow double digits, 14% in Q2. This was slightly less than in prior quarters, mainly due to comps. So nothing to worry about here, but still double digit. In fact, we remain, I would say, super excited about the prospects for Parvovirus, including the recent China launch. And that's pretty much it. Together with it, there is a [indiscernible], but as we said, it was up in Q2 and with very tough comps, but that's the color on fertility.

Thank you, Oliver. Thank you, everyone, who participated in today's discussion and for your continued interest in Merck. This concludes our Q2 '26 earnings call.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.

Thank you very much, Amber, and a warm welcome to everyone joining us for this update call on our announcement today to acquire Bio-Techne. My name is Florian Schraeder. I'm the Head of Investor Relations at Merck. I am delighted to be joined by Kai Beckmann, Group CEO; Helene von Roeder, Group CFO; and Jean-Charles Wirth, CEO, Life Science.

Before we start, let me emphasize that the closing of the transaction is subject to customary closing conditions, including required regulatory approvals and approval by Bio-Techne shareholders.

In the first few minutes of this update call, we would like to guide you through some key slides we published late this morning. And after that, we would be more than happy to take your questions. With that, I believe we are ready to begin. Over to you, Kai, to kick us off.

Thank you, Florian, and good afternoon, everybody, and thank you all for joining us today. We have exciting news today, and we are delighted to share an important milestone for our company. As announced this morning, we have signed a definitive agreement to acquire Bio-Techne Corporation.

Bio-Techne is a global life science developer, manufacturer and supplier of the high-quality reagents, analytic instruments and diagnostic systems that are powering precision medicine. This represents the third largest acquisition in the history of Merck KGaA.

The offer price is USD 73 per share, and the transaction has been approved by the Board of Directors of Bio-Techne and the relevant corporate bodies of Merck. We believe that the proposed acquisition reflects both the stand-alone strength of Bio-Techne and the significant value creation opportunity we see in combining its capabilities with our Life Science business.

This is not a financial engineering exercise. It's a strategic transaction that builds on our strength, enhances our portfolio and advances our ambition to drive sustainable profitable growth.

Before we discuss the strategic rationale in detail, let me highlight several key transaction parameters.

Given Bio-Techne's attractive growth profile and the highly complementary nature of the two portfolios, we anticipate the proposed transaction to be immediately sales growth accretive for the Merck Group following closing.

For Life Science, especially, growth accretion is expected to materialize by 2028. In other words, we see this proposed combination contributing positively to the growth profile of our Life Science business during the integration phase already.

From a profitability perspective, we expect the proposed transaction to be EBITDA pre margin accretive immediately after closing. This is an important point even before the full synergy potential is realized. The proposed transaction is expected to support the margin profile of the business.

In addition, we have identified approximately EUR 140 million of cost synergies, which we expect to be fully realized by 3 years after closing. These synergies are grounded in clear operational logic, including scale effects and procurement opportunities.

Finally, we expect EPS pre-accretion by year 3 after closing on the proposed transaction, which we anticipate completing by the end of 2026 or early 2027.

Let us move to Slide 3 and take a closer look at the strategic rationale behind this transaction.

This intended transaction is closely aligned with the group's 4 strategic value streams. Most importantly, it would accelerate our shift from selected product portfolios towards integrated workflow solutions by bringing together highly complementary capabilities, we can provide customers with broader, more connected solutions across discovery, development and manufacturing.

In addition, it would sharpen our exposure to our high-growth value drivers. Bio-Techne has a highly innovative consumables-led portfolio across next-generation biology solutions, complemented by strong positions in proteomics and an attractive exposure to spatial biology, multiomics and cell therapy manufacturing.

Moreover, the proposed transaction allows us to leverage capabilities across businesses. The highly synergistic nature of the combination would expand customer access, broaden geographic reach and further strengthen our position across the full Life Science value chain.

Finally, this intended acquisition is an example of how we intend to scale and source innovation through our disciplined M&A and in-licensing. Bio-Techne's proven track technology leadership and innovation engine will enhance our future R&D pipeline and capabilities and further improve our ability to create long-term value.

Taken together, this proposed transaction would be a natural strategic fit and an important step forward for our Life Science business.

Jean-Charles will now guide you through the several opportunities of the proposed transaction. JC, please.

Thank you, Kai. Good afternoon, everyone, for joining also the call. Let me start by saying that I'm generally excited to be here today to discuss why we believe Bio-Techne will be such a compelling addition to our Life Science business.

Bio-Techne has established an outstanding track record and with leading positions across several mission-critical segments of the Life Science industry. The company is recognized for delivering innovative, high-quality consumables and scientific tools for next-generation biology applications and advanced bioprocessing.

Importantly, consumable represent around 81% of sales, creating a highly durable and recurring revenue profile, supported by leading position in high-growth markets, including protein science and special biology as well as precision diagnostics and cell therapy manufacturing.

The business has demonstrated impressive momentum over the last 6 years, growing sales from USD 714 million in fiscal year 2019 to USD 1.2 billion in fiscal year 2025. Adjusted operating income increased from USD 244 million to USD 384 million.

Moreover, we see meaningful potential to accelerate growth throughout our global lab footprint. While Bio-Techne has historically been weighted towards the Americas, we believe EMEA and Asia Pacific offer meaningful opportunities for growth and expansion.

We believe that our go-to-market model and omnichannel customer reach have the potential to grow Bio-Techne footprint and will unlock additional growth opportunities.

Bio-Techne will be also bolster of our position in cell therapy manufacturing through Wilson Wolf and its G-Rex platform. These differentiated tools and consumable end-to-end platform support customers as they move from R&D into commercial scale manufacturing.

We're especially excited about the opportunity to secure access to the next-gen highly scalable manufacturing technology for immune cell therapy once the remaining 80% of Wilson Wolf should be consolidated by 2028.

Let's go to the next slide. The markets Bio-Techne serve are large, growing and strategically important. Advanced therapy manufacturing include areas such as targeted protein degradation, cell therapy is expected to grow at rate exceeding 20% annually in the next years.

Key elements of Bio-Techne offering in the field are characterization and quantification of protein, quality control testing, quantification of translation biomarker and support for diagnostic development.

In a broader context, you may also think of potential synergies with our acquisition of last year, Mirus Bio in transfection technologies. Discovery of novel biology insights growing at high single-digit rate is addressed with a wide range of cell-based system for better disease understanding on cellular level, ranging from immune cell system, stem cell system, organoid, a perfect addition of our HUB organoid business, which was acquired last year.

In the market of enabling of precision diagnostics, which grow at mid-single-digit rates, special multiomics technologies have been developed to help understanding disease on a molecular level. The portfolio range from [ institute, into radiation to mid-plex ] special multiomics transactional and clinical application leadership.

In summary, the cumulative size of the total addressable market reached USD 27 billion, and we think that as a combined group, we will have a position to win in this market.

The next slide illustrates why Bio-Techne will be such a compelling strategic fit for our Life Science business. Together, we will be uniquely positioned to support customers across the full spectrum of Life Science workflow, from discovery and transactional research through development, testing and commercial manufacturing, what stands out immediately in the highly complementary nature of our portfolios.

Bio-Techne has built a strong position in high-growth next-gen biology R&D, including new approaches to manufacturing emerging modality. Its capabilities span reagent solution, precision diagnostics, spatial biology, analytical solution and going forward, cell therapy manufacturing through Wilson Wolf. These trends will fit exceptionally well along our own portfolio.

Within Discovery Solutions, we provide reagents, immunochemistry, biochemicals and cell biology tools that help accelerate breakthrough discovery. Within Advanced Solutions, we offer technically specialized tailored and compliant product and services that support customers in a highly regulated environment as they translate scientific discovery into real-world impact. And in Process Solutions, we provide high-performing solutions, including filtration, chromatography, media, process chemical and single-use assembly that enable bioprocessing efficiency, reliability and scale.

Together, our capabilities will create a powerful scientist and commercial model that will allow us to further strengthen customer stickiness in priority segments and leverage both portfolio globally across the full life science supply chain from discovery to development and manufacturing. With that, let me over to Helene.

Thank you very much, JC, and a warm welcome from my side. Now as we have discussed throughout the presentation, we believe this proposed transaction is expected to create value for our customers, for our shareholders and for our employees.

We anticipate the integration of Bio-Techne into the Life Science segment would yield clear accretion across the three dimensions: revenue growth, margins as well as EPS pre.

So starting with revenues. Bio-Techne is expected to deliver high single-digit growth over the medium term. This reflects its market-leading product and exposure to highly attractive growth areas in Life Science, including, as JC outlined, next-gen biology, advanced therapies and bioprocessing. And importantly, this growth profile would further strengthen the midterm organic sales trajectory of our Life Science business. Leveraging our global platform also provide opportunities to expand Bio-Techne's reach and accelerate growth internationally.

Let's look at earnings. The proposed transaction offers significant margin accretion potential. We would expect immediate EBITDA pre margin accretion after closing. And run rate cost synergies of approximately EUR 140 million by year 3 after closing. Now this represents about 12% of Bio-Techne sales, which does compare favorably with industry benchmarks.

These synergies are expected to support the overall profitability profile of the combined company, while onetime costs are expected to amount in about EUR 500 million. Taken together, we expect the intended transaction to be EPS pre accretive by year 3 after closing.

Our all-cash proposal for Bio-Techne at USD 73 per Bio-Techne share represents the second largest external growth step in the history of Merck. It clearly demonstrates our commitment of accelerating growth and deploying capital to strengthen our competitive position and innovation power through disciplined M&A.

The implied premium of 35% versus Bio-Techne's unaffected share price of USD 54 is attractive for Bio-Techne shareholders, while remaining fully within the financial guardrails for large acquisitions that we have consistently communicated.

And as a reminder, these guardrails are: one, EPS pre accretion, which we expect by year 3; two, IRR above WACC, which we also expect to achieve by year 3; and of course, maintaining our strong investment-grade rating.

This transaction is expected to be funded through a combination of cash and new U.S. dollar and euro-denominated debt. We have structured the financing with discipline. We expect net debt to EBITDA below 3x and an average interest rate between 4% and 5%.

At the same time, we do expect rapid deleveraging after closing, supported by the strong cash generative profile of the Merck Group overall to which all businesses contribute based on their specific cash generation capabilities. And just to frame this proposed transaction, it would be yet another testimony to Merck's disciplined M&A strategy. And with that, handing back to Kai.

Thank you, Helene. And before we move to the Q&A, allow me to summarize the key elements. The proposed transaction is closely aligned with the group's four strategic value streams. This represents a significant step for Life Science and for the Merck Group as a whole.

The intended acquisition strengthens our growth profile and creates a clear path to value creation through strategic fit and financial discipline. We anticipate the proposed transaction to immediately be sales growth accretive for the Merck Group after closing, and we also expect the transaction to be EBITDA pre margin accretive immediately after closing.

Most importantly, this intended transaction would bring together two highly complementary organizations with a shared commitment to scientific innovation and customer success.

Merck has a strong presence in the United States with more than 14,000 employees and 58 sites. Our Life Science products are used in the manufacturing of almost every of the top 30 blockbuster drugs. To date, the U.S. is our largest business hub globally with more than 30 U.S. manufacturing sites. We remain committed to strengthening our U.S. presence because it is an essential innovation and manufacturing market.

Upon closing, the proposed acquisition will also enhance resilience and expand our capabilities within the U.S. Strong domestic capabilities are critical for resilient supply chains, and we are committed to maintaining and strengthening these essential capabilities in the United States. With that, I will now hand over back to Florian.

Thank you, Kai. I believe we are now ready to move to the Q&A part of the call. Amber, I'm handing over to you.

[Operator Instructions] and the first question comes from the line of Sachin Jain of Bank of America.

Three quick questions, if I may, please. Firstly, can you just talk about the high single-digit growth outlook and your level of confidence in that. Are revenue synergies, geographic expansion referenced within that? Or is it upside? The background for the question is that consensus has growth roughly flattish, Bio-Techne this year and mid-single digits into '27.

Second question is, Helene, I wonder if you could just comment on the short-term EPS dilution you see before the 3-year period. It seems to be in the low single digit to confirm.

And then finally, just if you give us some sense of how you're going to split this business across your existing three divisional business lines, that would be helpful.

Helene, do you want to take the EPS part and...

Let me start with the EPS one. I mean, Sachin, this is actually quite easy if I give you two more additional data points. One is if you think about the synergies, you can assume that there's a linear evolution of the synergies over the 3 years. And the other one is then to say like that we are basically broadly happy with where the consensus sees Bio-Techne. And hence, I think with that, you should be able to be able to create your model quite easily yourself.

Now before JC tells you about all of the opportunities that we see, I would want to point towards two things if we look at the high single-digit growth consensus. One, no, it is not in our model, any sales synergies. And B, ultimately, we want to sort of like be careful around looking at this. Let's first look at closing the deal, work around it and then sort of like move forward and give you more color when we have more visibility. And with that, over to JC with all of the optionalities.

Thank you, Helene. And Sachin, again, very exciting to be in this call with you. Talking about the integration. So we expect that Merck will tackle a thoughtful and phased approach to the integration as we have done with the large integration in the past. I'm thinking about Millipore, Sigma-Aldrich or Versum. What we have in mind, number one, we want to focus on business continuity. Two, talent retention. The third element will be customer relationship linked to our new go-to-market approach within Merck Life Science. And the third element, you need to keep in mind that when we do an acquisition, innovation is in the center of what we want to do.

From an integration planning point of view, we'll proceed with discipline and phased manner as we have done in the past. And talking about sales synergy, I expect that we'll be able to leverage on our global footprint. I expect that we'll be able to leverage on omnichannel approach. I think keep in mind that we are selling our direct sales force, e-commerce and so forth.

And to your second question, talking about split by division, we see a very nice complementary of Bio-Techne portfolio within Merck Life Science, very, very nice. We are convinced that the Bio-Techne future acquisition will benefit the entire three business units, but the majority will go to Discovery Solutions.

Do you have further follow-up questions, Sachin?

We will now take our next question from the line of Peter Verdult from BNP Paribas.

Just two questions. Maybe, JC, can I ask you to put your optimistic hats on, and it's going to be another question on why you're assuming no revenue synergies when you're clearly stating you've got an opportunity to globalize a U.S.-focused portfolio. And maybe if you're not willing to go down that road, could you maybe give us some specific examples of where you see the opportunity to bundle the offering -- the combined offering, assuming that the Bio-Techne deal goes through. So just to push you a bit more on the revenue synergy potential.

And then for Helene, on cost synergies and cost of debt assumptions, if I think about Merck's M&A track record over the last 10, 15 years, it's been pretty good, exemplary. And one feature has always been that when it comes to cost synergies, you over-deliver on the amount and you over-deliver on the timing. So I just want to push you a bit more about how conservative you've been with this $140 million number? And the same question goes around the cost of debt assumption. It feels quite -- 4% to 5% seems quite high given current rates.

So Peter, let me start with an answer. First of all, we need to close. So -- and when we close, then we will have a look, point number one, it's -- I want to make sure that we will stay on this specific topic. But yes, I expect that we'll see benefits from the global footprint of Merck. And I'm thinking about region for region, where not only on omnichannel, but region for region, we have very strong capabilities.

And I think I can't emphasize it enough. It's like it is not in the model, and please be so kind and do yourself and others, we're not putting it into the model.

Let's look at synergies, Peter. I mean, we feel pretty good at the EUR 140 million cost synergies. Having said that, if we compare it, it is already at 12% of the revenues of the company. So that's very much in the benchmark.

And as you rightly point out, we have a very successful track record in M&A. And with that, we're confident to be able to deliver these synergies. We expect a normal integration and hence, are looking at the linear ramp-up. very much based on our internal due diligence. But again, let's close the deal first.

We will now take our next question from the line of Matthew Weston from UBS.

Three questions for me, please. Merck has been looking for a large Life Science acquisition for a number of years. Bio-Techne has obviously been there for a number of years. So Kai, why now?

The second question really is around Bio-Techne stock-based compensation, Helene. So historically, Bio-Techne has always excluded stock-based compensation from its financials. So can I please just check that the numbers when you talk about accretion fully assume a normal Merck accounting such that stock-based compensation will go back into the Bio-Techne P&L? I'll leave it there.

So on your second -- sorry, I will just answer the second question because it's fast, it's yes.

I'll take the first one as you clearly directed to me. So I think it's very important to zoom out first before I give you more details on the specific deal. Merck is a growth company. And we always stated growth comes from Life Science and Electronics, and hence, this is where the M&A focus lies. That's what we always said. We have always kind of shared what are the financial criteria as well that we put on that in order to drive growth in these two areas.

In addition, I think we gave you color on how important health care is for us from a cash flow perspective, and we needed to stay healthy to help us to deleverage as fast as we want to deleverage. And hence, our plans to invest in early and mid-stage pipeline in health care. So that's the big picture strategy focus.

And the Bio-Techne transaction is a prime example on how we play the strength of Merck and Bio-Techne comes with an appealing growth and margin profile benefiting the group growth and the group margin. And while at the same time, we use the strong cash flow profile of healthcare for faster deleveraging. And to be more specific on why now. The transaction represents an enterprise value of USD 11.5 billion and it's equivalent to a multiple of 23.2x, and this equals 17.5x, including the target run rate cost synergies of EUR 140 million. And this is broadly in line with the sector, the life science tools sector. And despite a lot higher growth and a higher margin profile. So that gives you an idea why that valuation, of course, wasn't possible 2 years ago.

Understood. Can I ask one quick follow-up? I don't know whether you'll be prepared to share. We will learn more with the [ S-1 ]. Was this a process which Merck won? Or is this a conversation between two companies that's been going on for some time?

I wouldn't want to comment on this one, Matt.

We will now take our next question from the line of Richard Vosser of JPMorgan.

Two questions from me, please. Just thinking about overlaps in terms of the business, it doesn't seem like there are significant overlaps with Merck's capabilities. It looks very synergistic. But just if you could confirm your thoughts on that line.

And then secondly, I noticed, of course, that there is a buyout option that you inherit on this acquisition for Wilson Wolf. So just wondering about the financial terms on that and how that would look and how that would be accounted for.

Let me quickly start. So very important is for that intended acquisition is the focus on innovation. This is the highest importance for us in M&A is focusing on innovation. This is how it contributes to the sector as well as to Merck as a whole. This is very important to put that at first and maybe then in terms of the potential overlaps and complementary nature, the very complementary nature of that deal, JC, can give you some more color.

Richard. So to your first question, yes, there is very, very limited overlap between the two portfolio. I confirm and I echo what Kai said.

Concerning Wilson Wolf, so Wins Wolf is a company, I would say, specialized in cell therapy manufacturing. And so this company is focusing on creating, call it, innovative cell culture device which aim to provide, let's say, a solution to patients which are fighting cancer through new technologies.

And in this context, Wilson Wolf has, I would say, has a proven relevance in the late-stage and commercial cell therapy.

And yes, in 2023, Bio-Techne entered an agreement with this innovative company. And Wilson Wolf may or should be acquired in 2028 based on the 2027 financial performance, and it will be between 4.4x revenue up to maximum EUR 1 billion.

And Richard, thank you so much for this question because this gives me the possibility to mention a little bit of accounting here.

This would represent a derivative under IFRS. And as a result, we would need to account for this option as part of the P&L, and it would be recognized in EBITDA.

So the way we need to do this is like we will need to value it -- we would need to value it as part of the purchase price allocation and then allocate account for it at fair value until there would be an execution of the acquisition.

We will now take our next question from the line of James Quigley of Goldman Sachs.

I've got three, please. So firstly, on -- can you talk to the margin expansion potential for the Bio-Techne businesses? It looks like the slight margin contraction between 2019 and '25. But how should we think about the underlying margin expansion potential here, particularly in the Diagnostics and Special Biology segment? That's number one.

Number two, can you talk to what's included in the EUR 500 million of onetime costs? Typically, when we see these types of deals or cost savings announcements, et cetera, the ratio of onetime cost to cost savings is around about 1:1. So what is in the EUR 500 million? And how should we recognize that as well? Should that be straight line?

And then number three, just a follow-up on the Wilson Wolf option. Can you confirm how much of the business is actually consolidated today? Is it the 20%? Or do you have sufficient control that you have to consolidate all of it? And then can you talk to the '25 revenue and operating margins for Winston Wolf, just to give us an idea of whether the threshold for the EUR 1 billion could potentially be hit for the future payout?

Okay. Maybe let me start with the option. I think the answer around the IFRS points to the fact that like we cannot consolidate it or we would not consolidate it, sorry, I need to watch my language.

Also, please remember that like at this point in time, we cannot comment too much on Bio-Techne's numbers itself. I think the hint towards we feel broadly comfortable with the consensus is all what we would answer here.

And then let me think about the third question. I need some help here.

Onetime costs. I think the other question related to onetime costs. if you could share a bit more details here.

So let's look at the onetime costs. I mean we're looking at roughly EUR 200 million of transactional costs, roughly EUR 300 million of integration costs, and they are roughly distributed across year 1 and 2.

Now as you know, we've done a lot of M&A transaction as a company. And as such, we feel very much this is a customary view of how much this integration would cost and how much work would be around this. So I think there's nothing really too much to read into that number at this point in time. Having said that, we will be back to you once we come closer to closing.

We will now take our next question from the line of Charles Pitman-King of Barclays.

Just trying to double-click a little bit on this cell and gene therapy opportunity you're highlighting. Just I'm wondering what it is that you've seen in the market that has driven you to seek greater exposure in this end market or if it's actually the other areas of the business and cell and gene therapy is more of an additional opportunity, just given the added option of taking on Wilson Wolf by 2028, as you highlighted? And is there any potential read across here for potential synergies to the pharma business if you're actually accessing greater next-gen technology for cell therapy manufacturing.

And then maybe just asking the next step question of thinking about your scientific value chain, if it's your goal to achieve an end-to-end offering as is highlighted on Slide 6, I'm just wondering where the white space still exists once you've accounted for Bio-Techne and Wilson Wolf.

Let me start with the end-to-end question. So of course, it's too early now to speculate on what could be the next step. You saw in that nice puzzle pieces chart that how things fit beautifully together and how we kind of create a better integration of workflow related technologies.

I think from there, it's probably easy to anticipate which could be white spots in terms of technology because we are very much consumables focused, and we need to drive our growth in consumables by the proper integration across different steps in workflows and Bio-Techne. Bio-Techne is a perfect example of how these things fit together. So you take that as the map and then you know what are the white spaces. And I would pass it to JC for your second question.

So the second question was around Wilson Wolf. So to keep it short, Wilson Wolf is focusing on cell therapy. And yes, we see it as a good opportunity for us looking forward.

Quickly. Is there anything that you've seen developing in the market or developing across the pipeline that give you greater confidence today that cell therapy is the correct modality to be investing in for the future?

At this stage, we see positive and good activities in cell therapy improvement.

We will now take our next question from the line of Rajesh Kumar of HSBC.

If I can get some color on your 3-year earnings accretion plan. Obviously, 12% of current revenues. And if I look at consensus, you indicated that the margin -- you're comfortable with consensus on Bio-Techne. So on that basis, you're looking at about 44% margin. And if I take the cash outlay for the deal today, and the numbers you've given, still not getting to return on capital over 8% by '28, '29.

So you indicated it's IRR accretive. It's clearly not returns accretive. So can you help us with the math there? And then you've also clarified you're not assuming revenue synergies. So is the option value a part of the equation or the growth accretion and therefore, what multiples the whole group would be trading as a consequence has gone into the equation?

Just the math of IRR accretion did not add up for me. So I would really appreciate that clarification, please.

Yes. So let's go this step -- through this step by step. As I said now many times, you can't really comment too much on Bio-Techne itself. So hence, we continue to look at what is the consensus model. Then of course, we have the 12% of synergies. And as we said, that is a linear evolvement over time.

Now on top of that, as you rightly point out, we will need to finance the deal using debt. And we have said that the interest rate will be between 4% and 5%, but you need to also take into account that we have a very strong cash generation profile.

And with that, I would like to also remind you of the fact that our three acquisition criteria are EPS accretive in year 3, EPS accretion, IRR above WACC and a strong investment-grade rating. So I think overall, I believe you have most of the numbers.

Then you've also heard JC and myself talking about JC saying there is optionality around potential sales or revenue synergies, but we do not want to put that in a model because at this point in time, it is way too early to quantify anything. And hence, I would really like to urge you not to put it into your model either.

Yes, I get that. But then if you're not getting returns accretion, how are you getting to IRR accretion? I mean I know there are two different calculations there. But how are you getting over WAC on IRR? Because of cash flow, if you mean to say, you think the cash collection cycle is quite different?

Isn't it maybe the easiest thing to actually compare models more in detail because I think the numbers are there. It is working in our model.

Okay. But can you confirm it's not returns accretive, right, until the third year?

As said, our criteria for M&A are EPS pre IRR above WACC and investment grade in year 3.

We will now take our next question from the line of Oliver Metzger of ODDO BHF.

First question is on Bio-Techne academia exposure, which seems to be at around 20%. So most likely was not supportive to growth over the last years. Do you see in your high single-digit growth assumption, some unchanged academia environment? Or does this number also include some recovery in academia?

Second question about cell therapy. So it's for you more or less a new area, but overall pretty small. I don't want to say it's subcritical, but -- and also Wilson Wolf optionality might help on that side. But how do you think about the necessary scale in that business?

And my final question is about your overall setup post the takeover if it happens. So we have waited for some years for a bigger deal to happen. And despite this bigger deal, your financial firepower is still pretty good. And how do you think about the potential M&A in the future? Do you think more, okay, now you have to digest that deal? Or does this deal -- is it an either/or? Or is it an end what you think about further opportunities? That's from my side.

Thank you, Oliver. Jean-Charles speaking, let me start with your question around Academia. You are right. The Academia segment wait for roughly 20% of the total revenue of Bio-Techne. I cannot comment much further until we'll complete the acquisition. But if I compare to our current trend within Merck Life Science today.

Yes, we have exposure to academia. Yes, the market has been kind of muted or changing over the last few years, but we feel that we are at a stage where we reach a bottom. And looking forward, the market should be slightly more attractive. And don't forget, when we think about Academia, this segment is highly, highly innovative.

To your question on cell therapy, I would like to echo what you just said. In terms of size, this is today a small business. but growing nicely. And we talk about manufacturing end-to-end from R&D to commercial. And we see at this stage some improvement momentum in early-stage steps. Kai?

Yes, Oliver, thanks for the opportunity to kind of give you a bit the bigger picture. Before I go there, let's just look into more on the timeline. So first, of course, focus on closing the deal. Second then is on -- and you know that from our past on very proper integration and generating value out of the deal by proper integration. I think we have done that with highest retention rates in the teams and by safeguarding the innovation capability of the companies we acquired across different businesses. So this is the focus -- the near-term focus on a more strategic lens.

Now zooming out, as I shared earlier, kind of the growth company focus that we have and growth comes from Life Science and Electronics, and this is really M&A focus lies. And I alluded to what is the very important role of health care. Health care is very important to us from a cash flow perspective, and it really needs to stay healthy. And this is why we said we want to continue investing in the early and mid-stage pipeline. So these are the strategic priorities over a longer period of time, and we execute whenever the things are strategically impressive as well as they are financially meaningful. And if these things come together, then we act on these deals.

And I think we have time for one last question as we are at the time for the call...

Certainly, so our final question today comes from Falko Friedrichs of Deutsche Bank.

My one question is, can you give us an idea to what extent Bio-Techne could also strengthen your bioprocessing business going forward? And what are the specific overlaps to that business?

Falko. So let me start with your second part of your question around overlap. We don't see any major overlap. We are thinking about synergistic portfolio.

Concerning the contribution of bioprocessing, as I said earlier, we are seeing Bio-Techne as an outstanding strategic fit, which supports our mid- to long-term growth strategically within Life Science. It's true across the entire portfolio, Advanced Solutions, Discovery Solutions and Process Solutions.

We feel that when we'll be able to complete this transaction, Bio-Techne will provide very solid capabilities. Again, I would like to echo what Kai said around innovation. We see strong complementary portfolio, deep customer interaction. And what is also interesting recurring businesses, a large part of their portfolio is consumables related, roughly 80%.

And so to answer to your question, the three business units, Advanced Solutions, Process Solutions, Discovery Solutions will benefit, but a large portion will go to Discovery Solutions.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may now disconnect your lines.

Dear ladies and gentlemen, welcome to the Merck Investor and Analyst Conference Call on First Quarter 2026. [Operator Instructions] I'm now handing over to Florian Schraeder, Head of Investor Relations, who will lead you through this conference. Please go ahead, sir.

Thank you, Sarah. Highly appreciate everyone joining us for our Q1 '26 earnings call. My name is Florian Schraeder, and I'm the Head of Investor Relations at Merck. I am delighted to be joined by Kai Beckmann, our Group CEO; and Helene von Roeder, Group CFO. Kai and Helene will walk us through the key slides and financial highlights of the past quarter. And Kai will also take the opportunity to provide an update on the company's strategic direction.

For the Q&A part of the call, we will be further joined by Jean-Charles Wirth, CEO of Life Science; Danny Bar-Zohar, CEO of Healthcare; and Benjamin Hein, CEO of Electronics. And with that long intro, I will turn it over to Kai to get us started.

Thanks, Florian, for the introduction, and welcome, everybody, to our Q1 earnings call. Let us move to Slide 5. So what was to characterize this quarter, I would call it a solid start to 2026 despite global challenges. Organically, group sales increased by plus 2.9%, and EBITDA pre went up by plus 5.3%.

Life Science & Electronics showed robust organic sales growth at plus 8% and plus 4%, respectively, overcompensating a moderate decline in health care. Now let me draw your attention to the remarkable performance in Process Solutions, delivering double-digit growth at plus 16% in the quarter. For the first time since Q1 2023, Process Solutions reported more than EUR 1 billion of sales in a single quarter. Healthcare's organic decline of minus 3% was mainly driven by generic competition for Mavenclad in the U.S. Aside from that, we saw a solid contribution of our rare disease franchise with a plus 4% portfolio impact.

Moving to Electronics, which showed a positive organic sales development in Q1, this was driven by a double-digit growth in semiconductor materials. The overall solid start to the year and the particularly strong finish of the quarter that has raised our guidance for full year 2026. You may also remember that we guided just 1 week after the crisis in Middle East broke loose. Since then, we have gained more visibility on the macro trends, and therefore, we are reflecting these developments in our updated 2026 guidance today.

Lastly, at the AGM on April 24, or a dividend proposal of EUR 2.2 per share was approved by our shareholders. So let's turn to Slide 6 for an overview of our performance by business sector. Life Science was the largest contributor with organic sales growth of plus 8.3%. All 3 business units within Life Science achieved organic growth, led by Process Solutions, which experienced a visible growth acceleration towards the end of the quarter, resulting in a growth rate well north of the average midterm aspiration of around 10%.

Discovery Solutions and Advanced Solutions developed according to plan. Healthcare organic sales decline of minus 3.4%, driven by the anticipated decline of Mavenclad amid generic competition in the U.S. However, let me highlight CM&E, which demonstrated continued resilience as well as continued double-digit growth of over.

Electronics grew by plus 4.2% organically as our semiconductor business was up driven by double-digit growth of semiconductor materials franchise. Moving now to the right side of the slide. EBITDA pre-increased by plus 5.3% organically versus the same quarter last year. FX headwinds had a negative impact of minus 5.7%. Please bear in mind that we saw a disproportionate currency headwind in Q1 relative to what we expected for the full year.

As flagged in our Q4 earnings call, EBITDA pre in Q1 was supported by 2 one-off effects. First, divestment of our OLED IP portfolio to Universal Display Corporation, resulting in a gain of EUR 42 million in electronics. And secondly, we indicated that a potential recovery of cost could be incurred in connection with a supplier mislabeling dispute not related to product quality. I'm pleased to confirm that we have successfully closed this matter, resulting in an additional gain of EUR 25 million in electronics. And with that, let me hand over to Helene for a more detailed review of our financials.

Thank you very much, Kai, and a warm welcome also from my side. I'm now on Slide 8 for an overview of our key figures in the first quarter. Reported net sales fell minus 2.8% to EUR 5.134 billion. Organic growth of 3% was offset as guided in our last earnings call, by disproportionate FX headwinds this quarter, notably from the U.S. and Asian currencies. We do expect this impact to ease throughout the year. Reported EBITDA pre was down by minus 0.3% to EUR 1.530 billion.

However, on an organic basis, EBITDA pre grew by 5% driven by Life Science and 2 one-offs in Electronics, as Kai just mentioned. The EBITDA pre margin improved by 70 basis points year-on-year to 29.8% and with the underlying margin remaining approximately stable. EPS pre showed a similar trend as EBITDA pre and reached EUR 2.11 per share compared to EUR 3.12 per share in Q1 '25. Also supported by lower-than-anticipated financing costs.

This trend gives rise to the assumption that the midpoint of our financial result in 2026 will be 10 million vessel than guided in March. Operating cash flow increased significantly by 47.2% to EUR 880 million, reflecting changes in other assets and liabilities. You heard Kai talking about accelerated momentum in Life Science toward the end of the quarter. This, in particular, had effect on the development of our working capital as of 31st of March. In order to support future growth, we kept inventory levels high.

At the same time, we saw a significant increase of trade account receivables linked to the steep sales increase at the end of the quarter. Net financial debt decreased moderately by minus 3.5% to EUR 8.318 billion compared with end of December last year, largely driven by a strong operating cash flow and focused CapEx.

Now let me turn to a detailed overview of our 3 businesses, and I'm starting with Life Science. This is the first quarter in which we are reporting under a new organizational setup and based on our newly implemented go-to-market strategy. As a reminder, the scope of Process Solutions remains unchanged. While Advanced Solutions now comprises our business in lab water, diagnostics and regulated materials, biomonitoring, contract testing as well as contract development and manufacturing services.

Our third unit, Discovery Solutions combines our chemistry and biology franchises. Life Science sales grew organically at 8.3% in Q1. And this is fueled by an acceleration in Process Solutions, supported by strong underlying demand for downstream processing and single-use solutions towards the end of the quarter alongside limited customer safety stock build up and new customer projects, not only actual sales, but our order intake was strong again in Q1 and book-to-bill stayed comfortably above 1.

As we have closed the acquisition of JSR on April 3, we will have a broader offering in our downstream business as of Q2. This transaction adds advanced protein A chromatography capabilities, enhancing our ability to offer more efficient scalable protein purification solutions that support accelerated biopharmaceutical production.

Moving on to Discovery Solutions, sales were up 1.6% organically against a low comparable basis and amid ongoing headwinds from muted spending in academia government and an evolving Chinese market environment.

Advanced Solutions recorded an organic sales growth of 4% in a gradually improving market, driven by industrial testing and large pharma customers. EBITDA pre was up by 7.4% organically in Q1, with the EBITDA pre margin by up by 50 basis points year-over-year, driven primarily by volumes in Process Solutions. M&S and admin spend remain around stable, reflecting cost discipline while R&D expenses have increased as planned to ensure continued future growth and differentiation.

Moving on to Slide 10 and sharing details of the developments in our health care business. Healthcare reported an organic sales decline of minus 3.4% in Q1, which is ahead of our indication provided on the Q4 earnings call. The main reasons are Mavenclad sales in the U.S. and positive phasing in China. In terms of franchises, rarely leases was the largest contributor to growth, including a 4.4 percentage point contribution from SpringWorks and initial sales from a promising launch of pimicotinib in China.

As indicated in our March call, sales of Ogsiveo and Gomekli were sequentially down amid U.S. stocking effects. CM&E posted a slight organic increase of 1.2% against tough comps. This is supported by positive phasing in China, as mentioned before and offset by negative phasing in the Middle East. Fertility declined by minus 5.2% organically in Q1, mainly due to remaining pricing headwinds for Gonal-f in the U.S.

Most of these will annualize in Q2, suggesting Gonal-f's trajectory should improve to around stable for the remainder of the year. Pergoveris, on the other hand, continued its very strong growth, up 20% organically in Q2. And we continue to prepare for U.S. launch in H2.

Oncology sales were down minus 4.9%, mainly reflecting competition for Erbitux and Bavencio. N&I declined minus 9.2% amid continued erosion of rebids in line with the interferon market and generic competition for Mavenclad in the U.S. The Mavenclad ex U.S. business grew double digits. A few words on our pipeline before turning to margins. We announced in April the dosing of the first patient in our Phase III enpatoran program building on encouraging Phase II data.

The ELOWEN studies are evaluating inpatient in lupus rest patients with an active skin manifestation. So turning to profitability, EBITDA pre declined by minus 8% organically. This is better than the organic decline in sales despite significantly higher R&D, implying swift execution on cost measures.

Yet taking into account slight dilution from SpringWorks, and significant FX headwinds, the EBITDA pre margin came in at a very healthy 35%. Based on our updated guidance, which Kai will present in a minute, we continue to expect lower margins for the remainder of the year amid lower U.S. margin flat sales and launch investments such as for pimicotinib and for Pergoveris.

Moving on to the Electronics on Slide 11. Organically, sales increased by 4.2% in Q1, while currency headwinds of minus 7.5% were most pronounced in this segment and a portfolio effect of minus 10.6% from the divestment of Surface Solutions led to a decline of reported sales by minus 13.9%. The solid organic growth was driven by strong performance in our Semiconductor Solutions business, which grew organically by 7.5%, fueled by continued growth in semi materials at low double-digit organic growth rate. Healthy growth continues to be driven by AI, advanced notes alongside specialty and mature nodes in Asia.

Our DS&S business performed in line with our expectations in Q1, with sales stabilizing quarter-over-quarter. In Optronics, the Q1 development is consistent with the dynamics we flagged during our last quarterly call. To strengthen our position in metrology and inspection, we recently opened a new site near Grenoble, expanding our production capacity for tools that enable our customers to develop the next generation of items. On profitability, EBITDA pre increased significantly by 30.1% organically with EBITDA pre margin at 34.6%. And among strong currency headwinds and positive portfolio effect.

It is important to note that the EBITDA pre margin was significantly elevated by one-off items totaling EUR 68 million related to the divestment of the OLED IP portfolio to UDC and by cost recovery tied to a nonquality supplier mislabeling dispute. So before handing back to Kai, let me also briefly comment on our balance sheet and cash flow. As you can see on Slide 12, our balance sheet increased by EUR 1.6 billion compared with the end of December 25. It increased from EUR 51.5 million to EUR 53.1 billion, which is more than EUR 1.1 billion and is related to an increase in net equity driven by profit after tax of EUR 669 million and an increase of OCI by more than EUR 550 million.

Our equity ratio remains stable at 56%. Taking a closer look at important movements on the asset side, please remember this is a comparison versus December 2025. I Receivables increased from EUR 3.9 billion to EUR 4.3 billion, driven by FX effects and a strong sales performance closer to the end of the quarter. Inventories were slightly up from EUR 4.6 billion to EUR 4.8 billion, mainly due to FX effects.

Goodwill and other intangible assets increased from EUR 25.6 billion to EUR 26 billion and other assets were up from EUR 4.7 billion to EUR 5.1 billion, both mainly due to FX effects. So moving to the last slide in the financial section, the year-over-year comparison of cash flows. Operating cash flow increased significantly from EUR 556 million in Q1 '25 to EUR 818 million in Q1 '26 despite a decrease in profit after tax.

Changes in other assets and liabilities turned positive, contributing EUR 30 million compared to minus EUR 224 million in Q1 '25 and driven by higher deferred income for goods in transit and increased bond interest accruals. Changes in working capital improved by EUR 75 million year-on-year to minus EUR 322 million.

Investing cash flow increased significantly to minus EUR 755 million from EUR 419 million in Q1 and which is a change of EUR 336 million, driven by the short-term investments and payment from the acquisition of JSR chromatography. Financing cash flow improved significantly from minus EUR 1.6 billion in Q1 '25 to minus EUR 62 million in Q1 '26. As the prior year financing cash flow included a repayment of EUR 1.5 billion of U.S. dollar-denominated bonds. And with that, let me hand back to Kai for the outlook.

Thank you, Helene. Let's now turn to Slide 15 to share our upgraded guidance with you. You have my initial comment on better visibility after navigating 2 more dynamic months and the strong momentum we continue to build across the businesses. Based on that, we are adjusting our 2026 target corridor for the group now expecting EUR 20.4 billion to EUR 21.4 billion in sales and EBITDA pre in the range of EUR 5.7 billion to EUR 6.1 billion. The majority of this adjustment is the result of our assumptions regarding a stronger momentum in our Life Science business in health care, navigating well in a challenging environment.

As a consequence, the implied corridor for organic growth of group sales moved to 0% to plus 3%, up from minus 1% to plus 2%. Our guided FX impact on sales was previously minus 4% to minus 2% and is now expected to be at minus 3% to minus 1%. And -- the group EBITDA pre organic growth rate is now expected to be in a range of minus 2% to plus 2%, up from minus 4% to plus 1%. And -- the expected FX impact on EBITDA pre has been updated to minus 5% to minus 2%, up from previously minus 7% to minus 3%.

EPS pre guidance is now at EUR 7.50 to EUR 8.20 per share, up from the prior EUR 7.10 to EUR 8 range. For some additional color by business sector, let's take a look at Slide 16. Starting with Life Science, we are increasing our organic sales growth guidance core resulting in plus 4% to plus 7%, up from plus 3% to plus 6%. This is underpinned by the strong performance of our Process Solutions business at the end of the quarter. For Advanced and discovery solutions, our underlying assumptions have not changed. We anticipate improving market conditions in biotech funding and academic research stabilization while we navigate evolving market environment in China.

We now expect EBITDA pre to show an organic increase of between plus 4% and plus 8%, up from plus 2% to plus 6%. Moving on to health care. We raised our guidance for organic sales growth by 1 percentage point to minus 6% to minus 3%, mainly reflecting 2 additional months of U.S. Mavenclad sales. Consequently, we also increased our organic EBITDA pre guidance resulting in minus 12% to minus 8%, up from minus 14% to minus 10% previously.

Regarding Mavenclad U.S., please note that our forecasting methodology remains unchanged. We take into account what is in the books and take a conservative view on the remainder of the year. There may be some near-term upside to this assumption. However, visibility beyond the next couple of weeks is limited amid additional generic entries. Relative to Q1, we expect weaker organic growth in Q2 amid phasing effects and likely lower Mavenclad contribution while H2 will see contributions from SpringWorks becoming organic.

Also, note that as part of our ongoing efforts to streamline our health care business, we are remodeling our franchise into 4 therapeutic areas to align our product offering with the commercial capabilities required. The 4 TAs are rare diseases, cardiometabolic, fertility and endocrinology and specialty care, the latter being the combination of oncology and N&I. We will report in the new structure as of Q2 and to support your modeling will share historical numbers for the new structure with you in due course.

For Electronics, we confirm our organic sales guidance and EBITDA pre growth projections, including the ranges of the guidance. In summary, Q1 was a solid start to the year in a challenging environment. Through disciplined execution, we captured opportunities across our portfolio. While macro conditions remain demanding, we now have a greater clarity on the actions we will take and the markets we can win. Our updated guidance reflects these assumptions.

So with that, let me now zoom out to give you my initial views on the strategic direction of the Merck Group going forward. Merck is operating from a position of strength. We are strategically positioned in growth markets from NAP to customers and patients operating across the entire value chain of the broader life science spectrum.

Our expertise in biology, chemistry and physics combined with our unique position as both an enabler and a user of AI gives us a powerful foundation to drive next-gen innovation. We observe customer and patient needs are changing. The profound technological transformation is accelerating, the digital and physical worlds are converging, driven by artificial intelligence. AI dramatically accelerates discovery and early-stage R&D, reducing the time it takes to identify promising drugs, materials and biologic candidates.

As innovation cycles compress, competitive advantage shifts downstream towards companies that can rapidly validate manufacture, scale and commercialize innovations. Against this backdrop, Merck is uniquely positioned to lead with our diverse portfolio and our inherent capabilities. How are we going to address that? To make the most of these opportunities, I'm sharing our new strategic direction. It is designed to create superior value for customers and patients and in turn, to deliver stronger structural growth at attractive margins for Merck.

Specifically, we will leverage 4 streams, which I will come back to in a moment. Ultimately, we will not only adapt our offering vertically will also bundle and integrate our capabilities. In short, we'll optimize for speed and scalability where it matters, leveraging our unique footprint. Having said this, we remain firmly committed to our midterm guidance shared with you during our Capital Markets Day last year. We plan to unlock growth and value creation through 4 strategic streams. This will help to elevate our company towards higher speed and better scaling. Sailing will be crucial for the implementation of our strategy.

First, we will focus on high-growth value drivers. We continue to take disciplined portfolio management approach prioritizing products and businesses that deliver the highest value. Second, we will shift selected product portfolios towards integrated workflow solutions. This means expanding from stand-alone products to integrated end-to-end solutions where we can solve high-value customer problems and build on our existing expertise. Third, we'll leverage platform capabilities across businesses. We will identify abilities to integrate and platform across the enterprise enabling us to better support our businesses and improve our agility, speed and scale.

Fourth, we will source and scale innovation through M&A and in-licensing. We see M&A as a growth lever for all businesses clearly aligned to high-growth value drivers. Above all, we will implement those 4 pillars over time, expecting their financial impact to materialize progressively while supporting our midterm guidance. In select high-value markets. I'm now on Page 20, I will build on strong expertise ranging from stand-alone products to integrated end-to-end offerings. We observed a shift in a number of areas towards higher demand for solutions that cut across different parts of the value chain, such as materials, consumables, equipment, tools, software and services.

This is essential to solve our customers' problems and call that integrated workflow solutions. In order to address those more integrated requirements, we have to work in a more integrated way in our company as well. We call that platform capabilities. For example, in AI deployment, post-merger integration, carve-out and an integrated management systems approach we will plan to build. While this serves as a strategic direction, not just mid but also long term, it's an important journey we embark on. And we are not starting from scratch.

Let me highlight 2 of our highly successful examples in bioprocessing and heterogenous integration. In bioprocessing, we have already made strong progress into becoming a provider of integrated workflow solutions, combining consumables, like our banks, with instruments like our bioreactors, supporting processing steps across multiple critical control points and controlled by software products like our VAT solution. In the fast-growing area of heterogenous integration for advanced semiconductors. We complement our advanced materials with tools like metrology and inspection to offer a more integrated approach to our customers.

Now on Page 21. You won't be surprised we will leverage inorganic moves to invest in the opportunities ahead of us. M&A always was and continues to be a crucial component and we will broaden our M&A scope. Having said this, we will remain disciplined in line with our strategic direction. Above all, we'll optimize our portfolio across the group, aligning to identified high-growth value drivers. M&A will also be an important component in the context of programmatic innovation. This covers targeted transactions to improve our product offering and accelerate our integrated solutions approach. And we could also expand into opportunities to foster our internal capabilities.

Next, we will drive external innovation to build a risk-balanced pharma pipeline, strengthening the early and mid-stage development. And we are committed to manage health care north of 30% EBITDA pre margin with an R&D to sales ratio towards 25% in the midterm.

Our financial criteria are unchanged. Above WACC, EPS pre accretion, post synergies and strong investment-grade rating at all times. So I'm now on Slide 22. The executive board and I are confident in our way forward. We built our strategic direction on a strong foundation, connecting our capabilities, identifying new sources of growth. By combining our core strength in biology, chemistry and physics with data NAI will become a more agile company that delivers at greater speed and scale. And this is how we will best serve customers and patients.

Merck has tremendous potential, and we have an exciting journey ahead of us unlocking more of it. Hence, it's time to get to work. We'll keep you updated on an ongoing basis, and we currently envisage a dedicated stand-alone event in the course of next year. I hope you are as excited as we are on the journey ahead of us.

Having said this, Florian, now over to you to kick us off for Q&A.

Thank you so much, Kai. Before we move on, just a minor clarification on the Q1, we had negative portfolio effects in electronics. With that, I'll hand it back to Sarah to moderate our Q&A session.

[Operator Instructions] And the first question today is from Richard Vosser from JPMorgan.

First question, please, on Process Solutions. Could you give us a bit more color around the growth in the quarter from an underlying basis what was safety stock build? And what was the fill of the customer warehouse. And aligned to that, how should we think about that business going forward? Would you anticipate a quick reversal of some of those elements on the safety stock? Or would you expect this to linger given the uncertainty on the geopolitical environment?

And one, your thoughts on the underlying business, which does seem very, very strong as well. So just your thoughts on that going forward. And then second question, just on the strategic elements that you've just highlighted, Kai, M&A clearly a key driver. It does like the elements around the health care pipeline have taken a sort of a higher level within the thoughts in terms of M&A. Is that right? Or is M&A sort of more - actually, should we think of it as more balanced across the Group? So how should we think about business development going forward?

Jean-Charles speaking. So let me answer the first question. So overall processing Q1 performance was driven by 3 effects. First, I would like to mention operational efficiency gain, which had a stronger impact than anticipated. It was driven by improved inventory management and fill rates to enhance customer experience linked to our new go-to-market model.

So if you remember, I announced the new go-to-market model where we want to make sure that our business will work closely with our supply chain and manufacturing capabilities, and today, it's paying off.

The second key driver it's about the contributions from new customer projects this quarter, which boosted results based on their strong performance in their molecules as well as an effect of stocking of new warehouse. And finally, the third driver relates to the fact that we observed stronger buying patterns, particularly from APAC customer, partially due to the fact that it's mainly related to the global crisis, it didn't strain in March.

So excluding these effects, we will still be closer to the upper end of the 8% to 12% range. We talked about during the Capital Markets Day last year and during the March conference call. So while some of these exceptional effects of Q1 may persist in Q2, their impact is expected to be less pronounced over the course of the second half of the year, leading to return to an anticipated normalized average underlying growth rate in the range of 10% in the future.

So overall, to answer your direct question about the underlying business, the underlying business is very solid. We have a very solid and strong order book. And as mentioned earlier by Helene, our book-to-bill ratio is far above 1. Last comment from my side, if you think about our midterm guidance. Our midterm guidance remains unchanged for process to around 10%.

So Richard, let me take the M&A question. So let me start with health care. So on health care specifically, we -- health care will be managed, as I indicated in my speech, north of 30% EBITDA pre-margin that means it's accretive to the group margins, and we will focus to strengthen the pipeline predominantly in early and in the mid-stage part.

Here, we leverage internal excellent innovation might be M&A or in-licensing. Now to zoom out to the group level, that's the bigger picture. Look at the group overall, we will invest in opportunities ahead of us, which fit to our strategic direction. It includes targeted transactions to improve our product offering and accelerate our integrated solutions part, as I've stated in the speech, and we could also expand into opportunities to foster our internal capabilities.

The 2 examples I mentioned earlier in terms of bioprocessing and heterogenous integration, they can serve as a good direction in general. So we will be anchored around what we call the broader life sciences value chain, so this bigger picture that we have mentioned.

Next question today comes from Sachin Jain, Bank of America.

Just a couple, please. One, the first actually for Kai, just to clarify some commentary from your strategic remarks. So I think within the health care comment, you mentioned R&D spend, you're now targeting 25%. I wonder if you could just comment on how quickly you get to that level and maintaining EBITDA above 30%, I just think consensus is sort of in the 33%, 34% range. So should we think about R&D spend being downside to consensus Healthcare EBITDA margins with the sort of refocus on pipeline investments. Second, you reiterated the midterm guide which is very helpful. That obviously implies an acceleration from what you're guiding for '26.

So would we see the underlying midterm guide appear in '27? Or is it getting that a bit further out? And then the final 1 is just for Danny, if you could just update us where you are on Pergoveris submission and time lines, you obviously reiterate 2026. But I think on the earlier call, you gave a very detailed assessment of submitting Part 2 and then a 60-day review. Maybe you can just update us where we are on that.

So let me start on the margin. Just to be very clear on this one. So we're talking about it's moving towards that 25% range for R&D. And in order to secure the 30% -- above 30% EBITDA pre-margin and being accretive to group margin. And of course, it always depends on what we have in our hands. There's no automatism. It depends on what the pipeline candidate that we have in our hands and how much do we need to invest in order to drive these opportunities. it's very important to keep that in mind. So '26 will be drinking at where we are.

So there is nothing specific here, in addition to mention on '26. Now let's talk about the second part of your question concerning the guidance and how we go towards '27. So I think it's very important to understand we have confirmed our midterm guidance today that was part of my speech. For 2027, Life Science Electronics are well on track. I think there's nothing to add for life science and electronics for health care. It's important to consider that depending on where in that will be for the next quarters.

The more successful we are, the tougher '27 will be. That's pretty straightforward. And of course, the open price remains on what exactly happens to Pergoveris and will depend on, of course, the timing of a possible launch. Now I'll hand it to Danny.

Sachin. So regarding Pergoveris, on the backdrop of continuous very strong growth of 20% organically and also expecting double-digit growth for the full year. When it comes to the U.S. to be very honest with you, not so much change.

And that's actually good news. We continue to have a very constructive exchange with the FDA and plan to submit the Part the file under the voucher procedure in the coming months, and that's fully consistent with our unchanged goal to launch in the second half of 2026 and we will only be able to talk more about the U.S. opportunity once we have clarity on the label, as I said several times ago, and we are doing whatever we can in order to bring the product to patients as soon as possible in maximizing the potential. But regarding the label language, it will be tough to discuss now.

Next question today comes from Peter Verdult from BNP Paribas.

Peter Verdult, BNP. Can I just push you on the pace of business development. Should we anticipate that to pick up in 2026. And perhaps thanks for your strategic update. But can I just push you for some concrete examples of immediate changes you've made to how Merck operates on a day-to-day basis. since you stepped up to group CEO, will be interested to know what sort of immediate changes you've made? And then secondly, Danny, just on ASCO for the rest of the year, any updates or data updates or canal trial starts that you want to flag to the market to keep an eye on.

Peter, I'm not sure whether I got the question perfectly right because audio was not perfect. But the -- on the BD side of your question. So of course, as you know, we are continuously assessing opportunities and market becomes more attractive going forward. We are handling that as we go forward. So nothing to share at this point in time, just tuned on that. Now on the strategy itself, we are actually in week 2. It was very important to get started with our implementation work.

It's very important that we get started as fast as possible with the implementation work. And this is why we share the direction today. Of course, we cannot share now details on implementation steps as it is only week too. Stay tuned on our progress here. We'll keep you informed.

And of course, most importantly, towards the end of next year and then we will share a much more detailed picture on how we progress. And of course, I would expect some more serious updates on details. But for now, that is the frame and bear with us now working on the details.

Peter, it's Danny. Regarding clinical trial starts. So you heard Helene about enpatoran two twin studies, global studies, Phase II in lupus rash, the potentially first-in-class drug for this huge unmet need. We dosed the first patient. This adds to the already ongoing Phase III cladribine tablet study -- sorry, cladribine capsules study in general is myasthenia gravis, which is also recruiting very well.

The next one to start, and I guess that we will announce it in the next couple of weeks, not more than that, is our anti-CEACAM5 ADC, Precem-TcT, M9140 in third-line metastatic colorectal cancer, global Phase III study, very exciting. We have additional ongoing data that will come out very exciting also from pimicotinib extension study, and we have recently started a bridging study to maximize the opportunity also in Japan. So there is a lot of good traction from David's team.

Next question today is from Matthew Weston from UBS.

Two questions, please. The first for Danny, on SpringWorks. Now that we should be washing through, I guess, all of the integration dynamics, can you walk us through what you think investors should expect kind of quarter-by-quarter for SpringWorks growth going into potentially competitor launches and Merck really delivering the full potential of the acquisition.

And then the second question is one for Kai. I know you've been pushed in a number of different directions. But we've had the kind of strategic update headlines. I realize it's very early and you've reiterated midterm guidance, which I assume is a statement where you want to reassure investors that there isn't a meaningful incremental cost of what you have planned. But I would love to know how you envisage the new strategic thinking manifesting for investors, what time frame and how we will see it. So will we see a faster growing Merck will we see a more profitable Merck, how will we actually judge the success?

Matthew, it's Danny regarding the SpringWorks question. So I'll try to address your question from several angles. First of all, in the quarter, Q1 2026, rare disease in general and rare disease include the SpringWorks legacy products, Gomekli as well as Ogsiveo in China, the rare disease, in general, came in at EUR 94 million, EUR 93 million were attributed to Ogsiveo and Gomekli as I flagged last time.

Q1 sales were sequentially down versus Q4, minus EUR 9 million. It's mostly pronounced for Ogsiveo. Actually for Gomekli, it was rather flat. And this is -- the reason and the main reason for that is the stocking ahead of WACC increases which we have minimized as we promised. If you remember, the dynamics for SpringWorks last year.

So we minimized it as we promised. Now if you drill down to 1 of the most important surrogates for launch dynamics here with a focus on which is new patient starts, we see a healthy increase in Q1 versus Q4. So the phasing that you see towards Q4 had nothing to do with the increase in new patient starts. The launches in Germany and in Austria are, I would say, quite encouraging.

For Gomekli, we are actually working against a competitor. You know that's quite established one, and our launch is progressing very well. And if you take a look at the numbers for the competitor in the U.S. for their MEK inhibitor, you will clearly see that our EMV team there is doing a very good job in terms of share.

Now you are right, the integration is behind us. There is a lot to be done as we are working on many fronts, reduction of surgical procedures according to the guidelines for both products. raising shares in systemic first-line therapy, taking care of discontinuations and drug holidays. And here, the real life in -- for these tumors is different from a clinical trial because patients tend to go on and off, not necessarily because of the therapy. So we get used to that as well. And mostly finding those patients who are under active surveillance we are making quite a lot of progress there using a lot of advanced analytics and AI and to find these patients, and I see the results.

A little bit more color, number of prescribers for Ogsiveo was sort of, I would say, flattish, slightly increasing. But in the last 4 months, there was a 20% increase in the number of prescribers. So if you are referring to the around EUR 1 billion expectation for Ogsiveo and near blockbuster for Gomekli, we still believe that the potential is there. Now we increased the guidance slightly for the first half to at least EUR 200 million for both products.

We do expect a ramp-up in the second half. We have a plan how to deliver it. I don't dismiss the challenge but I see initial signals that there is a strong likelihood we can make it. Now that we are fully integrated in Europe and countries beyond Europe are picking up. I overall feel comfortable with the current market expectation for the 2 products in 2026.

Matt, I appreciate your question on the strategy. So again, let me reiterate. The strategy is a mid- to long-term direction that I've shared today. And it's a pretty substantial development of how we operate in the group where the first part, the earlier part is to support our midterm guidance. And then on top of that, progressively, we will see impact as we move forward kind of beyond the midterm guidance.

So I need your patience of staying tuned on the updates that we will share then in the course of next year, how we then build that progression over the coming years. Very important to understand mid- to long-term strategy important to capture cost opportunities on the mid- and long-term horizon, and we will share details as we go forward -- thank you.

Next question is from James Quigley from Goldman Sachs.

I've got 2, please. And unfortunately, they're both clarification questions. So First of all, on healthcare, R&D, you sort of mentioned it depends on what's in the pipeline now in order for the 20% or for the new guidance of 25%. We're around 20% to 21% now. Is it safe to assume that this is the level where we should stay at until we see further M&A or BD and then that will boost us towards a 25% level. Just also on the increase of the site increase, what was the key decisions or the key factors that led you to increase that R&D threshold?

And would there be a skew towards discovery or development or for the R&D spend? And the second question on Process Solutions. So Jean-Charles, you mentioned that the underlying would be closer to the top end of the 8% to 12% range. on Slide 28, it says the underlying organic growth is slightly north of 10%. So how do you reconcile those comments or your comments was the slide? And then -- could you help us out a little bit more on the actual impact of those key growth drivers or the 3 impacts of Process Solutions.

So particularly in terms of quantifying the growth impact of the stocking from APAC customers and on the warehouse. -- presumably the stocking from APAC customers could continue in the second quarter, as you said. But just to give us an idea of how the cadence of growth might develop in process solutions through the quarters, that would be great.

This is Amy. I'll take the first one. So regarding R&D needs. So right now, when you look at the pipeline, you see pretty much the first time that we have 3 uncorrelated Phase III programs ongoing or just underway. And this is quite an achievement. I don't remember that at Merck. So this is a great testament for what we can do. Now once we move things from Phase II to Phase III and also after we told you last time that we closed the efforts in the DDR space, so our mid- and early-stage pipeline is rather slim, I would say.

And here, we need to build that in order to sustain or to ensure that we grow beyond the low to mid-single-digit midterm guidance that we gave you beyond 2030, beyond 2031. And this is something that we need to start building now. So if you're talking about what will we focus on in terms of BD, both on M&As and so, it will be mainly on the early to mid-stage, not excluding discovery platform deals that can actually continue relying on validated biology and using our own strengths in communications and so on and so forth. So this is regarding the -- what will we invest in. Now from -- in terms of the R&D ratios, so right now, we are at around 21%.

As Kai said, we would gradually go towards the 25%. We will do that only with keeping the EBITDA margins, the EBITDA margins above 30%. So it's not going to be in 1 shot. It will need to be based by a good acquisition or a good in-licensing that is worth investing in. So take that into account, it will be gradual. It needs to feed the midterm pipeline in order to secure the long term of the health care business.

Jean-Charles speaking. So let me provide you some more color. So as I said, process solution Q1 performance was driven by 3 effects: Operational efficiency linked to our new go-to-market model. The second 1 was new customer projects as well as stronger buying pattern, as I said, mainly coming from our Asian customer. But all in all, I would like to repeat that while these exceptional effects impact Q1, some of them may persist in Q2.

So when you are working on your modeling, you should think about it. And then when you think about H2, we assume that we'll return to a kind of more normalized underlying growth rate around 10%. But all in all, to answer the question, we are feeling -- and I'm feeling very confident with the overall underlying business for process solution in 2026.

Next question is from Charles Pitman King from Barclays.

Two, if I may. Firstly, for Jean-Charles, thanks very much for providing the extra detail on the extraordinary items for PS. But I'm just wondering if you could give a little bit more detail around the overall underlying for you remain confident in. So I'm just wondering if you're able to speak at all to any share gains that you saw within the quarter -- and then just thinking about the kind of underlying mix. Firstly, can you just confirm your exposure to the equipment mix. And given you talk about a rapid gain towards the end of the quarter, I'm wondering if the return of demand for equipment in this space is what has supported the performance in 1Q.

Any details you could provide very helpful. And just a second question, in terms of your guidance, in your release note, you mentioned that you have -- you're assuming the Middle East conflict will de-escalate in 2Q and stabilize and normalize from there. Given relatively limited exposure in Middle East this year, I'm just wondering if you could give us an idea of any potential impact that we could see, especially for health care, should we not see a return normalization. Thank you.

So let me start with your third question about the gain in market share. First of all, we don't comment versus our competitor. But overall, I would say, within a quarter, it's very hard to comment on market share trends. Concerning the underlying mix Keep in mind that our portfolio is mainly composed by consumables. Call it, 90% of our portfolio is based on coal 10%, call it service and equipment. Related to your second question on Middle East and conflict, I will hand over to Kai.

Charles, I'll take the Middle East question. As you're aware, only 3% of our sales in total are Middle East and Africa. And in health care, I think we are pretty used to crisis-related phasing in the region over quite a longer period of time. And in life sciences, we have already indicated the temporary effect of the prices. And in electronics, we are probably there, more exposed to consumer sentiment as compared to other sectors, but this has been fully integrated in our guidance already.

And the next question comes from the line of Oliver Metzger from AHS.

Yes. The first one is on your strategy update. So on Slide 20, you show the value chain of Life Sciences. And this slides suggest that the expansion potential is the biggest for instruments and equipment, which is from an industry perspective under representative of you? So would you agree with that? And is it possible to expand more into this area organically? Or is there something where you really need more and organic growth.

This brings me also to my second question because on Slide 21, you described the financial criteria for M&A, which is also wrote down the criteria for accretive deals. So how do you think about technology accretive deals, which are not necessarily earned accretive. And we think about life sciences, it's hard to find earnings accretive deals. And the last 1 is very quick on Electronics calculation.

The DS&S business should have been down only in the low single digit territory, which will be a sequential improvement. Do you expect already this positive trend to continue in DS&S upturn positive already in Q2. Thank you .

Oliver, thanks for your question. So let me start with the different perspectives on the chart you have mentioned on, let's say, how to expand beyond materials and consumables. We already do that in certain areas where I've shared have shared examples, and we intend to do it where it really makes economic sense. There is no intent to do it kind of across the full portfolio to go into equipment and tools, but where it makes sense in order to drive growth in our core business, namely materials and consumables to create additional value for our customers. And then in these areas, we intend to selectively do that.

That's the idea which we have already demonstrated, and you remember the examples in bioprocessing or for example, the more recent one with Unity-SC in heterogenous integration. I think very important that, that is -- you bear that in mind as one of the components. On the financial exterior bigger moves, they are clearly, as they have stated, on the chart for some smaller capability-related moves. These are more bolt-on moves. We would then, of course, apply a more kind of strategic lens to that. But the -- that is for only some smaller bolt-on related technology modes. But let's trust that with once we get there.

Yes. Thank you very much. Let me cover the DS&S question. It's Ben speaking. So semiconductor materials represents about 2/3 or 65% of electronic sales and in Q1, it's once again the main growth driver, benefiting from AI advanced nodes and continued demand across both specialty and mature nodes in Asia. Coming to DS&S, it represents roughly 15% of sales and after bottoming out in Q4 2025 has now shown quarter-over-quarter stabilization in Q1. We expect DS&S to be stable in 2026 and therefore, no longer to be a growth headwind going forward.

A quick follow-up of a last 1 because DS&S comps in H2 are very low. Let me it means sequentially that DS&S in H2 will be worse than it was in H1. And would you confirm that? Or do you see it much more is from the base comparison perspective?

So first of all, I agree 1 especially towards H2. And over the full year, we expect DS&S to be by and large flat compared to the previous year.

Next question today is from Falko Friedrichs at Deutsche Bank.

My first question is on the Discovery Solutions business within Life Sciences. How is the market environment in China evolving? And how would you characterize the U.S. market environment at the moment? And then secondly, a quick one on Advanced Solutions, which showed a nice pickup in organic growth in Q1. And I saw that you called out the services business in the appendix of your presentation as a key driver. Can you add a bit more color on what exactly was driving this and whether the type of growth could be sustainable over the next few quarters?

Jean-Charles speaking. So let me comment on both Advanced Solutions and Discovery Solutions business. In both cases, the 2 business units delivered solid quarterly performance within the 2026 guidance. So I call it all clean. We don't see any exceptional effects neither for advanced suction or discovery solution. The key driver for Advanced Solutions include, again, very strong and solid performance for our, call it, quality testing business, biomonitoring, but also solid performance from a low comp when I mentioned business services, think about CTS and think about CDMO.

But overall, I will say we had a solid growth across the different franchises within Advanced Solution with, let's say, no exceptional effect. Concerning your question on Discovery Solutions, we observed slight organic growth versus our initial guidance, which feels good. And it was driven by, I will say, low funding in U.S. academic customers last year. If you remember correct. I mean if you remember last year, in March, we suffer a bit in U.S. from an academic segment perspective. So we have a lower comp.

And we also enjoy an increase of our service level within the quarter for Discovery Solutions, which is again linked to our new go-to-market model. So for Discovery Solution, you have to drive lower comp in 2025 and you have a higher sales level from a supply chain point of view, would boost a bit of performance, and it's aligned with our new go-to-market model. Concerning your question on China for Advanced Solutions and Discovery Solution, we are still navigating through changing environments situation in China. I will say the market overall for these 2 business units remain soft.

Next question today is from Thibault Boutherin from Morgan Stanley.

Just two quick questions on Pharma. The first one on fertility. You had a guide, I think, for a low single-digit growth for the year. given the performance in Q1? Is this still on track? And for Gonal-f in particular, could we see -- or what should we expect once you lap the price cut that you took in Q2 last year. So should you expect stabilization can we see growth? That's the first one facility? And the second one, just on CME I think Q1 was expected to be the worst for the year. Actually, it's probably better than what we expected. So could the mid-single-digit guidance for the year actually land a bit better given what we saw in Q1.

I will start again. It's Danny. Regarding fertility, Gonal-f 16% organic decline is -- the key driver there is the remaining pricing headwinds in the U.S. We took a significant price cut in the second quarter of last year, which is carrying over here, annualizing. However, this effect annualizes, we expect Gonal-f momentum to improve significantly as of Q2.

In fact, we expect Gonal-f sales to be broadly stable year-over-year from Q2 onwards, which will also improve the overall fertility trajectory more towards our midterm ambition of mid-single-digit growth. And of course, the -- our ability to predict pricing with the MFN deal will help us a lot as well from that perspective. Now the key growth engine of fertility business continues to be Pergoveris.

As I said, another strong quarter, 20% up in sales. We are successfully leveraging Pergoveris differentiated profile as the only recombinant FSH and LH product. As a reminder, we launched Pergoveris recently in China, one of the largest fertility markets, and we start seeing a little bit of encouraging early signs from the launch. And then, of course, as we spoke about the U.S., the assumption is that we will launch in the second half of this year based on the priority review voucher. And if that happens, then, of course, it brings us even closer to the ambition of mid-single-digit growth.

Now when it comes to CME, for the CME franchise, we reported, yes, organic sales growth of 1.8% increase. And this is quite remarkable against the very tough comp from prior year where the organic growth was more than 10% for this entire franchise. Now you also heard Helene talk about phasing effects and actually, there are 2 that we are calling out. 1 on the positive side related to China. The other 1 on the negative related to the geopolitical situation in the Middle East, both were pretty similar in terms of the magnitude of about EUR 30 million and actually neutralizing each other.

Looking ahead, we are confirming our indication that in 2026 CME should grow in line with its midterm outlook of mid-single-digit organic growth. It assumes that the phasing effect should wash out over the rest of the year, as we said before, for Q2, I don't expect CME to be back to mid-single-digit growth yet, but rather a bit below, while the second half of 2026 should be well in line or even slightly above the mid-single-digit line. But please take that with a grain of solvency, the situation in the Middle East continues to be quite volatile and phasing could be different from what we currently assume, but rest assured that the underlying trends for CME are fully intact.

Next question today is from Rajesh Kumar from HSBC.

Can I ask a follow-up on Process Solutions. You gave some very precise quantification or not quantification in terms of color in terms of why you think your growth is so much higher than most of your other global peers, lower exposure to consumables, lower exposure to instruments, lower exposure to China, but also you quantified the APAC stronger buying patterns. In terms of your management systems, when you look at these quantification, how well -- can you -- what is the solidity of this estimate that 2% to 3% benefit came from stocking up from APAC customers, i.e., how much of that is an estimate based on the process that you improved during COVID? And how much of that is unknown back because you have visibility on your customers' inventory?

The second follow-up question is, so we are starting the year in Process Solutions with a very high growth run rate, then we probably go back to the normal 10%. I'm assuming that this talking little destocking effect will not repeat in '27 and the world might be slightly clearer place. Should we then expect first quarter next year to face this difficult comp taking you to the lower end of the 8% to 12% corridor? Or could it go below that corridor, given the comp effects you've seen in the first quarter this year?

Thank you, Kumar, for the 2 questions. So let me try to answer the first one on the quantification. So yes, you're right. I mentioned the 3 effects, and you dropped a number 2% to 3%. I will not comment on it. But you should assume that learning from the past, learning from the new go-to-market, we have quite a deep understanding of our order book. I mentioned several times that we have a report, called a rainbow report where we could slice and dice our order intake, order book by customer, by region, by product type and we also could have our order hedging from 0 to 1 month, 1 to 3, 3 to 6, 6 to 9.

Overall, we don't see any normal pattern except with a few customers in Asia. So the quality of our insight is extremely high. One point I would like to highlight on top of our quantify report. Now for several quarters, we have implemented qualitative survey with our global strategic accounts, and we are fostering the interaction with our global strategic accounts, and I'm personally involved in some of them.

Again, nothing which is normal. So I want to repeat, I feel comfortable and confidence in the full year for Process Solutions. To your next question concerning the stocking effect for 2027. What I would like to mention is that we don't expect the normalization of inventory to happen in 2026, maybe in 2027 and it will depend of the geopolitical situation of the Middle East. And this is something we cannot predict.

Next question is from Simon Baker from Rothschild & Co Redburn.

Two, if I may, please, both on health care. Going back to, I think, your Sachin's question about the drift upwards in R&D as a percentage of sales over time. I just wonder if there are any countervailing cost reductions because in the quarter, on 1 side, you did have higher-than-expected R&D, but your SG&A cost control was very impressive. Is that a trend we should extrapolate over the coming years? And then going back to the strategy, looking at the framework that you've presented, Kai, I just wonder if it's led to any -- if there's been any change in the perception of the strengths and weaknesses of the Pharma business? Because if we dissect it into the commercial and the innovation, the commercial performance of health care over the last has been absolutely outstanding. The performance in R&D, less stellar. Within this framework, is there -- is there any change in where you view the strengths and the opportunities for investment within Pharma based on the framework and based on the performance of those 2 activities.

I will take. Simon, I will take the margins question and the R&D ratio. So you are right, the Q1 EBITDA pre margin was still at a very solid level of -- in fact, the year-over-year decline in the margin was mainly due to FX and to a minor extent from dilution from SpringWorks. On an organic basis, we were able to even slightly increase the margin which is quite an achievement, considering the significantly higher R&D and also lower Mavenclad sales. Now while there was also a bit of benefit from a couple of smaller one-timers together, adding some 100 basis points to the margin. in Q1.

This clearly speaks to our disciplined cost management approach. Now as we said at the beginning of the call, we are streamlining the organization, the entire organization to mitigate pressures on some of our more mature brands like Mavenclad, not just Mavenclad. And this is what you actually see in the numbers. Looking at the remainder of the year, just to give a little bit more color on that, we do expect lower margins in the coming quarters, still above 30%, in line with our updated guidance.

Key drivers to consider here in this context are also launch investments in rail diseases, particularly outside of the U.S., pimicotinib launch in China and in the U.S., hopefully, the at the end of this year. and also for Pergoveris when it comes. So you need to balance that, now the increase in the R&D right now, as we speak, is a reflection of the ramping up of Phase III programs, which are quite extensive. And that's good news. We like Phase II. And as I've said before, the continuous increase will be gradual based on the opportunities up to 25%, maintaining the EBITDA margin above 30.

Simon, let me take the strategic question. So I think it's important to zoom out first and look at the group picture. It's very important to look at the capability perspective I've shared with you across the and where all businesses contribute to these capabilities that we need in order to serve customers and patients better.

It's important to start at that level every business has an important role to play. And now zooming into pharma, we have expertise in different parts, and we addressed already kind of the commercial expertise with our move in rare diseases and how we utilize that. And we will say very much focused in pharma on risk and profitability on the right balance of the 2. This is very important to always better in mind for pharma specifically. But again, let me remind you, there's many opportunities if you think broader, what we call the life sciences value chain, across the different businesses to -- in addition, with using AI to improve the way we do research, the way we do manufacturing in the company the way we drive new businesses, it's very important to see every part of our company has an important role to play across the different businesses.

And the last question today is from Peter Spengler from DZ Bank.

Two questions. First, given that specific guidance for Q2 was not provided, could you please provide a kind of qualitative trading update for the second quarter? And my second question the strategic update outlines the plan to develop the portfolio and increase company velocity by leveraging capabilities across the existing businesses. While this reinforces the 3-pillar structure of Life Science, Healthcare and Electronics were alternative structures such as more focused division approach or strategic swap of divisions considered as part of this review. What makes the current 3 sector model the optimal structure for future value creation of Merck.

So Peter, let me start with the second question, then the a chart in the deck that shows you the kind of the 2 ends of the spectrum that we have been addressing. So there is the what we would call the front end. This is the customer-facing side, the market-facing side of our business. I think it's essential and it is a competitive advantage that we feel we have how much aligned we are in different businesses with different customer groups, different markets.

And then is the strength that we should build on and that's a competitive strength as we compare that across the industries. And it's always important in your structure, you have to have the end caster in mind to focus predominantly on that part. However, at the same time, it should not exclude options for kind of better collaboration across different businesses and that's what we call building platforms because it helps us to scale better. It helps us to increase speed in the implementation. So these are the 2 different angles that we have to balance. It's very important that you bear these 2 streams of the picture in mind as we look at into our strategic development going forward. Who takes the first question? Peter, there specifically on one business. The first question or...

Could you repeat the first question again, please, Peter?

Yes, it's basically, could you give us a qualitative guidance or a trading update for Q2 for the whole group?

No, but that is typically not something which we do on the running level. So there, I hope you understand that we'll keep you posted around August.

Thank you. And I will now hand the conference back to Florian Schraeder for closing remarks.

Thank you so much. I think we have reached the end of a long call. So with that, I would say we close the call for today. Thank you very much and then see some of you at the upcoming roadshows. Thank you, and have a great day. Bye-bye.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.

Dear ladies and gentlemen, welcome to the Merck Investor and Analyst Conference Call on Fourth Quarter and Full Year 2025. [Operator Instructions] I'm now handing over to Florian Schraeder, Head of Investor Relations, who will lead you through this conference. Please go ahead, sir.

Thank you very much, Sarah, and a sincere welcome to everyone joining us for the Q4 and full year '25 earnings call. My name is Florian Schraeder, and I'm the Head of Investor Relations at Merck. I am delighted to be joined by Belen Garijo, Group CEO; Helene von Roeder, Group CFO; as well as Kai Beckmann, Deputy Chairman of the Executive Board. For the Q&A part of the call, we will be further joined by Jean-Charles Wirth, CEO of Life Science; and Danny Bar-Zohar, CEO of Healthcare.

As you have surely noticed, we recently announced upcoming changes to the Executive Board. I am pleased to share that Benjamin Hein, appointed CEO of Electronics as of May 1, will join us later today for a brief introduction. And with that, I am pleased to hand over to Belen to kick us off.

Thank you, Florian, and good afternoon, everyone. A very warm welcome from my side as well, and thank you for joining us today. Please go to Slide 5 of the presentation, where I will start. 2025 was overall characterized by a challenging macro and geopolitical environment, as you all know. And despite this, we delivered solid organic net sales and EBITDA pre growth. Our Life Science business has returned to organic growth driven by the normalization of demand from our Process Solutions customers.

Healthcare continued to show solid organic performance despite certain market pressures and Electronics recovered in H2, thanks to continued AI-driven demand in Semiconductor Solutions. Above all, we have delivered on our latest guidance for both the group and our business sectors as well as market expectations for the group. With that, let's move to the highlights on the fourth quarter on Slide #6.

Group organic sales growth came in at a solid plus 2.6% in Q4. We delivered profitable growth supported by all 3 sectors with group EBITDA pre up plus 3.1% organically. Life Science continued to show good momentum with organic sales growth of 4%. I am particularly pleased with our Process Solutions business with sales up by close to 10% organically despite the rising comparables.

Order intake remained strong with a book-to-bill that is still comfortably above 1. Healthcare posted plus 3% organic sales growth with CM&E as the main driver on a franchise level. Our newly established Rare Disease business added a remarkable 5 percentage points of inorganic growth, which is ahead of the latest guide. Electronics, on the other hand, declined minus 2% organically in Q4 as Delivery Systems and Services reached its expected trough.

Our Semi Material business, on the other hand, continued to perform strongly, supported by surging demand in AI and advanced nodes. Returning to the group level, given our strong cash generation, we have improved our leverage to 1.4x net debt to EBITDA pre despite ongoing investment in both CapEx and M&A. As we have communicated earlier today, we will propose a stable dividend of EUR 2.20 per share to the Annual General Meeting on April 24, which would mark the 15th consecutive year with an increasing or a stable dividend.

Moving on to Slide 7. Let's take a closer look at 2025 through a more strategic lens. Our Life Science business returned to growth, mainly driven by our Process Solutions. Here, we delivered around 10% organic growth in 2025 as the market normalized and moved beyond the destocking phase. This is, as you know, fully aligned with our midterm guidance and what we have communicated previously.

Strategically, Life Science focuses on 2 key areas: customer centricity and innovation. To sharpen the focus on customers, strengthen execution and improve capital efficiency, we have aligned our go-to-market model around customers' buying patterns. The new model was successfully implemented in January and customer feedback is very, very positive. When it comes to bolstering our innovation pipeline in Life Science, let me highlight the Chromatography business of JSR Life Science and the Hub Organoids acquisitions.

Both are great illustrations of how we are reinforcing our portfolio leadership strategy in Life Science. Life Science is well positioned for continued growth with a stronger customer-facing model and an enhanced product portfolio supporting our midterm growth ambitions. Turning to Healthcare. 2025 was a defining year with the establishment of Rare Diseases as a new strategic pillar, supported by the acquisitions of SpringWorks and obtaining rights for the global commercialization of pimicotinib, which we recently launched in China.

We have 3 growth engines with Rare Diseases, CM&E and Fertility while we will manage the life cycle challenges for key brands in N&I and Oncology. Danny and his team also revealed plans to replenish the pipeline with an improved risk/reward profile and backed by a combination of internal and external innovation. We stand firmly behind our commitment to maintain Healthcare EBITDA pre north of 30% and R&D around 20% of sales. We are focused on driving growth in line with our upgraded midterm ambition with scope for further acceleration in the longer term.

In Electronics, we have successfully completed the divestment of Surface Solutions and thus evolved into a focused pure-play electronic business. We have one of the most complete offerings in Semiconductor Solutions, which puts us right at the center of the rise in artificial intelligence. Materials demand continues to be strong, and we have bottomed out in DS&S. And as well, we continue to shape our portfolio in Optronics. Against this backdrop, we are bullish on the outlook for Electronics and feel good about growth accelerating in the quarters ahead.

Before handing over to Helene, let me briefly touch on a few highlights in terms of sustainability, and I am now on Slide #8. 2025 is the second year we fully apply the European sustainability reporting standards, and I am pleased to share that we have made excellent progress. Not only did we reach our 2025 targets, we have also already achieved some of our environmental ambitions for 2030.

The most prominent example, we have surpassed our 50% reduction target, achieving a 60% reduction in Scope 1 and 2 greenhouse gas emissions versus our 2020 baseline. Despite increasing business volumes and portfolio shifts, we strive to maintain these low emission levels going forward. In terms of greener alternatives, we have significantly expanded our product portfolio already.

In Life Science, we delivered an impressive 53% year-over-year increase in the number of greener products. We now offer more than 5,000 such products with combined sales of over EUR 300 million, growing at a CAGR of about 30% since 2021. And we aim for 10% greener alternatives in our Life Science product portfolio by 2030. These achievements underscore our commitment to sustainable growth and demonstrate that environmental responsibility and business performance go hand in hand.

With that, let me pass on to Helene for a more detailed review of our financials.

Thank you very much, Belen, and welcome also from my side. And I'm now on Slide 10, and we'll start with an overview of our key figures for the group in Q4. Net sales declined by 3.1% to EUR 5.249 billion. Organic growth of EUR 139 million was more than offset by FX headwinds of EUR 318 million. These FX headwinds are related to the U.S. dollar as well as various Asian currencies, including the Chinese renminbi, Korean won, Indian rupee and the Japanese yen.

EBITDA pre declined by 3.2% to EUR 1.443 billion, with a stable margin of 27.5%, demonstrating strong operational discipline. EPS pre came in at EUR 1.88 per share. Operating cash flow increased by 4.9% to EUR 1.291 billion. Working capital year-on-year remained stable and net debt was at EUR 8.6 billion as per December 31. Let me also briefly comment on our reported results on Slide 11. EBIT declined by EUR 341 million year-on-year, mainly driven by R&D-related impairments in Healthcare.

The financial result of minus EUR 82 million reflects the increased interest cost and reduced interest income following the SpringWorks acquisition. The effective tax rate came in at 19.1%. That is actually below our guidance corridor amid deferred tax effects. We expect this effect to normalize in '26. Reported earnings per share came in at EUR 0.73.

So let's turn to Slide 12 for an overview of our performance by business sector. Group organic sales growth in the third quarter was 2.6%. Life Science was the largest contributor with organic sales growth of 3.9%, driven by the fourth consecutive quarter of around 10% organic growth for Process Solutions. Healthcare grew 3.3% organically, driven by strong growth in our CM&E franchise alongside contributions from N&I and Fertility.

Electronics, however, declined by 2% organically due to DS&S headwinds. However, the Semiconductor Materials business delivered stellar growth in the mid-teens range once again, gaining market share on the back of new customer qualifications. Regarding earnings, EBITDA pre amounted to EUR 1.443 billion, up 3.1% organically, driven by all 3 business sectors. The net portfolio effect was negligible in Q4, while currencies were a significant drag of about minus 6% on both group sales and EBITDA pre.

Life Science grew organically by 3.9% in Q4, driven by another strong performance of our Process Solutions business, which maintained its momentum, while Science & Lab Solutions was around stable. Process Solutions delivered organic growth of 9.7%. Order intake remained strong in Q4 and the book-to-bill ratio stayed comfortably above 1.

Turning to Science & Lab Solutions. Sales increased by 1.2% organically. This was slower compared with Q3. However, it was affected by the U.S. government shutdown impacting academic and government lab spending as well as a softer market in China. Life Science Services reported an organic sales decline of minus 8%, reflecting high comps and demand fluctuations at key customers. Our R&D ratio increased slightly, consistent with our ambition to be at roughly 5% of sales in the midterm.

EBITDA pre increased by 2.5% organically. This implies a 40 basis points lower margin year-on-year as operating leverage was more than offset by FX headwinds and start-up costs for site expansions. Lastly, as we transition into Q1, our reporting structure will be updated to align with the new go-to-market strategy. As a reminder, Process Solutions will remain unchanged, while Advanced Solutions will comprise our businesses in Lab Water, Diagnostics-related Materials, Biomonitoring, Contract testing as well as Development and Manufacturing services.

Our third franchise, Discovery Solutions, will combine our chemical and biology operations. As detailed at our last CMD, this new organizational setup will enhance our strategic focus on customers and operational efficiency. So turning to Healthcare on Slide 14. Healthcare delivered a solid organic sales growth of 3.3% in Q4. And that was mainly driven by our CM&E franchise, up 7% organically with strong performance across all therapeutic areas.

Fertility sales increased 3% organically, mainly driven by continued strong performance of Pergoveris, which was up by 22%. We recently secured approval for Pergoveris in China and continue working towards a launch in the U.S. in H2 '26. Sales in our N&I franchise grew by 3% organically. Mavenclad delivered another strong quarter and was up 16% organically with only a small impact from the first generics launch in the U.S. in December.

Oncology experienced a moderate organic sales decline as anticipated. A key driver in this context is the increased competition for Erbitux in China from noncomparable biologics. On top of the solid organic performance, we saw a significant portfolio effect of 5 percentage points from the consolidation of SpringWorks. Indeed, our newly established Rare Disease franchise delivered 20% higher sales quarter-over-quarter.

This was partially helped by stocking effects, which basically explained the outperformance versus guidance. And as a result, we expect Ogsiveo sales modestly down quarter-over-quarter in Q1. In terms of pipeline, we were recently granted the first regulatory approval for pimicotinib in China, which came in well ahead of time. We expect minor sales contributions in the coming months and work towards NRDL inclusion as of 2027.

For the U.S., we anticipate an FDA decision towards the end of the year. In addition, we are preparing to initiate 2 Phase III studies this year. One, enpatoran in lupus rash and precem-TcT in third-line colorectal cancer. In terms of earnings, EBITDA pre amounted to EUR 683 million in Q4 with a margin of 31.2% as expected and reflecting normalized R&D now in line with our ambition of around 20% of sales.

Looking ahead to Q1, please note that we anticipate an organic sales decline more around the lower end of our full year guide with all franchises expected down year-on-year on a mix of various factors, including tough comps and phasing. And Danny will very happily provide more color if needed. So let's move to Electronics on Slide 15. Organically, sales declined by 2% in Q4.

Semi Materials delivered solid double-digit growth, yet Semiconductor Solutions declined by 4% organically as the strength in Semi Materials could not entirely offset the anticipated decline in Delivery Systems and Services. Looking a bit deeper into Semi Materials, demand for advanced nodes continues to drive growth for the eighth consecutive quarter with low teens growth on average. For the year, Semi Materials was up in the high single digits. This reflecting encouraging AI-driven 3D NAND trends and strength in Asia around specialty and mature nodes.

In DS&S, the quarter was in line with our expectations. As anticipated and highlighted by Kai during our Q3 call, we flagged approximately EUR 100 million downside in DS&S for Q4, which did materialize. Our view is that DS&S bottomed out in Q4 and will stabilize going forward. Our Optronics business achieved moderate organic growth of 5%, supported by a good quarter in our traditional applications.

The EBITDA margin -- EBITDA pre margin increased by 250 basis points year-over-year to 27.2%, mainly driven by the accretion from the divestment of Surface Solutions and ongoing cost discipline within the business. The high 20s margin now reflects the pure-play electronics business, clean of Surface Solutions. Let me also briefly comment on our balance sheet and cash flow statement. As you can see on Slide 16, our balance sheet per year-end of '25 contracted by EUR 100 million year-over-year. So let's take a closer look on the asset side.

Cash & cash equivalents increased by about EUR 200 million, mainly reflecting the net effects from the U.S. dollar bond issuance in connection with the SpringWorks acquisition and the divestment of Surface Solutions. Receivables were stable, while inventories were up by about EUR 100 million. Intangible assets increased by some EUR 100 million net, mainly due to the SpringWorks PPA. Property, plant & equipment decreased by roughly EUR 100 million, mainly due to FX.

And lastly, other assets were down by about EUR 500 million, mainly due to the divestment of Surface Solutions. So let's look at the liability side. Financial debt increased by EUR 1.7 billion, reflecting the funding of the SpringWorks deal. Pension provisions were down by EUR 400 million, mainly due to actuarial gains. Payables and other liabilities were roughly stable. And net equity decreased by EUR 1.3 billion, and that was mainly due to FX. As a result, and in summary, our equity ratio declined from 58% to 56% as per the year-end.

So turning to cash flow on Slide 17. Operating cash flow increased to EUR 1.291 billion in Q4 '25, up from EUR 1.231 billion in Q4 of last year. Profit after tax declined due to impairments in Healthcare and other noncash portfolio actions such as the divestment of CDMO activities in Martillac, France. D&A is significantly up, reflecting the noncash nature of the impairment and portfolio actions. Changes in other balance sheet items were similar to the prior year period. And with that, I am delighted to hand over to Kai, who will share with you our financial guidance for '26.

Thank you, Helene. And before I talk about the guidance for 2026, I want to take a moment to thank Belen for her outstanding leadership. I also want to acknowledge the successful years we have experienced under her leadership and Belen your support during the CEO transition has been invaluable, enabling a smooth and effective handover in a few weeks just from now. On behalf of the team and the Executive Board, thank you, Belen, for setting a strong foundation for our future, and I look forward to building on the successes that we have achieved together.

Let me now turn it to the outlook for 2026. As a brief reminder, similar to last year, we are sharing quantitative targets for net sales and EBITDA pre along with our full year results. In addition, for the first time, we are pleased to provide an outlook for EPS pre with our full year guidance. Before we dive into the details, there are 2 key assumptions to consider. We assume no Mavenclad sales in the U.S. as of March 2026.

Also not reflected in our guidance is the potential launch of Pergoveris in the U.S. We forecast group net sales in the range of EUR 20 billion to EUR 21.1 billion. This reflects an organic sales development of minus 1% to plus 2%. On EBITDA pre, we forecast a range of EUR 5.5 billion to EUR 6 billion. This equals an organic growth in the range of minus 4% to plus 1%.

With the evolution of currencies, please bear in mind that we expect for Q1 a disproportionate currency headwind relative to our full year FX guidance. You will note that the implied midpoint of our guidance clearly confirms our early indication of EBITDA pre margins of around 28% at the group level. Concluding the view on the group, this translates into an EPS pre range of EUR 7.10 to EUR 8. Now for some additional color, let's take a look at Slide 20.

Starting with Life Science, we confirm mid-single-digit organic sales growth. This is in line with Jean-Charles' projection from our CMD last October. Our assumption reflects the continued strong performance in our Process Solutions business and across Advanced and Discovery Solutions, we anticipate gradual improvement in biotech funding and academic research stabilization. And furthermore, we are facing an evolving market environment in China.

Moving on to Healthcare. A challenging year is ahead of us amid life cycle challenges for key brands, in particular, Mavenclad. On the other hand, we expect growth in the remainder of the portfolio, including CM&E, Fertility and above all, Rare Diseases, which will become organic in the second half. Danny and his team remain firmly committed to sustaining margins north of 30% as reflected in the guidance.

For Electronics, we anticipate continued strong growth in our Semiconductor Materials business, while our DS&S business stabilizes going forward. The effect of one-timers in Electronics will contribute to mid-20% growth in EBITDA pre. On the other hand -- on the one hand, the negative EUR 51 million from 2025 and on the other hand, in 2026, the positive contribution from sales of OLED IP and compensation from our supplier that totals around EUR 60 million in 2026.

Ignoring these one-timers, the underlying business shows nice operational leverage. Before we go to Q&A, we are joined by Benjamin Hein, who will succeed me as CEO of Electronics. Ben and I have worked closely together for many years. He played a central role in shaping the Electronics strategy and in the transformation of Performance Materials into a focused Semiconductor business. Ben is joining us today from Arizona, where he's visiting customers. Ben, great to have you with us for a brief introduction.

Thank you, Kai, and hello, everyone, from my side from sunny Arizona. Let me start by thanking the Merck family for the trust that they've placed in me and Kai for his leadership in building the Electronics business we have today. Over the past years, Kai led the transformation that has created a pure-play business with an exceptionally strong base. For those of you who don't know me quite yet, I've been with Merck KGaA Darmstadt, Germany for 13 years with leadership roles across Group Strategy, Electronics and Life Science.

A defining part of my experience has been leading the teams and executing with our customers in Taiwan and Southeast Asia for electronics and most recently in Boston, Massachusetts for Life Science. That's how we help today. The future of AI will need better performance from the chip. This means new materials and chemistries, new connectivity like silicon photonics and complex scale architecture.

The combination of materials, data and control will be more important than ever before. In this role, enhancing our strength and doubling down on execution is essential to me. I will build further on the strong foundation, accelerate hand-in-hand with our customers and ensure operational precision and co-develop innovation at speed. I very much look forward to engaging with many of you in the very near future. And with that, back to you, Florian.

Thank you so much, Ben, for your time today. We will now come to the Q&A part of our call to be followed by some special closing remarks from Belen. Sarah, I will now hand it over to you to kick us off for the Q&A session.

[Operator Instructions] First question today is from Richard Vosser from JPMorgan.

Two, please. First one on Electronics. Just looking at some of your customers, they're increasing CapEx again now. And you highlighted the bottoming of DS&S. But I was wondering if you could give us a bit more color on the picture for DS&S and the Semi Materials business. You mentioned the stabilization of DS&S. Why should we not think about an improvement of that part of the business in 2026?

And on the Materials business, just wondering about the sustainability of the strong double-digit growth in advanced nodes and what's going on in terms of the catch-up of some of the older nodes. And then the second question, just on Process Solutions. You talked about the strong order book. I was wondering just on the visibility you have into '26 given that strong order book and whether we could maybe even anticipate stronger growth in '26 than the 10% you delivered in 2025.

So Richard, let me pick up the Electronics question. So on DS&S, with the planned ramp-up of CapEx of our customers, we will then after the stabilization in 2026, see us moving towards the midterm guide in the future. So this will take some time. And have in mind that we still compare with some ramp down of projects in the first half of last year. So the comparisons we still have to overcome for that stabilization.

Second, on the Materials side, the -- our customers are engaged in debottlenecking their capacity for AI and advanced nodes, and this carries on as we speak. And this will give us the momentum that continues well into 2026 of growth, pretty good growth of the Materials business for Semi Materials.

Richard, Jean-Charles speaking. Let me answer the second question related to Process Solutions. First of all, we don't disclose any information guidance by BU, but I would like to share with you some opinion. Number one, we continue to view the bioprocessing market as structurally attractive with a growth in the range of 9% to 10% midterm. And talking about 2025, yes, we had a solid performance with an organic growth for the full year around 10%.

And we have a very clear view on our order book. Our order book looks solid. And maybe to answer one additional question, our book-to-bill ratio is still comfortably above 1. Based on that and on ongoing exchange interaction with our customer, we confirm our guidance for 2026 concerning Process Solutions and the ambition is to grow around 10%. I would like to highlight one point. When we say around 10%, you should assume that some quarters will grow 8%, some quarters will grow 12%. But overall, we are confident -- very confident in Process Solutions to grow around 10% for 2026.

We'll now take our next question. This is from Peter Verdult from BNP Paribas.

Two quick ones for Kai and one for Danny. Kai, when do you plan to lay out your [ go-forward strategy ] for Merck? I know it's not going to be a revolution, but just when should we expect to hear from you? Will it be the CMD in October? Or could it be sometime sooner? And then just staying on the current business, Electronics, just smart glasses, I realize this is probably relatively immaterial right now.

I'm assuming the business is less than EUR 50 million, but clearly there's going to be a huge area of growth. So can you help us better understand Merck's competitive advantage here and the level of materiality for the current business, either on revenues or margins? And then Danny, on pipeline prioritization and replenishment. It's good to see the VR portfolio efforts terminated.

Just wanted to better understand whether the Phase III CEACAM5 start is contingent on securing a partner or is Merck now willing to go solo? And could you just give us a little sort of temperature check on the M&A environment? I know you're not going to talk to specific assets, but you've clearly articulated a desire to accelerate the transformation towards Rare. Would you characterize the environment to do that as good, bad or currently?

Thanks a lot, Peter, for the 2 questions. So maybe on the first one, let's have Belen and myself kind of conclude on the transformation and the transition first. And once done, we are sitting together after May 1, we will come back to all of you in sharing the plans going forward. So way too early to make any projections today. Second, on the AR/VR, you're right that with the current quite low-tech solution that we see in the market, our business is quite low on this one.

But assuming that we will see more implementation of higher-end glasses with higher field of view and kind of higher color intensity contrast, this is where the currently developed technologies will then have an opportunity. It depends, of course, on the road map of our customers. And it's again way too early to speculate that. And as we said during the CMD at the midterm guidance, none of that is included in our midterm guidance. This is not yet as much visible as we would need it for including it into our midterm guidance.

Yes. So Peter, thank you for the question, Danny in, sorry for my deep voice regarding the pipeline. As you remember, we have an ongoing Phase III trial with cladribine tablets in generalized myasthenia gravis. We are expecting -- it's recruiting very well. We are expecting it to read out around 2028. In addition to that, we are starting this year 2 studies, 2 Phase III studies, twin studies with enpatoran, the TLR7/8 in lupus rash.

So this is going to -- the first patients are going to be enrolled in the next couple of months. If I'm not mistaken, they appear on clinicaltrials.gov. You mentioned the CEACAM5, precemtabart tocentecan based on the, I would say, very encouraging results that we have from the Phase Ib and the expansion cohorts, we are starting a trial in third-line colorectal in the next few months.

These are the plans. The protocol has been aligned with all regulatory authorities. When it comes to partnering of CEACAM5, yes, we said that if this program is going to be expanded further beyond third-line colorectal cancer, so we would really like to partner it in order to share the cost and the risk.

The partnering discussions are currently ongoing with potential partners. We are also looking or waiting for additional combination data to come in earlier lines that will dictate the rest of the clinical development program. Now as I said at the Capital Markets Day and David alluded to, we are moving forward towards more homogeneous populations in terms of the biology.

So you will less likely going to see us going into neurodegeneration in the next couple of years or to a very large population solid tumors. Homogeneous populations can be epidemiologically rare diseases, which is a very big focus for us, pimicotinib, Gomekli, Ogsiveo and other smaller things in the pipeline right now from internal innovation perspective.

Myasthenia gravis is a rare disease as itself. So we are already there. We will continue expanding on that. And to your question around the fertile ground out there, we are very encouraged and we are very, very active in terms of looking for the next opportunities. So we need to supplement the pipeline, mainly around the peri-PoC and executing on the Phase III programs that are very exciting.

[Operator Instructions] This is from Matthew Weston from UBS.

Just before I start, Belen, congratulations to the end of an era at Merck and Kai, good luck in the new role. And Belen, look forward to seeing you in your new role. So to my question, I've got 2, both around guidance. So I don't understand the caveats to the '26 guidance. I don't think I've ever seen a generic erosion go to 0 in 6 months. And I don't think I've ever seen a company exclude a pipeline opportunity unless there's been an issue raised by a regulator.

So can you explain the Mavenclad decision? And can you reassure us that all is well with Pergoveris at FDA? And then a specific question to Jean-Charles regarding Life Science guidance. If you're highly confident in the growth in bioprocess that you laid out in answer to Richard's question, how do we get to the 3% organic Life Science growth number at the bottom end of the '26 growth range?

Thank you for your congratulations, Matthew. I'm going to invite Kai to speak about the 2026 guidance together with Danny on your first question.

Matthew, thanks for your good wishes. And let me address your question on the guidance. And -- so I will start and Danny will give you some additional insights on the 2 products you mentioned, but let me start a bit with the rationale that we have used and which I believe is quite straightforward.

So regarding Mavenclad, we will not speculate on the timing of potential entries of generics nor their market behavior. And frankly, we believe there is very little to gain from this speculation. And hence, we have opted for a more conservative approach concerning this item while clearly outlining our assumptions. So we will, of course, keep you updated as the year progresses. Rest assured that we will manage the decline very carefully and always focusing on maximizing the returns for shareholders and prioritizing patient needs.

And similar for Pergoveris, we are advancing the filing under the CNPV as quickly and diligently as possible. And as Helene already mentioned, we are preparing for a launch in the second half of the year. However, the ultimate decision regarding the Pergoveris approval is beyond our control. And thus, we have chosen to exclude potential sales from our guidance.

And Danny, maybe you want to add a bit more color to that.

Yes. Thanks, Kai. I fully agree with your points. Matthew, briefly on Mavenclad some additional color. So we filed, as you may remember, the petition for the CAFC for a panel rehearing at the very end of November last year. This petition was denied at the end of January. Now in light of this decision, we expect generic companies to request the district court to lift their 30-month stays where applicable.

Now as of today, there is one generic version of Mavenclad that received final FDA approval. They received that at the end of November and has entered the U.S. market. And what I can tell you is that already for December, we see an impact on volume with that one generic. Another generic has received tentative FDA approval early December. And 3 additional companies to the best of our knowledge, are working on developing Mavenclad generics as well.

So you're right, there are erosion curves for generics. However, the unknown entry date of the second generic and how others that we know are trying to get in, make it very difficult for us to predict sales. On top of that, you should also add the unknowns of how these erosion curves would behave in terms of year 1 and year 2 because of the very special dosing regimen for Mavenclad. So that said, yes, one can take that as conservative, and we guide without the sales of Mavenclad in the U.S. as of March.

To the question regarding Pergoveris in the U.S. following the Commissioner's National Priority Voucher procedure, we submitted Part 1 of the filing for Pergoveris at the end of November, and we are currently in a rolling submission mode and preparing Part 2. And the clock starts ticking as of Part 2 is submitted.

Now as we've said, the Pergoveris submission is based, and I said that on a lot of legacy data, a lot of legacy data. We have extensive data. And while this is not our first submission to the regulator, the procedure when it comes to the CNPV is quite new. And I want to ensure that the FDA has everything that is needed for an approval. We have this one shot and we want to get it right.

Now we are diligently working through adaptations from data collected primarily to satisfy ex U.S. authorities to the FDA, and we are doing that in close collaboration with the FDA. This means that there is some uncertainty about the exact time line for the submission of the second part. But of course, we will keep you updated. As Kai and Helene mentioned, we are still aiming for a potential launch in the second half of this year.

And then regarding the opportunities magnitude, how much to forecast. As I previously indicated, this depends first and foremost on the timing then on the label so it is premature to provide more details. And additionally, you must be mindful of channel and access negotiations with payers. So many unknowns here. And the largest of them is actually the timing and knowing that the submission has not been finalized yet. So rest assured, we aim to bring the product to patients as soon as possible as we said second half 2026.

Richard, Jean-Charles speaking. To answer your question on Life Science guidance, let me start by the fact that we confirm what we initially shared during the Capital Market Day, where we mentioned mid-single-digit organic growth for Life Science. And when you peel the onion, this is split by the 3 business units. And let me give you some hint.

From Process Solutions, we confirm that we are marching towards an organic growth around 10%. And as I said earlier today in the call, we have a very clear view on our order book. Our book-to-bill ratio is comfortably above 1, and we continue to have ongoing clear discussion communication with our key customers. So on Process Solutions, we are very confident.

From an assumption point of view in Advanced Solutions, we anticipate organic growth this year towards the lower end of our midterm guidance. And we currently assume that the QC testing business, namely biomonitoring would be a key driver of the growth.

Concerning Discovery Solutions segments, we anticipate performance to be flattish as headwinds persist such as academia and biotech funding, China and the macroeconomic factor, including tariff. So it's one part of the answer. But to give -- and to be clear on your question about the 3% organic growth, which will be in the low end of our guidance, if we find ourselves at the lower end of our guidance, it will be influenced by the non-process solutions businesses, namely Advanced Solutions and Discovery Solutions, and the key headwinds could be China, NIH funding, biotech funding and, call it, broader macroeconomic factors.

We'll now take the next question. This is from Sachin Jain from Bank of America.

Two, I guess, for Danny, if I may. So just a follow-on on for a prior question on Pergoveris, just to get a better understanding there from your perspective, when would you feel comfortable enough to guide? Is that when Part 2 has been submitted? Or would you need to see full approval? And then acknowledging you sort of want to see the label, perhaps you could just remind us for our benefit as to where you're seeing differentiation of this product in the ex U.S. market share to uptake so we can begin to think about how to better model the U.S.

And then the second one on the 2 SpringWorks assets. I wonder if you could just give us your latest updates on the 2 launches, how we should think about progress in the course of this year? Anything to note on geographic split of launch? And then now that you've seen the immunome data, any change in your perspective on that as a potential competitor as we think about 2027?

Thank you. Thank you so much, Sachin, for your questions. So when it comes to Pergoveris, again, as I said, the entire procedure of the CNPV is new to us as much as it's new to the FDA. And we need to be aware of that. And I guess that many other companies that receive these vouchers are also taking some caution. We have one shot here.

Now when will it come? As we said, our assumption and our aim and our goal together with the FDA is to have it in the second half of this year. Now rolling submission. Part 1 was submitted in November. We are submitting smaller parts actually as we go. We are in a continuous dialogue. And then there is this challenge, I would say, when it comes to adapting quite old legacy data from Europe to what the FDA needs. And this might take time. Initially, we thought that we will complete that in March. And what I expect is that it will be delayed beyond March in order to get it done right. So that's the nature of, I would say, a little bit the uncertainty regarding the approval time lines. Only once the second part is submitted, the clock starts ticking the 60 days that the FDA gives.

Now when it comes to the label, I don't want to comment too much on label because we are currently under review with the FDA, and this is not something that we usually do. It depends on the eligible patient population and how you define the need for the therapy, whether it's based on hormone levels or clinical judgment, and I will leave it like that. So this is another unknown. We are progressing very well, but we will keep it like that.

Regarding SpringWorks. So generally speaking, I remain very confident in the potential of both products. When Ogsiveo positioned, we positioned it as around blockbuster potential and Gomekli as near blockbuster potential. For Gomekli, we are encouraged with the uptake with sales increasing by 35% quarter-over-quarter in Q4. We see positive uptake across both pediatric and adult populations, which is super important for us. We see 90%, 9-0% penetration in centers of excellence, while successfully tapping also into non-centers of excellence. And just to remind you, we are in the same class with a rather well-established Koselugo.

Additionally, early signs from the launch in Europe for Gomekli are promising, having launched in Germany and Austria in Q4 with further country-by-country launches planned across Europe in the months and the quarters ahead.

When it comes to Ogsiveo, I am equally pleased with Ogsiveo's uptake, first of all, in Europe, I mentioned Europe before. And the drug was launched in Germany in the middle of Q4. And also in Austria, and there is very strong launch as it looks right now, very similar to Gomekli.

In the United States, as we've said in the last couple of times that we spoke, we are currently in the second phase of Ogsiveo's launch. We're transitioning from the "warehouse patients to identifying those who are under active surveillance who should be given systemic treatment." Now the patient pool is significant. There are over 20,000 diagnosed patients in the U.S. alone, of which you could say 20% to 30% are under the active surveillance. And we are using a lot of tools, including AI in order to identify these patients, particularly at the community level. They are no longer always floating in the centers of excellence. And we are becoming also more targeted in terms of our messaging towards patients and health care professionals.

Also, we are focused on maximizing patient retention by leveraging the quite substantial amount of long-term data that we have at hand providing education on adverse event management through dose modifications, and we have an advantage with our formulation, the dose and the dose strength when it comes to the ability to dose modify. It's very important and also enhancing compliance and persistence.

So the disease itself, desmoid tumors is chronic and the patient and the physician and maybe to some extent, the drug needs also be -- need to be managed or to dance together with the drug on the long term. And this is not just related to managing adverse events. They behave differently from malignant tumors.

Now I don't want to disclose exactly how -- what we know about patient dynamics because we will have competition in the class, but I suspect that these dynamics will be applicable for the competition as well. So yes, we are currently going through a period of lower growth.

When it comes to Ogsiveo, I also expect Ogsiveo sales in the first quarter of 2026 to be down versus Q4. However, this is mainly due to seasonality. We observed some stocking in Q4 ahead of the anticipated WACC increase, which is normal. In fact, we have minimized that stocking, as we told you, and it's much less pronounced as compared to what you saw with SpringWorks exactly a year ago, the transition between Q4 '24 and Q1 '25. Importantly, the underlying demand continues to increase. We saw Q4 versus Q3, and we expect new patient starts to be higher in Q1 versus Q4. So we remain confident with that.

When it comes to immunome data, I said that also at the CMD for each one of the rare tumors, we have or either -- or will have strong in-class competition. And we are aware of that, and AL102 has been taken into account very seriously from the get-go. Now with all of the beautiful attempts to get into indirect comparisons, this is the same class. The numerical differences in response rates, of course, are there, but the question is what they mean for a patient. As I said before, the patient needs to feel comfortable with the drug on the long term.

Now it's a nasty disease, but it's not a malignant disease. The treatment should be long term, as I said, and need to -- we need really to see the data on things that matter to the patients as well, pain, quality of life, onset of effect. We haven't seen that data.

When it comes to toxicity, this was also mentioned every once in a while. Each drug needs to manage the patients on the tolerability side. And the most bugging tolerability issue is the GI effects. And on this side, as expected, both drugs have quite, I would say, identical rate. Now here comes how these patients are handled, kept dose adjusted. As I said before, the BID dosing that we have and the different dose strengths of Ogsiveo that we have are actually a potential advantage here, and we know that. We know that because I am personally talking with a lot of prescribers. We have touched more than 1,300 prescribers have already prescribed Ogsiveo, and this is what they are telling us. This flexibility is important.

On ovarian toxicity, it's on target. We knew that. And it's also important to see how they reported their numbers in terms of apples-to-apples. So Ogsiveo will have been in the market for almost 3 years when AL102 is launched. And that's quite a long time for same class competition. We have the broadest and the longest long-term data. And this data suggests increasing efficacy, effects on quality of life, very robust ones with no new safety signals. AL102 is a credible competitor. We believe in the strength of Ogsiveo and its potential.

We'll now take our next question. This is from Theodora Rowe Beadle from Goldman Sachs.

So firstly, it looks like the DNA damage repair portfolio is no longer part of your pipeline trial. So what were the reasons to discontinue the program? And how do you plan to reinvest the R&D expenses that are unlocked here? And then secondly, what are your expectations for the pimicotinib launch, both globally and also in the U.S., assuming approval?

Thank you, Theodora. I will take the questions. First one on the DDR. So rightfully said, the key assets in the DDR portfolio were the -- were Tuvusertib, the ATRi inhibitor and the PARP1 selective compound that we in-licensed from Hungary. So both of them were taken, each one of them data-driven, taken out of the pipeline, data-driven. We ran combination studies, particularly with other DDRs in selected populations with chemotherapy, trying to address all of these questions.

And I must say that we answer these questions relatively fast and relatively cheap. If you could look at other companies that have been doing DDR in this space, I'm really proud of the R&D organization that managed to answer all of these questions very fast and very clearly. So these are taken out of the pipeline.

Now yes, on paper, there are freed up "R&D resources, but these are quite nicely used in terms of ramping up the Phase III programs, cladribine in myasthenia gravis [indiscernible], the CEACAM5 in colorectal cancer, 2 studies with enpatoran Phase III studies. So we are -- I would say, our hands are full. And of course, we are keeping our R&D spend around 20%, and we'll move forward like that.

Yes. When it comes to pimicotinib launch, so as Belen mentioned, the drug was approved first in China, well ahead of time, and we are very happy about that. It's going to be introduced into the private market in, I would say, several weeks from now. And we are very excited about the potential of this drug in China. We are currently in discussions -- in NRDL discussion in order to get the price in China, but this will kick in only in 2027.

We submitted to the FDA. The file has been accepted, which means that the clock has started ticking, which means we have a PDUFA date, an action date around November this year. So stay tuned to that. We also submitted in Europe. Overall, we said that the potential of pimicotinib in TGCT will be around near half blockbuster, I would say.

We'll now move to our next question. This is from Oliver Metzger from ODDO BHF.

The first one is on the Electronics guidance. So organic growth of 3% to 7% is targeted for '26. Just want to understand the dynamics stronger. So you have, on the one hand, the semiconductor materials, which are doing very well. You said above 10% or even Q4 15%. DS&S should stabilize, let's say, in H1 and also on lower comps turn positive in H2 and Optronics mid-single-digit range does not look ambitious. So if I look in particular to the lower end, it looks like that consists of a lot of safety cushion. But even at the high end, it looks like that you, let's say, factor in more uncertainties. A comment on that would be great.

And second question, very quick on Process Solutions. You made only a quick comment on equipment demand, but could you share with us how you see demand for equipment evolving? And when do we expect a normalization of that?

Yes, Oliver, let me take the electronics question first. So if you take the fact that we got 66% of our business in semi materials, then roughly 15% in DS&S and about the rest of 20% in Optronics. And as we said, Optronics about stable, DS&S about stable and the Materials business at high single digit, that gives you the midpoint of our guidance. So what kind of offers us the kind of the lower end of the guidance is the current constraints driven by the high memory prices limiting consumer behavior on consumer electronics. So this is the optionality that drives us towards the lower end of the guidance. And the efforts of our customers for debottlenecking advanced node capacity and AI-related capacity that kind of would give us the opportunity towards the higher end of the guidance. So this gives the frame of the guidance, and that should do the math as per our CMD and Q3 communication last year.

Oliver, Jean-Charles speaking. Related to the question around Process Solution equipment, keep in mind that more than 90%, 9-0, 90% of our portfolio is consumables related. And as such, we have very limited visibility and exposure on equipment.

We'll now take our next question. This is from Charles Pittman-King from Barclays.

Two questions for Jean-Charles from me, please. Firstly, just on Life Science. I know that we've kind of -- we've been cautioning about potential downside drivers. But just wondering a little bit more about the upside drive potential mean given M&A picked up in 2H '25, and we saw a record year of China in-licensing. I'm just wondering how your RFP discussions are starting to evolve? Are you seeing any potential uptick in interest for advanced therapy development, acknowledging the NIH funding and macro issues you've mentioned?

And just how are you thinking about the potential for U.S. onshoring given recent U.S. peers have been pointing to a kind of '27, '28 time frame just in terms of your midterm outlook? And then just a second point, following your strategic review of the Life Science business that gave us these new divisions, I'm just wondering if there's any follow-up or further thoughts on the potential future of your CDMO offering within that.

Thank you for the question. So let me start with the second one on CDMO. So if you -- let's step back a bit for 2025. We mentioned that the LSS business decline in 2025, and it was mainly driven by customer phasing and also, let's say, lower funding in biotech, which impacts mainly our CDMO business.

Talking to the CDMO business, you're right. We mentioned during the Capital Market Day that we are navigating the complexity of the CDMO market with a strategic approach for us focusing our customer needs and customer expectation. I also mentioned that we are currently reviewing our CDMO business to ensure that the business is aligned with our mission and with our current portfolio. And to do this, we have established a very robust decision-making framework in order to assess the market, assess our operational excellence, assess financial ambition and implication.

This framework ensures our strategic initiatives to remain close to our commitments being a customer-centric organization. So at this point, we are making progress. Paolo Carli, the Head of Advanced Solutions is working on this assessment and be sure and reassure that when we'll be ready, we'll come back with further information on our CDMO business.

Related to the second question, so on the uptick and onshoring, as I said earlier to the question, most of our Process Solutions portfolio is consumable related. So on short term, on 2026, 2027, we don't see massive upside linked to the onshoring in U.S. as an example. We may see maybe some upside in 2027, 2028. But onshoring for 2026, we don't see any upside. Again, it's linked to our portfolio, which mainly relates to consumables.

And just a follow-up in terms of your RFP discussions for kind of advanced therapies or any changes just following the recent uptick in M&A or in-licensing? Has there been any change in your conversation?

We will now take our next question.

This is from Falko Friedrichs from Deutsche Bank.

Two questions, please. Firstly, can you elaborate on the reasons why Q1 is expected to be at the low end of full year guidance? Do you expect to see a pickup in Q2? Or is the year expected to be rather back-end loaded in terms of growth and margins? And then secondly, how much do you expect Mavenclad to grow outside of the U.S. in 2026?

Falko, the main point on the low end of the guidance for the thing is, as Danny just elaborated, the fact that like especially in the health care area, we expect lower sales for the Q1. And I think you made all of the points around that. The other thing which you also need to take in mind is like if you look at FX, FX has basically the biggest delta in Q1 '25 to '26 because we saw the biggest market moves in FX in that quarter. I think those were the 2 reasons that you should be looking at. And then I'll pass on to Danny for Mavenclad.

Thanks, Helene. So as I said, we do expect the Q1 sales in Healthcare to decline, I would say, towards the lower end of our full year guidance, the minus 7% to minus 4% with actually all franchises down year-over-year due to different various reasons, including phasing and also tough comps. So let's try to pick one by one.

Starting with CM&E. The full year, we expect to be in line with our midterm guidance of mid-single-digit organic growth. We expect Q1 to be moderately down around low to mid-single-digit decline. The main reason for this is a very tough comp. I don't know if you remember last year, Q1 2025 was 11% growth.

On top of that, we may see some shifts from Q1 to Q2 of this year due to some geopolitical situations, as you are aware of in the Middle East. When it comes to fertility, with fertility, we expect low single-digit organic growth for the full year, again, excluding the potential Pergoveris in the U.S.

That's below the mid-single digits that we expect midterm, mainly due to the remaining near-term headwinds for Gonal-f in the U.S. And these are -- in general, this consists of a significant price cut for Gonal-f in Q2 last year, which is going to be annualized only this year, fully annualized this year. So you will see an effect in Q1. We have a lower inventory valuation for Gonal-f in light of the direct-to-patient model that was agreed with the White House, and we will have the initial impact of the MFN.

When it comes to oncology and NNI, we expect both franchises to decline, I would say, significantly in 2026 due to the life cycle challenges for the key brands. Based on our guidance, we -- which assumes no Mavenclad sales in the U.S. as of March. The decline in NNI should be, I would say, substantially more pronounced than in oncology. For Q1, however, the decline could be, I would say, more similar, likely around higher, slightly higher than 10% in both franchises.

That said, I -- this relates a lot to what I said at the Capital Markets Day. What you can expect from us is the highest degree of clarity and transparency about what's coming, and we maintain our full enthusiasm with the growth of Ogsiveo, Gomekli, pimi, Pergoveris and of course, the CM&E.

To your question around Mavenclad potential outside of the U.S., you saw the double-digit growth in 2025, both in Q4 and in the full year. This is the most prescribed oral high-efficacy drug. We expect continued very solid growth outside of the U.S., maybe not double digit, as you said, but very solid growth with a very good potential there.

Sarah, we have time for one last question, please.

The last question today is from Simon Baker from Rothschild & Co Redburn.

Firstly, just returning to Sachin's question on Pergoveris. Danny, I appreciate you don't want to get embroiled in potential labels in the U.S. So could you highlight the key differences in the European marketing authorizations for Pergoveris and Gonal-f? And how has that manifested itself in European territories in terms of share?

And then going back to Charles' question on Life Sciences and CDMOs. Jean-Carles, my reading of your description of the strategic decision-making framework was that the outcomes were we keep it, we dispose of it. Are there outcomes where you would increase your exposure to the CDMO space if that were deemed consistent with your broader strategic ambitions?

So let me start with the CDMO question. We keep it or we dispose it or we increase the investments. As of now, I can't say -- I can't give much more information. We are assessing all the options. So stay tuned more to come. But I will stop there for the time being.

Simon, regarding Pergoveris, I hope that I got your question right. I'm not sure. You asked about differences in the label between Gonal-f and Pergoveris in Europe?

Yes. I was really -- in terms of the -- yes, the characteristics, what are the points you would emphasize as the key differentiators between the 2 products?

Okay. The 2 products are -- Gonal-f is the only recombinant FSH that is in the market. Pergoveris is a fixed-dose combination of recombinant FSH and LH. As such, it is much more suitable for the treatment of -- for IVF treatments in advanced maternal age where they lack also the LH because what you usually do, you start with the FSH and when there is a need, you top up with additional injections with the LH component. This is a fixed-dose combination, and it allows much better addressing this patient population with great results.

As I said, the drug has been -- I'm talking about Pergoveris, has been growing in the last 5 years at a CAGR of 20% in Europe, Asia Pacific, for example, Middle East, Latin America. So the potential is very high, and we believe that the potential will be high also in China when it gets in and potentially in the U.S. in the second half.

Thank you. I will now hand over to Belen for closing remarks. Thank you.

Thank you, Sarah. And as you know, today is my last quarterly call and yearly call. And because of this, I just wanted to be a bit longer on my closing remarks. As previously said, I really look forward to meeting many of you in my new mandate. But today, looking back at my time at Merck, first of all, I have to say I have immensely enjoyed working for Merck.

When I joined in 2011, the company had just begun an unprecedented period of transformation alongside with major acquisitions like Millipore, Sigma-Aldrich, Versum. I took on the task of transforming our health care business for a new era of patient care.

In 2017, we launched Bavencio, Mavenclad and Tepmetko, 3 products that brought Healthcare back to growth, and we expanded beyond our European routes to build a truly global presence across growth markets, particularly China, where we built a business from scratch that became an above EUR 1 billion in sales and meaningfully strengthened our position in health care. That decade shaped a globally diversified company.

I stepped into as CEO in 2021. And over the last 5 years, my ambition was to make Merck not only bigger but also better. Since 2020, we increased sales by 20%. We grew earnings even faster and reduced our net debt by 20%, all with only modest increases in headcount and assets. And we achieved it during one of the most volatile periods in modern history, the pandemic, the war in Europe and rising geopolitical tension. So each and every challenge has tested us and each and every challenge made us stronger.

Alongside with our strong financial performance, we grew selectively through high-quality M&A such as Mirus Bio, Unity-SC and SpringWorks. And this string of pearls approach sharpened our focus on key growth fields like bioprocessing, semiconductors and rare diseases. We also streamlined the portfolio through divestments, including consumer health, biosimilars, Surface Solutions. And in parallel, we strengthened our resilience very early, particularly in Life Science and Electronics by investing several billion euros across our global footprint under our region for region strategy.

So I believe Merck is exceptionally well positioned for the next chapter, ready to lead in the breakthrough markets that will define the next decade from novel modalities to the materials powering chips for AI. Today, preparations to hand over the reins of leadership to Kai Beckmann are very advanced, as he mentioned already. And I know that Kai and the team have everything they need to keep reaching higher.

And I want to use this opportunity to say a heartfelt thanks to our teams around the world and to our investors and to all the analysts covering us, thank you for your trust, and I hope to see many of you in my new mandate, my new job. Thank you so much, and goodbye.

Thank you. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.

Good morning, everyone, here in Darmstadt at the Merck Innovation Center and from Darmstadt into the world and a warm welcome to our annual of Merck press conference. My name is Axel Lober, I'm Head of Communications of Merck, and I'm here today with our CEO, Belen Garijo; and our CFO, Helene von Roeder, and both will walk you through our results of 2025 and of course, talk about our outlook for 2026. So as always, -- both Helene and Belen will give some insights first before we dive into our Q&A session a little bit later. And with that, already, I'd like to ask to the stage, Belen Garijo. Belen, the stage is yours.

Thank you, Axel, and good morning, everyone. Thank you for taking part in our full year press conference, whether you are here in Darmstadt or following us virtually. As Axel mentioned, Helene and I will provide an overview of our business performance for 2025 as well as an outlook for '26. After this, we look forward to your questions.

So let me start by summarizing 2025 in a few messages. First of all, we delivered on our financial guidance. Second, our diversified business and regions was a source of strength. And last but not least, we are positioned in major growth areas such as health and AI, and these will be strong platforms for future growth. Before we dive into the numbers, let me reflect on 2025. We recognize that the ongoing crisis, the geopolitical tensions and rather global challenges have become the new normal, our new reality. The recent developments in the Middle East once again demonstrates how quickly political uncertainties can escalate, this is obviously a very concerning situation. And as you can imagine, the safety of our employees and the safety of our partners in the region is a top priority for us right now. We are in close contact with our teams on the ground. And at this moment, we see no material impact, both at the employee level or in anything that relates to our logistics and distribution.

Now let us deep dive now on 2025. Our achievements are made possible by our more than 62,000 dedicated colleagues globally and our recently expanded Executive Board team. I want to take this opportunity to extend my heartfelt gratitude to the entire Merck team for their commitment, for their creativity and for their dedication. Thank you so much, everybody.

In 2025, as you know, we strengthened our Executive Board, welcoming Danny Bar-Zohar, Jean-Charles Wirth and Khadija Ben Hammada to the team. We also announced that Kai Beckmann will be my successor as the CEO of Merck. And most recently, Benjamin Hein has been appointed as Kai's successor as the CEO of Electronics.

Let me now highlight some of our business sectors in 2025. First, in Life Science, we continued to invest on both capability and capacity. In 2025, we opened our new EUR 100 million facility in Blarney in Ireland. And this site produces critical filtration technologies that are used in advanced therapies and is expected to create over 200 jobs by 2028. We are also strengthening our innovation capabilities, including in the next-generation biology. This is illustrated through the strategic acquisitions that we have announced as HUB Organoids and the JSR chromatography business in Life Science. Those are excellent examples of how we are reinforcing our portfolio leadership strategy.

Organoids provide earlier predictive insights into human biology and help researchers identify promising candidates faster and make better informed decisions when it comes to clinical development. And of course, this leads to faster clinical progress and hopefully, to improve outcomes for complex diseases like cancer as well as genetic disorders. You can see an organoid 3D dome as an exhibit here. Now in the health care sector, we are making strategic moves to strengthen our position in high-growth areas.

In July 2025, we completed the acquisition of SpringWorks in the U.S., establishing rare diseases as a new strategic growth pillar for Merck. In October, we announced an agreement with the White House to increase access to approved IVF therapies. This will strengthen our presence in this highly attractive market while providing affordable access to innovative fertility treatments on their -- and to families on their journey to parenthood. You will also see Pergoveris Pen, one of our key IVF treatments in today's exhibit.

In December, we received an approval for pimicotinib in China for treating symptomatic tenosynovial giant cell tumor, which is a rare tumor that affects joints, tendons or the bursae. This is PV's first global approval and a significant step in strengthening our leadership in rare tumors, which will stay a key growth drivers for us.

Now let's look at electronics. In 2025, we seized new opportunities for our electronic business and gain benefit from the growing artificial intelligence demand. In August, we also completed the sale of Surface Solutions, allowing Electronics to become a pure-play business in semiconductor solutions. At the end of 2025, the acquisition of Unity-SC already contributed to our organic growth for the first time since we acquired the company.

In December, we also inaugurated a EUR 500 million Semiconductor Solutions megasite in Taiwan. Therefore, Electronics is well positioned to meet the rising demand from artificial intelligence. It is important to note that Merck is involved in 99% -- yes, 99% of chips that are produced worldwide. We supply materials and chemical solutions for many of the critical steps in chip manufacturing process. In our exhibits today, you can see 3 different types of transistors that are essential for chip production. To give you an idea of a scale, the Apple M1 Max chip contains approximately 57 billion transistors, all packed into an area about the size of the chip of an index finger. The technologies and services that we offer to the semiconductor industry are one of Merck's key growth drivers.

Let me now give you an example of how Merck delivers on future technologies because as a science and technology company, we drive innovation by bringing technologies together. A great example is our partnership with imec on organ-on-a-chip technology, which combines our expertise in biology with advanced semiconductor chips to simulate human organ functions using living cells. This allows scientists to test medications safely and effectively without using animals. Making also drug development faster and even more reliable. You can see this technology once again among our exhibits today.

All these achievements demonstrate what I said at the beginning, and this is our strategy to drive growth through innovation is working. Our diversified businesses and regions is giving us significant resilience and strength. Our in-region for-region approach provides global flexibility while meeting local needs. And we are well positioned in major growth areas also for the future, and those are semiconductors, rare diseases and advanced therapies. Today, Merck stands strong with a clear focus on 3 growth drivers: Process Solutions in Life Science, rare diseases in health care and semiconductor solutions in Electronics. And this is once again a strong platform for future growth.

Now let's move on to the financial performance of 2025 that Helene will further detail. We have delivered on our guidance spot on despite a tough 2025 that was marked by significant geopolitical challenges in major markets and importantly, very strong currency headwinds. Net sales were around stable at EUR 21.1 billion. And throughout the year, strong negative foreign exchange effects weighed on net sales and EBITDA pre. These effects largely resulted from the exchange rate development of several ASEAN currencies as well as the U.S. dollar. Overall, the group EBITDA pre was EUR 6.1 billion, up by 5.6% organically.

Now let's look briefly at some of the highlights from Q4 of 2025. In Q4 2025, our group organic sales came in at a solid 2.6% growth. We delivered profitable growth, once again supported by all the 3 sectors with group EBITDA pre up 3.1% organically. In Life Science, a strong order intake momentum in Process Solutions fueled the growth in the business sector. The organic sales growth in healthcare was driven by strong growth in our CM&E franchise alongside contributions from Mavenclad and from Fertility. Both Mavenclad and Pergoveris achieved double-digit growth. Although Electronics reported a decline in organic sales due to headwinds from our DS&S business, our semiconductor material business achieved its strongest quarter of the year in Q4. It continued to benefit from strength in artificial intelligence and the advanced nodes markets. Based on this result, we will propose a stable dividend of EUR 2.2 during our general meeting -- Annual General Meeting in April 24.

And now let's take a closer look at the numbers for the full year 2025, and it's my pleasure to hand over to Helene, who will walk you through our 2025 financial performance. Helene, welcome on the stage.

Thank you very much. And a warm welcome also from my side. So if you look at our net sales in '25, they came in around stable. And our organic sales growth was really dampened by foreign exchange effects of around 4%. Foreign exchange had a significant negative effect across all sectors, mainly driven by the U.S. dollar as well as Asian currency. Our Life Science business, if you look at it, grew organically driven by sustained demand from our Process Solutions customer that drove order momentum.

Healthcare delivered solid organic performance despite market pressures. And Electronics recovered towards the end of the year, thanks to AI-driven demand in our semiconductor solutions, although full year organic sales were slightly down. EBITDA pre was EUR 6.1 billion, which actually corresponded to a margin of 28.9% of net sales. And with that, let's take a look at our business sectors, and I'm starting with Life Science. Life Science has returned to growth, delivering organic sales growth of 4%. And as mentioned earlier, this growth was driven primarily by double-digit organic growth of our Process Solutions business that saw the market normalize and move beyond the destocking phase finally this year.

EBITDA pre rose 3.9% on an organic basis but due to foreign exchange effects, EBITDA pre remained around stable at EUR 2.6 billion. Now despite the challenging environment, the EBITDA pre margin remained stable at 28.8%. What we have seen is slightly higher R&D expenses as well as ramp-up costs for recent site expansions, which reflect our increased investment in innovation. And this investment is absolutely crucial as it serves as a key driver for our future growth and differentiation in the market.

Moving on to Healthcare. Net sales in this sector climbed 3.7% organically. Foreign exchange effects, however, had a negative impact of 4.1%. Growth was primarily driven by our CM&E franchise, which grew a stellar 7% as well as strong contributions from our multiple sclerosis treatment, Mavenclad and Fertility treatment Pergoveris. And as Belen just mentioned, we announced an agreement with the White House in October to enhance access to approved IVF treatment from EMD Serono. Our complete fertility portfolio has been available since beginning of February 2026 on trumprx.gov and the new fertility instant savings website.

And of course, in the U.S., we are working towards approval of Pergoveris, a fertility medication already available in 75 countries. All in all, EBITDA pre came in at EUR 3 billion for the business, which is up more than 11% organically. Once again, foreign exchange effects partially offset the strong organic growth. And with that, let's look at the Electronics sector.

Now Electronics experienced the slight organic decline of 0.6%, which was mainly driven by our DS&S business caused by prolonged delays to large customer projects. Merck expects DS&S to stabilize in '26 and to return to growth in the medium term. But despite this temporary headwind, our semiconductor materials business remained the main growth driver for Electronics. It delivered strong high single-digit organic sales growth for the year, thanks to increased demand for high-value materials that enable AI chip systems and advanced nodes.

Advanced nodes refer to the latest semiconductor manufacturing processes, allowing for smaller feature sizes and the development of the most powerful chips. EBITDA pre was 9% lower, mainly due to onetime adjustments we reported in the second quarter of '25, as you may remember. And with that, let's take a look at our guidance for '26. Before I share the '26 guidance, note that there's 3 key assumptions underlying this guidance. First, regarding portfolio changes, our forecast reflects the SpringWorks acquisitions as well as the Surface Solutions divestment. And both of those will show portfolio effects in the first half. They will contribute to organic performance in the second half.

Second, product scope. This guidance assumes no sales in the U.S. of Mavenclad from March '26 onwards amid generic competition. What it also excludes is the positive effects from a potential U.S. launch of Pergoveris. And third, my favorite topic, currencies. We expect a more volatile foreign exchange environment again in '26. And we assume negative FX effects to continue. Of course, the main drivers are U.S. dollar developments, but we also observe various Asian and emerging market currencies extremely volatile. And with the evolution of currencies, please bear in mind that we expect for Q1 a disproportionate headwind coming from currencies relative to our full year FX guidance. Now with these 3 underlying assumptions in mind, we are expecting group net sales of between EUR 20 billion and EUR 21.1 billion, which is based on an organic sales development of minus 1% to 2%. Group EBITDA pre of between EUR 5.5 billion and EUR 6 billion.

And with that, let me walk you through the sector breakdown for '26. Starting with Life Science, our largest business, we confirm mid-single-digit organic sales growth. And that is very much in line with our projections from our Capital Markets Day, which was held in last October. We include in our assumption the continuation of the strong performance in our Process Solutions business. And across Advanced and Discovery Solutions, we anticipate gradual improvements in biotech funding and academic research stabilization in -- as well as an evolving market environment in China.

With that, moving on to Healthcare. There, a challenging year is ahead of us amid life cycle challenges for key brands, and that is in particularly Mavenclad. On the other hand, we expect growth in the remainder of the portfolio, including CM&E, Fertility and above all, the rare diseases, which will become, as already said earlier, organic in the second half of '26. For Electronics, we anticipate continued strong growth in our semiconductor materials business, while our DS&S business stabilizes going forward. And with that, I would like to hand it back for Belen for closing remarks before we take your questions.

Thank you, Helene. So let me first summarize our results and highlights on what 2025 has truly shown us. In the face of a multitude of challenges, we have delivered on our guidance. We also demonstrated our strength of our diversified strategy across businesses and regions, and we believe we are sitting a strong platform and in the right growth areas, semiconductors, artificial intelligence, rare diseases, advanced therapies, which, as I have said before, are a strong platform for growth -- for future growth. And this was not by any chance. It was the result of a strategy built to endure and to build a resilient team that consistently delivers.

As many of you mentioned to me at the beginning of the meeting, today is my last conference -- press conference with Merck. When I joined Merck in 2011, the company had just begun an unprecedented period of transformation. You may remember those days, I do. Alongside major acquisitions like Sigma-Aldrich and Versum, I took on the task of transforming our Healthcare business for a new era of patient care. When I became CEO in 2021, none of us could have imagined the volatile world we would have to navigate together.

A global pandemic, remember, I call myself a COVID CEO, the artificial intelligence revolution and the geopolitical fragmentation reshaping entire industries. Through it all, Merck just not only survived, but I believe we also thrived. We shifted from growth driven by acquisitions to disciplined capital-efficient growth. And today, our earnings are rising faster than our sales. Our leverage is failing and our -- every euro is working harder. The numbers tell the story. We invested over EUR 7 billion in more than 30 new and expanded sites worldwide. We deployed over EUR 4 billion in strategic acquisition and divestments, and we didn't just weather the storm, we emerged stronger.

I am absolutely confident that Merck will continue this successful trajectory under Kai's leadership. And why? Because Merck is very well prepared and have very solid foundation for the next growth cycle. We have proven we can execute with discipline. We bridge the physical and the digital world. We turn science into solutions that matter for patients and customers. And we know that the future belongs to those companies that can navigate complexity and deliver results. And this is exactly what our company does and will continue to do.

And I want to use this opportunity as well to say a heartfelt thank you to our teams around the world and of course, to the executive team that has been working with me in recent years. And to you, thank you for covering our story. Thank you for holding us accountable, and thank you for your trust. Overall, thank you for this journey. And with this, Helene and I are ready for your questions. Over to you, Axel.

Thank you, Belen. So we are now transitioning into our Q&A sessions. [Operator Instructions] So we have now 3 chair, I suggest we use them, so Helene, if you would like to join us on stage again for the Q&A session. And I see already -- and I knew it, one hand up from Sonja Wind from Bloomberg.

I would be curious what you think about some analyst comments who said that Merck gave a deliberately conservative guidance because of the early Mavenclad like that it's not included from March on and also Pergoveris that it's not included in the guidance. Do you agree with that assessment? Is there more upside for earning upgrades if all goes well? And my second question would be on the deal with Trump on the drugs. Can you give a bit more color on how much -- like what is the size of that financial impact on the earnings? How much does it matter because it's only a certain patient group?

The agreement -- Sonja, the agreement with the U.S. administration, you mean? What is the impact? So I will take this. Perhaps you want to start with the guidance.

I do that. So overall, I mean, what do we guide? We guide the things that we have under our control and that we can actually see and predict properly. And in both of the things, it's like both Pergoveris, we are in discussions, we are talking, but it's unclear exactly how that will shape. I'm sure Belen will say that in a second. Mavenclad, the problem is we don't know how many generics will come when and at what point in time. And as a result, this is a guidance which reflects our current knowledge at this point in time as it should really.

So for the agreement of the U.S. administration, we have signed 2 agreements, and we believe that this is a real win-win-win. It's a win first for the patients who are going to have access to IVF at affordable prices. It's a win for the administration because with our agreement, they have been able to also start this novel approach through the -- from Rx to sell directly to patients. And it's a win for the company because we were already offering our treatments through different channels. And financially, there is not a huge impact to -- under the agreement.

The second agreement is the one that is going to make us exempt of tariffs for pharmaceuticals during 3 years. So with this, you can imagine that we are extremely satisfied with the agreement, and we are actually hoping that as part of this agreement, we will also get the approval for Pergoveris in the U.S. at some point in time in 2026.

And the next question comes also here from the room from Patricia Weiss from Reuters.

Some questions around Mavenclad. The strong effect comes something of a surprise even though the patent loss was known. Why no sales at all in the U.S. instead of fewer? And how much of the EUR 1.2 billion in last year was in North America? And what is the higher burden this year ForEx or Mavenclad? And it's your main product in healthcare. So what does that mean for the division? And which successor candidates are ready to fill this gap?

So maybe I'll start with the Mavenclad question and then move -- Belen will take the successor candidates, et cetera. So yes, roughly 50% of the sales in Mavenclad were U.S. with 50% roughly in Europe. At this point in time, when we look at the U.S., we have a number of generics lining up. We -- they could be starting to sell tomorrow. And as a result, this is how we look at our guidance to basically say we don't exactly know when the sales are going to start and how it's going to impact our sales. I think when you look at the guidance, this is basically how we see the world going forward. So I don't think I need to add anything around that. And maybe, Belen, you want to do the successor products.

Well, I mentioned already the acquisition of SpringWorks has given us a new growth pillar. SpringWorks will contribute to organic growth, as Helene mentioned, as of the second half of 2026. But if you take the portfolio impact of the SpringWorks acquisition, it's already pretty nice and it's contributing 5% of portfolio growth already. So we are confident that SpringWorks will bring healthcare to the midterm guidance that we have communicated before progressively with 2026 being a year of transition in relation to the Mavenclad loss of exclusivity in the U.S.

Thank you. Patricia, does it answer all your questions? Perfect. So we don't have a question online yet. And here from the room, I see a question over there.

I'm Shan Weiyi from XInhua News Agency. And I would like to ask a question about the global investment. And due to the current rising geopolitical tensions, and you have already mentioned about the agreements with the U.S. administration, I would like to ask about whether you are considering a change in any other investments or strategic focus in different -- in any other markets like Europe or China?

Absolutely. I mean we have mentioned several times our significant investment in our region-for-region approach. And this includes all the major regions. Keep in mind that our main source of revenue already for the group is coming from Asia Pacific. And of course, this is a very important growth avenue for Merck. And we will continue to operate in this geopolitical context very much as a global company, but with a region-for-region approach.

Thank you. And we have a question from an online participant. So we have [indiscernible] from Handelsblatt.

Just a quick one. I'm a bit confused about the issue of U.S. tariffs. Did Merck pay tariffs on imports into the U.S. in 2025? And if so, will you demand a refund and take legal action to get it?

We are not thinking about refunds. So I mean, the situation of tariffs in the U.S., as you may know, has recently changed with the Supreme Court decision. But this is not changing or having an impact on the agreement that we have signed with the U.S. administration that I mentioned already. For 2025, you want to comment?

Yes, so as you know, pharma tariffs under the Annex II were exempt. So we didn't pay any tariffs in the pharma area. However, there were products in the Life Science area, which were not exempt. So we did pay tariffs in '25 and also small imports that we've seen in electronics, which were subject to tariffs. As Belen just said, I'm not sure how the refund regime will be on the back of the Supreme Court. So definitely nothing to be put in any guidance short term. And then let's see how exactly the world pans out now post the recent announcements, Supreme Court, et cetera. That one at the moment, it's pretty unclear how this will be.

But our agreement is basically out of this Supreme Court decision. So it holds.

So I'm looking into the room. Do we have further questions here from the live audience in Darmstadt. And [indiscernible].

Just to bridge the time gap. Just a personal question for you. Belen Garijo, looking back, what's the most important task that you achieved here at Merck? And what would you have liked to see unfold, but now you like the time because you're leaving?

I think I have been privileged to work with this company for 15 years. I still remember my times in healthcare, and we need to remember that, as I mentioned, when I came in 2011, we -- we're starting an unprecedented transformation and the turnaround of healthcare. In 2017, we launched 3 products to the market, Mavenclad, Bavencio and Tepmetko. If you look at how will we refocus on pharma to be able to diversify the company, I feel very proud that, that transition that I supported that transition actively from healthcare to find this globally diversified business that I fight in 2021.

I feel particularly proud of everything that we have done on culture, talent and people. And of course, the financial performance that we have delivered is stellar because if you look at the period between 2020 and 2025, our business -- revenues grew by 20%. Our earnings grew faster, and our debt has been going down. So of course, there are many other things that we could have done. But if you look at the overall picture, I feel extremely proud of what we have achieved together in the last 15 and even 5 years.

And because Belen is very humble. I mean, you're looking at a CEO who has steered the company through unprecedented volatility in a very safe way. And actually, if you look at how we're set up now for the future, especially on the back of our local-for-local strategy, immunizing us from all of these geopolitical changes, that is like a real feat. And I think we're all here at Merck super grateful for everything that Belen has done.

Thank you, Helene.

And we have a follow-up question, Sonja from Bloomberg.

Yes. My question is about the strategic review in the CDMO business. How is that progressing? And what is your plan there?

Go ahead. Is future looking -- so I mean, we have looking at -- let me say that we are looking at all the options, and we will communicate once a decision is made. But clearly, this is what we can say today. I don't know if you want to...

No, I think it's ongoing. I mean we've announced clearly that we're looking at this. Yes, you'll get news if they're ready to be announced.

And [ Tania ] [indiscernible].

Just one task, it didn't succeed. It was a deal for the Life Science business. Is this a task for your successor, Mr. Beckmann now? Or do you step away from this?

I mean you have to have -- you will hear from Kai what is the agenda. I'm confident that the focus on Life Science will stay because, I mean, Life Science is our most important business. So -- but I would really wait to hear directly from Kai because he is the one that will be in charge as of May 2026.

Thank you. Do we have further questions here in the room? Looking left and right. There's a bit of an overweight from questions from that side. If not, also online, we don't have any questions, maybe last call. We have a question from Focus Money from [indiscernible].

I have one question concerning healthcare. So the last few weeks, we have seen very conflicting messages from the FDA, to say the least, especially concerning rare diseases. So first question, how have Merck's interactions with the FDA been through the last month -- months? And second question is more broadly, what does it mean for the healthcare business if somehow goalposts are moving and there are new regulations concerning how a study has to be done or how many studies have to be done?

We are very close to the regulatory agencies, not only to the FDA and particularly to the FDA because, of course, as part of that agreement that I mentioned before, we are having discussions on the Fertility franchise and another products. Overall, I see some of the news coming from the FDA as positive, if at the end, confirm that they will be a bit more open to grant approval with less studies or with a lower -- I don't think they will lower the bar anyway for the evaluation of risk benefit of any new drug.

But in particular, just to be brief on our orphan drugs, we are confident that this is the environment in which we can expect not only support from the regulatory agencies, but also encouragement to continue to invest and investigate new solutions for patients given that orphan drugs and rare diseases are huge unmet medical needs.

Looking into the room, and we have a question from [ Ralf ] from Darmstadter Echo.

First question is the personal question to Belen Garijo. Have you been surprised becoming the next CEO of Sanofi? Then I would like to know your plans for the headquarters in Darmstadt. I think your last big investment program is over or will be over in the next time. I'm not sure what will be next in Darmstadt. And I would like to know your plans for the employees in Germany and in Darmstadt?

Look, we are highly committed to Darmstadt. We have been investing in the last decade, a significant amount of EUR 1 billion. Here, this is our hard quarter. We repeat and repeat that because this is very important to us. So we have given good signals of this and our plan for Darmstadt, you will have to further discuss for future years with my successor. I don't know if he want to comment, but is to continue to make sure that becoming a global company, we operate our company from our headquarter. As for my personal question, I always said I keep all my options open. And that's the only thing I can continue to repeat.

And maybe I take a little bit on the Darmstadt. I mean we continue to invest. You see the number of construction cranes if you walk around the site. And we're laser-focused on bringing more business into Darmstadt. And now I will do something slightly mean because we also need German politicians and German politics to finally deliver on the simplification agenda. It is very clear that we are frequently faced with the discussion around can we put things here into Germany, which we really want. Belen said, a headquarter. But then if you actually look at the delays around getting permissions at the entire red tape that we have in Germany, it is not helpful. So if you could maybe include a big plea from our side, please deliver on the simplification, that would be great.

Thank you. Looking online, we don't have a question online into the room, further follow-up questions here from the audience. Maybe one last check. See a lot of smiles, but no raised hands, also not online. So I would say this concludes our press conference this year. A big thank you to all of you joining us here in Darmstadt today.

Also a big thank you to everyone online for joining us virtually. I'm looking forward to seeing all of you during our Annual General Meeting on April 24, live and in color from Frankfurt from Jahrhunderthalle and of course, to our Q1 webcast on May 13, online as always. So please take care. See you soon and all the best. Thank you.

Thank you.

Welcome to the 44th J.P. Morgan Healthcare Conference. I'm Richard Vosser, European pharma analyst with J.P. Morgan. It's my great pleasure to host and introduce the CEO, Belén Garijo, from Merck KGaA, Darmstadt, Germany and their presentation today at the conference. Just before I hand over to Belén, just a few housekeeping remarks. [Operator Instructions] Belén, welcome to the conference.

Thank you so much. Thank you very much. Good morning, everyone. It's great being here. So very welcome to the session of Merck KGaA, Darmstadt, Germany. And it's great to start the year, as usual, sharing our 2025 results and the journey -- the growth journey ahead. So let me start by providing a helicopter view of our business as well as reinforcing confidence in our ability to create significant shareholder value with the next wave of growth becoming increasingly tangible.

And why is that? First, because we are very well positioned in highly attractive innovation-driven end markets and are addressing key secular trends with our so-called key growth pillars, namely Process Solutions, Rare Diseases & Semiconductor Solutions. Second, while our investment focus is on these 3 growth pillars that I mentioned, our strong cash generation is broad-based, and it serves as the backbone of active portfolio management.

Many of you know that we have a proud history of 358 years of existence and M&A is deeply embedded in our DNA. And we will continue to build on this strong track record of both acquisitions and divestments. Number three, our multi-industry business model and importantly, our globally diversified footprint which are clear strengths. And this paired with the increasing regionalization in which we have been investing in recent years, provides additional resilience to help us navigate more successfully in a highly changing geopolitical environment.

So for those of you who may be less familiar with our company, let me highlight a few points. First of all, we operate in 3 leading businesses: Healthcare, Life Science and Electronics. And we focus on innovation-driven businesses with the key growth pillars highlighted in the framed boxes on the slides, and those are great examples of what I mean innovation-driven businesses.

In Process Solutions, we are at the forefront of bioprocessing, driving significant advancements in speed and quality across both traditional and novel modalities. Our current growth momentum is very strong and the long-term fundamentals of this market, we have confirmed are fully intact. Second, Rare Diseases is a new strategic pillar for us. And this is backed by the acquisition of SpringWorks that you know we announced last year in 2025.

We aim at building a portfolio of innovative medicines, which are addressing significant unmet medical needs, and we are making good progress. For example, pimicotinib has been approved in China right before Christmas. And a few hours ago, we received the news that the FDA has accepted our filing for the U.S., and you may have seen the announcement that we released a few minutes ago.

In Semiconductor Solutions, we are a critical enabler of artificial intelligence with one of the strongest and most innovative portfolio of materials and services for the manufacture of leading-edge chips. Last but not least, we are a truly global business with significant local presence, operating in over [ 7 ] countries worldwide and a balanced distribution of sales across key economic regions, U.S. or North America, Europe and APAC.

Before turning to the future, let's take a quick look at what I call our strong track record. Over the past 15 years, we have delivered consistent sales growth with highly attractive margin. If we only look at even recent years, we have delivered revenue growth every single year with the exception of 2023 when, of course, we were significantly hit by the COVID cliff after the pandemic. That performance has been powered by a strategic foresight and a combination of organic growth boosted by M&A and a highly disciplined portfolio management.

As you see on the slide and the bubbles illustrate, we are extremely focused and ruthlessly allocate resources where returns are the highest. Recent pivotal moves include the acquisition of SpringWorks, which I already mentioned, as well as the divestment of Surface Solutions. We have also further increased and strengthened our portfolio through a string of pearls approach, tapping into attractive technologies such as Mirus Bio, UnitySC and the Chromatography business that we acquired late last year from GSR.

And the results speak for themselves, attractive margins across cycles, sustained by rigorous focus on profitable growth and capital discipline. So what is ahead of us? Before taking a closer look at the journey ahead, let me quickly turn to some important housekeeping items. First of all, to confirm our 2025 guidance as well as the early indication on 2026 in full consistency with the information that we provided during our Q3 call in November.

Importantly, I think we reiterate our view of gradually improving end markets in both Life Science and Electronics, and we are confident to be able to capitalize on these improving trends. We also remain confident in navigating life cycle challenges of some of our key brands in Healthcare next year, in particular, Mavenclad, where we are building for accelerating growth over the midterm with Rare Diseases as the key contributor to growth in Healthcare.

I touched on the key growth drivers or the 3 key pillars earlier. So let me add a little bit more color into this. Across our 3 sectors, we operate in attractive industries, growing at least in the mid-single digits over the medium term. Within these industries, we are tackling key secular trends, bioprocessing, orphan diseases and the strong demand for fab materials. These are long-lasting trends. With that in mind, we are strongly positioned with our 3 growth drivers, Process Solutions, Rare Diseases & Semi, all of them with a clear competitive edge.

What does this mean in terms of outlook? Well, we see a clear path. Next slide, I think. Yes, we see a clear path to mid-single-digit growth for the group, powered by our 3 main growth pillars. Together, we expect sales of the key growth drivers to grow in the low single -- in the low double digits over the medium term, contributing to over 80% of our future growth.

The remaining of our business, the so-called core business will also grow, though at a slower pace. And in this part of the business, though, resilient cash generation is a very, very important feature so that we can continue to invest both organically and inorganically. So let's go deeper into our business sector, starting with Life Science.

As we mentioned in our Capital Markets Day in October, we are introducing a new organizational design in Life Science. And this is with the goal of becoming even more customer-centric. The organization is designed around the customer buying patterns and the way they use our products. Our new model is centered around 3 go-to-market approaches. First, Process Solutions, which is about tailored solutions embedded in customer processes; Advanced Solutions, a high-touch model for specialized products and services, requiring technical sales and services; and Discovery Solutions, a high share of purchases going through our e-commerce platform.

The new go-to-market model has come live on January 1 and is giving the teams, the Life Science team, a simplified, more focused structure that accelerate execution and ultimately better serves our customers. Within the new organizational structure, Process Solutions remains unchanged, serving mainly large biopharma companies, CDMOs and biotech with end-to-end bioprocessing products. In this segment, we expect midterm market growth of 9% to 10%, driven by a strong demand of monoclonal antibodies and novel modalities like ADCs.

Our Advanced Solutions portfolio includes regulated lab products and services such as CTO, contract testing and CDMO, targeting pharma, biotech, industrial and diagnostic clients. The market backdrop is favorable with mid-single-digit growth expected over the midterm. Discovery Solutions is operating in modestly growing markets, offering a broad catalog of chemical and biological reagents for research and analytical workflows, primarily sold, as I mentioned before, through our e-commerce platform.

And collectively, these 3 businesses form a balanced, high-quality portfolio positioned to win in highly regulated markets, which are faced with high switching barriers. Overall, we aim for mid- to high-single-digit organic growth in our Life Science business over the midterm. 2026, as mentioned in our early indication, will be more around mid-single-digit as the markets continue to recover, mainly China, earlier-stage biotech funding and the U.S. academic environment.

In this context, Process Solutions will remain our main growth engine with a growth of around 10%, which is consistent with the strong momentum that we have seen over the past couple of quarters. Growth continues to be very, very healthy in traditional modalities, while novel modalities are growing even faster, driven by rapid biotech advancements and more approvals.

Turning to Advanced Solutions. We expect mid- to high-single-digit growth as we build on our leading positions in key areas like Lab Water and Bio Monitoring. Last, Discovery Solutions is expected to grow in the low-single-digit range, supported by a strong e-commerce platform and an omni-channel presence.

Moving into Healthcare. Our Rare Disease business is a new strategic pillar and has allowed us to raise our midterm growth projections for Healthcare to low to mid-single digits recently. This franchise currently includes 2 commercial products from the SpringWorks acquisition as well as pimicotinib, which I already mentioned at the beginning of the presentation, was recently approved in China and which we expect to launch in the U.S. by the end of 2026.

CM&E and Fertility will provide continued growth. It's a strong, very resilient business, extending beyond the midterm. We intend to continue modest and highly selective investments in this segment. And a great example of this approach is the expected launch of Pergoveris in the U.S. and other geographies to support the global potential. Switching to the longer term, we continue to strive for further growth acceleration with contribution from our pipeline as a key driver.

We have a couple of promising assets in late-stage development, and we intend to continuously replenish our pipeline, managing the risk profile very rigorously with about 50% of our new launches coming from external innovation. In Rare Diseases, we continue to be very open after the recent acquisition of SpringWorks to in-license or bolt-on M&A in all stages of development.

And for non-rare diseases, we will focus on assets with a strong biological validation, either in-licensing or co-development from Discovery to Phase II. So let's briefly zoom into our current Rare Disease business. Ogsiveo developed by SpringWorks is still the only approved systemic treatment for desmoid tumors, and the market -- and has been in the market for more than 2 years.

It has seen a strong uptake and is now entering the next phase of launch in the U.S. And in Europe, we are very strongly encouraged by the positive signs from recent launches in Germany, and we will roll out further across Europe in the coming quarters. We, despite competition, remain confident in the blockbuster potential of this drug in the future. Gomekli, also from SpringWorks is indicated for the treatment of neurofibromatosis and following approvals from the FDA and the EMEA last year, this product is off to a strong start with adoption both in pediatrics and adult markets supported by a highly-differentiated value proposition.

Last but not least, pimicotinib has a best-in-class potential in TGCT and will be launched in China and later in the U.S. And we aim to leverage the synergies that exist between pimi and the 2 commercial drugs of SpringWorks. Taking these 3 products together, we see combined peak sales potential in the range of EUR 2.5 billion. Let me now move briefly into Electronics to conclude. We are at the center of the most important innovation in computing power for years, which is artificial intelligence.

You all know that. And we mainly benefit through our Semiconductor Solution, which is now representing 80% of our Electronic sales. A few points to highlight. The size of chips keeps shrinking, and hence, the biggest growth is advanced nodes with new materials. Over 50% of our Semi portfolio is here versus 33% of that of the market. AI is driving an infrastructure boom. And as this spans, we expect significantly more volume. Advanced packaging in this context is the next frontier.

And basically, we have gone from no sales 3 years ago to now expecting well over EUR 100 million. We are also excited about Optronics, the smaller part of Electronics. And in short, Electronics is a great value compounder and Semiconductor Solution is one of the fastest growth pockets of the group. To bring this session to a close, let me wrap up with our midterm guidance and key priorities. So we have a clear and credible path to accelerating growth and driving margin expansion over the medium term.

The structural growth drivers across our sectors are intact, and we are focused on the right trends with our key growth pillars, which I already mentioned. This -- from these growth pillars, we expect to deliver low-double-digit growth combined. This momentum comes on top of a resilient core business, which we expect to continue to grow slightly. When you put it together, the group is committed to deliver mid-single-digit organic sales growth over the midterm.

When we look at the margins, we are targeting an increase of about 100 basis points over the level implied by our 2025 guide. As you saw earlier in the presentation, underlying margin expansion will be masked by life cycle challenges of some of our key brands in Healthcare, as we mentioned already in 2026.

However, looking through this, we will see margin expansion supported by positive mix from the key growth drivers, coupled with core discipline in the core, improving capacity utilization and efficiency gains. All in all, we are firmly committed to profitable growth over the midterm. And looking further ahead, our ambition is to accelerate even more as we approach to 2030 and before.

In summary, we have a clear set of priorities. Next slide, please. First, concentrating resources behind our growth pillars. Second, driving margin expansion and cash generation, which is going to be helped by an improving mix, ongoing cost discipline, which characterize our company and higher capacity utilization, tighter net working capital and reduced CapEx intensity that we have already announced after big investment in supply chain resilience.

Third, our investment opportunity is rich, and we retain a disciplined opportunity-driven M&A appetite and significant headroom. And last but not least, customer centricity and innovation are the flywheel. And with this, we are ready for the next wave of growth grounded in execution today and positioned to win in the markets that matter the most.

With this, thank you very much for your attention, and I will hand it back to Richard to start the Q&A.

Thanks, Belén. [Operator Instructions] And maybe I'll start. So maybe a question just on Healthcare to start with. Belén, you alluded to some of the near-term challenges around, and I think that's with relation to Mavenclad and the LOEs. Maybe you could just talk about the balance of that and how we should think about Mavenclad and then the underlying growth of the business as well?

[ Thank you, Richard. ] Danny...

Yes, thanks, thank you so much for the question. I think that this is a super valid one. When it comes to Mavenclad, we have the loss of exclusivity, I would say, earlier than we expected, started late last year. And as we say, we expect the impact of it in the U.S. this year, and we will be able to quantify it better when we guide in March.

Of note, in Europe, just to remind that in Q3 2025, the growth in Europe was along the lines of 19%, and we expect it to continue growing in Europe. The loss of regulatory data protection in Europe, we are talking about August 2027. So the trajectory in -- outside of the U.S. stays the same. Now when it comes to the bigger picture, the growth will be mainly driven by a double-digit growth, as Belén alluded to, when it comes to the Rare Tumor business.

Ogsiveo, Gomekli, we are very encouraged with what we see in terms of the launches of the drug. With Ogsiveo, we are the second phase of the launch in the U.S. and doing very well in Europe. That makes us very, very optimistic. Pimicotinib, recently approved in China, we are going to bring it to patients after we get the price in China and in the U.S., hopefully, at the end of this year upon FDA approval.

Now another element to the growth potential of Healthcare is in the Fertility business, particularly when it comes to Pergoveris. Pergoveris is the fixed-dose combination of FSH and LH. And it has been growing. The 5 years CAGR has been 20% outside of the U.S., Japan and China. When it comes to China, we submitted Pergoveris in China last year, and we expect an approval within the next couple of months. So this should give us a boost, and we are optimistic about that.

When it comes to Japan, we agreed with the Japanese authorities on a very lean development plan. It will not impact 2026, yes, but it will bring hopefully Pergoveris to Japan in 2028, 2029. The biggest ticket item is the United States. As we communicated at the end of last year, we received a Commissioner's National Priority Review Voucher to review Pergoveris fast. Pergoveris is not new to the FDA.

We had a lot of back and forth in recent years on how to bring that. And this Priority Review Voucher gives us a very nice opportunity to bring it fast. And I would call it right now as a non-negligible opportunity for us. It will depend on how the label looks like. We are -- we started the submission in January. And if everything goes right, as we assume that it will go, it's going to be launched early second half of this year, somewhere around the summer.

So we are very optimistic with that as well. With, I would say, the pushes mainly coming from Bavencio continued erosion during the Padcev and Keytruda competition, a lot of competition for Erbitux in China with the noncomparable biologics. And of course, as we said at the beginning, Mavenclad. So I hope that it gives you the picture.

And maybe one other question on Healthcare. Just Belén, you mentioned the sort of the competition and not being afraid of the competition in terms of Ogsiveo. We've seen the [ immuno ] data, which was slightly higher response rate. So maybe just you could put into context how you see that competition and...

I will invite Danny to speak, but of course, we are not fearful about competition. It's not a matter of being fearful. It's a matter of being prepared. And this is what matters the most. And Danny will share a bit more detail on how are we preparing for that?

Yes. So I'm going -- taking one step backwards, and I'm referring us back also to what I said at the Capital Markets Day, it was one of my first sentences. I think that one of the learnings that we had when it comes to previous launches and performance is that we need to have a much more sober look at the competition, yes. And this is exactly what we did when we due diligence the SpringWorks assets.

And we took into account the varegacestat, same mechanism of action. It had back then data from a handful of patients. And our assumption was -- is that -- and I said that many times, is that it will be a drug and a serious competitor. Now exactly how we're going to compete with them, it will be a little bit -- and what is the strategy in terms of data generation and messaging, it will be a little bit complex to say it right now, but we looked at their data.

Now you mentioned higher response rates and so on and so forth. So the drug clearly works because it belongs to the data of gamma secretase inhibitors. What we know from Ogsiveo, Ogsiveo is in the market for more than 2 years. We have 4 years data of increasing ORRs, of decreasing adverse events of more than -- in the real world of more than 90% refilling by prescribers and by physicians and by patients.

So we feel very confident in the profile in the real world. Now few percentages up or down. I wouldn't -- it's not my personal opinion. Actually, last week, I spent a lot of time here in Stanford and UCSF with key opinion leaders. There is no slam dunk. It is, I would say, a conglomerate of efficacy, safety, tolerability, convenience for the patients, the high touch for the patients, though we need to see the data. We haven't seen the data on the time to response.

We haven't seen the data on what matters to the patients most in these non-lethal tumors, which is pain and quality of life. We haven't seen the data on Grade 3 and 4 adverse events. So of course, the drug works, but I believe that Ogsiveo will continue delivering on that promise. And there are, to remind you, more than 20,000 patients only in the U.S. that can use this treatment. So I'm very optimistic with the potential of Ogsiveo with taking into account super seriously the competition.

Excellent. Maybe we could pivot to Life Science. We've seen a good recovery in the Process Solutions business in '25. What's the thoughts on the continuation of that and how your customer base are in terms of their inventory levels, et cetera?

Yes. Thanks, Richard. So as you said, 2025 -- during the course of 2025, we saw our Process Solutions performing quite well. So we disclosed a solid performance in Q1, Q2, Q3, more to come in Q4. What I would like to highlight is we learned from COVID time, meaning that today, we have implemented very, very robust tools, system processes to track our Process Solution performance, to monitor our customer behavior.

As an example, once a quarter now, we do a kind of mini survey with our top 20, top 30, what we call global strategic accounts to have a feeling of what they perceive within the market and how they don't want to manage their own business, including our inventory. So we said that for Process Solutions, we are marching towards an organic growth midterm around 10%. And today, I would like to confirm that this is what we are aiming at in the near future.

Excellent. And there's been outside of Process Solutions, some pressure on the other parts of the business funding requirements in the U.S., funding in R&D, et cetera. I mean there's been -- even the courts have got involved. So what's the latest picture there for Discovery Solutions?

Yes. I mean -- so overall, I would like to highlight the fact that when you look at our Life Science markets, mid- to long term, our fundamental remain very strong. The megatrends are confirmed, i.e., aging population, access to health, robust drug pipeline, especially in biologics. So we feel good on the midterm guidance.

On short term, I believe we would like to echo what you said. We are facing some headwinds. I would like to highlight 3. China remains muted, which has an impact on our Discovery and Advanced Solutions business unit, and biotech funding are still a question mark. We believe we reached the bottom, but we don't see yet a recovery.

And the third element I would like to highlight is the academic market, especially in U.S., where most of our customers, I will say, are extremely cautious from a behavior point of view because of the unknown. So I would say on short term, we are quite positive on Process Solutions markets. We are more cautious on the Lab business.

Makes sense. And Belén, you highlighted the new business structure for the Life Science business. What does that bring? Are any tangible elements that's brought to the business performance of being more customer-centric?

Yes, I can take it. So first of all, we announced the new organizational design in October. We went live on January 1. You should assume that's the decision to adjust our go-to-market model was mainly driven by our customer. From last year, actually, we started to pressure test our current model here at JPM a year ago. Overall, so from January to March, we spent a lot of time with customers and the feedback was always the same.

We need to simplify the way we interact with them. And today, the feedback is extremely positive. I would like to give you some concrete example. Number one is with our -- what we call our global strategic accounts, which are extremely important for our Process Solutions business. In the past, our global strategic account in Process Solutions were only selling the portfolio of Process Solutions. We gave the guidance, and we trained the organization not only to sell the Process Solution portfolio, but to expand to Advanced Solutions and to Discovery Solution.

The feedback is absolutely outstanding. Our customers are extremely positive about the way that now they have only one interaction, one face, and they can interact on a day-to-day basis with this person. Same is true for our e-commerce platform. In our key strategy, we said that we have 3 pillars: Portfolio Leadership, Customer Centricity and Operational Excellence. Under Operational Excellence, we want to improve our service level.

And there is one metric that we are measuring under e-commerce called ETS, Estimated Time to Ship. And I would say over the last few weeks and months, we have been good strike. And guess what, the feedback from our customer is extremely positive as well. So overall, I feel good with the model, and it's about execution. So quite positive.

I think Jean-Charles has been a bit modest on defining the way this new design is securing customer intimacy and much higher accountability in front of the customers, a simplification that was absolutely key in the Life Science business post-COVID. And definitely, we are confident that the value that the customers are drawing from this organization will ultimately reflect and help performance.

And Belén, in your slides, you highlighted many business development opportunities and M&A that have transformed Merck over the last, I don't know, 20 years. Where are we in terms of thinking about the use of M&A now? SpringWorks is transforming Healthcare, where do you go next?

Look, I mean, first of all, let me emphasize that we have been already extremely active in M&A in recent years. For us, M&A is not only acquisitions, but it's also focusing on the right businesses that are going and disposing or putting our businesses in the hands of other companies through divestments. And this is equally important.

What is very clear is that in the current environment and also when we look at our portfolio, we don't feel the need of looking for a scale, but you have heard me many times saying that what we need is in Life Science, for example, which is our top priority, a very solid innovation model, which is going to contribute to accelerating growth of the future.

In Healthcare, clearly, we have been very short of external innovation. And therefore, we haven't invested enough in recent years in external innovation. And if you compare any company of our size, right, a mid-cap pharma company, between 50% and 70% of the new launches will come from external innovation. So the focus on external innovation is driving our strategy for Healthcare. And definitely, in Electronics, we are very well positioned, as I mentioned.

But we are also interested in tapping into this advanced packaging as we have done with UnitySC, which we consider to be a very promising opportunity for the future. So in reality, sitting on a solid organic performance, we will continue with the activities that we have initiated and actually look for the way we do it, right time, right target, right price. And it's likely that looking at these innovation-driven businesses, we will stay on a string of pearls approach.

Makes perfect sense. I think we've run out of time. Thank you very much, Belén. Thank you very much...

Thank you.

Thank you, everybody.

Dear ladies and gentlemen, welcome to the Merck Investor and Analyst Conference Call on Third Quarter 2025. [Operator Instructions]

Please note that at our customers' request, this conference will be recorded. I'm now handing over to Florian Schraeder, Head of Investor Relations, who will lead you through this conference. Please go ahead, sir.

Thank you so much, Smart Sarah, and a sincere welcome to everyone joining the Merck Q3 '25 Results Call. I'm Florian Schraeder, the Head of Investor Relations at Merck. I'm delighted to be here today with Belén Garijo, our Group CEO; and Helene von Roeder, our Group CFO. During the Q&A part of this call, we will also be joined by Kai Beckmann, CEO of Electronics and Deputy Chair of the Executive Board; Jean Charles Wirth, CEO of Life Science; and Danny Bar-Zohar, CEO of Healthcare.

In the first few minutes, we will walk you through the key slides of our presentation. After that, we will be happy to take your questions.

Now I will turn it over to Belen to get started.

Thank you, Florian. Good afternoon, and welcome, everybody, to our Q3 earnings call. I am now on Slide #5, starting with the highlights of this quarter. So as you have seen during the morning in Q3, we delivered solid organic growth across all 3 sectors.

Organically, the group revenues increased by 5.2% and EBITDA pre went up by 8.8%. Life Science delivered the strongest organic sales growth at 6%, followed by our Healthcare and Electronics businesses, which both delivered solid organic growth of 5%. One key highlight of the quarter is the continuation of the strong performance of our Process Solutions business, which showed organic growth above 10% for the third consecutive quarter despite rising comparables.

We saw a very strong order growth year-over-year and a book-to-bill ratio that is still comfortably above 1. In Science & Lab Solutions, we returned to organic growth, and that despite continued near-term headwinds. In Healthcare, organic growth was largely driven by the CM&E franchise, up 7% and solid N&I performance of 6%, driven by Mavenclad which reached double-digit growth in this quarter.

Oncology showed moderate organic growth despite heavy competitive headwinds for Bavencio and rising competition for Erbitux in China from noncomparable biologics. Following the closing of the SpringWorks acquisition on July 1, this is the first quarter in which we are consolidating our rare disease franchise, which has contributed 4% portfolio growth for Healthcare and has performed well in line with our expectations.

Moving into Electronics, we saw organic growth of 5%, driven by our semi-material business, and in this context, please note that Q3 includes 1 final month of Surface Solutions since we have now successfully divested as of July 31. Regarding full year 2025, we are now confirming and narrowing our absolute guidance ranges for net sales, EBITDA pre and EPS pre. We are maintaining the midpoints for net sales and EBITDA pre, while slightly increasing the midpoint for EPS pre.

So turning to Slide 6 for an overview of our performance by business sector. Once again, organic sales growth in the third quarter was plus 5.2% and Life Science was the largest contributor with organic sales growth of almost 6%, driven once again by the stellar performance of Process Solutions. Healthcare grew 4.6% organically, driven by strong growth of our CM&E franchise alongside contribution from Mavenclad and Fertility, which has returned to growth, supported by Pergoveris.

Electronics also showed the solid organic sales growth with Semi Materials up high single digits, while DS&S was down in the low teens range as was expected. Regarding our earnings, EBITDA pre amounted to EUR 1.69 billion, up plus 8.8% organically versus the same quarter of last year. The currencies had a negative effect across all sectors, while the portfolio effect was slightly positive driven by the contribution of SpringWorks.

As flagged in our Q2 earnings call, EBITDA pre in Q3 was supported by the sale of a priority review voucher resulting in a gain of plus EUR 60 million in health care and legislative changes in South America, adding another EUR 59 million of income in [ CO ]. Our underlying EBITDA pre margin, excluding these 2 effects, was stable at around 29%, fully aligned with our expectation for the full year.

And with this, let me hand it over to Helene for a more detailed review of our financials.

Thank you very much, Belen, and also a warm welcome from my side. And with that, I'm now on Slide 8, and we'll start with an overview of our key figures in the third quarter.

Net sales increased by 1% to EUR 5.318 billion. Organic growth of EUR 273 million and a portfolio effect of EUR 34 million were largely offset by FX headwinds of minus EUR 256 million. EBITDA pre was up by 3.1% to EUR 1.669 billion with a margin of 31.4%, and that is up 70 basis points year-on-year. The group margin benefited from the sale of a priority review voucher and legislative changes in Latin America, which together contributed EUR 119 million supporting the margin by 220 basis points.

EPS pre increased slightly by 0.9% to EUR 2.32 per share. The gains resulting from the aforementioned priority review voucher and legislative changes have supported EPS pre growth and overcompensate the higher interest related to the SpringWorks acquisition.

Our operating cash flow increased moderately by 4.1% to EUR 1.518 billion. Net financial debt rose 29.8% to EUR 9.228 billion (sic) [ minus EUR 9.228 billion ], primarily reflecting financing for the SpringWorks acquisition via a U.S. dollar bond issuance. Our return to the U.S. dollar bond market after 10 years was highly successful and further diversified our fixed income investor base. We were over 4x oversubscribed and that enabled us around 25 basis points of pricing tension underlining the strong confidence from fixed income investors.

Let me also briefly comment on our reported results. And with that, I'm now on Slide 9. EBIT was up by 11.3% year-on-year. The financial results declined significantly from minus EUR 54 million to minus EUR 99 million, and that is primarily due to higher interest costs from the U.S. dollar bond related to the SpringWorks acquisition. The year-to-date effective tax rate was 21.2%, and that is within our guidance range and reflects normal quarterly fluctuations throughout the year.

Turning to EPS. Reported EPS was EUR 2.07, which is up 11.3% year-on-year and is on par with our EBIT growth. With that, let's move to the business sector review, and I'm beginning with Life Science on Slide 10.

Life Science grew organically by plus 5.9% in Q3. Growth accelerated versus prior quarters with Process Solutions maintaining its momentum and Science & Lab Solutions returning to growth. As projected, Process Solutions continued its strong momentum with organic sales up by 10.3%. That is the third consecutive quarter of low teens growth despite increasing comps. Order intake remained strong in Q3 and the book-to-bill ratio stayed comfortably above 1.

To further strengthen our Process Solutions downstream offering, we announced on October 15, the acquisition of JSR's Chromatography business. This adds advanced protein A chromatography capabilities, enhancing our ability to offer more efficient, scalable protein purification solutions that support accelerated biopharmaceutical production.

Turning to Science & Lab Solutions. Sales grew by 2.5% organically despite continued headwinds from U.S. policy changes weighing on academic and government lab spending and still challenging market conditions in China. While the U.S. government shutdown had no impact in Q3, we do expect some effects to materialize in Q4. Life Science Services reported organic sales growth of 5.2% against the low comp, driven by our CDMO business, and that is notably bioconjugation for ADCs.

As noted at our recent Capital Markets Day, Life Science intends to gradually increase R&D investment towards roughly 5% of sales over the midterm. And the R&D increase in Q3 is absolutely in line with this goal. EBITDA pre increased by 6.1% organically, with the margin up by 20 basis points year-over-year, reflecting operational leverage.

I'm now on Slide 11 with an overview of the Healthcare business sector's performance. Healthcare delivered solid organic sales growth of 4.6% in Q3, about 1% of the growth resulted from a pull-in from Q4. For the first time this year, we consolidated our rare disease franchise contributing a plus 4 percentage point portfolio effect well in line with expectations. CM&E was once again the largest contributor of Healthcare's organic growth, delivering 7% organic growth with all therapeutic areas contributing.

Fertility sales were up 2% organically, mainly driven by very strong growth of Pergoveris, up 37%. Meanwhile, we announced on October 15, a voluntary agreement with the U.S. government to accelerate the U.S. review time lines for Pergoveris and access to our IVF therapies via trumprx.gov.

Our oncology franchise delivered 3% organic sales growth as Erbitux sales rose by 10.3%. Erbitux' performance was driven by strong growth in Latin America and Europe, more than offsetting tougher competition for noncomparable biologics in China where sales declined in the low teens. Our N&I business grew by 5.6% organically in Q3. Mavenclad delivered stellar organic growth of 20.4% supported by continued strong commercial execution. I want to briefly comment on the recent decision by the Court of Appeals for the Federal Circuit, which has affirmed the conclusion by the U.S. Patent Office that our 2 Mavenclad dosing regimen patents are invalid. We are disappointed by the ruling and intend to file a petition for rehearing or rehearing en banc. Belen will comment on implications later.

Regarding our pipeline, longer-term results from Part 2 of the Phase III pimicotinib study were presented at ESMO, showing increasing ORR over time and ongoing improvements in key secondary endpoints. We intend to launch pimicotinib in 2026 in TGCT. On R&D spend, as mentioned in our Q2 earnings call and the Capital Markets Day, we are increasing our R&D ratio in H2. The key drivers are project ramp-up costs and a small effect from the SpringWorks acquisition.

Our Q3 ratio of 20.9% is in line with our midterm ambition of around 20%. Overall, EBITDA pre amounted to EUR 818 million in Q3, which represents a margin of 37%. Please keep in mind that this includes the EUR 60 million gain from a sale of a priority review voucher and only a modest dilution from SpringWorks. Furthermore, please note that the margin in Healthcare tends to be lower in Q4 due to seasonality.

Let us move to electronics on Slide 12. Organically, sales increased by 4.8% in Q3. Semiconductor Solutions sales were up in the high single-digit percentages organically overcompensating lower DS&S sales. In Semi Materials, AI and advanced nodes continue to drive growth. In addition, we see demand from mature nodes in Asia, where we have been able to gain market share with new qualifications. On business, the quarter was in line with our expectations. As we communicated in Q2, we expect a very muted year 2025. Considering the usual back-end loaded seasonality of DS&S, we're calling out Q4 '25 as the bottom. We're more constructive on the outlook for 3D NAND driven by [ eSSDs ]. This is consistent with the view Kai and his team shared at the Capital Market Day '25.

Our Optronics business achieved moderate organic growth of 2.9%. Resilience in our offerings for liquid crystal and OLED drove organic growth complemented by a strong portfolio contribution from UnitySC. The EBITDA pre margin went up by 150 basis points year-on-year to 27%, mainly driven by the accretion from the divestment of Surface Solutions. We see gradual improvement of Electronics margins from here onwards.

Before handing back to Belen, let me also briefly comment on our balance sheet and cash flow statement. Now as you can see on Slide 13, our balance sheet decreased by EUR 700 million compared with the end of December '24. Taking a closer look on the asset side. Cash and cash equivalents increased quarter-over-quarter, reflecting the U.S. dollar bond issuance and receipt of proceeds from the divestment of Surface Solutions. Inventories were stable, while receivables rose by EUR 300 million, following a quarter of strong focus on cash collection efforts.

Intangible assets increased slightly by EUR 100 million due to goodwill created by the SpringWorks acquisition, partially offset by negative FX. Property, plant and equipment decreased slightly by EUR 200 million, which is mainly due to FX translational differences. And lastly, other assets were down by EUR 700 million, mainly due to the divestment of Surface Solutions and revaluation effects.

On the liability side, financial debt increased by EUR 1.8 billion with the issuance of the U.S. dollar bonds. Pension provisions were slightly down, driven by actuarial gains. Payables decreased by EUR 100 million as we saw declines in current payables across all 3 sectors. And net equity decreased by EUR 1 billion as the increase in retained earnings was more than offset by FX differences, primarily reflecting a weakening U.S. dollar. In summary, our equity ratio declined from 58% at the end of December '24 to 57% at the end of Q3.

Turning to cash flow on Slide 14. Operating cash flow increased to EUR 1.518 billion in Q3 '25, up from EUR 1.456 billion (sic) [ EUR 1.458 billion ] in Q3 of last year. Profit after tax rose driven primarily by the gain of the sale of a priority review voucher and changes in local legislation in Latin America. The EUR 166 million year-over-year delta in other assets and liabilities reflect variable compensation and tax adjustment. Other operating activities decreased by EUR 181 million year-over-year in Q3 '25, largely due to the neutralization of gains from the PRV voucher and the Surface Solutions divestment.

Net cash used in investing activity reflects the SpringWorks acquisitions and the Surface Solutions divestment. CapEx on PPE was EUR 63 million lower, in line with the updated full year guidance of EUR 1.5 billion to EUR 1.7 billion, down from previously EUR 1.6 billion to EUR 1.8 billion. The change in financing cash flow is explained by the proceeds from the U.S. dollar bond issuance.

Lastly, consistent with my comments at the Capital Markets Day, within CDMO, we are actively reviewing our mRNA and viral vector activities with potential financial implications in the next quarters.

And with that, let me hand back to Belen for the outlook.

Thank you very much, Helene. Let's now move into taking a closer look at our full year guidance on Slide 16 before we open for Q&A. As you may have seen in the press release, we have sharpened our group sales guidance to a range of EUR 20.8 million to EUR 21.4 billion with an unchanged midpoint at EUR 21.1 billion.

FX remains a strong headwind and has been refined to minus 5% to minus 3% from the earlier minus 5% to minus 2%. Our organic net sales growth guidance is now set at around 3%, staying within the previously communicated range. Turning to EBITDA pre, we have also kept the midpoint at EUR 6.1 billion and narrowed the absolute range to between EUR 6 billion and EUR 6.2 billion.

Organic sales growth has been narrowed from previously plus 4% to plus 8% to now plus 5% to plus 7%. For EBITDA pre, we anticipate an FX between minus 6% and minus 4%, adjusted from the previous minus 6% to minus 3% and we have raised the midpoint of our EPS pre guidance by EUR 0.05, now guiding a range of EUR 8.20 to EUR 8.60.

For some additional color, let's take a look at Slide 17. Consistent with our group-wide approach, we are narrowing our organic sales growth guidance to plus 4% to plus 5%, while reaffirming the midpoint at 4.5% for the full year. We're also maintaining the midpoint at 5% for EBITDA pre and narrowed the guidance to a corridor of plus 4% to plus 6%. In Healthcare, we anticipate organic sales growth of around 3% at the lower end of our previously communicated guidance range of plus 3% to plus 5%. This reflects the underlying year-to-date trends and some uncertainty for Q4 related to the recent Mavenclad news Helene referred to earlier. For organic EBITDA pre, the guidance has been updated to plus 9% to plus 11%, consistent with the adjustment to sales and within the corridor communicated in August.

As portfolio effect, we now expect the SpringWorks to contribute EUR 180 million in sales, up from EUR 170 million previously guided and EBITDA pre of between 0 and minus EUR 20 million, which is significantly better than the prior minus EUR 70 million to minus EUR 90 million communicated before. For Electronics, we forecast organic sales development between minus 3% to minus 1%, tightened from the prior range of minus 5% to minus 1%. Organic EBITDA pre for electronics is now expected to be between minus 11% to minus 7%, compared to the earlier guidance of minus 15% to minus 7%.

Now turning to 2026 in which, I am sure, you are expecting a bit more transparency. We recently provided you at our Capital Markets Day with an early indication of group sales and margin for 2026. You may now be wondering about the potential impact of the recent Mavenclad news regarding the upcoming loss of exclusivity in the U.S. To no surprise, this will impact the 2026 sales and earnings projections for Healthcare. To what extent it's going to be influenced by the phasing of U.S. generic launches and our ability to drive volume also outside of the U.S. and Danny can provide further information later during Q&A.

Hence, we will closely monitor the developments in these respects means U.S. generic launches, an update due in Q4 with the full year guidance. In any case, you should assume for your modeling that Healthcare margins should remain north of 30%. Coming to the group, first of all, we see our early 2026 indication for the group during the Capital Markets Day for sales within the range we provided, trending to the lower end. When it comes to group margins, you can ensure that we stay laser focused to mitigate the potential impact of the Mavenclad erosion in the U.S. While acknowledging state cost mitigation measures, you could assume for 2026 a margin of around 28%. As mentioned, more to come at Q4 earnings when we will provide a full year guidance to all of you.

And with that, Florian, over to you to lead us through the Q&A session for today.

Thank you, Belen and Helene, for leading us through the slides. Actually, there's one small amendment to what we have set and is on group level, the organic EBITDA growth, which has been narrowed from previously quarter 8 to now 5% to 7%, not the organic sales growth.

With that, Sarah, I'm very happy to hand over to you to manage the Q&A part of the call.

[Operator Instructions] Your first question today is from Matthew Weston from UBS.

Two questions, if I can, please, both on pharma and on the guidance for 2025. Belen, you called out the SpringWorks change in guidance where we've seen a very sharp turnaround in profitability of what you expect from inorganic this year. I'd love to understand what's changed in your assessment of SpringWorks? Have you reduced costs? Have you had more revenue leverage? Because it looks like a very dramatic change in assumption.

And then the second question is around the offset to that within guidance, which is a downgrade to the organic Healthcare growth. I'd love to understand if that's also associated with an assumption of Mavenclad U.S. generics entering on the 22nd of November, as you previously flagged in the release around the patent board decision? Or is it another part of the business which is performing less well?

Thank you, Matthew. Let me invite Danny to address the 2 questions for Healthcare.

Thanks, Belen. Hello Matthew, thank you for the questions. So I'll address first the SpringWorks question around the margins for Q3. So it is rather technical. We have taken a conservative approach when we provided the first guidance. As you remember, the first guidance was provided several weeks only after closing. So we took a rather conservative approach for that in terms of cost.

Now moving forward, as you could see, we have upgraded the guidance on the portfolio from EUR 170 million to EUR 180 million. So there is a gain there. And so we do expect sequential sales growth in Q4 for the SpringWorks Therapeutics compounds. We do expect an EBITDA pre loss in Q4, which will be a bit above Q3 due to the phasing of investments. But overall, you're absolutely right, most of the assumptions were conservative when it comes to the cost of SpringWorks marketing and sales and a little bit on R&D.

When it comes to the EBITDA pre at the group level -- sorry, at the Healthcare level. So what did we communicate? We communicated an update to the top line of around 3% growth, instead of of the 3% to 5%. What are the drivers for that? First and foremost, as Belen said, when we look at the 9 months year-to-date, we see the trends on Erbitux. We see the trends on Gonal-f on Bavencio. Only this would bring us to the, I would say, the lower half of the previous guidance. Add to that, that in Q3 for Healthcare, the 4.6% growth is approximately 1% overstated. There is a pull-in from Q4. That's the second component. And then goes to the last one, which is the uncertainty regarding the effect of Mavenclad in Q4, and I'm sure that we will get questions around that later.

So the guidance for the EBITDA for Healthcare, we upgraded it slightly and what it reflects are actually the downside on the updated sales, the 3% -- around 3% instead of 3.5%, the updated headwinds on FX. And on the upside, the pull-up of the portfolio effect when it comes to the SpringWorks. I hope that it gives you the bigger picture.

Danny, perfect. If I could add one very quick follow-up. Can you tell us where the 1 percentage point to pull-in from 4Q was in terms of the product breakdown? Which drug should we look at?

Yes. Thank you. That's a good one. In terms of regions, it was mainly in Middle East, Africa due to the tensions in the Middle East or the fluctuating tensions in the Middle East they -- there was a tendency to play safe and to stock a little bit ahead of time. So we are talking about mainly the CM&E and a little bit of Erbitux.

The next question is from Richard Vosser, JPMorgan.

One follow-up just on Mavenclad. Danny, I think Belen was saying, you would give some more color maybe about Mavenclad and the assumptions for '26 in terms of the growth, the generics coming in, et cetera, into the U.S. and growth ex U.S. Maybe you could give us some of that color, that would be great.

And then secondly, on Electronics. it seems that Surface Solutions, as I think we all know, was a lower-margin business. So that should enhance the margins going forward. But also there's been the widening of growth, a little bit elements beyond maybe in Semi Materials outside of just traditional AI. So perhaps you could talk about the implications for growth -- for the gross margin of that and the margins going forward in the Electronics business.

Okay. Richard, thank you for the Mavenclad question, and I think that, yes, it is appropriate to provide more color. So let's step one step -- let's take one step backwards. This quarter, sales of EUR 304 million, exceptional growth of 20%, and this 20% growth is driven pretty much equally between North America and Europe. Very strong commercial execution. Now when it comes to what's next, how should we think about it?

First of all, Europe, which is approximately 1/3 of the revenue should continue growing in 2026. So this one is clear. When it comes to the U.S., we are definitely not in a position to speculate here. Technically, there is one single company with a tentative FDA approval for a generic version of Mavenclad and the earliest possible conversion of it to a full approval is the 22nd of November. Now the FDA guidance states that it generally assesses a request for a conversion from tentative approval to a final approval within 3 months.

So we don't have the full clarity on where it is going to land. So the -- when it comes to 2026, so this is a little bit of premature. Why? Because the time of entry of a generic is still unknown. We can think about something about early 2026, and we don't know about other generics. There is no other generic that has an FDA tentative approval, but we know about other generics. It's in the public domain.

We have a petition prepared for filing and also generics are generics and the game and the price play is not always expected. So obviously, what we told you at the Capital Markets Day when it comes to the top line, as Belen said, will need to be adapted and when it comes to the [ staged ] cost mitigation that Belen mentioned, so this is a U.S. play only, and it will depend a lot on the timing and on the phasing of who comes after the first generic. When the first generic is there, we can continue playing, and we should continue investing moderately. What's good in the U.S. is that once we see the dynamics, we can act very rapidly, so we will modulate the cost appropriately.

Just one sentence to add. With this, repeating what Belen said, all of this negative impact on the top line that we expect for Healthcare in 2025. The costs will be managed and the margins will be managed to be north of 30%.

Second attempt. Richard, I'm taking the Semi question on the margin. Let me provide a bit more color on this one. So we made steady progress on the EBITDA margin in Q3 with 27% now and we've put the exceptional items that you have seen in Q2 '25 behind us. Still we aren't where we want to be in Electronics. The margins should be higher, but the biggest missing piece is the acceleration in volumes and our midterm target to the mid- to high-single-digit organic sales growth. So in Q3, we see support from the first 2 months where Surface is deconsolidated.

On an annualized basis, we expect 100 basis points of margin accretion from the Surface Solutions divestment. We also see the continued benefit of operational leverage in Semi Materials and positive mix for materials for applications that serve AI and advanced nodes. And we did get some support from the release of some provisions in Q3 '25 as well. And it's worth remembering that biggest driver of lower margins are the investments we make in capacity for our local-for-local strategy, investments like the new Taiwan site are helping us to mitigate tariff operationally as well as gaining share via new qualifications. What we anticipate is exiting the year with margins in the high 20s with the guidance implying 26% to 27% EBITDA pre margin. So clearly, we have still work to do, but it's a clear sign of focus, Richard.

We'll now take the next question. And this is from Shyam Kotadia from Goldman Sachs.

I have one on the SpringWorks assets. So on a quarter-over-quarter basis, it appears Ogsiveo sales were broadly flat. So given your portfolio effect guide for Healthcare assumes EUR 180 million and you achieved EUR 85 million in 3Q, it implies EUR 95 million of sales for 4Q. I imagine the majority of this EUR 10 million uplift in 4Q may come from Gomekli, given its earlier in the launch and the recent growth momentum.

So this would again imply Ogsiveo being relatively flat in 4Q. So I just wanted to, therefore, check what's driving this flat quarter-on-quarter revenue assumption for Ogsiveo? And are you anticipating a growth uplift there? That's the first question.

And then Second question on SLS. So there was some positive phasing dynamics I saw in the release in the chemistry subdivision. So how much of that supported the low single-digit organic growth this quarter? And given it was a phasing impact, how should we think about 4Q for SLS? And also if you could quantify the potential impact from the government shutdown, that would be great.

So regarding Ogsiveo, I'll give a little bit more color. So in the third quarter, sales came in at EUR 62 million, which is 38% up year-over-year, which is practically the strongest quarter since launch and the drug was launched exactly 2 years ago. So it's not a very fresh launch. We continue to see robust underlying demand with new patient adds and refills and also low discontinuations. Ogsiveo is the standard of care holding more than 70% share of first-line systemic new patient starts. So this is very significant for us.

Why are we confident with Ogsiveo? We saw a drop in surgery rate from 70% prior to launch to 50% already 18 months after the launch in the U.S. We see a very high level of satisfaction amongst both patients and prescribers, 90% prescribers have the intent to prescribe again. The drug is in the NCCN guidelines, high level of refills above 90%, real-world data that suggests a very positive feedback from both physicians and patients. Long-term efficacy and safety data we published a couple of weeks ago, that indicates clear increase in response rates over time, sustained improvement in quality of life and a very consistent safety profile.

So we are definitely, definitely excited about that. What we need to do is to continue to drive leadership as first-line systemic treatment of choice, continue to grow the systemic treatment market for desmoid tumors through physician and patient education. And then when it comes to the flattening that you suggested, we are changing practice here. And this is the first in disease in this indication, in this severe indication. And in some cases, you need to, I would say, do a lot of education in terms of mobilizing patients.

As I indicated on the Capital Markets Day with Ogsiveo, we are moving now. And I guess that SpringWorks has moved into this phase just between signature and closing to the second phase of the launch. This is the phase where the bolus of patients waiting at the center of excellence for the first drug ever are already treated. And now the task on us is to mobilize those patients under, what we call, active surveillance into therapy and increase the number of new patients, increase the funnel.

So I'm referring back to two other things that I said when we announced the deal. One, expect volatility. Second, we'll need to deepen penetration in the U.S. The potential of more than 20,000 diagnosed patients in the U.S. only is huge, and the vast majority are sort of stuck with symptoms, but no decision how to treat these, and these are the patients that we need to get.

So we have this -- and this is exactly what I meant when I said at the closing depending on our efforts in the U.S. Now specifically, when it comes to Q3, chronic disease, we do see summer seasonality. And if one splits that 2 months, you clearly see the seasonality there. When it comes to Q4, you saw that overall, we topped the SpringWorks guidance a bit. It's for both compounds. We will not provide additional split. But I would not expect the dynamics also that you might have observed between Q3 and Q4 last year, which was, as communicated by SpringWorks, a result of increased stocking in anticipation for a price increase.

So we will consciously control this. We will continue to see broadly consecutive growth, and we are super excited with the recent launch in Germany. We launched 3.5, 4 weeks ago, and I spoke with a commercial lead there. And I'm very, very content about the progress of both Ogsiveo and Gomekli.

You're absolutely right about Gomekli, fantastic launch as it looks right now in the U.S., EUR 23 million, 73% growth quarter-over-quarter. Both adult and pediatric population, we feel very confident with this product.

And Shyam, let me comment on SLS overall. So first of all, talking about Q3. Yes, we returned to positive organic growth in Q3 despite changing environment. When you peel the onion, biomonitoring from a portfolio point of view was a strong driver. Same is true for Chemistry and Lab Water as well. From a region point of view, Europe was the key driver.

Now I would like to share also the fact that a few months ago, we launched an initiative around customer focus. What I mean and what we mean by customer focus. We have concentrated on enhancing our supply chain in SLS, particularly regarding inventory management and fill rates in order to improve the customer experience. And yes, we saw a nice and important benefit on chemistry, but this is a onetime effect.

Moving forward, we are seeing some kind of sequential stabilization in academia, government and hospital, but the market remains volatile. And I will give you 2 concrete examples. One is China, where we continue to see China as a muted market linked to geopolitical situation, local competition and so forth. And the second key driver I would like to highlight looking forward or going forward is the U.S. government shutdown that caused some kind of uncertainty within the market, especially for academic government hospital customer segments. And we saw, let's say, a slowdown of our order intake per week in U.S. over the last few weeks. Good news is the shutdown should be now behind us, but it's true that it has impacted the first weeks of Q4.

The next question is from Charles Pitman-King, Barclays.

Just a first question please on the kind of thinking about the Fertility business. Just thinking about the kind of [indiscernible] performance in the quarter versus consensus a little bit weaker, but also just thinking a little bit more broadly next year, now that you've signed your MFN agreement with the U.S. administration to improve access to your Fertility business, what sort of dilution should we really be expecting to be reflected in FY '26? Or do you expect that to be offset by volume rises due to the improved access? And just wondering if you can confirm this is expected to eliminate the rest of your portfolio tariff risk as a result of the agreement, just given that happened about a couple of hours after the end of your CMD?

And then just a second question. I'm not sure I have missed it earlier, apologize I had to join late. But can you just talk a little bit more -- can you just confirm what the driver of the lower dilution seen from the SpringWorks acquisition was for the third quarter and why you're now only expecting EUR 10 million for the year? Is it just the better-than-expected sales seen for Ogsiveo and Gomekli you were just referencing?

Yes. Thanks. I'll take that. I'll start from the second one because it has the potential to be shorter. So the driver -- the key driver of the lower dilution of SpringWorks in Q3, we moved it from a midpoint of minus 70 to a midpoint of minus 10 is mainly a very conservative approach that we took just a few weeks after we closed the deal in terms of commercial and R&D spend. So we are releasing a little bit of this conservative approach when it comes to spend, some of it will phase to Q4, but overall that's the key reason for this lower dilution. I hope that it helps.

So when it comes to Fertility, the third quarter was at EUR 360 million as a franchise, 2% up organically. And we pretty much anticipated that. It's the first quarter this year that returns to growth. The previous 2 ones were flattish to minus low single digit. By region, yes, a double-digit decline in North America due to mainly almost exclusively Gonal-f price erosion as we flagged in the last couple of quarters. And this decline in North America was more than offset by growth across all other regions. First, Europe, then Asia Pacific, Middle East, Latin America.

When it comes to the brands, high single-digit decline in Gonal-f and this is driven, as we said, in North America by negative price effects and in the U.S. and in China as it has been the situation in the last 2 quarters. I would call them still temporary market softness in China in a rather competitive environment with local biologics and local hMGs. But these were largely offset by double-digit growth, 36%, 37 almost percent growth of Pergoveris across all regions, and it's a very differentiated profile that this drug offers and all other fertility products grew moderately. So this is what we have in terms of the status quo.

Now for 2026, we are anticipating low single-digit growth as near-term headwinds, Gonal-f price erosion and also a little bit of the muted market growth in China will be more than offset by the continued strong growth of Pergoveris. We expect the launch of Pergoveris in China in the first half of 2026, which is very important for us. And as you mentioned, we are working towards a launch of Pergoveris in the U.S. in the second half of 2026 under the Commissioner's National Priority Review Voucher Program.

Now this is, I would say, a breaking news immediately after the Capital Markets Day with the private public deal that we have with the White House and we intend to file Pergoveris to the U.S. FDA in the next couple of weeks after the shutdown is over. And we hope to have, I would say, if approved, with a broad label, a significant upside in the U.S. and globally.

Now in the midterm, I expect Fertility to grow, as we said at the Capital Markets Day mid-single digits. And the key growth drivers for Fertility are, first of all, a growing market fueled by the increased need for IVF combined with improving access in many areas, Asia Pacific and Europe and also reimbursement and market share gains of Pergoveris and we also intend to launch Pergoveris Pen to replace the vial in several markets. So this is likely to give us an additional boost. There are risks, further penetration by biosimilars, and most of the risks are on Gonal-f in China and in Europe, but we are very confident with this forecast.

When it comes to the tariffs. So the second part of this agreement with the White House, the first part was on [ DTC ] for Gonal-f and for Pergoveris. The second part was a letter of intent with the Ministry of Commerce, where the aim actually once we finalize this conversation is to exclude a pharmaceutical product and ingredients from the Section 232 tariffs. So we are in negotiations with a very good intent in order to relief us from the pharmaceutical tariffs moving forward.

Now I'll take the next question. This is from Peter Verdult, BNP Paribas Exane.

Danny, just can we come back to Fertility, just in the context of how much of a medium to long-term underappreciated value driver is the deal that you've done with the U.S. So I heard all the comments you made with respect to the previous question, but could you perhaps be helpful in baseline for us as we exit 2025, the run rate of Pergoveris. And I think most people on the call would think that Fertility might be a sort of mid-single-digit growth franchise.

So I don't want you to repeat all the dynamics that you've just said. But I do want to ask, when you think about that government deal and the volume opportunity, and the fact that you're not yet in China and Japan with Pergoveris. Do you, as a management team, think about Fertility as a mid-single-digit growth? Or do you start to think about upside to that. So baseline on Pergoveris and the medium- to long-term outlook for Fertility.

Thank you, Peter, for this question, and I will clarify, you're absolutely right. So what we expect for the full year this year for Fertility is flattish organic sales growth. You saw the effects -- the very muted effects in the first 2 quarters, returning to growth, getting our heads above the water in the next couple of quarters. So this is what you should expect for this year.

Now for Gonal-f, I would say expect the pressure. We broadly think that it's going to be stable midterm outlook for Gonal-f. On one hand, we see the drivers that I mentioned before. On the other hand, we'll see the biosimilars, the price pressure and also to some extent, some extent, partial cannibalization by Pergoveris. Now when it comes to the U.S. deal, you need to think about it like this. There are 2 channels where we commercialize Gonal-f. There is the private channel, which is a cash-paying channel, and there is managed care through PBM, okay? The deal with the White House relates to the private one. So this discount or rebate that we are providing around 83% brings, generally speaking, the price to the private channel at the same range that is currently on the public one.

So I would continue given that we are still -- we still have contracts with managed care channels, I do expect continued erosion in the next year and then eventually in outer years, not in 2026, we will start seeing, I would say, a stabilization. But this should be largely offset by Pergoveris, which is, in my opinion, and not just in my opinion, key opinion leaders, patients, a huge innovation in each and every market that we have Pergoveris. Both Pergoveris and Gonal-f are doing better. So this makes us very excited about the potential of this drug. And of course, we confirm the mid-single digit for Fertility in general. I don't think that we are at the stage to change it either up or down. We need to see how it [indiscernible].

And the next question is from Oliver Metzger, ODDO BHF.

So the first one is on Healthcare. It's more about the strategic nature. So the recent news regarding Mavenclad and the loss of exclusivity, how has this, say, earlier happening or changed your view on the MS business as a whole? Second question, in your qualitative comments on SLS, you described some higher demand coming from early biotech. Do you consider this as a sustainable turn to be better? Or would you rate this still as a quarterly volatility.

So regarding Mavenclad loss of exclusivity and the impact on the multiple sclerosis franchise. So as I said before, the loss of exclusivity, yes, it came 10 months, 11 months earlier than expected in the U.S. In Europe, the end of regulatory exclusivity is in August 2027. And after that, we have SPCs per country. So the situation in Europe is well known, and we expect Europe or ex U.S. to continue to grow when it comes to Mavenclad.

Now in the U.S., as I said at the beginning and as was mentioned a couple of times, we will need to manage this decline properly, and we have all the plans and all the capabilities to do that and to respond as fast as possible. Now longer term in multiple sclerosis, you know exactly what is the situation of our pipeline when it comes to multiple sclerosis. We don't have additional products in this field. So what we are going to do, and I mentioned that at the Capital Markets Day when it comes to Mavenclad, it just came a little bit earlier. We will manage the Mavenclad decline for cash, which means having a profitable decline. I hope that it gives you more color on that.

Jean-Charles speaking. So to answer to your question related to SLS, we confirm that we are seeing some positive green shoots from pharma company impacted Science & Lab Solution moving forward. However, I want to repeat what I said about China. We have seen some quite muted demand in China on short term. Nevertheless, China remains a very important strategic pillar for Life Science in general. And a few weeks ago, in this context, we announced a new go-to-market transformation. We are making good progress. We just nominated 24 hours ago, the new head of of China.

And again, it highlights the fact that China for us remains very, very important. And last but not least, I also would like to repeat again that we are seeing some impact coming from the U.S. shutdown on our academic customer in North America.

We'll now take the next question. And this is from Florent Cespedes, Bernstein.

Two quick ones, please. First on pharma for Danny on the pipeline, could you maybe share with us which are the key milestones that we should anticipate for 2026 in terms of clinical trial readouts?

And my second question for Kai. Electronics, DS&S, why do you anticipate stabilization in 2026 for this business?

Florent, thanks. I'll take the first one. Key milestones. First, you should expect initiations, Phase III trial initiations for precemtabart tocentecan, the ADC, in colorectal cancer third line. As I mentioned and also David mentioned at the Capital Markets Day, we are in active discussions when it comes to partnering because of the size of -- potential size of this program also in the second line and the first line. You should expect data release in 2026, initial data release from the pan tumor trial. For that compound, we are testing it in pancreatic, in gastric and in lung cancer in a basket study.

So that's for [ Pareto ] you should expect enpatoran entering Phase III trial in lupus rash. We completed the interactions with the regulators, very fruitful interactions. And these are the big ticket items, the myasthenia gravis with cladribine is enrolling patients, the Phase III, and of course, super important. It's not a trial. It's a drug in registration. We are expecting the launch of pimicotinib in China and also in the United States. In China, it's currently under review. In the U.S., it's going to be submitted in the next few days. We had the shutdown thing, but it's going to be released. We are going to also to get into a decision -- data-based decision on the PARP1 selective.

Florent, let me take the DS&S question. So let me take it from where we started in Q2 with our messaging. In Q2 '25, we envisioned a drop of sales of EUR 200 million to EUR 300 million. That was the organic sales downside that we have mentioned in Q2. Now that we are 3 months further, we can confirm that slightly more than EUR 200 million, which was our optimistic case. So that's where we are ranging. So the downside is largely projects and related equipment, and we have seasonality in the large capital equipment and protect business and a lot of revenue here is booked at the year-end. You can see that since we bought Versum, Q4 was often seasonally the highest sales quarter of the year. And as we have seen now EUR 100 million downside in the first 9 months of the year, that means counterseasonal downside now of another EUR 100 million in Q4 '25 to get to the slightly more than EUR 200 million, I just mentioned.

So we are calling Q4 '24 now as the bottom for DS&S and that's why when you do the math on the Electronics guidance, expect Q4 '24, it's our lowest sales quarter of the year. And if you take the guidance, midpoint down around 7% organically and around EUR 200 million down considering the divestment of Surface as well. So that's the bridge for Electronics and specifically for DS&S. And looking at our order pipeline and a very low base of projects, we expect stabilization for 2026.

The last question today is from Simon Baker from Rothschild.

Two, if I may, please. Firstly, going back to Pergoveris in the U.S. Danny, you said you will be filing in the next couple of weeks now that shutdown has been resolved. Given the 1- to 2-month review period of these national priority vouchers, can you explain what else needs to be done in order to get to a second half rather than the first half launch in the U.S.?

And then a question on SpringWorks and just in terms of phasing of the integration costs, it looks like more was taken in Q3 than we were perhaps expecting. So I just wonder if you could give us some idea of the phasing and cadence of SpringWorks related costs on acquisition and integration.

Thanks. So when it comes to Pergoveris, so this, I call it, an exercise with the Commissioner's National Priority Review Voucher is new to us and is also new to the FDA. So on that, we are in -- despite even the shutdown, we are in active discussions with that particular division, and we are preparing the file. So we have what we need to do when it comes to preparation of the file. The file needs to be prepared based on data that was submitted to the EU regulators. As you know, there were no trials in the United States on Pergoveris, and there is work that needs to be done on that regard. And then we need to get this reviewed. It's up to 60 days, it's, I would say, one of the -- it's a leading assumption by the FDA, but we need to see how it goes because still the drug was not tested in the United States. But I also want to make sure that we have the right label for this drug and prepare for this launch.

So yes, theoretically, you can see that at the very end of H1 2026, we'll update you as we go because we are relatively early in this process. When it comes to SpringWorks integration, we actually have a positive update on integration and transaction costs, which we now expect at approximately EUR 250 million in total versus the EUR 260 million that we communicated previously, EUR 300 million originally. And in detail, we confirm our assumption for the integration cost of EUR 200 million and have slightly lowered our assumption for the transaction costs to around EUR 50 million, the previous assumption was at EUR 60 million, due to some lower legal costs. I hope that gives more clarity.

I will now hand the conference back to Florian Schraeder for closing comments.

Thank you, Sarah, and thank you, everyone, for your continued interest in Merck. With this, we closed the Merck Q3 '25 results call, and we look forward to meeting many of you in our upcoming roadshows. Thank you, and goodbye.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.