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Purpose and Values

We are a vibrant science and technology company. Science is at the heart of everything we do. It drives the discoveries we make and the technologies we create. Our work makes a positive difference to millions of people’s lives every day.

In Healthcare, we discover unique ways to treat the most challenging diseases such as multiple sclerosis and cancer. Our Life Science experts empower scientists by developing tools and solutions that help them to deliver breakthroughs more quickly. And the science of our Performance Materials business sector sits inside technologies that are changing the way we access and display information.

Everything we do is fueled by a belief in science and technology as a force for good. A belief that has driven our work since 1668, and will continue to inspire us to find more joyful and sustainable ways to live.

We are curious minds dedicated to human progress. We believe that scientific exploration and responsible entrepreneurship are key to technological advances that benefit us all. Our values – courage, achievement, responsibility, respect, integrity and transparency – guide us in every step we take and in every decision we make.

Strategy Fundamentals

As a company, we have a strong foundation. These fundamentals have been defined by the Merck Family. We always take them into consideration when discussing and deciding on our Group strategy.

  • We follow a risk diversification strategy with three distinct business sectors, and we avoid overexposure to any single customer, industry, or geography.
  • With our science and technology focus, we want to be leaders in our fields of expertise and markets, always pushing the boundaries to find new solutions and drive innovation.
  • We continue to operate under our current ownership with the Merck Family as majority owner.
  • We continue to deliver sustainable value, and we want to maintain an attractive financial profile (for example, a strong credit rating).
  • Mergers and acquisitions (M&A) are an important driver of our long-term value creation strategy with a focus on innovation-driven technology.

Group Strategy

Our transformational journey since 2007

Over the past years, our company has grown significantly through a series of strategic moves that have enabled us to develop into a vibrant science and technology company. We have systematically and continuously strengthened and focused our portfolio of innovative science and technology throughout our business sectors.

In Healthcare, we divested our Generics business in 2007 to focus on highly specialized products and acquired Serono, also in 2007, to expand our pipeline. This focused approach has continued with the divestments of our Biosimilars business in 2017 and our Consumer Health business in 2018. We are now focusing our R&D efforts on the fields of oncology, immuno-oncology, and immunology (including multiple sclerosis).

Within Life Science, we have significantly transformed to become a diversified industry leader through the acquisition of Millipore in 2010 and Sigma-Aldrich in 2015. We continue to leverage our e-commerce platform to expand our reach and leadership in the industry as well as invest in strategic initiatives, such as Gene Editing & Novel Modalities, BioReliance® End-to-End Solutions, and BrightLab™, our digital solution for lab management.

Performance Materials has delivered profitable growth and a significant cash contribution over many years, strongly driven by liquid crystals. Over the past several years, we evolved this business sector into new areas such as semiconductor materials, for example through the acquisition of AZ Electronic Materials in 2014. Performance Materials is currently undergoing a major transformation by repositioning its overall business toward the highly attractive electronic materials market. With the acquisitions of Versum Materials and Intermolecular, both in 2019, we are expected to achieve a leading position in this market, with a focus on the electronics market.

Our ambition for 2022

With our Group strategy, we want to become the vibrant science and technology company. By 2022, we aim to have strong, innovative science- and technology-focused business sectors with leadership positions in our areas. We want to be a top-tier company in relation to our peers in terms of sales and margin growth and we aim to continue to deliver sustainable returns to our owners.

We are now in the growth and expansion phase of our strategy and are well on track. Following the closing of the Versum Materials acquisition on October 7, 2019, we are putting special emphasis on generating cash in order to quickly lower our post-acquisition debt. Going forward, we aim to deliver profitable growth while focusing on ensuring a high degree of cost discipline. In 2020, we expect all three business sectors to drive earnings growth and support the growth and expansion phase of our strategy.

In Healthcare, we intend to fully leverage our pipeline’s potential. Our new product launches, Mavenclad® and Bavencio®, are increasingly contributing to earnings. We expect our core business with our established products to at least remain organically stable for the mid-term. By 2022, we aim to achieve additional annual sales of at least € 2 billion with new medicines.

Life Science growth is driven by our strong product portfolio, our e-commerce platform –, which generates more than € 1.5 billion in sales – and our strong track record of service and innovation excellence. The business sector plans to deliver annual growth of 5% to 8% per year in the mid-term, thus continuing to outpace market growth. Our high-growth Process Solutions business unit and our e-commerce platform are expected to remain meaningful drivers of this growth.

Performance Materials has made significant progress with the implementation of its Bright Future transformation program, which was initially announced in 2018. With the acquisition of Versum Materials and Intermolecular, we reached key milestones in our transformation journey to become a leading player in the electronic materials market. Performance Materials aims to benefit from sustainable growth trends, particularly from the trend toward increasing data volumes worldwide.

To achieve our strategic ambition of becoming the vibrant science and technology company, we focus on our three Group-wide priorities: Performance, People, and Technology.


Our priority Performance focuses on the financial aspects of our activities. It provides a clear definition and tangible targets of financial success. As we focus on organic growth, we aim to sustainably increase our profitability with a focus on cash generation, and on implementing strict financial discipline.

In Healthcare, a successful year 2019 included further launches of our innovative products Bavencio® and Mavenclad®. Our Healthcare business has grown consistently for many quarters, and we continue to diligently develop and manage our pipeline of innovative medicines. The scientific data we presented at various congresses in 2019 underscored the overall attractiveness of our pipeline with its highly innovative assets in key indications and various stages of the clinical development process.

Life Science continued along the path of science and technology leadership through our sustained investment and focus on our strategic initiatives. Those include Gene Editing & Novel Modalities, BioReliance® End-to-End Solutions for Bioprocessing, and BrightLab™, our digital solution for complete lab management. Additionally, we maintained our focus on our leading e-commerce platform,

In Performance Materials we are well on track with the execution of our five-year Bright Future transformation program, which we are using to adapt to new market realities and customer requirements. Bright Future forms the foundation for returning to sustainable growth, ensuring attractive margins. In 2019, we further streamlined our cost-base and our processes. With the completion of the acquisition of Versum Materials and Intermolecular, we achieved major milestones of our Bright Future program to transform Performance Materials into a strong solutions provider and leading player in the electronic materials market.


To become the vibrant science and technology company, we need to focus on our people – their talent, their performance, their ideas. Our People strategy aims at building the capabilities we need to shape the future by attracting and retaining the right people as well as creating the right culture for them to collaborate and perform at their best. It addresses how we as a science and technology company can create a working environment that meets our employees’ individual needs and allows curiosity to unfold. Our growth strategy calls for people with diverse experiences and backgrounds who work together on the basis of shared values to innovate new solutions and respond flexibly to changing demands.

It is crucial to be perceived as an attractive employer in the market in order to continue to capture the interest of potential employees. The fact that we rank among the world’s best employers was also confirmed by our distinction as a “Global Top Employer 2019” by the Dutch Top Employers Institute. In addition, we were ranked fourth among employers worldwide in the field of biotechnology and pharmaceutics by Science Magazine, an international scientific publication.

Our leaders play a decisive role in our People strategy. We aim to place leaders who will develop employees for future requirements – not just current needs – and foster the unique strengths of diverse individuals within the organization. At the same time, we want the leadership style of our managers to enable strategic innovation. The right leaders will help us promote curious talents who can solve complex problems and are passionate about the work they do. We will also strengthen results-driven teams as well as networks that value collaboration and provide flexible frameworks within which teams and individuals can drive our business forward.

We want to make data-driven people decisions – both when hiring new members of staff as well as in the personal development of employees. Another element of this strategy is to promote diversity, with a special focus on women and talent in Asia, and to create the inclusive environment that enable these groups – and all employees – to bring in their unique strengths and understanding of key customers and markets. We need to value different perspectives and encourage constructive discussions.

We place great importance on continuous advanced training and further development of our managers. This is essential to address the diverse needs of team members and the changing requirements of the businesses, especially in the area of digitalization. Our leaders are responsible for pushing our strategy ahead by building up the right competencies, thereby fostering innovation. As part of this, they take calculated risks, give clear and inspiring direction to their employees, and provide the requisite structures and resources to achieve our goals. Based on our competency model, we have identified six leadership behaviors that define how we expect our leaders to act (for further details see People). Those leadership behaviors are being implemented into our existing processes and tools (for example, selection, assessment and feedback tools, leadership programs, etc.).

In the context of the People strategy, we also want to look at new forms of cooperation and experiment with methods that result in better decision-making. For example, pilot initiatives focus on further expanding our Science Network. Through this project, we are promoting the scientific community within the company to accelerate the exchange of innovative ideas and improve collaboration between all employees in the Research and Development sector.


Our approach to technology paves the way for discovering and scaling the most exciting technologies. The majority of our innovations come from within our existing business sectors, with approximately 7,800 scientists and researchers working for our company. These innovations include everything from incremental innovations to disruptive opportunities in the fields of Healthcare, Life Science, and Performance Materials.

Complementary to the business sectors, we are also looking into innovations that fall between our business sectors or beyond our company’s current scope. With our Innovation Center in Darmstadt, Germany, and our Innovation Hubs in Menlo Park, California, United States, in Shanghai, China, and in Guangzhou, China, we are discovering new ideas and technologies, then scaling them up to build new businesses. We are focusing on our activities within three core innovation fields of interest: Liquid Biopsy, Clean Meat, and Biosensing & Interfaces. With liquid biopsies, a variety of diseases can be diagnosed through the detection of biomarkers in body fluids. This could be a key technology for early disease detection and expanding delivery of precision medicine to more patients. The innovation field Clean Meat comprises technological innovations to meet the world’s growing demand for protein- and nutrient-dense foods made by means of ethical, eco-friendly methods. The innovation field of Biosensing & Interfaces focuses on the integration of electronics with the human body to create a digital human/biological interface. This could enable faster, more accurate (remote) health monitoring and treatment.

In addition to these global innovation fields, we have also introduced a China-focused innovation field through our China Innovation Hub: AI-enabled health solutions. Our focus within this field is the exploration of new AI-based technologies, products, and services that could impact the medical and healthcare industries across the value chain by, for example, increasing efficiency, saving costs, and improving customer experiences.

While our Innovation Center is operating on a global scale, the China Innovation Hub, with offices in Shanghai, China, and Guangzhou, China, will accelerate our innovation development by tapping into the China innovation ecosystem. Our objective is to advance innovation in China, for China and beyond – together with local partners, such as technology companies, start-ups, universities, and research institutes.

Through our Silicon Valley Innovation Hub in Menlo Park, California, United States, we aim to uncover new technological opportunities and establish partnerships and projects within our three global innovation fields, with a strong focus on Clean Meat.

Additionally, we focus on disruptive external innovation in emerging fields adjacent to, in between, and beyond our established business sectors. We strive for successful external innovation by transforming groundbreaking scientific ideas into businesses with the potential to improve patients’ lives, disrupt industries, and transform the way we live. This includes M Ventures, our strategic corporate venture capital fund, with a total volume of € 300 million distributed across its Healthcare, Life Science, Performance Materials, and New Businesses evergreen funds. Since inception, M Ventures has invested in over 60 promising start-ups and companies that could impact our core business areas, while at the same time providing us with strategic and financial returns, such as the successful IPO of Progyny (on October 19, 2019). In addition to company creation initiatives and its incubator activities in Israel, M Ventures has set up a China seed fund worth RMB 100 million (€ 13 million) to further foster innovation in this market with strategic importance for us.

A major focus of our innovation efforts is digitalization. We are leveraging related opportunities through our Digital Organization in order to create value for patients, customers, and business associates. To us, digitalization means the digital integration of our entire value chain, the digitalization of our products, services, and communication interfaces to customers, as well as the development of new digital business models. All this is supported by state-of the-art methods to collect and analyze vast amounts of data. Syntropy, our planned joint venture with Palantir technologies to advance cancer research, has been evolving throughout 2019 as we continue to grow our pipeline of potential customers and collaborators who share our vision of creating a step change in oncology.

We are strengthening our company as a vibrant science and technology company. In this context, Darmstadt plays an important role as our headquarters and largest location, where all three business sectors are represented with their entire value chains and where we have invested around € 1 billion since 2015. We are in a phase of accelerated growth and will continue to make targeted investments in Darmstadt as one of our centers for science and technology. For instance, in 2020 we will open a new research and development facility for Performance Materials that is currently under construction. And with projects such as a production site for Life Science’s membrane business and a new training center, we plan to invest another € 1 billion in Darmstadt by 2025. The physical proximity of the business sectors in Darmstadt promotes cross-sector cooperation. By developing a state-of-the-art digital infrastructure and digital solution approaches, such as those pursued in our Innovation Center, we support profitable growth and new innovation fields.

Business Strategies


Our Healthcare business sector specializes in key franchises and specific diseases. Global megatrends – such as a rising prevalence of chronic diseases and the increase in average life expectancy – continue to drive the demand for our products. To meet these demands and respond appropriately to the dynamics of our markets, we have significantly transformed our Healthcare business sector in recent years.

Following on from the successes over the past three years, we continue to drive pipeline projects with the aims of bringing groundbreaking medicines to patients, maximizing our existing portfolio and continuing our expansion in growth markets. Our ambition is to become a global specialty innovator, operating in franchises with significant unmet medical needs and bringing high value to patients. Therefore, we continue to invest in research and development to discover new treatment options and improve existing ones. Together with our stakeholders and partners, we want to ensure that people can access the medicines they need to stay healthy and live longer.

The first pillar of our strategy is to reinforce our global footprint, bringing the innovation of our pipeline to patients and growing our presence – in the United States and in China, for example. The emerging markets and China are expected to be the largest growth drivers for many of our established products in the future. Managing the balance between delivering innovative new medicines while expanding our reach and ensuring the profitable growth of the existing business will be one of the strategic challenges. Fertility and endocrinology offer significant opportunities to bring value to patients, given their high profitability and growth potential. Maximizing the commercial potential of these areas will remain important.

The second pillar of our strategy is the focus on specialty medicine franchises. Here, we expect the oncology, immuno-oncology, and immunology markets to remain highly attractive in terms of size, growth prospects, and profitability. Within each specialty franchise, our approach is to develop deep internal expertise and insight, from internal research to commercialization, augmented by external talent sourcing, strategic partnering, and asset acquisitions.

The third strategic pillar is innovation: We aim to develop high-quality, first-to-market, and best-in-class therapies and to build a portfolio in each of our franchises. We have streamlined our pipeline and expanded our innovation capabilities with strong investigational drug candidates and technologies. In order to maximize the output of our R&D investments and increase our chances of success in discovering and developing new therapies, we focus our expertise on specific franchises and are exploiting synergies in disease mechanisms and biological pathways. We are investing in digital technologies as well as personalized and translational medicine in order to drive continued pipeline success.

In this context, strategic collaborations are an integral part of delivering on our commitment to transform the lives of patients living with serious unmet medical needs. We recognize the value of collaboration in the research and development of breakthrough therapies, as well as in strengthening our current portfolio. Here, we focus on balancing the right blend of internal capabilities and external partnerships (for example, with Pfizer and GlaxoSmithKline) and on building strong collaborations with other leaders in the industry.

Life Science

Life Science continues to deliver on our strategic agenda by increasing profitability due to strong organic growth. In 2019, we maintained our status as a top-three player in the industry. Our organic sales growth exceeded that of the industry and has remained the highest among integrated peers - as it has since the acquisition of Sigma-Aldrich in November 2015.

To sustain our leadership into the future, Life Science has established a strategy based on three key pillars:

  1. Ensure operational excellence by focusing on building our base business, creating value in a strong organization and implementing consistent processes
  2. Strengthen the core organization by expanding our leadership in bioprocessing and e-commerce as well as advancing our robust offering of testing kits and services to ensure food and beverage safety and quality
  3. Establish new growth pillars through our three strategic initiatives: Gene Editing & Novel Modalities, BioReliance® End-to-End Solutions, and BrightLab™.  

We have completed the integration of Sigma-Aldrich, the largest in our history and of the industry, during which we consistently outperformed the market. Work toward harmonizing our Enterprise Resource Planning (ERP) systems continues. Our aspiration remains to reinforce our leadership position as an innovation-driven tools supplier and collaborator dedicated to solving the toughest problems in life science.

Looking ahead, we expect our strategy to continue delivering net sales growth ahead of the market and further expand our market-leading EBITDA pre margin. For 2020, we will prioritize the continued support of new growth pillars with our Gene Editing & Novel Modalities offerings as well as differentiated gene editing tools, drug safety systems and models, and clinical viral vector manufacturing. In addition, we will further develop our BioReliance® End-to-End Solutions, a service offering for process development and manufacturing for emerging biotech companies, alongside our BioContinuum™ Platform, which addresses intensified bioprocessing and continuous manufacturing. We will also focus on expanding the use of BrightLab™, our digital solution for lab management, as well as our food and beverage testing kits and services.

Performance Materials

Performance Materials is currently undergoing a major transformation by repositioning its overall business toward the electronic materials market. This market is very attractive due to its long-term growth potential. The electronic content of any product is increasing; electronics are now part of nearly every product, and diversification is securing the market’s long-term stability. Megatrends like the Internet of things (IoT), AI (artificial intelligence), and autonomous driving lead to high innovation pressure and drive the growth of data from every side. The global data volume grows exponentially with more than 30% annually; the “data explosion” will transform electronics far beyond what today’s systems can handle. Data needs to be generated, transferred, processed, stored, and made comprehensible for humans through smart interfaces. Our strategy is to cover all aspects of this data handling and to enable processes by providing customized solutions for the production of innovative electronic components. We are the company behind the companies advancing digital living. Performance Materials targets the electronic materials market with a focus on the semiconductor and display industries in order to participate in the growth of data-driven electronics. 

The Bright Future program ensures the successful transformation of Performance Materials by driving the realization of our strategy. Main outcomes are the shift of our portfolio into growing electronics segments, safeguarding our margin ambition, and changes in the culture within Performance Materials. The absolute growth of Semiconductor Solutions and the ongoing growth in OLED are expected to outweigh the decline in liquid crystal sales. We assume to stabilize the EBITDA pre margins at around 30% in the long term, well above the industry average. From 2020 onward, Performance Materials expects to be back to organic growth. With Versum Materials and Intermolecular, we are able to obtain a leading position in the electronic materials market. Overall, strategy realization within the electronics market is well on track, and we are working on measures in Surface Solutions to stabilize the business.

Our strategic priorities going forward:

  • Drive top-line growth especially in Semiconductor Solutions and OLED 
  • Transform into a leading enabler for data driven electronics with best-in-class capabilities and portfolio
  • Accelerate the realization of our growth ambitions through the successful integration of both Versum Materials and Intermolecular

Strategic finance and dividend policy 

We are pursuing a conservative financial policy characterized by the following:

Financial flexibility and a conservative funding strategy

We ensure that we meet our obligations at all times and adhere to a conservative and proactive funding strategy that involves the use of various financial instruments. Our diversified and profitable businesses form the basis for our strong and sustainable cash flow generation capacity. Moreover, we have several funding resources in place. A € 2 billion syndicated loan facility, renewed in 2018, is in place until 2024 to cover any unexpected cash needs. The facility is a pure backup credit facility and has not been drawn on so far. In addition, we have a commercial paper program with a volume of € 2 billion at our disposal. Within the scope of this program, we can issue short-term commercial paper with a maturity of up to one year. Furthermore, in 2019, we used bilateral bank loan agreements with first-class banks to optimize our funding structure and cost. For the acquisition of Versum Materials, we also agreed on a US$ 6.3 billion acquisition loan with our relationship banks, consisting of a US$ 4.0 billion bridge facility (which was never drawn and was canceled before the closing of the acquisition) and a US$ 2.3 billion term loan, which is partially drawn.

Additionally, as a general rule, the bond market represents a key element. The most recent bond issues took place in 2019 in connection with the acquisition of Versum Materials. Hybrid bonds (totaling € 1.5 billion) and euro bonds (totaling € 2.0 billion) were issued. The use of various instruments provides a broad financing basis and addresses different investor groups.

Maintaining sustainable and reliable business relations with a core group of banks

We mainly work with a well-diversified, financially stable and reliable group of banks. Due to our long-term-oriented business approach, bank relationships typically last for many years and are characterized by professionalism and trust. The banking group consists of banks with strong capabilities and expertise in various products and geographic regions. We regard these banks as strategic partners. Accordingly, we involve them in important financing transactions.

Strong investment grade rating

The rating of our creditworthiness by external rating agencies is an important indicator of the company’s financial stability. A strong investment grade rating is an important cornerstone of our financial policy, as it safeguards access to capital markets at attractive financial conditions. Our company currently has a Baa1 rating from Moody’s, an A rating from Standard & Poor’s (S&P), and an A– rating from Scope, each with a stable outlook. Continuing to reduce our debt after the Versum Materials acquisition is of utmost importance to us.

Sustainable dividend policy

We are pursuing a sustainable dividend policy. Provided the economic environment develops in a stable manner, the current dividend represents the minimum level for future dividend proposals. Our dividend policy will follow the business development and earnings increases over the coming years. However, dividend growth could deviate, for example, within the scope of restructuring or in the event of significant global economic developments. We aim for a target corridor of 20 – 25% of earnings per share pre.

* The contents of this chapter or section are voluntary and therefore not audited. However, our auditor has read the text critically.