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Fundamental Information about the Group

The Group

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. We make a positive difference in the lives of millions of people every day. 

In Healthcare, we discover unique ways to treat some of the most challenging diseases, such as multiple sclerosis (MS) and cancer. Our Life Science experts develop tools and solutions, which are aimed at enabling scientists achieve breakthroughs even faster. And in Performance Materials, we develop science that sits inside technologies and changes the way we access and display information.

Everything we do is fueled by our 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 operate globally under our corporate brand. The only exceptions are Canada and the United States. In these countries, we operate as EMD Serono in the biopharmaceutical business, as MilliporeSigma in the life science business, and as EMD Performance Materials in the high-tech materials business.

Apart from our three business sectors, our financial reporting presents five regions: Europe, North America, Asia-Pacific, Latin America, and the Middle East and Africa. As of December 31, 2019, we had 57,071 employees worldwide1, which compares with 51,749 employees on December 31, 2018.

1 The Group also has employees at sites that are not fully consolidated subsidiaries. These figures refer to all people directly employed by the Group and therefore may deviate from figures in the financial section of this report.

Healthcare

Our Healthcare business sector comprises the two businesses Biopharma and Allergopharma. In 2019, Healthcare generated 42% of Group sales and 40% of EBITDA pre (excluding Corporate and Other). Europe and North America generated 55% of Healthcare’s net sales in 2019. In recent years, we have steadily expanded our presence in growth markets. In 2019, Asia-Pacific and Latin America accounted for 38% of sales.

Biopharma*

Our Biopharma business discovers, develops, manufactures and markets innovative pharmaceutical and biological prescription drugs to treat cancer, MS, infertility, growth disorders, and certain cardiovascular and metabolic diseases. Biopharma is the larger of our Healthcare businesses and operates in four franchises: Oncology, Neurology & Immunology, Fertility, and General Medicine & Endocrinology. Our R&D pipeline positions us with a clear focus on becoming a global specialty innovator in oncology, immuno-oncology, and immunology including multiple sclerosis (MS).

At the end of March 2019, Mavenclad® (cladribine tablets) was approved in the United States, the market with the greatest number of people living with MS. Mavenclad® was approved for the treatment of adults with relapsing-remitting MS (RRMS) and active secondary progressive MS (SPMS). Our cladribine tablets have been approved by the FDA as a treatment for RRMS and SPMS that provides two years of proven efficacy, with a maximum of 20 days of oral treatment during a two-year period. With U.S. approval, Mavenclad® is now approved in more than 70 countries, including those of the European Union, Australia, Canada, and Switzerland.

We view Mavenclad® as a complementary oral treatment option in our MS product portfolio. Rebif® (interferon beta-1a), a disease-modifying drug used to treat relapsing forms of MS (RMS), is and remains a well-established therapy. Rebif® is registered in more than 90 countries worldwide. Interferon beta-1a has been proven to delay the progression of disability, reduce the frequency of relapses, and reduce magnetic resonance imaging (MRI) lesion activity and area.

In September, we initiated two global pivotal Phase III trials of evobrutinib, an oral, highly selective Bruton’s tyrosine kinase (BTK) inhibitor in adult patients with RMS. Evobrutinib was developed within our own laboratories and further demonstrates our commitment to improving the lives of people with MS and other chronic progressive diseases (for further details see “Research & Development”).

Erbitux® (cetuximab) remains the second best-selling drug in terms of revenue in the portfolio of our Biopharma business and is our flagship product in oncology. Treating more than 900,000 patients since authorization, the product is a standard of care for patients with epidermal growth factor receptor (EGFR)-expressing, RAS wildtype metastatic colorectal cancer (mCRC), as well as both recurrent and/or metastatic and locally advanced squamous cell carcinoma of the head and neck (SCCHN). We continue to invest in cetuximab and are committed to making it available to those patients it will benefit most. In September, Erbitux® obtained the approval of the National Medical Products Administration of China in mCRC.

Together with Pfizer Inc., we are developing much-needed new treatment options for patients with hard-to-treat cancers. We have made key progress in this area, with regulatory approvals in more than 50 countries for our anti-PD-L1 antibody avelumab under the brand name Bavencio®. In May, we and our alliance partner Pfizer announced that the FDA had approved Bavencio® in combination with axitinib for the first-line treatment of patients with advanced renal cell carcinoma (RCC). In October, we and Pfizer reported that the European Commission (EC) had also approved Bavencio® in combination with axitinib for the first-line treatment of adult patients with advanced RCC.

Bavencio® was initially granted two approvals in 2017 by the FDA for the treatment of adults and pediatric patients 12 years and older with metastatic Merkel cell carcinoma (mMCC) and previously treated patients with locally advanced or metastatic urothelial carcinoma (UC). These indications were granted accelerated approval based on tumor response rate and duration of response. Continued approval for these indications may be contingent upon verification and description of clinical benefit in confirmatory trials. The prognosis for both patient groups is very poor, so avelumab may represent a welcome new treatment option.

The Bavencio® approvals were based on data from our comprehensive clinical development program JAVELIN, which currently involves at least 30 clinical programs and more than 10,000 patients evaluated across more than 15 different tumor types.

We are continuing to explore all potential options and have entered into a number of strategic collaborations to evaluate avelumab in combination with a range of complementary oncology medicines (for further details see “Research & Development”). Key data from the JAVELIN program was presented at major medical congresses in 2019, including the European Society for Medical Oncology Congress (ESMO), where we shared new results from the Phase III JAVELIN Renal 101 study evaluating the efficacy of first-line treatment with avelumab in combination with axitinib compared with sunitinib in two clinically relevant subgroups of patients with advanced RCC.

Other highlights from our development pipeline included the presentation of new data for our investigational oral MET inhibitor, tepotinib, in advanced solid tumors. In September, we shared important milestones for two combination studies of tepotinib in locally advanced or metastatic non-small cell lung cancer (NSCLC) with epidermal growth factor receptor (EGFR) mutation and select MET dysregulations. In September, we announced that the FDA granted Breakthrough Therapy Designation (BTD) for tepotinib in patients with metastatic NSCLC harboring MET exon 14 skipping alterations who progressed following platinum-based cancer therapy. In November, we reported that the Japanese Ministry of Health, Labour and Welfare (MHLW) granted orphan drug designation (ODD) for tepotinib for patients with NSCLC-harboring MET gene alterations.

In February 2019, we entered a global strategic alliance with GlaxoSmithKline (GSK) to jointly develop and commercialize the investigational bifunctional fusion protein immunotherapy bintrafusp alfa, discovered as a result of our own research. In 2019, we achieved our alliance objective of eight trials ongoing or with protocol under development, including our most recent clinical trial initiations in October in 1L biliary tract cancer (BTC) (for further details see “Research & Development”).

Being the global market leader in fertility drugs and treatments, with a unique and broad portfolio from therapeutics to lab technologies, our Fertility franchise is an important growth driver for our Biopharma business. Infertility represents an increasing challenge globally due to demographic changes and growing lifestyle adjustments like delayed childbearing. In this highly specialized market, the focus lies on quality, standardization, outcome improvements, and patient convenience. With our portfolio, we are well equipped to be the Fertility partner of choice for our customers and to further improve assisted reproductive technologies (ART) through innovative solutions across therapeutics, lab technologies, services, and digital health solutions.

The Pergoveris® Pen is the first product with a combination of recombinant follicle-stimulating hormone (FSH) and recombinant luteinizing hormone (LH) in a ready-to-use liquid version, eliminating the need for mixing. It thus provides an improved and convenient treatment option for women with severe deficiency of both FSH and LH, a group of patients that is difficult to treat. Launches will continue. The Pergoveris® Pen has now been launched in 23 countries and we will continue to provide patients with access to this innovative therapeutic.

On the occasion of the annual meeting of the European Society of Human Reproduction and Embryology (ESHRE), we launched the Medical Innovation Program (MIP) for human reproduction. This initiative strives to support early stage innovation in key areas highlighting our continued commitment to open innovation. The MIP will support collaboration and co-development, bringing together internal and external expertise, and serves as a platform for interdisciplinary, conceptual, and methodological debate on how to provide new solutions to boost innovation in human reproduction.

Every day, more than 72 million patients around the world use our trusted general medicine and endocrinology (GM&E) medications. Concor®, Euthyrox®, Glucophage®, and Saizen® are highly valued brands and market leaders in many key markets worldwide. As a result, GM&E is the largest business franchise of the Healthcare business sector in terms of sales, with strong growth in all major therapeutic areas of focus, contributing significantly to the overall profitability of Biopharma and Merck KGaA, Darmstadt, Germany. Although no longer patent-protected, the brand equity of our products, built up over decades, makes them cornerstones for the treatment of chronic cardiovascular, metabolic, and endocrine diseases.

Concor®, containing bisoprolol, is the leading beta-blocker for chronic cardiovascular diseases such as hypertension, coronary artery disease, and chronic heart failure. Euthyrox®, with the active ingredient levothyroxine, is the worldwide market leader with a market share of 28% in volume for the treatment of hypothyroidism, a disease with high prevalence but still low diagnosis rates in most emerging markets. Glucophage®, containing the active ingredient metformin, is the drug of choice for first-line treatment of type 2 diabetes. During 2019, multiple health authorities worldwide continued to approve Glucophage® in prediabetes when intensive lifestyle changes have failed. This indication for Glucophage® is now registered in 53 countries. Overall, considering the high prevalence of prediabetes and diabetes, we see great potential for Glucophage®.

We help to raise awareness and education in the areas we operate in, such as thyroid diseases and diabetes. This is well demonstrated by our active role in International Thyroid Awareness Week and our partnership with the International Diabetes Federation (IDF), which serves as a basis for implementation of education and communication activities that emphasize the importance of type 2 diabetes prevention.

Saizen®, with its active ingredient somatropin, is our main endocrinology product and is indicated for the treatment of growth hormone deficiency in children and adults. Saizen® is delivered with the Easypod® electromechanical injection device, the only growth hormone injection device of its kind. Easypod® is able to wirelessly transfer data such as injection times, dates, and doses to the web-based software system Easypod® connect, making it easier for healthcare practitioners and patients to ensure adherence and reach their treatment goals.

In endocrinology, we differentiate ourselves from competitors through leadership in the eHealth space, both by building evidence and by expanding our offerings with new services for patient engagement, partnership with healthcare practitioners, and better payer value proposition. In 2019, Aluetta® (the new Saizen® pen) was launched with the objective of expanding the reach of Saizen® by tapping strategic segments and expanding our devices portfolio.

Allergopharma*

Our allergy business Allergopharma is a leading company in the field of allergy immunotherapy (AIT) in Europe. In 2019, we celebrated our 50th anniversary. For high-precision, effective allergy therapy, we offer comprehensive diagnosis solutions as a basis for individual treatment concepts. Our AIT products concentrate on causal treatment of type 1 allergies such as allergic rhinitis and allergic asthma to meet patients’ needs. For AIT, strong evidence of efficacy and an acceptable safety profile have been well-documented in allergy-induced allergic rhino-conjunctivitis in numerous clinical trials. Furthermore, there is a potential positive effect on the long-term course of the allergic disease. AIT is designed to induce tolerance in the immune system of the allergy patient to the allergy-triggering allergen, thus potentially inducing an immune modification.

We offer high dosage, hypoallergenic, standardized preparations for allergen-specific immunotherapy for pollen and house dust mite allergies, as well as a wide range of diagnostic allergy tests. Based on long-standing expertise, scientific excellence, and entrepreneurial responsibility, we provide physicians with first-class therapy options and help people with allergies lead more fulfilled lives. Products of Allergopharma are available in more than a dozen countries worldwide.

Life Science

Our purpose is to solve the toughest challenges in the life science industry in collaboration with the global scientific community. With our Research Solutions, Process Solutions, and Applied Solutions business units, we are a leading worldwide supplier of tools, high-grade chemicals, and equipment for academic labs, biotech, and biopharmaceutical manufacturers, as well as the industrial sector. Research Solutions provides our academic customers with the chemicals and tools needed to make scientific discovery easier and faster. Process Solutions provides drug manufacturers with process development expertise and technologies, such as continuous bioprocessing. Applied Solutions offers both testing kits and services to ensure that our food is safe to eat and our water is clean to drink.

Since acquiring the chemical and technology company Sigma-Aldrich in 2015, our strategy includes strengthening our core business by delivering a broad and relevant portfolio as well as establishing new pillars of growth in scientific areas, such as cell and gene therapy and continuous bioprocessing. As determined by sales, our Life Science business sector has achieved a top-three ranking in the global life science industry.

In 2019, the Life Science business sector generated 42% of Group sales as well as 44% of EBITDA pre (excluding Corporate and Other).

Portfolio at a glance*

Our portfolio comprises more than 300,000 products, ranging from lab water systems to genome-editing tools, antibodies, and cell lines, as well as end-to-end bioprocessing systems to support the manufacturing needs of both emerging biotech and large pharma companies. For example, our ZooMAb® recombinant antibodies bring the next generation of polyclonal and monoclonal antibody technology and production to the industry, specifically engineered for greater specificity, higher consistency, and maximum stability.

Our e-commerce platform, www.sigmaaldrich.com, continues to grow and connect customers globally with the products needed to advance their research, development, and production efforts. To expand our e-commerce reach, in 2019, Life Science became the first in the industry to launch an official flagship store on Alibaba’s 1688.com in China, providing easy access to high-quality products and solutions for our customers in that country. The launch reinforced our commitment to the scientific community in China and to enhancing e-commerce capabilities.

Another example is our BioReliance® End-to-End Solutions, a service offering for process development and manufacturing for emerging biotech companies. In 2019, Life Science agreed to provide Phanes Therapeutics Inc. of China with this full suite of products and services to accelerate the development and manufacturing of a bispecific antibody for the treatment of solid tumors. Responding to an increased demand for these process solutions, this collaboration represents our dedication to delivering innovative advancements for global clinical drug development and scaling processes. We also launched the new integrated Plug & Play Upstream Development Service to help emerging biotech and start-up companies optimize the cost and speed of advancing their molecules to the clinical stage.

Additionally, our Life Science business sector has built the expertise to further develop BrightLab™, our digital ecosystem for complete lab management.

In February 2019, Life Science made the first of several announcements regarding our CRISPR intellectual property portfolio for genome editing. CRISPR functions as a core competency for our business sector and we support research with genome editing under careful consideration of ethical and legal standards. In February, we received our first United States patent for proxy-CRISPR technology. This specific technique makes CRISPR more efficient, flexible, and specific by opening the genome for modification of DNA.

Our portfolio now includes 22 patents for CRISPR technology granted worldwide, including 10 additions throughout 2019 in Canada, Europe, Israel, South Korea, the United Kingdom, Japan, and Singapore.

In July, we simplified the path to licensing CRISPR technology for commercial research and product development through an agreement with the Broad Institute of MIT and Harvard in Massachusetts, United States. With this unique offering, Life Science collaborates to ease navigation of the complex intellectual property landscape of CRISPR patents, encouraging participation and innovation in this area. Additionally, in November, we licensed our foundational CRISPR intellectual property to Evotec SE, an international biotechnology company headquartered in Hamburg, Germany, again demonstrating our promise to accelerate discovery and research that may lead to new therapies.

Our CRISPR Core Partnership Program continues to add more members each year. The program, which started in 2014, accelerates collaboration on cutting-edge, gene-editing techniques with diverse and advanced CRISPR workflow solutions. In March, we announced the addition of China’s Zhejiang University to our Core Partnership Program, which will utilize our Arrayed CRISPR Library to assist in discovering the relevance of specific genes in biological functions. With more than 80 core partners in our global network, this addition demonstrates our dedicated collaboration to promote ethical scientific exploration in genome editing.

In March, we took a further step with regard to our Life Science expansion plans by opening a new M Lab™ Collaboration Center in Molsheim, France, to serve customers in Europe, the Middle East, and Africa. With 4,000 square meters of space, this M Lab™ Collaboration Center is the first in Europe — representing a € 10 million investment in the region — and ninth worldwide. It includes non-GMP pilot and bench scale labs. This allows our customers to engage in process development support, troubleshooting, demonstrations, and hands-on training to explore new ways of increasing productivity, improving processes, and mitigating risks.

We announced continued expansion in May with our approximately € 3.1 million (£ 2.7 million) investment in our biopharmaceutical production facility in Irvine, United Kingdom. The is our only location where we manufacture both liquid and powder cell culture media. As a result of its expansion, we will be able to supply an additional two million liters of specialized medicine to the global healthcare industry. Additionally, in November, we announced the completion of a 5,250-square meter expansion to our site in Gillingham, United Kingdom, which serves as the primary distribution center for the region in our global supply chain. The addition, valued at approximately € 10.5 million (£ 9 million), supplies the pharmaceutical industry, biotechnology companies, research institutes, and academic centers with biochemical and chemical reagents, laboratory supplies, and testing services. Both expansions demonstrate our commitment to the United Kingdom and to growing our global presence while providing employment opportunities.

In addition to the new expansion of these facilities, Life Science announced new product platforms for our biopharmaceutical customers in 2019. In April, we launched the BioContinuum™ Buffer Delivery Platform. A building block of our BioContinuum™ Platform, which addresses intensified bioprocessing and continuous manufacturing, this integrated solution is tailored to provide the highest levels of accuracy and precision in buffer preparation and management. The configurable platform supplies process buffers at a fraction of the resources and facility space, resulting in a more streamlined buffer suite and a more efficient manufacturing process. Its launch marked a key step in our strategy to deliver “contiguous” bioprocessing, which goes beyond connecting the individual unit operations to include the orchestration and management of all the processing steps — materials, production, testing, and analytics — with an industry-leading, streamlined, and optimized approach. Pilot studies suggest that conversion to such a manufacturing method may reduce manufacturing costs by up to 50%.

In August, we acquired all ownership rights to the ProcessPad™ platform from Simplyfeye Softwares Private Limited. Adding to our biopharmaceutical product portfolio, the web-based platform provides easy, on-demand access to data for aggregation, analysis, visualization, and management. It advances our BioContinuum™ Platform by adding a building block that connects across functions and with suppliers to deliver continuous manufacturing.

A key goal for our Life Science business sector is to help our customers that manufacture drugs, from small to large innovator companies, bring life-enhancing medicines and therapies to market — and to patients — faster. To facilitate reaching this target, in October, we became the first to make acoustic technology available for cell therapy manufacturing with the acquisition of FloDesign Sonics of Massachusetts, United States. The unique acoustic cell processing platform will industrialize the manufacturing of autologous cell therapy and provide revolutionary cancer treatment by way of chimeric antigen receptor T (CAR-T) cell therapies. A strategic fit with our goal of advancing cell-based therapies to patients, the acquisition will allow further advancement toward potentially life-saving treatments.

In October, we launched our ADC Express™ services to accelerate pre-clinical conjugation candidate selection. The portfolio addition uses established platform technology to reliably scale target molecules, providing rapid production of antibody drug conjugates (ADCs). Aligning with our goal to accelerate access to health, this innovation reduces time to clinic through comprehensive services spanning pre-clinical to commercial from a single source.

Working toward that same goal, we aim to optimize digitalization across Life Science to increase lab productivity, efficiency, and safety. In March, we announced the Milli-Q® Connect online service portal as a cloud-based, remote lab water service and monitoring capability. Available on all Milli-Q® CLX 7000 clinical water purification systems, this technology streamlines quality report production, allowing increased productivity, maximal uptime, easier data traceability, and saved time.

In August, we announced the acquisition of BSSN Software, a Darmstadt, Germany-based laboratory informatics company. The acquisition continues the acceleration of customers’ digital transformation in the lab by giving scientists better, more efficient access to their lab data. We remain committed to building this ecosystem based on the AnIML standard and Standardization in Lab Automation, which the acquisition promotes by boosting our digital lab productivity business and commercial growth for Life Science.

Earlier this year, we completed the divesture of our flow cytometry business to Luminex Corporation of Texas, United States. A process begun in 2018, this included the portfolio’s combined stock, asset, and inventory purchases.

Collaboration remains an important focus for Life Science as we work to drive innovation and solve the industry’s toughest problems. While developing our own portfolio and capabilities, we also seek to unite with other key players in the industry to work toward our shared goal of bettering and increasing access to health globally. To extend the reach and accessibility of our work, we developed a fully-equipped Center for Microbiological Analysis Training (C-MAT) in Ghaziabad, India, and, in April, announced its handover to the Food Safety and Standards Authority of India (FSSAI). The C-MAT lab provides training to food safety scientists from government and FSSAI-ratified private laboratories on the latest technology in microbiological testing.

In November, we announced our intent to participate in a consortium comprised of academic healthcare, biotech, and biopharma industry leaders across Massachusetts, United States, that will come together and establish a new center for advanced biological innovation and manufacturing. Pooling our resources with industry partners like Harvard University and Massachusetts Institute of Technology (MIT), among others, the central facility will develop next-generation medicines and regenerative therapies. The purpose of the US$ 50 million investment is to explore and cultivate innovations in cell and gene therapy, advance biologic innovation and manufacturing, as well as advance developments in immunotherapy, cell therapies, gene editing, and other technologies. It is expected that the center will operate as an independent, non-profit organization. By fostering collaboration, this center holds the promise of speeding innovation and broadening the universe of patients that can be served by these emerging therapies. 

Since 2018, 63% of drugs in the pipeline were being developed by biotech start-ups focused on innovative therapies, including those intended to treat niche diseases with small patient populations. Our global health commitment focuses on these companies and supports bringing their drugs to market through our grant programs. Grants provide selected companies with access to our products and services to help accelerate market entry for new therapies. Through our Advance Biotech Grant Program, which we run in North America, Europe, and Asia, we announced 12 grant recipients for 2019, selected based on the scientific and societal merit of their respective therapies in development, as well as process challenges and expertise gaps.

In addition to these grants, in May, we announced three winners of our new Retrosynthetic Reaction Prediction Contest. Retrosynthetic analysis plays a critical role in the development of new drugs, and its application has broad prospects in accelerating the speed of drug research and development, improving efficiency, and reducing costs. The contest, open to anyone in China, included a free training camp, online knowledge sharing, workshops, lab tours, and mentorship for participants. It attracted 1,150 contestants, including students, researchers, and practitioners from leading institutions.

Along with promoting scientific engagement and STEM disciplines within schools and universities, our business sector extends to the wider community through SPARK, our global volunteer program. In 2019, through this initiative, just under 2,300 employees volunteered nearly 19,400 hours to host thousands of events in 20 countries and engaged some 66,500 young minds. For the third year, our Curiosity Cube™ mobile science lab toured North America, celebrating the 150th anniversary of the Periodic Table of Elements and igniting youth interest in science. In 2019, the mobile lab traveled 48,000 kilometers (30,000 miles) and engaged with students at schools and city centers in 99 communities. 94% of the schools visited were classified as Title 1, indicating under-resourced areas.

Related to our work in the Asia-Pacific region, in June, Life Science held a national campus tour of our new mobile lab to promote protein research across China. Proteins are the fundamental building block in our research, and revealing the structure and function of thousands of proteins in organisms remains one of the industry’s most challenging areas. The tour offered engaging learning experiences and scientific discovery through product displays, live demonstrations, speeches, online games, and digital interaction. It covered 20 colleges and biotech campuses in 13 cities across China.

Performance Materials

Our Performance Materials business sector comprises our specialty chemicals business and consits of three business units: Semiconductor Solutions, Display Solutions, and Surface Solutions. Comparing Performance Materials with a smartphone, Display Solutions represents the user interface, Semiconductor Solutions the intelligence, and Surface Solutions the aesthetics. In Performance Materials, we offer innovative solutions especially for the electronics industry — for microchips and displays — and for surfaces of every kind.

We are well on track in the execution of our five-year Bright Future transformation program announced in 2018, with which we are adapting to new market realities and customer requirements. Bright Future lays the foundation for returning to sustainable growth, attractive margins, and remaining competitive. Throughout 2019, we further streamlined our cost-base and processes. This included the reallocation of R&D resources. In this context, we closed our main R&D site in Chilworth, United Kingdom, in September 2019. The closure of our Atsugi site in Japan will follow by mid-2021. In addition, as announced in 2018, we will downsize by 400 positions in Germany by 2022.

With the completion of the acquisition of Intermolecular on September 20, 2019, and Versum Materials on October 7, 2019, we reached two major milestones on our Bright Future journey to transform Performance Materials into a strong solutions provider and leading player in the electronic materials market. Intermolecular has application-specific materials expertise and platforms for accelerated learning and experimentation with a powerful analytical infrastructure, all of which perfectly complement our portfolio. Together, we are well-positioned to deliver next-generation digital devices for a smarter, safer, and more connected world. Versum Materials is a leading global provider of innovative, high-purity process chemicals, gases, and equipment for semiconductor manufacturing. The merger should transform our company into a leading provider of electronic materials for the semiconductor and display industries. The Intermolecular and Versum Materials businesses are being integrated into the Semiconductor Solutions business unit. We are making good progress with the integration, ensuring a seamless transition and business continuity.

Performance Materials accounted for 16% of Group sales in 2019 and its share of EBITDA pre (excluding Corporate and Other) was 16%. The EBITDA pre margin was 31.2% of net sales.

Semiconductor Solutions*

With the acquisition of Versum Materials and Intermolecular, Semiconductor Solutions is now the largest business unit within Performance Materials. It consists of two dedicated units: Semiconductor Materials and Delivery Systems & Services. Our Semiconductor Materials unit supplies products for every major step in the wafer manufacturing process, including doping, lithography, patterning, deposition, planarization, etching, and cleaning. Specialty cleaners and conductive pastes for semiconductor packaging round off the portfolio. The Delivery Systems & Services (DS&S) business enables the safe and responsible handling of gases and liquid chemicals for electronic manufacturers. It focuses on the development and deployment of safe and reliable delivery equipment. This allows our materials to be handled with the highest quality and safety standards for our customers.

In the area of deposition materials, we are continuously looking for both new organosilanes and organometallic materials as well as liquid phase silicon formulations for processes with low resistance and various dielectric characteristics for faster and better processors, as well as higher data storage density. Our photoresists business is growing rapidly; throughout the year we have developed new photoresists to address the needs of the markets, for example, for 3D NAND memory, sensors, and radio frequency (RF) filters. Furthermore, interest in Directed Self Assembly (DSA) technology continues among our customers. Our advances in DSA technology have enabled customers to begin planning high volume manufacturing (HVM) qualifications. We have responded by developing exceedingly pure, high volume synthesis capabilities, which are key to meeting our customers performance and quality targets. In the 5G space, our transient liquid phase sintering (TLPS) conductive pastes are enabling highly efficient production of modern antenna applications. Our mid- to back-end photolithography resist materials used in electronic packaging applications continue to drive miniaturization and heterogeneous integration for small form factor devices.

Display Solutions*

Our Display Solutions business unit comprises the liquid crystals, OLED (organic light-emitting diodes), photoresists, and liquid crystal windows businesses. Even though competition continues to intensify, we defended our position as the global market and technology leader in the display materials business in 2019. Modern, energy-efficient technologies such as UB-FFS (ultra-brightness fringe-field-switching) have further established themselves on the market. With our XtraBright™, XtraBrilliant™, and XtraBoost™ products, we secured new projects for large-area displays as well as high-resolution mobile devices. The OLED business continued to develop favorably and experience a high demand due to the increased production capacities of display customers. Our constantly enhanced OLED material portfolio secured successful qualifications in a number of upcoming technical devices. For liquid crystal window modules, four projects are in the installation phase. These innovative solar shading solution projects demonstrate superior design aesthetics. The ramp up of commercial manufacturing at our Veldhoven site is running as planned, with the integration of a new lamination unit further optimizing overall production yield. Our photoresists business for displays continued to perform well, thanks to proven technical success in high-performance product lines. This is evidenced by a strong position in new display production lines in the growing Chinese market.

Surface Solutions*

In the Surface Solutions business unit, we provide our customers with solutions that help them to create innovative surfaces of all kinds. Our materials enable more beautiful, more resistant, and more effective products. Our pearlescent pigments allow striking automotive coatings, fascinating cosmetics, extraordinary packaging, innovative product design, and even unique food creations. With a broad portfolio of active ingredients, we enable cosmetics manufacturers to enrich their skin care products with moisturizing, protecting, or anti-aging effects. Moreover, with our functional solutions we serve a large number of innovative applications, from dirt-repellent and easy-care surfaces to laser markings of plastic parts and cables. We continue to invest in our pigment production capabilities. In August 2019, we celebrated the topping-out ceremony for new production facilities for silica flakes in Gernsheim, Germany. This investment will significantly increase production capacities for this special substrate, which is the basis for a whole range of unique effect pigments. In February 2019, we implemented a new structure as announced in October 2018 to align even more closely with the needs of our customers. We strengthened our key account approach as well as our regional setup to even better serve the diverse needs of our regional markets. Furthermore, we are implementing measures to stabilize our business in a market environment that has become challenging, mainly due to weaker demand from the automotive industry.

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