Merck KGaA

XETRA:MRK

Earnings Call Transcript 2020-Q3

[Operator]

Dear ladies and gentlemen, welcome to the Merck Investor and Analyst Conference Call on Third Quarter 2020. [Operator Instructions] May I now hand you over to Constantin Fest, Head of Investor Relations, who will lead you through this conference. Please go ahead, sir.

[Constantin Fest, Head of Investor Relations]

Thank you very much, Lauren. Dear ladies and gentlemen, a very warm welcome to this Merck Q3 2020 results call. My name is Constantin Fest. I'm Head of Investor Relations. And I'm delighted to have here today with me Marcus Kuhnert, our Group CFO. I would also like to highlight that we have for our Q&A present in this call, Chris Ross, which you know from the Capital Markets Day, our interim Sector Head of Life Science. We also have available for you to ask questions, Darren Verlenden which you know from the deep dive sessions of Process Solutions from the Capital Market Day, our Head of Bioprocessing. And I would encourage you to ask any Life Science- or Process Solutions-related questions to Chris and Darren. And we also have joining this call, as you might have seen, we have 3 slides on sustainability in this deck, Mr. Herwig Buchholz, our Head of Group Corporate Sustainability. And also here for any questions related to sustainability, please don't hesitate to use the opportunity and ask Herwig. Having said that, we would now like to guide you, as always, through the key slides of this presentation and then answer all your questions during the following Q&A. Having said this, I'd like now to turn over and to hand over to Marcus to kick off this presentation, Marcus.

[Marcus Kuhnert, CFO & Member of Executive Board]

Thanks a lot, Constantin. And also from my side, a warm welcome, everyone, to our Q3 earnings call. I'm starting on Slide #5 of the presentation with the highlights. Overall, Q3 was very strong and is yet another proof point for the successful execution of our strategy. Organically, group sales increased by 7.2% while EBITDA soared by 52.6%. As you know, earnings included a major boost from the Biogen provision release. However, even when stripping this out, organic EBITDA pre-growth was remarkably strong at 19.8% despite tough comps. We saw FX headwinds, and Q3 was also the last full quarter of consolidation benefits from Versum. As a result, reported sales growth was 2.5 percentage points ahead of our organic performance and reported EBITDA pre-growth was in line. The net effect of COVID-19 was about neutral in Q3. In fact, we saw a significant recovery across various franchises and also increasing tailwinds in others. Thanks to our successful crisis management, we continued to cope very well with the challenges during this pandemic and continued to adapt business processes accordingly. This also means that in many instances, the border between COVID-19 effects and underlying performance becomes increasingly blurred. But you can rest assured that we will continue to be as transparent as possible. Based on the strong 9 months performance, we are raising our earnings guidance for the full year. In particular, we now expect net sales in the range of EUR 17.1 billion to EUR 17.5 billion, EBITDA pre in the range of EUR 5.05 billion to EUR 5.25 billion, and EPS pre in a range between EUR 6.50 and EUR 6.80. Last but not least, we are proud to be introducing our new sustainability strategy today, and I will talk more about this later. And with that, let's go to Slide 6 for an overview of Q3 by business sector. Looking at the organic sales development, Life Science had a record quarter, with growth in Q3 at more than twice the rate of H1, while Healthcare returned to positive territory after the dip in the second quarter. And momentum in Performance Materials also improved markedly. Another way of looking at our business, which we introduced at our recent Capital Markets Day, revealed that organic growth in the quarter was primarily driven by the so-called big 3, namely Healthcare pipeline, Process Solutions and Semiconductor solutions, while the rest of the business was about stable. Significant FX headwinds of 4% -- minus 4% on group sales were more than offset by portfolio effects from Versum, resulting in total group net sales of EUR 4.5 billion, up 9.7%. Regarding Healthcare, please note that the core business recovered strongly and was almost flat year-on-year in Q3, while Mavenclad and Bavencio showed impressive double-digit growth. In Life Science, Process Solutions marked a new all-time high, with organic growth of 27%, while Research Solutions picked up significantly after the dip in Q2. And Applied Solutions also saw improving momentum. In Performance Materials, good organic growth in Semiconductor Solutions continued, while declines in Display and Surface were much less pronounced than in Q2. Regarding earnings, group EBITDA pre came in at EUR 1.7 billion, which corresponds to an exceptionally strong margin of 38.2%. However, even when excluding the EUR 365 million provision release, the margin was up by 260 basis points to 30%, reflecting strong top line growth and an ongoing focus on costs. Also note that nonrecurring income in Healthcare was about EUR 70 million higher last year, partly mitigated by lower travel expenses this year, but still suggesting an underlying margin expansion of more than 300 basis points. On to Slide 7 with a few comments on the regional sales development. Our 3 main regions: Asia Pacific, North America and Europe, returned to organic growth in Q3, reflecting easing of adverse effects from COVID-19, paired with successful crisis management. In each of the 3 regions, Life Science posted mid- to high-teens organic growth and Healthcare contributed positively, thus more than offsetting organic declines in Performance Materials. Latin America also turned positive after the dip in Q2, while Middle East and Africa is negative amidst delayed impacts from the pandemic. So let's now take a closer look at our financial performance and key developments in Q3. I'm now on Slide 9 with an overview of our headline figures. As mentioned before, earnings were significantly boosted by the Biogen provision release. Excluding this effect, you will still find a nicely leveraged P&L, where top line growth of 10%, translated into EBITDA pre and EPS pre growth of 20% and 27%, respectively. I've also indicated before that underlying earnings performance was even better given significant differences in nonrecurring income in Healthcare. In particular, Q3 last year included around EUR 80 million in total, comprising around EUR 50 million deferred income from Pfizer and around EUR 30 million deferred income from GSK. Q3 this year included just a high single-digit million euro amount, namely deferred income from GSK. That said, we are updating our full year guidance for deferred income from GSK to around EUR 70 million from around EUR 100 million previously, which means we expect close to EUR 20 million in Q4. As a general rule, please note that this amount can derive depending on cost evolution in the program and the achievement of development milestones. This just -- this is nothing new, just a reminder. We also confirm our full year guidance for up to a mid-double-digit million euro amount from active portfolio management. Nothing was booked in Q3, but we are well on track for the full year, given the recently announced out-licensing of M6495, which will, for example, support Q4. That said, operating cash flow was strong at close to EUR 1.2 billion and helped to reduce net debt by around EUR 300 million compared to year-end 2019. Please also note that net debt would be lower by another EUR 500 million if you take into account the temporary investment of excess cash, which we made in Q3. Let's take a brief look at our reported figures on Slide 10. While EBITDA pre increased by EUR 589 million, reported EBIT increased EUR 558 million. The difference mainly comes from higher D&A, partly mitigated by lower intangibles amortization on the one hand and higher adjustments on the other hand. The financial result was lower, largely due to lower LTIP provisions and lower interest expenses. The effective tax rate was within the guided range of 24% to 26%. And consequently, reported earnings per share came in at EUR 1.85 compared with EUR 0.79 in Q3 last year. With that, let's move on to the review of our business sectors, starting with Healthcare on Slide #11. Healthcare had a good quarter, with sales up 3.2% organically, as a minus 1.4% decline in the core business was more than offset by strong double-digit growth of our new products, in particular, Mavenclad and Bavencio. The adverse effects from COVID-19 were much less pronounced compared to Q2, as is most evident in the strong recovery of Fertility as well as the reacceleration of Mavenclad. Overall, our active crisis management continues to bear fruit, yet we still face some headwinds here and there. For example, Fertility in Asia Pacific and the dynamic MS markets remain muted, so our best estimate is that COVID-19 reduced organic sales growth by 2 to 3 percentage points in the quarter. Healthcare EBITDA pre surged 94% organically or by 20% if you exclude the Biogen provision release. This is despite the already mentioned lower nonrecurring income versus last year, which was partly mitigated by a meaningful cost benefit from reduced face-to-face activities in light of the pandemic. Earnings growth was also supported by solid top line performance and stringent underlying cost control. In fact, we continued to step up our efforts to drive profitable growth further and have earmarked a provision of around EUR 100 million, which will be booked under adjustments in Q4. Acting from a position of strength, this amount will be used over the coming quarters for ongoing optimization of our organizational structures, consistent with our focus on execution of the earnings phase of our strategic agenda for Healthcare as a global specialty innovator. Finally, based on our strong 9-month performance, we are raising our Healthcare guidance for the full year, with organic sales growth now expected at 2% to 3% and organic EBITDA pre growth at 6% to 8%, or 25% to 27% when you include the Biogen provision release. For Q4, this guidance implies stable to slightly growing sales and EBITDA pre, which you need to put into perspective of higher comps and initial effects from the third round of volume-based procurement in China. And with that, let's go to Slide 12 for a review of Life Science. Life Science had a truly outstanding quarter with organic sales growth of 15.6% or more than twice the rate of H1 and well ahead of our recently upgraded midterm ambition. COVID-related headwinds in some areas started to fade as expected, while tailwinds in others increased, leading to a significant net benefit, which explains about 40% to 50% of our growth in Q3 in Life Science, obviously. All of our 3 main regions: North America, Europe and APAC, saw accelerating organic growth into the mid- to high-teens territory. Similarly, we also saw significant acceleration across most customer segments. Pharma and biotech as well as diagnostics and testing were particularly strong. And while industrial and academia remain impacted, the latter recovered strongly from the dip in Q2. From a portfolio view, Process Solutions was a star performer, with organic growth accelerating further to an impressive 26.5%, mainly driven by bioprocessing and including a substantial boost from COVID-related demand. More on that in a minute. Research Solutions saw a major swing, from the worst to the best ever quarter in terms of organic growth. That means from minus 7.1% in Q2 to now a plus 9.5% in Q3. All business lines contributed to growth. And there were multiple drivers at work, including catch-up and also some pull-in effects related to COVID-19 as well as some underlying improvement. Applied Solutions also accelerated, albeit less pronounced, with organic growth of 3.7% compared to a stable development in H1. Almost all business lines were up, while the picture remained mixed across customer segments, as indicated before, and the effects from COVID-19 were still slightly negative on balance. EBITDA pre came in strong at EUR 630 million, reflecting organic growth of 25% or a margin expansion of 200 basis points to a record level of 33%, mainly due to operating leverage, positive pricing, good cost control, and finally, also a favorable product mix. You will remember that we already told you in -- I think, in the Q2 call, that on average, the additional demand from COVID-19 has higher margins and unfolds a favorable mix effect. Based on the strong 9 months performance, we are raising our guidance for the full year and now expect organic sales and EBITDA pre growth of 9% to 10% and 13% to 15%, respectively. For Q4, please note that this implies somewhat lower growth in margins versus Q3. However, this is mainly due to tough comps in Process Solutions and the aforementioned catch-up and pull-in effects in Research. Before moving on to Performance Materials, let's take a closer look at the COVID-19 implications for Life Science on Slide #16. Back in August, we shared with you the so-called 2020 heat map, illustrating that there are different factors at work across business units and customer segments. The conclusion was that downsides would actually fade as lockdowns are lifted, while some upsides would remain. Q3 already provides strong evidence of this as the net effect of COVID-19 turned significantly positive. Process Solutions, in particular, is benefiting from major tailwinds due to increased demand from portfolios focusing on COVID-19 therapies and vaccines. About half of the growth in Process this quarter stemmed from COVID-19 related business, and order intake has further accelerated to over 50% in the 9-months period. However, please also note that lead times have extended markedly. In addition, many of our customers working on COVID-19 topics are producing at risk and different products come with different requirements. And while visibility is good going into the next couple of quarters and we are making meaningful progress on capacity expansions, the potential longer-term upside remains difficult to predict. Finally, let me also briefly comment on Research and Applied. Both developed positively in Q3, mainly on the back of improving trends in academia. Both continued to see headwinds as well as tailwinds related to COVID-19. But unlike in Process Solutions, they are generally more balanced, at least when you look over a couple of quarters. In summary, the outlook for Life Science remains strong. Underlying demand is robust. And while still difficult to predict longer term, net upsides from COVID-19 are starting to visibly materialize. I'm sure you will have more questions on this, and Chris, Darren and myself are looking forward to discuss them with you later. With that, let's move on to the review of Performance Materials on Slide #14. Overall, the picture in PM remains mixed. However, momentum has improved substantially compared to Q2. Reported sales growth was strong at over 40% in Q3, reflecting moderate FX headwinds and obviously, also a significant portfolio effect from Versum. Organically, sales declined minus 5.4%, which is much better compared to the minus 13.7% that we have seen in Q2. About half of this improvement came from easing of COVID-19 headwinds, while the rest can be attributed to normalizing comps in liquid crystals and improved underlying performance, also on the back of stringent cost management. Semiconductor Solutions, the largest business unit in Performance Materials, delivered another strong quarter with organic growth of 8%. And while we will have noticed that this is slightly below the growth of the previous 2 quarters, it is still a strong quarter and towards the high end of our midterm guidance. Also note that growth of legacy Versum was consistent with this, and the integration continues to run smoothly, with synergies coming through even faster. That means we now expect about EUR 30 million cost synergies to be realized in 2020. Sales in Display Solutions declined almost 10% organically, given normalizing comps in liquid crystals, prevailing but easing adverse effects from COVID-19 and a solid underlying performance. In Surface Solutions, organic sales declined by 12.6%. And similar to Display Solutions, the rate of decline was also less than half of that seen in Q2, mainly due to a less pronounced impact from COVID-19. On earnings, reported EBITDA pre increased by 43.3%, as a moderate organic decline and currency headwinds were much more than offset by the Versum portfolio effect. Costs continue to be well managed, supported by strong execution on our Bright Future transformation program and COVID-19 countermeasures, resulting in a stable margin of 30.4%. Based on the solid 9-months performance, we are slightly upgrading our full year guidance for Performance Materials and now expect organic sales and EBITDA pre declines of minus 4% to minus 5%, and minus 6% to minus 9%, respectively. The portfolio effect from Versum in the mid-30s percentage range for both sales and EBITDA pre is confirmed. For Q4, please keep in mind that we will have no portfolio effect from Versum and expect very strong organic growth, also due to low comps in connection with the change of control, as mentioned in previous calls. Moving on to Slide 15 with a few remarks on our balance sheet. As you can see, there's not much change compared to year-end 2019. Cash and cash equivalents continued to remain some EUR 750 million higher, in line with the end of the previous 2 quarters and reflecting our prudent approach to secure liquidity during this time of crisis. Our equity ratio remains above 40%, and net debt-to-EBITDA improved by -- from 2.8 at the end of December to 2.3 at the end of September. Let's now take a closer look at cash flow on Slide 16. Operating cash flow came in strong at EUR 1.17 billion, up EUR 240 million compared to Q3 last year. Adjusted for the Biogen provision release, cash conversion as a percent of EBITDA pre improved, mainly due to reduced net working capital outflows. Investing cash flow was up significantly, reflecting temporary investments of excess cash, as already mentioned. CapEx was also up. And as you may have noted already, we are raising our full year CapEx guidance by EUR 100 million, mainly due to accelerated spending on growth projects, for example, in Process Solutions. Last but not least, financing cash flow in Q3 was on a more normal level, while last year included significant effects in connection with the financing of the Versum acquisition. And with that, let's move to the guidance, to the outlook. Before going into the details of our guidance upgrade, let me start by reflecting on our performance in the context of the COVID-19 pandemic. I'm on Slide 18 now. As laid out to you at our recent Capital Markets Day, we have made significant progress on transforming into a leading global science and technology company, both from a portfolio as well as a cultural perspective. Following a period of major investments, we entered the growth and expansion phase of our strategic agenda last year, promising to you that Merck would stand for profitable growth with high margins and a low risk profile. 2019 marked a strong start into this phase. And while we are heading into 2020 with a lot of momentum, the COVID-19 pandemic turned out to be a major test. Clearly, we couldn't fully decouple from what has become the deepest global recession in over 70 years. However, we will deliver profitable growth even in this turbulent year 2020 and confidently reaffirm the aforementioned promise today. Guided by a clear set of priorities, and as illustrated on this chart, we have successfully managed various challenges, while simultaneously identifying and capitalizing on new opportunities. As a result, our business performance is strong, and we are well on track to mitigate the effects of the pandemic, even slightly ahead of plan. I'm now on Slide 19 with a brief reminder of the key earnings drivers for 2020. As you can see, not much change compared to the version we shared with you in August. The one notable addition is the EUR 365 million provision release related to the patent litigation with Biogen. So let's go straight to the group guidance on Slide 20. As mentioned earlier, we now expect group net sales in a range of EUR 17.1 billion to EUR 17.5 billion, EBITDA pre in the range of EUR 5.05 billion to EUR 5.25 billion and earnings per share pre in the range between EUR 6.50 and EUR 6.80. We have narrowed our guidance corridor of our group net sales by EUR 400 million, while leaving the midpoint unchanged, as better organic growth of 4% to 5% is offset by greater FX headwinds, now assumed at minus 2% to minus 3% and versus 0% to minus 2% previously. For EBITDA pre, we have narrowed the corridor by EUR 200 million, and at the same time, lifted the midpoint by EUR 500 million. Out of this upgrade, EUR 365 million relate to the Biogen provision release, while the remainder reflects better organic growth of 6% to 8%, partly mitigated by bigger FX headwinds, now assumed in a range between minus 3% and minus 5% versus minus 2% to minus 4% before. For EPS pre, we have narrowed the corridor by EUR 0.35 and are upgrading the midpoint by around about EUR 0.70, including about EUR 0.63 from the Biogen provision release. Finally, please note that the anticipated portfolio effects from Versum are confirmed as a positive mid-single-digit percentage effect for both net sales and EBITDA pre. Let me also briefly comment on our business sector guidance on Slide #21. While so far this has been qualitative, we are now providing quantitative targets also per business sector. As you can see, we have slightly upgraded our organic sales and EBITDA pre assumptions for all 3 businesses, while for Healthcare, we have additionally included the Biogen provision release. And with that, let's move on to Slide 22 for our special topic on today's call, namely, introduction of our new ESG targets. Future growth will not only be driven by the sheer amount of new business. And already today, the success of the company is no longer exclusively measured in financial KPIs. With our transformation into a leading science and technology company, we developed the necessary mindset to connect business and societal values successfully. We have displays with low energy consumption or enabling of scientists to develop new therapies. Technical expertise, innovation power and a sense for unmet needs in the pharmaceutical, life science and electronics space already led to a number of pioneering products from Merck. Top ratings from leading sustainability platforms like Sustainalytics or MSCI confirm that we are already on the right path to contribute positively to sustainability. Just 4 weeks ago, The Wall Street Journal ranked us #4 out of the 100 most sustainable companies and #1 in social responsibility. But to further improve and keep pace with the fast development in the ESG area from a reputational as well as from a business perspective, we decided to implement the ESG focus even more strongly into our businesses, R&D and governance. Therefore, we developed 3 new sustainability targets and 7 focus areas which match our special strength in innovation and will guide important actions on our way to further improve our contribution to sustainability. Our first target takes into account the contribution of all 3 sectors to human progress and well-being. In 2030, we will advance human progress for more than 1 billion people through sustainable science and technology from Merck. Our second target reflects the need to integrate sustainability into our value chain to further develop various fields of governance and operations in a changing environment. This includes, for example, our culture and values, transparency in our supply chains, as well as risk and life cycle management. With more than 50,000 employees and more than 50,000 suppliers, this is a huge and impactful task. Our environmental approach is reflected in our third target. By 2040, we aim to achieve climate neutrality and to significantly reduce our resource consumption regarding waste and water. As the new sustainability strategy is an integrated part of our overall strategy, we will enhance in-depth steering of operations, design tailored KPIs for reporting and reflect all of this in our compensation scheme. So let's go to Slide 24 for an overview of our potential contributions to and benefits from ESG. The strategic exercise of the past months has sharpened our understanding of the 17 sustainable development goals defined by the United Nations on which we can have the strongest impact. You can see that for us, 5 most relevant SDGs on this slide. The most obvious fit is with SDG 3, good health and well-being. Here, Merck is well placed to contribute with dedicated products and initiatives in pharma, science and technology. The same is basically true for SDG 9, which we address by our innovation power. Also, for the other 3, we believe there is strong rationale for how they are connected to our strengths and targets. Finally, we are convinced that sustainability can be a benefit for both society and business. In particular, we expect our new targets to be helpful guardrails towards even greater resilience on the one hand, and on the other hand, further economic growth through new partnerships and business opportunities. And with that, let's go to the final slide, which outlines our ESG road map in the years ahead. We have made significant progress during 2020 by conducting an in-depth analysis of our operations and focus areas, the changing regulatory environment and the needs of our stakeholders. Based on that, we reassessed our sustainability strategy, which resulted in our new targets and ambitions, as just shared with you. Please also note that we will continue to review and further develop our targets as we appreciate that the overall ESG topic remains very dynamic. We are currently building a capable data platform to improve our internal steering of sustainability-related processes. Based on this, we will develop ESG KPIs for external reporting and integrate those also into the compensation schemes of the Executive Board as well as senior management from 2022 onwards. We are already working on an integrated approach in all businesses and will further develop strategies to fundamentally integrate ESG in R&D, controlling, M&A and our supply chain, just to name a couple of examples. All in all, we are confident that this will help us to make the right decisions on dedicated investments and initiatives to achieve our new targets. Thank you. And now we come to your questions.

[Constantin Fest, Head of Investor Relations]

First question, please.

[Operator]

[Operator Instructions] Our first question comes from Matthew Weston with Crédit Suisse.

[Matthew Weston, Managing Director and Co]

2 questions, please. The first is to Darren regarding the Process Solutions business and the fantastic growth. You've cautioned now for a number of quarters about the potential capacity constraints to growth in that business. But you still keep posting incremental accelerating revenue and the order book is clearly growing. I totally understand Marcus' comments about some of your customers are now taking risk. But can you please just walk us through how much capacity you are currently being able to add? And are we reaching levels of growth where you're really going to hit supply constraints and it could curtail future abilities to grow? And then the second question, if I can, is on the M7824 non-small cell lung cancer lung study. I can see there's a lot of detail on Slide 41 and clear commentary that you won't share very much information. But it was very surprising to a lot of investors that you continued with the 300 patient trials. So can you just give us any color that you can? But most importantly, can you reiterate your confidence that even with only 300 patients and with a PFS and OS endpoint, you are confident that this trial could have registrational potential?

[Marcus Kuhnert, CFO & Member of Executive Board]

Thank you, Matthew. And yes, I would hand over the first question, as you suggested, directly to Darren.

[Darren Verlenden]

Great. Thank you, Matthew, and thank you for recognizing the great uptick in Process Solutions business. Showing 27% growth is just fantastic. But as you say, with that immense growth that we're seeing, we actually do have some limitations on capacity that we're seeing today. As Marcus described as well, our lead times are starting to extend as we move out into this pandemic situation. We're in the fortunate situation of having multiple modalities by which we're treating the pandemic, whether it be a vaccine candidate, nucleic acid or monoclonal antibody therapies out there. So with the advancement of our lead times, we have done a significant look at our short- and long-range planning outlooks. We actually have made some significant investments on the short term here in capacity. We've actually invested about EUR 30 million so far, north of EUR 30 million, in specifically, our single-use and our filtration platforms and growth. So we're actually looking at our order book. We're looking at the long-range plans, the short-term implications, and investing and accelerating where we need to, to be able to advance this demand.

[Christos Ross, Interim Sector Head]

Matthew, this is Chris. Just to add a bit here. I think in the short run, in Darren's business, it's been really a very strong Q3 performance as noted. And the output from our manufacturing operations significantly improved in Q3. And we're seeing some measures taken in place to provide allocation principles to some of our customers, to re-densify some of our operations and also leverage some hiring that we've done in many locations really to bring up the capacity in the short run. But as Darren mentioned, the investments that we're making into the future, particularly in filtration and single use, we'll see the benefits of in the first part of 2021.

[Marcus Kuhnert, CFO & Member of Executive Board]

Thank you, Chris and Darren. Matthew, to your second question. So I know that our recent communication regarding the closure of recruitment at 300 patients and the change in status to active, not recruiting, has resulted in some speculations regarding the potential outcome of this study. And I'm also aware that those interpretations have a pretty broad range from quite positive, but also to a very negative interpretation. As you know, we are a little bit limited. We cannot talk too much about this topic. Yes? What I can tell you is, we have received a clear signal from the Independent Data Monitoring Committee that we have passed futility. So that means the trial is continuing. And while it's premature to speculate on the outcome of the trial based on recruitment closing at 300 patients, however, we will continue with the trial. And let me reiterate very clearly that, yes, there is confidence. We want to reiterate the confidence that this trial is registrational or it's registration relevant. Let me also clarify one more topic again. In fact, the interim data are not known to us. The data is blinded to the study sponsor. So that means neither us, nor GSK, know the results of the interim data. That was only known to the IDMC. They have reviewed the interim data. And only their decision was that futility was passed that we are carrying on. And other than that, nothing has changed. It is a registration relevant study, and we have passed utility, I think, which is a good sign, and we are now continuing, with the relevant endpoints, PFS and OS, as we have changed in, I think, in March, where we went to the adaptive trial design.

[Matthew Weston, Managing Director and Co]

Can I just have a quick follow-up on the Process Solutions question? I'm just trying to understand how much of the supply and revenue that was booked in Q3 was essentially manufactured live, if I can put it that way, or came out of inventory. And I know that a great deal of what you supply is very specialized to your customers. So I guess the question is, if you had to ship exactly the same again as what you shipped in Q3 in Q4, is your manufacturing capability capable of doing that, or we're reaching a point where you've been shipping from inventory, and we have to play catch-up as the new capacity comes online early next year?

[Christos Ross, Interim Sector Head]

This is Chris. I mean I'll add to where Darren led off with regard to lead times. I think it's important to recognize that our lead times have extended rather significantly. So the growth in order intake in the current quarter definitely does not translate into the sales growth in a couple of quarters down the line. So we're having a usual lead time in the 2- to 6-month range and orders not typically sitting in the 4- to 6-month range. So we are seeing a change in that landscape. And a heightened level of advanced order placement is happening as well with our COVID-19 regular business. So there's an appreciation here of what's going on in the supply constraints, but we are making progress there. And we see that strong H1 next year, but it gets a little bit less clear in the second half of the year.

[Operator]

We'll take our next question from Richard Vosser with JPMorgan.

[Richard Vosser, Senior Analyst]

So just a follow-up on Process Solutions, first of all. Just thinking about the vaccines, and we've obviously had 1 positive vaccine. But should the AstraZeneca-Jenner vaccine make it to market or one of the others, could you give us some perspective how we should think about that for a revenue opportunity for Merck in '21? Second question, back on TGF beta. And just maybe you could give us a bit of an explanation for spreading out the milestone income, the upfront milestone income over a longer period of time. Why is that? And how therefore should we think about the amount that's left to book in 2021? And then finally, just on Mavenclad. It looks like the ex North America revenue is about EUR 74 million. So perhaps you could give us the split of that, or maybe not the exactly split, but talk about the revenue from returning patients there and new patients in the market outside of North America?

[Marcus Kuhnert, CFO & Member of Executive Board]

Yes. So we start with the Life Science part. Chris, Darren?

[Christos Ross, Interim Sector Head]

Yes, yes. Sounds good, Marcus. Thank you. So let me just start with the -- I suppose the good news of the day, right, with the BioNTech-Pfizer news and the clinical results. Really very exciting and a big step forward here. And we're seeing that there's an expectation of the vaccination of up to 675 million people by the end of next year, so roughly 10% of the global population. So that's really the good news. But there's still need for other vaccines and other treatments. And we are well positioned in the COVID-19 developments for mAbs, for vaccines, for nucleic acid approaches. And we'll play a key role in the treatment strategies for the coming years, and I'll let Darren talk about that a little bit more. An effective vaccine, of course, we see could reduce the use of mAb cocktail treatments prophylactically, but they'll still be needed to treat patients with severe symptoms. So we still see a good outcome there. And the cold chains that are required and the cost and availability of the mRNA vaccine are challenging. So overall, we expect the market to continue advancing varying modalities with differentiated technologies to meet the continued needs. But maybe for a little bit more color, Darren, I could toss it to you.

[Darren Verlenden]

Sure. Thanks, Chris. If you actually go back to our Capital Markets Day back in September, we were talking about over 300 different candidates we're looking at across the pipelines of these therapies and vaccines and treatments. So I think it's the benefit of the Process Solutions business where we have a key part to play in all of those therapies, whether it be services, whether it be products or CDMO landscape. So it's really great news that we're advancing in these therapies as a patient population and just world health, if you will, that we play a significant role in all of these candidates moving forward. And I think if you look at the profile of -- for our business and where we're investing, the capacity, even into the R&D landscapes of some of these new mRNA therapies that are coming to market, we've been significantly investing in our R&D resources and our footprint in CDMO to be able to capitalize on the full breadth and opportunity that this market gives to us today.

[Marcus Kuhnert, CFO & Member of Executive Board]

Okay. Richard, I take the second question regarding the bintrafusp milestones. I would start it in a way, just to give you a short reminder all of us how the deal is structured. So we are talking about a net present value of EUR 3.7 billion. Thereof, we have received EUR 300 million per upfront payment, as you know. And then we have EUR 500 million potential development milestones. And the rest of the remaining EUR 2.9 million are milestone payments which are due for approvals and/or the reaching of commercial thresholds, so when products are in the market and when we hit certain sales thresholds. So I think under discussion are the EUR 500 million development milestones. Let me clarify. So far, there was no milestone payment yet. We have only received so far on the collaboration the EUR 300 million upfront, which, as you know, will go via deferred income through our P&L over the next 2 to 3 years. One thing. No milestone payment yet. It is impossible for us to predict, let's say, when those milestone payments will come. And let me just remind you again, and I think this we already told you in our Q2 call, there was one first analysis of interim data earlier this year. There will be some others most likely coming, yes? But we have never disclosed a kind of comparison between interim data readout and milestone payments. We just said that, eventually, the outcome or data from the lung program as a whole could eventually trigger those development milestones. And there's not much more to say, Richard. The second question was revenue from returning versus new patients for Mavenclad outside of the United States. We cannot give a specific split, but we can say that we are seeing new initiations rebounding after the lowest -- low point in April across all major ex -- or outside U.S. markets, with very good performance for you 2 -- I'm sorry, for year 2 return patients. And you can -- or we interpret this and I hope you, too, as a sign of continued confidence in Mavenclad. And also, please remind that there was a general pause of the entire high efficacy market due to COVID-19. That means there were no new initiations and no retreatment of patients. And this is still a little bit ongoing. So this has still not fully recovered. We are now navigating through this. And we can confidently say that the returners are coming back.

[Operator]

Our next question comes from Sachin Jain with Bank of America.

[Sachin Jain, Managing Director]

I've got a few, if I may. Firstly, back to Process Solutions. Just -- and apologies, I may be confused, but just to clarify your visibility on lead time and order book. I think you commented in answer to the last question, you've got 2- to 4-months visibility on order book. So could you comment to the sustainability of the existing 50% through the fourth quarter and into next year? And when you say you've got visibility on the business 'til 1H, is that order book or delivery of sales, which I guess, would give you longer visibility than that? I guess the last one other question, what I'm trying to get to is if your lead time, which I think you also referenced is 2 to 6 months, and that's lengthened, it would imply that whatever you saw in 2Q order book is being delivered through 4Q. So I just wanted to check if that was correct. Second question is a big picture margin question into '21. In Life Science, any color on how we think about margin uplift from that accelerated Process Solutions growth versus the prior commentary? And then Healthcare, can you -- absolute cost decline this year continue into '21? And then a final question, just on aggregate, on pipeline. So any color on pipeline build which covers both products and labs in to positive for next year in current levels? What I'm trying to do is triangulate the EUR 2 billion pipeline target for '22 versus consensus sales of around EUR 700 million-ish this year. So the '21 pipeline number would be roughly in the middle of that at EUR 1.3-ish billion? Or how do we think about phasing of pipeline over the next 1.5 years, 2 years?

[Marcus Kuhnert, CFO & Member of Executive Board]

Yes. Start again with the Life Science question, Chris, Darren?

[Darren Verlenden]

Sure. So Sachin, thanks, again, for the question on the order book. So as Marcus said in the opening presentation, we're actually showing our order book growing by greater than 50%, which is up from the guidance which we had in the first half of greater than 40%. What's happening is, actually, we're starting to get better visibility and transparency to the orders and where they're coming from, whether they're base business, whether they're COVID-related. I think if you can actually appreciate the landscape that we're in right now where some of these customers of ours actually have business in both areas of COVID, non-COVID. So really, just getting down to the ability for us to actually have these very intricate discussions with our customers to understand where the business is coming from. And it's really allowing us to sharpen our pencil as to the order book and what is tied to what and what we can actually prioritize. I think as you've heard, we've had a whole prioritization scheme where we have COVID and government rated orders as our first and foremost priority moving down the line as you go through that allocation. So yes. So as the lead times start to extend, as Chris said, we're in this -- our average is around 2 to 6 months. And again, it's really tough to say because the product portfolio is so diverse and differentiated, whether it be filtration, whether it be cell culture media, single-use, each one carries its own nuance, if you will, and the ability to deliver and the lead times required from there. But we are seeing that the lead times are going up from that 2 to 6 standpoint into the 4- to 6-month window. But again, it's dependent on the product actually that we are delivering and shipping to those customers.

[Christos Ross, Interim Sector Head]

And I think it's important to keep in mind that COVID customers are producing at risk. And it's very unlikely that all the products currently in development will get approval. So we need to see how that plays out. So that puts a little murkiness there. And the different products have different requirements. We talked about this before as well that we, for example, sell more of our products into the manufacturing of mAbsthan vaccines. So there's a bit of clarity that needs to come in the second half of the year, but I agree with Dan's comments on the lead times.

[Marcus Kuhnert, CFO & Member of Executive Board]

Okay. Your second question, Sachin, was around potential margin uplift in 2021. As you know, we would not precisely guide you on margins per business sector or on product levels today. What I can say or -- but I can give you a couple of hints and comments. So first of all, please keep in mind, Life Science, for sure, had an extraordinary quarter 3 2020, not only in terms of top line momentum, but also in terms of profitability, strongly driven by this extraordinary top line growth, strongly driven by the still very high COVID-19 tailwind, which has -- or which unfolds a positive mix effect, what I've outlined already a couple of minutes ago in the presentation, and also supported by strong positive pricing effects, which we have seen in the third quarter. For 2021, even under very bullish assumptions, we -- actually, we do not see a scenario where organic growth in Life Science would exceed a mid-teens territory next year. While in a base case, we would be rather looking at growth similar to what we are seeing in fiscal year 2020, where we are still ahead of our recently upgraded midterm guidance. And that also then translates into the margin that this extraordinary 33%, I would not necessarily, yes, prolong or write further into 2021. We stick, however, of course, to our ambition that we say, we want to keep going forward margins at least stable. And it goes without saying, that when we are in a such benign market environment, that then we see also potential to further increase margins. But as I said, the 33% are, I would say, also an exceptional level which we have enjoyed this quarter. When we look on Healthcare, for Healthcare, we have a couple of moving points in a way. On the one hand, we have benefited from the COVID-19 crisis and the related cost implications in 2020, by around about -- I would say, estimate by end of this year, by around about EUR 150 million. If we, let's say, allocate this EUR 150 million proportionally to the sales share to the business sectors and take a little bit out, because also the group functions have obviously contributed, you get a feeling on the cost tailwind or cost savings tailwind that our 3 business sectors are currently, let's say, getting a support to mitigate for the top line challenges. We should, let's say, not be too bullish in assuming that everything of that can be maintained in 2021 when we come to more normal business conditions. And now, let's say, with the most recent news on a vaccine development, that is not completely unrealistic. I would foresee that we do more travel, a bit more travel next year, that we do more customer visits, that we do the one or other customer event also in our businesses. So while we are very strongly committed that we would not, on the other hand, also not return to pre-COVID cost levels, that also should happen under no circumstance, we also need eventually to reinvest a little bit, let's call it, in personal relationships in the broad variety and the broadest variety of sense, yes? So yes, you can assume that some of the cost savings will actually go into 2021, that we will carry them over. But definitely not everything what we have also, let's say, driven by the crisis environment this year what we were able to read this year. Last question, on the pipeline. I understand where you are coming from. Let me reiterate. The main contributors for 2022 will be obviously Mavenclad and Bavencio. We expect also tepotinib, and eventually, also bintrafusp to contribute. I cannot give you now a precise guidance for the pipeline or new product sales for 2021. However, when you think about the gap that we still have to bridge to reach the EUR 2 billion, you can imagine that it is in our best interest that we do not get too much back-end loaded, yes? So that we had carried then a huge risk into 2022. That means we will have and continue to have pretty aggressive rollout plans to see a further strong ramp-up also in 2021. More, I cannot tell you.

[Operator]

And we'll take our next question from Peter Verdult with Citi.

[Peter Verdult, Managing Director]

Pete Verdult here at Citi. 2 questions, the Life Science and bintra, sorry to be boring. Just to Chris and Marcus. Did I hear right that you said your best guess for Process Solutions' growth, excluding the benefits of COVID, was around 13% to 15%? And could you just clarify that as it relates to managing inventories and preventing stock-outs that we're not at that sort of a situation yet given the surge you're seeing in demand? And then on bintra, Marcus, I mean you made the point that you're still blinded to the results. So can you explain to us on what basis it was decided then not to expand the trial? Just given the prize on offer as well as the hurdle, it would seem like a prudent move. So anything you can share with us on that will be appreciated. And maybe one last one on bintra, the very latest in terms of next interim or when you expect that 037 study to read out.

[Christos Ross, Interim Sector Head]

Starting on the Life Science on the Process Solutions side. So yes, organic growth, as discussed in Q3, very strong at 26.5%. And here, just to answer your question. So the estimated net effect from the COVID explains about 50% of the growth in Q3. So this does imply to us still strong base business growth of about 13%. So well in line, slightly above our midterm guidance for the low-teens growth. Slightly below the growth rates prior that we discussed for COVID, and this is likely due to some of the base business being slightly impacted by the allocation principles toward COVID.

[Marcus Kuhnert, CFO & Member of Executive Board]

So on your first bintrafusp question, Peter. So first of all, obviously, the -- this decision that we are fully recruited with 300 patients was also an outcome of the Independent Data Review Committee, which was submitted to us. And again, the criteria behind this decision are not visible to us, have not been visible to us. So I can unfortunately also not discuss the pros and cons of this and it was just something we had to accept after the independent data monitoring committee has reviewed the data. They said, okay, you have passed futility, which was good news, obviously. And then they said, okay, we continue with 300 patients, yes? So as with any other trial, now coming to the second part of your question, there are multiple interim analysis scheduled. And so also for 037, between now and the end of the study in April 2023, which is a currently estimated primary completion date, which will be, of course, event-driven. And again, sorry to say, I hope you understand that we cannot discuss more detail at this point in time.

[Operator]

Our next question comes from James Quigley with Morgan Stanley.

[James Patrick Quigley, Equity Analyst]

Just one on the cost savings. So you mentioned there's EUR 100 million provision that you're taking in Q4 to support efficiency gains and things like that. So what is the -- sort of the goal from that, in terms of how much you could potentially save in absolute terms and from a margin perspective going forward?And secondly, in Process Solutions, do you have any idea how your customers' inventory is looking? Clearly, they're likely to be burning through quite fast. But are -- is anybody over-ordering in order to have a buffer for the future?

[Marcus Kuhnert, CFO & Member of Executive Board]

Yes. So to your first question, the EUR 100 million, the EUR 100 million is a set of initiatives that we are doing in Healthcare in order to prepare ourselves for the future. And please note, it is definitely not that we are fighting a fire, but it is that over the years, let's say, with original development plans for pipeline, et cetera, we have figured out that in some areas, the reality simply has developed somewhat differently than original plans. And we think that it is now time to adapt structures accordingly. So the program has a very strong organizational or structural component. At the same time, we are addressing also cultural aspects, which are very important, where we want to foster simplicity, accountability and execution as our guiding principle and carry this even more into the entire organization. So we are addressing the way of working going forward in the future, and we are addressing also inefficient organizational structures in various areas, go-to-market, in R&D, et cetera, et cetera. So this is, I would say, a big organizational, but also cultural program, with the aim to fully leverage our investments of the past and view this initiative as a consequent next step in the context of the longer-term transformation of the health care sector and the successful -- or finalizing the successful transition or securing the successful transition now into the earnings phase, what we have promised to you. Can you repeat again, please, your second question?

[James Patrick Quigley, Equity Analyst]

Sorry. So the second question was, do you have any sort of visibility on the inventories of your customers in Process Solutions? They're clearly going to be burning through their inventory [ with debt ]?

[Marcus Kuhnert, CFO & Member of Executive Board]

Okay. Yes. I would just give this to Chris and Darren, of course.

[Christos Ross, Interim Sector Head]

James, I can't actually speak to our customer inventory outlooks. I can't speak for them and what their practices are. But I can tell you, when we look at the orders that are coming in for Process Solutions business, there are some customers that are calling in advance, understanding they need to get into the queue to ensure that they have the raw materials when they need them at the right time. So we do see practices of customers planning in advance, planning well ahead of time. But again, we still stick to our practices of allocation, which is government-rated orders and COVID first; life-saving therapy, second; life-enhancing therapies, third; and then clinical programs in the last spot as we move ahead.

[Operator]

Our next question comes from Falko Friedrichs with Deutsche Bank.

[Falko Friedrichs, Research Analyst]

Firstly, on Bavencio maybe. Could you provide us with a bit of a refresher on the pickup you saw in Q3 and the feedback you've been able to gather from physicians in the quarter? Then secondly, you alluded to slightly higher CapEx spend this year. Could you just quickly remind us what exactly it is you're spending in this year? And maybe also provide a bit of a glimpse into next year, whether we should expect a higher level next year as well? And then thirdly, FX is obviously a massive headwind for so many companies and also for you this year. So I think it would be helpful for all of our models to have maybe a bit of an indication for what the negative impact could be in 2021 if the FX rates stay where they are.

[Marcus Kuhnert, CFO & Member of Executive Board]

So Falko, I take -- I answer your -- the second question first. So on higher CapEx, we have actually a lot of growth opportunities, as you may have heard and taken already from our quarterly release and also from what Chris and Darren has told you. So we are currently carefully assessing how sustainable the COVID-19 tailwind is in Life Science and which the areas are where we safely can invest in order to reap future benefits on a sustainable way. The main investment, actually, we have currently in mind, support the growth of the Process Solutions business. So that should be not a big surprise; serving the high demand and the growing markets there. And it does, in fact, include the expansions at 2 of our plants in the U.S., where we will add additional capacity, especially for single-use assemblies and downstream filtration. And also, on top of that, we are reviewing our long-range demand for our product portfolio against the expected capacity. And we will define prioritized list of expansions to accelerate against the current plan. On the FX headwind topic, this is, at this point in time, relatively difficult to judge. I must honestly say we have also not yet in-depth had a look into that because we still have our planning meetings in front of us. And there, we will then get acquainted on, let's say, the FX developments in our businesses in our regions. Current status, obviously, is that the FX impact in 2021 will likely be negative, but I cannot tell you much more at this point in time. On Bavencio, so you asked me to provide you with a refresher on the third quarter and some feedback from physicians in the quarter. So we have seen a very, very nice growth. So Bavencio in total was up 53% versus prior year and quite impressive 41% sequentially versus the second quarter. And obviously, that points to the fact that the major part of this increase actually is coming from first-line bladder. This is progressing extremely well with the first 3 months post-launch. Of course, there's also a note of caution, 3 months after launch is still pretty early. But the first signs we see are very encouraging and setting a strong foundation for 2021. And let me also take you now to Slide #37 for a couple of -- in more couple of details. So on the slide here, on the right side, you see Bavencio first-line bladder strong early launch performance. And the reception in the community validates the significance of the overall survival advantage that we have here. We have seen encouraging data points discussed in the September R&D update by Rehan, continuing trending positively. Continued increase in penetration, yes? We believe now we have a 50%, round about 50% share here. And we have also sustained the increase in the accounts ordering Bavencio. And we have leading share of voice of more than 50%, which is also very supportive.So all in all, I think we are off to a very good start and on track to change the standard of care within the integrated -- indicated segment.

[Operator]

We'll take our next question from Daniel Wendorff with Commerzbank.

[Daniel Wendorff, Team Head of Healthcare & Chemicals]

3, I have. 2 on Process Solutions. When you say that a number of your Process Solutions customers have started to produce at own risk, can you give us a sense about what number here we are talking about? Is it a single-digit number of customers? Is it a double-digit number of customers? And then my second question on Process Solutions is referring to the order intake. When you look at the order intake growth you saw in Q3, what part of this is really driven by COVID-19 related demand? And what is really underlying growth or order growth development? And my last question is for Healthcare. How should we think about the sales development of Glucophage over the next quarter, potentially over the next quarters when considering the VBP situation in China?

[Marcus Kuhnert, CFO & Member of Executive Board]

Yes. We start with Life Science. Over to Chris and Darren.

[Darren Verlenden]

All right. So Daniel, thank you. And definitely, when we say customers are producing at risk, this is just the context that they're producing at risk in the context of getting a treatment approved, if you will. So again, I can't speak to what the breakdown is, specifically of who's producing at risk or what -- and who are not. But definitely, this is actually lending to the order intake that we're doing and the growth we're seeing in the COVID linked to that idea of a lot of these customers, whether they have approval for treatments or not, they're producing, right? And when you look at this, one of the risks that we have is order cancellation could be one of the outlier perspectives in this context. But we -- in case you're questioning or have --] insights there, we see limited risk there as well because the demand is high, limited ability for these cancellation of orders moving ahead. And then I think you had a question that was related to order intake as well. Can you just repeat the order intake piece?

[Daniel Wendorff, Team Head of Healthcare & Chemicals]

The underlying order intake growth. So what would this have been in the quarter without COVID-19 related projects?

[Christos Ross, Interim Sector Head]

Yes. And I can take that one, Daniel, this is Chris. So the main contributors, as you know, to the growth of the portfolio are the COVID-19 treatments and vaccines. And just as a rough number, we're working on over 50 vaccines and over 20 treatment solutions here. And the COVID versus non-COVID situation, so we're estimating about 30% of the growth in the order book right now is tied to COVID-19 specific manufacturing processes. I think, previously, we reported that as 50%. But now we're looking much more closely with the transparency we have with customers at the specific molecule application. And in fact, we see that the strength in the base business is quite strong there as well. So that's the latest update.

[Marcus Kuhnert, CFO & Member of Executive Board]

We have one more question that's open. Daniel, you asked about the VBP effect of Glucophage. So first of all, we will see a first impact, obviously, in the fourth quarter 2020, but it will be moderate, and it will be -- or it is fully captured, obviously, in our guidance. Secondly, I'm sure you have heard about it, but just to reiterate, we have recently completed or finalized negotiations with the Shanghai authorities on the so-called gradient price cut. As you know, the gradient price cut refers to the segment, public hospital segment where we still have access to, so which is not reserved to the winners where we can still compete, but where we have to accept a price cut which is much, much more moderate than the price cut that the winners got. And here, I can tell you that we are very satisfied with the outcome of the negotiations. It was significantly ahead of the worst case scenario, where we said the worst case scenario is a price cut of around about 30%. We are significantly better than that. And last but not least, I can only tell you so much that I'd say, in China, of course, next year, we will see the full-blown effect of VBP, yes? We are confident, and I reiterate now what I said after the Q2 call, that over a 2-years' time period, so from 2020 to 2021, also, the base business in China will be back to growth, yes? I'm, let's say, not as courageous, promising you big growth for 2021 because there, as I said, we will see the VBP effect. But over a 2-years' period of time, China-based business will be back to growth.

[Operator]

And we'll take our next question from Simon Baker with Redburn.

[Simon P. Baker, Head of Pharmaceutical Research]

One on Healthcare, one on Performance Materials. Firstly, on Healthcare. Just looking at the TRx trajectory of Mavenclad, it looks stronger now than it did pre-pandemic. So I just wonder if you could give us some color on that. Is that catch-up? Is that a change in access, change in marketing? Just some thoughts on why the performance certainly looks better than it did before the lockdowns. And then going back to bintrafusp. I fully appreciate you cannot and will not talk about any of the data. But presumably, the interim analyses of at least a number of them was prespecified in the study protocol. So I wonder, Marcus, if you could give us a little bit more clarity on what you meant by multiple. And then just finally, on -- 2 very quick questions on PM. Would it be fair to assume that the regular depreciation and amortization charge we saw in Q3 is a sensible run rate post Versum? And also related to Versum, could you confirm that we have now lapped on the acquisition growth impact? So in Q4, the acquisition impact on growth on Versum will be essentially 0.

[Marcus Kuhnert, CFO & Member of Executive Board]

Yes. A lot of questions. I try to work my way through. So I'll start with the PM question. I think that the Q3 rate, depreciation, amortization for PM represents a reliable run rate going forward. I do not see any disturbing effects in the third quarter. The PPA effects are fully included. So I think this is a fair assumption, Simon. On Q4, you should assume that we have seen -- or that from Q4 onwards, the Versum business will be contributing to our organic growth. So that means we have seen now 3 quarters as portfolio effect, Q4 will be organic. On the Mavenclad question, actually, yes, that's not an easy one. It's a combination of effects. Most importantly, COVID-19 caught Mavenclad, let's say, at a very bad timing during the ramp-up phase, which sets us back a little bit. We are now on the recovery. And I think it is quite natural, so that we see, let's say, an ongoing demand dynamic during a launch that we are still in a ramp-up phase. Yes? So that means there are not necessarily very special reasons behind that we are now on a sales level which is already exceeding the level pre-COVID-19 because we have seen -- I think that a lot of concerns regarding the adverse effects of Mavenclad on the immune system. Meanwhile, off the table, they are seeing some recommendations also out which show that the immune system shows a relatively quick recovery. And I think the main reason is actually that we just are more progressed in the launch, that some more time has been done. On the other hand, we see also still factors that are holding us back because, for example, the high efficacy market is still depressed. We are gaining market shares, but the market growth of the high -- or the market status, the market growth of the high efficacy market is not yet back to pre-COVID levels, which also holds us back a little bit. And if we see a kind of recovery here, then that should also have another positive effect on the further ramp-up of Mavenclad. Let me share one more thing with you. That was a big topic in our quarterly review meetings. And we have seen -- I've seen an interesting presentation there, which shows that there's a very high correlation between patient mobility and the development of the high efficacy market. That means in lockdown times or when people are restricted to travel, that then the high efficacy market is suffering. So let's say -- let's hope that the situation normalizes as we find now, or that soon, an effective vaccination is coming. If mobility goes up, so will high efficacy market and further than the Mavenclad sales. Is that answering your question, Simon, or?

[Simon P. Baker, Head of Pharmaceutical Research]

And just as a final question on the bintrafusp interims. I wonder if you could, that would be lovely.

[Marcus Kuhnert, CFO & Member of Executive Board]

Yes, yes. So as I said, I mean, no standard practice, that there are multiple interim analysis, but it could happen. And as I said, I cannot tell you more. Yes? I think I made myself clear. We cannot give more details on that.

[Operator]

And we'll take our next question from Emily Field with Barclays.

[Emily Field, Research Analyst]

I'll just ask one on Bavencio. I know you commented on some of the launch metrics for first-line bladder a few questions back. But just thinking about going into 2021. Consensus for 2021 implies a significant acceleration in growth, essentially a doubling year-over-year. I mean is that something that, as you see the launch trajectory now, that you think is achievable? Or to ask another way, if you could just perhaps give any metrics on the size of that overall market in first-line bladder.

[Marcus Kuhnert, CFO & Member of Executive Board]

So I think it is, let's say, inherent to any launch that we see, especially in the earlier phases, a relatively strong ramp up. So definitely, you can assume a further acceleration of the Bavencio sales into 2021. Why I believe we are -- we have meanwhile received our peak sales more or less in MCC. I do not expect much from bladder second line, to be honest. Renal is a little bit stagnant in the U.S. and quite nicely growing outside. So the major part of the growth in 2021 and definitely a further acceleration is to be provided by first-line bladder. Second question was market size, right, or potential of the market. So I can answer this question only, let's say, in terms of number of patients. And here, is this slide available in the presentation? Emily, if you would just flip to Slide #38. I'm sorry. It was on the R&D update call, Matt. It is highlighting the number of patients that are actually eligible for Bavencio first-line bladder. So we are starting with newly diagnosed metastatic UC cases where we have some 20,000 patients in the U.S., some 30,000 in Europe and some 9,000 to 10,000 in Japan. If we assume 85% of those patients are platinum eligible, we end up with 17,000 in the U.S., 25,000 in Europe and 8,000 in Japan. And then we have, let's say, also a fraction of that which can take carboplatin or Cisplatin first-line treatment. And then this reduces the number to some 8,500 patients in the United States; 21,000 in Europe; and 7,000 in Japan. And then roughly 70% of that assumable will show a complete or partial response or a stable disease, which means that they are finally then eligible for a maintenance therapy in using our Bavencio first-line bladder. So this is, let's say, the indication that I can give you based on the available patient data. And of course, keep in mind, Emily, we have now meanwhile received approval in the United States. We also expect approval or we aim for approval in all bigger jurisdictions. That means in Europe and in Japan as well in the second -- sorry, in the first half of 2021, and please keep in mind, why we have not received a milestone payment for the U.S. approval for bladder as we have received it for the second-line approval 2 years -- 3 years ago, for potential approvals in Europe and in Japan, we would be eligible for a milestone payment. And that is something that you should have on the radar screen for next year.

[Emily Field, Research Analyst]

Would that be of a similar amount to the prior milestone?

[Marcus Kuhnert, CFO & Member of Executive Board]

Yes, yes. The milestones are all the same. The difference is only by region. Yes? So Europe and North America is double the amount of Japan. But I think that you have figured out already.

[Operator]

Our next question comes from Krishna Arikatla with Goldman Sachs.

[Krishna Chaitanya Arikatla, Research Analyst]

I have 2, please. Marcus, on General Medicine portfolio, a big picture question there. That franchise is now being a drag on the overall Healthcare growth rate. How should we think about your priorities for the franchise there? Are you looking at managing that for cash? Or should we think about divestments there, any of those products, and use those resources elsewhere in Healthcare? That's the first one. The second one, I appreciate you can't say much on bintrafusp, but I'll still try. You mentioned that both GSK and Merck are blinded to the data. Will the data remain blinded to the 2 companies until the study is fully complete, please? And if that is the case, what forms the basis for payment of any potential milestones?

[Marcus Kuhnert, CFO & Member of Executive Board]

Thank you, KC. On your first question, General Medicine has been over years a significant growth driver of our Healthcare portfolio and also a good contributor of growth into the group. We actually do not see that this is going to change dramatically going forward. Actually, we have to deal with the real key impact, especially next year when we are, for example, having tough comparables from more or less unaffected 2020. So that will be, let's say, a little bit a challenge on -- for China, obviously, but also for the entire General Medicines portfolio where we believe that it will be stable in 2021. But due to that effect, but then definitely back to a mid- to high single-digit growth rate beyond 2021. At the same time, so General Medicine is not, I would say, the most preferred area in our group which we would consider for potential M&A deals. However, I would also not -- or cannot totally include this. When it comes to portfolio management, it is the usual topic. That means we are screening from time to time our portfolio and looking whether there, let's say, businesses where we are eventually not the best strategic owner on the one hand, but also, of course, whether there are areas, strong growth areas especially which we want to strengthen. However, let me also clearly outline the focus areas for investments, and here, especially also in the M&A space, are the big 3. I mean, obviously, the Healthcare, our new product pipeline is more an organic or an internal investment into our pipeline and further development of our pipeline. But Process Solutions and Semiconductor Solutions are, I would say, the priority areas when it comes to next M&A moves. Your second question on bintra. You asked -- so bintra will remain blinded until 2023. What forms spaces for potential milestones? First of all, yes, the data will remain blinded until the study completion. Right now, the estimated primary completion date is in April 2023, as you know and as we said earlier. And this is event-driven. Analysis from the study will only be shared after the study completion. And once the full data set for the dual primary endpoints, which we have changed in March to PFS and OS, as you know, has been obtained and analyzed. So the development milestones, again, are tied to the data from the lung cancer program, and that is all I can say.

[Operator]

Our next question comes from Florent Cespedes with Societe Generale.

[Florent Cespedes, Senior Equity Analyst]

2 quick ones, please. First, on Healthcare. For 2021, could you share with us which are the next most important milestones in your view? And my second question -- on the research side I mean. And the second question is on Research Solution. Could we have more color on whether this Q3 performance is a kind of one-off and if Q4 will be a little bit more depressed? Or if we should see a little bit more, let's say, dynamic demand in Q4 as well and for early 2021? So just to figure out kind of the shape of the trend on this business.

[Marcus Kuhnert, CFO & Member of Executive Board]

Chris, do you want to start with the Research question?

[Christos Ross, Interim Sector Head]

Certainly can, Marcus. Absolutely. So thanks for the question. So yes, exceptional growth in Q3 from Research Solutions, exceptionally strong. And we estimate that the net effect of the COVID-19 portion of that growth is about 60% of the growth in Q3. So if you break it down, we see half of that growth coming from COVID underlying demand and half of it coming from actually pull-in of work from Q4. And 2 other elements, which actually offset each other a bit is that we saw a pretty significant catch-up effect from Q2. As you saw before, we had a very deep decline in Q2, a very significant uptick in Q3. So that catch-up effect impacted Q3. And we have to be reminded also in the balanced view that the academic labs are not fully operational yet. So we've seen global activity trending in the right direction, but certainly, still far from normal. So though it was an exceptional Q3, there are some mitigating factors here in Q4 and beyond.

[Marcus Kuhnert, CFO & Member of Executive Board]

Okay. Thank you, Chris. I'll take the second question on Healthcare, Florent. So you said milestones. I'm not 100% sure of what you mean by that. I guess you mean the news flow in 2021. But just to reiterate. We expect 2 milestone payments, which I just said, which are for potential approvals for bladder first-line in Europe and in Japan, as just outlined. On the news flow side, this is on Slide #42 in the presentation, but I can also give you the most important messages quickly now. So for tepotinib, MET exon 14, we expect FDA approval in the first quarter of 2021. You know Japan has already been approved. Midterm, we plan for going in all jurisdictions. For first-line bladder, as already said, expected approval by the EMA and the Japanese MHLW in the first half of 2021. On Bavencio lung, our lung study, we expect in the second quarter to have available in-house data and then the data readout completed in the second half of 2021. And bintrafusp alfa, importantly, second-line delivery tracks data readout in Q1 2021. And then, in the second half of the year, the expected regulatory submission subject then to the discussions or completion of the discussions with the health authorities. And we have also our M5040, TLR 7/8 antagonists, our antibody against corona. And here, we expect to see first results in the second quarter of 2021. So this is the news flow we expect for next year.

[Constantin Fest, Head of Investor Relations]

Thank you very much for asking all your questions today on this call. With this, I'd like to hand over to Marcus for some closing words. Thank you.

[Marcus Kuhnert, CFO & Member of Executive Board]

Yes. Thank you, Constantin. And thanks also to all of you for your strong and continued interest in Merck. Let me summarize. Overall, Q3 was very strong, and I think it's yet another proof of the successful execution of our strategy. We can -- I can promise you. We remain focused on addressing the challenges that we are currently facing in light of the pandemic, while at the same time capitalizing on the new possibilities that arise. That said, we will report back to you again with our Q4 results in March. And I look forward to meet many of you on the upcoming roadshow and conferences. This time, unfortunately, again, in a virtual setup, but I'm really looking forward also for the one or other personal meeting again. Let's hope that this will work out next year. Thank you very much, and goodbye.

[Operator]

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