EVOLUTION AT MERCK - INVENTING FOR LIFE
VALUE-CREATING CAPITAL ALLOCATION STRATEGY
Commitments
R&D Investments: Continued investments in internal
innovation
CapEx: ~$16 billion of capital projects through 2022
focused on manufacturing capacity for our growth
businesses, R&D discovery buildout and IT
infrastructure
Dividends: Target payout ratio of 47%-50% over time
Discretionary
Business Development: Value-creating, bolt-on
acquisitions and strategic collaborations to further
Capital allocation priorities
over the next 5 years
Financing
Activity
MERCK
INVENTING FOR LIFE
enhance portfolio and pipeline
Share Repurchases: Return excess cash to
shareholders
After-Tax R&D
CapEx
Dividends
'Assumes financing consistent with A1 rating
Excess Capital for
BD & Share Repo¹
Expect to generate significant free cash flow over the next 5 years
Rob Davis
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