Dear ladies and gentlemen, welcome to the Merck Investor and Analyst Conference Call on Q4 2021. As a reminder, all participants will be in a listen-only mode. May I now hand you over to Constantin Fest, Head of Investor Relations, who will lead you through this conference. Please go ahead, sir.
Thank you, John. Dear ladies and gentlemen, a very warm welcome from my side to this Q4 2021 earnings results call of Merck. My name is Constantin Fest. I'm Head of Investor Relations here at Merck, and I'm delighted to have here today with me, Belén Garijo, CEO of the Merck Group, as well as Marcus Kuhnert, CFO of the Merck Group. For the Q&A, we will also be joined by Matthias Heinzel, CEO of Life Science, as well as Peter Guenter, CEO of Healthcare, and Kai Beckmann, CEO of Electronics. We would like to first run you through the key slides of this presentation, and then we'll be happy to take all of your questions during the Q&A. Having said this, I'd like to now hand over to Belén to kick off the presentation.
Thanks, Constantin, and welcome everybody to our full year earnings call. We have invited you to discuss our annual results today. Given the incomprehensible violence happening right now at the very heart of Europe, business events like this need to be put into perspective. The war in Ukraine is a painful cut to any regularity. To me, personally, and to all of us at Merck, it is devastating to witness. It saddens me, especially, to see the heartbreaking images every day, what we know to be a truth in the world, that women and children suffer disproportionately. Hence, to support humanitarian aid in Ukraine, Merck as a company will donate EUR 2 million to the German Red Cross. EUR 1 million of this amount will be contributed by the Merck family.
In addition, we have set up a donation platform to enable everyone at Merck to contribute. Donations made here will be matched by the company. As you know, we are dedicated to advancing human progress, and the health and well-being of people will always be at the center of our actions. We live up to this responsibility by continuing to do everything in our power to ensure the supply of medicines and products to patients and customers, of course, in full compliance with the existing sanctions. What makes me very proud is to see how Merck colleagues across the company, particularly in countries bordering on Ukraine, such as Poland, are volunteering, supporting the Ukrainian.
Preparing to welcome Ukrainian refugees to their homes, organizing the transportation of care packages with food and hygiene products, and connecting on our intranet, as well as locally, to share information about ways to help and donate. This is the very team that delivered our 2021 results. In face of other considerable challenges, such as COVID, they did a fantastic job. Now let's go to slide number five of the presentation for the highlights. Overall, as you have seen in the press release already, 2021 was an outstanding year for Merck, operationally, strategically, and financially. Thanks to the commitment and dedication of our more than 60,000 employees, we delivered strong operational performance in what continues to be a highly challenging environment.
We made progress with our strategic agenda, accelerated our science and technology leadership through cutting-edge innovation and launching major investments for profitable growth in the years ahead. We delivered very strong financial results. Organically, group sales increased by 14.1%, and EBITDA pre rose 27% on an underlying basis that is excluding the Biogen provision reversal in 2020. Operating cash flow soared by over 30%, and we strengthen our balance sheet further through rapid deleveraging. Close to 80% of our total sales growth was driven by the so-called Big 3. All three of our business sectors posted double-digit earnings growth which clearly speaks of the strength of our portfolio. Life Science was the star performer with very strong growth in the core business and a significant upside from our contribution in the response to COVID-19.
We increased capacities significantly in 2021 and further boosted our capabilities to expand in the attractive CDMO space. In healthcare, we continue to advance our pipeline and drove significant growth from the further ramp up of Mavenclad and Bavencio on top of a very highly resilient established portfolio. In electronics, we accelerated our growth trajectory by capitalizing on our strong position as a leading supplier in the semiconductor industry. As we look to 2022 and ahead to 2025, we expect to achieve continued strong growth at, following rigorous execution of our strategic priorities. As usual, at this time of the year, we are introducing qualitative guidance for 2022. This calls for strong organic growth of group sales and EBITDA pre, supported once again by all three business sectors.
We are confident that 2022 will mark another successful year for Merck, and we will provide more color later and in the Q&A. Let me now move into the next slide six, to take a quick look at how we performed against our targets in 2021. As you can see, we delivered on all of our headline promises. In fact, if you recall, we upgraded our guidance three times last year, mainly owing to the very dynamic environment generated by COVID in Life Science. On slide seven, you will find the sales breakdown and growth by region. Having generated almost EUR 20 billion sales in 2021, we also generated double-digit growth in all major regions, a strong testament to the global relevance of our diversified portfolio.
Growth in Life Science was very strong and very similar across our three main regions. While in Healthcare and Electronics, it was strong but slightly skewed towards North America. Above all, it is important to note that our footprint remains nicely balanced, with significant exposure to strategically important growth markets in Asia Pacific at 36% of sales, followed by Europe at 29% and North America at 27%. On slide number eight, you have the dividend. As you have seen from our press release this morning, we have proposed a dividend of EUR 1.85 per share. We will propose that to the AGM in April 22nd.
This is a 32% increase over 2020 and a payout ratio of 21.2 of EPS pre, and fully consistent with our well-known dividend policy aimed at continuous dividend growth in line with our earnings developments. Let me now provide a more detailed view of 2021, starting with Life Science in slide 10. Once again, Life Science had a fantastic year. Organically, sales and EBITDA pre rose 21% and 38% respectively. All three business units delivered record organic revenue growth, with Process Solutions being in the lead at an outstanding 31%, followed by Research Solutions at a very strong 15% and Applied at a very good 9%. Also note that we posted double-digit growth across all regions and customer segments. Slightly more than half of the growth was attributable to our strong core business.
Here, we got a benefit from a recovery against soft comparables in H1 and more normal dynamics in H2, with very robust fundamentals across the board. On top of this, we continue to make critical contributions in the response to COVID-19, supporting more than 80 vaccines projects, over 35 testing solutions, and more than 50 treatments. Total COVID-related sales in Life Science amounted to about EUR 1.15 billion last year, of which close to EUR 1 billion came from Process Solutions and around EUR 150 million from Research Solutions. Looking ahead, we expect continued strength in the core business, which is our key value driver, and we also expect significant demand related to COVID, although likely fading and potentially increasingly volatile, as we will explain to you later. Turning to profitability, 2021 was exceptional.
The EBITDA pre-margin in Life Science came in at a record 36.6% on sales, supported by a positive mix, favorable pricing, and strong operating leverage. We have seen slightly lower margins in H2, mainly due to investment, basically accelerated recruitment of people that we need for the factory and the ramp-up of other strategic investments. Talking about strategic investment, our direction is clear. We aim to strengthen our core and expand in high growth segments, and we have made great strides against our strategy in 2021. First, we have maximized the output in bottleneck areas through productivity gains and adding significant new capacity in Danvers and Molsheim for single use and in Jaffrey for filtration. We have successfully launched our upgraded e-commerce platform and more than 20,000 new products across our broad portfolio.
The highlights include important new features to our Bio4C platform and Synthechol, a high purity synthetic cholesterol, for use in mRNA therapeutics. In life science, we increase R&D in the double-digit percentage range, and we will put even greater emphasis on innovation, digital and emerging markets, mainly China going forward. We enter important strategic partnership, for example, with BioNTech, and we significantly accelerated our multimodality CDMO strategy through organic and inorganic investment, including the acquisition of AmpTec, and most recently Exelead. In summary, 2021 was a great year for life science, and we remain confident about the outlook. The new organization of our Life Science sector that Matthias recently announced is aimed at enhancing our focus and capabilities in the service business while fully exploiting the synergies between Research Solutions and Applied Solutions at the customer level.
We are convinced that it will better serve the realization of our ambitions for our ambitious growth plan in the coming decade. Coming to healthcare on slide 11. Healthcare had also a strong year overall. Organically, sales were up 9% and EBITDA pre increased 17%, excluding the Biogen provision reversal in 2020. Our established portfolio remained highly resilient, delivering organic sales growth of 3% despite VBP impacts in China. On top of this, sales from new launches, in particular Mavenclad, Bavencio and Tepmetko, grew sharply by more than 60% year-on-year.
By franchise, oncology increased almost 30%, reflecting double-digit growth of Erbitux, supported by, you may remember, the temporary supply agreement with Eli Lilly and the strong uptake of Bavencio in first-line metastatic UC, urothelial cancer, with sales more than doubling. Our NNI franchise was up with the ongoing decline of Rebif, more than offset by significant growth of Mavenclad, which was up over 30% despite a very challenging high efficacy dynamic market environment. Another clear highlight of healthcare was the very robust performance of our fertility franchise, which posted remarkable growth of more than 25% amid a broad-based recovery following the pandemic-related dip in 2020. Our cardiometabolic and endocrinology franchise, CMNE, was down slightly due to the temporary impact from China VBP on Glucophage.
In fact, Glucophage outside of China and the rest of the CMNE portfolio delivered very solid growth. In terms of profitability, and excluding the Biogen provision reversal in 2020, the EBITDA pre-margin in Healthcare increased to 30.4% on sales, supported by revenue growth, milestone income from Bavencio and a very disciplined cost management. Looking more strategically, our priorities have further evolved, and we are confident that our focused leadership approach is providing solid basis for longer term growth. Our pipeline has significant potential, and we advance it further in 2021. In total, as you can see on the slide, we have now 14 clinical development programs underway, including compounds with novel mechanism that could redefine the standard of care in major therapeutic areas.
We completed the phase III recruitment for our blockbuster candidate Evobrutinib in MS, and we are on track with the development of Xevinapant, our late stage blockbuster candidate in head and neck cancer. We also remain committed to our other focus assets and will initiate phase II for enpatoran in SLE and CLE shortly. With regard to our recent launches, Mavenclad is holding or gaining market share in most markets while we see a suppressed dynamic high efficacy dynamic market in terms of volume. Bavencio is poised for continued strong growth from rising uptake in first line metastatic UC and the launch of Tepotinib in MET exon 14 will benefit from the recent approval in Europe.
Our established portfolio continues to be providing a robust base and we have further strengthened our leading position in fertility and return to growth in China in Q4. All in all, we feel good about our positioning in Healthcare and we will remain very focused on the stringent execution of our strategy to deliver efficient growth. Let's move into electronics on slide 12. Here as well, 2021 was a very strong year for Electronics. Organic sales increased by a strong 8% and EBITDA pre even faster at 10%. The key driver of growth was Semiconductor Solutions with revenues up 15%, once again significantly ahead of our mid-term guidance. Double-digit growth in semi was supported by strong demand across key markets, including China, as well as new business wins in patterning, thin film, and specialty gases.
On top of this, our DS&S business benefited from significant project contributions as our customers are executing on major investments in capacity expansion to address the well-known chip shortages and the future demand. The display was down 6% organically, fully aligned with our expectations as the ongoing decline of liquid crystals was mitigated by high growth in OLED materials. Surface increased 13% organically on the back of strong market recovery following, as you recall, pandemic-related impacts in 2020. The EBITDA pre-margin in electronics increased to a very solid 31.3%, supported by the Versum synergies and despite rising input cost pressure in the H2 of the year. The bigger picture, we have successfully delivered on our Bright Future transformation ahead of time and launched our growth initiative Level Up to drive growth in the years ahead.
Note, the integration of Versum has been very smooth, and I'm very pleased to inform that we have already achieved our upgraded cost synergy target of EUR 85 million for 2022 in the year 2021. One year in advance. Looking at our end markets, we see vast growth potential and a substantial need, not only for more materials and solutions, but also for cutting-edge innovation to enable the next generation of chips. We are highly confident that Level Up will help ensure that we address our customers' ongoing capacity expansion as well as the innovation needs. Today, we are focusing on additional scale in key semiconductor regions on supporting leading-edge technology, a broad and relevant portfolio, and importantly, the right people and capabilities to cater to our customers' needs.
To sum up, once again, 2021 was a good year, great year for Electronics, I should say, and we have everything in place to continue to execute on our accelerated growth ambitions. With this, let me hand it over to Marcus for a more detailed review of our financials in Q4.
Thanks, Belén, and welcome also from my side. I move on to slide number 14 for an overview of our key figures. Overall, we are very pleased with our performance, delivering very strong results in 2021. On a reported basis, Group net sales increased 12.3% to EUR 19.7 billion. EBITDA pre was up 17.3% at EUR 6.1 billion, and EPS pre rose 30.1% to EUR 8.72. Excluding the Biogen provision reversal in 2020, EBITDA pre and EPS pre increased even faster, by 26.2% and 43.7% respectively. Portfolio effects were minimal, and FX was a slight headwind for the full year but turned positive in H2.
Operating cash flow was very strong, up 32.7% at EUR 4.6 billion, given strong earnings growth paired with sound working capital management. As a result, we were able to deleverage quickly, lowering our net financial debt by around about EUR 2 billion. Moving on to slide 15 for a summary of our performance by business sector. Group organic sales growth was very strong at 13.8%. This was fueled by all three business sectors, with Life Science as the largest contributor, followed by Healthcare and Electronics. EBITDA pre-growth exceeded sales growth in all three business sectors, and corporate and other costs were down year-on-year, mainly due to an improved hedging result. As such, the group EBITDA pre-margin came in at a remarkable 31%.
Compared with 2020, this corresponds to an increase of 130 basis points and even as much as 340 basis points when excluding the Biogen provision reversal. Other non-recurring income items in healthcare did not make a big difference in the year-on-year comparison and were fully in line with our latest guidance. In other words, the strong underlying margin expansion is primarily a reflection of significant operating leverage in Life Science and disciplined cost management across the entire company. Before I move on to a review of our performance in Q4, let's have a look at our reported earnings figures for 2021. As you can see on slide 16, EBIT increased 40% year-on-year or by close to EUR 1.2 billion in absolute terms.
Please note that this number would have been even EUR 365 million higher without the Biogen provision reversal in 2020. EBIT growth exceeded EBITDA pre-growth by close to EUR 300 million, mainly due to lower adjustments, fewer impairments, and reduced amortization of purchased intangibles. The financial result improved by close to EUR 100 million on the back of ongoing swift deleveraging, hence significantly lower interest expenses. The effective tax rate was 21.9% in line with the lower end of our guidance range. As a result, the reported net income soared 54% to EUR 3.1 billion. Reported EPS came in at EUR 7.03. That said, let's now take a closer look at Q4.
Before, however, I go into the details by business sector, let me briefly share some headline figures for the group, which you will find in the appendix to this deck. Organically, group net sales increased 9.9% in Q4 and EBITDA pre rose by 11%. As such, momentum moderated further compared with previous quarters. However, this was fully in line with our expectations amid tougher comparables and performance overall was still very strong, led by Life Science and Electronics. Please also note that reported numbers were boosted by significant FX tailwinds in the Q1, adding over 3% to group sales and close to 7% to EBITDA pre. EPS pre increased sharply by 31%. With that, let's now take a closer look to our three business sectors, starting with Life Science on slide 17.
While growth moderated further due to rising comps, Life Science delivered yet another record quarter in terms of absolute sales and earnings. Organically, sales increased 14.2% in Q4, still well above our midterm guidance. The core business contributed almost two-thirds to this growth, expanding at a very healthy pace of around 10%. COVID-related sales made up the rest, growing significantly year-over-year, but declining slightly quarter-over-quarter, which supports our view that we have reached or even passed the peak by now. From a portfolio perspective, Process Solutions remains the key engine of growth, with sales up 25.5% organically. About half of this was attributable to the core business, with mid-teens growth reflecting robust end markets, especially in biopharma.
COVID-related sales and Process Solutions still contributed positively to the growth in the Q1 and came in at around EUR 950 million for the full year, slightly shy of our latest guidance due to supply challenges. All business lines grew double-digit, with bioprocessing as the main driver and strong growth in services. We continue to make good progress with our capacity expansions, in turn a key enabler of yet another strong sequential sales increase. Order intake growth was slightly positive against tough comps and the order book continued to increase quarter-over-quarter. Moving on to Research Solutions. Here, the sales were up 1.5% organically against tough comps. Growth was entirely driven by the core business with lab activity at or close to pre-pandemic levels.
COVID-related sales and Research Solutions were down year-on-year for the first time and continued to fade sequentially, coming in at close to EUR 200 million for the full year and thus exceeding our latest guidance due to higher testing activity at year-end. Not least, Applied Solutions reported very robust growth of 6.9% organically, with diagnostics as a key driver and negligible COVID-related sales. Geographically, we saw double-digit growth in all major regions. In terms of customer segments, pharma and biotech was the strongest, followed by industrial and testing and diagnostics, all showing double-digit growth while academia was slightly down against tough comparables. With regard to earnings, EBITDA pre surged 25.4% organically, implying a margin expansion of 300 basis points driven by positive mix, favorable pricing and operating leverage.
Similar to Q3, we saw a further modest margin decline on a sequential basis as we are stepping up strategic investments and as Belén mentioned, we make progress in hiring people, which is essential to bring capacities up. With that, let's move on to healthcare on slide 18. Healthcare delivered solid top-line growth in Q4, with sales up 4.7% organically. The established portfolio was stable against tough comps and recently launched products showed strong growth with combined sales up more than 40%. By franchise, oncology was up 21%, entirely driven by continued strong uptake of Bavencio at +132%, in turn supported by the ongoing first-line metastatic urothelial cancer launch in Europe. Was flat against tough comps related to the temporary supply agreement with Eli Lilly.
As a reminder, this agreement generated initial sales of EUR 32 million in Q4 2020 versus a final booking of EUR 10 million in Q4 2021. Excluding this effect, performance of Erbitux was very strong, with double-digit growth. Our NNI franchise was down 5% organically as the ongoing decline of Rebif at a level of -12% may be partly offset by growth of Mavenclad at 5%. On a positive note, we were able to keep market share stable for Mavenclad in the high efficacy dynamic market. However, this market was clearly impacted by the Omicron wave. Fertility performed strongly again, up 8% organically against slightly soft comps. With the fertility market back at pre-pandemic levels, we do not foresee further catch-up effects, but solid growth on robust market fundamentals, including rising prevalence and awareness of infertility.
Last but not least, our CM&E franchise returned to growth of 3% in the Q1 as the China VBP impact on Glucophage started to fade, and the remainder of the portfolio continues to be in a good shape. Other highlights include the recent approval of Tepmetko in Europe and the acquisition of Chord at the end of last year. With regard to earnings, EBITDA pre declined 12% organically, with the margin down 360 basis points, mainly due to tough comps in terms of non-recurring income in the last year and fluctuations in manufacturing yields. I should say temporary fluctuations in manufacturing yields. On non-recurring income, please note that Q4 2020 included around EUR 30 million from GSK and a mid-double-digit million EUR amount from active portfolio management, while Q4 2021 did not contain any non-recurring income as guided.
Looking into 2022, we expect income from active portfolio management in the low to mid-double-digit million EUR for the full year, of which we expect a low double-digit million EUR amount in the Q1 . With that, let's continue with Electronics on slide 19. Electronics performed also very strongly in the Q1 , with sales growing at 10.4% organically. Semiconductor Solutions was again the key driver and is firing on all cylinders with a record organic sales growth of 24%. This is significantly ahead of our midterm guidance and should not be extrapolated. Our semi materials business accelerated further despite rising comps, delivering broad-based performance across the portfolio and growth of over 20% in a strong market.
On top of this, we continued to capitalize on important projects in our Delivery Systems & Services business, helping customers to realize their investments in new fab capacity, and we expect these project contributions to last throughout all of 2022. Sales in Display Solutions were down 10% organically, with the usual pattern of a continued decline in liquid crystals, partly offset by strong performance of OLED materials. Surface Solutions posted a slight growth of 1% against a rising comp. EBITDA pre increased 12.1% organically, translating into a very solid margin of 31.5%. This corresponds to an increase of 160 basis points with operating leverage, favorable yield fluctuations, and Versum synergies more than offsetting rising input cost pressure. Turning to slide 20 for a few remarks on our balance sheet at year-end 2021.
In summary, the EUR 3.6 billion expansion over 2020 mainly reflects the strong business performance and FX. Cash and cash equivalents increased due to strong operating cash flow. Goodwill rose due to FX, and net working capital increased less than sales. Property, plant, and equipment increased on the back of investments to support our growth ambitions and also again, FX effects. Financial debt was reduced by over EUR 1 billion amid significant net repayments, and as a result, our equity ratio strengthened from 41%-47%, while net debt to EBITDA pre improved from 2.1x to 1.4x . Let me also briefly comment on cash flow performance in Q4.
As you can see on slide 21, operating cash flow was down EUR 243 million year-over-year, mainly due to tax prepayments and increased working capital to support sales and supply security in Life Science and Electronics. Cash out for investing activities was higher than last year, although CapEx on PP&E was lower. Keep in mind that investing cash flow in the Q1 of last year was positively impacted by the reversal of temporary investment of excess cash. At the same time, CapEx was elevated last year by the opportunistic purchase of buildings at our Burlington and Tempe sites. By contrast, cash out for CapEx in Q4 2021 was low due to phasing of payments.
In fact, gross additions to PP&E on the balance sheet were broadly in line with our latest CapEx guidance of around EUR 1.4 billion in 2021. Also note that for 2022, we are guiding to CapEx in a range between EUR 1.6 billion and EUR 1.7 billion, fully in line with our goal to increase CapEx to around a level of EUR 2 billion by 2023 to support our accelerated organic growth ambitions. Last but not least, the significant decline in cash out for financing activities can be explained by significant net debt repayments, here, especially of bank liabilities and commercial papers in the prior year period. With that, let me hand back to Belén for an update on ESG and the guidance.
Thank you, Marcus. Briefly on ESG, I'm pleased to report that we have accomplished all goals that we set ourselves in 2021. The Merck ESG database is in place, and we have implemented and tested the sustainable business value methodology in several pilots. We have developed a set of KPIs that we are introducing to you today. The 14 metrics and corresponding targets, as far as they have been disclosed today, can be found in the appendix of this deck. For the majority of the KPIs, we will report numbers as of 2021, while the remainder will follow next year. We have incorporated ESG frameworks in major processes across important functions, including R&D, procurement, controlling, and M&A. We have already defined a list of priority projects and approved the corresponding budgets to fund those.
One of the projects relates to our global group-wide supply chain, with the objective of increasing the percentage of relevant suppliers that are covered by a valid sustainability assessment. Other projects, to mention some, growing the share of greener products in Life Science, as well as establishing a sustainability scorecard for Healthcare R&D and portfolio assessment in Electronics. In Healthcare, we are also, for example, building programs for access to medicine in low and middle income countries. Moving on to the 24th, our initiatives are coupled with increased transparency on ESG. Starting with the fiscal year 2021, we integrated the non-financial statements into the annual report. We also added reporting on EU Taxonomy in line with the recent regulations.
This shows that our share in taxonomy-eligible net sales, CapEx and OpEx in connection with the environmental objective of climate change mitigation is low. However, this is due to limited conformity of Merck's business activities as defined in the regulations so far and will evolve, will change with the next steps of the EU Taxonomy reporting. As discussed, we are introducing a set of 14 sustainability metrics, including those which are relevant for the compensation of the executive board. Looking ahead, we are planning to publish our comprehensive sustainability report in April as usual, and this will contain the Task Force on Climate-related Financial Disclosures reporting for the first time.
In addition, we will extend it to our Sustainability Accounting Standards Board reporting from the pharma and biotech to the medical supply and the semiconductor industry standards to reflect all three business sectors. The analysis of ESG requirements I mean, will be dynamic as the stakeholder expectations and regulations continue to evolve. We will adjust our plans as necessary and continue to be very focused on execution. To sum it up, significant progress in 2021 convinces that this will help us to further accelerate the contributions that we make to solving more of the greater sustainability issue facing the world, resulting in mutual benefits for society, for the environment, and importantly, for our competitive advantage and business performance. Let me conclude with the guidance for 2022.
As you can see on the slide 26, we are providing qualitative targets as usual at this time of the year, and these will be followed by more detailed targets as part of our Q1 reporting in May. For group net sales, we are guiding to strong organic growth and currency tailwinds in a range of 1%-4%. For group EBITDA, we are also guiding to strong organic growth and even slightly higher FX tailwinds in a range of 2%-5%, and this is mainly linked to the USD and the Chinese renminbi. With regard to the situation in Russia and Ukraine, please note that our business exposure is limited and our forecast currently doesn't assume a meaningful impact.
However, we are, of course, carefully monitoring the situation and will provide you with further updates as the year progresses and we have more transparency on the evolution of the war. Moving into the next one, some color by business sector. There, as you can see, we expect sales and earnings growth to be supported by all three business sectors, as it was the case in 2021. Life Science will continue to be the fastest growing sector, followed by Electronics and Healthcare. Please note that you should think about qualitative guidance in ranges. These ranges could be overlapping and the sector guidance are to support the group guidance and do not have to add up.
For Life Science, we expect growth to be driven by continued strength in the core business and Process Solutions, as the key driver of growth. COVID-related sales will be slightly dilutive to growth. In particular, we now expect COVID-related sales in Process Solutions of up to EUR 900 million, which is slightly more cautious, compared with our previous guidance of around EUR 900 million. For research, we continue to expect COVID-related sales below EUR 100 million and negligible contributions in Applied. In terms of the margin, our qualitative guidance may suggest a stable margin in Life Science. We continue to believe that slight margin erosion is the most likely scenario, consistent with the trend in recent quarters and reflecting increasing strategic investments. Let me also give a sense on phasing.
In the past couple of weeks, we have observed increased volatility around COVID-related demand in Process Solutions due to Omicron. That is, certain type of vaccines and treatments are working better than others, and there are signs for a potentially accelerated transition into the endemic phase. In addition, we are facing increased supply chain constraints related to Omicron, including staffing and raw materials, which are temporarily weighing on output in key manufacturing sites. Bear this in mind when you build your models for Q1. For Healthcare, we expect growth to be mainly driven by the launches, mainly Mavenclad and Bavencio, and in Electronics, semiconductors will stay the key growth engine with OLED materials to continue with a strong performance. Last but not the least, we believe that we are very well positioned to manage profitability amid rising input costs.
Although the situation has become slightly more challenging in the past couple of months, and we can further discuss all these topics during the question and answer session. This is concluding my presentation and over to you, Constantin.
Thank you very much, Belén, for this presentation, Belén and Marcus. Now, John, if we could start the Q&A, please. I would like to remind everybody to kindly limit yourselves to a maximum of two questions. This will allow more of you to ask questions. With this, John, please, let's kick off the Q&A.
Thank you. We will now begin our question and answer session. If you have a question for our speakers, please dial star one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial star two to cancel your question. If you are using speaker equipment today, please lift the handset before making your selection. One moment please for the first question. We'll take our first question from Matthew Weston. Please go ahead.
Thank you very much. It's Matthew Weston from Credit Suisse. Two questions, if I can. The first please, is on Mavenclad. Obviously, you had a challenging performance during the Omicron wave in Q4, but it's also clear that it's a very major driver of your healthcare growth guidance in 2022. We're already into March. I would be very interested in understanding the trends that you are seeing in Mavenclad recovery in the dynamic MS market as the Omicron wave wanes in major markets around the world. Then the second question is on Life Science. There was a lot of discussion during 2021 about whether customers were overstocking their non-COVID orders because they were just concerned about constraints on supply chain.
During those discussions, Merck always expressed confidence that this wasn't the case with your products and you were managing customers very carefully because of the limited inventory you have. There are clearly concerns at some of your peers that we may see a significant unwind of customer-based stocking in 2022. Can you reiterate your confidence that you think you don't have customers with a lot of stock in the channel?
Matthias, do you want to start with that?
Yeah. Hey, Matt, it's Matthias here. If I may, I start with your second question. Indeed, I confirm what we talked about in the past, right? We stay very close to our customers, and we do not see by and large, especially in the high demand products, a major overstocking, right? Here, I talk especially about the single-use products, which are really made to order, right? Yeah, by and large, we still see a very, very high demand, and we do not see a major overstocking.
Peter.
Matt, thanks for the question. It's Peter. You remember that in Q3, I hinted to further volatility in Q4, which is related indeed to the impact on the high efficacy market due to Omicron. As you know, I'm not the only one in the high efficacy sector having mentioned those issues. I think my colleagues of Roche and Novartis hinted towards the same continued depression of the high efficacy market. I would say, though, that the impact of Omicron is definitely bigger in the U.S. than it is in Europe.
I think that if you would take all these things into account, you also remember that we had a one-off in Q3, that actually Q4 would have been in line with Q3 sales, normalized for this one-off of Q3. The other point I think it's important to mention is that our market share remains stable in the U.S., continues to grow in some of the key European markets. Basically, I'm confident that if we can consolidate that market share position and the high-efficacy market indeed recovers once we go out of Omicron, that you should see a recovery of the growth of Mavenclad. I would say, though, that in the first months of this year, we are still not out of the Omicron wave, as you know, especially in the U.S.
I would expect some more volatility in Q1, and then a more clear trajectory moving forward.
Many thanks, indeed. I'll jump back in the queue.
As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. We'll now take our next question from Gary Stevenson. Please go ahead. Your line is open.
Thank you for taking the question. I guess just going to your CDMO and CTO offerings. They've been getting a bit more airtime in recent quarters and are going to be split out with Life Science going forwards. Could you just talk a bit here to your aspirations for this business as well as kind of the current profile in terms of growth and margin contribution within Life Science and Process Solutions? On the slides, you note that you intend to scale up to become the leading CDMO, so I'm just wondering kind of what this means in terms of size and over what time periods. Just a follow-up question on Mavenclad, please.
You gave us an update in terms of the patent term extensions at the Capital Markets Day. I think you mentioned you were appealing a decision in the U.S. and then that extensions have already been granted in France, Italy, and Spain, I think, in Europe, taking you through to 2030. Other decisions were pending, so just an update here on any progress would also be helpful. Thank you.
Yeah, Gary, let me start by the Mavenclad question. There is no update since our last communication on that. Our appeal is pending in the U.S. and the SPC situations in the U.S. are identical actually to the update that we gave you. Indeed, we have some key European countries where we have an SPC obtained, and we are continuing to try to get those SPCs in those European countries where we haven't got it yet.
Hein?
Yeah. Hey, Gary, it's Matthias. To your question around CDMO and CTO, currently it's about 15% of our Process Solutions business. Our strategy is clearly, as we've outlined at the CMD, to rebuild a multimodality CDMO business based on our existing presence, which is mainly around mAbs, high-potency APIs, viral vectors, and obviously mRNA. We recently also added significantly with an acquisition of Exelead. Our goal is clearly to really further accelerate the business, investing into R&D, we're investing into capacity to really build it up. Probably you have seen that we also announced a new organization effective April 1. To really support that growth and really accelerate it, we are creating a Life Science Services unit.
Basically we are splitting out all the service-related businesses, namely CDMO and CTO, and then post Q2, we will actually report that business, the new Life Science services business. You will also get greater transparency on that business going forward.
Okay, thank you.
We will now take our next question from James Quigley. Please go ahead. Your line is open.
Hi there. Thank you for taking my question. I have two. First one is on Bavencio in bladder. It's now been on the market for quite a while. Where is the average stay time landing during the maintenance setting? And can you give us a bit more details on the new combination trials with novel therapies that I think are due to start in the Q2 ? In these trials, will Bavencio still be used as a maintenance or will you sort of push it up in the treatment setting as part of those combinations? And secondly, on Russia and Ukraine, you mentioned that your business exposure is quite low.
From a clinical trials perspective, there's been some reports that there have been a number of clinical trials that are currently ongoing and enrolling in Russia and Ukraine. I think I noticed that one of your or both of the Evobrutinib trials have some reasonable exposure in Ukraine. So have you done an analysis of what that could mean in terms of timing of readouts or how that could impact any of your trials, particularly the Evobrutinib trial? Thank you.
Peter can build on this, but of course, we have deeply analyzed the multiple dimensions of the implication of the situation in the region. We have conducted around 13 clinical studies in Russia and Ukraine. I think the team has done a marvelous job to anticipate the dynamics of the trial in preparation for what was to come. It's too early to say at this time, but definitely the team is very well prepared to protect the safety of the patients, to secure the continuity of the follow-up to the extent that we can control that, and we will keep you informed on future developments. Peter, I don't want.
You want to add anything?
I think, Belén, you captured it perfectly. I think we did everything we could, what is within our power to try to mitigate the impact. You know, for example, we increased, of course, the investigational product stock in the countries and the sites. We were looking into moving into local labs instead of central labs for the biologies, et cetera, et cetera. But as you know, it's a very dynamic situation, I would say. We have to navigate it as things unfold. On Bavencio, we continue to make progress, you know, both sides of the Atlantic, and you can see that also in the sales.
I think your question was around the percentage of maintenance therapy now in the U.S. We are making progress continuously. We are now at 75% of patients given indeed chemo or platinum-based treatment if they are platinum eligible. We started at 50% at the launch of Bavencio. We are really able to change the treatment paradigm there. I would say that in the use of first-line maintenance therapy with Bavencio, we are at 50% at the end of last year, also making continuous progress. The share of countries like Japan and some key countries in Europe should not be underestimated in the total Bavencio sales.
We have very good performance with Bavencio in Japan, in countries like France, like Germany. We are still, I would say, in the probably final stages of getting reimbursement for Bavencio in countries like Italy and Spain, for example. I think we can be relatively optimistic to see that growth continue. A last piece of news is that at the extension of the Javelin Bladder trial in metastatic UC, we have now over 30 months of follow-up. Actually we have seen that the survival benefit further increased now to 8.8 months, where it was 7.1 months in the pivotal data. We remain very optimistic and very bullish on Bavencio.
On the clinical trials, the so-called Medley trial, I can tell you that these trials are actually focused on reinforcing the position in the maintenance segment. We are not moving up into, for example, the adjuvant setting. I think we have talked more about this in detail in the R&D update call.
Thank you.
We will now take our next question from Falko Friedrichs. Please go ahead. Your line is open.
Thank you. I also have two questions, please. Firstly, what are your latest thoughts on M&A? Are you open to make a bigger step, this year, or is that rather unlikely? Secondly, on your electronics business, my question is, how much longer can this higher demand due to the semiconductor shortage last? And do you expect this to normalize again at some point this year, or do you rather think you can benefit from it throughout the entire year? Thank you.
Let's start by the semiconductors question. Kai?
Yeah. Falko, this is Kai speaking. Thanks for your question asking about how long that additional demand lasts long-term. Our customers are investing like never before. There is a strong expectation in the industry that demand is not just short-term, it's a mid- to long-term demand. The investments point clearly in this direction. This doesn't come from only one source, it comes from very different sources of developments and all kinds of areas that digitize and require more chips and more sophisticated chips going forward. The current data clearly supports the mid-term guidance that we have given last year at the Capital Markets Day. We see a similar development confirming this year's growth trajectory.
MSI growth is projected at mid- to high-single-digit for 2022, confirming our mid-term assumptions.
Falko, on the M&A front, not too many things new to report. I think we have been very disciplined in executing on our strategy. As I mentioned before, we have recently closed Exelead, which is very centric to further developing our mRNA offering, as a CDMO in our Life Science sector. We will continue to move on primarily on bolt-on acquisitions this year, which is exactly your questions. Although, of course, we are not excluding or close to looking at more transformative options as of 2023, as our cash position continues to significantly improve.
Okay. Thank you.
We will now take our next question from Daniel Wendorff. Please go ahead. Your line is open.
Thanks for taking my questions and good afternoon also from my side, two if I may. The first one on Semiconductor Solutions, if I may. According to my understanding, Ukraine supplies 70% of the world's neon gas, which is an important step for semiconductor manufacturing. How much of a risk is the war here really for a recovery of this market and maybe for your guidance? Any more color you can provide here would be much appreciated. My second question would be on Life Science and then particularly on Applied Solutions and Research Solutions. How should we think about these two businesses going into 2022?
According to my understanding, the business environment or spending environment from life science research institutions looks actually quite healthy. Yeah, any more color you can provide here, I would appreciate. Thank you.
Yeah, Daniel, this is Kai speaking. Merck has no supplies from Russia or Ukraine as direct suppliers. We're currently in contact with our suppliers whether there are any indirect effects that could harm us, but we do not expect anything which is significant on our side. 'Cause your data is correct, and we need to check with our customers whether they have other sources than Merck that would impact their factory outputs. That's the unknown at this point in time, and we'll check going forward.
Hello, Daniel. It's Matthias here. To address your question about research and applied, first of all, as we look at 2021, we are coming from very strong growth rates for research with 50% applied with 9%. That's partially due to also the softer comps against 2020. Now as we move into 2022, I think we're on the path towards our mid-term guidance, which we provided, which was for research in the lower single digit and in applied in the mid single digit. Again, I would keep in mind that especially with research, as you're widely pointing out, the spending levels are increasing. The labs are getting more occupied.
Given the extremely strong comp versus 21, I think the view around what we provide for the midterm guidance gives you a good indication.
Thank you. Maybe a follow-up on Research Solutions. Is that excluding the COVID sales you mentioned, or should we think about this also taking into account COVID sales?
Yeah. This includes COVID sales, right? I mean, we indicated already before that we expect. First of all, in 2021 we had COVID close to EUR 200 million for research, and we were indicating that it will be below EUR 100 million. The question will be how much below EUR 100 million. Keep that in mind when I provided the low single-digit.
Okay. Thank you.
I think we have time for one more question, please.
We will take our final question from Michael Leuchten. Please go ahead. Your line is open.
Oh, thank you very much. It's Michael Leuchten from UBS. Just one quick question going back to the order book and maybe related to the slight wording change on COVID contribution. Just wondering why you have softened that wording and what you're seeing in the order intake and Process Solutions. Then a quick follow-up on Evobrutinib, please. Looking at the number of sites that are located in Russia and Ukraine for evolution RMS arms one and arms two, it's about 15%. It's a meaningful enough number. Given those trials are fully recruited, if you cannot follow up with those patients as planned, what happens then? Are they just censored from the study and you have to run with the patients that you've got, or would you be able to recruit more patients elsewhere should that be needed? Thank you.
Yeah, Michael. Hello, it's Matthias. Let me address your first two questions. Indeed, we made a careful wording change and, based on our view of the market, our very close discussions with our customers, we believe that the EUR 900 million we put out for Process Solutions is still possible. At this point in time, we would see that rather at the upper end of the range. That is of course based on a view on the different COVID drivers. We look at target vaccination rates, especially the boosters, and also as we see now, Omicron still being highly contagious but with milder symptoms. The question is what's the booster adoption rate going forward.
At the end of the day, it's still very volatile, but we believe the indication we provide to you is very important and, yeah, we believe it's more on the upper end of the range. To your question, on order book or usually we talk here about order intake. First of all, we see the order intake, the growth rates coming down over the quarters. The growth is still higher than prior year for Q4, but it's certainly coming down significantly like you've seen also from other market players. Nevertheless, the book-to-bill ratio is still above one, meaning our order intake is still above the sales we have. Then tying that answer to my first point, what we see indeed in the order intake is that the COVID share is significantly coming down.
On the other hand, the base business order intake share is significantly increasing, but again, given the order intake for COVID coming down, that's yet another evidence for our more cautionary statement on the EUR 900 for this year. Peter?
Yeah, Michael, on the Evobrutinib, you know, as Belén and I mentioned before, it's really a moving target. We are looking at different scenarios. We are in, I would say, daily contact with our CRO to have the pulse on what's happening. In function thereof, we have to look at different alternatives if necessary. I remind you of course that countries like Russia and Ukraine are traditionally countries where there's a lot of clinical trials ongoing by the whole pharmaceutical market. So it's not like we are in a specific position here. But if there's more news, of course we will update you.
Thank you very much for all your questions. With this, I'd like to hand over to Belén for some closing remarks.
Very briefly, because we are running out of time, thank you, Constantin, and thank you for your continued interest in our company. 2021 was clearly a record year in terms of growth and margin expansion. As we have discussed today, we have a very solid position to deliver another successful year in 2022. We look forward to meeting many of you at the upcoming roadshows and conferences and obviously we will be updating you whenever is necessary as the year progresses. Thanks again, and have a good evening.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may now disconnect.