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Leading Innovation Efficiency – Evotec Company Overview Evotec AG, Jefferies 2016 Global Healthcare Conference, 08 June 2016

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Page 1: Leading Innovation Efficiency Evotec Company Overvie · Leading Innovation Efficiency – Evotec Company Overview ... World Market 2015 1 2 3 Increasing comfort with ... Strategy

Leading Innovation Efficiency –

Evotec Company Overview

Evotec AG, Jefferies 2016 Global Healthcare Conference, 08 June 2016

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Forward-looking statements

1

Information set forth in this presentation contains forward-looking statements, which involve a

number of risks and uncertainties. The forward-looking statements contained herein represent the

judgement of Evotec as of the date of this presentation. Such forward-looking statements are

neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of

which are beyond our control, and which could cause actual results to differ materially from those

contemplated in these forward-looking statements. We expressly disclaim any obligation or

undertaking to release publicly any updates or revisions to any such statements to reflect any

change in our expectations or any change in events, conditions or circumstances on which any

such statement is based.

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Agenda

2

Evotec Overview

EVT Execute

EVT Innovate

Financials & Outlook

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Leading innovation efficiency

3

Evotec at a glance

1 Strong growth and financial performance

3 Unique business model based on top-quality drug discovery platform

4 Focused investments with near-term news flow and partnering events

5 Strong balance sheet and very good strategic corporate position

2 More than 70 partnered product opportunities

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Leadership in drug discovery

4

Our mission

Based on the highest quality drug discovery

science, and through innovative

collaborations, we are building a partnered

product pipeline.

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Our “Sweet spot”

5

Pre-clinical development candidate (PDC)

Source: Paul et al. Nature Reviews Drug Discovery, 9 (2010)

Duration

Phase II Phase III

Approval

Academia

Target

ID/-Vali-

dation

Hit-

Identi-

fication

Lead

Optimi-

sation

Phase I Pre-clinical

> 14 years

Market

Cost Approx.

$ 1–3 bn

Partner Evotec

Clinical

Phase Pre-clinical

Phase

Approx. 3–6 years Approx. 6–10 years

PDC –

Pre-clinical

development

candidate

Approx.

$ 5–15 m

Evotec’s core competencies

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Leading the macro trend of R&D productivity

6

Market dynamics in drug discovery

Source: Visiongain; Drug Discovery Outsourcing: World Market 2015

1

2

3

Increasing comfort with

outsourcing also in drug

discovery

Higher R&D capital efficiency

through switch from fixed costs

to variable business models

Ability to adjust investments

proportional to portfolio needs

for Pharma and biotech

Growth drivers Drug discovery outsourcing is a macro trend

Market overview – Revenues, in $ bn

5–10% p.a.

12.8 14.5

16.6 19.2

21.8 24.5

27.1 29.7

2013 2014 2015(e) 2018(e) 2019(e) 2020(e) 2016(e) 2017(e)

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Globally leading service company and first-in-class

partnered product pipeline

7

Strategy overview

2009

Business segmentation

Investments in discovery

service platform

Performance-based

integrated discovery and

clinical alliances

Cure X/Target X strategy

Royalty income from

legacy pipeline

Restructuring

Capital efficiency

for sustainability

First EVT Innovate

investments

Highest quality drug discovery

and pre-clinical services

– EVT Execute

Cure X/Target X strategy &

“Academic bridge”

– EVT Innovate

Company formations to

accelerate drug discovery and

product development

– EVT Equity

2012

2016 2020

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Our offering close to Pharma, biotech and academia

8

Evotec’s global footprint – Approx. 1,000 employees

San Francisco, Branford and Princeton, USA

~70 employees

Compound ID, selection and acquisition

Compound QC, storage and distribution

Cell & protein production

Abingdon and Manchester, UK

~300 employees

Medicinal chemistry

ADMET

Structural biology

In vitro & in vivo anti-infective platform/screening

Hamburg (HQ), Göttingen and Munich, Germany ~400 employees

Hit identification

In vitro & in vivo biology

Chemical proteomics & Biomarker discovery and validation

Cell & protein production

Antibody discovery

Toulouse, France

~230 employees

Compound management

Hit identification

In vitro & in vivo oncology

Medicinal chemistry

ADME & PK

Early drug formulation & Solid form screening

Cell, protein & antibody production

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Strong financial performance

9

Financial highlights of FY 2015 – Selected KPIs

1) Adjusted for changes in contingent consideration as well as for one-time effects with regards to the bargain purchase resulting from the acquisition of Evotec (France) SAS in 2015 and of

Bionamics GmbH in 2014 and excluding impairments on goodwill, other intangible and tangible assets as well as the total non-operating result 2) Driven by the one-time effect of the income from bargain purchase resulting from the acquisition of Evotec (France) 3) Excluding M&A and related payments (Earn-out Euprotec)

in € m

2015 2014

Total Group

revenues

Base

revenues

EVT Execute

revenues

EVT Innovate

revenues

Employees

Adjusted Group

EBITDA1)

Adjusted EVT

Execute EBITDA1)

R&D

expenses

Operating

income2)

Liquidity

position3)

89.5

+43%

127.7

73.4

+57%

115.4

93.3

+44%

134.0

14.7

21.5

+46% +39%

717

1,000

12.4

+48%

18.3 22.1 23.8

+8%

7.7

+13%

8.7

(6.4)

+281%

11.6

93.1

+44%

134.5

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Business model meets partners’ needs

10

EVT Execute & EVT Innovate

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Agenda

11

Evotec Overview

EVT Execute

EVT Innovate

Financials & Outlook

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Broad stand-alone innovation services

12

EVT Execute – Comprehensive drug discovery platform

No. 1 in drug

discovery

High-quality service

business

The strategic

outsourcing partner

of choice

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Above market performance

1) Adjusted for changes in contingent considerations

EVT Execute – Key performance indicators Q1 2016

Revenues

(in € m)

Adjusted EBITDA1)

(in € m) Q1 2016 includes € 7.5 m of

intersegment revenues

Revenue growth driven by strong

performance of the base

business, milestone achievement

from the Padlock collaboration

and full quarter of Sanofi

contribution

Strong adjusted EBITDA growth

mainly due to higher margins in

the base business, milestones

and the contribution of the Sanofi

collaboration

38.6

Q1 2015

23.1

Q1 2016

9.6

Q1 2015

3.5

Q1 2016

+67%

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48%

24%

19%

9%

Well balanced customer mix

14

EVT Execute – Selected customer and revenue metrics

1) Third-party revenues only

Top 20

Pharma

Mid-sized

Pharma

Biotech

Foundations

Revenues by customer

segment ytd 20161) (in %)

Customer type ytd 2016

(in %)

Revenues by region ytd 2016

(in %)

77%

16%

7%

Top 10

Long-term

Strategic

Alliances

Top 10-30

Customers

Remaining 100%

52%

47%

1%

Europe

USA

ROW 100% 100%

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Evolving as trusted partner of foundations

15

Foundations & Evotec

1) Over 6,000 rare disease NGOs; more than 10,000 relevant private foundations with more than $ 5 bn funding

Disease foundations are

increasingly driving

science and they are

turning to companies

like Evotec to pursue

novel drug discovery

pathways1)

Indication (mechanism) Partner Timeline

Parkinson’s Disease Michael J. Fox

Foundation

Start 2016

Huntington’s Disease CHDI Foundation Extended through

to 2018

Alzheimer’s Disease Gladstone Institutes Start 2015

Juvenile Batten Disease Beyond Batten Disease Start 2015

Leukemia The Leukemia &

Lymphoma Society

Start 2013

Muscular dystrophies Jain Foundation Start 2013

Malaria Medicines for Malaria

Venture (MMV)

Start 2014

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Strong partner base accessing integrated drug

discovery value chain

16

EVT Execute – Representative partners

Chemistry

Cmpd

Mana-

gement Hit ID

Structural

Biology

In vitro

Biology

In vivo

Biology

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Outlook 2016

17

EVT Execute – Expected key milestones 2016

New long-term deals with large and mid-sized Pharma

Expansion of foundations and biotech network in USA/EU

New performance-based integrated technology/disease alliance

Milestones from existing alliances

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Agenda

18

Evotec Overview

EVT Execute

EVT Innovate

Financials & Outlook

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Five fields of core expertise

19

Overview

DIABETES &

COMPLICATIONS NEUROSCIENCE

ONCOLOGY

ANTI-

INFECTIVES PAIN

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Strong revenue growth reflects new partnerships

1) Adjusted for changes in contingent considerations 2) In Q1 2016, Evotec was informed by Janssen Pharmaceuticals, Inc. that Janssen intends to phase out the licence agreement regarding NMDA antagonist with effect

from August 2016.

EVT Innovate – Key performance indicators Q1 2016

Revenues

(in € m)

Adjusted EBITDA1)

(in € m)

Strong revenue growth and improved EBITDA due to new partnerships signed in 2015

Increased R&D expenses due to intensified efforts in CNS and oncology

Full impairment of EVT100 series (€ 1.4 m)2)

6.4

3.8

(2.4)

Q1 2015

(3.8)

Q1 2016

R&D expenses

(in € m)

4.9 4.6

Q1 2015 Q1 2016 Q1 2015 Q1 2016

+67%

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Constantly growing pipeline of product opportunities

21

Partnership portfolio

Molecule Therapeutic Area/Indication Partner Discovery Pre-clinical Phase I Phase II Phase III

Clin

ica

l

EVT3021) CNS – Alzheimer’s disease

EVT201 CNS – Insomnia

EVT1001) CNS – Depression

EVT401 Immunology & Inflammation

ND2) Oncology

ND2) Oncology

Pre

-cli

nic

al

ND2) CNS – Pain

ND2) Oncology

Various Women’s health – Endometriosis

EVT770 Metabolic – Diabetes (type 2/1)

ND2) Respiratory

ND2) Immunology & Inflammation

EVT801 Oncology

EVT701 Oncology

EVT601 Oncology

Dis

co

ve

ry

Various Immunology & Inflammation

Various Metabolic – Diabetes (type 2/1)

Various Metabolic – Diabetes (type 2/1)

Various Nephrology

Various Metabolic – Diabetes Various CNS – Alzheimer’s

Various Oncology – Immunotherapy

Various Immunology & Inflammation – Tissue fibrosis

Various CNS – Multiple Sclerosis NEU2

Various Metabolic – Diabetes >5 further programmes

Various CNS >5 further programmes

Various Oncology >10 further programmes

Various CNS – Pain & Inflammation >5 further programmes

1) EVT302 and EVT100: Evotec has regained the licence rights and is currently assessing potential business opportunities 2) Not disclosed

Investor Presentation Focus

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World-leading effort in Endometriosis

22

Bayer & Evotec in Endometriosis – Since 2012

Agreement with Bayer

€ 12 m upfront payment

Up to € 580 m in potential milestone payments

based on the achievement of pre-clinical, clinical

and sales milestones, up to double-digit royalties

Integrated collaboration involving more than 30

scientists at Evotec

Strategic, five-year multi-target collaboration

Background

Endometriosis affects approx. 200 million women

worldwide, 10% of women of reproductive age

There is no known cure for endometriosis

Mission

Goal of developing three clinical candidates for

the treatment of endometriosis within five years

Both parties contribute innovative drug targets

and high quality technology infrastructures

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Agreement with J&J Innovation

$ 10 m in FTE-based research costs

Pre-clinical, clinical, regulatory and commercial

payments up to approximately $ 125 m to

$ 145 m per programme

Significant royalties on future sales of any

products that may result from the alliance

Integrated three-year collaboration, resources

involving more than 20 scientists at Evotec and

J&J Innovation

Background

Approximately 7.7 million new cases of dementia

are diagnosed each year. $ 612 bn were spent on

the treatment of dementia in 2014

AD costs equal about 1% of the world’s GDP

Mission

Explore genes dysregulated in Alzheimer’s

disease patients to identify new targets for drug

discovery and development

Identify and develop novel therapies in AD

23

J&J Innovation & Evotec in Alzheimer’s disease (AD) – Since 2013

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Agreement with Sanofi

Significant pre-clinical, clinical and regulatory

milestones exceeding € 200 m

Significant royalties upon commercialisation

Integrated collaboration involving more than 20

scientists between Evotec, Sanofi and Apeiron

Multi-year research payments for Evotec and

Apeiron

Background

Based on partnership between Apeiron and

Evotec initiated in 2012/13

Immuno-oncology will become a new pillar of

cancer therapy – Market potential estimated to be

$ 35 bn in 2023

Mission

Development of small molecule-based cancer

immunotherapies for next-generation immuno-

oncological therapies to complement current

offerings of checkpoint inhibitors

Small molecule-based cancer immunotherapies

24

Sanofi & Evotec in Immuno-oncology – Since 2015

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Agreement with Pfizer

Undisclosed upfront payment

Potential milestone payments based on the

achievement of specific development and sales

milestones (undisclosed)

Integrated collaboration involving more than 10

scientists between Evotec

Strategic four-year collaboration

Background

Tissue fibrosis is a huge unmet medical need –

Total market value up to $ 100 bn

Four major indications: liver, kidney, cardiac, lung

fibrosis

Mission

Evotec and Pfizer develop novel mechanisms as

targeted anti-fibrotics in multi-organ fibrosis

Novel mechanisms in tissue fibrosis

25

Pfizer & Evotec in Fibrosis – Since 2015

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Agreement with Sanofi

Upfront fee of € 3 m

Potential pre-clinical, clinical, regulatory and

commercial milestones exceeding € 300 m

Significant royalties upon commercialisation

Integrated collaboration, resources involving

more than 15 scientists at Evotec and Sanofi

Background

Fast growing insulin market already exceeds

>$ 22 bn in 2014

Diabetes is driven by loss in beta cell function

Human beta cells offer only disease-modifying

product opportunity

Mission

Development of beta cell replacement therapy

and drug discovery based on functional human

beta cells derived from stem cells

Restoring beta cell function – iPS cell-based

projects

26

Sanofi & Evotec in Diabetes – Since 2015

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Translating first-in-class science to Pharma

27

EVT Innovate

Carefully selected discovery stage projects in indications of high unmet medical need

Advancing and partnering projects at tangible value inflection points

Fuelling Evotec’s pre-clinical and clinical opportunities

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More than 10 projects primed for partnering

28

EVT Innovate – Cure X/Target X

= Innovate Pharma partnerships signed since 2011

CureBeta

(Harvard Stem

Cell Institute)

2011

CureNephron

(Harvard, BWH,

USC, AstraZeneca)

TargetASIC

(BMBF/undisclosed

Pharma partner)

Somatoprim

(Cortendo)

TargetPicV

(Haplogen)

TargetFibrosis

(Pfizer)

2012

TargetImmuniT

(Apeiron/Sanofi)

TargetDBR

(Yale)

TargetMB

(Second Genome)

TargetPGB

(Harvard)

TargetKDM

(Dana-Farber,

Belfer)

TargetIDX

(Debiopharm)

CureMN

(Harvard)

TargetEEM

(Harvard)

TargetAD

(NBB/J&J)

2013

TargetBCD

(Sanofi)

TargetDR

(Internal)

TargetATD

(Internal)

TargetFX

(Internal)

TargetKX

(undisclosed)

TargetCytokine

(DRFZ/BMBF)

Various

(Fraunhofer

Institute)

2014

TargetFRX

(Internal)

TargetNTR

(Internal)

TargetKras

(OSU)

Various

(Gladstone

Institute)

2015

TargetaSN

(MJJF)

TargetBispecifics

(ex scientia)

TargetRhoB

(undisclosed)

2016

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Driving value of hidden assets –

First-in-class approach for tolerance induction

29

Topas Therapeutics: An Evotec spin-off company

Topas Therapeutics GmbH is focused on the

development of novel tolerizing particles for

immune-mediated diseases using proprietary

NdL® nanotechnology platform

Use of nanoparticles to deliver selected

antigenic peptides to the liver

(Topas = Tolerizing particles)

€ 14 m Series A funding secured with VC

consortium

Pre-clinical development for multiple

sclerosis has been initiated; Phase I to start

in 2017; strong pipeline

Evotec will remain the largest shareholder

Bionamics

GmbH

Principal

shareholder

Investors &

Partners

Epidarex, EMBL,

GIMV

Licence

NdL®

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Vision for improved development probabilities

30

Evotec’s iPS cell accelerator

1) e.g. HSCI, Gladstone, MPI, CRTD, etc.

Academia1)

iPS cell lines

Disease

modelling

Phenotypes

Pharma

Hits, leads,

PDCs

Targets,

biomarker

Patient

stratification

Upscaling

Med Chem Target ID

Phenotypic

screening

Generation/

banking

Disease

modelling/

read-outs

Differen-

tiation

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Outlook 2016

31

EVT Innovate – Expected key milestones 2016

New clinical initiations and good progress of clinical pipeline within

partnerships

Expansion of network of top-class academic alliances

Partnering of Cure X/Target X initiatives

Strong focus on iPSC (induced pluripotent stem cells) platform

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Agenda

32

Evotec Overview

EVT Execute

EVT Innovate

Financials & Outlook

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Group revenues +74%, higher gross margin

33

Key financials Q1 2016: Condensed income statement (IFRS)

1) Adjusted for changes in contingent consideration

in € m

Revenue increase

mainly driven by

strong performance

of the base

business, milestone

achievement in

Padlock

collaboration and

three months of the

Sanofi contribution

Adjusted Group

EBITDA strong and

significantly

increased

Q1 2015 Q1 2016 % vs. 2015

Revenues 21.5 37.5 74%

Gross margin 28.0% 33.3% –

R&D expenses (3.8) (4.4) 14%

SG&A expenses (5.1) (5.4) 5%

Impairment of intangible assets – (1.4) –

Other op. income (expenses), net (0.4) 1.4 –

Operating income (loss) (3.3) 2.7 –

EBITDA adjusted1) (0.3) 7.2

Net loss (1.1) (1.2) 9%

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Strong revenue growth in EVT Execute and

increased investments in EVT Innovate

34

Condensed segment information for Q1 2016

in € m

Strong revenue growth

and improved EBITDA

for both segments

Increased investments

in Cure X/Target X

initiatives and

oncology projects in

Toulouse in-line with

expectations and

strategy plans

Impairment of EVT100

series

EVT

Execute

EVT

Innovate

Inter-

segment

elimination

Evotec

Group

External revenues 31.1 6.4 – 37.5

Intersegment revenues 7.5 – (7.5) –

Gross margin 26.1% 46.1% 33.3%

R&D expenses (0.1) (4.8) 0.5 (4.4)

SG&A expenses (4.4) (1.0) – (5.4)

Impairment of intangible assets – (1.4) – (1.4)

Other op. income (expenses), net 1.1 0.3 – 1.4

Operating income (loss) 6.8 (4.0) – 2.7

EBITDA adjusted1) 9.6 (2.4) 7.2

1) Adjusted for changes in contingent considerations

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Accelerated path to growth and sustainability

35

Key metrics 2010 – 2015

1) Adjusted for changes in contingent considerations 2) Cash and cash equivalents and investments 3) Effective on 01 April 2015, Evotec acquired Sanofi’s scientific operations in Toulouse, France; 2015 number including the employees from this transaction

Revenues (in € m)

R&D expenses (in € m)

EBITDA adjusted1) (in € m)

Liquidity2) (in € m)

Alliances

Employees3)

55.3

127.7

2010 2015

72

>150

2010 2015

6.1

18.3

2010 2015

70.4

133.9

2010 2015

519 1,000

2010 2015

6.5 8.7

2010 2015

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Strong team and shareholders for innovation

36

Management & shareholder structure

1) Deutsche Asset Management Investment GmbH 2) Allianz Global Investors GmbH 3) BVF Partners L.P. and its affiliates

Number of shares: 132.8 m

Listing: Frankfurt Stock Exchange (TecDAX), OTCBB

52 week high/low: € 4.31/€ 2.86

Management Board

Werner Lanthaler (CEO)

Long-time experience in

Pharma & biotech

Mario Polywka (COO)

Strong operational and

commercial management

track record

Cord Dohrmann (CSO)

Outstanding background in

metabolics

Enno Spillner (CFO) – as

of 18 July 2016

Long-time experience in

finance & biotech

Supervisory Board

Wolfgang Plischke

Ex-Bayer

Bernd Hirsch

Bertelsmann SE & Co.

KGaA

Claus Braestrup

Ex-Lundbeck

Paul Herrling

Ex-Novartis

Iris Löw-Friedrich

UCB

Elaine Sullivan

Carrick Therapeutics

77% Free float

~13.0%

3% DAMI1)

1% Management

13% Roland Oetker/ROI

3% BVF3)

3% AGI2)

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Strong growth and important R&D

triggers expected in 2016

Guidance 2016

1) Excluding milestones, upfronts and licences 2) Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total non-

operating result 3) Excluding any potential cash outflow for M&A or similar transactions

KPIs Guidance 2016 Actual 2015

Group revenues1) More than 15% growth € 115.4 m

Adjusted Group EBITDA2) Positive and significantly improved

compared to prior year € 8.7 m

R&D expenses Approx. € 20 m € 18.3 m

Liquidity3) Similar level compared to 2015 € 134.5 m

Capex investments Up to € 10 m € 11.2 m

in € m

Page 39: Leading Innovation Efficiency Evotec Company Overvie · Leading Innovation Efficiency – Evotec Company Overview ... World Market 2015 1 2 3 Increasing comfort with ... Strategy

Your contact:

Dr Werner Lanthaler Chief Executive Officer

+49.(0).40.560 81-242 +49.(0).40.560 81-333 Fax [email protected]