Fresenius SE & Co. KGaA
Investor Relations & Sustainability
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The health care sector is one of the world’s largest industries and we are convinced that it shows excellent growth opportunities.
The main growth factors are:
In the emerging countries, additional drivers are:
At the same time, the cost of health care is rising and claiming an ever-increasing share of national income. Health care spending averaged 8.8% of GDP in the OECD countries in 2019, with an average of US$ 4,224 spent per capita.
As in previous years, the United States had the highest per capita spending (US$ 11,072). Germany ranked fourth among the OECD countries with US$ 6,646.
In Germany, 85% of health spending was funded by public sources in 2019, above the average of 74% in the OECD countries.
Most of the OECD countries have enjoyed large gains in life expectancy over the past decades, thanks to improved living standards, public health interventions, and progress in medical care. In 2018, average life expectancy in the OECD countries was 80.7 years.
Health care structures are being reviewed and cost-cutting potential identified in order to contain the steadily rising health care expenditures. However, such measures cannot compensate for the cost pressure. Market-based elements are increasingly being introduced into the health care system to create incentives for cost- and quality-conscious behavior. Overall treatment costs will be reduced through improved quality standards.
In addition, ever-greater importance is being placed on disease prevention and innovative reimbursement models linked to treatment quality standards.
|Source: Latest available data from OECD Health Data 2020; data on the dialysis market is based on company research, Database for China 2016.|
Our most important markets developed as follows:
In 2020, the global dialysis market (products and services) was worth approximately € 82 billion.
Worldwide, approximately 4.5 million patients with chronic renal failure were treated in 2020. Of these patients, around 3.7 million received dialysis treatments and about 823,000 were living with a transplanted kidney. About 89% were treated with hemodialysis, 11% with peritoneal dialysis.
The major growth driver is the growing number of patients suffering from diabetes and high blood pressure, two diseases that often precede the onset of chronic kidney failure.
The number of dialysis patients worldwide increased by around 3% in 2020.
While the pandemic has not sustainably affected the fundamental development in the number of new patients starting dialysis, excess mortality of dialysis patients significantly accelerated in the U.S. and in EMEA.
The prevalence rate, which is the number of people with terminal kidney failure treated per million population, differs widely from region to region. The significant divergence in prevalence rates is due, on the one hand, to differences in age demographics, incidence of renal risk factors, genetic predisposition, and cultural habit, such as nutrition. On the other hand, access to dialysis treatment is still limited in many countries. A great many individuals with terminal kidney failure do not receive treatment and are therefore not included in the prevalence statistics.
In 2020, the global dialysis care market (including renal pharmaceuticals) was worth around € 67 billion.
About 9% of worldwide dialysis patients were treated by Fresenius Medical Care. With 4,092 dialysis clinics and more than 346,000 dialysis patients in around 50 countries, Fresenius Medical Care operates by far the largest and most international network of clinics for the treatment of dialysis patients. In the United States, Fresenius Medical Care treated approximately 38% of dialysis patients in 2020. The market for dialysis care in the United States is already highly consolidated.
Outside the United States, the market for dialysis care is much more fragmented. Here, Fresenius Medical Care competes mainly with clinic chains, independent clinics, and with clinics that are affiliated with hospitals.
Dialysis reimbursement systems differ from country to country and often vary even within individual countries. The public health care programs, the Centers for Medicare & Medicaid Services (CMS), cover the medical services for the majority of all dialysis patients in the United States.
To be able to continue care for patients during the COVID-19 pandemic, Fresenius Medical Care implemented a number of measures, both operational and financial, to maintain an adequate workforce, protect patients and employees through expanded personal protective equipment protocols, and expenses related to surge capacity for dialysis patients suspected or confirmed to have COVID-19. Fresenius Medical Care North America collaborates with DaVita Inc. and other dialysis providers, who aim to support the broader kidney care community in the United States by offering isolation capacity for dialysis patients who are or may be COVID-19-positive.
By further driving our efficiency measures and with governmental support, in particular in the U.S., we managed to almost compensate the financial effects of COVID-19 in 2020.
In 2020, the global dialysis products market was worth around € 15 billion.
Fresenius Medical Care is the leading provider of dialysis products in the world, with a market share of 35%.
Fresenius Medical Care is the leading supplier worldwide of hemodialysis products, with a market share of 40%, and has a market share of approximately 16% in the worldwide market of products for peritoneal dialysis.
Severe COVID-19 cases often cause acute kidney failure, which has significantly increased worldwide demand for dialysis solutions needed to conduct acute dialysis. In 2020, Fresenius Medical Care accelerated the work on the new production line at the St. Wendel plant in response to higher demand caused by the COVID-19 pandemic. Hence, Fresenius Medical Care was able to put the new production line into operation several months ahead of schedule.
As part of the next level of our strategy 2025, we intend to go a step further and provide health care for chronically and critically ill patients across the entire renal care continuum. We aim to use our innovative, high-quality products and services to offer sustainable solutions at a reliable cost. To achieve this, we will concentrate on three key areas: the renal care continuum, critical care solutions, and complementary assets.
Fresenius Medical Care aims to implement new renal care models by applying state-of-the-art digital tools to give our business a major boost in terms of personalized dialysis and therapeutic innovations. Fresenius Medical Care also intends to treat more patients in their homes by offering holistic home care.
In addition, Fresenius Medical Care’s value-based care models create medical value while ensuring that care remains affordable and will incorporate kidney transplants in future. To achieve this, Fresenius Medical Care builds sustainable partnerships with payors worldwide to support the transition from a fee-for-service to a pay-for-performance system. In addition, Fresenius Medical Care Ventures GmbH therefore makes strategic investments in start-ups to gain access to new technologies in our core and complementary businesses, as well as new therapy approaches.
The number of patients requiring continuous renal replacement therapy to treat acute renal failure is set to rise to 1.6 million by 2030. Over the next few years, we will leverage our competence in the business of critical care solutions to address a variety of health challenges. We can also use our expertise in the area of extracorporeal blood treatment for acute renal failure to treat acute heart and lung failure. We are also planning innovative solutions for multi-organ support to benefit from the growing critical care market.
Creating additional medical value while cutting costs requires complementary assets and solutions. We have reached some important milestones and gained many insights into how to coordinate patients more efficiently. We will continue to leverage our core competencies through partnerships, investments, and acquisitions.
A reasonable estimate of the market volume of the renal care continuum, critical care solutions, and complementary assets is not possible due to the large number of different services. The spectrum of our value-based care services may vary across countries and regions, depending on the particular reimbursement system or market specifics.
The global market for generic IV drugs, biopharmaceuticals, clinical nutrition, infusion therapy, and medical devices / transfusion technology was worth about € 105 billion in 2020.
Thereof, the global market for generic IV drugs was worth about € 38 billion2. Fresenius Kabi was able to enter additional market segments of the global addressable market due to targeted investments and the expansion of our product portfolio, in the areas of complex formulations, liposomal solutions, and pre-filled syringes, among other items.
1 Market data based on company research and refers to Fresenius Kabi’s relevant markets. This is subject to annual volatility due to currency fluctuations and patent expiries of original drugs in the IV drug market, among other things.
2 Market definition adjusted as in prior year: among other items, sales volume of non-patented branded drugs is included.
The global market for generic IV drugs remained at a stable level, adjusting in response to changes in demand during the COVID-19 pandemic. Competitors in the market for generic IV drugs include Pfizer, Sanofi, Sandoz, Viatris, and Hikma.
The relevant market for the targeted original biopharmaceuticals, all in the therapeutic areas of oncology and autoimmune diseases, is worth about € 46 billion and grew by 6%.
In 2020, the global market for clinical nutrition was worth about € 10 billion. In Europe, the market grew by about 3%. Higher growth rates were experienced in the emerging markets. For example, the clinical nutrition market in Latin America showed strong growth of 10%. Similarly strong growth of 9% was achieved in Asia-Pacific, while the African clinical nutrition market grew by 7%.
There is growth potential in clinical nutrition worldwide, because nutrition therapies are often not yet sufficiently used in patient care, although studies have proven their medical and economic benefits. In cases of health- or age-induced nutritional deficiencies, for example, the administration of clinical nutrition can reduce hospital costs through shorter stays. In the market for clinical nutrition, Fresenius Kabi is one of the leading companies worldwide.
In parenteral nutrition, the company is the market leader worldwide. In the market for enteral nutrition, Fresenius Kabi is one of the leading suppliers in Europe, Latin America, and China. In parenteral nutrition, competitors include Baxter, B. Braun, JW Pharma, and Kelun Pharma. In the market for enteral nutrition, Fresenius Kabi competes with, among other companies, Abbott, Nestlé, and Danone.
In 2020, Fresenius Kabi considers its global market for infusion therapy to have been worth about € 5 billion, slightly below the previous year’s level. Affected by postponed or canceled elective surgeries due to the COVID-19 pandemic and the reduced demand for blood volume substitutes in Asia-Pacific, the total market showed a slight decline in 2020. This could not be fully compensated by the increasing product demand in emerging markets in general. In Europe and the United States, the market for infusion therapies remained rather stable. Fresenius Kabi is the market leader in infusion therapy in Europe and Latin America. Competitors in the market for infusion therapies include B. Braun and Baxter.
In 2020, the global market for medical devices was worth about € 4 billion and grew by 5%. In the medical devices market, the main growth drivers are IT-based solutions that focus on application safety and therapy efficiency. In the medical devices segment, Fresenius Kabi ranks among the leading suppliers worldwide. International competitors in the market for medical devices include Baxter, B. Braun, and Becton, Dickinson and Company, as well as ICU Medical.
In 2020, the global market for transfusion technology was worth about € 3 billion, which is at the previous year’s level. The COVID-19 pandemic also had an impact on market demand in this product segment. The postponement of operations negatively impacted the need for blood bags and autotransfusion treatments, while the significant decrease in blood and plasma donations also had a negative impact on the demand for blood bags and, above all, plasma disposables.
The pandemic had a slightly positive impact on the demand for convalescent plasma. A possible therapy option for some COVID-19 patients is based on the use of plasma (blood component) from recovered patients. This treatment involves the collection of plasma containing antibodies from recovered COVID-19 patients. After donation and further processing, the antibody-enriched plasma is administered to ill COVID-19 patients. This process is made possible by devices from our portfolio such as Aurora and Alyx.
In transfusion technology, Fresenius Kabi is one of the world’s leading companies. Competitors in the market for transfusion technology include Haemonetics, Macopharma, and Terumo.
The market volume for acute care hospitals in Germany in 2018 was around € 105 billion2, as defined by total costs (gross). Personnel costs accounted for around 61% of this total and material costs for 38%, each of which increased by around 4%.
Admissions in the acute care hospital market in 2018 were roughly on the previous year’s level.
With a share of sales of around 6.0%3, Helios Germany is the leading company in the German market for acute care hospitals. The company’s hospitals compete primarily with individual hospitals or local and regional hospital associations. The main private competitors are Asklepios Kliniken, Rhön-Klinikum, and Sana Kliniken.
1 In each case, the most recent market data available refers to the year 2018 as no more recent data has been published: German Federal Statistical Office, 2018 data; German Hospital Institute (DKI), Krankenhaus Barometer 2020
2 The market is defined by total costs of the German acute care hospitals (gross), less academic research and teaching.
3 Measured by 2020 sales in relation to gross total costs of acute care hospitals minus scientific research and teaching in Germany (latest available data: Federal Statistical Office, 2018 data)
The economic situation of German hospitals worsened compared with the previous year. Around 47% expect losses in 2020. 24% project to break even and just 29% expect to be able to generate a profit for the year. In 2019, approximately 46% of the hospitals recorded a profit and approximately 44% reported a loss. One reason for the further deterioration of the economic situation in 2020 was the COVID-19-related loss of revenues among the hospitals.
In addition to the often difficult economic and financial situation, there is an enormous need for capital expenditure due to medical and technological advances, higher quality requirements, and necessary modernizations, as well as investments in digitalization. Moreover, the federal states have in the past failed to meet their statutory obligation to provide sufficient financial resources. This results in a continually increasing investment backlog. The German Hospital Institute (DKI)1 estimates that the annual investment requirement at German hospitals is at least € 6.5 billion. This is more than two times the investment funding currently being provided by the federal states.
1 German Hospital Institute (DKI), Krankenhaus Barometer 2020
What is known as the change in value figure is crucial for the increase in reimbursement for hospital treatments. It is used to compensate for rising costs in the hospital market, particularly with regard to personnel and material costs. The change in value figure is redetermined each year for the following year. For 2020, it was 3.66% (2019: 2.65%).
Due to the COVID-19 pandemic, in spring 2020, hospitals in Germany were asked to suspend scheduled surgery and new admissions in order to reserve capacity for COVID-19 patients. This resulted in lost revenues and additional costs. In order to provide financial support for hospitals, the German parliament (Bundestag) passed the law to ease the financial burden on hospitals (Krankenhaus-Rettungsschirm) in March 2020. Among other things, the law provided for a compensation payment of € 560 for each reserved bed per day of occupancy as well as a co-investment for each newly created intensive care treatment unit with artificial respiration. Nursing costs and additional costs for personal protective equipment were also financed on a flat-rate basis. In July 2020, the uniform compensation per reserved bed was replaced by a differentiated flat-rate amount, based on the actual revenue losses of the individual hospitals. The flat rate varied between € 360 and € 760. The regulations governing the law to ease the financial burden on hospitals were valid until September 30, 2020.
Source: German Federal Statistical Office, 2018 data
A follow-up regulation came into force with the Third Law of Protection of the Population in an Epidemical Situation of National Dimension as well as the Hospital Future Act (Krankenhauszukunftsgesetz – KHZG). Under this act, the local infection rates and the utilization rates of the hospitals’ wards were decisive for receiving financial aid. This rule ceased to apply on February 28, 2021. A draft bill stipulates, however, that the rule endures until April 11, 2021 in an unchanged form. The KHZG also provides for compensation payments to mitigate COVID-19-related revenue losses and additional costs. The revenues generated by the individual hospitals in 2019 are used as the benchmark for these losses. The exact structure was determined as of December 31, 2020.
In addition, hospitals can negotiate per-case surcharges to compensate for the additional costs resulting from COVID-19 that have not yet been taken into account by other compensation payments. No further measures to provide financial support to hospitals in Germany are currently planned.
In addition, the Hospital Future Act aims to further modernize and digitalize hospitals in Germany. For example, there are plans to introduce nationwide standards to enable stronger networking in the health care system and to further improve patient care. Funding is being provided for investments in modern emergency room capacities and digital infrastructure, e.g., in patient portals, electronic documentation of nursing and treatment services, digital medication management, IT security measures, and cross-sector telemedical network structures.
In order to give hospitals more flexibility in the deployment of personnel during the COVID-19 pandemic, the minimum level for nursing staff in the care-intensive geriatrics, intensive care, cardiology, trauma surgery, cardiac surgery, neurology, early neurological rehabilitation, and neurology /stroke unit wards in force since 2019 were in part suspended for 2020.
As a result of the Act to Strengthen Nursing Staff (Pflegepersonalstärkungsgesetz), since 2020, nursing costs have been deducted from the standardized base rates and the costs for direct nursing patient care are instead fully reimbursed by the health insurance companies via separate care budgets at costs. This rule was not affected by the COVID-19 pandemic.
|2018||2017||2010||2000||1991||Change 2018 / 2017|
|Length of stay (days)||7.2||7.3||7.9||9.7||14.0||-1.4%|
|Number of admissions (millions)||19.39||19.44||18.03||17.26||14.58||-0.3%|
|Average costs per admission in €1||5,615||5,439||4,432||3,216||2,930||3.2%|
|1 Total costs, gross|
|Source: German Federal Statistical Office, 2018 data|
The private hospital market in Spain had a volume of around € 16 billion1 in 2019.
Helios Spain is the market leader with a market share of around 13% in the private hospital market in terms of sales. Helios Spain competes with a large number of stand-alone private hospitals, as well as with smaller hospital chains such as HM Hospitales, Hospiten, Vithas, Ribera Salud, Hospitales Sanitas, and HLA, among others.
In particular, the increasing number of privately insured patients is opening up growth opportunities for private operators. Private supplemental insurance in Spain is relatively affordable, especially when compared to other countries, and it is a prerequisite for using the services of private hospitals. Among other factors, the comparatively short waiting times for scheduled treatments and the possibility to access specialists directly make private hospitals attractive.
The opportunity for private hospital operators to expand their networks by building additional new hospitals and outpatient medical centers opens up further potential. Since the Spanish market is highly fragmented, it also has some consolidation potential.
In view of high patient numbers with COVID-19 infections and overburdened hospitals, Spain declared a national emergency (State of Alarm) for the first time from March to late June 2020. Where medically justifiable, elective treatments were prohibited nationwide in order to free up bed capacity for COVID-19 patients. During the summer period, the pandemic situation improved, and elective treatments were performed again, recovering also some procedures (catch-up effects) that had to be canceled during the first State of Alarm. However, after the number of infections rose once again, another nationwide State of Alarm was declared in October 2020. This time, responsibility for health policy was largely delegated to the 17 autonomous regions. None of them issued a new ban on performing elective treatments.
In June 2020, the Spanish central government approved a special fund to help the autonomous regions finance the costs of the pandemic. In total, it provided around € 16 billion in non-repayable grants. Around € 9 billion of this amount was earmarked for financial support of the regional health care systems, particularly to rebalance their budgets after increased costs and to reinforce the public system to cope with the expected new waves of the COVID-19 pandemic. The specific use of these funds was to be decided by the regional governments themselves, depending on their own needs and health care plans. In this respect, regional health authorities could support private hospitals by referring patients to them where appropriate or by reimbursing them for other kinds of provided services, but there was no specific program to compensate for reserved beds. Compensation payments for the increased costs of treating COVID-19 patients were negotiated bilaterally by private hospital operators with private health insurers and the relevant government authorities.
1 Market data based on company research and refers to the addressable market of Quirónsalud. Market definition includes both inpatient and outpatient health care services. It includes neither public-private partnership (PPPPPP (public-private partnership model)Public-private partnership describes a government service or private business venture that is funded and operated through a partnership of government and one or more private-sector companies. In most cases, PPP accompanies a part-privatization of governmental services.) nor occupational risk prevention centers (ORP). The market definition may differ from the definition in other contexts (e.g., regulatory definitions).
The global market for projects and services for hospitals and other health care facilities was heavily impacted by the COVID-19 pandemic in 2020. Thus, the market for projects for hospitals was characterized by delays, postponements, and cancellations. These were accompanied by general delays in project execution, not least due to COVID-19-related travel and quarantine restrictions, as well as supply chain constraints. Furthermore, the COVID-19 pandemic led to health-authority-induced capacity restrictions in the service business, coupled with lower demand for rehabilitation services due to postponed elective surgeries.
The market for projects and services for hospitals and other health care facilities is very fragmented. Therefore, an overall market size cannot be determined. The market is country-specific and depends, to a large extent, on factors such as public health care policies, government regulation, and levels of privatization, as well as demographics and economic and political conditions. In markets with established health care systems and mounting cost pressure, the challenge for health care facilities is to increase their efficiency. Here, demand is especially high for sustainable planning and energy-efficient construction, optimized hospital processes, and the outsourcing of medical-technical support services to external specialists. This enables hospitals to concentrate on their core competency − treating patients.
In addition to offering services for health care facilities worldwide, Fresenius Vamed itself is active as a leading post-acute care provider in Central Europe, especially in Germany, Austria, Switzerland, and the Czech Republic. In emerging markets, the focus is on building and developing health care infrastructure and improving the level of health care.
Fresenius Vamed is a global company with no direct competitors covering a comparably comprehensive portfolio of projects, services, and total operational management over the entire life cycle of health care facilities. As a result, Fresenius Vamed has a unique selling proposition of its own. Depending on the business segment, the company competes with international companies and consortia, as well as with local providers.
Overall business development