Health care sector and markets
The health care sector is considered to be widely independent of economic cycles. The demand, especially for lifesaving and life-sustaining products and services, is expected to increase irrespective of the COVID-19 pandemic and mortality among dialysisDialysisForm of renal replacement therapy where a semipermeable membrane – in peritoneal dialysis the peritoneum of the patient, in hemo dialysis the membrane of the dialyzer – is used to clean a patient’s blood. patients, given that they are medically needed and the population is aging. Moreover, medical advances and the large number of diseases that are still difficult to cure – or are incurable – are expected to remain growth drivers.
In the emerging countries, the availability of basic health care and the demand for high-quality medical treatment are increasing. As per-capita income increases, individuals increasingly have to cope with the illnesses associated with lifestyle diseases.
On the other hand, experts estimate that further ﬁnancial constraints in the public sector could result in more pricing pressure and a slowdown in revenue for companies in the health care industry. Some countries are experiencing signiﬁcant ﬁnancing problems in the health care sector due to the strained public finance situation. Especially in the industrialized countries, increased pressure to encourage saving can be expected as health care costs constitute a large portion of the budget.
It will be increasingly important for companies in the health care sector to increase patient benefit, to improve treatment quality, and to offer preventive therapies. In addition, especially those products and therapies that are not only medically but also economically advantageous will be of increasing importance.
Source: Company research
The dialysis market
The global dialysis market is expected to grow in a range of 2% to 7% at constant exchange rates in 2022.
The number of dialysis patients worldwide is expected to rise, depending on further developments of the global COVID-19 pandemic, by approximately 5% in 2022, although signiﬁcant regional differences will remain. For the United States, Japan, and the countries of Central and Western Europe, where prevalencePrevalenceNumber of all patients who suffer from a specific disease within a defined period. The prevalence rate indicates the number of people with this specific disease (e.g., terminal kidney failure) treated per million population. is already relatively high, we forecast below-average patient growth in the region. In emerging markets, we expect growth rates to be even higher.
Excess mortality of dialysis patients due to the COVID-19 pandemic is continuing in 2022 and is expected to have a significant adverse effect on treatment volumes and additional COVID-19 related costs. The further development significantly depends on the adoption and speed of the roll-out of vaccinations to our worldwide patient population.
Overall, factors such as aging populations and the growing number of people suffering from diabetes and hypertension, which are ailments often preceding terminal kidney failure, are contributing toward continued growth of the dialysis markets. The life expectancy of dialysis patients is also rising thanks to ongoing advances in treatment quality and the rising standard of living, especially in the emerging countries.
The market for generic IV drugs, biopharmaceuticals, nutrition and infusion therapies, medical devices, and transfusion technology1
The market for generic IV drugs is expected to grow in the high single-digit range worldwide in 2022. The demand for generic IV drugs is likely to grow because of their significantly lower price in comparison to the price of originator drugs. The growth dynamic will continue to be driven by originator drugs going off-patent, as well as by original off-patent products that are offered at steady prices due to a unique selling proposition. The patent expiries of some high-revenue IV drugs in 2022 suggest extraordinary market growth for the year. A factor working in the opposite direction is the price erosion of original drugs now off-patent and generic drugs that are already on the market.
It is forecast that, in 2022, the market for biopharmaceuticals relevant for Fresenius Kabi will grow by 4% to 6% on the basis of units sold and by 3% to 5% on the basis of sales.
We expect the market for clinical nutrition to continue to grow at the same level as the previous year in 2022. Growth prospects are supported by increasing awareness of the need for early clinical nutrition, which is also reflected in the latest guidelines. In addition, the practice of mandatory screening for malnutrition² is on the rise. We see additional potential in the continuing high proportion of malnourished people who do not yet have access to nutrition therapies. Considerable potential continues to be projected in Latin America and Africa with growth rates of 5% to 7% in individual regions.
1 Market data refers to Fresenius Kabi’s addressable markets. Those are subject to annual volatility due to currency fluctuations and patent expiries of original drugs in the IV drug market, among other things. Percentage increase based on market value (price × volume). Depending on the further development of the COVID-19 pandemic in 2021, the market growth of single product segments could change.
2 Sources: New ESPEN guideline on clinical nutrition and hydration in geriatrics. Clin Nutr. 2019 38(1):10-47; by Volkert D, Beck AM, Cederholm T, Cruz-Jentoft A, Goisser S, Hooper L, et al.; latest implemented e.g., in Portugal: “National Policy for effective screening implementation”; Directorate General of Health DGS
We expect the market for infusion therapies in Europe to be slightly above the level of the previous year in 2022. While the market for blood volume substitutesBlood volume substitutesThey are used for the temporary stabilization and / or maintenance of blood volume, for example, in the event of major blood loss. is expected to remain relatively stable, the standard solutions business is expected to grow slightly in Europe in 2022. Outside Europe, we expect the infusion therapies market to be around 1% to 3% above the previous year’s level, with Latin America likely to grow at mid single-digit rates.
In 2022, the medical devices market should experience growth of 1% to 3%. In many countries, we continue to see strong demand in the infusion technology segment with more nationally resilient positions even after COVID-19. In addition, the infusion pumps already placed in recent years will increase the demand for dedicated infusion sets.
In transfusion technology, we expect to see growth of 5% to 6%. In the product segments, we expect plasma to grow by between 8% and 9%. In particular, the demand for plasma-derived products, such as intravenously administered immunoglobulins, is on the rise worldwide, driven by the fact that more and more people have access to high-quality health care and that plasma products are used more widely. In cell therapy, we expect to see growth of up to 15%. In this therapy, the patient’s own immune cells are taken, processed in the laboratory, and returned to the patient via an infusion. Especially in cancer immune therapy, we are seeing an increase in the use of cell therapies.
The hospital market1
We assume there will be a stagnation or decline in inpatient hospital admissions in the future, in particular as a result of the increasing number of outpatient treatments, as well as the increasing acceptance and use of digital health offerings.
What is known as the change in value figure is crucial for the increase in reimbursement for hospital treatments in Germany. For 2022, it was set at 2.32%. In addition, the hospital funding system provides for various increases and reductions for acute hospitals. For additional services agreed in advance with the health insurance companies, hospitals have to accept what is known as the fixed-cost degression discount of up to 35%. The exact amount of the discount is negotiated between the hospitals and the health insurance companies.
In order to factor medical outcomes into the remuneration, the Federal Joint Committee defines quality indicators. The specific financial terms and details are being worked out in a consistent overall fashion. However, we do not expect any adverse effects from this since the Helios Group is well prepared for quality-based remuneration thanks to its clear focus on quality and transparency of medical outcomes.
The future expectations for 2022 among German hospitals with respect to their economic situation are clearly negative: according to the Krankenhaus Barometer 2021 survey by the German Hospital Institute (DKI), only a fifth (21%) of hospitals expect their economic situation to improve in 2022, whereas 50% expect it to worsen.
Hospitals’ results of operations could further worsen, as the COVID-19-related support measures are expected to be largely discontinued in 2022 and the fundamental challenges in the German hospital market remain unchanged. In addition to inadequate income from current business, the need for capital expenditure continues to grow, while government subsidies are decreasing. Hospitals can only close this gap to a limited extent on their own.
With regard to the financial support of hospitals in Germany, a surcharge for patients with COVID-19 has been introduced. The surcharge applies to patients who test positive for COVID-19 on admission and who are admitted in the period from November 1, 2021 to March 20, 2022. Furthermore, the legal amendment regulates an ordinance authorization for the Ministry of Health (“BMG”). The BMG can thus issue regulations on COVID-19-related revenue shortfalls by statutory order, i.e., without the approval of the parliament of federal state governments (“Bundesrat”). The full-year Corona compensation has been extended for 2022. Although the details have not yet been agreed, it is likely that the 2021 schemes will be continued.
Further measures to provide financial support to hospitals in Germany in 2022 are not planned. The renewed rapid increase in incidence rates, combined with a vaccination rate that is still insufficient, may make it necessary to extend the current regulation. It remains to be seen what concrete measures the new German government will take.
The Rheinisch-Westfälisches Institut für Wirtschafts-forschung (RWI) forecasts that more hospitals will respond to economic pressures by joining together into networks and bundling their services. The affiliated hospitals benefit from synergy effects, including the possibility of generating cost savings, for example in purchasing. RWI expects the COVID-19 pandemic to further accelerate the trend towards more collaboration.
The agreement on the separation of nursing staff costs (“Pflegepersonalabgrenzungsvereinbarung”), which has been in force since 2021, will remain in force until further notice.
In addition, the regulations on the binding minimum level for nursing staff will apply again in 2022. These regulations apply to nursing staff in hospitals in the following areas: geriatrics, intensive care, cardiology, trauma surgery, cardiac surgery, neurology, neurology / stroke unit, and early neurological rehabilitation, as well as internal medicine, general surgery, pediatrics, and pediatric intensive care medicine. For the year 2022, the minimum level for nursing staff has been extended to the area of orthopedics, gynecology and obstetrics. Binding minimum levels for nursing staff could also be introduced in other areas of hospitals. However, there is currently no timetable for the implementation of these further regulations. In the coalition agreement, the new German government agreed to introduce a defined measurement of the staffing levels according to the hospitals’ need (Pflegepersonalregelung 2.0 or PPR 2.0).
We expect the private hospital market in Spain to continue to grow by 2% to 3% in 2022. The continuing increase in the number of privately insured patients should also open up opportunities for private operators in the future.
Relevant indicators, for example nationwide health care spending and bed density, indicate the further market development potential in the Spanish health care system compared with other EU countries.
This also provides opportunities for the establishment of new hospitals. In addition, the highly fragmented private Spanish hospital market offers further consolidation potential.
Key for the future viability of hospitals will increasingly be the degree of digitalization. Interconnectivity and the use of digital solutions open up new opportunities to make processes safer and more efficient, and thus to break new ground in patient care. The integration of telemedicine and digital health applications in the inpatient setting could also significantly expand hospital services in the future.
We expect the trend toward digitalization in health care to continue and generally increase in importance. The COVID-19 crisis has provided a decisive push, particularly with regard to interest in and use of telemedicine. Experts assume that as people become more accustomed to the new tools, acceptance of digital healthcare applications and services will increase on a broad scale and that the future of medical care will be a hybrid mix of digital and personal treatment.
The global market for fertility services is expected to grow between 10% and 15% in 2022, depending on the market, due to an anticipated pent-up demand brought about by COVID-19, as well as demographic and health trends and changing lifestyles.
1 In each case, most recent market data available refers to the year 2018 as no more recent data has been published: German Federal Statistical Office, 2018 data
Sources: Company research; German Hospital Institute (DKI), Krankenhaus Barometer 2020, Roland Berger Krankenhausstudie 2020, McKinsey & Company, eHealth Monitor 2020
The market for projects and services for hospitals and other health care facilities
For 2022, we expect a slight increase in demand for projects and services for hospitals and other health care facilities worldwide, depending on the further course of the COVID-19 pandemic.
In the Central European markets with established health care systems, we expect solid growth and a continued rise in demand. This is due to demographic developments and an increasing need for investment and modernization in public health care facilities that has also become apparent as a result of the COVID-19 pandemic. Demand is particularly strong for services, i.e., the maintenance and repair of medical and hospital technology, facility management, technical or overall operational management, and the optimization of infrastructural processes – especially within the framework of public-private partnership models. Additional growth opportunities arise from the fact that public institutions are increasingly outsourcing non-medical services to private service providers due to increasing efficiency pressure. In addition, an expansion of the range of post-acute services in Europe is expected.
In the emerging markets, we anticipate an overall dynamic development. Growth in markets such as Africa, Latin America, and southeast Asia will initially be driven by the demand for efﬁcient, needs-oriented medical care. In China and the Middle East, growth will be driven by the development of infrastructure and the creation of new care services, as well as research and training facilities.
Further opportunities arise from the progress of digitalization. It is important to systematically exploit the opportunities it offers, for example in the establishment and operation of “virtual hospitals”. These can make a decisive contribution to making state-of-the-art technology and medical expertise available at adequate cost. This goes hand in hand with networking between health care systems at different levels of development in order to facilitate access to high-quality health care services for broad sections of the population.