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Overall economic risk and risks resulting from global economic conditions

The war against Ukraine launched by Russia in February 2022 will continue to have a significant negative impact on our business, financial position, and operational result. As a provider of life-sustaining medical devices and healthcare services, we are continuing our operations in both Russia and Ukraine to the best of our ability -- despite the war and notwithstanding the extensive economic sanctions against Russia and Belarus imposed by numerous governments in response to the war. However, we cannot rule out the possibility that operations in Ukraine, Russia, or Belarus may be adversely affected by the destruction of assets, expropriation or other official measures.

In addition to these risks, the highly dynamic situation gives rise to considerable uncertainties, in particular due to a further deterioration in the global macroeconomic outlook. Although the direct and indirect effects of the Ukraine war are difficult to assess at present, the macroeconomic inflationary environment, including significantly rising energy, supplies and transportation. The discontinuation of energy supplies from Russia intensified these effects and had additional negative consequences for our business.

To limit these cost increases for Fresenius, we are continuously analyzing and exploiting potential savings, for example in energy consumption. We are also examining alternative energy sources and use them wherever possible.

In addition, the Ukraine war increased the risk of cybersecurity attacks on our systems and data. Also, our ability to access capital could be impacted by increasing volatility and disruptions in the financing markets, as well as by further increases in interest rates.

An expansion of the war beyond the borders of Ukraine would have significant consequences for the whole of Europe.

Overall, the aforementioned factors will have a negative impact on our business, financial position, and operational result.

Despite the aforementioned effects, from today's perspective the global economic development does not constitute a business continuation risk for the Fresenius Group.

Fresenius is only affected to a minor extent by general economic fluctuations. We expect demand for our life-saving and life-sustaining products and services to continue to grow.  

In addition, Fresenius aims to achieve a balanced distribution of business in the major regions of the world and between established and emerging markets. The risk situation of our business segments depends in particular on the development of the markets relevant to them. We therefore also carefully monitor and assess country-specific political, legal and financial conditions, particularly in the current macroeconomic environment. This applies, for example, to our receivables portfolios in countries that are experiencing budgetary problems due to their indebtedness.

This also applies to initiatives by governments regarding possible changes to the healthcare programs currently in place.

Inflation-related cost increases could have an adverse effect on our business, particularly if prices for our products and services remain unchanged or cannot be adjusted sufficiently to reflect increased costs.

Risks related to the covid-19 pandemic

The global covid 19 pandemic also continued to have a significant impact on our business in 2022. It was characterized by regional differences in the development of the COVD-19 pandemic with persistently high infection rates overall and the associated shortage of resources. The further development of the global situation remains uncertain and depends on the extent of the spread of new virus variants and associated local lockdowns. Negative effects on our business could be caused, for example, by a continuing or increasing excess mortality of our dialysis patients, restrictions on the business activities of our suppliers, customers and ourselves, including our personnel, resulting from regulatory requirements, orders and conditions at regional, national or international level. The unavailability of crucial manpower and increased costs, e.g. due to protective measures in our dialysis clinics, hospitals and production facilities, could also have a negative impact on our business.

Risks in the healthcare sector

Risks related to changes in the healthcare market are of major importance to the Fresenius Group. The main risks are the financing of healthcare systems and the corresponding reimbursement systems, as well as the development of new products and therapies. 

Financing of healthcare systems and reimbursement systems

In our largely regulated business environment, changes in legislation, including those relating to reimbursement, can have a drastic impact on our business success.

National insurance systems are financed very differently. For example, healthcare systems in Europe and the British Commonwealth countries are generally based on one of two funding models: the system with a mandatory employer and employee contribution, and the predominantly tax-funded system.

In the Asia-Pacific region, universal healthcare ("UHC") is at various stages of implementation, so reimbursement mechanisms can vary significantly from country to country (and even from province to province and city to city). In Latin America, healthcare systems are funded by public or private payers, or a combination of both. Due to the high share of the U.S. market in Group sales, changes in the government reimbursement system in particular, e.g. reimbursements for 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. treatments, can have a significant impact on our business.

For example, in 2022, Fresenius Medical Care generated approximately 26% of its global revenue through reimbursements from the Centers of Medicare and Medicaid Services (CMS) government healthcare programs in the United States. Changes in legislation or reimbursement practices, such as those relating to the End-Stage Renal Disease (ESRD) Prospective Payment System (PVS), fee schedules for physicians and clinical laboratories, and the billing system for ambulatory surgical clinics, could affect both the scope of Medicare and Medicaid reimbursement for services and the scope of insurance coverage.

A reduction in reimbursement rates, reimbursed services or changes in standards, regulations and government funding in countries in which we operate could adversely affect our revenues and profitability and have a material adverse effect on our business, financial position, and operational result.

For further information on material legislation and compensation programs, please refer to Fresenius Medical Care's annual report.

Changes in government and private insurer reimbursement for our full range of products and services in the U.S. could have a material adverse effect on our business and results of operations.

The same applies to the hospital market in Germany. The DRG system (Diagnosis Related Groups) is intended to increase efficiency in hospitals and reduce expenses in the healthcare system. To a considerable extent, occupancy in the hospitals is provided by statutory health insurance funds and pension insurance institutions. The continuation of contracts with these institutions therefore influences the success of Helios Germany. We keep a close eye on legislative activities and planning and work together with the state healthcare organizations.

As part of the Nursing Personnel Strengthening Act (PpSG), nursing costs were removed from the flat rates per case (DRG) from 2020 and the costs of patient-centered care were reimbursed in full by the health insurance funds via separate care budgets. As early as 2021, each additional or increased bedside care position was fully refinanced by payers, and the care budget's inclusion criteria were changed.

As negotiations with the payers on the care budgets have largely not yet been concluded, this gives rise to a potential risk to the business, financial position, and operational results.

The allocation of nursing staff to the care budget has been adjusted to the current definitions of nursing specialist and nursing assistant or other professions in the Nursing Staff Lower Limits Ordinance (PpUGV).

For the 2022 care budget, the personnel costs of the occupational groups nursing specialist and nursing assistant (nursing assistant, physician assistant, anesthesia technician, emergency paramedic, nursing and geriatric nursing assistant) were fully included in the care budget.

Digital and technical measures that reduce or support nursing activities were included in the care budget (4% of the total care budget).

In the German market, Helios Germany is observing a general trend towards outpatient treatment, which could lead to lower case number growth for inpatient treatments. To take account of this trend, Helios Germany is expanding outpatient services in a separate division. If Helios Germany does not succeed in sustainably adapting its business model through appropriate measures, this could lead to a decline in case numbers and have a material adverse effect on our business and operating profit.

Our private hospital chain Quirónsalud in Spain operates hospitals, among other things, via PPP (public-private partnership) contracts. These are part of the public healthcare system in Spain. The company has thus been assigned responsibility for certain areas of healthcare for Spanish citizens with statutory health insurance. In return, Quirónsalud receives remuneration in the form of a per capita flat rate or a fee for the respective service provided. If Quirónsalud loses the concession to operate hospitals under 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. contracts or obtains poorer terms in renegotiations with public or private insurers, or if the hospitals are unable to offset lower reimbursement rates through cost savings, this may have a material adverse effect on our business, financial position, and operational result.

Savings in the reimbursement of healthcare services may also have a negative impact on the sales prices of Fresenius Kabi's products.

Changes in legislation, reimbursement practices and healthcare programs could affect the scope of reimbursement for services, the scope of insurance coverage and the product business. This could have a material adverse effect on our business, financial position, and operational result. Overall, we aim to counteract such potential regulatory risks via benefit enhancements and cost reductions.

Competition and Innovation

We face numerous competitors in both our healthcare services business and dialysis products business, some of which may possess substantial financial, marketing or research and development resources. Competition from new and existing competitors and especially new competitive developments and innovations in technology, pharmaceuticals and care delivery models could materially adversely affect the future pricing and sale of our products and services.

Growing competition, among other things induced by the recovery of some notable competitors, in particular in the U.S. market for generic IV drugs after halts to production, may continue to materially affect the pricing and sale of our products and services. In addition, the introduction of generic or patented drugs by competitors may have an impact on the revenue and operational results of our products.

Generally, the healthcare sector is characterized by pricing pressure (including from tenders), competition, and efforts to contain costs. These factors could result in lower revenue and adversely affect our business, financial position, and operational results.

In the United States, almost all Fresenius Kabi injectable pharmaceutical products are sold to customers through arrangements with group purchasing organizations (GPOs) and distributors. The GPOs also have purchasing agreements with other manufacturers, and the bidding process for products is highly competitive.

If Fresenius Kabi is not successful in maintaining its existing contracts or if new contracts are concluded on less favorable terms, this could have an adverse effect on our operational results.

Similar developments with regard to price pressure in the tender business and increasing competition and price reductions are affecting our business in all major markets in Asia. Further expansion of National Volume based Procurement (NVBP) and Provincial Volume based Procurement (PVBP) is expected with one or two rounds annually over the next three years. Based on the directive from the Chinese State Council, drug price reduction will continue to be one of the major measures to further contain healthcare costs in a market in which volumes are steadily growing. This development could have a negative impact on our business, financial position, and operational result if Fresenius Kabi is not successful in offsetting these price reductions, for example through cost savings and efficiency gains in production.

To ensure our permanent competitiveness, we work closely together with physicians and scientists. Important technological and pharmaceutical innovations are intended to be quickly identified and further developed, if necessary also by adapting our business strategy. Moreover, we secure our competitiveness by ongoing analyzes of our market environment as well as the regulatory framework. The market activity, especially our competitors’ products and newly launched dialysis-related products are thoroughly monitored. The cooperation between the various technical, medical and academic institutions within our company also ensures our competitiveness, which is finally further enhanced by our consequent conduction of programs devoted to cost saving and efficiency increase.

The introduction of new products and services, or the development of advanced technologies by competitors, could render one or more of our products and services less competitive or even obsolete, and thus have a significant negative impact on future sales, the prices of products, and our range of services. This includes the introduction of generic or patented drugs by competitors, which may have an impact on sales and operational results. Cooperation with medical doctors and scientists allows us to identify and support relevant technological innovations. This means we are always able to keep abreast of current developments in alternative treatment methods so that we are able to evaluate and, if necessary, adjust our corporate strategy.

Information technology and cybersecurity risks

Digital information is a cornerstone and enabler for our global business as one of the leading healthcare groups. Ongoing digitization and digital transformation offer great opportunities for healthcare - with innovative technological and therapeutic approaches that improve patients' treatment paths. Fresenius is continuously digitizing its processes, opening up new markets with digital product solutions, and taking into account that digitization is associated with cyber risks that can affect confidentiality, integrity, or availability.

We continuously strive to strengthen our resilience to cyberattacks and reduce our cyber risks to avert harm to our patients, customers and the company. To this end, we conduct regular risk analyses along our value chains, assess the cyber threat landscape and its implications for our infrastructures, critical systems and data in order to derive adequate risk mitigation measures.

The overarching cyber risks that affect the Fresenius Group holistically include the theft and disclosure of personal and patient data, as well as trade secrets, attacks and associated failures of our IT infrastructures and applications, e.g. through malware, or the targeted manipulation of data. In addition, cyber risks exist in connection with the business activities of our respective business units: In the product business, these relate to the disruption of production and logistics processes and the theft of intellectual property. In our healthcare facilities, cyber risks relate to patients, their patient data and the medical products or devices used. The unavailability of IT systems in critical situations or the compromise of medical devices could negatively affect patient safety and treatment effectiveness.

The loss of sensitive data or non-compliance with data protection laws, regulations and standards could damage our competitive position, our reputation and the company as a whole. Furthermore, Fresenius or one of its Group companies could be subject to substantial fines in the event of a data protection breach. To comply with all legal requirements, we have implemented comprehensive data protection management systems that provide for the appropriate technical and organizational measures and controls to protect personal data.

Our stakeholders have great confidence in the cyber security of our products and services. To minimize cyber risks, we have implemented security architectures and concepts that include preventive, detective and reactive measures. We can detect cyber threats at an early stage through monitoring mechanisms in our networks as well as on our end devices, such as desktops, servers, and mobile devices, among others. The security of applications that process sensitive patient or personal data is regularly checked by so-called penetration tests and red-teaming exercises that simulate targeted attacks. Critical systems, such as central communication systems or clinical information systems, are subject to special protection concepts that can, for example, offset the failure of a system.

Data protection

Fresenius’ business activities are also subject to data protection regulatory requirements. This includes compliance with the General Data Protection Regulation (GDPR) as well as compliance with other country-specific data protection regulations. Breaches of these regulations or of the GDPR can result in substantial fines, damage to reputation, and loss of trust. The core element of data protection is the secure and lawful processing of personal data in accordance with these regulatory requirements. In addition to patient data, this also includes the personal data of employees as well as that of contractual partners and other persons.

Risk areas include compliance with data protection principles, information obligations, data subjects’ rights, risk analysis regulations, and the documentation of data processing activities, as well as ensuring secure data processing, including the establishment of an appropriate level of data protection in (inter)national data transfers.

To comply with legal requirements, Fresenius has implemented comprehensive data protection management systems, which provide the appropriate technical and organizational measures and controls for the protection of personal data. Fresenius SE & Co. KGaA and all business segments maintain data protection organizations in accordance with their organizational and business structures. This includes independent data protection officers reporting to the respective company’s management. The dependence on data protection and IT security / cybersecurity resulting from increasing internationalization is also taken into account by the data protection organizations by ensuring collaboration with the respective departments is as close as possible.

The business segments have implemented processes and standards based on their organizational and business structures that also provide internal guidelines for processing personal data in a secure and appropriate manner.

In addition, the individual data protection management systems also include appropriate control measures in order to adequately check compliance with regulatory and internal requirements.

Financial risks

Currency and interest rate risks

Our global orientation gives rise to a variety of foreign currency risks. In addition, the financing of our business activities may give rise to interest rate risks which may also affect the value of our assets, in particular goodwill.

In order to limit these risks, we use, among other things, derivative financial instruments. We restrict ourselves to marketable instruments traded over the counter and use them exclusively to hedge underlying transactions, not for trading or speculative purposes. Transactions are conducted within limits approved by the Board of Management, which are set depending on the counterparty's rating.

Our foreign currency management is based on a policy approved by the Board of Management. It defines the objectives, organization and sequence of the risk management processes. In particular, it defines who is responsible for identifying foreign currency risks, entering into hedging transactions and regular risk management reporting. The responsibilities correspond to the decision-making structures in the Group's other business processes. Decisions on the use of derivative financial instruments in interest rate management are generally made in close consultation with the Board of Management.

With a few exceptions due to foreign exchange regulations, transactions with derivative financial instruments are carried out under the control of the Group Treasury of the Fresenius Group. They are subject to strict internal supervision. This ensures that the Management Board is always fully informed about all material risks and about existing hedging transactions.

In general, Fresenius is highly hedged against foreign currency and interest rate risks: Of the Group's financial liabilities as of December 31, 2022, approximately 86% were protected against an increase in interest rates by fixed-rate financing or interest rate hedges. Thus, around 14% were subject to interest rate risk. A sensitivity analysis shows: If the reference interest rates relevant for Fresenius increase by 0.5 percentage points, this will affect the Group's net income by about 0.5%.

As a global group, Fresenius is subject to foreign currency translation effects. In view of the strong U.S. business, the relationship between the U.S. dollar and the Euro plays a special role. Foreign currency exchange risks are not hedged. A sensitivity analysis shows that a change in the US dollar to the Euro of 1 cent would have an annual effect of around €140 million on Group sales, around €15 million on EBITEBIT (Earnings before Interest and Taxes)EBIT ​does ​include ​depreciation ​and ​write-ups ​on ​property, ​plant ​and ​equipment. ​EBIT ​is ​calculated ​by ​subtracting ​costs ​of ​revenue, ​selling, ​general ​and ​administrative ​expenses, ​and ​research ​and ​development ​expenses ​from ​revenue. and around €4 million on the consolidated result.

As a globally operating company, we have production capacities in all major foreign currency regions. In the service businesses, our sales and cost base match to a high degree. Transaction risks in foreign currencies are quantified and managed using a cash flowCash flowFinancial ​key ​figure ​that ​shows ​the ​net ​balance ​of ​incoming ​and ​outgoing ​payments ​during ​a ​reporting ​period.-at-risk model. This analysis is based on the foreign currency cash flows that are reasonably likely to occur in the next twelve months, less any hedging that has been performed. As of December 31, 2022, the Fresenius Group's cash flow at risk was €52 million, i.e., with a probability of 95%, a potential loss from foreign currency cash flows in the next twelve months will not exceed €52 million.

Recoverability of assets

Financial risks that could arise from acquisitions and investments in property, plant and equipment, and in intangible assets are assessed through careful and in-depth reviews assisted by external consulting firms. The intangible assets, including goodwill, product rights, trade names, and management contracts, contribute a considerable part to the total assets of the Fresenius Group.

Currency devaluations, adverse changes in general interest rates and deteriorating economic conditions, including inflationary price developments in various markets combined with deteriorating country credit ratings, increase the risk of goodwill impairment, which may lead to a partial or complete write-down of the goodwill or brand name of the affected cash-generating unit or negatively impact our investments and external partnerships.

Goodwill and other intangible assets with an indefinite useful life carried in the Group’s consolidated balance sheet are tested for impairment each year.

Debt and liquidity

As of December 31, 2022, the Fresenius Group’s financial liabilities including leases under IFRS 16 were €27,763 million. The debt could, among other things, limit the Company’s ability to pay dividends, arrange refinancing of financial liabilities, or implement the corporate strategy. If Fresenius’ credit rating or the conditions on the relevant financial markets deteriorate significantly, financing risks could arise for Fresenius. We reduce these risks through early refinancing as well as a high proportion of mid- and long-term funding with a balanced maturity profile.

Some of our financing agreements that were concluded before the year 2017 contain covenants requiring us to comply with certain financial ratios. These covenants are currently suspended due to the investment grade rating of the Fresenius Group. A deterioration of the rating may therefore also lead to the currently suspended covenants in some financing agreements becoming active again. Non-compliance with these covenants could then result in a default and acceleration of the debt under the respective agreements. We counteract this risk by taking the performance indicators relevant for our investment grade rating into account in our Group planning and continuously monitoring their development. This enables us to take countermeasures at an early stage.  

Taxes and duties

As a global corporation, Fresenius is subject to numerous tax laws and regulations. Risks arising therefrom are identified and evaluated on an ongoing basis. The Fresenius Group’s companies are subject to regular tax audits. Any changes in tax regulations or adjustments resulting from tax audits and additional duties, import levies, and trade barriers could lead to higher taxes and duties.

Similarly, tax and trade law reforms, in particular the OECD initiatives for the reallocation of taxation rights and the introduction of a global minimum tax, as well as a potential U.S. tax reform, may increase our tax and duty burden.

Operating risks

Our operational business around the world is exposed to a number of risks and extensive government regulation, which include, among others: 

  • The quality, safety, and efficacy of medical and pharmaceutical products, supplies, and therapies;  
  • The operation and licensing of hospitals, other healthcare facilities, manufacturing facilities, and laboratories;  
  • The planning, construction, equipping, and management of pharmaceutical and medical-technological production facilities;  
  • The planning, construction, equipping and management of healthcare facilities;  
  • Permits from public authorities and monitoring of clinical and non-clinical research and development activities; 
  • Product approvals and regulatory approvals for new products and product modifications;  
  • Audits and reviews by enforcement authorities of compliance with applicable pharmaceutical legislation;  
  • Compliance with due diligence obligations, warranty obligations, and product liability regulations;  
  • The accurate reporting of and billing for reimbursements by government and private insurers;  
  • Discounting reimbursable pharmaceutical and medical device products and reporting drug prices to government agencies;  
  • The labeling and designation of pharmaceutical products and their marketing;   
  • Attracting qualified personnel;   
  • Compensation of medical personnel and financial arrangements with physicians and establishments that arrange patient referrals; 
  • Access to collection, publication, use, and security of health-related information and other protected data;
  • Limitation of our ability to make acquisitions or certain investments and the conditions for transactions of this nature.  

If Fresenius fails to comply with laws or regulations, this may give rise to a number of consequences, including monetary penalties, increased compliance costs, exclusion from governmental reimbursement programs, or a complete or partial curtailment of our authorization to conduct business, any of which could have a material adverse effect on our business reputation, business, financial position, and operational result. Significant risks of operations for the Fresenius Group are described in the following sections.

Production, products, and services

Compliance with product specifications and manufacturing regulations is ensured by our quality management systems, which are structured in accordance with the internationally recognized quality standards ISO 9001 and ISO 13485 and take into account relevant international and national regulations. We implement them by means of internal standards such as quality and work procedure manuals. Regular internal and external audits are carried out at the Group’s production sites, distribution companies, and dialysis clinics to check compliance. This covers all requirements and regulations, from management and administration to production and clinical services, right through to patient satisfactionPatient satisfactionFresenius ​Vamed ​measures ​the ​level ​of ​patient ​satisfaction ​in ​the ​VAMED ​healthcare ​facilities ​and ​the ​overall ​patient ​satisfaction ​with ​the ​services ​offered ​in ​the ​VAMED ​healthcare ​facilities. ​Each ​patient ​receives ​a ​questionnaire ​at ​or ​immediately ​after ​discharge, ​which ​contains ​16 ​standardized ​questions ​that ​are ​evaluated ​for ​the ​patient ​satisfaction ​target. ​. Our production facilities comply with the Good Manufacturing Practice (GMP) requirements of the markets they supply. Our facilities are audited by local public health authorities such as the U.S. Food and Drug Administration (FDAFDA (U.S. Food & Drug Administration)Official ​authority ​for ​food ​observation ​and ​drug ​registration ​in ​the ​United ​States.) or the European Medicines Agency (EMA) and other authorities. If an authority identifies any deficiencies, Fresenius will immediately take comprehensive and appropriate rectifying measures.

Non-compliance with the requirements of these authorities in our production facilities or at our suppliers could lead to regulatory actions, such as warning letters, product recalls, production interruptions, monetary sanctions, or delays in new product approvals. Any of these regulatory actions could adversely affect our business reputation and our ability to generate revenue and result in significant expenses.

Global safety officers react promptly as soon as Fresenius becomes aware of a quality-related issue. They initiate and coordinate necessary actions on a global level, such as product recalls. With its early warning system, Fresenius evaluates any quality-related information from various risk areas to identify risks at an early stage and take corrective and preventive actions. For this purpose, Fresenius Kabi uses databases in which complaints and side effects are logged, internal and external audits, and key performance indicators used for internal control purposes and the optimization of quality processes. In this way, safety profiles of the products can be created and evaluated worldwide.

Product recalls, for example, are initiated as a risk-minimizing measure in cooperation with the responsible regulatory authority; at the same time, the cause of the recall is analyzed thoroughly. Corrective action may be taken to avoid the circumstances that led to the recall occurring again in the future.

In addition, changes made to requirements and regulations by regulatory authorities, such as those affecting our production processes, can lead to lower production volumes during any transitional period or jeopardize production.

Production could also be adversely affected by events such as natural disasters, infrastructure disruptions, regulatory rulings, supply disruptions, such as of raw materials, or technical failures. To minimize these risks, stocks are built up, for example to bridge any gaps in the event of short-term problems.

Potential risks arising from the start-up of new production sites or the introduction of new technologies are countered through careful planning, regular analysis, and continual progress reviews.

Providing medical services in our hospitals, rehabilitation clinics, and dialysis clinics is generally subject to inherent risks. For example, disruptions to processes, also due to causes such as natural disasters or technical failures, involve risks for patients and the clinic. In addition, there are operational risks, for example regarding hygiene. We counteract these risks with strict operating procedures, continual personnel training, and patient-oriented work procedures. At Fresenius Helios, for example, a structured hygiene management system is in place to ensure that infections within the hospital are avoided and their spread prevented as quickly as possible. Furthermore, we are constantly striving to improve the standard of patient treatment through our quality management systems.

Performance risks associated with Fresenius Vamed’s project business are countered through professional project management and control and with a proven system tailored to each business activity for identifying, evaluating, and minimizing these risks. This system consists of organizational measures, such as standards for pricing in risks when preparing quotations. Risks are assessed even before accepting orders and are subsequently updated during regular project controlling. To avert the risk of default, the system also includes financial measures, such as checking creditworthiness and, as a rule, safeguarding through prepayments, letters of credit, and secured credits.


In the procurement sector, potential risks arise mainly from price increases or the lack of availability of raw materials and goods, as we saw in the wake of the COVID-19 pandemic. We counter these risks by appropriately selecting and working together with our suppliers, through long-term framework agreements in certain purchasing segments, and by bundling volumes within the Group.

We counter the risk of poor-quality purchased raw materials, semi-finished products, and components mainly by requiring our suppliers to meet strict quality standards. This includes a structured qualification process, which comprises audits, document and advance sample inspections, as well as regular quality controls of deliveries. We only purchase high-quality products with proven safety and suitability from qualified suppliers that conform to our specifications and standards. Evaluating our risks and our management measures, we also take into account new regulatory requirements and legal conditions, such as the Act on Corporate Due Diligence Obligations in Supply Chains, which will be effective in Germany in 2023.

Payment defaults

To limit the risk of delayed payments or defaults, we generally assess the creditworthiness of new customers. In addition, we continuously perform follow-up assessments and credit limit reviews. We monitor outstanding accounts of existing customers and assess the default risk of receivables. This applies in particular to countries with budgetary problems and countries exposed to political risks. We continued to work on our receivables portfolio in 2022 through measures such as factoring. We counteract performance risks associated with Fresenius Vamed's project business with professional project control, competent project management, and a sophisticated system for identifying, assessing, and minimizing these risks, adapted to the respective business activity. On the one hand, this includes organizational measures: For example, standards for risk calculation apply as early as the preparation of a quotation. Risks are assessed even before an order is accepted and then continuously updated as part of project controlling. To prevent possible default risks, the system also includes financial measures such as credit checks and, as a rule, collateral in the form of advance payments, letters of credit and secured loans.


Fresenius addresses potential shortages of qualified personnel through appropriate employer branding measures, as well as recruitment, upskilling, and retention of qualified staff.

In order to increase the awareness and attractiveness of the Fresenius Group, our employer branding relies on a mix of marketing to universities, in-house events (such as the Fresenius Career Day “Meet the Board” involving our top management), and digital employer branding (such as by expanding our career website and our presence on social media channels).

To ensure a sustainable supply of qualified staff, we offer, for example, targeted programs for young academic talent with subsequent retention programs, as well as comprehensive apprenticeships for students who just graduated high school.

With more than 6,300 apprentices and dual students, Fresenius is one of the biggest training companies in Germany. Fresenius offers 44 apprenticeships and 33 study programs throughout Germany. The number of our apprenticeships and study program offerings was further expanded nationwide in 2022.

We provide information about our apprenticeship and study program offerings on our career website, as well as at our respective training locations through various marketing activities and vocational orientation offers (such as the career guidance app Aivy, vocational information days, and the Night of Apprenticeship).

Furthermore, we offer young academic talent the opportunity to gain initial practical experience and to establish contacts within our company in the context of internships and working student positions before or during their studies or in the context of their final papers.

Depending on the customer and market structure, our business segments place very different demands on concepts and measures for personnel development. We strengthen employee loyalty to our company by offering our employees attractive development opportunities and fringe benefits and variable compensation and working-time models. In addition, we promote international and interdisciplinary cooperation.

By using target-group-specific measures, Fresenius addresses the overall shortage of specialized hospital personnel. We thereby aim to recruit qualified and dedicated personnel, thus ensuring our high standard of treatment quality.

Greater employee absenteeism and longer recruiting cycles as an effect from the COVID-19 pandemic further contribute to the experienced shortages in personnel.

Since January 1, 2019, the German hospital market has also been subject to the Ordinance on the Minimum Requirements for Nursing Personnel in Hospitals (PpUGV). This ordinance stipulates minimum staffing levels for nursing personnel in certain areas of the hospital. Further statutory regulations on minimum personnel levels in additional hospital departments with beds may further intensify competition for qualified nursing staff.

Helios Germany is therefore working intensively on additional measures to make it particularly attractive as an employer for nursing staff. These include the compatibility of family and career (e.g., through childcare facilities at hospital sites or the option of part-time work), attractive further and advanced training opportunities, occupational health management, and career opportunities.

The Spanish hospital market is also experiencing a shortage of qualified nursing staff. As a result of the COVID-19 pandemic and the associated additional need for nursing staff, public hospitals have hired more nurses at more attractive terms than before. Quirónsalud is undertaking various measures such as online campaigns and other employer branding measures to attract new employees. In addition, long-term security in the workplace and attractive working conditions, for example, should help to retain existing employees.

Risks associated with research and development and product approval

The development of new products and therapies always carries the risk that the ultimate goal might not be achieved, or it might take longer than planned. This is particularly true for our biosimilar products from Fresenius Kabi. The development of biosimilar products entails additional risks, such as significant development costs and the still-developing regulatory and approval processes. Regulatory approval of new products requires comprehensive, cost-intensive preclinical and clinical studies.

Furthermore, there is a risk that regulatory authorities either do not grant, or delay, product approval, or withdraw an existing approval.

In addition, adverse effects of our products that may be discovered after regulatory approval or registration may lead to a partial or complete withdrawal from the market, due either to legal or regulatory actions or our voluntary decision to stop marketing a product.

For example, following feedback from the European Medicines Agency (EMA), risk mitigation measures for HES products from Fresenius Kabi (controlled dispensing of hydroxyethyl starch (HES) medicines to accredited hospitals, training and letters to healthcare professionals and warnings on packaging) were initiated in 2019. Based on the results of a study investigating the routine use of HES in accredited clinics, the EMA had advocated a suspension of the marketing authorization of HES-containing solutions. However, the EU countries were allowed to decide for themselves whether to implement the suspension of marketing authorization immediately or to make use of an 18-month transitional solution.

Follow-up studies as well as similar measures could also be taken by authorities in non-EU member states. Currently, two regulatory studies are being conducted to evaluate the long-term safety and efficacy of our HES products in surgical and severely injured (trauma) patients. The respective study reports will be submitted to the EMA and assessed by the end of February 2023.

The Fresenius Group spreads its risk widely by conducting development activities in various product segments.

We also counteract risks from research and development projects by regularly analyzing and assessing development trends and examining the progress of research projects. Furthermore, we strictly comply with the legal regulations for clinical and chemical-pharmaceutical research and development.

With IV drugs, it is also crucial that new products are continually brought to the market in a timely manner. Therefore, we monitor the development of new products on the basis of detailed project plans and focus on achieving specific milestones. In this way, we can take countermeasures if defined targets are called into question.

Both Fresenius Medical Care and Fresenius Kabi are exposed to typical patent-related risks. These include insufficient protection by patents of the technologies and products we develop, which could enable competitors to copy our products without having to bear comparable development costs.

Risks in relation to increasing regulatory requirements for sustainability and for compliance with human rights

The increasing sustainability requirements of governments, investors and customers, as well as in the context of financing transactions, could lead to additional costs. The growing requirements and due diligence obligations in the regulatory environment, as well as the voluntary commitment to our own sustainability and climate protection targets, could lead to additional liability risks. Furthermore, business involvement in areas that are the focus of social debate on sustainability can be perceived negatively and trigger negative media attention. This could lead to reputational damage and impact the achievement of our business objectives. Since 2017, we have been conducting a comprehensive analysis to identify material issues for Fresenius with regard to any environmental and social risks as well as related human rights and reputational risks.

Risks from acquisitions

The acquisition and integration of companies carries risks that can adversely affect the business, financial position, and operational result of Fresenius. Acquisition processes often include closing conditions, including but not limited to antitrust clearance, fulfillment of assurances and warranties, and adherence to laws and regulations. Non-compliance with such closing conditions by either party to an acquisition could lead to litigation between the parties or with others and thus claims against Fresenius.

Following an acquisition, the acquired company’s structure must be integrated while clarifying legal questions and contractual obligations. Marketing, patient services, and logistics must also be unified. During the integration phase, there is the risk that key managers will leave the company and that both the course of ongoing business processes and relationships with customers and employees will be harmed. In addition, change-of-control clauses may be claimed. The integration process may prove more difficult or require more time and resources than expected. Risks can arise from the operations of the newly acquired company that Fresenius regarded as insignificant or was unaware of. An acquisition may also prove to be less beneficial than initially expected. Future acquisitions may be a strain on the finances and management of our business. Moreover, as a consequence of an acquisition, Fresenius may become directly or indirectly liable towards third parties, or claims against third parties may turn out to be non-assertable.

We counter risks from acquisitions by means of structured, detailed due diligence prior to deciding to go ahead with the acquisition and by means of detailed integration plans, as well as with a dedicated integration and project management process afterward so that countermeasures can be initiated in good time if there are deviations from the expected development.