The healthcare 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 regardless of the macroeconomic challenges, 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 as a result of the COVID-19 pandemic, 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 healthcare 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 healthcare industry. Some countries are experiencing signiﬁcant ﬁnancing problems in the healthcare sector due to the strained public finance situation. Especially in the industrialized countries, increased pressure to encourage saving can be expected as healthcare costs constitute a large portion of the budget.
It will be increasingly important for companies in the healthcare 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.
The dialysis market
Fresenius Medical Care expects the number of dialysis patients worldwide to grow by about 4% in 2023 depending on the further development of the global COVID-19 pandemic. The accelerating effects of excess mortality due to the COVID-19 pandemic are continuing into 2023. Fresenius Medical Care expects a significant adverse annualization effect on treatment volumes. Some significant regional differences are likely to remain: the company anticipates below average growth rates in the United States, Japan, and Western and Central Europe. The number of patients with chronic kidney disease is already relatively high in these countries and regions and patients generally have reliable access to treatment, normally dialysis. In economically weaker regions we expect the growth rates to be considerably higher in some cases.
Hemodialysis will remain the treatment of choice, accounting for 88% to 89% of all dialysis therapies. Peritoneal dialysis will continue to be the preferred treatment for 11% to 12% of all dialysis patients.
The volume of the worldwide dialysis market last year was influenced by the ongoing COVID-19 pandemic and exchange rate effects and amounted to about €82 billion according to preliminary estimates. Going forward, we expect an increase of 1% to 3% per year. This is based on the assumption that exchange rates will remain stable in the forecasting period. The overall volume of the dialysis market could thus reach around €83 billion to €84 billion by 2023.
In addition, the reimbursement and ancillary services utilization environment significantly influences our business. In the United States, our biggest revenue market, the reimbursements of governmental institutions are lower than the reimbursements of private insurers. Therefore, a change in the portion of reimbursements by private insurers in the United States influences our business.
The market for biopharmaceuticals, clinical nutrition, MedTech, generic IV drugs, and IV fluids1
Fresenius Kabi expects that the market for biopharmaceuticals from the therapeutic areas of oncology and autoimmune diseases will grow in the high-single-digit to low-double-digit range in the upcoming years, though the biosimilarsBiosimilarsA ​biosimilar ​is ​a ​drug ​that ​is ​“similar” ​to ​another ​biologic ​drug ​already ​approved. segment is clearly in the double-digit range. Today, more than one in three new drug approvals is a biopharmaceutical and significant growth of this global market, especially biosimilars, is expected in the next few years and decades.
1 Market data refers to Fresenius Kabi’s addressable markets (based on revenue, growth p.a). 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.
In the short term, we expect the market for clinical nutrition to grow in the mid-single-digit range. Growth prospects are supported by increasing awareness of the need for early clinical nutrition, which is 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 emerging regions like Latin America and Africa, with high-single-digit growth rates.
2 Sources: New ESPEN guideline on clinical nutrition and hydration in geriatrics. Clin Nutr. 2022 41:958-989; by Volkert D, Beck AM, Cederholm T, Cruz-Jentoft A, Goisser S, Hooper L, et al.; most recently implemented e. g., in Portugal: “National Policy for effective screening implementation”; Directorate General of Health DGS
The MedTech Infusion and Nutrition System (INS) market should experience growth in the mid-single-digit range going forward, mainly driven by infusion management systems. In many countries, we continue to see a strong demand in the infusion technology segment, with more nationally resilient positions after COVID-19. In addition, the infusion pumps already placed in recent years will increase the demand for dedicated infusion sets.
In the MedTech Transfusion Medicine and Cell Therapies (TCT) market, we expect to see mid-single-digit growth in the near future. This growth will be driven primarily by the worldwide demand for plasma-derived intravenously administered products. In cell and gene therapy, we expect extraordinary growth as these therapies are approved for first-and second-line treatments. In the blood center business, we expect continued slight market growth, driven by increased platelet apheresisApheresisA ​medical ​technology ​in ​which ​the ​blood ​of ​a ​person ​is ​passed ​through ​a ​device ​that ​separates ​out ​one ​particular ​blood ​component ​and ​returns ​the ​remainder ​to ​the ​circulation. ​This ​technology ​is ​used ​for ​the ​collection ​of ​various ​blood ​components ​by ​donors, ​as ​well ​as ​for ​therapeutic ​applications ​for ​patients. use in developing markets.
Going forward, the markets for generic IV drugs and IV fluids are expected to grow in the low-to-mid-single-digit range, with significant regional differences. 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 improvements in healthcare infrastructure and access to care in the emerging markets, originator drugs going off-patent, as well as by volume increase in original off-patent products that are offered at steady prices due to a unique selling proposition. A factor working in the opposite direction is the price pressure on off-patent brands and generic drugs as regulators seek to keep healthcare budgets under control, and it is expected that the competitive pressure in the market will further increase.
The hospital market2
We assume that the number of inpatient hospital treatments in Germany will tend to stagnate or decline in the future, in particular due to the increasing provision of services in the outpatient sector and the growing acceptance and use of digital healthcare services.
2 Sources: Company research; German Hospital Institute (DKI), Krankenhaus Barometer 2022
What is known as the rate of change figure is, amongst others, crucial for the increase in reimbursement for hospital treatments in Germany. For 2023, it was set at 3.45%. In addition, the hospital funding system provides for various increases and reductions for acute hospitals.
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 2023 among German hospitals with respect to their economic situation are clearly negative: according to the Krankenhaus Barometer 2022 survey by the German Hospital Institute (DKI), more than half of the hospitals (56%) expect their economic situation to deteriorate. Only 17% of the hospitals expect an improvement.
To provide financial support for hospitals in Germany, a total of €6.0 billion is to be made available through 2024 via the liquidity reserve of the healthcare fund. To determine the amount of reimbursement, hospitals are to report the direct costs of purchasing natural gas and electricity to the hospital planning authorities in three tranches up to 2024. Energy rebates for the month of March 2022 will be used for comparison. A total of €4.5 billion is to be made available for this financial support. A further €1.5 billion is to be paid out as a lump sum based on the number of beds installed (indirect costs). This funding will serve as liquidity support for inflation-related additional costs for hospitals.
Starting in 2025, a new instrument for measuring nursing staff, referred to as the nursing staff model PPR 2.0, is to be gradually introduced. For this purpose, all hospitals will have to classify each patient daily into a nursing classification starting in 2024. The nursing classification then results in a calculated requirement for nursing staff for each clinic. From 2025, the Federal Ministry of Health (BMG) will be able to specify the percentage of this requirement that must be implemented in practice. If this normative requirement is not met in practice, financial sanctions may be imposed.
For the year 2023, the mandatory minimum nursing staff levels have been extended to include the specialist departments of ENT and rheumatology. Binding lower nursing staff limits will be introduced for further specialist departments in the hospital in the future.
Digitalization in hospitals in Germany is to be driven forward by the Hospital Futures Act. For example, nationwide standards will be introduced to enable greater networking in the healthcare sector and further improve patient care. From January 1, 2025, a deduction of up to 2% of the bill for each full and partial inpatient case is to be deducted if a hospital does not provide all the digital services listed in the Hospital Structure Fund Ordinance.
In January 2023, the health ministers of the German states discussed a concept for comprehensive hospital structure reform. The aim is to fundamentally restructure the hospital landscape in Germany. In the process, the current proportion of remuneration based on per-case flat rates is to be limited. The plan is to limit remuneration according to per-case flat rates to 60%. In the future, 40% of the remuneration is to be distributed as what are referred to as maintenance costs regardless of performance. The criteria for this distribution have yet to be determined.
The reform also provides for a reorganization of hospital planning. In the future, hospitals will be divided into three care levels and will receive financial resources depending on their relevance (maintenance costs). It is also to be ensured that complicated interventions may only be performed in hospitals that have the appropriate personnel and technical equipment. The changeover to the 40% retention costs is to take place successively over a total of five years. The hospitals argue that the concept in its current form deals only with operating costs and not with adequate financing of investment costs.
According to our expectations, we anticipate that the private hospital market in Spain in 2023 will continue to grow by 2% to 3% in terms of revenue. 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 healthcare spending and bed density, indicate the further market development potential in the Spanish healthcare system compared with other EU countries. This also provides opportunities for the establishment of new hospitals. Investments are being made both by the public sector and by private hospital operators. Across the country, around 40 new hospitals are planned by 20241.
1 Foreign Trade Center Madrid, The Spanish Economy - Austrian Chamber of Commerce 2022
In addition, the highly fragmented Spanish private hospital market offers further consolidation potential.
Increasingly, the degree of digitalization will be central to the future viability of a hospital. Networking and the use of digital solutions are opening up new opportunities to make processes more efficient and safer and thus to break new ground in patient care. The integration of telemedicine applications and digital health applications in the inpatient area could also significantly expand hospital offerings in the future.
We expect the trend toward digitalization in the healthcare sector to continue and generally gain in importance. The COVID-19 crisis has provided decisive impetus, 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 lie in the hybrid mix of digital and personal treatment.
The global market for fertility services is expected to grow in a low-single-digit percentage range in 2022. Growth was impacted by Omicron in the first quarter of 2022 and the Ukraine war which led to a global economic downturn with inflation impacting households and causing postponement of decisions in building a family. For 2023, the market is expected to return to higher growth, depending on the market, following economic recovery.
The market for projects and services for hospitals and other healthcare facilities
Fresenius Vamed expects both the project and service business to continue to grow due to the need for life-cycle and 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. projects. Furthermore, the company intends to expand its position through follow-up contracts with existing customers and to enter new target markets. In addition, Fresenius Vamed plans to further strengthen its leading position as a post-acute care provider in Central Europe.
For fiscal year 2023, depending on geopolitical developments, Fresenius Vamed expects growing demand worldwide for projects and services for hospitals and other healthcare facilities.
In the Central European markets with established healthcare 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 healthcare 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 demand 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 healthcare systems at different levels of development in order to facilitate access to high-quality healthcare services for broad sections of the population.