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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, 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 market for biopharmaceuticals, clinical nutrition, MedTech, generic IV drugs, and IV fluids1

It is forecasted that the market for biopharmaceuticals from the therapeutic areas of oncology and autoimmune diseases will experience high-single-digit percentage growth in the upcoming years, whereby 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. 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 x volume).

Going forward, we anticipate mid-single-digit growth in the clinical nutrition market. This outlook is underpinned by the growing awareness of the importance of early clinical nutrition, as emphasized in the latest guidelines. Moreover, the increasing adaption of mandatory screening for malnutrition2 is contributing to the positive growth prospects. We see further potential in addressing the substantial number of malnourished individuals who still lack access to nutrition therapies. Notably, emerging regions such as Latin America and Africa are expected to play a significant role in this growth story, with projections indicating mid- to high-single-digit growth rates in these areas.

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.; latest 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 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 improvement in healthcare infrastructure and access to care in the emerging markets, originator drugs going off-patent, and 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 market1

Due to the increasing provision of treatments in the outpatient setting, in particular, as well as the growing acceptance and use of digital healthcare services, we assume that the number of inpatient hospital treatments in Germany will rather continue to remain on a constant level or to have limited growth potential in the future.

1 Sources: Company research; German Hospital Institute (DKI), Krankenhaus Barometer 2023

According to calculations, the potential for outpatient treatment in German hospitals is around 20% of inpatient cases (excluding births)2. Increasing outpatient treatment is desirable, not least for reasons of the shortage of specialist staff. This requires, in particular, the creation of financial incentives that contribute to a shift of cases to the outpatient sector. The first steps have been taken with the hybrid DRGs, which were introduced on January 1, 2024. In future, hybrid DRGs are to be extended to other service areas.

2 Care Compass BARMER Institute for Health Systems Research (bifg, 2023a)

In addition, a stronger cross-sectoral integration of inpatient and outpatient medicine should ensure high-quality hospital care close to home, which goes hand in hand with the reduction of duplicate structures and specialization. Helios is well positioned in terms of cross-sector medicine in Germany with its broad range of inpatient and outpatient services.

The increase in the remuneration of hospital services in Germany is determined, among other things, by what is known as the change value. It amounts to 5.13% for 2024. The hospital financing system also provides for various surcharges and discounts for acute hospitals.

Due to the overall delay in negotiations on the budgets (including the nursing care budgets) of hospitals in Germany, the federal government has introduced legislative initiatives to improve the liquidity of hospitals. Among other things, liquidity compensations outstanding related to the nursing care budgets up to and including 2024 can also be agreed as part of current agreement. The aim is to accelerate payment and thus improve the liquidity situation of hospitals, which is continues to be challenging for many hospitals in Germany due to the COVID-related decline in case numbers and thus lower proceeds.

Future expectations for the year 2024 are negative for German hospitals: according to the Hospital Barometer 2023 of the German Hospital Institute (DKI), 71% of hospitals expect their economic situation to deteriorate. Only 4% of hospitals still expect an improvement. Helios expects to continue to grow profitably in Germany in 2024. Since its founding, the company has focused on good organization, cost efficiency, and measurable, high medical quality as well as transparency of medical results.

To provide financial support for inflation-related additional costs and increased energy costs, hospitals in Germany will be supplied with compensation and reimbursement amounts from the liquidity reserve of the healthcare fund for the last time by the end of April 2024.

For 2024, the obligatory minimum nursing staff levels have been extended to include the specialist department of neurosurgery. Obligatory minimum nursing staff levels will be introduced for other hospital departments in the future.

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.

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. In July 2023, the federal and state governments agreed on a key points paper for hospital reform. At the end of 2023, the Federal Ministry of Health presented a working draft for a law. The proposed draft is currently being reviewed by the states involved. The planned law is expected to come into force in the first quarter of 2024 at the earliest. The aim is to fundamentally restructure the hospital landscape in Germany. The current system of purely volume-based remuneration via flat rates per case is to be changed. In future, 60% of the remuneration is to be distributed independently of performance via what is known as maintenance flat rates and linked to specific performance groups. The changeover to maintenance flat rates is to take place gradually over several years.

The financial impact of the reform on the Helios clinics cannot be estimated at present, as significant details are not known, particularly regarding the planned allocation of performance groups and the criteria of the maintenance financing.

In principle, however, Helios Germany considers itself to be well positioned for the upcoming reform as it has been strategically focusing on structural changes, new forms of care, and regional healthcare networks (clusters) for many years. Helios expects the hospital structure reform to be rather beneficial than detrimental to the company.

The government is currently planning to revise the regulations on emergency care. However, there is currently no concrete legislative procedure.

According to our expectations, we anticipate that the private hospital market in Spain in 2024 will continue to grow in the mid-single-digit percentage range 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.1

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.

We expect the trend towards digitalization in the healthcare sector to become even more important. Increasingly, the degree of digitalization will be central to the future viability of a hospital. Networks 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. Digitalization will be a core element in maintaining competitiveness and being able to react to upcoming changes in an agile way.

The market for projects and services for hospitals and other healthcare facilities

For fiscal year 2024, 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 in part 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, a sustainable 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 what are known as virtual hospitals and the consistent further development of telemedical treatment procedures. 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.

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