07.22.14
$7.12 Billion
KEY EXECUTIVES:
Heinz-Walter Große, Chairman of the Management Board
Markus Strotmann, Head of the Avitum Division
Hanns-Peter Knaebel, Head of the Aesculap Division
Meinrad Lugan, Head of the Hospital Care & OPM Divisions
Caroll H. Neubauer, Head of the North America Region
Otto Philipp Braun, Head of the Iberian Peninsula and Latin America
NO. OF EMPLOYEES: 49,889
GLOBAL HEADQUARTERS: Melsungen, Germany
Rafael Mohrstedt was ecstatic the first time a co-worker called him by name. His own name.
For months after joining his father’s department at B. Braun Melsungen AG, the 27-year-old architect was known simply as “Werner’s son.”
“When I first started, it was strange having my Dad as my supervisor,” recalled Mohrstedt, who has worked for the company’s Brazilian subsidiary in São Gonçalo since 2006. “Most of my co-workers simply referred to me as Werner’s son. Now, however, I have earned their trust and they all call me by my real name.”
While convenient (think carpooling) and clever (employee retention), the Mohrstedts are a rarity in the 21st-century business world, as takeovers, layoffs, pension cuts and Chapter 11 bankruptcy reorganizations has forced workers to hopscotch around the job market to remain employed. But worker longevity is fairly common at B. Braun, where families like the Mohrstedts, the Rachners, the Griffiths, the Sanchezes and the Bakar-Bt Basirs work together (in some cases, side-by-side) at various manufacturing sites throughout the world.
Such domestic-professional bliss actually is welcome at B. Braun, an anomaly itself among the planet’s corporate titans. The company has been family-owned since its humble 1839 start as a small pharmacy (then named Rosen-Apotheke) on the banks of the Fulda river in central Germany’s North Hesse Highlands. The firm is now in its sixth generation of Braun ownership, with 70-year-old Prof. Dr. h.c. Ludwig Georg Braun chairing its Supervisory Board and Otto Philipp Braun managing the company’s Iberian Peninsula and Latin American branch.
With the arrival of its 175th birthday, B. Braun becomes an exception to the kinship business rule, joining only a handful (3 percent) of ancestral companies still operating into the fourth generation or beyond. Roughly 30 percent of family enterprises survive into the second generation and 12 percent remain viable into the third generation, according to statistics.
Clearly, B. Braun can attribute its overall market longevity to strong family values. But equally strong principles have helped as well, enabling the company to grow through honesty, integrity and benevolance.
“In addition to family values, I have always been driven by the ethos of the ‘honorable merchant’—‘Only do honest business so you can sleep with a clear conscience!’ This ethos has always been important to our family and shapes the entire company,” Ludwig Georg Braun said in an interview included within the company’s 2013 annual report. “We do not pursue growth for growth’s sake.
The important thing is to see the world with your eyes open, to understand the markets and the people who live there, and to identify trends early on. For example, we saw an opportunity to significantly improve hygiene by using plastic and single-use products. If you seize such opportunities, financial success is the logical outcome.”
And there’s no sense arguing with logic—at least not Ludwig’s kind of rationale, anyway. Company data show the B. Braun growth formula has begat solid profits for the last five years, hitting historical highs in both 2012 and 2013. Last year was the most lucrative for the company as sales jumped 1.6 percent (5.8 percent in constant currency rates) to 5.1 billion euros ($7.1 billion) and operating profit climbed 2 percent to 478.5 million euros ($658.7 million). The company’s cost-cutting measures and internal efficiency improvements counteracted public spending cuts, stringent medical/pharmaceutical product placement regulations, and competitive pricing to improve its EBITDA margin to 15.2 percent. Actual EBITDA (earnings before interest, taxes, depreciation and amortization) rose 3.6 percent to 784.9 million euros ($1.08 billion) and consolidated annual net profit ballooned 9.3 percent to 315.5 million euros ($434.3 million). (Editor’s note: Percentages reflect changes based on the local currency in which the financial data were reported—in this case, the euro—and do not take into account annual foreign currency exchange fluctuations. Dollar amounts were converted using the exchange rate on the last day of the reporting period, Dec. 31).
Executives attributed the company’s stellar fiscal record last year to robust gains in the company’s core business areas (Hospital Care, Aesculap, Out Patient Market, B. Braun Avitum). As a whole, core business sales increased 3 percent to 2.9 billion euros ($4 billion); the rise was nearly double the 1.7 percent increment posted by B. Braun’s specific focus areas (home care, enteral nutrition, diabetic supplies, orthopedics, neurosurgery, vascular systems, IV catheters, wound drainage, etc.).
The Hospital Care and B. Braun Avitum divisions were the year’s top performers, besting their brethren segments by significant margins. Hospital Care sales rose 2.6 percent to 2.4 billion euros ($3.4 billion) due to strong demand for infusion therapy primary care products (i.e., parenteral nutrition solutions and injectables such as the Introcan Safety 3 Closed IV Catheter, a Top 20 Innovation Award winner). Specific business area revenue inched up 1.7 percent to 1 billion euros ($1.3 billion).
Acquisitions drove B. Braun Avitum growth, catapulting sales 9.5 percent to 613 million euros ($843.8 million).
Revenues remained essentially flat in the Aesculap and Out Patient Market (OPM) divisions, rising a negligable 0.1 and 0.5 percent respectively. Wound and incontinence care products helped bolster OPM revenues by 3 million euros last year, pushing the division’s sales gross to 609 million euros, or $838.3 million. The strength of both focus areas offset the pecuniary gaps left by the discontinuation of insulin production and the transfer of veterinary business to the Aesculap division, which failed to benefit from the switch or a sales partnership with Maquet Surgical Workplaces. The two entities agreed to jointly offer comprehensive operating room integration solutions for endoscopy.
The strong euro, particularly in comparison to other currencies like the sharply devalued Japanese yen, impacted growth within the Aesculap division’s specific business areas, capping the overall hike at 0.3 percent. The Closure Technologies business area, comprising B. Braun’s suture portfolio, was the only such subdivision not affected by volatile foreign exchange rates.
Though they wreaked havoc on Aesculap’s overall profits, fluctuating world currencies had a minimal impact on the company’s bottom line in 2013. Only North American profits faltered, tumbling 1.6 percent to 1 billion euros ($1.4 billion); revenues rose in the remaining locales, with Africa and the Middle East posting a chart-topping 12.4 percent surge to 157.8 million euros ($217.3 million). Latin America and Europe were profit-makers as well, growing sales 4.7 percent and 3.8 percent respectively while revenues in B. Braun’s home base of Germany climbed 1.7 percent to 952.2 million euros, or $1.3 billion.
Much of the company’s regional strides resulted from past facilities investments. In 2012, for example, B. Braun expanded and reorganized production at its Tuttlingen, Germany, facility; added nutritional product manufacturing areas in Melsungen and Crissier (Switzerland) and began a cross-divisional modernization and expansion of its Penang, Malaysia, site, where Noorhassu Diyana Bt Basir takes coffee breaks with her mother, Suria Bakar.
B. Braun continued working on the Penang expansion last year and enhanced its footprint in both Brazil and Hungary with twin redevelopment efforts. The company is building a new industrial park in Guaxindiba, Brazil, near two major freeways and Guanabara Bay. The project’s first phase will add a logistics center to the site, with storage areas for finished products and tanks for storing combustible materials. The second phase will consist of an administration center and a medical device manufacturing plant. The entire project—situated on a 200,000-square-meter plot (an area equivalent to 28 football fields) is scheduled for completion in 2017.
The company’s expansion of its Gyöngyös, Hungary, facility was considerably less complex but nevertheless doubled the site’s production area and capacity, thus enabling the manufacture of an additional 100 million products annually. A new 5,300-square-meter cleanroom also was added to handle the production of disposable blood lines, wound drainage systems, catheters, and customized infusion sets.
“The clean room has brought processes to the latest standards of technical development and ensure a more efficient production,” plant manager Jozef Bognar said.
KEY EXECUTIVES:
Heinz-Walter Große, Chairman of the Management Board
Markus Strotmann, Head of the Avitum Division
Hanns-Peter Knaebel, Head of the Aesculap Division
Meinrad Lugan, Head of the Hospital Care & OPM Divisions
Caroll H. Neubauer, Head of the North America Region
Otto Philipp Braun, Head of the Iberian Peninsula and Latin America
NO. OF EMPLOYEES: 49,889
GLOBAL HEADQUARTERS: Melsungen, Germany
Rafael Mohrstedt was ecstatic the first time a co-worker called him by name. His own name.
For months after joining his father’s department at B. Braun Melsungen AG, the 27-year-old architect was known simply as “Werner’s son.”
“When I first started, it was strange having my Dad as my supervisor,” recalled Mohrstedt, who has worked for the company’s Brazilian subsidiary in São Gonçalo since 2006. “Most of my co-workers simply referred to me as Werner’s son. Now, however, I have earned their trust and they all call me by my real name.”
While convenient (think carpooling) and clever (employee retention), the Mohrstedts are a rarity in the 21st-century business world, as takeovers, layoffs, pension cuts and Chapter 11 bankruptcy reorganizations has forced workers to hopscotch around the job market to remain employed. But worker longevity is fairly common at B. Braun, where families like the Mohrstedts, the Rachners, the Griffiths, the Sanchezes and the Bakar-Bt Basirs work together (in some cases, side-by-side) at various manufacturing sites throughout the world.
Such domestic-professional bliss actually is welcome at B. Braun, an anomaly itself among the planet’s corporate titans. The company has been family-owned since its humble 1839 start as a small pharmacy (then named Rosen-Apotheke) on the banks of the Fulda river in central Germany’s North Hesse Highlands. The firm is now in its sixth generation of Braun ownership, with 70-year-old Prof. Dr. h.c. Ludwig Georg Braun chairing its Supervisory Board and Otto Philipp Braun managing the company’s Iberian Peninsula and Latin American branch.
With the arrival of its 175th birthday, B. Braun becomes an exception to the kinship business rule, joining only a handful (3 percent) of ancestral companies still operating into the fourth generation or beyond. Roughly 30 percent of family enterprises survive into the second generation and 12 percent remain viable into the third generation, according to statistics.
Clearly, B. Braun can attribute its overall market longevity to strong family values. But equally strong principles have helped as well, enabling the company to grow through honesty, integrity and benevolance.
“In addition to family values, I have always been driven by the ethos of the ‘honorable merchant’—‘Only do honest business so you can sleep with a clear conscience!’ This ethos has always been important to our family and shapes the entire company,” Ludwig Georg Braun said in an interview included within the company’s 2013 annual report. “We do not pursue growth for growth’s sake.
The important thing is to see the world with your eyes open, to understand the markets and the people who live there, and to identify trends early on. For example, we saw an opportunity to significantly improve hygiene by using plastic and single-use products. If you seize such opportunities, financial success is the logical outcome.”
And there’s no sense arguing with logic—at least not Ludwig’s kind of rationale, anyway. Company data show the B. Braun growth formula has begat solid profits for the last five years, hitting historical highs in both 2012 and 2013. Last year was the most lucrative for the company as sales jumped 1.6 percent (5.8 percent in constant currency rates) to 5.1 billion euros ($7.1 billion) and operating profit climbed 2 percent to 478.5 million euros ($658.7 million). The company’s cost-cutting measures and internal efficiency improvements counteracted public spending cuts, stringent medical/pharmaceutical product placement regulations, and competitive pricing to improve its EBITDA margin to 15.2 percent. Actual EBITDA (earnings before interest, taxes, depreciation and amortization) rose 3.6 percent to 784.9 million euros ($1.08 billion) and consolidated annual net profit ballooned 9.3 percent to 315.5 million euros ($434.3 million). (Editor’s note: Percentages reflect changes based on the local currency in which the financial data were reported—in this case, the euro—and do not take into account annual foreign currency exchange fluctuations. Dollar amounts were converted using the exchange rate on the last day of the reporting period, Dec. 31).
Executives attributed the company’s stellar fiscal record last year to robust gains in the company’s core business areas (Hospital Care, Aesculap, Out Patient Market, B. Braun Avitum). As a whole, core business sales increased 3 percent to 2.9 billion euros ($4 billion); the rise was nearly double the 1.7 percent increment posted by B. Braun’s specific focus areas (home care, enteral nutrition, diabetic supplies, orthopedics, neurosurgery, vascular systems, IV catheters, wound drainage, etc.).
The Hospital Care and B. Braun Avitum divisions were the year’s top performers, besting their brethren segments by significant margins. Hospital Care sales rose 2.6 percent to 2.4 billion euros ($3.4 billion) due to strong demand for infusion therapy primary care products (i.e., parenteral nutrition solutions and injectables such as the Introcan Safety 3 Closed IV Catheter, a Top 20 Innovation Award winner). Specific business area revenue inched up 1.7 percent to 1 billion euros ($1.3 billion).
Acquisitions drove B. Braun Avitum growth, catapulting sales 9.5 percent to 613 million euros ($843.8 million).
Revenues remained essentially flat in the Aesculap and Out Patient Market (OPM) divisions, rising a negligable 0.1 and 0.5 percent respectively. Wound and incontinence care products helped bolster OPM revenues by 3 million euros last year, pushing the division’s sales gross to 609 million euros, or $838.3 million. The strength of both focus areas offset the pecuniary gaps left by the discontinuation of insulin production and the transfer of veterinary business to the Aesculap division, which failed to benefit from the switch or a sales partnership with Maquet Surgical Workplaces. The two entities agreed to jointly offer comprehensive operating room integration solutions for endoscopy.
The strong euro, particularly in comparison to other currencies like the sharply devalued Japanese yen, impacted growth within the Aesculap division’s specific business areas, capping the overall hike at 0.3 percent. The Closure Technologies business area, comprising B. Braun’s suture portfolio, was the only such subdivision not affected by volatile foreign exchange rates.
Though they wreaked havoc on Aesculap’s overall profits, fluctuating world currencies had a minimal impact on the company’s bottom line in 2013. Only North American profits faltered, tumbling 1.6 percent to 1 billion euros ($1.4 billion); revenues rose in the remaining locales, with Africa and the Middle East posting a chart-topping 12.4 percent surge to 157.8 million euros ($217.3 million). Latin America and Europe were profit-makers as well, growing sales 4.7 percent and 3.8 percent respectively while revenues in B. Braun’s home base of Germany climbed 1.7 percent to 952.2 million euros, or $1.3 billion.
Much of the company’s regional strides resulted from past facilities investments. In 2012, for example, B. Braun expanded and reorganized production at its Tuttlingen, Germany, facility; added nutritional product manufacturing areas in Melsungen and Crissier (Switzerland) and began a cross-divisional modernization and expansion of its Penang, Malaysia, site, where Noorhassu Diyana Bt Basir takes coffee breaks with her mother, Suria Bakar.
B. Braun continued working on the Penang expansion last year and enhanced its footprint in both Brazil and Hungary with twin redevelopment efforts. The company is building a new industrial park in Guaxindiba, Brazil, near two major freeways and Guanabara Bay. The project’s first phase will add a logistics center to the site, with storage areas for finished products and tanks for storing combustible materials. The second phase will consist of an administration center and a medical device manufacturing plant. The entire project—situated on a 200,000-square-meter plot (an area equivalent to 28 football fields) is scheduled for completion in 2017.
The company’s expansion of its Gyöngyös, Hungary, facility was considerably less complex but nevertheless doubled the site’s production area and capacity, thus enabling the manufacture of an additional 100 million products annually. A new 5,300-square-meter cleanroom also was added to handle the production of disposable blood lines, wound drainage systems, catheters, and customized infusion sets.
“The clean room has brought processes to the latest standards of technical development and ensure a more efficient production,” plant manager Jozef Bognar said.