Prof. Dr. Heinz-Walter Große, Chairman of the Management Board
Markus Strotmann, Head of the Avitum Division
Dr. Joachim Schulz, Management Board Chair of Aesculap AG
Dr. Meinrad Lugan, Head of the Hospital Care & OPM Divisions
Caroll H. Neubauer, LL.M., Head of the North America Region
Anna Maria Braun, Head of Asia Pacific Region
Dr. Annette Beller, Chief Financial Officer and Latin America
NO. OF EMPLOYEES: 58,037
GLOBAL HEADQUARTERS: Melsungen, Germany
Meet Xiaoqian, a 30-year-old human resources manager from Shanghai, China.
Xiaoqian is a typical Millennial: She’s single, lives at home with her father, works flexible hours, and equates good health with a happy life.
“What’s the most important thing in life?” she asks. “Health, I think. I want to be healthy in order to be able to explore the world and learn something new every day. I want to finish things I have started. Everything else, I just take as it comes. When will I have the chance to enjoy my life, if not now?”
Meet Xiaoqian, B. Braun Melsungen AG’s 2016 cover girl.
Swathed in a soft, golden backlight and smiling naturally off to one side, Xiaoqian graced the front of B. Braun’s 2016 annual report, a stodgy, 168-page dissection of the company’s fiscal performance. It was the second consecutive year the German device manufacturer gave an Everyman (or in this case, “Everywoman”) a starring role in its annual report.
“Every single life is precious. That is why a life story is again our focus for the Annual Report this year,” B. Braun Management Board Chairman Prof. Dr. Heinz-Walter Große said in the document’s introduction. “The central character of this year’s report takes us on a journey through her everyday life. We accompany Xiaoqian from Shanghai and gain insight into her life and a changing China. Xiaoqian represents the diversity and opportunities that life offers us and that we strive for every day at B. Braun.”
Life—specifically the unremarkable journeys of China’s 1.37 billion citizens—held a wealth of opportunity for B. Braun last year: In addition to earning “Best Employer” honors, the company opened a 3,000-square-meter Aesculap Academy in Suzhou (roughly 52 miles from Shanghai), its first global Aesculap training center outside of Europe. Like dozens of others worldwide, the Academy was established to provide local physician training in various surgical procedures (neurosurgery, orthopedics, cardiac, etc.) and educate clinicians on operating room processes/procedures and supply room management.
The Middle Kingdom is also credited with helping boost B. Braun’s bottom line in 2016 (year ended Dec. 31). Overall sales rose 5.6 percent to 6.47 billion euros and profit (before taxes) jumped 18.5 percent to 527.8 million euros, according to the company’s annual report. Strong product demand in the Asia Pacific region—led by China, Indonesia, and Vietnam—fueled much of that sales growth, though solid gains in the North American and German markets helped as well. Total Asia Pacific revenue swelled 8.3 percent to 1.16 billion euros, while North American sales posted a 7.6 percent increase (to 1.5 billion euros) and German proceeds ended the year 5.9 percent above 2015 levels.
“2016 was an exciting year that brought new ideas and changes,” Große wrote in the annual report. “For the B. Braun Group, it was the first full year of implementation of our 2020 corporate strategy. We have defined the course of our future with this strategy: As a ‘system partner for health care,’ we want to better understand the problems of our customers and partners to develop compatible approaches to solutions in collaboration with them. The goal is to achieve the best results through the interactions of people, products and processes.”
That formula worked exceptionally well for the company last year, spawning hardy profits in all four reporting divisions. China, Germany, and the United States powered a 3.7 percent sales hike in B. Braun’s Aesculap division (to 1.72 billion euros), mostly due to higher angioplasty-related revenue stemming from knee implants, endoscopy products, instrument containers, and technical services. The growth, however, was somewhat surprising, considering the price declines plaguing the German stent and implant market.
ANALYST INSIGHTS: B. Braun has remained fairly quiet in 2016 and year-to-date in 2017. B. Braun is focused on its goals to have a more cohesive company set to come to fruition in 2020. It remains a solid “brick and mortar” service company that provides consistent support and aims to work with its customers to achieve better and more affordable healthcare. Who could not agree with that?
—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors
The Hospital Care division hatched a surprise of its own, overcoming Latin American currency devaluations and stagnant demand for injection needles, syringes, and intravenous drug products to increase its 2016 revenue 4.7 percent to 2.99 billion euros. Growth champions included automatic infusion pumps/equipment, regional anesthesia products, and the Nutrilipid nutrition solution bag that debuted in the United States in 2015. Future gains are possible through the company’s echogenic peripheral nerve block needle technology and NRFit connectors for neuraxial use, both of which debuted last fall at the American Society of Anesthesiologists meeting in Chicago, Ill.
B. Braun also attempted to secure its fiscal future through a patent infringement lawsuit it filed last spring against Becton, Dickinson and Company, and Becton Dickinson Infusion Therapy Systems Inc. Entered in Delaware, the suit accuses Becton Dickinson of infringing on B. Braun’s patents by manufacturing and distributing the BD Insyte Autoguard BC IV catheter and BD Nexiva closed IV catheter system. B. Braun has filed additional lawsuits involving foreign counterparts of the patents in question in Australia, Belgium, and the Netherlands, and has won judgments in Austria and Germany involving three of the patents involved in the Becton Dickinson suit.
The Avitum division locked in future growth with a handful of product introductions in 2016, including the Aquabase water treatment system, the xevonta dialyzer, the Diacap Pro dialysis machine, the OMNI acute care system, and the Dialog iQ hemodialysis machine. The latter product features two biological inputs for more accurate hemodynamic condition data, one-touch priming, and automated bloodline loading/ejection.The Dialog iQ machines and OMNI system premiered too late in the year to truly impact sales, but the division was none the worse for wear: Avitum led B. Braun divisional growth in 2016, expanding revenue 11.6 percent (15.4 percent at constant currency) to 944.8 million euros. Strong demand for consumables and dialysis machines as well as significant increases in Asian, European, and U.S. proceeds helped the division overcome a potentially damaging Class 1 recall of its Dialog+ Hemodialysis systems last spring.
B. Braun recalled the product over conductivity sensor defects (specifically, cracks) that could allow air to enter into dialysis fluid or dialysate solution used to help filter waste and excess fluids in the blood. Air in dialysis fluids can lead to improper blood filtration, which could cause possibly fatal medical complications, according to the U.S. Food and Drug Administration. The company recalled 1,033 Dialog+ units in the United States that were manufactured between April 1, 2013, and July 3, 2013, and distributed between June 25, 2013, and Oct. 7, 2015.
Conversely, the Out Patient Market division had no such threats to profits last year. It relied on U.S. growth in elastomeric pumps, infusion solutions, and infusion systems, as well as strong sales in Eastern Europe, Asia-Pacific, and Latin America to boost revenue 5.5 percent to 781.7 million euros.