KEY EXECUTIVES:
Dr. Ben J. Lipps, Chairman and CEO
Lawrence A. Rosen, CFO
Dr. Emanuele Gatte, CEO, Europe, Latin America, Middle East and Africa
Roberto Fuste, CEO, Asia-Pacific
Mats Wahlstrom, Co-CEO, Fresenius Medical Care North America and CEO, Fresenius Medical Services
Rice Powell, CEO, Renal Therapies Group, Fresenius Medical Care North America
GLOBAL HEADQUARTERS: Bad Homburg, Germany
The year 2008 was one for the history books at Fresenius Medical Care. The dialysis product and services firm not only increased its dividend for the 12th consecutive year, it also surpassed $10 billion in sales for the first time in its 12-year history. In addition, Fresenius reached a production milestone of 80 million for its dialyzers and fiber bundles.
“Our company continued to grow in a difficult business environment and we were able to reach our ambitious targets,” Fresenius Chairman and CEO Dr. Ben J. Lipps wrote in the firm’s 2008 annual report. “2008 proved to be an extremely challenging yet successful year for Fresenius Medical Care. Last year, we were able to demonstrate that our company’s business model is a robust, profitable and sustainable one that, even in turbulent times, is able to generate continuous growth…”
That growth amounted to 9 percent as demand surged for the company’s dialysis products (hemodialysis machines, dialyzers, blood lines and concentrates). Revenue from dialysis products jumped 15 percent to $2.8 billion (11 percent in constant currency). Fresenius executives attributed the growth to increased sales of products for peritoneal dialysis, as well as higher revenues from the phosphate binding drug PhosLo and monies from intravenous iron products. When sales to its own dialysis clinics were taken into account, net product sales rose by 14 percent to $3.73 billion.
The bulk of dialysis product sales were generated from international customers, according to the company’s 2008 report. International sales of dialysis products contributed $2.1 billion to Fresenius’ bottom line in 2008 (ended Dec. 31), while sales in North America came to $758 million, a 14.7 percent increase compared with the $661 million the continent generated in dialysis product sales in 2007.
The revenue distribution of dialysis products and services in North America differs from the international region due to the development and structure of local healthcare systems. For example, dialysis markets in Germany and Japan have more laws forbidding the operation of dialysis clinics by private companies.
Though the numbers indicate otherwise, rising prices for raw materials and energy, coupled with increasing overall inflation rates, negatively affected results last year, executives said. The depreciation of many currencies against the U.S. dollar also took its toll on the company’s finances.
Those setbacks were somewhat offset by the release of products such as the Liberty Cycler, a dialysis machine that allows patients to receive treatment at home while they sleep. The company’s product line played an important role in helping garner $10.6 billion in sales last year and $818 million in net income.
Sales will mostly likely be affected this year by an expansion project that increases the company’s ability to produce dialysis products at its plant in St. Wendel, Germany. The $150 million expansion project added two new spinning lines for hollow fibers, which is expected to boost production by about 30 percent. Fresenius also increased production capacity for the bags used in peritoneal dialysis.
Besides the earnings and production milestones, Fresenius achieved two other milestones last year: It was deemed one of the world’s most ethical companies by Ethisphere, a New York, N.Y.-based think tank, and a variety of its products were certified by Nordic Ecolabel, a standard promoted by the Nordic Council for environmentally sustainable products.
Ethisphere included Fresenius on its list of the world’s most ethical companies because of its “impressive and meaningful ethical business practices.”
In December, the company announced that a variety of its products were certified by Nordic Ecolabel. The license covers nearly all disposable products made by Fresenius of PVC-free material Biofine. Products include bags for peritoneal dialysis solutions as well as accessories for peritoneal dialysis machines.