Heinz-Walter Große, Chairman of the Management Board
Wolfgang Feller, 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: 43,676
GLOBAL HEADQUARTERS: Melsungen, Germany
All companies keep secrets. KFC Corporation keeps its famous fried chicken recipe (that surreptitious mix of 11 herbs and spices) locked in a corporate vault more than 30 years after Colonel Harland Sanders’ death. At Apple’s sprawling headquarters, employees reputedly are banned from design labs, and windowless “lockdown” rooms sequester precious information from the outside world (including the company’s own rank-and-file workers).
Such a clandestine atmosphere is non-existent at B. Braun Melsungen AG. The company’s management board, in fact, promotes a corporate culture of knowledge sharing and partnerships, a philosophy reflected in the manufacturing firm’s 2011 annual report.
“The theme of this annual report, ‘Sharing expertise, Promoting partnership,’ is important to us,” Management Board Chairman Heinz-Walter Große said in a brief letter to shareholders. “It is one of B. Braun’s recipes for success as we not only see ourselves as a partner to hospitals, physicians and healthcare personnel but also take responsibility for patients. Achieving peak performance is not something you can do on your own. The ongoing exchange between physicians, healthcare personnel and patients helps us to continually improve lives, whether through research or through daily interaction with our colleagues and business partners. Our corporate culture is based on the firm belief that fair and reliable partnerships lead to the best results…”
Or, perhaps, the next best outcome. B. Braun recorded its second-most profitable year in company history in 2011. Net profit totaled 256 million euros ($331 million) and gross profit remained steady at 2.1 billion euros ($2.7 billion). (Editor’s note: Percentages reflect changes based on the local currency in which the financials 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).
Net sales rose 4.2 percent to 4.6 billion euros ($6 billion), though foreign currency exchange rates boosted that growth to 5.3 percent. EBITDA (earnings before interest, taxes, depreciation and amortization) slipped 1.7 percent to 688.5 million euros ($891.5 million) due to cost-cutting measures by public healthcare purchasers, higher commodity prices and startup costs for new factories.
B. Braun opened new or expanded facilities in Romania, Serbia, Vietnam and Germany last year, and announced the expansion of a manufacturing plant in Glandorf. Located 220 kilometers (136 miles) north of the company’s headquarters in Melsungen, Germany, the Glandorf plant produces drugs and medical devices for dialysis therapy. B. Braun is spending 50 million euros on the expansion project, adding a new dialysis production facility and fully automated high-bay warehouse to meet increased product demand. The factory is expected to open early next year.
B. Braun opened its expanded facility in Timisoara, Romania, in mid-February 2011. The 4 million-euro expansion plan raised total annual production capacity at the site to 19 million units of infusion solutions and is expected to help the company increase its presence in southeastern Europe.
Executives envision the Romanian facility as a distribution hub for B. Braun in the region, delivering products to such neighboring markets as Albania, Bulgaria, Macedonia, Montenegro and Serbia.
“Though the investment in Timisoara, we plan to make the location a hub for other neighboring countries’ needs, which will strengthen Romania’s position within the B. Braun group,” Meinrad Lugan, head of the company’s Hospital Care & OPM divisions, said during an opening ceremony at the plant.
B. Braun also reinforced Vietnam’s position in the company with the opening of a 32.6 million-euro IV production plant in Hanoi. Encompassing 9,800 square meters (32,152 square feet)—slightly larger than a soccer field—the new facility will enable the company to increase its annual production of IV sets to 100 million units from 35 million units. Over time, production possibly could reach 200 million units annually, bigwigs noted.
Besides the production facility in Hanoi, B. Braun has offices in Can Tho, Danang, Hanoi, Hue and Ho Chi Minh City, Vietnam.
The company doesn’t have quite the same market penetration in southeastern Europe as it does in Vietnam, but officials attempted to correct that disparity (in part) with the addition of a facility in Belgrade last summer. Dragan Soljakovski, managing director of B. Braun in Coatia and Serbia, said the new facility sends a “strong signal in a country with great challenges but also enormous potential for the entire Balkan region.”
Other new facilities born to the B. Braun family last year include an IV pump and dialysis machine manufacturing plant in Melsungen, Germany, and the Bucharest chapter of the Aesculap Academy, a medical training program established by the company in 1995.
B. Braun’s Aesculap division (which oversees the Aesculap Academy) was the second-largest contributor to growth in 2011, amassing 1.35 billion euros ($1.75 billion), a 5.8 percent increase compared with the 1.28 billion euros ($1.69 billion) the division garnered in 2010. Surgical products were the main growth driver in the division, followed by vascular therapeutic devices. Sales of drug-eluting balloon catheters and wound closure products were strong as well. Orthopedic and spine sales were off, reflecting continued stagnation in both sectors.
The Aesculap division was outperformed by the Hospital Care unit, which generated 2.15 billion euros ($2.79 billion) in sales last year, a 3.5 percent increase compared with the 2.08 billion euros ($2.76 billion) the division collected for B. Braun in 2010. IV catheters (Introcan Safety and Vasofix Safety catheters) and injectable drugs (Propofol-Lipuro, Duplex and Heparin) were top-grossing products, as were large-volume IV solutions and standard IV sets. Increased demand helped lift sales of regional anesthesia products, according to the company’s annual report.
In February, the Hospital Care division marked a very special milestone: Its LIFE facility in Melsungen manufactured the billionth Ecoflac plus container for standard IV solutions. Since production of the Ecoflac container began in 2004, the company has grown its market share from 25 percent to more than 45 percent, executives noted.
Sales in the Outpatient Market division rose 2.5 percent to 568.4 million euros ($736 million). Hygiene management devices, diabetes care items and incontinence care products achieved above-average growth.
B. Braun’s Avitum division trailed its siblings, netting 500.6 million euros ($648.2 million) in sales last year, a 5.4 percent increase compared with the 474.8 million euros ($629.1 million) the unit posted in 2010. Growth came mostly from dialyzers and machines, though the division’s dialysis provider business performed surprisingly well due to increased patient demand in India, Russia and South Africa.
Research and development spending jumped 15.7 percent to 179.9 million euros ($233 million), but operating profit fell 5.2 percent to 432.2 million euros ($559.6 million).
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