02.1
Operations and Business Environment
EVENTS SIGNIFICANT FOR BUSINESS DEVELOPMENT
ACQUISITIONS AND DIVESTMENTS
Our investment strategy remained largely unchanged in the last financial year. We further invested in our future growth by expanding our clinic network and production capacities. In 2008 we spent a total of $218 million on acquisitions; investments totaled $673 million. Individual acquisitions and disinvestments play a secondary role in this part.
COLLABORATIONS
In July 2008, we concluded two special and independent licensing and sales agreements enabling us to market and sell Galencia Ltd.’s and Luitpold Pharmaceuticals, Inc.’s intravenous iron preparations Venofer and Ferinject for dialysis treatment in the U.S. and in certain European and Middle Eastern countries. The drugs are used to treat anemia in dialysis patients. Venofer is the world’s top-selling iron preparation. The contracts encompass all corresponding activities for the two products in the field of dialysis and took effect as of January 1, 2009. On the basis of our ten-year contract for North America, Luitpold will produce the products for Fresenius Medical Care. Galenica and its partners will retain sole responsibility for marketing the products in other medical areas. The market volume for intravenous iron preparations in 2008 is estimated at more than $800 million worldwide. Further information can be found in the section „Renal Drugs”.
BUSINESS ENVIRONMENT
The business environment as well as the legal conditions that are particularly relevant to our business remained virtually unchanged in 2008. A special situation arose in the U.S. with the drug Heparin, an anticoagulant substance. In February 2008, one of the manufacturers of Heparin, the U.S. company Baxter, began taking the product off the market after impurities were found in the production process. In the following months, the sole remaining manufacturer of the product, APP Pharmaceuticals, raised the price of Heparin significantly. The higher prices were not offset by higher reimbursement rates, and so the price increase had a direct negative effect on the earnings situation of our clinics and on our margins.
In Portugal, a new reimbursement model was introduced at the beginning of the second quarter. “Comprehensive Price Payment” is an integrated, quality-driven approach that bundles a variety of dialysis-related services and products. It requires the successful implementation of an integrated disease management model in order to provide comprehensive patient care while at the same time improving quality and boosting the efficiency of the health system. Including the new additional services in this reimbursement model, the Company expects the reimbursement rate to increase significantly. For more information please refer to the section „Reimbursement Models”.
SUMMARY
There were no further major events in 2008 with a significant influence on the operating business or the legal structure of Fresenius Medical Care. In the year under review, Fresenius Medical Care continued its extraordinarily positive development from last year, achieving record revenues and earnings. All regions and segments contributed to this result.
