• 02.1
  Operations and Business Environment
• 02.2
  Results of Operations, financial Situation, Assets and Liabilities
• 02.3
  Non-financial Performance Indicators
• 02.4
  Risk Report
• 02.5
  Subsequent Events
• 02.6
  Outlook

02.3

Non-financial Performance Indicators

QUALITY AND ENVIRONMENTAL MANAGEMENT

At Fresenius Medical Care, quality and environmental management are an essential part of the Integrated Management System (IMS), which we developed with the primary aim of meeting our own high quality standards. As a provider of products and services for the treatment of kidney failure, we bear a particular responsibility for our patients and for upholding our level of quality. The IMS complies with the legal guidelines for products and services, and is at the same time geared to our operational workflows. It fulfils the ISO 9001:2000 requirements for quality management systems in combination with the ISO 14001:2004 standard for environmental management systems. At the same time, it conforms to the special requirements for medical devices specified by the ISO 13485:2003 standard. Our quality and environmental management systems are also TÜV-certified. TÜV, a German technical inspection agency, subjects our corporate headquarters, our plants, our distribution and our clinic organization to precise testing on a yearly basis.

We have introduced the IMS at most of our European production sites. In 2008, it was implemented for the first time in the Republic of Serbia (ISO 9001 and ISO 14001) and South Africa (ISO 9001) as well as in France and England (ISO 14001). The share of our dialysis clinics that are certified according to ISO 14001 is constantly growing. In 2008, the figure rose to 37 % from 29 % the previous year. Add to these 39 facilities that meet the quality management standard ISO 9001:2000 as well as 48 clinics certified according to the standard ISO 14001. The total number of clinics in Europe that fulfil ISO 9001:2000 requirements increased to 282. The number of our European dialysis clinics whose work is geared to the environmental management standard 14001:2004 grew to 145. Our U.S. production sites in Ogden, Utah, and in Walnut Creek, California, as well as our plant in Reynosa, Mexico, are certified according to ISO 13485.

In the U.S., we introduced a formalized “certified” environmental health and safety audit program several years ago that inspects all of our manufacturing operations on an annual basis.

In the Asia-Pacific region, we are currently boosting our efforts to establish western quality and environmental standards at all of our plants. Furthermore, in the year under review, we undertook improvements based on the “Six Sigma” concept, which is used in quality management to further reduce the error rate.

We use audits to verify whether the IMS is implemented effectively. To enable us to do this at as many sites and as regularly as possible, we stepped up our auditor training activities in 2008. A focus in the year under review was the Eastern Europe region.

As the above statements show, we see quality management as being much more than just the final inspection in the production process – although of course at Fresenius Medical Care this is a standard procedure and indispensable. Rather, quality in production means ensuring that outstanding work is done from the manufacture phase onwards. This requires targeted training and high employee commitment, and – an essential aspect – that the production team has a particular idea of the value it creates.

We currently carry out quality training regularly in our medical product and drug areas as well as in our dialysis services. To anchor quality management more firmly in the entire workforce, we are working on a comprehensive training management system. The aim of this is not to focus on certain products or services. Instead, an integrated system should emerge, similar to an IMS (for details on the training management system).

Another central aspect of our quality management activities is preparing drugs for approval and submitting applications. This is subject to national and international regulations. The aim is to keep the time between development, clinical testing and market launch to a minimum. To meet this goal, the so-called mutual recognition procedure plays a key role in Europe. This directive allows for accelerated approval of medical products in all European countries if they have already been approved by another eu member state. The speed depends on the choice of reference country. Another path that is usually even faster is the so-called decentralized procedure, whereby an application for the approval of a product is submitted in several member states at the same time.

In 2008, we focused our activities in this area on dialysis drugs, particularly phosphate binders like Phoslo and iron supplements. More than 38 approvals were granted for these products alone. At the same time, we expanded our product range of peritoneal dialysis (PD) and hemofiltration solutions and obtained a total of 36 approvals for these medical products.

To evaluate the quality of our dialysis treatments, we use quality parameters that are generally recognized by the dialysis industry (see the table on the next page containing a selection of quality data), such as hemoglobin values. In cooperation with responsible nephrologists, we aim to achieve a defined hemoglobin level for our patients. The so-called kt / v value gives an indication of the filtering performance of a treatment by establishing the ratio of the length of treatment and the filtration rate of certain toxic molecules. Albumin, a protein, is one quality parameter used to monitor a patient’s general nutritional condition. Hospitalization days are another important indicator of the treatment quality, because they are particularly cost-intensive and can significantly reduce the quality of life of dialysis patients. In 2008, we were able to further improve the quality of our dialysis treatment based on these parameters.

Fresenius Medical Care makes efforts to promote greater environmental awareness and environmental protection on several levels at its sites. By improving our operational efficiency, for example through measures to save energy or by reducing the amount of raw materials needed in manufacture, we contribute to the sustainable development of the Company even in times of rising energy and raw materials prices. Increasing efficiency also means limiting the influence of our Company’s activities on the environment. Therefore conservation of drinking water and energy, as well as emissions and waste, has been a central element of our environmental management for years.

In the U.S., for example, we already recycle an average of 1,752 tons of paper and cardboard a year. As a result, we avoid about 1,226 tons of CO₂ emissions and save around 160,000 liters of fuel, approximately 46.6 million liters of water, and 7.2 million kilowatts of electricity; and stop 29,700 trees from being chopped down. In our clinics in the U.S., we collect plastics, such as cannulae, in special boxes and pass them on to be recycled; in 2008, this totaled 18.64 tons of recyclable plastic waste. We also take environmental considerations into account when it comes to our buildings: we use energy-saving lamps and eco spec premium paint and exceed the insulation standards for the industry. We place great importance on avoiding waste and making sure that our production processes are energy-saving. In our Ogden plant, many of the components of the dialyzers produced there are recycled, as are different parts of dialysis machines made in Walnut Creek, where we prevent over 450 tons of machine waste from reaching our landfills.

Back in 2007, we adopted our environmental program for the entire emea (Europe, Middle East, Africa) region. In conjunction with this program, environmental goals were defined that are to be achieved by 2010:

• specifying environmentally relevant performance indicators for all participating production sites,
• further improving energy efficiency and avoiding emissions,
• carrying out a feasibility study on the use of alternative energy generation methods at a sample production site,
• improving the recycling rate from 70 % at present to 85 % in 2010,
• further training our employees and raising their awareness of environmental protection and environmental management, and
• optimizing eco-controlling in the rapidly growing number of dialysis clinics in Europe.

Last year, we made significant advances concerning all of these points.

In addition, our production buildings are becoming more environmentally friendly. In 2008, we began operating the extension of the production plant at our Schweinfurt site, in which dialysis machines are manufactured. The building is equipped with a heat recovery system and automatic fresh air supply. Consequently, air-conditioning is not needed, which saves a great deal of energy.

At our plants in St. Wendel (Germany), SMAD (France) and SisTer (Italy), our environmental measures centered on improving production processes by increasing the scope of plastic raw materials used.

Another environmental protection project launched in 2008 was the implementation of the new eu reach chemical regulation at our European plants. Our project focuses on complying with legal requirements, assessing risks and developing appropriate preventive measures, for instance, exchanging information with suppliers or pre-ordering strategically important materials. Fresenius Medical Care is an active member of the reach working group of the Federal Association of the Medical Device Industry in Germany.

At the largest industry trade show in Stockholm, we presented a resource-saving package solution. The Smart- Bag for liquid dialysis concentrates is PVC-free. It contains 80 % less plastic and has 90 % less waste volume than conventional Duroplastic containers. Moreover, it can be recycled very easily as it consists of polyolefins. Fresenius Medical Care did not first start promoting environmental protection with its environmental program, which we adopted in 2007. We introduced our first environmentally friendly products back in 1996. stay·safe CAPD was the first system for PD made of Biofine. Many more PVC-free products have followed since. Biofine consists exclusively of hydrogen and carbon. It is 60 % thinner than PVC, making it less costly to dispose of due to its smaller volume, and is easy to recycle. We use Biofine today to manufacture most of our PD products due to its many advantages. In the year under review, we received Nordic Ecolabel certification (also known as “SWAN”) – a triumph for Biofine and for us. The Nordic Ecolabel organization certified our stay·safe Balance, stay·safe Bicavera, sleep·safe Balance and sleep·safe Bicavera products and the corresponding accessories, which are all completely PVC-free. Nordic Ecolabel is an officially recognized organization in Sweden, Norway, Finland, Iceland and Denmark that labels environmentally friendly products. But Nordic Ecolabel is also acknowledged in other countries for its quality standards, as a recent study by the British government shows. Its standards not only apply to environmentally friendly product qualities, but also to the corresponding production processes. Thus, Nordic Ecolabel expressly recognizes the two plants in which the certified PD products are manufactured: St. Wendel in Germany and SisTer in Italy. The Nordic Ecolabel certification is also interesting for economic reasons. As we are the only manufacturer of PD products to have received this eco label, we should be able to win market share in this product segment, particularly in countries that have a comprehensive environmental agenda.