Experts estimate the value of the global dialysis market at around $69 BN for 2010, which equates to 4% growth in constant currency terms compared to the previous year. We assume that the market volume can be broken down as follows: dialysis products with sales of around $11.7 BN and dialysis services (including dialysis drugs) with sales of approximately $57 BN. Detailed information on the data basis can be found in the section “Collection and analysis of market data”.
The main dialysis products include dialyzers, hemodialysis machines, concentrates and dialysis solutions, along with peritoneal dialysis products; also see glossary. The three largest manufacturers of dialysis products together accounted for approximately 67% of the worldwide market in 2010 measured by sales. With a market share of approximately 33%, Fresenius Medical Care was the market leader in this segment, followed by Baxter and Gambro. The remaining, mainly Japanese, dialysis product providers all held market shares in the single-figure percentage range.
Market position in major product groups 2010
Fresenius Medical Care
|Source: Based on company statements and estimates.|
Fresenius Medical Care
Fresenius Medical Care
|Concentrates for hemodialysis||
Fresenius Medical Care
Fresenius Medical Care
|Products for peritoneal dialysis||Baxter||
Fresenius Medical Care
Dialyzers form the largest product group in the dialysis market with a worldwide sales volume of around 203 M units in 2010. Around 92 M, or almost half, were made by Fresenius Medical Care, meaning we comfortably held the largest market share in that area. Dialyzers can generally be categorized as cellulose-based or synthetic-based (plastic-based), depending on the material used for the production of the dialysis membrane. Approximately 90% of dialyzers used around the world have a synthetic membrane. Fresenius Medical Care developed the high-performance Polysulfone fiber (see glossary), pioneering the development and production of dialyzers while setting new standards in the field of dialysis.
Dialysis machines constitute another key segment of Fresenius Medical Care’s product business. Here, too, we are the clear market leader. Of the roughly 69,000 dialysis machines sold in 2010, about 55% were produced by Fresenius Medical Care.
In the U.S., which is our largest business region, our market share in these two product groups, dialyzers and dialysis machines, exceeded 80% of the socalled independent market in 2010. We define the independent market as all dialysis clinics that do not belong to the major dialysis care provider Fresenius Medical Care or DaVita. In 2010, at least 85% of all dialysis machines installed in dialysis clinics and centers in the United States and more than 90% of all new machines purchased were manufactured by Fresenius Medical Care. The 2008K machine from Fresenius Medical Care is the leading dialysis system in the United States. More than 100,000 units are currently in use there. Dialyzer sales also developed very positively last year: We achieved record figures in the U.S., selling more than 35 M units.
In the year under review, China was our secondlargest sales market for newly sold hemodialysis machines after the U.S.; in 2010, we supplied more than 3,800 units here. Almost half (over 48%) of all hemodialysis machines currently used in China were produced by Fresenius Medical Care. With a recent growth rate of more than 30% in the product business, China will continue to gain importance as a sales market for Fresenius Medical Care. The country’s government is making efforts to develop a modern healthcare system with corresponding reimbursement structures – an important prerequisite for opening the market for dialysis services to international providers.
In peritoneal dialysis we account for 17% of this market worldwide measured by sales. Our market share in the U.S. was 26%. The current market leader for peritoneal dialysis is the U.S. company Baxter. Further information on our position in the home dialysis market, which comprises home hemodialysis and peritoneal dialysis, can be found in the “Home dialysis” section.
In August 2010, Fresenius Medical Care concluded a binding framework agreement to acquire the global peritoneal dialysis business from Gambro and finalized the acquisition at the end of the year under review. Through this acquisition, we hope to expand our activities in the area of home dialysis, particularly in Europe and the Asia-Pacific region. Consequently by considering Gambro’s entire revenue, Fresenius Medical Care’s market share in peritoneal dialysis products improved from 17% in 2009 to 19% in 2010 also see chart 2.1.13.
Dialysis services are dialysis treatments that are carried out by specialized physicians and care personnel. Renal patients generally receive this type of treatment in clinics or dialysis centers, which they visit several times a week for several hours. They are treated either during the day or overnight while they are asleep. Further treatment options include home dialysis, which patients generally carry out themselves at home under expert guidance and with the necessary accessories, or dialysis on vacation, for example on a cruise ship or at a resort; Fresenius Medical Care also offers services for these cases. The vast majority of dialysis services, however, involve classical treatment in clinics or centers.
Last year, most dialysis patients were cared for in one of around 29,000 dialysis centers worldwide, resulting in an average of some 70 patients per center. The organization of the centers varies significantly depending on whether the health systems in the individual countries are state-run or private: The United States and the EU have more than 5,000 dialysis centers each; whereas in the U.S. only around 1% of patients are treated in these publicly operated clinics, in the EU this number is about 60%. In Japan, private nephrologists (doctors specializing in renal treatments) play a key role, treating about 80% of dialysis patients in their facilities.
Fresenius Medical Care can operate its own therapy centers in countries where the healthcare system allows private sector companies to provide medical services and an appropriate reimbursement system is in place. For some years now, healthcare systems in many countries have been under pressure to improve the quality of treatment while at the same time keeping healthcare costs as low as possible. They have therefore started to turn to specialized private companies for help. Other countries are currently developing their healthcare systems and are looking to interact with healthcare companies with a good reputation for high quality in their business activities to develop modern treatment standards. In both cases, Fresenius Medical Care, as an experienced, vertically integrated provider, is the right partner: With our high-quality and innovative products and services, we have the ideal prerequisites to continually improve our position on the dialysis market.
In the U.S., Fresenius Medical Care and the second largest provider, DaVita, together serve around 65% of all dialysis patients; this means that the concentration of dialysis clinics is relatively high. In the year under review, Fresenius Medical Care retained its position as market leader and treated more than 134,000 patients, approximately 33% of all dialysis patients in the U.S. Outside the U.S., the dialysis service segment is much more fragmented: With 955 dialysis clinics and more than 80,500 patients in 36 countries, Fresenius Medical Care operates the largest and most international network of clinics by far.
Overall Fresenius Medical Care further expanded its clear position as market leader in the reporting period and treated 214,648 patients worldwide (2009: 195,651) in 2,757 clinics (2009: 2,553). In order to strengthen its market position in dialysis services in the Asia-Pacific region, Fresenius Medical Care acquired Asia Renal Care Ltd. This company was the second largest dialysis provider in this region after Fresenius Medical Care, and treated around 5,300 patients in some 80 clinics at the end of the reporting year.
Collection and analysis of market data
Reliable information on the development of the dialysis market and its general conditions both globally as well as on a national and regional level is an important prerequisite for the success of our business. This includes current and future patient numbers, social and medical trends, as well as the position of our competitors. To obtain and manage representative market information, Fresenius Medical Care has developed its own tool, the Market & Competitor Survey (MCS). The American journal “Nature Reviews Nephrology” recognized the MCS as the industry standard in 2010. The MCS is used to collect and analyze relevant dialysis market and competitor data, distribute it globally throughout the Company and evaluate it. For this purpose we request data in the individual countries on the number of dialysis patients, the chosen treatment method, the products used, the location of treatment and the structure of service providers. After that, the data is reviewed by comparing it with official figures from national associations and with results of previous surveys to draw conclusions on patient numbers and market values, globally as well as regionally. Finally, we use the information together with publicly available data on our competitors as a basis for strategic decisions of our management, research and development and marketing on the one hand, and for our external reporting, such as the annual report, on the other. Unless otherwise stated, the data in this chapter is based on internal estimates provided by the MCS. Through regular updates we account for new trends such as changes in the use of certain treatments or to the structure of our competitive environment, e.g. caused by the entry of new providers.
Fresenius Medical Care uses its own system to collect market data with good reason: Although renowned organizations in many countries publish information on chronic kidney failure (also called end-stage renal disease or ESRD), demographic patient structures and relevant trends, there is either a time lapse between collection and availability or the data is not reliable or detailed enough to give a complete and up-to-date picture of patient numbers worldwide. Furthermore, unlike the MCS, these generally do not track the number of renal products used for dialysis, such as dialyzers or peritoneal dialysis solution.
The results of the MCS are also part of a model that enables us to measure developments in the dialysis market worldwide. The overall market is represented via the reimbursement structures of the individual countries. We take into account which products and services are included in the reimbursement rates. Services that are reimbursed separately are added. As well as information on the product market, this model allows us to acquire and analyze data for dialysis services and the pharmaceutical market. Further information on our MCS can be found in the Annual Report 2009.
Chronic kidney failure is a global problem: At the end of 2010, approx. 2.621 M patients were treated. Around 2.029 M of these in more than 145 countries received renal replacement therapy in the form of dialysis. Some 592,000 renal patients live with a transplanted kidney. Of the 2.029 M patients worldwide who underwent regular dialysis treatment at the end of 2010, approximately 20% were treated in the U.S., 16% in the EU, and 15% in Japan. The remaining 49% of all dialysis patients are spread across 120 countries in various regions around the world. In 2010, the number of dialysis patients rose by approximately 7%, although significant regional variations remained.
The patient numbers in individual countries can be compared based on prevalence, which expresses the relative number of people in treatment for chronic kidney failure. Prevalence varies widely from country to country, from well under 100 to over 2,000 patients per million population (p.m.p). Prevalence is highest in Taiwan with around 2,700 p.m.p., followed by Japan with around 2,490 p.m.p. and the U.S. with around 1,890 p.m.p. It averages at about 1,030 p.m.p. in the 27 countries that make up the EU. In the past 10 years, prevalence increased steadily. The average prevalence worldwide is around 380 p.m.p, much lower than in the countries mentioned above. There are several reasons for this:
- The countries differ demographically, because age structures in the population vary worldwide.
- The incidence of risk factors for kidney disease such as diabetes and high blood pressure also diverges.
- The genetic predisposition for kidney disease differs across the world.
- Cultural factors such as nutrition also play a role.
- Access to dialysis is limited in many countries so that many kidney failure sufferers are not treated and thus do not appear in prevalence statistics.
Dialysis patients - regional development
|Source: Based on company statements and estimates.|
|North America||492,000||~ 5%|
|Europe/Middle East/Africa||573,000||~ 5%|
|Latin America||215,000||~ 7%|
A comparison of the economic strength of countries– based on their gross domestic product (GDP) – and their prevalence values suggests that economic factors affect not only demographic development, but also treatment options for renal patients. Particularly in countries with an annual GDP per capita of less than $10,000, not all sufferers have access to treatment. In countries with a higher GDP, there is no noticeable correlation between economic strength and prevalence. However, rising global prevalence indicates that, based on the total population, more and more people are receiving renal replacement therapy over the years.
In the U.S., Japan and Western and Central Europe, we recorded a below-average growth in the number of patients in 2010. In these regions, prevalence is already relatively high and patients generally have reliable access to treatment, normally dialysis. In economically weaker regions, growth was above average and in some cases reached double-digit figures – an indication that access to dialysis treatment in these countries is still limited but is gradually improving. In addition to easier access to dialysis resulting in better recording of patient numbers, however, other factors contribute to a rise in global prevalence, for example the spreading incidence of illnesses that cause renal damage such as diabetes and high blood pressure, as well as the general aging of the population due to medical advances.
There are basically two types of dialysis treatment: hemodialysis (HD) and peritoneal dialysis (PD). In the case of HD, a hemodialysis machine controls the flow of blood from the patient through synthetic bloodlines into a special filter, the dialyzer, where it is cleansed and returned to the patient’s body. With PD, the patient’s peritoneum is used as a dialyzing membrane. Please refer to the glossary for a detailed description of HD and PD. Not every patient is equally suited to these two methods. As PD is usually carried out by patients themselves, it requires a high degree of personal responsibility. In addition, the human peritoneum can only be used as a dialyzer for a limited period of time, ideally if the kidneys are still functioning to some extent.
Of the 2.029 M patients who underwent dialysis treatment at the end of 2010, 1.810 M – more than 89% – were treated with HD and around 219,000 with PD. In a global comparison of treatment methods, HD is clearly the most commonly used. Within the group of the 15 countries which account for more than three quarters of the world dialysis population, HD is the predominant treatment method in all countries, except Mexico.
A third alternative method for treating patients with end-stage renal disease is kidney transplantation. Approximately 592,000 patients were living with a transplanted kidney at the end of 2010. However, for many years now, the number of donated organs worldwide has been significantly lower than the number of patients on transplant waiting lists. Consequently, less than one quarter of patients with chronic kidney failure lives with a donor organ. Despite ongoing and extensive efforts by regional initiatives to increase awareness of kidney donation and willingness to donate, the share of patients receiving kidney transplantation compared to other treatment modes has remained relatively unchanged over the past ten years.
Patients with end-stage renal disease
|Source: Based on company statements and estimates.|
|Patients with end-stage renal disease (ESRD)||2.621|
|of which dialysis||2.029|
|Peritoneal dialysis (PD)||0.219|
|of which patients with transplants||0.592|
Fresenius Medical Care’s most important customers are state-owned or public health insurers, private health insurers, and companies. The largest private customer, which is also the world’s secondlargest provider in the dialysis services sector after Fresenius Medical Care, is the U.S. company DaVita.
Health and reimbursement systems
As renal replacement therapy is a life-saving medical service, patients do not usually have to pay for it themselves, but the costs are carried by the responsible healthcare system. The reimbursement systems for dialysis treatment – in other words the scheme used by a healthcare system to pay for dialysis services – differ from country to country and often vary even within countries. The factors determining reimbursement include regional conditions, the kind of treatment provided, regulatory issues and the type of care provider (public or private). As a provider of dialysis services, Fresenius Medical Care offers dialysis in more than 35 countries with different healthcare systems and reimbursement schemes. Our international experience puts us in a position to support national healthcare systems in their endeavors to customize structures, adapt our business to local needs and regulations and at the same time act profitably.
The healthcare debate in some countries is currently focused on establishing reimbursement structures based on treatment quality. The goal of a reimbursement system of this kind is to improve the quality of treatment for a dialysis patient at a lower overall cost. The example of Portugal shows the opportunities that a reimbursement system aimed at maintaining the highest possible quality offers Fresenius Medical Care as a vertically integrated company. Fresenius Medical Care treats more than 4,300 patients in 34 dialysis centers in Portugal. At the beginning of 2008, The Ministry of Health and the national association of privately run dialysis centers agreed on a new, quality-oriented flat-rate reimbursement plan for the ambulatory care of hemodialysis patients. Instead of reimbursing the costs of individual dialysis services and products, some of them were bundled to achieve more comprehensive patient care, improve quality, and boost the efficiency of the healthcare system in the field of dialysis. This new model provides a fixed reimbursement per patient per week, covering all necessary services and the use of dialysis products. The requirement is that certain treatment results are achieved and quality parameters maintained. Our experience in the past year confirms that, with our high quality standards and proven methods for monitoring therapy results, Fresenius Medical Care is in an ideal position to meet the requirements of the new system. For Fresenius Medical Care, the reform not only means that the reimbursement rate (including the new additional services) went up by around 50%. We see the successful launch of the flat-rate reimbursement system in Portugal as further confirmation of our integrated, quality-oriented approach.
Spain now introduced a reimbursement structure similar to the system in Portugal: Fresenius Medical Care signed a cooperation agreement with the public health authorities in the Murcia region for the country’s first comprehensive dialysis care and performance-oriented reimbursement model. The contract will be effective from mid-2011 and allows us to provide dialysis therapy to approximately 200 renal patients in the region. Currently, we provide dialysis treatment and related products to patients in the region of Murcia on a “fee-for-service” basis. In Spain, we treat more than 5,500 patients in 64 dialysis clinics.
In January 2011, the United States, our largest sales market, also introduced a new bundled reimbursement system for the dialysis treatment of public healthcare patients (Medicare patients). The corresponding draft law had been passed in July 2008; in July 2010, the Centers for Medicare and Medicaid Services (CMS), which represent the governmental healthcare program, published its final report with corresponding guidelines for the implementation of the new reimbursement system. All products and services that used to be reimbursed according to the composite rate are now reimbursed in a flat fee. This includes services such as the administration of certain drugs and diagnostic laboratory tests that were reimbursed separately in the old system. The bundled reimbursement rate is adapted to patients’ characteristics such as age and weight considering adjustments for patients who require exceptional medical care that results in higher costs. In addition to inflationary adjustments starting in 2012, other special features of this new reimbursement system include adherence to certain quality parameters. For example, the reimbursement rate is reduced starting in 2012 for dialysis clinics that do not meet certain criteria. Quality standards comprise, among other things, patient satisfaction, regulation of the hemoglobin content of the blood (anemia management) and the mineral metabolism in the bones. In preparation for the new reimbursement system, the composite rate was increased by 1% in both 2009 and 2010.
End-stage renal disease is one of the few chronic illnesses whose treatment is covered by public health insurance in the U.S. The care of more than 85% of all U.S. dialysis patients is mainly financed by Medicare and Medicaid, the two American healthcare programs that manage the medical care of the el- derly and people on low incomes who do not have private health insurance. Changes to the reimbursement rates and methods of Medicare and Medicaid therefore have a significant effect on our business in North America. At Fresenius Medical Care, we feel that our vertical business model puts us in an good position to work with the new system. For additional information on the latest changes to the reimbursement system in the U.S., please see our magazine 2010.