Operations and Business Environment - Fresenius Medical Care

Dialysis machines constitute another key segment of
our product business, in which Fresenius Medical Care
also holds a leading position. Of the more than 50,000
new dialysis machines sold in 2006, over 50 % were
produced by Fresenius Medical Care. The introduction
of the new generation of hemodialysis machines in
2005, the 5008 series, contributed to that development.
Thanks to its innovative user interface and technologies
that set new standards in dialysis, the 5008 found a
high level of acceptance the first year it was on the
market. The new machine not only reinforces our strong
market position, but also provides excellent prospects
for future market share growth.
In the U.S., our most important market, our market share
in these two product groups – dialyzers and dialysis
machines – exceeded 70 % of the net available external
market. We define the net available external market as
all dialysis clinics that do not belong to a major dialysis
group, such as Fresenius Medical Care or DaVita.
Sales of our 2008K dialysis machine grew by 26 % in
2006. This dialysis machine is the leading dialysis system
in the U.S.; we have sold more than 13,000 of
these dialysis machines there. Dialyzers also outpaced
average growth in the U.S. – record sales of approximately
27 million Optiflux dialyzers were achieved.
At the end of 2006, more than three quarters of all
hemodialysis patients in the U.S. on single-use have
been provided with single-use dialyzers from Fresenius
Medical Care.
Our sales of peritoneal dialysis products also increased.
Worldwide, we hold a 20 % share of that market, which
has traditionally been dominated by Baxter. Our market
share in the U.S. was 31%. Further information on our
position in the home therapies market, which comprises
peritoneal dialysis and home hemodialysis, can be
found in the “Continuum” section beginning on page 89 .
Events Significant for
the Business Development
Acquisition of the Renal Care Group
In addition to the very good operating performance, the
acquisition and integration of Renal Care Group (RCG)
was a major event for Fresenius Medical Care in the
fiscal year 2006. We discussed the acquisition of RCG
in depth in the 2005 Annual Report.
The purchase of RCG was a milestone in the history of
our company. RCG is a rapidly growing, highly profitable
dialysis service company which is active exclusively in the
U.S. With the acquisition, we significantly expanded our
position as market leader in the U.S., increasing our market
share from around 27 % to about 34 %. RCG’s network
of dialysis clinics supplements our activities in the
world’s largest dialysis market both strategically and geographically.
RCG is particularly strong in the Midwest of
the U.S., where we had been underrepresented previously.
RCG has an attractive share of privately insured patients.
Another positive aspect of the acquisition is the fact
that it has enabled us to further expand our dialysis
product business.
In February 2006, Fresenius Medical Care had announced
it was selling 96 dialysis clinics to a subsidiary of DSI
holding company followed by additional nine dialysis
clinics in June in the U.S. state Illinois. The sale was an
essential prerequisite for the approval of the Federal
Trade Commission (FTC) of the RCG acquisition. Following
a review of the acquisition, the FTC issued a consent
order approving the deal, enabling Fresenius
Medical Care to take over RCG on March 31, 2006.
The results of RCG’s operations have been included
in Fresenius Medical Care’s Consolidated Financial
Statements since April 1, 2006.
To finance the acquisition, Fresenius Medical Care entered
into and drew upon a $ 4.6 billion senior credit facility.
The acquisition of RCG and the further improved
operating performance had a very positive impact on
Fresenius Medical Care, and hence we could raise our
forecast for 2006. More information can be found in
the “Comparison of the Actual Business Results with
Forecasts” section starting on page 65 .
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Fresenius Medical Care 2006