Operations and Business Environment - Fresenius Medical Care

Our Fiscal year
02. 1
02. 1 Operations and
Business Environment
Group Structure and Business
Fresenius Medical Care is the world’s leading, vertically
integrated provider of products and services for individuals
with chronic kidney failure. About 1.5 million
individuals worldwide regularly undergo dialysis treatment.
In a network of 2,108 dialysis clinics in North
America, Europe, Asia, Latin America and Africa,
Fresenius Medical Care provided dialysis treatment to
163,517 patients at the end of 2006.
Fresenius Medical Care markets its wide range of products
and services in more than 100 countries and runs
a network of production facilities on all continents. The
Company’s major important production facilities are in
the U.S., Germany and Japan. In addition, we operate
plants in other European countries, in Asia and in
Latin America.
Fresenius Medical Care’s activities are organized into
three operating segments: “North America”, “International”
and “Asia-Pacific”. For reporting purposes,
we aggregated the International and Asia-Pacific
segments into the segment “International” because
of similar economic conditions in the two operating
segments. The similarity relates, among other things,
to the products sold, patient structures, methods
of distributing products and services, as well as the
economic environment.
Management and Control
As reported in detail in the previous Annual Report,
the transformation of the legal form of the Company
from an Aktiengesellschaft into a partnership limited
by shares (Kommanditgesellschaft auf Aktien – KGaA)
became effective upon registration with the commercial
register of the local court (Amtsgericht) in Hof an der
Saale (Germany) on February 10, 2006. As a result, all
shareholders of the former Fresenius Medical Care AG
are now shareholders of Fresenius Medical Care AG &
Co. KGaA.
The corporate organs of Fresenius Medical Care in its
legal form as AG & Co. KGaA as well as the Group
management and supervisory structure are discussed in
the Corporate Governance Report starting on page 43 .
Key Products, Services and Business Processes
Fresenius Medical Care provides dialysis services in its
own dialysis clinics in more than 25 countries. In addition,
we offer an extensive range of hemodialysis and
peritoneal dialysis products in more than 100 countries,
within our own network of dialysis clinics and outside
of it. Consequently, Fresenius Medical Care is truly
a global company.
Major Markets and Competitive Position
Fresenius Medical Care’s most important markets are
North America and Europe, where we generate approximately
71% and 21% of our sales, respectively.
Fresenius Medical Care is the world’s largest provider
of dialysis services and dialysis products. Further information
on the dialysis market and the position of
Fresenius Medical Care can be found in “Sector-
Specific Conditions – Dialysis Market” on page 58 .
Legal and Economic Factors
Fresenius Medical Care provides life-saving products
and therapies for ill people and is therefore only
partially exposed to economic cycles. In this regard,
we are different from manufacturers of consumer
goods, for example, that must contend with cyclical
demand for their products.
The dialysis markets are continuing to grow on account
of demographic factors, including the aging population
and the increasing incidence of diabetes and hypertension,
two illnesses which frequently precede the onset
of end-stage renal disease (ESRD). The life expectancy
of dialysis patients is increasing thanks to continual improvement
of treatment quality and higher standards
of living, also in developing countries.
Dialysis reimbursement structures differ from country
to country, and often even vary within one country. In
the U.S., costs for the majority of dialysis treatments
are reimbursed by public healthcare programs such as
Medicare. As a result, Fresenius Medical Care’s business
is partially influenced by reimbursement rates and
methods specified by the government. Further information
on this issue can be found in the “Reimbursement
Structure” section beginning on page 92 .
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Fresenius Medical Care 2006