Operations and Business Environment - Fresenius Medical Care

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02. 3 Our Fiscal year 90 ment has considerable long-term potential. With Continuum, we aim to support patients with excellent products and comprehensive training programs in order to make home dialysis easier and safer. We expect the need for home dialysis to increase substantially; growing patient numbers and rising cost pressure will likely contribute to this. We estimate that a total of more than 200,000 patients worldwide could undergo a home hemodialysis or peritoneal dialysis by 2010. Continuum is a fully integrated program. In the future, patients should not only be able to choose between hemodialysis and peritoneal dialysis, but first of all whether they would like to be dialyzed in a clinic or at home. While home dialysis requires more responsibility on the part of the patient, it gives patients more say in how to budget their time. We plan to provide information to doctors, care personnel and healthcare decision-makers, but primarily to patients, and convince them that home dialysis is a safe, flexible, cost-effective option for the treatment of patients with end-stage renal disease who do not have co-morbid diseases. Fresenius Medical Care has many years of experience as well as safe, highquality products for dialysis at home. The name HDI – Holiday Dialysis International – represents a special service we offer to dialysis patients worldwide. Generally regarded as immobile, dialysis patients – and especially those regularly receiving hemodialysis – have little opportunity to travel abroad or take a business trip to another country. So Fresenius Medical Care uses its global presence to offer hemodialysis and peritoneal dialysis patients a free and professional worldwide booking service for receiving dialysis treatment away from home, either within our own network or from external providers. The program restores mobility by providing dialysis patients with life-saving dialysis treatment in nearly every corner of the globe. Patients who wish to go on cruises are not just provided with their accustomed high standard of dialysis treatment, but with a little extra quality of life HDI ensures that the dialysis machines, dialyzers, water preparation systems and other related equipment used on ships meet our high quality standards to ensure that patients on cruises receive the customary excellent treatment. In the past year, more than 1,800 patients took advantage of HDI’s services, almost 50 % more than in 2005. Furthermore, HDI promoted twelve cruises in the Mediterranean and Scandinavian region in the course of 2006. In 2007 we intend to strengthen HDI’s business in the U.S. by cooperating more closely with our North American colleagues. After launching the program in Asia in 2005, we introduced it in Europe and North America in 2006, and pilot projects continued in Scandinavia, the Netherlands, Hong Kong and Australia. We aim to continue expanding home dialysis in general and home hemodialysis in particular and establish it as a relevant treatment alternative in the long term. Holiday Dialysis International USA Integration of Renal Care Group Fresenius Medical Care’s fiscal year 2006 in North America was marked by the acquisition of Renal Care Group (RCG). After the completion of the takeover at the end of the first quarter, we immediately began with the company’s integration. We had already made the necessary preparations in the preceding months, efficiently using the time until the U.S. Federal Trade Commission closed its review of the acquisition. The integration combines key factors of success of the two companies. In addition, we have created a basis for using valuable synergies, pursuing our joint corporate goal: to offer the best-possible quality of treatment. Fresenius Medical Care’s profitability and growth perspectives were bolstered by the takeover, which Fresenius Medical Care 2006
combines RCG’s industry-leading share of revenue from private payors with Fresenius Medical Care’s cost leadership. While Fresenius Medical Care is a fully integrated provider of products and services for the entire value chain in dialysis, RCG is active exclusively in dialysis services. Therefore, the acquisition of RCG opens up further growth potential for us in the field of dialysis products such as dialysis machines and dialyzers. In 2006, the synergies already amounted to about $ 30 million. They were primarily achieved in administration and procurement, as well as from growing product business, as we provided products to RCG clinics. We expect synergies for the fiscal year 2007 and the years to follow to range between $ 40 million and $ 50 million. Further information on the acquisition of RCG can be found in the section “Events Significant for the Business Development” from page 63 onwards. In order to ensure a streamlined transition to the new organization, we integrated more than 7,000 former Renal Care Group employees into our company (more information is available in the Employees section starting on page 80 ). In addition, we provided well over 25,000 RCG dialysis patients with information about the acquisition and distributed welcoming and orientation materials. We assured the former RCG patients that they would constantly receive the best-possible dialysis treatment in our clinics. Moreover, we reworked and updated the patient handbooks. Under the slogan “Becoming one”, we staged integration events for patients and employees at which we answered questions about the takeover. In addition, we advertised Fresenius Medical Care’s acquisition of RCG in U.S. specialist magazines to inform healthcare decision-makers as well as general practitioners and nephrologists about the takeover. We also rebrushed the website of our North American subsidiary. Among other things, we installed a facility locator, making it easier to find Fresenius Medical Care’s dialysis clinics. Laboratory Services Nephrologists use laboratory tests to decide on the appropriate dialysis therapy for every patient. The quality of these test results has a significant impact on the treatment quality and our patients’ quality of life. In 2006, our subsidiary Spectra Laboratories provided these laboratory services for about 146,000 dialysis patients, an increase of 17 % over the previous year when we provided laboratory services to about 125,000 patients. Spectra Laboratories is also the laboratory of choice for independent clinics and therefore the largest clinical laboratory for dialysis-related services in North America. With more than 45 million tests performed in 2006 – compared with 42 million in 2005 – our subsidiary had a market share of about 47 % in the year under review. As planned, we introduced an Internet-based ordering system for laboratory tests in 2006. With the new system, we intend to make its operation even easier for our customers and set a new standard for laboratory services. Our customers’ first reactions were very positive. As we have enough capacity ourselves, the laboratory services provider RenaLab, a subsidiary of Renal Care Group, was not integrated into our subsidiary Spectra Laboratories, as originally planned, but sold to Renal Advantage Inc., an U.S. services provider. Disease Management Disease management (DM) goes beyond usual dialysis treatment, dealing with many additional aspects of dialysis. These include diabetes and circulatory illnesses often seen in dialysis patients as well as the care of vascular accesses, which in most cases are located on the patient’s forearm. The advantage of DM is the holistic approach. It includes preventive measures, coordination of treatments and the active care of additional, co-morbid diseases to avoid unnecessary hospital visits for our patients and to cut costs. 91 Fresenius Medical Care 2006
Page 1 and 2: 02. 1-6 With more than 56,000 emplo
Page 3 and 4: Our Fiscal year 02. 1 02. 1 Operati
Page 5 and 6: Path 2: Acquisitions. We intend to
Page 7 and 8: In addition, our development depart
Page 9 and 10: on the basis of growing clinical ex
Page 11 and 12: Asia While Japan’s gross domestic
Page 13 and 14: dialysis and about 165,000 receive
Page 15 and 16: As in previous years, many healthca
Page 17 and 18: Dialysis machines constitute anothe
Page 19 and 20: Comparison of the Actual Business R
Page 21 and 22: The Management’s General Assessme
Page 23 and 24: In terms of dialysis products, we w
Page 25 and 26: Europe, including the Middle East a
Page 27 and 28: egarding stock options and the incr
Page 29 and 30: Financing Detailed information on f
Page 31 and 32: of existing production facilities i
Page 33 and 34: The Group has no significant accrua
Page 35 and 36: is among our most important goals.
Page 37 and 38: departments enter into outline cont
Page 39 and 40: Quality and Environmental Managemen
Page 41 and 42: Clinical Databases Clinical databas
Page 43: In addition, we received regulatory
Page 47 and 48: - In April 2006, new guidelines wer
Page 49 and 50: titative appraisals of the likeliho
Page 51 and 52: Risks in the Healthcare Industry Ri
Page 53 and 54: possibility of default. Please see
Page 55 and 56: to page 95 of the Consolidated Fina
Page 57 and 58: 02. 6 Outlook Business Policy Frese
Page 59 and 60: dialysis will remain the treatment
Page 61 and 62: Employees At this point, Fresenius

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