Operations and Business Environment - Fresenius Medical Care

Risks in the Healthcare Industry
Risks related to changes in the healthcare market are
of major importance to the Fresenius Medical Care
Group. The main risks are the development of new
products and therapies by competitors, the financing
of healthcare systems and reimbursement in the
healthcare sector. Risks are actively kept to a minimum
by closely monitoring the market, especially the products
of our competitors and the introduction of new
dialysis-related products. As part of our active risk management,
Fresenius Medical Care maintains strategic
business units that help anticipate and quickly react
to new market conditions. Their main activity is to
identify, analyze and internally communicate activities
that could affect the dialysis market and the Group’s
business. In addition, close ties with the medical and
scientific communities enable us to quickly identify and
capitalize on technological innovation. This involvement
also keeps us up-to-date on alternative treatment
methods and enables us to evaluate and, if necessary,
adjust our corporate strategy. Consequently, we
continuously analyze and evaluate trends and review
improvements in research and development. The
development of new and innovative products will
remain a decisive factor in the dialysis market for
the foreseeable future.
Since we operate in a highly regulated environment,
changes in the law, such as those relating to reimbursement,
can have a major economic and strategic impact
on the Group’s economic success. This is especially true
in the United States, where about 91% of our sales
are generated with dialysis care, the majority of which
are financed by the public health insurance programs
Medicare and Medicaid. Regulatory changes outside
our most important market could also have a significant
impact on the Group. For this reason, we do not
only carefully monitor regulatory planning and changes,
but actively work together with government healthcare
agencies. Details on the reimbursement system in the
public Medicare/Medicaid program in the U.S. can be
found in “USA” section on page 92 .
Risks Associated with Operating Activities
We confront potential risks in production, products
and services using the following active control
measures:
Procurement. Substantial requirements are placed on
suppliers to control the risk of low-quality raw materials,
consumable goods and other external products.
This includes demanding external certification, performing
our own inspections of suppliers and sample products,
and performing regular quality control checks.
Fresenius Medical Care demands high-quality, safe
products from certified suppliers that meet the Group’s
specifications and requirements, and have a proven track
record. These suppliers are constantly reevaluated
using a supplier assessment system.
We monitor and work to avoid market-related dependencies
with major suppliers. Our strategy calls for a
primary and back-up source for every product and raw
material required. Where this is not possible, we
minimize the risk by entering into long-term contracts
to ensure a steady supply and price advantages while
avoiding price fluctuations. As a manufacturer of dialysis
products, Fresenius Medical Care is also specifically
exposed to general price changes in raw materials.
Continuous market analyses are conducted in an effort
to anticipate such price movements and quickly
counteract any potential negative impact. Further information
on procurement can be found on page 82 .
Production. Compliance with product and manufacturing
regulations is ensured by our Integrated Management
System in accordance with ISO 9001, ISO 13485
and “Good Manufacturing Practice” (GMP) requirements,
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Fresenius Medical Care 2006