Operations and Business Environment - Fresenius Medical Care

02. 6 Outlook
Business Policy
Fresenius Medical Care is the world’s leading dialysis
company and intends to expand its position in the
years to come. At present, the Company does not plan
any major changes to its business policy.
We are planning expenditures for research and development
of about $ 60 million in 2007, an increase
of more than 20 % over 2006. The number of employees
in the research and development departments
should slightly increase from approximately 350 fulltime
equivalents. Expenditures and the number of
employees working in research and development
should remain at roughly the same level in 2008.
Global Economy
Markets
As a global company, we offer a wide range of dialysis
products and services in over 100 countries.
Consolidation in the dialysis industry is expected to
continue in the future. However, Fresenius Medical
Care and DaVita already hold a market share of about
two thirds in the U.S. Therefore, and in the light of potential
restriction due to anti-trust reasons, we would
expect acquisitions in the U.S. to be on a smaller scale
than in the past. Consolidation in the international
market is at an early stage, but such future acquisitions
are also expected to be minor due to the lack of larger
providers.
Therapies, Products and Services
Research and development of new dialysis technologies,
products and treatment methods are long-term
projects. In the future we will continue to focus on the
further development of dialysis membranes as well as
other dialysis products and machines. With these technologies,
we intend to continually improve the treatment
quality and thus the quality of life for our
patients. Additional research areas are extracorporeal
procedures, such as the therapy of liver diseases, and
the research on alternative methods for local blood
coagulation, as well as online hemodiafiltration. This
dialysis therapy is discussed in detail in the Research
and Development section starting on page 52 .
General Economic Development in 2007
In their Fall Report, the leading German economic
research institutes forecast a global economic growth
of 3.1% for 2007. This expectation is based on the
assumption that raw material prices and particularly
energy prices will not keep on climbing. Please
see page 57
for the growth forecast of selected countries
and regions.
United States. The United States’ gross domestic product
is expected to increase by 2.7 %, a lower growth
rate than in the reporting year. Private spending
should not increase as much as in the previous year
due to higher interest rates on mortgage loans resulting
in increased individual saving rates. Real estate prices
are expected to stagnate. Weaker consumer demand
should dampen companies’ revenue and profit
expectations. If the underlying price pressure slowed
noticeably in 2007, then key interest rates should fall
slightly.
Europe. In the euro zone, an economic growth of
2.1% is expected. More restrictive financial policies in
Germany and Italy could slow down the economy in
the euro area. At the same time, continued tightening
of the monetary policy in 2007 should result in a
lower inflation rate of slightly over 2 %. In addition, the
unemployment rate should continue to decrease.
The German economy is expected to grow by 1.4 %,
less of an increase than in the previous year. However,
there are different opinions about the effects that
might derive from the 3 % increase in value-added
tax in Germany. No clear consensus has been reached
among the economic institutes in this respect. Generally,
the institutes assume private spending to decrease
in the first half of 2007 so that an economic upswing
will have to be largely driven by foreign trade.
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Fresenius Medical Care 2006