Fresenius Kabi

High growth rates reflect the success of our products: We achieved an organic sales growth of 8 % and increased EBIT substantially. Following the acquisitions of APP Pharmaceuticals and Dabur Pharma in 2008, we significantly expanded our global market position in 2009.

Key Figures of Fresenius Kabi

  • Infusion therapy, IV drugs, Clinical nutrition, Medical devices / Transfusion technology
in million € 2009 2008 Change
1 Net income attributable to the parent company of the respective business segment.
Sales 3,086 2,495 24 %
EBIT 607 443 37 %
Net income 1 200 200 0 %
Operating cash flow 397 205 94 %
Capital expenditure / acquisitions 157 3,749 - 96 %
R & D expenses 129 109 18 %
Employees (December 31) 21,872 20,457 7 %

in million € 2009 2008 Change
1 Net income attributable to the parent company of the respective business segment.
Sales 3,086 2,495 24 %
EBIT 607 443 37 %
Net income 1 200 200 0 %
Operating cash flow 397 205 94 %
Capital expenditure / acquisitions 157 3,749 - 96 %
R & D expenses 129 109 18 %
Employees (December 31) 21,872 20,457 7 %

Fresenius Kabi specializes in the therapy and care of chronically and critically ill patients, providing intravenously administered generic drugs (IV drugs), infusion therapies, clinical nutrition, and related medical devices. Our products cover the full range of patient care: emergency cases, surgery, intensive care, hospital wards, and outpatient care.

Our portfolio of IV drugs includes anesthetics, analgesics, anti-infectives, and drugs for the treatment of oncological and other critical diseases. For infusion therapy, we provide blood volume substitution products and infusion solutions. In the area of clinical nutrition, we are one of the few companies worldwide that offer both parenteral and enteral nutrition products. To administer our products, we supply infusion pumps, infusion management systems, nutrition pumps, and disposables. For transfusion technology, we offer a range of products used by blood banks and blood donation units to produce blood products.

BUSINESS DEVELOPMENT

In 2009, Fresenius Kabi increased sales by 24 % to € 3,086 million (2008: € 2,495 million). Organic growth was 8 %. Net acquisitions had an impact of 18 %. Currency translation had a negative effect of 2 %.

The sales growth by region was as follows:

in million € 2009 2008 Change
Europe 1,566 1,499 4 %
North America 728 336 117 %
Asia-Pacific 482 381 27 %
Latin America / Africa 310 279 11 %
Total 3,086 2,495 24 %

in million € 2009 2008 Change
Europe 1,566 1,499 4 %
North America 728 336 117 %
Asia-Pacific 482 381 27 %
Latin America / Africa 310 279 11 %
Total 3,086 2,495 24 %

We continued to achieve strong organic growth, especially in the growth regions of Asia-Pacific and Latin America, both with increases of 15 %. China is our biggest market in Asia-Pacific and is the third largest contributor to Fresenius Kabi’s sales after North America and Germany. The strong sales growth in North America was due to the first full-year consolidation of APP Pharmaceuticals. The company increased its sales by 14 % to US$ 889 million.

Sales by product segment were as follows:

in million € 2009 2008 Organic
growth
Infusion therapy 712 683 6 %
IV drugs 1,027 563 9 %
Clinical nutrition 924 845 10 %
Medical devices / Transfusion technology 423 404 5 %
Total 3,086 2,495 8 %

in million € 2009 2008 Organic
growth
Infusion therapy 712 683 6 %
IV drugs 1,027 563 9 %
Clinical nutrition 924 845 10 %
Medical devices / Transfusion technology 423 404 5 %
Total 3,086 2,495 8 %

We continued the excellent earnings progress of past years. EBIT increased by 37 % to € 607 million (2008: € 443 million), including amortization of € 26 million on intangible assets from APP Pharmaceuticals. The EBIT margin rose to 19.7 % (2008: 17.8 %). The strong margin improvement is mainly due to the consolidation of APP Pharmaceuticals for the full year. At APP Pharmaceuticals, EBIT rose to US$ 273 million. The EBIT margin was 30.7 %. Adjusted EBITDA1 was US$ 347 million.

All the regions contributed to the growth in EBIT:

in million € 2009 2008 Change
Europe 335 323 4 %
EBIT margin 21.4 % 21.5 %  
North America 216 87 148 %
EBIT margin 29.7 % 25.9 %  
Asia-Pacific, Latin America / Africa 151 113 34 %
EBIT margin 19.1 % 17.1 %  
Administrative and corporate R & D expenses - 95 - 80 - 19 %
EBIT 607 443 37 %
EBIT margin 19.7 % 17.8 %  

in million € 2009 2008 Change
Europe 335 323 4 %
EBIT margin 21.4 % 21.5 %  
North America 216 87 148 %
EBIT margin 29.7 % 25.9 %  
Asia-Pacific, Latin America / Africa 151 113 34 %
EBIT margin 19.1 % 17.1 %  
Administrative and corporate R & D expenses - 95 - 80 - 19 %
EBIT 607 443 37 %
EBIT margin 19.7 % 17.8 %  

Fresenius Kabi's consolidated net income2 was € 200 million (2008: € 200 million).

INFUSION THERAPY

Infusion solutions are used widely in everyday hospital routines. Among other things, they are administered to patients suffering fluid loss or electrolyte deficiencies. They also serve as carrier solutions for intravenously administered drugs. We offer a comprehensive range of products in infusion bags and bottles.

For blood volume substitution we offer artificial colloids, which are used mainly in surgery and emergency cases, and can be infused regardless of blood group. They can compensate for blood loss by binding water in the vascular system. Our products contain hydroxyethyl starch (HES), which is derived from waxy maize starch. We are the world market leader for artificial colloids. Our Voluven® product meets highest quality and safety standards in blood volume substitution. In 2009, we sold it in more than 90 countries, and in over half of these markets we are the leading supplier. We also successfully launched our new blood volume substitute Volulyte® in more European markets.

Further successes were achieved with our medical devices for the application of infusion therapies. In Australia, we won a tender with our Volumat MC Agilia infusion pump and were appointed as exclusive supplier to the New South Wales Health Hospitals for this product. The contract involves the supply of approximately 10,000 pumps, including the related disposables, over the next three to five years.

In transfusion technology, we are one of Europe’s leading suppliers of blood bag systems and medical devices for collecting, processing, and transporting blood products. In 2009, we launched our new CompoFlow concept in Europe. Its salient feature is a novel CompoFlow valve on the blood bag that opens automatically on the CompoMat G5 blood component separator. This minimizes possible mistakes when opening the valves manually and considerably reduces the physical effort of opening several hundred break-off valves each day for blood bank staff.

INTRAVENOUSLY ADMINISTERED DRUGS

In 2009, we continued the integration of APP Pharmaceuticals and Dabur Pharma (now operating under the name Fresenius Kabi Oncology). The acquisition of these two companies was a milestone in our growth strategy in this product segment. Today, we have a portfolio of over 200 products in different formulations and dosage forms, which makes us one of the world’s leading suppliers of generic IV drugs. Through Fresenius Kabi Oncology, we also produce our own cytostatic agents and thus have the expertise to cover the entire pharmaceutical value chain – a factor of particular relevance for quality in the very important growth market of cytostatics.

APP Pharmaceuticals distributes its products in North America, where it is one of the leading suppliers of IV drugs. In the important segment of anti-infectives, the company offers a broad portfolio of about 27 products in over 70 different formulations and dosage forms. The company further expanded this product segment with the successful launch of Penicillin G potassium, an antibiotic used especially for treating severe infections.

IV drugs for the treatment of critical diseases are another big product segment at APP Pharmaceuticals. The company offers about 87 products in over 200 different formulations and dosage forms. APP Pharmaceuticals is currently the leading supplier of unfractionated heparin in North America. Heparin is used for the prophylaxis and treatment of blood clotting after surgery, e. g. during heart and major orthopedic and gastrointestinal surgeries or in extracorporeal blood circulation, such as dialysis. In 2009, APP Pharmaceuticals continued its information campaign “Working Together for Patient Safety” and introduced online training programs for pharmacists and other healthcare professionals.

In 2009, APP also launched the diuretic Chlorothiazide Sodium, the muscle relaxant Rocuronium, the migraine drug Sumatriptan, Deferoxamine, an iron chelating agent, and the oncology drugs Idarubicin, Bleomycin, and Oxaliplatin, a powder for intravenous infusion and a marketing authorization of Fresenius Kabi Oncology. Nonetheless, with a total of seven new marketing authorizations in 2009, APP Pharmaceuticals received fewer than in previous years, and they were also obtained later than expected. As a result, there were not as many new product launches as we had planned. At the end of 2009, APP Pharmaceuticals still had 35 pending applications at the U.S. Food and Drug Administration (FDA). More information can be found here.

At the end of 2009, the FDA contracted APP Pharmaceuticals at short notice to make additional supplies of Propofol from Fresenius Kabi plants in Europe. This exceptional measure was necessary in order to alleviate shortages of anesthetics in the US market in the wake of product recalls by competitors. Together with APP’s anesthetic Diprivan®, which has been a market-leading product for many years, Fresenius Kabi was able to assure a more or less seamless supply of the US market.

We also expanded our portfolio of IV generics outside North America. We launched six new products in various formulations and dosage forms in a number of European markets. Our goal is to roll out our extensive product portfolio across Europe and the growth regions of Latin America and Asia-Pacific. Already today, our anesthetic Propofol, for instance, is the global market leader in the IV anesthetics segment.

Fresenius Kabi Oncology specializes in generic drugs for cancer treatment and offers an extensive range of products for the common diseases of lung, breast, and colon cancer, as well as for tumors of the neck and head.

In 2009, we successfully continued with the internationalization of our oncology products. The cytostatic drug Gemcitabin Kabi, for instance, was launched very successfully in Germany, Great Britain, France, and Italy, among other markets. This product is used, for example, in chemotherapy for pancreatic and bladder cancer. The cytostatic drug Irinotecan Kabi, which is used for the treatment of colon cancer, also sold very successfully in numerous European markets in 2009. We are already marketing a large number of oncology drugs in the Asia-Pacific region, where we managed to consolidate our market leadership in India, Thailand, and the Philippines.

Today, with the addition of oncological generics to our portfolio, we are providing patients with a comprehensive range of products for cancer treatment. Our offering includes generic drugs as well as enteral and parenteral nutrition products for improving the nutritional condition of patients. We also supply medical devices for administering the solutions as well as patient-specific preparations (Compounding) that can also be used in outpatient care.

CLINICAL NUTRITION

Clinical nutrition serves to supply patients who are unable to eat any or sufficient normal food. This applies especially to patients in intensive care units, to the severely and chronically ill, and to those who are malnourished. The use of clinical nutrition products is on the increase. Weight loss and deficiencies in essential nutrients can result in higher complication rates, longer recovery periods, a diminished quality of life, and elevated mortality rates. The acceptance of clinical nutrition is also increasing due to aspects of health care economics. In Germany alone, malnutrition causes additional costs of about € 9 billion a year for health and nursing care insurers.3

Three-chamber bags are one of our core parenteral nutrition products and are reference products for parenteral nutrition therapy in hospitals. In 2009, we were once again extremely successful in this product segment. There were two main reasons: firstly, our pioneering bag design, which assures a high level of safety in everyday hospital use, and, secondly, our international presence. We have continued with the international roll out of this product and now sell the new bag design in about 60 countries.

Another growth driver for our business with three-chamber bags was the launch of SmofKabiven®. We use our SMOFlipid® product as the lipid component in this new product and therefore offer a multi-chamber bag for parenteral nutrition with a balanced fatty acid profile and an optimized Omega-6 to Omega-3 fatty acid ratio. The clinical benefit is high: the product has a beneficial effect on important liver function parameters and anti-inflammation reactions. The results of studies show that the product’s composition helps to reduce the length of time patients spend in hospital. In 2009, we began to sell this product successfully in Europe.

In the field of enteral nutrition therapy, we offer a comprehensive range of sip and tube feed products. Enteral products are used, for instance, in geriatric, pediatric, and intensive care as well as in outpatient care. Enteral nutrition is also acquiring growing importance as a supportive component of the overall therapy process, for instance in cancer treatment. Because of chemotherapy, nausea, vomiting, physical weakness, or depression, tumor patients often do not have a sufficient intake of food.

In 2009, we successfully launched our high-calorie sip feed products Fresubin® 2kcal, which is particularly well suited for tumor patients, in numerous European countries. We offer this product in a wide range of flavors to prevent taste fatigue during long-term therapy. We have also broadened our range with the addition of an alternative to sip feeds: Fresubin® Crème is a balanced, high-calorie nutrition product of a creamy consistency that is ideal for patients who are malnourished or are suffering from dysphagia. Fresubin® Crème has been successfully launched in five flavors in Europe.

We also hold a strong position in Latin America and Asia-Pacific with our enteral nutrition products. We are one of the leading suppliers in China, for instance. In 2009, we successfully continued with the internationalization of our range of enteral nutrition products and launched our sip and tube feeds in further markets.

We are one of the leading suppliers in Europe in the field of medical devices for the application of clinical nutrition. Our Ambix® activ infusion pump is a small, lightweight, mobile pump for parenteral nutrition. Ambix® activ can be operated intuitively and, being easy to use and convenient to handle, offers patients maximum independence. With its successful launch in Germany, we have set new standards of user friendliness in outpatient care.

For further information, please see Fresenius Kabi’s website at www.fresenius-kabi.com.

Please see here for the 2010 financial outlook of Fresenius Kabi.


1 Non-GAAP financial measures – Adjusted EBITDA is a defined term in the indenture governing the Contingent Value Rights (CVRs), however it is not a recognized term under GAAP.
2 Net income attributable to Fresenius Kabi AG.
3 Cepton Studie, Mangelernährung in Deutschland – Handlungsfelder für Medizin und Politik, 2007 (Malnutrition in Germany – A Need for Medical and Political Action)

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