our market position.
Fresenius Medical Care is the world’s leading provider of products and services for people with chronic kidney failure.
Around 3.4 million patients with this disease worldwide regu-larly undergo dialysis treatment. When the kidney function of patients with this disease fails, dialysis takes over the vital task of cleansing the blood of toxins and surplus water.
Fresenius Medical Care offers products and services along the entire dialysis value chain from a single source. We care for more than 333,000 patients in our global network of more than 3,900 dialysis clinics. At the same time, we operate 42 production sites, to provide dialysis products such as dia-lysis machines, dialyzers, and related dis posables.
Our strategy is geared towards sustainable growth. We aim to continuously improve the quality of life of patients with kidney disease by offering innovative products and treatment concepts of the highest quality.
BUSINESS DEVELOPMENT
Fresenius Medical Care decreased sales by 7% to € 16,547 million in 2018 (currency adjusted: - 2%). Organic sales growth was 4%. The application of IFRS 15 reduced sales by 3%. With the prior-year basis additionally adjusted for divested Care Coordination activities, sales in fiscal year 2018 decreased by 1% (increased by 4% in constant currency).
Health care services sales 1 (dialysis services and Care Coordination) decreased by 2% (increased by 4% in constant currency) to € 13,264 million. Sales of health care products (e. g., dia ly sis products) increased by 1% (5% in constant cur-rency) to € 3,283 million.
EBIT increased by 29% to €3,038 million (2017:
€ 2,362 million). The increase is mainly attributable to the divested Care Coordination activities. The EBIT margin was 18.4% (2017: 13.3%). EBIT on a comparable basis1 increased by 6%; the EBIT margin 1, was 14.2% (2017: 13.6%).
SALES BY REGION
€ in millions 2018 2017 Change
Currency translation effects
% of total Fresenius Medical Care sales
North America 11,570 12,879 - 10% - 4% 70%
Europe / Middle East / Africa 2,587 2,547 2% - 2% 16%
Asia-Pacific 1,689 1,623 4% - 4% 10%
Latin America 686 720 - 5% - 27% 4%
Corporate 15 15 0% 0% 0%
Total 16,547 17,784 - 7% - 5% 100%
1 On a comparable basis
For a detailed reconciliation please refer to the tables on page 60.
Business Segments
Net income 1 increased by 55% (60% in constant currency) to € 1,982 million (2017: € 1,280 million). The adjusted net income 1 increased currency-adjusted by 4%.
Comparable basis net income 1,2 increased by 14% in constant currency.
REGIONAL DEVELOPMENT
North America remained Fresenius Medical Care’s largest business region. In 2018, sales 2 decreased by 2%
(increased by 2% in constant currency) to € 11,570 million, compared to € 11,834 million in 2017. EBIT increased by 28% to € 2,665 million (2017: € 2,086 million), with an EBIT margin of 23.0% (2017: 16.2%). The changes are mainly attributable to the divestiture of Care Coordination activities.
The average revenue per treatment in the United States was US$ 354 in 2018, compared to US$ 342 in 2017. The average cost per treatment in the United States increased from US$ 271 in 2017 to US$ 289 in 2018.
In 2018, the business development outside of North Amer-ica, in the business segments EMEA (Europe / Middle East / Africa), Asia-Pacific, and Latin America, was impacted by currency translation effects. Sales increased by 1% (8% in constant currency) to € 4,962 million (2017: € 4,890 million).
EBIT decreased by 10% to € 731 million (2017: € 815 million).
The EBIT margin was 14.7% (2017: 16.7%).
ACQUISITIONS / DIVESTITURES
In 2018, Fresenius Medical Care further expanded its clinical network.
With the announced acquisition of NxStage Medical, Inc., a provider of dialysis machines and other products for use in home dialysis and critical care, we intend to broaden the range of therapies. The transaction remains subject to regu-latory approvals and other customary closing conditions.
Fresenius Medical Care expects the closing of the transaction to occur in early 2019.
As of June 28, 2018, Fresenius Medical Care closed the announced divestiture of Sound Inpatient Physicians Holdings, LLC (Sound) to an investment consortium led by Summit Partners. The divestment of Sound is aligned with Fresenius Medical Care’s goal of further sharpening the profile of the company’s Care Coordination portfolio in the United States.
TREATMENT QUALITY
Again in 2018, physicians and clinical staff in our dialysis clinics offered patients the highest-quality treatment. Please see page 96 ff. of the Group Non-financial Report for further details on treatment quality.
Please refer to page 75 f. of the Group Management Report for the 2019 financial outlook of Fresenius Medical Care.
For further information, please see Fresenius Medical Care’s Annual Report 2018 or visit the website at
www.freseniusmedicalcare.com.
North America
Europe / Middle East /
Africa Latin America Asia-Pacific Total
2018 Change
2018 / 2017
Dialysis clinics (December 31) 2,529 776 229 394 3,928 5%
Dialysis patients (December 31) 204,107 65,061 32,687 31,476 333,331 4%
Treatments 30,843,876 9,731,941 5,080,020 4,371,742 50,027,579 4%
FRESENIUS MEDICAL CARE BY REGION
€ in millions 2018 2017 Change
North America
Health care services 2 10,725 10,991 - 2%
Health care products 3 845 843 0%
Total 11,570 11,834 - 2%
International 4
Health care services 2 2,539 2,496 2%
Health care products 3 2,423 2,394 1%
Total 4,962 4,890 1%
Worldwide
Health care services 2 13,264 13,487 - 2%
Health care products 3,5 3,283 3,252 1%
Total 16,547 16,739 - 1%
1 On a comparable basis
2 Sales from dialysis services and Care Coordination
3 Sales from dialysis products such as dialysis machines, dialyzers, and related disposables and non-dialysis products
4 International represents the business segments EMEA (Europe / Middle East / Africa), Asia-Pacific, and Latin America
5 Including sales generated by corporate functions of € 15 million in 2018 and
€ 15 million in 2017
SALES BY SEGMENT1
1 Net income attributable to Fresenius Medical Care AG & Co. KGaA
2 On a comparable basis
For a detailed reconciliation please refer to the tables on page 60.
Business Segments
FRESENIUS KABI. Our business grew across all regions and product segments in 2018. Organic sales growth of 7% and EBIT growth in constant currency of 2% significantly exceeded original expectations.
Fresenius Kabi specializes in the therapy and care of chronic-ally and criticchronic-ally ill people. The portfolio includes IV drugs, i. e., intravenously administered generic anesthetics, anal gesics, anti-infectives, and drugs for the treatment of oncol ogical and other critical diseases. We are also developing biosimi-lars with a focus on oncology and autoimmune diseases.
Another product segment is clinical nutrition. In this segment, we are one of the few companies worldwide that offer both parenteral and enteral nutrition products. The infusion ther-apy portfolio includes infusion solutions and blood volume substitutes. In the medical devices / transfusion technology segment, we offer infusion and nutrition pumps, as well as consumables, for the administration of pharmaceuticals and clinical nutrition products. Moreover, our portfolio includes products used in the collection and processing of blood com-ponents, as well as in transfusion medicine.
BUSINESS DEVELOPMENT
Sales increased by 3% to € 6,544 million in 2018. Organic sales growth was 7%. Negative currency translation effects (4%) were mainly related to the devaluation of the U.S. dollar, the Brazilian real, and the Argentinian peso against the euro.
In Europe, we achieved organic sales growth of 3%
based on the good development of the clinical nutrition prod-uct segment. In North America, organic sales growth was 8%, driven by persisting IV drug shortages and new product launches. Fresenius Kabi also showed strong overall growth in the emerging markets. We achieved organic sales growth of 17% in Latin America. In Asia-Pacific we achieved organic sales growth of 12%.
€ in millions 2018 2017 Change
Currency translation effects
% of total Fresenius Kabi sales
Europe 2,248 2,214 2% - 1% 34%
North America 2,359 2,290 3% - 5% 36%
Asia-Pacific 1,300 1,196 9% - 3% 20%
Latin America / Africa 637 658 - 3% - 15% 10%
Total 6,544 6,358 3% - 4% 100%
SALES BY REGION
Business Segments
ACQUISITIONS / INVESTMENTS
In the lawsuit by Akorn, Inc., a U.S.-based manufacturer and marketer of prescription and over-the-counter pharmaceuti-cal products, against Fresenius for the consummation of the April 2017 merger agreement, the Supreme Court in the U.S.
state of Delaware ruled in favor of Fresenius on December 7, 2018. As this is the highest Court in Delaware, no further appeal is possible (for further details please see page 67).
In the United States, we are expanding our plant in Mel-rose Park, near Chicago, into a state-of-the-art campus for the manufacture of intravenously administered drugs. The investment volume for this expansion amounts to approxi-mately US$ 350 million. At our existing site in Wilson, North Carolina, we will invest approximately US$ 350 million in the construction of a new manufacturing facility.
Enteral nutrition products are Fresenius Kabi’s fastest-growing product segment. Due to strong demand, we will create additional production capacities: last year, we started to expand our plant in Wuxi, China, to produce enteral nutri-tion products. Producnutri-tion is scheduled to start in 2019. We are also expanding our production capacities in Europe, where we will invest almost € 100 million in our plant in Emmer-Compascuum, Netherlands.
PRODUCT SEGMENTS
In the generic IV drugs segment, we have expanded our product portfolio to additional regional markets. There were more than 90 product launches of IV drugs worldwide. In the biosimilars segment, we took an important step in the future commercialization of our biosimilar products with the con-clusion of a global settlement and license agreement with AbbVie for our biosimilar candidate of AbbVie’s Humira®. Subject to regulatory approval, we will be able to market our biosimilar candidate in the United States from September 30, 2023. Fresenius Kabi expects to launch the product in Europe from the first half of 2019 onwards.
In clinical nutrition, we further expanded the market presence of our products for parenteral nutrition. With our three-chamber bags, we are the global leader in the multi-chamber bag product segment for parenteral nutrition. In 2018, we launched our new product SmofKabiven extra Nitrogen, a three-chamber bag with a special protein-energy ratio, in Europe. We also introduced a new product line in
enteral nutrition in the year under review: Fresubin 2kcal Savoury is a high-calorie, high-protein formula that we launched in Europe and Latin America.
In infusion therapy, we launched our isotonic sodium chloride solution in the freeflex bag in the United States.
In 2018, we continued to move forward with the inter-nationalization of our product range and we introduced new products in our medical devices / transfusion technol-ogy business segment. For example, for our new Agilia SP PCA infusion pump and our new Amika+ nutrition pump we received CE marking and started launch activities worldwide.
Please refer to pages 75 f. of the Group Management Report for the 2019 financial outlook of Fresenius Kabi. For further information, please see Fresenius Kabi’s website at
www.fresenius-kabi.com.
1 Before special items; before expenditures for further development of biosimilars business.
For a detailed overview of special items and adjustments please see the reconciliation table on page 61.
EBIT1 rose by 5% to € 1,305 million. Currency translation had a negative effect of 5%.
Sales by product segment were as follows:
€ in millions 2018 2017 Change
Europe 355 351 1%
North America 894 853 5%
Asia-Pacific /
Latin America / Africa 398 373 7%
Administrative and
corporate R & D expenses - 508 - 400 27%
EBIT 1 1,139 1,177 - 3%
EBIT excl. biosimilars 1 1,305 1,237 5%
EBIT margin excl.
biosimilars 1 19.9% 19.5%
Net income 1, 2 742 702 6%
1 Before special items
2 Net income attributable to the shareholders of Fresenius SE & Co. KGaA
€ in millions 2018 2017
Organic sales growth
IV drugs 2,735 2,699 5%
Clinical nutrition 1,796 1,671 13%
Infusion therapy 929 903 7%
Medical devices /
Transfusion technology 1,084 1,085 4%
Total 6,544 6,358 7%
Business Segments