Fresenius Medical Care

We again reached record levels in sales and earnings. Very good organic sales growth of 8 % was achieved. All regions contributed to the growth. We consolidated our worldwide leading position in dialysis. We successfully continued to improve the quality of our medical outcomes.

Key Figures of Fresenius Medical Care

• Dialysis products, Dialysis care

Fresenius Medical Care is the world’s leading provider of dialysis care and dialysis products for patients with chronic kidney failure. When the kidney function of patients with this disease fails, dialysis takes over the vital task of cleansing the blood from toxins and surplus water.

In dialysis, two treatment methods are distinguished: hemodialysis (HD) and peritoneal dialysis (PD). With HD, the patient’s blood is cleansed with a dialyzer, or ‘artificial kidney’, a process that is controlled by a hemodialysis machine. In the case of PD, the patient’s peritoneum is used as a ‘filter’ to cleanse the blood. Fresenius Medical Care treats dialyses patients and also manufactures the dialysis products. We offer our dialysis services and dialysis products in over 115 countries. Fresenius Medical Care has a worldwide network of more than 30 production sites on all continents. Fresenius Medical Care’s largest plants are in the United States, Germany, and Japan.

We further consolidated our leading market position in 2009: we treated 195,651 patients at 2,553 dialysis clinics worldwide, an increase of 6 % and 7 %, respectively, over 2008. The number of treatments grew by 6 % to 29.4 million.

BUSINESS DEVELOPMENT

In 2009, Fresenius Medical Care increased its sales by 6 % to US$ 11,247 million (2008: US$ 10,612 million). Organic growth was 8 %. Currency translation had an effect of -3 %. Net acquisitions accounted for 1 % of the growth. Both segments – North America and International – contributed to the sales growth.

Revenues from dialysis care increased by 8 % to US$ 8,350 million in 2009 (2008: US$ 7,737 million) and accounted for 74 % of total sales. This increase was driven by excellent organic growth of 9 %.

Sales of dialysis products grew by 1 % to US$ 2,897 million (2008: US$ 2,875 million). Sales increased by 6 % in constant currency. Dialysis products accounted for 26 % of total sales. Including supplies to our own dialysis clinics, sales of dialysis products increased by 3 % to US$ 3,836 million (2008: US$ 3,728 million).

EBIT increased by 5 % to US$ 1,756 million (2008: US$ 1,672 million). The EBIT margin was 15.6 % (2008: 15.8 %). The decline in the margin was mainly due to higher personnel expenses, higher costs for renal pharmaceuticals and the impact of the launch of a generic version for the phosphate binder PhosLo^® by a competitor in the United States. This was partly offset by an increase in revenue per treatment, strong performance from the dialysis products business, and strong cost management.

Net income ¹ increased by 9 % to US$ 891 million (2008: US$ 818 million).

NORTH AMERICA

Sales in North America, Fresenius Medical Care’s largest business region, increased by 9 % to US$ 7,612 million (2008: US$ 7,005 million). Excellent organic growth of 8 % was achieved. Acquisitions contributed 1 % to the growth in sales.

Dialysis care was by far the largest contributor to sales, with a share of
89 %. In 2009, sales from dialysis care increased by 9 % to US$ 6,794 million (2008: US$ 6,247 million). Very good organic growth of 8 % was achieved. Growth in the number of treatments and the higher revenue per treatment were the drivers for the positive business development. In 2009, the average revenue per treatment in the United States, our largest single market, rose by 5 % to US$ 347. The rise is largely due to an increase in the reimbursement rate and an increased utilization of pharmaceuticals.

Business in dialysis products was also very successful. Sales increased by
8 % to US$ 818 million (2008: US$ 758 million). The main growth drivers were improved sales proceeds, especially from newly licensed, intravenously administered iron preparations. By contrast, there was a negative effect from lower sales from the phosphate binder PhosLo^® due to the launch of a generic product by a competitor in the United States in October 2008.

EBIT increased by 7 % to US$ 1,250 million (2008: US$ 1,168 million). The EBIT margin was 16.4 % (2008: 16.7 %). The decline in the EBIT margin was mainly due to higher costs for renal pharmaceuticals, the impact of the launch of a generic version for the phosphate binder PhosLo^® by a competitor in the United States, and higher personnel expenses. This was mainly compensated by higher reimbursement rates and an increase in the utilization of pharmaceuticals.

INTERNATIONAL

The International segment comprises all business regions outside North America. In 2009, we derived about 32 % of Fresenius Medical Care’s total sales from these regions.

The International segment’s good operating performance was based on strong organic growth of 8 %. Net acquisitions had a small positive effect of 2 %. However, owing to negative currency translation effects of 8 %, sales reported in US dollars increased only slightly by 1 % to US$ 3,635 million (2008: US$ 3,606 million).

Revenues from dialysis care increased by 4 % to US$ 1,556 million (2008: US$ 1,490 million). Excellent revenue growth of 14 % was achieved in constant currency.

Sales from dialysis products were US$ 2,079 million (2008: US$ 2,117 million). Sales increased by 6 % in constant currency. The main drivers were stronger sales of drugs, dialyzers, and concentrates.

The International segment’s largest business region is Europe / Middle East / Africa. In 2009, sales were US$ 2,479 million (2008: US$ 2,510 million). Our revenues from dialysis care in this region were US$ 980 million, an increase of 3 %. In constant currency, we increased revenues by 14 %. Sales from dialysis products were US$ 1,499 million, an increase of 4 % in constant currency. In 2009, we treated over 2,500 patients in this region at 435 dialysis clinics, an increase of 9 % in each case.

In the Asia-Pacific region, we increased sales by 6 % to US$ 639 million (2008: US$ 606 million). In constant currency, the increase was 8 %. Revenue from dialysis care grew by 7 % (5 % in constant currency) to US$ 227 million. In 2009, sales from dialysis products rose by 5 % (9 % in constant currency) to US$ 412 million. In Asia-Pacific, we treated over 10,000 patients in 2009, an increase of 9 %. The number of dialysis clinics increased by 14 % to 143.

The Latin America region also developed well. Sales increased by 5 % to US$ 517 million (2008: US$ 491 million); in constant currency the increase was 16 %. Revenue from dialysis care rose by 6 % (18 % in constant currency) to US$ 349 million. We achieved sales of US$ 167 million with dialysis products, an increase of 4 % (12 % in constant currency). In 2009, the number of patients treated rose to almost 21,000, a growth of 9 %. We increased the number of dialysis clinics by 8 % to 191.

EBIT rose by 3 % to US$ 637 million (2008: US$ 616 million). The operating margin improved from 17.1 % in 2008 to 17.5 %, benefiting from reduced production costs driven by lower raw material and energy prices as well as economies of scale.

RENAL PHARMACEUTICALS

Dialysis performs most of the kidney’s main tasks but cannot substitute all of the natural organ’s functions. Consequently, patients suffering from chronic kidney failure also have to take drugs, for instance to maintain the right balance of minerals in the body or to prevent anemia. The spectrum of renal pharmaceuticals includes erythropoeisis-stimulating agents (EPO), phosphate binders, iron preparations, vitamin D preparations, and so-called calcimimetics.

Broadening the portfolio of renal pharmaceuticals is an integral part of Fresenius Medical Care’s growth strategy. Rather than accumulating different individual products, the focus is on a holistic approach. By combining renal pharmaceuticals with our dialysis products and therapies, our aim is to achieve even better treatment results for dialysis patients over the long term.

At present, Fresenius Medical Care’s product portfolio includes the phosphate binders PhosLo^® and OsvaRen^®, which help to improve dialysis patients’ bone mineralization. We received regulatory approvals for these products in further countries in 2009. Moreover, market launches have taken place in additional countries as well.

TREATMENT QUALITY

Our central concern is the health of our patients. Our mission is to improve their quality of life by continuously optimizing their dialysis treatment. Fresenius Medical Care is ideally qualified to achieve this thanks to its high quality standards and its well-established methods for monitoring therapy results.

To evaluate the quality of our dialysis treatments, we use quality parameters that are generally recognized by the dialysis industry, such as hemoglobin values. The so-called Kt / V value gives an indication of the filtering performance of a treatment by establishing the ratio of the length of treatment and the filtration rate of certain toxic molecules. Albumin, a protein, is one quality parameter used to monitor a patient’s general nutritional condition. In 2009, we were able to further improve the quality of our dialysis treatment based on these parameters.

HOME DIALYSIS

While the majority of our dialysis patients are treated at clinics, some patients prefer treatment at home. For patients with chronic kidney failure, home dialysis is a cost-effective treatment option that can easily be integrated into their day-to-day life. There are two kinds of home dialysis: peritoneal dialysis and home hemodialysis.

In 2009, about 11 % of all dialysis patients received peritoneal dialysis treatment. Home hemodialysis is still a niche market – less than 1 % of all patients worldwide received this treatment.

By the end of 2009, we treated more than 35,000 peritoneal dialysis patients and approximately 3,500 home hemodialysis patients. This made us the world’s largest provider of home hemodialysis. Approximately 40 % of all home hemodialysis patients use our dialysis machines and dialyzers.

Home dialysis is still not as common as clinical dialysis, but we expect the need to increase in the long term. Rising patient numbers and further cost pressure will lead to growing demand for home dialysis.

For further information, please see Fresenius Medical Care’s Annual Report 2009 or www.fmc-ag.com.

Please see here for the 2010 financial outlook of Fresenius Medical Care.

¹ Net income attributable to Fresenius Medical Care AG & C o. KGaA.