OTC Markets Group (OTCM): Tell us about Fresenius SE & Co. KGaA
Markus Georgi: Fresenius is a global healthcare group offering high-quality products and services for dialysis, hospitals, and outpatient treatment. With over 250,000 employees in more than 100 countries around the globe, and annual sales of roughly €30 billion, Fresenius is one of the world’s leading healthcare companies. Fresenius shares are listed in the DAX, a blue chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. Furthermore Fresenius is included in the EURO STOXX50, which tracks the share price development of 50 large publicly traded companies, representing various economic sectors, from twelve Eurozone countries.
The Fresenius Group includes four independently operated business segments, each one active in a major growth area of healthcare. Fresenius Medical Care is the world leader in treating people with chronic kidney failure. Fresenius Helios is Europe’s leading private hospital operator. The company comprises HELIOS Kliniken in Germany and Quirónsalud in Spain. Fresenius Kabi supplies essential drugs, clinical nutrition products, medical devices and services to help critically and chronically ill patients, while Fresenius Vamed plans, develops and manages healthcare facilities worldwide.
At Fresenius, the patient always comes first. For more than 100 years now we have been working to save lives and improve the quality of life of our patients. A clear focus on innovation and efficiency has helped us to make high-quality healthcare accessible to a steadily increasing number of people. Yet we never get complacent about our successes, and never stop looking for better solutions. This is how Fresenius is contributing to medical progress and better patient care.
At Fresenius, “Forward Thinking Healthcare“ captures our commitment to the future: better medicine for more people.
OTCM: What were your major accomplishments in 2016?
Mr. Georgi: 2016 was an extraordinarily successful year for Fresenius, and that is reflected in our business results. In fact, we are looking back on another record year, our 13th straight! Sales reached €29.1 billion, a year–over–year increase of 5 percent. Our operating profit increased 9 percent to €4.3 billion and our net income, at almost €1.6 billion was 12 percent higher than in the previous year. So all in all outstanding results that show: Even in politically and economically unstable times, Fresenius achieves stable – and dynamic – growth.
A milestone was the acquisition of the Spanish hospital operator Quirónsalud by Fresenius Helios. Based on the purchase price, this was the largest acquisition in Fresenius’ history. Quirónsalud is Spain’s leading private hospital operator. Its network comprises 43 hospitals, 39 outpatient centers and about 300 occupational risk prevention centers, located in every metropolitan region of Spain. With Quirónsalud and Germany–based Fresenius Helios, we combine two leaders in terms of quality and size.
OTCM: What is your future growth strategy?
Mr. Georgi: The course is also set for growth in 2017. We made an excellent start in the new business year. In the first quarter we have achieved a double–digit increase in sales, operating profit and net income. This should continue and we are expecting our 14th consecutive record year. We forecast sales to increase by 15 to 17 percent, and net income by even more – 19 to 21 percent.
At Fresenius, our focus is on organic growth. It has been that way in the past, and it will remain that way in the future. But we also move Fresenius forward with major, strategic acquisitions. Last year it was Quirónsalud, and at the beginning of this year we announced an important strategic step to prepare Fresenius Kabi for the next decade: the acquisitions of Akorn and Merck’s biosimilars business.
Akorn is a major U.S. provider of generic pharmaceuticals. The company has plants in the United States, Switzerland and India, and employs about 2,000 people. The purchase price is almost US$5 billion. With Akorn, we are getting access to new distribution channels, at first in the United States, where in future we will be also present in retail pharmacies. Akorn adds growth potential in attractive adjacent segments such as ophthalmology and clinical dermatology. The company’s complementary product portfolio and pipeline diversifies Fresenius Kabi’s IV generics offering. And while Akorn is mainly active in the U.S. market Fresenius Kabi has worldwide operations. That will be an additional growth area – gradually introducing Akorn’s products into new markets.
With the acquisition of the biosimilars business of Germany’s Merck KGaA we are entering the field of so-called biological drugs. It is the ideal time to enter biosimilars! The importance of biological drugs has been growing for years. They can be used to very effectively treat serious diseases, including a large number of cancers and rheumatism and other illnesses that afflict millions of patients around the world. Key regulatory and reimbursement rules have been clarified, and there are many parallels to our generics business.
So all in all bright growth prospects for Fresenius in 2017 and beyond!
OTCM: What else do you want U.S. investors to know about Fresenius?
Mr. Georgi: Fresenius has a strong footprint in North America. With approximately €14 billion almost 50% of Fresenius Group sales were generated in North America in 2016.
All three major rating agencies are rating Fresenius “investment grade“. We have a clear dividend policy which aims to align dividends with earnings per share growth. Fresenius therefore increased the dividend for 2016 by 13 percent, our 24th consecutive dividend increase.
Fresenius has clear communicated mid-term growth targets: We are aiming for sales of between €43 and €47 billion, with net income of €2.4 to €2.7 billion. That means we want to increase both sales and net income by about 50 percent – in only 4 years!
Clearly these are very ambitious targets – a marathon run at the pace of a sprint! It is in the DNA of Fresenius that we never let ourselves become complacent, or satisfied with the tried and tested. That is true for products and services, and it’s true for the company as a whole!
OTCM: Fresenius celebrates 4 years on OTCQX this year. How have you used OTCQX as part of your U.S. IR program?
Mr. Georgi: The U.S. market is very important for the Fresenius Group and the U.S. investor base historically plays a significant role. Consequently, we launched our ADR program to reach an even broader investor base by enabling direct investing in Fresenius via an U.S. traded instrument.
Our U.S. IR program comprises regular roadshowing and attendance on conferences in different U.S. regions. The ADR ticker is included on all presentation materials to highlight our ADR program. The OTCQX platform complements our strategy by improving visibility and awareness for Fresenius in the ADR investor community. Upgrading to OTCQX led to a substantial increase in ADR volume.
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