IHS Global Insight Perspective | |
Significance | Fresenius Medical Care of Germany has purchased Euromedic's (Netherlands) dialysis service business, International Dialysis Centers (IDC), in a deal worth 485 million euro. The purchase agreement comes a few days after Fresenius announced the completion of the acquisition of Gambro's (Sweden) peritoneal dialysis (PD) business. |
Implications | The deal allows Fresenius to expand its activities in the dialysis care market, especially in Eastern Europe, and sees Euromedic refocus its investment efforts on the diagnostics and cancer treatment fields. |
Outlook | The transaction is subject to regulatory approvals and is expected to close in the first half of 2011. The acquired unit is set to bring in additional annual revenues of around U$180 million. |
Fresenius Moves to Acquire East European Leader in Dialysis Care Market
Fresenius Medical Care of Germany announced the signing of a purchase agreement to acquire Euromedic's (Netherlands) dialysis service business, International Dialysis Centers (IDC), for a purchasing price equal to 485 million euro (US$642 million).. Euromedic agreed to divest its network of 70 dialysis clinics to Fresenius which gains, at the same time, access to over 8,200 haemodialysis patients currently served by Euromedic, predominantly in Central and Eastern Europe. This will add to the 210,000 patients served by Fresenius worldwide and to its 17,000 patients in Eastern Europe, where IDC is market leader. The transaction is subject to regulatory approvals and is expected to close in the first half of 2011. The acquired unit is set to bring in additional annual revenues of around U$180 million.
Completion of Takeover of Gambro's PD Business
This new dialysis acquisition comes a few days after Fresenius announced its acquisition of Gambro's PD business has been successfully approved by relevant antitrust authorities. The acquired operations will bring in additional annual revenues of approximately US$60 million. Gambro is the third-largest provider of PD solutions worldwide with over 4,000 patients served worldwide.
Outlook and Implications
The acquisition of Gambro reinforces Fresenius' position as the world's number two in the PD market. However, the uncontested leader in the PD market remains Baxter which held a market share of 71% in 2009. Peritoneal dialysis is less commonly used than haemodialysis. Of the 1.895 million patients who underwent dialysis treatment in 2009, more than 89%, or 1.692 million, were treated with HD. In the haemodialysis market, Fresenius leads with a market share of 38% while Baxter only owns 4% of the market. Overall, Fresenius is leader in the dialysis market with 32% of the market in its hands, against 21% for Baxter.
Market Shares in Dialysis Market – 2009, (%) | |||
Dialysis Products | Haemodialysis Products | Peritoneal Dialysis Products | |
Fresenius (Germany) | 32 | 38 | 17 |
Baxter (U.S.) | 21 | 4 | 71 |
Gambro (Hungary) | 15 | 19 | 3 |
Others | 32 | 39 | 9 |
Source: Fresenius | |||
The acquisition of Gambro's PD unit will bring an additional market share estimated at 3% (2009) as well as annual revenue of US$60 million to Fresenius. It is worth mentioning that Fresenius achieved worldwide dialysis product revenue of US$2.9 billion in 2009, up 1% year-on-year (y/y). But dialysis services are its main source of revenue, contributing 74% with earnings reaching US$8.35 billion (+ 8% y/y). This business segment will be further strengthened by the integration of Euromedic's chain of dialysis clinics, an operation which should bring in additional revenues of US$180 million for Fresenius.
But the acquisition of Euromedic is above all the opportunity for Fresenius to expand in Central and Eastern Europe where IDC is market leader in dialysis services. This was confirmed by Ben Lipps, chief executive officer of Fresenius Medical Care, who said that Eastern Europe was "a key component of Fresenius' overall growth strategy". On the Euromedic side, the disposal of its dialysis unit is part of a broader strategy aimed at focusing its activities on diagnostic and cancer therapies.