German health care firm Fresenius SA is shifting its business
model from the declining U.S. & European markets to address
emerging markets health care needs.
[caption id="attachment_67764" align="alignright" width="300"
caption="Fresenius headquarters in Hamburg, Germany"]
In an interview with
The Wall Street Journal
, Fresenius CEO Ulf Schneider stated that in kidney dialysis
alone, "Dialysis has always been kind of a slow crawl in China...
We're now north of 30%
pointed out that for the American market, "The Medicare program
which pays for nearly all U.S. dialysis care, cut rates by about 3%
last year and changed the way it pays for services." With the
budget problems in Washington and across the country, along with
the recession in Europe, this situation is likely to get worse for
health care providers in the future.
When asked about the problems in Europe and the impact on his
company, Schneider lamented that, "Greece, clearly, is in
trouble, but we're talking 10 million people. Italy and Spain and
France, yes, they're having budget problems, but so is the U.S.
When it comes to Italy and Spain we've seen normal organic
But when queried, "How's the dialysis business in emerging
markets?" he gushed in response, "Fantastically well.
[Historically,] there's not that much demand for dialysis products
or services because it's a fairly expensive treatment. Now, there's
a whole lot of catch-up demand. Once a country nears $8,000 to
$10,000 in annual per capita GDP, [governments] and health-care
insurers really start to pay for dialysis. That's when things take
As in so many other areas, the health care needs of emerging
markets will be a growth area for providers around the world.
Companies like Israel's Teva Pharmaceuticals (
) and Dr. Reddy's (
) from India are well positioned for this growth. In addition to
demand for medical treatments in emerging markets
is also very unique,
particularly when compared to that of developed regions such as
North America and Europe.
There is one constant: the profit potential for companies around
the world in meeting the health care needs of emerging markets.