Macroeconomic conditions¹

Global economic growth remained strong in 2024, with a projected growth rate of 3.4%. Notably, the United States and China stood out, with China´s manufacturing sector and the U.S. services sector experiencing robust growth. In the third quarter of 2024, the U.S. economy performed unexpectedly well, while the European area faced weaker growth. The outlook for 2025 remains positive, although uncertainties persist due to geopolitical tensions and political changes in the United States.

In 2024, world trade remained strong, supported by a front-loading of imports, particularly from the United States, driven by uncertainties around U.S. trade policies and rising consumer demand. Private consumption showed signs of recovery in many regions, contributing to increased demand for goods. In the euro area, private consumption rose by 0.7% in the third quarter, partly driven by factors such as the Paris 2024 Olympic Games. However, signs of a slowdown in consumption emerged in the fourth quarter, reflecting weaker demand. This weakening trend also affected global trade. Geopolitical tensions and rising protectionism continue to pose risks to future trade growth. World trade is expected to grow by 3.6% in 2025, although geopolitical factors and increasing trade barriers could dampen this growth.

Global inflation, measured based on the worldwide Consumer Price Index (CPI), moderated overall in 2024, but remained high in certain areas. The main inflationary pressure came from the services sector, which was strongly influenced by rising wages. In OECD countries, the inflation rate rose slightly to 2.6% in October, driven by less negative energy inflation. Core inflation remained stable, with services prices continuing to exert significant influence. A normalization of inflation is expected for 2025, particularly due to a cooling of wage growth in labor markets.

Global financing conditions developed to be challenging in 2024, given ongoing geopolitical uncertainties and the increasing burden of rising interest rates and energy prices. In many regions, especially the euro area and the United Kingdom, economic growth was dampened by weak investment activity. This was primarily due to uncertainties around global trade policies, geopolitical tensions, and the impact of higher financing costs. While investments in green and digital technologies are expected to see growth, overall business investments remained cautious. Persistently high oil and gas prices, exacerbated by geopolitical tensions in the Middle East, further heightened the uncertainty surrounding global financing conditions.

Healthcare industry

The healthcare sector is one of the world’s largest industries and we are convinced that it demonstrates excellent growth opportunities.

The main growth factors are:

• rising medical needs deriving from aging populations,
• the growing number of chronically ill and multimorbid patients,
• stronger demand for innovative products and therapies,
• advances in medical technology,
• the growing health consciousness, which increases the demand for healthcare services and facilities, and
• the increasing demand for digital health services for patients.

In the emerging countries, additional drivers are:

• expanding availability and correspondingly greater demand for basic healthcare, and
• increasing national incomes and hence higher spending on healthcare.

Overall, OECD countries² spent an average of 9.2% of their GDP on healthcare services in 2023 (2022: 9.2%). The average share of healthcare expenditure in national income in OECD countries was still significantly higher in 2023 than before the COVID-19 pandemic (2019: 8.8%), despite being lower than during the crisis.

The United States recorded the highest expenditure per capita with an estimated US$13,432 in 2023 (2022: US$12,742). Based on current estimates, Germany ranks fourth in the OECD country comparison with US$8,440 in 2023 (2022: US$8,011).

In order to limit the constantly rising expenditure in the healthcare system, cost bearers are increasingly reviewing care structures to identify potential savings. However, rationalization alone cannot compensate for the rise in costs. For this reason, market-based incentives for cost- and quality-conscious action in the healthcare sector should also be created. In this way, treatment costs can be reduced by improving the overall quality of care. As a result, prevention programs are becoming just as important as innovative remuneration models that are linked to the quality of treatment. The digitalization of the healthcare system in particular can also contribute to improved patient care and greater cost efficiency.

Our most important markets developed as follows:

The markets for biopharmaceuticals, clinical nutrition, MedTech, generic IV drugs, and IV fluids³

The market for biopharmaceuticals from the therapeutic areas of oncology and autoimmune diseases – consisting of originator products and biosimilars – grew by approximately 9% to around €255 billion, of which the biosimilars market was approximately €20 billion with a growth rate of 15% versus the prior year. The acquisition of a majority stake in mAbxience significantly strengthened Fresenius Kabi in this growth market, in which the company participates through biosimilars and contract development and manufacturing of biopharmaceuticals. The market for biopharmaceuticals is a fast-growing and innovative segment, which will gain even more relevance for the care of patients going forward. Competitors in the biosimilars market for biopharmaceuticals include Amgen, Sandoz, Celltrion, Biocon, Alvotech, Samsung Bioepis, and Teva.

In 2024, the addressed global clinical nutrition market reached approximately €12 billion, reflecting a strong growth of 7% versus the previous year, with equal contribution by most regions. Despite these positive developments, there remains considerable potential for further growth, as nutrition therapies continue to be underutilized in patient care, despite evidence of their medical and economic benefits. Research indicates that these therapies can help reduce hospital costs by shortening patient stays, particularly in cases involving health- or age-related nutritional deficiencies.

Fresenius Kabi, a leading provider of parenteral nutrition and a notable player in the enteral nutrition market, is focusing on addressing this growth opportunity. The company plans to introduce its clinical nutrition offerings in countries where its current portfolio is limited. By expanding its range of products and leveraging additional distribution channels, Fresenius Kabi seeks to enhance its global market presence.

The competitive landscape includes Baxter and B. Braun in the parenteral nutrition market, while Abbott, Nestlé, and Danone are among the main competitors in the enteral nutrition segment.

The MedTech Infusion and Nutrition Systems (INS) product portfolio of Fresenius Kabi is broad and composed of product groups such as infusion and nutrition pumps and their dedicated disposables, extended by software-based solutions focusing on application safety, user workflows, increased therapy efficiency and interoperability with hospital systems, non-dedicated disposables, anesthesia monitoring devices, and dedicated sensors. The market for devices and related dedicated disposables is estimated to be around €5 billion with a growth rate of around 5%. There is a significant further market for non-dedicated disposables. The MedTech INS product range has been extended with the Ivenix portfolio, designed to address specific needs for the U.S. market. In the MedTech INS segment, Fresenius Kabi ranks among the leading suppliers worldwide.

Competitors in the MedTech INS market include Baxter, B. Braun, Becton Dickinson, and ICU Medical.

In 2024, the market for MedTech Transfusion Medicine and Cell Therapies (TCT) was about €4 billion. Fresenius Kabi holds market-leading positions in blood as well as in plasma collection where, especially for the latter, increased demand for plasma-derived therapies has resulted in attractive market growth. Due to newly approved treatments, the cell and gene therapies segment continues to be the fastest-growing market within TCT. Our Lovo has quickly become an industry standard for automated cell washing and concentration.

Competitors in the MedTech TCT market include Terumo, Haemonetics, and Macopharma.

In 2024, the global market for generic IV drugs and IV fluids was around €50 billion⁴. With significant regional differences, the market generated low-single-digit growth. Fresenius Kabi was able to enter additional segments of the global addressable market due to the expansion of our product portfolio in the areas of complex formulations, differentiated generics, and prefilled syringes, among others.

Fresenius Kabi’s competitors in the market for generic IV drugs include Pfizer, Teva, Sandoz, Viatris, and Hikma. Competitors in the market for IV fluids include Baxter, B. Braun, and Grifols.

The hospital market⁵

The market volume for acute hospitals in Germany in 2023 was around €136 billion⁶. Measured in terms of total gross costs, around 60% of this was attributable to personnel costs and 38% to material costs, which increased by around 5% and 7%, respectively.

Based on the number of admissions, Helios Germany is the leading company in the German market for acute hospitals, with a market share of around 6%⁷. The Helios clinics mainly compete with individual hospitals or local and regional clinic associations. Private competitors include Asklepios Kliniken, Sana Kliniken, and the Ameos Group.

The number of inpatient treatment cases in German hospitals rose again in 2022 for the first time since the start of the COVID-19 pandemic. Nevertheless, the figure was still below the pre-pandemic year of 2019, at over 10% in 2023. In total, 17.2 million cases were treated.

The increase in the remuneration of hospital services in the German flat rate per case billing system (DRG system) is based on what is known as the change value (“Veränderungswert”). It is consented on an annual basis. For 2024, the change value was 5.13% (2023: 4.32%).

The flat rates per case are used to determine the reimbursement of inpatients. The related nursing staff costs per case at the bedside have been carved out from the flat rates since 2020. The nursing staff costs are reimbursed in full by the care budget based on the actual costs incurred. It is not tied to services provided, and is individually negotiated by the contractual partners as part of the overall budget negotiations.

HOSPITAL BEDS BY OPERATOR

Mainly due to the inflation-related general cost increases, the economic situation of the German hospitals has deteriorated. The proportion of hospitals with an annual surplus was only 30% (2022: 35%). 61% of German hospitals posted losses in 2023 (2022: 54%). In addition, there is a significant need for investment. The German Hospital Institute (DKI) estimates that the annual investment requirements of German hospitals amount to about €7 billion.

To provide financial support, hospitals in Germany were supplied with compensation and reimbursement amounts from the liquidity reserve of the healthcare fund for inflation-related additional costs. The financial support, which was last provided by the end of April 2024, amounted to a total of €1.5 billion in hospital-specific reimbursement amounts and €4.5 billion in flat-rate compensation payments based on the number of beds (indirect costs).

In 2024, the shortage of specialist staff and problems filling vacancies in the nursing care sector continued to pose a challenge for inpatient hospital care in Germany.

The central topic in the German hospital sector in 2024 was the hospital structure reform. The aim of the reform is to fundamentally reshape the hospital landscape in Germany. With the adoption of the Hospital Care Improvement Act (Krankenhausversorgungsverbesserungsgesetz – KVHG), the volume-based remuneration based on flat rates per case will be limited to 40%. In future, an average of 60% of the remuneration is to be distributed independently of performance via the maintenance flat rates and the care budget.

The maintenance funding is to be linked to medical service groups that are allocated to the individual hospitals by the federal states and which require compliance with defined criteria. Among other things, this is intended to ensure that complex treatments may only be carried out in hospitals that have the appropriate personnel and technical equipment. Depending on the performance group and its relevance, hospitals will receive financial resources. The changeover to the maintenance financing is expected to take place gradually over several years.

Further information on the hospital structure reform can be found in the Outlook section.

In order to promote outpatient care, since the beginning of 2023, day treatments without overnight stays in the hospital can be billed using flat rates per case. This is intended to reduce night shifts, particularly in nursing, in order to create additional capacity for nursing staff on the day shift. In addition, the first hybrid DRGs were introduced on January 1, 2024, which provide the same level of remuneration for treatments in hospital and by general practitioners.

The market volume for private hospitals in Spain was around €21 billion in 2023⁸.

With a sales share of around 14%, Helios Spain is the leading company in the private hospital market. Its competitors are a large number of privately run individual hospitals or smaller chains, including Vithas, HM Hospitales, Hospiten, Ribera Salud, Hospitales Sanitas, and HLA.

Of the approximately 800 hospitals in Spain, around two thirds of hospital beds are in public hospitals⁹. In an OECD comparison, Spain has around 3.0 beds per 1,000 inhabitants, which is well below the OECD average of 4.7 beds per 1,000 inhabitants.

Public healthcare facilities in Spain are largely tax-financed and are generally open to the population without further charges or co-payment obligations. In addition, the Spanish government promotes the private healthcare sector through tax reliefs for private health insurance purchased by employers, among other things.

A challenge in some regions of the country continued to be the shortage of skilled workers, particularly in the care sector. In addition, a certain shortage of doctors is emerging in some specialist areas due to the steadily increasing demand for healthcare services.

In addition to inflation-related cost increases, the shortage of specialists and changes in the regulatory environment, digitalization is another challenge for the hospital sector in Germany and Spain. At the same time, it offers enormous opportunities, for example by standardizing and automating processes to a greater extent.

New technologies offer the possibility of tapping into efficiency potential while maintaining at least the same, and often even higher, quality, and reducing costs. It is estimated that in Germany alone, around 12%¹⁰ of total expenditure on healthcare and patient care can be saved through digitalization.

¹ European Central Bank, 2024

² The following key figures and explanations are based on OECD health data and corresponding OECD publications; the available data refers to the year 2023 or the latest available figures from the previous year.

³ Market data is based on company research and refers to the markets relevant for Fresenius Kabi. This is subject to annual volatility due to currency fluctuations and patent expiries of original drugs in the IV drug market, among other things.

⁴ As in the previous year, the market definition also includes revenue of off-patent products.

⁵ In each case, the most recent market data available refers to the year 2023 as no more recent data has been published: German Federal Statistical Office, 2023 data; German Hospital Institute (DKI) 2023, Krankenhaus Barometer 2024

⁶ The market is defined by total costs of the German acute care hospitals (gross), less academic research and teaching.

⁷ Measured by Helios Germanys’ number of acute care admissions in 2023 in relation to total admissions numbers in Germany in 2023 (German Federal Statistical Office, 2023 data)

⁸ Market data based on company research and refers to the addressable market of Quirónsalud. Market definition includes both inpatient and outpatient healthcare services. It includes neither public-private partnership (PPP) nor occupational risk prevention centers (ORP). The market definition may differ from the definition in other contexts (e.g. regulatory definitions).

⁹ Healthcare in Spain (masainternational.de)

¹⁰ Digitalization in German hospitals McKinsey & Company, Healthcare September 2018