Germany-based pharma and healthcare services group Fresenius has had its share of challenges. After the group’s dialysis division, Fresenius Medical Care (FMC), was hit with a high rate of COVID-19 deaths among patients using its products and other areas of the business were faced with economic headwinds, the group was forced to lower its annual revenue outlook last year. Although the pharma division, Fresenius Kabi, has reported steady growth, it has also been through its own upheavals, recently naming its third CEO in three years.
Everyone at Fresenius knows we must improve on what we do. My priorities are clear: Reset the company aiming at becoming a stronger company and delivering value for our shareholders
Former Fresenius CEO, Michael Sen
The Fresenius group consists of four main branches. Fresenius Kabi, the pharma division; Fresenius Medical Care (FMC), its dialysis business; Vamed, the group’s hospital project development arm, and Helios, a private hospital operator. While Fresenius Kabi and Fresenius Helios have shown healthy growth, other business areas have struggled through compound difficulties, namely FMC.
After FMC was dealt a major blow during the COVID-19 pandemic, having faced a large number of deaths among its patients, the dialysis unit had to confront widespread staff shortages in the US and, like many companies, tackle inflation, forcing the firm to lower its annual outlook twice last year, which additionally brought down the wider group’s forecasts.
Moreover, the company’s Fresenius Vamed was also impacted in 20222 by what it called “macroeconomic headwinds” and the ongoing impact of COVID-19, reporting a third quarter net income that was down by 64 percent with respect to the same quarter the previous year.
When the group reported its 2022 third quarter results, the newly appointed group CEO, Michael Sen, was frank about the need for a widespread reboot: “Everyone at Fresenius knows we must improve on what we do. My priorities are clear: Reset the company aiming at becoming a stronger company and delivering value for our shareholders,” he said.
“Our businesses are growing yet in a more challenging environment. Now we sharpen our focus on structural productivity. More fundamentally, we have embarked on a top-to-bottom review of every business activity, looking at the entire corporate portfolio,” Sen continued. In the context of Sen’s proposed reset, activist investor, Elliott Investment Management, reportedly took a stake in Fresenius.
Fresenius Kabi: A New Strategy and Leadership Shakeups
The exhaustive review Sen announced has extended to the group’s unit focused on intravenous generic drugs, clinical nutrition and infusion therapies, Fresenius Kabi. Perhaps in expectation of changes to come, long-term Fresenius Kabi Management board member, Mats Henriksson, who the company said played a major role since its beginnings, stepped down from his CEO position in March, 2021.
The resignation, which the company claimed was due to “different views on Fresenius Kabi’s future direction,” came after the firm had weathered other challenges. One example was an attempt to buy American generics maker Akorn, which fell through after an audit found “blatant fraud at the very top level of Akorn’s executive team,” as Fresenius said in a statement at the time. And, the need to settle allegations from the US Department of Justice that the company had hidden records from the FDA ahead of an inspection in 2013, which cost Fresenius USD 50 million.
Enter new chief executive officer, Michael Sen, former CFO at Siemens Healthcare. Under the new CEO, Fresenius Kabi launched a five-year strategic roadmap, Vision 2026, set to increase global competitiveness and the effectiveness of the organization, building on its medtech and biopharmaceutical capabilities.
As one of the first steps within the new strategy, the company acquired US-based infusion systems company Ivenix to beef up its intravenous drug offerings and took a majority stake in Spanish biosimilar developer, mAbxience.
However, no more than 7 months after taking the job, Sen shifted into a new role as CEO of the entire Fresenius group in October 2022. He remained in the position on an interim basis until former Angelini Pharma CEO and Sandoz alumni Pierluigi Antonelli was recently appointed.
In the company’s statement, Antonelli claims he will continue to roll out the strategy laid out in the company’s Vision 2026. “Fresenius Kabi operates at the heart of Fresenius with a clear direction laid out with ‘Vision 2026’, which we will further shape together. Fresenius Kabi is already a market leader across multiple markets, offering healthcare products and solutions for chronically ill patients and competing in dynamic growth areas with biosimilars and MedTech. I will focus on working with the team to further strengthen the company’s position and drive profitable growth across the focus segments,” he said.
Parallel to the new appointment at Fresenius Kabi, the Fresenius group posted its fourth quarter results for 2022, showing a rise in revenues but a decline in earnings. Net profit fell to EUR 255 million euros from EUR 521 million the previous year. To get the group back onto a positive trajectory, Sem continues to work on a “reset,” simplifying the groups diverse operations. With FMC remaining one of its main worries, Fresenius announced in February that it would cede control over the struggling dialysis unit while maintaining a 32 percent stake in it, perhaps with the view of unloading the company in the near future.