Management Report Outlook Health Care Sector and Markets 
Source: Krankenhaus-Barometer survey 2007, Ernst & Young survey “Gesundheitsversorgung 2020”,The rationalization trend in the German hospital market will continue in 2008 and beyond. According to a study by management consultants Ernst&Young, by the year 2020 there will be only 1,500 hospitals operating in Germany. 2.9 beds will be available per 1,000 population, and the average length of stay will fall to 4.0 days (2006: 6.2 beds, 8.5 days).
Private hospital chains and clinic alliances will tend to be able to respond to the pressure to improve efficiency better than public hospitals. They often have more experience in operating commercially and creating efficient structures. They have the potential to secure cost advantages in procurement and generally have more advantageous financing possibilities. Finally, private operators have more experience with the process know-how in acquiring and integrating new facilities and quickly adjusting their cost structures.
Against this background, we expect the concentration and privatization process to accelerate further, especially among public hospitals. Overall, experts expect the market share of private operators in terms of beds to rise from approximately 14% at present to about 35 to 40% until 2015. Crucial factors for a clinic’s survival will be excellent medical standards, well-trained staff, well-organized processes and a well-structured treatment spectrum with a focus on high-quality, complex medical services.
Difficult pay negotiations are likely again in 2008 in the public sector, i.e. at the level of local government employers (as operators of municipal hospitals) and the German federal states (as operators of university clinics). The trade unions ver.di and Marburger Bund have both announced high pay demands for the professions they represent considering the economic and financing situation of the hospitals. Even a settlement on a much lower basis than the present demands would further accentuate the strained financial situation of many public hospitals. This will lead to further job cuts and privatizations.
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GROUP SALES AND GROUP EARNINGS
With its international production and sales platform and its market-oriented products and services, the Fresenius Group is excellently positioned for continued growth in the coming years. The opportunities for profitable growth are indicated by the developments described in the chapter “Health Care Sector and Markets”. In 2008, we therefore expect to increase Group sales by 8 to 10% at 2007 exchange rates.
While our traditional markets in Europe and North America are growing at average low to mid single-digit rates, we see far stronger growth potential in the Asia-Pacific region and in Latin America. Here, the demand for our life-saving and life-sustaining products continues to be very high due to the still limited access to medical care. This will also be reflected in the development of sales: While we expect single-digit rates of growth in our major markets of the United States and Europe, sales in the growth regions should increase at double-digit rates.
We plan to increase Group net income significantly again in 2008. We aim to achieve this through sustained sales growth and ongoing measures to lower costs as a percentage of sales, especially in production. Despite a market environment which continues to be marked by cost-containment and price pressure, we expect to increase net income by 10 to 15% in constant currency, i.e. more strongly than sales.
