“$1.8 Billion ($2.7B total)

KEY EXECUTIVES:

Stefan Dräger, CEO
Herbert Fehrecke, COO
Gert Hartwig Lescow, CFO

NO. OF EMPLOYEES:

6,077 (10,345)
   

GLOBAL HEADQUARTERS:

Lübeck, Germany

Dräger has been supplying ventilation, respiration and air filtration technology for more than 100 years (the company celebrated 100 years in the US market in fiscal 2007). Its healthcare subsidiary, Dräger Medical AG & Co., a joint venture with Siemens started in 2003, may not have been around quite that long but already has distinguished itself as the company’s largest revenue generator.

Dräger Medical develops medical devices and related services for the acute point-of-care sector—from emergency, perioperative (the three phases of surgery: preoperative, intraoperative, postoperative) and critical care to perinatal care and home care. Though headquartered in Germany, the company also has development centers and production plants in the Netherlands, China, Telford, PA and Danvers, MA.

To kick off fiscal 2007 (ended Dec. 31), Dräger upped its stake in the partnership with Siemens with the purchase of an additional 10%, making it a 75%/25% venture—with Dräger holding the majority shares. The purchase cost was approximately $143.9 million, which the company financed.

Despite steady growth during the past few years, Dräger Medical’s orders were down 4% for FY07. As a result, revenues also fell short of expectations, falling 2.4% ($1.78 billion). According to the company, this mainly was due to the absence of large contracts and the failure of its US business to meet expectations. In addition, the strength of the euro, particularly against the dollar, reduced order intake and revenues.

The company’s largest market even after sluggish US performance, remains the Americas (41% of sales, down 2%), followed by Europe (except Germany), which made up 27% of sales (down 1%). Asia-Pacific represented 19% of sales in fiscal 2007, up 1%. In particular, the company reported a large volume of orders from Spain and Russia. The major markets, however, remained the driving force behind global economic activity in 2007, despite increasing fears of a recession.

For the year, Dräger Medical’s earnings before interest and taxes (EBIT, before non-recurring expenses) fell 7.5% to $153.5 million. The division’s net profit also declined—31%—to $85.3 million. The cost of launching the new Infinity Acute Care System contributed to decreased profit, the company reported.

The Infinity Acute Care System, introduced in 2006 but rolled out in fiscal 2007, is a product that integrates monitors and medical treatment equipment to form one system. The company is betting much of its long-term success on this new product line. The system incorporates patient monitoring, anesthesia, ventilation and information management for all treatment phases, creating a cross-departmental, standardized and integrated platform.

In the field of perioperative care, the company unveiled its Fabius Plus anesthesia machine (to replace older Fabius devices) during the Medica trade show in November 2007, along with the Fabius MRI anesthesia machine designed specifically for use in strong magnetic fields. During the year, Dräger Medical’s Critical Care business unit launched the Carina intensive care ventilator.

Moving forward, for 2008, Dräger is still betting on mature markets in the United States and Europe. The company expects a boost from population growth in the United States, despite a tightening of healthcare purse strings. Dräger officials believe that increased investment in new process-supporting technologies as a means of increasing efficiency and decreasing costs in the healthcare sector will help the company’s bottom line. 

For the first three months of fiscal 2008, The Dräger Group’s overall order intake rose 11% to $779.2 million. Despite the weak performance of the US dollar against the euro, net sales grew by 3.4% to $640.6 million. Dräger Medical increased its order intake by 16.1% to $505.2 million in the first quarter of 2008. Net sales of $417 million were 1.6% above the same period in 2007. The Medical division generated an above-average increase, 42.4%, in EBIT (before non-recurring expenses), taking it to $19 million. After non-recurring expenses, EBIT was $18 million. ”

$1.3 Billion ($41.3B Total)
No. of Employees: 5,859

In its second year of operation, Dräger Medical, the joint venture of Drager and Siemens Medical, saw net sales climb to $1.3 billion, an 8% increase from $1.2 billion in 2004. The largest percentage of sales came from sales in Europe, with Germany and the Americas coming in second and third, respectively. Net revenues also increased by 15%, totaling $71 million.

The global focus of the German company was intensified in 2005 as 78% of total business and 87% of equipment orders were generated outside of Germany. The United States was particular strong for the company as it remained the largest regional market for equipment sales.

While the medical device industry continues to consolidate with a vast number of acquisitions, Dräger has remained steadfast in its goal of restructuring from within. This comes as no surprise, since the company received a grant of $9.2 million in December from German Finance Minister Dietrich Austermann, swaying Dräger to focus on its Lubeck, Germany-based headquarters in an attempt to revitalize the regional economic structure. As a result, Drager has recently relocated anesthesia device production from the US-based, Telford, PA plant to the Lubeck site, where the future corporate headquarters of Dräger Medical will reside. Dräger has invested $59 million in the new Lubeck headquarters and expects the project to be completed by 2007.

Through numerous product launches and partnerships announced in 2005, Dräger has been able to remain on the cutting edge of perioperative care. New products introduced in 2005 include the Stella OR light (developed in only two years), the Infinity Gateway Suite and the Zeus anesthesia system for infants and newborns.

Part of Dräger’s success was due to its partnerships with leading OEMs. During 2005, Drager entered into an agreement with Irvine, CA-based Masimo Corporation, for which Dräger is now fitting the Infinity patient monitors with Masimo SET Sp02 SmartPod sensors.

“We strive to offer our customers the best technology available. Masimo SET pulse Oximetry has achieved strong market acceptance and we feel this technology is an excellent choice for our customers worldwide,” said Marcus Aben, president and CEO of Dräger Medical Systems Inc.

Additional partnerships have augmented the Infinity line of patient monitors. During 2005, Dräger partnered with Munich, Germany-based Pulsion Medical Systems to incorporate Pulsion’s less invasive PICCO-Technology for monitoring complete circulatory function.

“One of the major trends in healthcare today is toward less invasive care,” said Aben. “As a result of our alliance with Pulsion, we are pleased to offer this less invasive approach to advanced hemodynamic monitoring to our customers.”

Further enhancements to the Infinity line included the introduction of newer Neonatal Intensive Care Unit capabilities to the Infinity Kappa XLT patient monitor, which provides complete neonatal parameter support facilitating easier assessment of apnea, bradycardia and desaturation.

In May 2005, Dräger announced another step toward perfecting the anesthesia workstation by unveiling IVenus, a dispenser of anesthesia drugs.

Although most of Dräger’s products are not available in the United States or Canada, the Apollo anesthesia system was unveiled for the US market during 2005 and has proven very successful. Additionally, the FDA approved Dräger’s SmartCare software solution, an automated ventilator-weaning module for the EvitaXL intensive care ventilator system.

Most of Dräger’s fiscal 2005 was characterized by numerous business process improvements and restructurings, most notably the transfer of production of all patient monitoring and information systems from Danvers, MA (August 2005) and the entire Perinatal Care division from Hatboro, MA (January 2006) to Telford, PA.

Dräger also implemented improved business processes during 2005, most notably the “Management Installed Base” (MIB) process. Under the MIB process, operating service processes are defined for each country’s organization, including the escalation processes and the global supply of replacement parts. The specific aim of MIB is to increase service efficiency by standardizing the company’s global service activities.

Dräger also sought to improve its processes with the global implementation of a product lifecycle management (PLM) system.

In 2006, Dräger’s internal improvement efforts are proving beneficial as the company achieved record first-quarter earnings. Revenues for the group grew 15% to $536 million, up from $465 million in 2005. Dräger Medical’s contribution was $360 million, a 15% increase, with Germany contributing the greatest increase in revenues. Dräger Safety reported a 14% increase to $185 million.

Dräger expects revenue growth on the order of 5% to 7% for Dräger Medical and 3% to 5% for Dräger Safety.