UPDATE 3-Fresenius lifts FY outlook, new monopoly windfall

* Rivals’ drug recalls create another Fresenius monopoly

* Sees FY adj net profit up 20 pct vs 10-15 pct previously

* Shares jump 2.5 percent, outpace flat healthcare index

* Subsidiary FMC says sees FY net income of $960-$980 mln

(Recasts lead, propofol market prospects)

By Ludwig Burger

FRANKFURT, Nov 2 (BestGrowthStock) – German healthcare conglomerate
Fresenius (FREG_p.DE: ) lifted its 2010 earnings outlook on new
generic injectable drugs and a windfall from becoming the sole
U.S. provider of a commonly used anaesthetic.

Fresenius expects net income before special items to rise by
about 20 percent excluding currency swings in 2010, up from
10-15 percent previously expected, it said on Tuesday.

The shares were up 2.5 percent at 1550 GMT, outperforming a
flat STOXX Europe 600 Health Care index (.SXDP: ).

Fresenius had a temporary U.S. monopoly on the propofol
anaesthetic after Teva (TEVA.TA: ) in May stopped production
because U.S. inspectors took issue with manufacturing practices
at a California plant. [ID:nN27141806]

Hospira (HSP.N: ) had stopped selling the drug in April after
running into similar problems. [ID:nN26200947]

Fresenius Chief Executive Ulf Schneider told an investor
call that Hospira was slowly returning to the market and that
this year’s exceptional growth rates at Fresenius’s infusion
drugs unit Kabi would normalise in 2011.

Propofol is best known for its role in Michael Jackson’s
death. The pop star died in June 2009 after his doctor gave him
the powerful anaesthetic as a sleep aid.

The withdrawal of Teva and Hospira marks the second time
Fresenius has benefited from rivals’ woes after its 2008
takeover of APP, the U.S. maker of propofol and other infusion
Fatalities forced Baxter (BAX.N: ) to recall anti-blood
clotting drug heparin in early 2008, giving Fresenius a
temporary monopoly that has translated into a consistently
strong market position.

Fresenius, which also runs hospitals and makes tube-feeding
gear, reported a 35 percent rise in nine-month net income,
adjusted for special items, to 495 million euros ($692 million).

“The strength comes from the heparin business and recent
product introductions,” said Kepler Capital Markets analyst Tero
Weckroth, adding “blowout” third-quarter results bode well for
the rest of the year.

Fresenius added the APP takeover will top up earnings per
share this year. It had previously expected a neutral effect.

The group, which traces its roots to a 15th-century pharmacy
that still exists in Frankfurt, sees currency-adjusted sales
growth of 8-9 percent after previously projecting 7-9 percent.

Subsidiary Fresenius Medical Care (FMC) (FMEG.DE: ), the
world’s largest dialysis company, also toned up its outlook and
now sees 2010 net income rising to $960-$980 million.

The lower limit of the target range had been $950 million.

FMC, which generates about two-thirds of its sales in North
America, said third-quarter net income rose to $248 million, in
line with the average estimate of $249 million in a Reuters poll
of analysts. [ID:nLDE69R0N3]

($1=.7158 Euro)

(Additional reporting by Andreas Kroener; Editing by David

UPDATE 3-Fresenius lifts FY outlook, new monopoly windfall