ANNUAL REPORT 1998

1
 MAJOR ADJUSTMENT REQUIRED
IN A CHANGING WORLD
Dr. Bertini Diego talking to Roy Luis, a patient at Gambro’s Sarmiento dialysis clinic in
Buenos Aires, Argentina.
1998 was a year of major changes at
Gambro. Incentive and the “old Gam-
bro” merged in July, and the new com-
pany took the Gambro name. This
represented the completion of Incen-
tive’s seven-year strategic journey,
with the transfer of about 70 former
Incentive companies into safe new
hands. At the same time, Mikael Lilius
took up his appointment as president
of the new Group. In August, Gambro
announced that the company’s sub-
stantial holding of ABB shares would
be sold to Gambro shareholders. In
November, an agreement was con-
cluded regarding divestment of the
Cardiopulmonary Care business area.
During autumn 1998, a compre-
hensive internal analysis was initiated
in the Renal Care Products business
area, in order to identify measures to
make the company more competitive
in this area. As a result of this analy-
sis, a global restructuring and rational-
ization program was launched in Janu-
ary 1999.
This program is designed to
strengthen Gambro’s leadership in ad-
vanced renal care and to ensure con-
tinued satisfactory growth, based on
further reinforcement of the com-
pany’s strong position in the market
2
for renal care products and its success-
ful Gambro and Hospal brands. The
program includes improvement of the
marketing, sales and service organiza-
tions and simultaneous rationalization
of administrative functions in these
areas.
The product range will be reduced
by eliminating overlapping products.
Module and platform-based products
will also be developed to achieve
higher efficiency and flexibility in pro-
duction and logistics. This will require
a more rapid upgrading and streamlin-
ing of manufacturing operations, in-
cluding the consolidation of produc-
tion units.
The restructuring program will en-
sure that the Group becomes more ef-
ficient, thus reinforcing Gambro’s glo-
bal leadership in the renal care sector.
Effective January 1, 1999, a new
organizational structure has been es-
tablished for Group activities in the
renal care field. The Renal Care busi-
ness area (Gambro Healthcare) cov-
ers global care operations, while the
Renal Care Products business area
covers global product operations.
 GAMBRO
Gambro is a global medical-technology com-
pany, with 99 percent of its revenues outside
Sweden. The company is active in the Renal
Care Services, Renal Care Products, Blood Com-
ponent Technology and Cardiopulmonary Care
business areas. Gambro has about 18,000 em-
ployees in some 40 countries. Research and de-
velopment are conducted in Sweden, Germany,
Italy, Japan, France and the United States.
RENAL CARE SERVICES
Almost 1 million people throughout the world
receive dialysis treatment.
Gambro owns and operates more than 450
clinics, treating a total of nearly 40,000 patients
on four continents. Gambro’s largest holding
of clinics is in the U.S. The dialysis care market
is valued at approximately SEK 200 billion.
RENAL CARE PRODUCTS
With about 17 percent of the world market,
Gambro is a global leader in the market for di-
alysis products, which is valued at approxi-
mately SEK 50 billion.
BLOOD COMPONENT TECHNOLOGY
Blood components are used, for example, to al-
leviate the effects of cancer treatment. Gambro
manufactures the equipment that separates the
blood into its different components.
CARDIOPULMONARY CARE
COBE CV has a leading position in the market
for cardiovascular surgery products, especially
heart-lung machines, oxygenators and blood
lines.
Cover: Alesandra Vigili, a patient, in conversation with
Marcela Rodriguez, who is a dialysis nurse at Gambro’s
Tediar dialysis clinic in Buenos Aires, Argentina.
ANNUAL GENERAL
MEETING
The Annual General Meeting will be held on March
24, 1999 at 5.00 p.m. in the Globen Annex in Stock-
holm.
NOTIFICATION
Shareholders who wish to participate in the Annual
General Meeting must be listed in the share register
maintained by the The Swedish Central Securities
Depository and Clearing Organization (VPC AB),
not later than Friday March 12, 1999. Shareholders
whose shares are registered in the name of trustees
must ensure that their shares are temporarily rereg-
istered by VPC in their own names, in sufficient time
before March 12.
Shareholders who wish to participate in the An-
nual General Meeting must also notify Gambro AB,
PO Box 7373, SE-103 91, Stockholm, Sweden, not
later than 12.00 noon, Friday, March 19, 1999. A sepa-
rate invitation has been distributed. Notification
may also be made by telephone (+46-8-670 25 70
or fax (+46-8-611 57 31).
DIVIDEND
The Board of Directors has proposed Monday, March
29, 1999, as the record date. If this proposal is approved,
it is expected that dividends will be dispatched by
VPC on April 7, 1999.
FINANCIAL REPORTS
Year end report 1998 February 24
Annual General Meeting March 24
Three month report Jan-March April 23
Six month report Jan-June July 21
Nine month report Jan-Sept October 21
Financial reports may be ordered from Gambro AB,
PO Box 7373, SE-103 91 Stockholm, Sweden
Tel. +46-8-613 65 00 . Fax +46-8-611 57 31
info@gambro.com . www. gambro.com
SHAREHOLDER CONTACT PERSON
Anna Augustson Tel. +46-8-613 65 00
anna.augustson@gambro.com
INVESTOR RELATIONS
Anna Augustson, IR Europe . Tel. +46-8-613 65 00
anna.augustson@gambro.com
Tim Schoenberg, IR USA . Tel. +1-949-425-2185
tim.schoenberg@ghrc.com
3
 1 9 9 8 I N S U M M A R Y

Highlights 1998
HIGHLIGHTS 1998

Contents Streamlining tive’s president, Mikael Lilius, was ap-

pointed as Gambro’s new president,
completed replacing Berthold Lindqvist, who re-
2 Highlights 1998 Gambro’s restructuring process from a tired. A new group organization and
4 Message from the Chairman conglomerate to a streamlined medical management structure was introduced
5 Message from the President technology group was completed dur- in connection with the integration.
7 The Gambro share ing the year.
10 Objectives and strategies • Sale of the remaining ABB shares
to Gambro shareholders for SEK 6.2 More patients
12 Global healthcare billion During the year, the number of patients
• Sale of 60 percent of the holding in treated by Gambro’s dialysis clinics
BUSINESS AREAS MacGREGOR to a company jointly increased from approximately 33,000
16 Renal Care, Introduction owned with IndustriKapital for SEK to almost 40,000. Clinics were acquired
19 Renal Care Services 900 M with a total of 3,000 patients, of whom
• Sale of the entire holding in Electro- 2,200 in the U.S. and 800 in the rest
23 Renal Care Products
lux for SEK 825 M of the world.
29 Blood Component Technology • Divestment of the TAC subsidiary
33 Cardiopulmonary Care for SEK 420 M
• Remaining holding in Munters sold Competitiveness
35 Research and Development in two steps for a total of SEK 190 M to␣ be enhanced
36 Human Resources In the second half of 1998, a compre-
hensive internal analysis was conducted
38 Environmental Work Incentive to identify measures to strengthen op-
40 IT solutions becomes␣ Gambro erations in the Renal Care Products
42 EMU-projects On July 1, Incentive and Gambro com- business area. During 1999 a rational-
bined under the Gambro name. Incen- ization and restructuring program will
BOARD REPORT
44 Value-based management
46 Financial risks
49 Financial review
54 Proposed disposition of earnings
55 Income statements
56 Balance sheets
57 Notes
62 Statements of changes in
financial␣ positions
63 Seven-year summary
64 Accounting principles
66 Auditors’ report
67 Work of the Board
68 Board of Directors
70 Executive management

71 Addresses Leonard Cavanna, a patient at Gambro’s new dialysis clinic in Denver, Colorado in the U.S.

4
 Revenues and earnings Revenues
after depreciation, SEK M by market, %
25000

20 000
● Europa 34%
15000
● North and South
10 000 America 57%
5000 ● Asia, rest of
0 the world 9%
96 97 98

2)
KEY RATIOS
SEK M 1998 1997 1996 1995 1994

Revenues 18,734 19,490 20,220 24,324 18,389

Production of dialysis fluid at the Biosol Earnings
plant in Italy after financial items 4.991 13,890 5,228 4,653 3,832
Return on
be initiated to make this business area shareholders’ equity, % 1) 10.7 57.6 21.5 20.8 21.0
more competitive in this field. This Return on
program will include production and total capital, % 14.6 35.3 19.1 18.1 18.7
logistics, product development, mar- Earnings per share, SEK 1) 6.70 33.70 8.44 7.11 6.40
keting and sales.
Total return
on Gambro share, % – 29.3 46.9 73.8 24.7 – 5.2
Cardiopulmonary Equity/asset ratio, % 54 52 44 52 43
Care sales Interest coverage, multiple 5.5 14.7 4.6 4.0 3.9
In November, subject to regulatory ap-
proval, Gambro decided to divest its 1)
After full tax
2)
Cardiopulmonary Care business area to See definition on page 65
Sorin Biomedica, an Italian company.
This transaction will be completed in
1999, and the price is SEK 2.1 billion. REVENUES amounted to SEK 18,734 M (19,490). In terms of the
current group structure, this constituted an increase of 25 percent in
comparison with 1997.
New products
• The DQM Urea Monitor registers EARNINGS AFTER FINANCIAL ITEMS amounted to SEK 4,991 M
the presence of urea in the blood when (13,890), including nonrecurring items (with the term used in the An-
connected to the AK 200 dialysis ma- nual Accounts Act “items affecting comparability”) net totaling SEK
chine. 4,179 (12,949).
• A bag containing peritoneal dialy-
sis fluid and designed to prevent the EARNINGS PER SHARE were SEK 6.70 (33.70), of which SEK 6.25
formation of toxic products during the (32.65) pertains to nonrecurring items.
sterilization process underwent further
development and was launched as the The Board of Directors proposes a dividend of SEK 1.00 per share (2.00
Unica Bag System in 1998. after split).

5
C H A I R M A N ’ S C O M M E N T S

Message from the

Message from the Chairman
Chairman
Gambro will achieve its objectives
Nineteen ninety-eight, too, was a very eventful year for The Annual General Meeting in spring 1998 approved
Gambro. After seven years of major changes, I hope that extensive changes to Gambro’s Board of Directors as a re-
the group, its employees and its shareholders can look for- sult of the company’s new orientation. The Board worked
ward to a new, less turbulent phase with strong and profit- intensively during the year, attending a total of nine meet-
able growth within the group’s new, more focused area of ings. In accordance with the new Swedish Company Act,
operations. the Board approved rules that regulate the work of the Board
During 1998, we brought to completion one of the most and the division of responsibilities vis-à-vis the President.
comprehensive transformations to have occurred in Swed- I would like to give my warmest thanks to my colleagues
ish industry for decades. Through systematic, efficient and on the Board for the commitment and professionalism
intensive effort, Incentive has metamorphosed from a some- they have brought to their Board duties during the year.
what formless conglomerate into a highly focused medical- I would also like to express my gratitude to Mikael Lilius
technology company. This transformation is symbolized and his management group for their outstanding efforts
by the change of name during the year from Incentive to during the year. They worked determinedly and efficiently
Gambro. to accomplish the dramatic change from the Incentive of
Today, Gambro’s operations are focused exclusively on 1991 to the Gambro of 1998.
products and services in the healthcare sector. Gambro Finally, I would like to express my own and the Board’s
holds strong market positions in segments that are show- profound appreciation to all employees for their efforts on
ing positive and stable growth. Gambro’s behalf, not only during the past year, but through-
In addition to its leading position in dialysis equipment, out the entire change process which was initiated in 1991.
the company has established itself during the 1990s as Seven turbulent years are at an end; now let us face the
one of the world’s largest supplier of dialysis services, an future with confidence.
area that offers excellent opportunities for continued
strong expansion. Claes Dahlbäck
However, intensive internal restructuring measures will
be required before Gambro can fully utilize its potential
for profitable growth and improved competitiveness.
The process will involve focusing on improved efficiency,
coordination and rationalization in order to capitalize on
the synergies and economies of scale that exist following
the extensive acquisitions of the past few years.
Despite the intensive, goal-oriented work performed
during the past year, the price trend for the Gambro share
was disappointing. This is by no means an unusual devel-
opment for growth shares with a high P/E ratio. The stock
market generates high expectations of continued strong
growth, increasing the risk of disappointment. During 1998,
the market’s assessment of Gambro was influenced both by
production problems and by a gradual decline in margins.
I am convinced that Gambro, strengthened by the ex-
tensive restructuring program announced by group man-
agement in January and the organizational changes that
have been implemented, will achieve its objectives and
become the leading company in its sector.
Based on the new dividend policy adopted during 1998,
the Board has decided to propose a dividend of SEK 1.00,
which represents a change compared with the preceding
year. This should be seen as an expression of the fact that
Gambro can now be regarded as a growth company, in
which category the share of profits allocated to dividends
is generally lower than in the case of more mature or cy-
clical companies.

6 6

Message from the President
Message from the President
Streamlining and building for the future
The strategic transformation of the group was concluded
in 1998. The medical-technology and healthcare com-
pany Gambro was created from the mixed industrial con-
glomerate Incentive.
Hägglunds Drives and TAC were sold at the beginning
of the year. The outstanding portion of our shareholding
in Munters was divested. MacGregor was divested to a
newly formed company in which we will hold a 40-per-
cent interest during a transitional period until the planned
listing of the company.
The major holdings in Electrolux and ABB were di-
vested. The block of shares in ABB was sold to the share-
holders at a significant discount. Through this discount,
about SEK 14 per Gambro share was transferred to the
shareholders whereby they received a portion of the value
represented by the ABB holding.
The sale of the large ABB block marked the conclusion
of the restructuring of Incentive. Since 1991, we concluded
an average of one major deal per month. Hidden values
were capitalized. We have carried out divestments and ac-
quisitions for more than SEK 90 billion. This is one of the
largest restructuring program ever carried out in Swedish
business.
Since the new group took shape at mid-year, two im-
portant changes were decided: the Cardiopulmonary Care
business area was divested and the Renal Care Products
business area is undergoing extensive restructuring.
New and distinct organization
Concurrent with combining Incentive and Gambro at mid-
year under the name Gambro, a new and distinct organi-
zation was established. Operations were structured into four
business areas with global responsibility for Renal Care
Products, Renal Care Services, Blood Component Tech-
nology and Cardiopulmonary Care. The group staffs in In-
centive and Gambro were integrated into a common group
organization with global responsibility.
With 99 percent of sales and 97 percent of all employ-
ees outside Sweden, Gambro is probably the most inter-
nationalized of the major companies in Sweden. Group
executive management – which in addition to myself in-
cludes the managers of the most important corporate staffs
– is based in Stockholm, Denver and Lund. We meet each
month for earnings reviews, strategy discussions and to
address management development issues. Alternately,
every other month, the meetings are held physically on-
site at one of the group’s units or carried out electroni-
cally. On two occasions we have gathered more than one
hundred of the senior managers in the global group for
joint sessions. These meetings were held in July to launch
the new organization and in January 1999 for a review of
P R E S I D E N T ’ S C O M M E N T S
the decided restructuring program and to set the course
for future activities.
Cardiopulmonary Care divested
The global market for cardiopulmonary care products has
been characterized for a number of years by low growth, a
large number of players, price pressure and depressed mar-
gins. The need for structural reform in the industry is obvi-
ous. For us, the alternatives were to either strengthen our
strategic position through acquisitions or to abandon the
market completely.
We came to a decision this autumn. In November, we
reached agreement on the sale of our cardiopulmonary care
company COBE CV to the Italian medical-technology
company Sorin BioMedica. The selling price amounts to
about SEK 2.1 billion, which yields a capital gain of about
SEK 950 M. The deal is pending approval of the requisite
authorities and is expected to be completed during 1999.
As a result of the sale, we contribute to creating a strong,
global leader in the cardiopulmonary market through the
COBE CV and Sorin combination. Concurrently, Gambro
gains resources for investments in our growth markets of
Renal Care Products, Renal Care Services and Blood Com-
ponents Technology.
Restructuring of Renal Care Products
Development in the Renal Care Products business area has
been unsatisfactory. The operating margin in the business
area has weakened successively. The rationalization efforts
initiated earlier in the area have not been sufficient and
have not proceeded at an adequate pace to cope with the
effects of stiffening competition and continued price pres-
sure. In order to strengthen Gambro’s leading position in
advanced renal care, secure continued favorable growth
and improve profitability, we are implementing a global
restructuring and efficiency-enhancement program within
the Renal Care Products business area.
We have the advantage in this product area of several
strong brands: Gambro, Hospal and COBE. However, our
internal efficiency is hampered due to having a separate
company structure underlying each brand, with brand-
specific product range, proprietary product development,
own production units and separate marketing organizations.
Consequently, the group’s common resources are not be-
ing used optimally.
The changes we are now implementing eliminate the
remainder of the multi-company structures which are a
result of the group growing through acquisitions. We will
combine the benefit of having several powerful brands
with the advantages of a unified global group.
We are discontinuing the COBE brand for renal care prod-
7 7
P R E S I D E N T ’ S C O M M E N T S
ucts and building further on the strong market positions
of Gambro and Hospal. We are eliminating overlapping
products to reduce the number of product lines. Addi-
tional rationalization gains are achieved through prod-
ucts and product types gaining common platforms for
product development and production. We have already
decided to close two plants and divest a third. The num-
ber of warehousing sites in Europe has been reduced from
50 to 36. Within a year, we will be down to six. We are
centralizing purchasing to capitalize on our global strength.
Through administratively coordinating operations in the
more than 100 countries in which we are represented,
substantial rationalization gains are achieved while con-
currently enhancing marketing efficiency. The number
of operating units will be reduced from slightly more than
300 to less than 100.
The program of measures will result in restructuring
expenses of SEK 1.1 billion, which will be charged against
earnings in the fourth quarter of 1998. Slightly more than
half of this amount is attributable to severance allowances
and transfer costs. The balance is for writedowns.
We expect to halt the downward trend and improve the
operating margin already in 1999. When the program is
completed at year-end 2000, the group’s operating mar-
gin before depreciation will have increased to 20 percent.
This is the immediate result of the action program. Addi-
8 8
tional benefits are also incurred as a consequence of the
new production structure, establishment of common plat-
forms for products and product development, higher
efficiency in logistics and the marketing organization and
other elements of the restructuring that successively
strengthen competitiveness and create conditions for sus-
tainable, profitable growth.
Strategy for profitable growth
Gambro holds a strong position, strategically, in terms of
skills and financial resources. And we have a strategy for
continued profitability and growth.
Our goal is to be the leading player in each market where
we are active. To achieve this, we must utilize the group’s
combined strength as effectively as possible. Gambro is one
company with many operations and brands – and must act
in each area as one company. This means that we must have
common management systems and processes and be based
on common values within Gambro. It is the successes and
the earnings of the entire group that count.
We will retain our strong market positions in Europe
and the U.S. in Renal Care Products and expand in Asia
and Latin America. We will increase our market shares
and grow by at least 8 percent annually.
In the Blood Components Technology business area
we foresee annual growth of at least 10 percent.
We will continue to be innovative and launch new prod-
ucts. Gambro is the company in the industry that is invest-
ing the most in research and development and which has
the closest contact with the research and university com-
munities. This position and direction will be retained and
developed.
In the Renal Care Services, we will continue to grow
through an increased number of patients and through a
broadening of the range of healthcare services offered. We
have set the goal for these operations to grow by at least 15
percent annually.
Global leadership in growth areas
The streamlining of the group is concluded. We have
achieved the goal of transferring resources to some selected
core areas with high knowledge and technology content
and with favorable growth potential.
Now the goal is to become the global leader in all of our
activities. We must be best at developing and manufactur-
ing products for renal care and blood processing and in
providing care for patients with kidney diseases. In addi-
tion, we will be the most skilled in the world at integrating
products and services. I am convinced that Gambro can
meet these challenges. We have the know-how and the
resources. Now we are increasing the joint competitive-
ness within the group.
Mikael Lilius
The Gambro share T H E G A M B R O S H A R E

Eventful year for the Gambro share

The Gambro share is listed on the Stockholm Stock PRICE TREND 1994-98
Exchange. It has been listed since July 18, 1991 un-
der the Incentive name. On July 1, 1998, Incentive B share General Index
changed its name to Gambro. This means that Gam- 160

bro was relisted in 1998, following delisting when 140

the entire Gambro operation was acquired by In-
120
centive in 1996.
100
Return on the Gambro share
During 1998, shareholders received a dividend of 80
SEK 2 per share (SEK 10 prior to split). In addition,
value in the form of redemption shares correspond-
ing to approximately SEK 14 per Gambro share was 60
transferred to shareholders in connection with the
sale of more than 113 million ABB shares to Gambro
shareholders.
The total return on a share includes the share’s 40
1994 1995 1996 1997 1998
price trend, the dividend, and reinvestment of the (c) SIX Findata
dividend. During 1998, the total return on the Gambro
share amounted to a loss of 29 percent. The average
for the Stockholm Stock exchange was a gain of 13
PRICE TREND AND TRADING VOLUME 1998
percent.
Since December 31, 1993, SEK 100 invested in B share Total number of shares traded
(thousands, including
Incentive/Gambro increased to SEK 214 at Decem- 200
General Index after-hours trading)

ber 31, 1998, compared with SEK 265 as the average 180
for the Stockholm Stock Exchange during this five-
160
year period.
140
Price trend
The Gambro A Series and B Series shares declined 120

by 38 percent during 1998, from SEK 143 (SEK 715

prior to split) to SEK 88. The Affärsvärlden’s Gen- 100

eral Index increased by 10.5 percent during 1998. 8000

The highest and lowest prices paid for A Series and 80
7000
6000
B Series shares were SEK 164 and SEK 65.50 respec- 5000
4000
tively. 3000
2000
In assessing the price trend, it should be borne 1000
60
in mind that the company spun off approximately J F M A M J J A S O N D
1998 (c) SIX Findata
SEK 14 per share to shareholders through the di-
vestment of the Group’s ABB shares.

Capitalization Prices paid

Gambro’s total market capitalization was SEK 30.1 at Dec.31 1994 1995 1996 1997 1998
billion at December 31, 1998, which may be com-
pared with the market capitalization of SEK 48.8 A share 48 58 99 143 88
billion at year-end 1997. The company ranked 21st B share 48 58 99 143 88
in size on the Stockholm Stock Exchange.

9
T H E G A M B R O S H A R E

GAMBRO SHARE: TOTAL RETURN

Turnover
During 1998, 140 million Gambro shares were traded,
B share Findata’s Yield Index corresponding to a value of SEK 16.7 billion. Histori-
350
cally, the B share is the most heavily traded, but trad-
300
ing has focused on the A share since the autumn of
250 1997.
200
The turnover rate for the Gambro share amounted
to 41 percent in 1998. 29 percent of the A shares and
150 71 percent of the B shares were traded. The Stock-
holm Stock Exchange turnover rate was 77 percent.

100 Beta value

The beta value of a share is a measure of risk indicat-
ing the sensitivity of share prices to market fluctuations
in comparison with the entire market over a given
period of time. If the beta value is greater than 1.0,
50
1994 1995 1996 1997 1998
this indicates that the share is more volatile than the
(c) SIX Findata market index. A value of less than 1.0 indicates that
the share is less sensitive than the market as a whole.
According to SIX Findata, the beta value for the
Gambro share is 1.23, measured against the Affärs-
Share type Number Propotion, %
världen’s General Index during the previous 48
Shares Votes Shares Votes
months. This means that the share varied 23 per-
A Series 250,574,090 250,574,090 72.7 96.4 cent more than the Index.
B Series 94,079,198 9,407,920 27.3 3.6 Proposed dividend SEK 1.00
Total 344,653,288 259,982,010 100 100 The nature of the group’s operations has changed
completely since 1991 as a result of a comprehensive
strategic transformation. The company is now a
closely focused medical-technology growth company.
PER-SHARE DATA 1) During 1998, the Board therefore reviewed the
dividend policy and the Annual General Meeting
1998 1997 1996 1995 1994 decided that dividends should comply with the
group’s new orientation, in which value is based on
Dividend, SEK 1.00 2) 2.00 2.00 1.80 1.60
growth to a greater extent. This means that higher
Dividend as % value is achieved by reinvesting a higher proportion
of market value of the cash flow generated in the business. Hence,
(direct yield) 1.1 1.4 2.0 3.1 3.3 the objective is to adjust the dividend in accordance
with the group’s profit trend, taking future growth
Earnings, SEK 6.7 33.70 8.44 7.11 6.40 into account.
Total shareholders’ The Board of Directors proposes a dividend of
return, % – 29.3 46.9 73.8 24.7 –5.2 SEK 1.00 (SEK 2.00 after split) per share for 1998.
Shareholders’ Changes in share capital
equity, SEK 52 74 43 36 32 At year-end 1998, Gambro’s share capital amounted
Market value/ to approximately SEK 689 M, for approximately 345
Net profit (P/E ratio) 13.1 4.2 11.7 8.2 7.5 million shares at a par value of SEK 2. The shares
comprise approximately 251 million A shares (1 share,
Market value/ 1 vote) and approximately 94 million B shares (1 share,
Shareholders’ equity, % 169 193 232 162 148 1/10 vote). The share capital has changed on two
1) 2) occasions during 1998.
After full tax Proposed
The 1998 Annual General Meeting approved a 5:1
share split, and it was decided that the par value of
the share was to be reduced from SEK 10 to SEK 2 per
share. This change was implemented on June 2, 1998.
The Extraordinary General Meeting held in 1998

10
 T H E G A M B R O S H A R E

approved the spin-off of call options against redemp- OWNERSHIP DISTRIBUTION, DEC. 31, 1998
tion of Gambro shares, thus entitling Gambro share-
holders to acquire the greater part of the group’s Number of % of % of
ABB shares. The following decisions were taken as Number of shares shareholders shareholders share capital
a result of this transaction: 1 - 1,000 63,424 81.1 5.7
1. Change in the par value of the share from SEK 2
1,001 - 10,000 13,829 17.7 10.3
to SEK 1
2. Share split (2:1) 10,001 - 100,000 789 1.0 5.9
3. Reduction of the share capital by SEK 342 M as a 100,001 - 190 0.2 78.1
result of redemption of shares and repayment to Total 78,232 100 100
shareholders Source: DN Ägarservice
4. New issue of 2.8 million shares, corresponding
to SEK 342 M TEN LARGEST SHAREHOLDERS
5. Change in the par value of the share from SEK 1
back to SEK 2 Number of % of % of
6. Bonus issue by increasing the par value of the share Dec. 31, 1998 shares share capital votes
to SEK 2, thus increasing the share capital by Investor 68,612,229 19.9 26.3
SEK 345 M
These changes were implemented on August 5, 1998. National Pension Insurance
Fund 4th Fund Board 21,150,200 6.1 7.3
Shareholders Wallenberg Foundations 19,313,355 5.6 7.3
At year-end 1998, Gambro had 78,232 shareholders, Robur’s funds 15,271,900 4.4 2.9
an increase of 14 percent since the preceding year-
end. Share ownership in Gambro is concentrated – AMF Pension Insurance 14,978,000 4.3 3.2
25 owners held 67 percent of the share capital. SPP (Mutual Insurance) 13,806,480 4.0 3.7
Gambro’s largest shareholder is Investor, with SEB/Trygg/ABB Funds 10,298,765 3.0 2.9
19.9 percent of the capital and 26.3 percent of the
votes. Gambro’s ten largest owners held shares cor- Trygg-Hansa Insurance 8,416,306 2.4 2.1
responding to 54.2 percent of the capital and 59.8 Nordbanken Funds 7,861,100 2.3 1.3
percent of the votes. SHB’s Funds 7,533,700 2.2 2.8
Swedish institutional investors hold 60.1 percent
of the shares, and 13 percent are held by Swedish Total 187,242,035 54.2 59.8
mutual funds. Swedish private individuals own 16.3 Source: DN Ägarservice

percent. Gambro is continuously monitored

The proportion of shares owned by individuals or
legal entities outside Sweden amounts to 10.6 per-
cent. 48 percent of the non-swedish shareholders
are U.S. investors, corresponding to 5.1 percent of
the total share capital.
DISTRIBUTION OF SHAREHOLDERS
● Swedish mutual funds 13%
● Swedish institutions 60%
● Swedish private individuals 16%
● Owners outside Sweden 11%
Source: DN Ägarservice
DISTRIBUTION OF FOREIGN OWNERS
● USA
United States 48%
● 48%
● Storbritannien
Great Britain 24%
● 24%
● Luxembourg 7%
● Luxemburg 7%
● Holland
Netherlands 5%
● 16%
● Other 16%
● Övriga 16% Source: DN Ägarservice
by the following financial analysts
ABG Securities
Mats Eriksson +46-8-566 286 00
Alfred Berg Fondkommission
Paula Treutiger +46-8-723 58 00
Aros Securities
Anette Rye Larsen +45-33 33 52 83
CAI Cheuvreux Nordic
Karl-Johan Bonnevier
+44-171-621 51 00
Carnegie
Anders Hallberg +46-8-676 88 00
Cazenove
Charles Evans Lombe, Jonas Pålsson
+44-171-588 28 28
Den Danske Bank
Tatiana Brask +45-33 44 00 00
Deutsche Bank
Johan Strandberg +46-8-463 55 00
DNB Markets
Peter Tron +44-171-621 11 11
Enskilda Securities
Annika Espander +46-8-522 295 00
Erik Penser Fondkommission
Linus Marmstedt +46-8-463 80 00
Fischer Partners Fondkommission
Carl-Olof Björkander +46-8-463 85 00
Hagströmer & Qviberg
Rosalind Lee +46-8-696 17 00
Handelsbanken
Stefan Wikholm +46-8-701 10 00
HSBC Trinkaus
Klaus Przybilla +49-211-910 00
Matteus Fondkommission
Andrea Croner +46-8-613 42 80
Merrill Lynch
Andreas Tholstrup, Suzy Neubert
+44-171-772 10 00
Morgan Stanley
James McKean, Isabelle Nowak
+44-171-513 80 00
Nordbanken Aktier
Erik Magnusson +46-8-614 70 00
Paribas
Hans Boström +44-171-595 25 28
Swedbank Fondkommission
Sten Westerberg +46-8-585 900 00
Warburg Dillon Read
Andrea L Schaefer +1-212-821-4708

11
O B J E C T I V E S A N D S T R A T E G I E S
Objectives and strategies
Objectives and
strategies
Gambro primarily operates in the renal care market,
which accounts for 87.4 percent of revenues. This is
a global, non-cyclical market which is expanding
by about 8 percent a year and is characterized by grow-
ing privatization, pressure on prices and the increas-
ing significance of new markets in the Far East, East-
ern Europe and Latin America.
Gambro’s aim is to be the global leader in the re-
nal care market. The company was founded at the
time this market emerged, and currently has a very
strong position as an integrated company, offering
both products and care services for renal patients.
Today, Gambro has all the basic prerequisites to
achieve this objective: a strong financial position,
extensive and solid experience and knowledge, in-
novative skills and a strong ambition to achieve suc-
cess.
The company considers that Gambro already
leads the blood component technology market, with
6.5 percent of revenues. Maintaining this position
is a crucial objective.
Gambro has as an overall objective the creation
of shareholder value.
Gambro has a number of fundamental strategies
to enable it to achieve these objectives.
• Adjusting to customer requirements is a crucial strat-
egy underlying the restructuring of the Renal Care
Products business area. Several measures are being
12
adopted to rationalize and modernize the produc-
tion of dialysis products.
• In several countries – particularly the United
States – the trend in the medical care sector is to-
wards dialysis treatment in cost-effective, privately
owned units. As a result, Gambro is continuing its
policy of owning dialysis clinics. At the same time, the
company is sensitive to customer requirements in
its development of sectors such as Disease Manage-
ment (see page 13) and is building extensive IT sys-
tems to facilitate and rationalize the operation of
clinics.
• Adjustment to the customer’s situation is also a ma-
jor factor in the Blood Component Technology busi-
ness sector. The company is monitoring and com-
plying with the current transformation of blood
banks in the U.S., including the introduction of new
methods and new forms of ownership.
• The company’s emphasis on attracting qualified
personnel is an overall strategy which permeates Gam-
bro’s operations on a worldwide scale. The company
also attaches considerable importance to opportu-
nities for existing employees to develop further in
their careers. Gambro considers that the key to suc-
cess lies with the people who work for the company.
Close-up of panel of TRIMA Automated Blood Collection System, a key product of the BCT business area.

13
G L O B A L H E A L T H C A R E
Global healthcare
Global healthcare
and the forces that control it
The global healthcare industry is con-
trolled partly by mechanisms different
from the traditional forces behind
industrial development. The industry is
dependent to a significant extent on
healthcare policies, forms of financing,
healthcare traditions and, naturally,
economic growth in national markets
around the world.
Kazumi Stuart, dialysis nurse in Gambro’s recently established
dialysis clinic in Denver, Colorado, USA.
14
In all developed societies, political organizations
adopt policies concerning their population’s need
for healthcare services and decide which forms of
financing should comprise the basic choice for health-
care organizations. As a natural consequence, they
also make decisions on the degree of government in-
volvement in healthcare services, including financ-
ing. In addition, they decide the amount of health-
care costs that should be absorbed by private indi-
viduals. Official bodies also provide guidelines for
insurance liability assumed by employers, for example,
or private and publicly owned insurance agencies.
Every society also has laws and regulations to con-
trol the target level and quality of healthcare ser-
vices, and decide the extent to which government
authorities or politically elected representatives should
control the services. Decisions are made regarding
required training and skill levels of healthcare per-
sonnel and the curriculum for training programs.
Gambro is a global player in the healthcare sector
and, accordingly, is highly dependent on healthcare
policy trends, decisions and legislation governing
medical and healthcare services in more than 100
national markets where the company conducts busi-
ness operations. In view of this general background,
the following is a brief presentation of healthcare policy
trends in some of Gambro’s most important markets.
USA
American healthcare services have developed vari-
ous financing concepts and organizational formats
for different groups, with every individual responsible
for his/her own health insurance as the dominant
principle. Public contributions were limited for many
years to regulated measures and special contributions
to particularly exposed groups. Since the 1960s, how-
ever, new insurance solutions have been tested in an
effort to increase the quality of services and meet the
needs of all people for medical and healthcare ser-
vices.
Part of the background in the current process of
dynamic change, however, is growing dissatisfaction
with constantly increasing healthcare costs (about
14 percent of GDP today), lack of accessibility to medi-
cal and healthcare services (about 13 percent of the
population has no health insurance coverage) and
the inconsistent quality of services rendered.
In 1965, the American Congress resolved to pro-
vide vulnerable groups in society with basic health
insurance through the establishment of Medicare
and Medicaid programs. The federal government,
accordingly, assumed primary responsibility for fi-
nancing healthcare services for elderly (Medicare)
and impoverished (Medicaid) members of society.
The programs are based on a combination of insur-
ance coverage at various levels, patient fees and con-
tributions by the states in which patients live.
The professional element in society also assumed
responsibility for insurance protection after 1965
through individual health insurance coverage, which
is subsidized indirectly by the government through
tax deductions for insurance payments. Today, health
insurance included among salary benefits is increas-
ingly commonplace.
Private health insurance coverage has tradition-
ally provided policyholders a freedom of choice in
selecting their medical service providers, which
charge patients on a fee-for-service principle. The
payment system was generally considered to provide
patients with the best possible medical and
healthcare services. Eventually, however, it became
difficult to control costs and guarantee medical care
quality under the system.
Rising costs became a major cause for concern and,
in 1983, a new reimbursement system was introduced
for Medicare patients based on fixed compensation
for all medical services and diagnostics. A classifica-
tion system was developed for most ailments and dis-
eases, which were divided into Diagnosis Related
Groups (DRG). The new system was soon adopted
in other countries, including Sweden. It radically
changed the driving forces in health care. Treat-
ment times were reduced sharply and quickly.
Another new healthcare trend developed in par-
allel with the classification system. Physicians be-
gan to increasingly move into managed care ser-
vices, so-called Health Maintenance Organization
(HMOs). Such managed care programs facilitate
cost reductions through higher patient volumes and
improved negotiation position. The so-called pri-
mary care physician in an HMO could determine
the care needs and restrain excess use. An HMO is
normally based on a network of doctors, hospitals,
specialist clinics and other medical experts who
share joint responsibility for the healthcare needs
of HMO members in return for an annual fee. There
are many variants of HMOs, and fees are paid either
by individual policyholders or employers.
During the late 1980s, HMO chains were devel-
oped very quickly and, in many cases, expanded into
nationwide organizations publicly listed on stock ex-
changes. There has been a clear break with this trend
during the past few years. A number of large hospi-
tals and HMOs that have experienced rapid and con-
tinuous growth are no longer profitable and are beset
with major financial problems. Some of the large in-
surance companies have abandoned the healthcare
insurance sector.
Visions of likely future developments are based on
the expectation that the pressure on high healthcare
costs will continue. The customer/patient will have
more of a say, and healthcare organizations will be-
come more local. Companies will be responsible for
a smaller portion of their employees’ health insur-
ance than is the case today, and the insurance com-
panies will also play a less significant role. IT will play
a major role in the rationalization of healthcare.
Doctors’ salaries are not expected to increase as rap-
idly as before, and attention will be focused on pre-
ventive healthcare.
The transformation of American healthcare ser-
vices has naturally also had certain effects on dialy-
sis services. The system of compensation introduced
in 1983 increased cost awareness in dialysis care. Mul-
tiple use of dialyzers was introduced and treatment
times were shortened in order to reduce costs. The
trend toward increased consolidation and the cre-
ation of nationwide chains was also clear in the di-
alysis segment.
Disease Management, a variation of HMO is a
model that can be expected to be developed fur-
ther, since it has proved to be a particularly appro-
priate alternative for the care of patients suffering
from chronic diseases, such as kidney failure or dia-
betes. This model comprises more loosely structured
networks of resources that are activated as needed.
Europe
Healthcare organizations in Europe have chosen a
variety of different avenues.
During the period after World War II, the UK and
Sweden were the most steadfast of all Western Euro-
pean countries in their efforts to develop complete-
coverage public health and medical care systems. Tax
financing dominated the public health services of
both countries, and medical services were provided
by publicly owned institutions.
The situation remains unchanged in Sweden,
where about 93 percent of institutional care is still
provided by the public sector. Of all European coun-
tries, it is principally in the Nordic and Benelux coun-
tries that public health services play such a domi-
nant role. The public sector’s involvement with in-
stitutional care in other European countries varies
between 50 and 70 percent.
During the 1990s, the European healthcare de-
bate has focused strongly on the high cost of health-
care. The percentage of healthcare costs in relation
to GDP varies between 5.5 percent in Norway, 6.9
percent in the UK, 8.6 percent in Italy and Germany,
and 9.7 percent in Austria and France (OECD Health
Data for 1996). Efforts to reduce costs have resulted
15
G L O B A L H E A L T H C A R E
in lower prices for purchases of medical technology
and pharmaceuticals, as well as comprehensive
medical and healthcare reforms in most countries.
The differences between the healthcare organi-
zations in various countries are pronounced, a factor
with far-reaching effects on Gambro’s business activi-
ties in Europe, which necessitates a separate local
model for the cultivation of every national market.
The section below comprises a brief presentation of
conditions in some key countries.
In the UK, public health care is still an important
social institution. The National Health Service
(NHS) became one of the most prominent features
in Britain’s post-war welfare state, and the NHS func-
tioned satisfactorily for nearly 40 years after the origi-
nal model was established during the 1940s. In the late
1980s, the Conservative government took the ini-
tiative in implementing significant changes in pub-
lic healthcare services. The new organization is char-
acterized by continued strong political control on the
national level, but regional influence in healthcare
policies has been strengthened. The general practi-
tioner’s role as a patient’s representative has also been
strengthened. Private healthcare services have be-
come an important complement to the NHS.
Dialysis care in the UK suffered negative effects
from cutbacks in public health services in the early
1980s. In order to provide care and treatment for
patients adversely affected by inadequate resources
caused by public spending cutbacks, relatively con-
certed efforts are now being made under the auspices
of both public and private institutions. The Public
Private Partnership system was introduced in an ef-
fort to reduce the financial burden on the public sec-
tor by using private-sector financial and management
expertise. The clinic opened by Gambro in Belfast in
autumn 1998 is based on an agreement of this type.
An important principle in Germany’s constitu-
tion is the so-called subsidiarity principle, whereby
nothing in society should be managed at a higher-
than-necessary level of administration. As a result,
the financing and provision of public health services
is decentralized to independent organizations. The
responsibility for financing is delegated to local health
insurance offices, while actual care and treatment
are transferred to private doctors and privately man-
aged hospitals. Direct political control is limited. Al-
though financing is publicly funded, it is supported
by a compulsory insurance system – not taxes. Gen-
eral practitioners are reimbursed in accordance with
the fee-for-service principle. Doctors in private prac-
tice have a central position, with exclusive rights to
out-patient treatment and full decision-making au-
thority on referrals to hospital. Medical and health-
care utilization is high, and there are no long queues
for treatment.
16
Dialysis care in Germany is conducted to a large
extent by foundations and other non-profit compa-
nies. The largest is Kuratorium, which treats more
than 50 percent of all dialysis patients in Germany.
The organization of healthcare services in Italy
has been based on the British model since 1979. Ser-
vices are divided into 21 regional healthcare authori-
ties that consist, in turn, of 227 “unitarie sanitarie
locali” (local health units) with direct responsibility
for health care. Approximately one-fifth of all hos-
pitals in Italy are privately owned or operated by
foundations. Italy’s public health sector is currently
characterized by economic restraint and continues
to exercise caution in the wake of the political tur-
moil that marked the beginning of this decade. One
of the country’s most important objectives is to bal-
ance the substantial differences between regional
resources. Important healthcare reforms are also be-
ing implemented in parallel with attempts to priva-
tize part of the country’s health insurance structure.
Dialysis care in Italy is characterized by many pri-
vate clinics and high quality standards. Close coop-
eration with nephrology research institutions has led
to rapid acceptance of new treatment forms in Italy.
France has relatively high costs for healthcare
services. Despite efforts to reduce healthcare costs,
French authorities have not been able to exercise any
appreciable influence over continued growth in the
medical market. Control from central authorities
of both public and private health care is strongly
dominant. One ambition of the present government
is to transfer more healthcare activities outside hos-
pitals. Several comprehensive hospital reform mea-
sures are also being planned.
French healthcare services are financed through
public-sector insurance, which accounts for 85 per-
cent of costs incurred for public health services. Pa-
tients are expected to pay about 25 percent of hos-
pital costs and 30 percent of medical costs for non-
acute conditions. Healthcare services are organized
in 21 healthcare regions and 90 healthcare districts.
About 35 percent of all hospitals in France are oper-
ated by private owners or foundations.
Dialysis care is organized in several different for-
mats, including private and public sector ownership
and clinics owned by foundations, with a variety of
very large units and many small satellite clinics. Am-
bitious trials of new treatment procedures are also
being undertaken.
The EU has created several organizations to coun-
teract the difficulties that the wide divergence be-
tween healthcare policies in European countries
creates for the players involved in the medical-tech-
nology market. A medical-technology directive has
been in force since June 1998. Common regulations
for the introduction of new products (CE marking,
etc.) and a joint EU patent office now contribute to
facilitating operations in the European market.

Japan
The Japanese system for health and medical services
is based on certain historically mandated conditions.
Shintoism, the national religion of Japan, is a virtu-
ally animistic religion strongly characterized by a
striving for purity. Chinese medicine was introduced
in Japan during the 4th Century. Its philosophy of
balance between the complementary principles of
Yin and Yang, as well as harmonization of the five
elements in the human body and its organs, provides
a holistic perspective that tends to prioritize non-
invasive forms of treatment. Herbal medicines com-
prise an important basis for therapy, and the medical
profession has concentrated on pharmaceuticals for
a long time.
Hospitals in Japan are small and 80 percent are
privately owned. They have the world’s longest av-
erage treatment times and their geographic distribu-
tion is unevenly divided between different parts of
the country. About 90 percent of all Japanese out-
patient clinics are privately owned. Personnel den-
sity is low, and patients are expected to provide for
their own services while confined to hospitals, either
through family members or fellow employees. The
responsibility of voluntary personnel in healthcare
services is generally quite substantial. Doctors com-
mand a prominent status in Japanese society.
The health insurance system is similar to the
American structure, with one category insured as
employees of private companies and public-sector
organizations, while National Health Insurance pro-
A transplantation operation taking place at the kidney trans-
vides coverage for people of uncertain financial plant clinic, Nephrology SA, in Buenos Aires, Argentina,
means. Central government authorities are trying to acquired by Gambro in November. Fr l t r: dr Guillermo
strengthen their control over costs in the country’s Hilchenbach, nurse Veronica Costa and dr Luis Mainetti.
healthcare system.
Technically, hospitals in Japan are well equipped. tients are treated in private clinics owned and oper-
Dialysis care has been firmly established since the ated by dialysis specialists. Private companies are not
introduction of a financial support program for di- allowed to own clinics.
alysis patients in 1972. Kidney transplants are rare,
since general public opinion remains skeptical of (Background: SNS series of papers on healthcare, MDIS,
organ transplants. Gambro Data, Greenspring Advisors, Lund University
More than 70 percent of all Japanese dialysis pa- Center of Health Economy (LUCHE)).

GLOSSARY

Managed Care HMO patient, regardless of the type of treat-

the collective term for healthcare
programs␣ in the U.S., whereby private
individuals are affiliated with a certain
network of doctors and hospitals and
healthcare providers are paid in accor-
dance with fixed rates.
(Health Maintenance Organization)
a network in the U.S. based on the
description␣ of Managed Care above.
Capitation
Doctors receive a fixed fee for every
ment provided.
Fee-for-service
Payment principle whereby patients
are charged for each individual compo-
nent of a treatment procedure.

17
R E N A L C A R E S E R V I C E S
RENAL CARE
– a market with 8 percent
annual growth
Renal Care, Introduction
The rapid development of renal care
has resulted in a world industry. Almost
a million individuals in the world suffer
from chronic renal failure. They can
survive when supported by dialysis treat-
ment or given a kidney transplant. The
number of people in need of renal care
is increasing by an average of 8␣ percent
each year.
Factors behind growth
Growth has continued at a stable level since the entre-
preneurial phase of renal care development leveled
off during the 1970s. A number of reasons lie behind
this steady, seemingly always predictable growth.
• Several of the reasons are demographic. In pace with
the constant increase in the world population, the
number of people suffering from kidney disease is also
increasing. The fact that people live longer today than
they used to is another reason for the increasing num-
ber of kidney disease patients.
• Other reasons are economic. Since World War II,
the economies of a number of third-world countries
have improved, allowing these countries to invest
in improvements to their healthcare systems. As a
result, people with kidney disease are diagnosed and
come in search of medical care – which previously
did not always occur, and is still not always the case
in certain countries. The resources directed to
health care have also been increasing for some years
in the western world and in Eastern Europe, al-
though the West is now characterized more by ef-
forts to cut back on the use of healthcare resources.
• Still other reasons are medical. Two thirds of all
cases of chronic kidney failure are caused by three
disorders: diabetes (25 percent), high blood pres-
sure (24 percent) and glomerulonephritis (18 per-
cent). Abuse or overuse of pharmaceutical drugs can
lead to kidney failure.
18
Distribution of the dialysis market by
operational segment
It is a complex matter to calculate the distribution of
the dialysis market according to the treatment forms
hemodialysis, peritoneal dialysis and kidney trans-
plantation, since moving targets are involved. Each
year, about 80 percent of new dialysis patients begin
receiving hemodialysis, while 20 percent go into peri-
toneal dialysis (see explanations of terms on page 27).
An average of 14 percent of new patients die during
the first year of treatment. Patients constantly change
treatment forms between hemodialysis and perito-
neal dialysis, with more patients switching from
peritoneal dialysis to hemodialysis than vice versa.
Transplantations of donated kidneys occur to a
varying extent, depending on the patient’s home coun-
try and its politics, traditions, economy and laws. An
average of 6 percent of patients who undergo trans-
plants die within less than a year, while 8 percent
lose the transplanted kidney during the first year and
again become dependent on dialysis.
Value of the dialysis market
Renal care has given rise to two Gambro business
areas: Renal Care Products and Renal Care Services.
The combined value of the market they are active in
amounts to approximately USD 28 billion, of which
Renal Care Products accounts for approximately
USD 6 billion.
Based on the anticipated stable growth of the num-
ber of patients, it is possible to forecast the number
of renal care patients in the year 2005. The numbers
expected to be receiving treatment then are, world-
wide, approximately 1,400,000 patients, of whom
360,000 in the US, 280,000 in Europe and 260,000
in Japan. The most rapid rate of growth in patient
numbers during this period – 11 percent – is expected
to occur in countries other than the US, the EU coun-
tries and Japan.
Nestor Miguel Azcue brushes the hair of his 11-year-old daughter Gabriela. A week earlier, Gabriela received a
new transplanted kidney at Gambro’s newly acquired transplantation clinic in Buenos Aires, Argentina.

19
R E N A L C A R E S E R V I C E S

Carmelo Imbriano, 71, has been a patient at Gambro’s Cerer dialysis clinic in Buenos Aires, Argentina, for three years.

20
 BUSINESS AREA
RENAL CARE SERVICES
– more own clinics
a␣ prioritized strategy
Privately owned dialysis clinics are
continuing␣ to become a more common
organizational form for dialysis care.
Privately owned clinics are particularly
suitable for the care of dialysis patients
who do not need the intensive care
offered by a hospital.
During the past year, Gambro has also
been the leading player in the ongoing
consolidation of clinic chains. Since
the company increased the number of
patients in the course of the year by
almost 6,500 through organic growth,
acquisitions or de novo clinics, about
40,000 individuals are being cared for
in clinics owned or managed by Gambro
at the present time.
The market
Generally, the previously very rapid consolidation of
dialysis clinics has taken on a somewhat slower pace
during the year. There have been no large clinic merg-
ers. At the same time, the existing chains have grown
on account of acquisitions and increased investments
in de novo establishments. Interest is being turned
towards newly established clinics, which are easier
RENAL CARE SERVICES
Proportion of total revenues Revenues per market
The Renal Care
Services business
area accounts
for␣ 49␣ percent of
Gambro’s revenues.
to adapt to new demands. Investments in new clin-
ics have a considerable effect on earnings in the short
term, but provide greater profitability in the long term.
The U.S. continues to be the country where most
patients are treated in clinics belonging to chains
which are acquiring a large share of the market. Con-
solidation is driven by the desire for cost-effective-
ness and the need for investments in the information
system.
The Managed Care concept will continue to have
increased influence on the dialysis industry. Among
other effects, this will result in increased focus on
Disease Management, with the aim of increasing care
quality and to reduce the total costs of caring from
kidney disease patients. It will also result in new forms
of remuneration in which various service products can
be combined and contracted at one price. It is also
possible the remuneration for care will be related to
the quality of care. The authorities remain watchful
of the high costs to society caused by dialysis demands.
In light of current opinion, the dialysis chains’ in-
fluence is growing. They are, as a result of their size,
cost-effective, remain stable in difficult situations and
are thus better able to safeguard the patient and the
quality of treatment. The chains can become estab-
lished throughout the country and contribute to prod-
uct development.
In Europe, the number of privately owned clinics
is slowly increasing. In Argentina, this development
is rapid, on the other hand, as it is in several other
countries in the Asia-Pacific region.
Revenues trend
10 000
● Europe 8 000
● North and 6 000
South America
4 000
● Asia, rest of
the world 2 000
0
95 96 97 98
21
R E N A L C A R E S E R V I C E S

There are a number of conditions underlying this

Patient Dolores Carmen Voron at Gambro’s Cerer dialysis
clinic in Buenos Aires, Argentina.
Strategies
Gambro is continuing to add to the number of clinics
it owns, through acquisitions, cooperation agreements
or new establishments. The business area expects to
expand by approximately 15 percent each year.
strategy:
• Gambro will strengthen its position in the priori-
tized geographical area through acquisitions, estab-
lishment of de novo clinics and local marketing ef-
forts.
• The company will have complete control over the
values chain from product development and pro-
duction to sales and dialysis care.
• Gambro aims to grow organically faster than the
market by offering an excellent quality of care that
attracts patients as well as doctors.
• Size also means influence and, in the continuously
growing world of dialysis, large-scale clinic owner-
ship provides the opportunity to influence future de-
velopment within the industry.
Gambro’s American clinics carefully monitor a
number of quality indicators for all dialysis patients,
including patient mortality, adequate dialysis, blood
deficiencies and nutrition, which are all factors re-
lated to high quality dialysis. Single use dialyzers are
used by 25 percent of the company’s American clin-
ics as a means of increasing quality. Gambro has
also established regional quality councils, whose task
is to monitor care quality and exercise control through
so-called peer review.
Within the American clinics operation a strategic
investment has been done in IT. Over a period of 12
years, a broad level of IT expertise has been estab-
lished, which, in 1998, has been extended to include
the 262 clinics acquired from Vivra in 1997. This
means that the American clinics possess powerful
tools for monitoring patients and for financial re-
porting. The IT system also provides favorable pre-
requisites for the structured planning of treatment
and fast support for medical decisions using the clini-
cal database that has been created. The paperless
system now being used at clinics makes administra-
tion better and more efficient.
Cooperation with well-known medical faculties
at the large American universities is continuing and
is being extended. In the U.S., it is Gambro’s clin-

THE FUNCTION OF A HEALTHY KIDNEY

Approximately 1,700 liters of blood
normally pass through the kidneys every
24 hours. In the kidneys, the blood is
distributed into about two million neph-
rons. The nephron is the kidney’s small-
est functional unit; it can independently
clean the blood and produce urine.
In the nephron, the blood flows first to
the glomerulus, a very small global struc-
ture of minute blood capillaries. There, a
large part of the liquid in the blood is
squeezed out through small holes in the
capillaries. The liquid contains water,
waste products, salts and many nutritive
substances. The primary urine is cap-
tured in “Bowman’s capsule,” which
surrounds the entire glomerulus.
The primary urine is then concen-
trated. The greater part of the liquid,
as well as salts and nutritive sub-
stances, are reabsorbed by the blood.
What remains is urine, which is dis-
charged to the bladder via the renal
pelvis and the ureter.

22
Chains of dialysis clinics, January 1999
No. of Other
patients Share,% USA Share,% Europe Share,% countries Share,%
Fresenius Medical Care 73,000 7.8 58,000 23.6 8,000 3.7 7,000 1.5
Gambro 39,500 4.2 33,400 13.6 2,700 1.3 3,400 0.7
TRC 39,500 4.2 36,000 14.6 800 0.4 2,700 0.6
Kuratorium für Dialyse 15,500 1.7 15,500 7.2
Renal Care Group 11,000 1.2 11,000 4.5
Dialysis Clinic Inc. 9,500 1.0 9,500 3.9
Baxter 9,000 1.0 1,000 0.5 8,000 1.7
Everest 5,400 0.6 5,400 2.2
Satellite 2,700 0.3 2,700 1.1
Excelsior Group 1,800 0.2 1,800 0.4
Braun Eurocare 1,500 0.2 1,500 0.7
Renex 1,100 0.1 1,100 0.4
Total 209,500 23 157,100 64 29,500 14 22,900 5
Other care providers 720,500 77 88,900 36 186,500 86 445,100 95
Total no. of patients 930,000 100 246,000 100 216,000 100 468,000 100

ics that are most often referred to at these opinion-

building educational establishments. Gambro also
continues to position itself as a medically ambitious
company with a strong Medical Advisory Board,
whose members are leading American nephrologists.
At the same time, investments are being made
in the marketing of Gambro’s dialysis treatment
locally. The ability to act globally and locally is an
important skill for a company. A patient at a small
Gambro clinic should realize that it is his needs that
the company is focusing on.

Highlights 1998
The Renal Care Services business area reported
growth of approximately 54 percent for the year.
In November, an 80 percent share was acquired
in the Argentinean renal care clinic Nephrology
SA, which specializes in kidney transplants. The
clinic holds 13 percent of the transplant market in
Argentina and performs more than 80 transplants
every year.
1998 saw the completion of the integration of the
Vivra chain of clinics – which were acquired in 1997
– with Gambro’s other clinics in the U.S. Gambro’s
IT system now encompasses all its American clinics.
From January 1, 1999, all clinic operations come
under one global organization, which constitutes the Patient Humberto Gutierrez at Gambro’s Sarmiento dialy-
Renal Care Services business area. sis clinic in Buenos Aires, Argentina.

23
R E N A L C A R E P R O D U C T S

Department head Elena Hilda Mercao at Gambro’s dialysis clinic in Buenos Aires, Argentina.

24

RENAL CARE PRODUCTS
– breadth and quality
are key concepts
The production of various dialysis
products has been the foundation of the
dialysis market ever since the 1960s.
During the 1970s and early 1980s,
the main focus was on dialyzers, their
characteristics and their efficiency, and
Gambro’s success depended on sales of
dialyzers. Interest gradually focused on
dialysis machines. Developments in IT
paved the way for increasingly sensitive
and sophisticated machines. A␣ single
machine could now perform a number
of tasks which would previously have
required trained personnel. During the
1990s, attention has focused more on
the dialysis fluid, its degree of purity
and methods of packaging it, which in
turn has led to considerable success for
sales of the chemical ingredients of di-
alysis fluid in powder form, as well as
water purification equipment.
RENAL CARE PRODUCTS
Proportion of total revenues
The Renal Care
Products business
area accounts for
39␣ percent of
Gambro’s revenues.
BUSINESS AREA
Market
Stable market growth of around 8 percent naturally
has a beneficial effect on the product market. Gam-
bro’s aim is that its share of the product market
should grow more rapidly than the market itself.
The market is characterized by price pressure to
some extent. The reasons for this vary from one coun-
try to another. In Europe, adaptations ahead of EMU
combined with a previously unregulated purchasing
policy have led to more accurate cost controls, while
the currency crisis in Japan has had ramifications for
prices in the Asia-Pacific region. The huge size of
the US dialysis market has resulted in a policy of re-
straint that has affected dialysis care in the US for
some 15 years.
Increased quality requirements are also a feature
of a number of markets. In the US, the federal Food
and Drug Administration (FDA) oversees the dialy-
sis product market, aided by regular inspections that
extend to the production units that export to the US.
High quality requirements also characterize the Japa-
nese market and a number of European markets.
The forms of sales agreements are becoming in-
creasingly significant, a preferred form being the long-
term contract, in which service and technical sup-
port are important elements.
Revenues per market Revenues trend
8000
● Europe
6000
● North and 4000
South America
● Asia, rest of 2000
the world
0
95 96 97 98
25
R E N A L C A R E P R O D U C T S
To supply the market with products, Gambro has
production units in 12 countries. The group has its
own sales companies in 29 countries, and a total of
6,700 Gambro employees work in the Renal Care
Products business area.
Products
The products used in dialysis are:
• dialyzers
• dialysis machines
• dialysis concentrate
• blood lines
Product development
Gambro has strong traditions as a leader in terms of
innovation among the companies competing in the
segment. Within its research and development or-
ganization, Gambro has developed the following
products, which are now found in dialysis units
throughout the world:
• the disposable dialyzer
• the synthetic high-flow membrane
• volumetric control of dialysis fluid
• the electronically controlled dialysis machine
• convective forms of treatment
• online infusion fluid production
• concentrate in powder form
• biosensors for dialysis treatment
(see glossary for descriptions of how
the products function)
Acquisitions
Over the years, Gambro has acquired a number of
competing companies with expertise in a specific
product area with the aim of broadening its prod-
uct range. The most important acquisition were
those of Hospal in 1987, which gave Gambro ac-
cess to the world’s most advanced dialysis mem-
brane, the AN69 and COBE in 1990. A number of
plants producing dialysis solutions have been ac-
quired during the past few years.
Competition
The three leading dialysis companies are Gambro,
Fresenius of Germany and Baxter of the US, fol-
lowed by a number of Japanese players.
Of the three major dialysis companies, Fresenius
Medical Care (FMC) is the leader in the hemodialy-
sis and dialysis clinics markets, while Baxter leads in
the peritoneal dialysis market. Gambro is in second
place in the hemodialysis and dialysis clinics markets
and in fourth place in the peritoneal dialysis market.
Within hemodialysis, Gambro ranks as number two
after FMC. Gambro is number three – after Baxter
and FMC – when all dialysis product companies are
compared.
26
Gambro Baxter Fresenius
Hemodialysis 22% 5% 26%
Peritoneal dialysis 2% 71% 16%
Total 17% 23% 23%
Gambro has maintained its strong position in the
product market for hemodialysis.
• The company is the world leader in sales of bicar-
bonate cartridges, dialysis machines (in terms of
value) and emergency dialysis.
•␣ Gambro is in second position for dialyzers and
water-treatment equipment.
• Gambro is number three in sales of dialyzers with
synthetic membranes and dialysis concentrate.
Gambro’s position in the peritoneal dialysis area
is weaker, but improved during the year due to the
introduction of innovative new products, such as
the Unica bag and the PD 200 machine (see below).
Despite the loss of the BiCart patent for the Eu-
ropean market in March 1997, which resulted in
the appearance on the market of ten imitators of
the bicarbonate cartridge, Gambro’s sales of BiCart
in Europe are increasing. One possible reason for
this is Gambro’s cost-efficient production of the
ancillary products – in the form of sodium chloride
cartridges and ion bags – which are now included
in the BiCart Select system.
New products
The development of new products has been gov-
erned by a number of basic principles.
Increasingly demanding customer expectations
have influenced all aspects of product development
and production. It has been a fundamental principle
to steer costs in a positive direction already at the
innovation phase.
Dialyzer development work has followed two
main guidelines: to provide the company with a
complete range of synthetic membranes, and to
develop a common product platform for all of the
group’s dialyzers. The same concerns have charac-
terized development work on new dialysis machines.
The success of the BiCart bicarbonate cartridge
over many years has influenced developments in the
concentrate area, a key principle being to support
BiCart with new products and systems.
Special attention has focused on adapting blood-
lines to Gambro’s own dialysis machines. Other key
areas for the product developers are emergency di-
alysis, water treatment and peritoneal dialysis.
The following new products were introduced
during 1998:
• A low-flux variant of the polyamide membrane
in the Polyflux dialyzer was added to the group’s range
of dialyzers using Gambro’s own synthetic mem-
Dialysis nurse Nicholas Paul assists patient Rose Mallard at Gambro’s
newly established dialysis clinic in Denver, Colorado.

27
R E N A L C A R E P R O D U C T S
branes. During the past few years, the trend has been
towards the increased use of synthetic membranes
in capillary form, while cellulose-based membranes
have declined.
• The DQM Urea Monitor, a monitor that regis-
ters the amount of urea in the blood, was introduced
during the year and has received high praise from
users of the AK 200 dialysis machine, to which the
monitor is connected.
•␣ A sodium chloride cartridge and an ion bag were
introduced to supplement the BiCart bicarbonate
cartridge. Together with BiCart, they make up BiCart
Select, a comprehensive dialysis concentrate system.
BiCart Select is a further development of the powder
concept and retains all its advantages: small volume,
easy storage, freedom from bacteria and low weight.
•␣ In the peritoneal dialysis area, the PD 200 machine
was introduced. The new machine is designed for Au-
tomated Peritoneal Dialysis, a strong growth area.
•␣ The PD fluid bag developed earlier by Gambro
Dr. Jennifer Fiore Chapman examines patient Lisandro Silva at
Gambro’s transplantation clinic in Buenos Aires, Argentina.
28
researchers, which was designed to prevent the for-
mation of toxic products during sterilization, un-
derwent further development and was introduced
under the name Unica Bag System.
Strategies
During the year, the business area worked on the
development of crucial basic strategies to underpin
future operations.
In order to strenghten Gambro´s leading position
within advanced renal care, to support the contin-
ued good growth of the company and to improve its
profitability, a global restructuring and efficiency
program within the Renal Care Products business
area will be launched. With these changes, the re-
mainder will be eliminated of the multi-company
structure that resulted from Gambro’s growth
through acquisitions. The restructuring costs of the
program will amount to 1.1 billion SEK.
The program is based on the strong global market
positions of the Gambro and Hospal brands. Mar-
keting and sales organizations are strengthened and
at the same time administrative functions are ratio-
nalized. The program also involves focusing on prod-
uct development and strongly pursuing coordina-
tion and common platforms for both knowledge and
technologies.
A review of production as well as logistics and
warehousing structure is planned as an element in
the efficiency and product development strategies.
Another key factor is the insistence on high qual-
ity, which is being emphasized in the group’s orga-
nizational changes.
There will be improved IT support as a result of
the extensive IT build-up in the group from Janu-
ary 1997 and onwards.
Strong customer contacts have always been at the
forefront of the business area’s strategy. During 1998,
the Best Use of Resources campaign had an impact on
customer contacts in Europe. The campaign’s em-
phasis on more cost-efficient forms of dialysis, such
as satellite dialysis and home dialysis, is extensively
supported by the products, IT and expert advice.
Another campaign, the Best Quality Treatment
campaign, focused on the segment of the European
market that favors the producer who enables nurs-
ing staff to give patients the most advanced and best-
quality care. Unique technical solutions were a key
strategy in the campaign.
Regional strategies are important for success in
the various geographical markets. The strategy in
Europe is to maintain Gambro’s high market share
of the hemodialysis market and improve its share of
the peritoneal dialysis market.
Increased penetration of the Japanese market and
improved positions in the new markets in Latin
America and Asia are desirable. The plan is to
achieve these aims by focusing on the sales organi-
zation and adapting the product portfolio.
The strategy in the U.S. focuses on increasing
the prevalence of Gambro’s own products in group-
owned clinics, while in the global context the strat-
egy is to focus on the marketing of the new powder
products, such as BiCart Select, and products for
emergency dialysis.

Highlights of 1998
The business area’s revenues increased by 7 percent
during the year. Total revenues amounted to SEK
7,976 M.
The volume trend in the main markets, Europe
and the U.S., was generally favorable and followed
market developments. Sales of monitors and dispos-
able products continued to develop favorably. Sales
of emergency dialysis monitors showed a particularly
positive trend. During the second quarter, bloodline
cassette production was adversely affected by mal-
functions. This was assumed to be the cause of some
cases of hemolysis. Corrective measures were taken
in close cooperation with the authorities.
A Swedish water technology company was ac-
quired in May. The company, a development and pro-
duction company with a turnover of approximately
25 million SEK, specializes in centralized water treat-
ment systems for dialysis clinics.
During the second quarter, problems ocurred in
a unit for dialyzer production. This caused, in turn,
problems in delivery of Gambro-made dialyzers to
the Company’s dialysis clinics in the U.S.
Effective January 1, 1999, all product-related Biosol, located in Canosa near Ancona in Italy, is one of the
operations are gathered in a global organization plants that produce dialysis fluids. The photo shows Biosol
making up the Renal Care Products business area. employees Claudio Criber and Vittorio Giromini.

HEMODIALYSIS PERITONEAL DIALYSIS

In this form of treatment, the blood is
conducted, via blood lines outside the
body, through the dialyzer, where the
purification takes place. In the dialyzer,
the blood and the dialysis fluid flow on
opposite surfaces of a thin membrane.
Waste products are transported from
the blood through the membrane and
carried away by the dialysis fluid. The
body’s excess fluid is removed through
the membrane by means of a pressure
differential created by the dialysis ma-
chine. The entire process is monitored
and controlled by the dialysis machine.
Peritoneal dialysis is a form of dialysis CAPD (Continuous Ambulatory
that differs from the more common Peritoneal Dialysis), the patient manu-
hemodialysis␣ in that the blood is ally changes the dialysis fluid approxi-
treated without being removed from mately every four hours. With APD
the body. Instead, the cleansing fluid is (Automated Peritoneal Dialysis), treat-
brought into the patient’s abdominal ment can be performed by a machine,
cavity, where the peritoneum acts as a and can thus take place even when the
dialysis membrane. patient is sleeping.
Dialysis fluid in plastic bags, sterile
blood lines, and in some cases special
machines to pump the fluid in and out
of the body, are required in this form
of treatment. In the most common
form of peritoneal dialysis, known as

29
BLOOD COMPONENT TECHNOLOGY

Close-up of panel of the TRIMA Automated Blood Collection System,

a key product within Business Area Blood Component Technology.

30
 BUSINESS AREA
BLOOD COMPONENT
TECHNOLOGY
shows rapid development
In 1998, Blood Component Technology
remained one of Gambro’s fastest-
growing business area, continuing to
display a high degree of innovative
creativity. The Transfusion Medicine
segment, which handles the collection
of blood components from blood donors
for transfusion to patients, remains the
largest segment, and the most significant
for the future. The focus today is on
Automated Blood Collection (ABC).
Market
About 5 percent of all the blood units collected
during a period of one year by all the world’s blood
banks are collected via apheresis. The world mar-
ket for apheresis products is valued at approximately
USD 430 M. Of this total, transfusion medicine ac-
counts for USD 300 M, the stem cell market for USD
BLOOD COMPONENT TECHNOLOGY
Proportion of total revenues Revenues per market
The Blood
Component Tech-
nology business
area accounts␣ for
6 percent of
Gambro’s revenues.
30 M, and therapeutic apheresis for the remainder
(see page 31 for an explanation of the terms used).
Apheresis work is conducted at blood banks
worldwide. The manner in which these centers are
organized varies according to local medical-care
policy. In Sweden, blood banks are almost always
departments in the major hospitals. In the U.S., they
are often run by the American Red Cross. Founda-
tions and other non-profit organizations may be
owners of blood banks, while in certain countries
the blood banks are owned by private interests.
Regardless of the ownership structure, blood
banks worldwide are currently undergoing changes.
In the U.S., blood banks are merging to form sub-
stantial chains. Competition is tough and the pay-
ments received are diminishing in value.
Technical developments have been an important
agent of change for the blood banks. During the past
decade, automation of blood tests has changed work
procedures at the blood banks and increased capac-
ity. In the near future, further steps will be taken
toward an even higher level of automation, impos-
ing increased demands on personnel. Another
source of change has been the increase in the num-
Revenues trend
1 400
1 200
● Europe 1 000
● North and 800
South America
600
● Asia, rest of 400
the world 200
0
95 96 97 98
31
BLOOD COMPONENT TECHNOLOGY
ber of players involved, all competing with each
other in terms of price and quality. The supervisory
authorities also press for changes, mostly aimed at
safeguarding quality and protecting the patients.
There is also increasing pressure from other inter-
ested parties, such as blood donors and society as a
whole, as well as customers, meaning doctors and the
owners of the blood banks.
In the future, blood banks may become extremely
large organizations, virtually fully automated and
with extensive IT support, focusing more on the
individual than is the case today and subject to clear,
internationally agreed quality requirements. The
blood bank will be an intermediate step between
the hospital and the blood donor. The commercial
requirements will be rigorous and there will be a
high degree of dependence on sophisticated, fully
automated systems.
The three segments in the business area differ in
terms of size and future prospects.
The transfusion market was valued at nearly
USD 600 M in 1997. The market is expected to grow
with an average of 15 percent a year. One sector,
Blood Platelet Collection, where growth is stable,
and a new sector, Collection of Red Blood Cells,
together account for 50 percent of the segment. Two
new sectors – Filters and Deactivation of Viruses –
are growing rapidly. By the year 2005, the Transfu-
sion Medicine market is expected to be worth USD
1,800 M, with apheresis accounting for 40 percent.
The market for therapeutic apheresis was val-
ued at USD 100 M in 1997. The market is expected
to grow with an average of 5 percent annually. The
two sectors in the market, Plasma Exchange and
Immunoadsorption, are showing stable but not rapid
growth. By the year 2005, the therapeutic apheresis
market is expected to be worth USD 137 M, with
plasma exchange accounting for 40 percent.
The stem cell market was valued at USD 30 M
in 1997. The market – which principally consists of
apheresis – is expected to grow with an average of 35
percent annually. The Peripheral Stem Cell Collec-
tion sector is showing stable growth, while two new
areas, Cell Selection and Blood Cell Expansion, are
just beginning to make an impact in the market. The
stem cell market is expected to reach a value of USD
335 M by 2005, with apheresis accounting for 10 per-
cent.
The most important competitors in the apheresis
area are the two U.S. companies operating in this
segment, Baxter Biotech Division and Haemonetics.
It is Gambro’s understanding that COBE BCT has
been the market leader in this area for the past sev-
eral years. COBE BCT’s market shares are 17 per-
cent in the transfusion medicine segment, 26 per-
32
cent in therapeutic apheresis, and 56 percent in stem
cell therapy.
Products
COBE BCT’s core product since its introduction
in 1988 has been its blood separator, the COBE
Spectra Apheresis System. Improved versions have
been introduced at regular intervals, the latest be-
ing version 7.
The TRIMA Automated Blood Collection Sys-
tem was launched in some European markets in late
1997. In autumn 1998, the FDA approved TRIMA
for sale in the American market. It was launched
for U.S. customers at the annual meeting of the
American Association of Blood Banks in Philadel-
phia on November 1, 1998. TRIMA is a system
which can be applied broadly for the collection of
all types of blood components. Different compo-
nents can be collected simultaneously from one
blood donor connected to a single needle. TRIMA
is the basis of COBE BCT’s Automated Blood Col-
lection (ABC) concept, which will dominate the
automated and cost-effective blood banks of the
future.
The disposable product Leucocyte Reduction
System (LRS) is an attachment for the SPECTRA
and TRIMA systems that continuously removes
white blood cells during the collection of blood
platelets. The high quality of the doses of blood
platelets collected using LRS have led to the prod-
uct being widely accepted.
APOLLOnet, the computer program offered to
SPECTRA users for documentation of the apheresis
process, provides strong support for the documen-
tation process at blood banks.
Strategies
Over several years, a number of strategies have been
formed around the basic strategy of making the cus-
tomer successful. Operations should offer the cus-
tomer successful technology, providing them with
high-quality blood products and increased cost-ef-
fectiveness. An example of this is the double blood
component doses that can now be provided by the
machines produced by the business area. This gives
the customer double the amount of blood compo-
nents for the same cost as previously. COBE BCT
also offers a number of educational programs which
the customer can use according to need.
The strong emphasis on the innovations that lead
to new products and therapies continues to be a key
factor for the business area. Approximately 10 per-
cent of revenues are invested in research and de-
velopment. For several years, this business area has
been the most innovative within Gambro.
 COBE BCT also works methodically in strength-
ening and developing its employees, so that they
can form strong teams with the customers. Lifelong
learning is an attitude to knowledge that perme-
ates the working atmosphere within the business
area.

Highlights of 1998
The Blood Component Technology business area
showed a favorable sales and earnings trend during
the year. Revenue increased by 10 percent to SEK
1,212 M.
While development was particularly positive in
the European and U.S. markets, it was weaker in
Japan and China than in the preceding year. Fa-
vorable growth continued for the Spectra blood
separator.
The distribution agreement with Aastrom Bio-
sciences, relating to stem cell therapy systems, has
been terminated. An important agreement was
signed with HemaSure relating to the use of filters
for purification of red blood cells, which represents
a significant new market for the business area. A
further agreement was concluded within Excorim
concerning marketing and sales cooperation with
the German company Therasorb. The agreement
covers the companies’ products for immunoadsorption
and therapeutic apheresis.

Paul Holland is president and medical superintendent of the

blood bank at Sacramento Medical Foundation in Sacra-
mento, California.

THE BLOOD’S COMPONENTS

Blood, the body’s most important trans-
port medium, consists of red blood cells
(erythrocytes), white blood cells (leuko-
cytes), blood platelets (thrombocytes),
blood plasma and stem cells.
The red blood cells, which are tiny,
pliable discs, are transported through
our arteries and veins 3,000 times per
day. They deliver oxygen and remove
waste products.
White blood cells provide protection
when the body is exposed to disease.
Blood platelets are cells whose main
task is to check bleeding. They bind with
each other to provide a natural bandage
until the wound has healed. The fluid
plasma transports nutrients, salts,
waste products and other substances.
Stem cells are found in the bone
marrow or, to a lesser extent, in the
peripheral blood system. They are the
blood’s mother cells, which eventually
develop into red or white blood cells or
blood platelets.
Apheresis is the name of the tech-
nique for separating out any of the com-
ponents named above from blood ob-
tained from a donor or from the patient.
Apheresis is used within three areas
of medicine:
• Transfusion medicine, which in-
volves the collection of red blood cells,
blood platelets and plasma from healthy
donors for transfusion to patients in
need of such therapy.
• During therapeutic apheresis, blood
cells or plasma are collected and sepa-
rated from the blood. They are replaced
by donated or artificially produced
blood cells.
• Stem cell therapy involves collecting
stem cells from the blood system and
infusing them into the patient, who is
then capable of forming new blood.
Cancer patients may need an infusion
of various types of stem cells following
treatment with cytotoxic drugs or radio-
therapy.

33
C A R D I O P U L M O N A R Y C A R E

Dr Yasar Akyurekli, surgeon at Ottawa Heart Institute, Ottawa, Canada.

34
 BUSINESS AREA
CARDIOPULMONARY CARE
– stable development
The Cardiopulmonary Care business
area develops, produces and markets
products designed specifically for car-
diovascular surgery, such as bypass
operations to correct vascular stenosis
(around 75 percent), and heart and
valvular disorders. The most important
products are an oxygenator, which
replaces the lung function during
surgery, and a heart-lung machine,
which replaces the pumping function
of the heart.
Market
During 1997, some 1.1 million bypass operations were
performed throughout the world, of which 450,000
were conducted in the U.S. and 350,000 in Europe.
Cardiovascular surgery, which accounts for just 13
percent of the total cardiovascular medical technol-
ogy market, is a relatively small segment of a market
that is dominated by angioplasty and pacemaker
operations.
The cardiovascular surgery market is growing by
only 2-4 percent per year. The moderate growth rate
is mainly attributable to alternative forms of treat-
ment, which have rapidly established themselves
in the market.
CARDIOPULMONARY CARE
Proportion of total revenues Revenues per market
The Cardiopulmo-
nary Care business
area accounts␣ for
6␣ percent of
Gambro’s revenues.
• Minimally invasive surgery is increasingly used.
• There is also angioplasty treatment supplemented
by stents (see glossary page 34).
• New surgical techniques that allow an uninter-
rupted natural heart function during operations
constitute another business threat, since they pre-
clude the need for a heart-lung machine.
• Other techniques are also entering the market,
such as the supply of growth hormone to the blocked
areas of blood vessels, which enable a completely
new vessel to be grown within just a few weeks.
There is also a clear trend towards reduced use of
heavy anesthesia. Patients are thus able to leave the
operating room more quickly and have a more ac-
tive metabolism, a development that is placing new
demands on the equipment used.
Classic cardiovascular products account for 81
percent and blood salvage products for 12 percent of
total sales within the Cardiopulmonary Care business
area.
A trend towards consolidation has commenced
within the cardiovascular-surgery products market.
Increasingly large units are being formed.
Products
During the year, two important products were intro-
duced:
• A completely biocompatible blood line system des-
ignated SMARxT was launched. The plastic in the
lines is treated with surface-modifying additives
(SMA), a technique licensed to COBE CV by the
Revenues trend
1 400
1 200
● Europe 1 000
● North and 800
South America 600
● Asia, rest of 400
the world 200
0
95 96 97 98
35
C A R D I O P U L M O N A R Y C A R E

• A new oxygenator, the Optima XP, featuring a

capillary membrane, was also launched during the
year.
• The new Century Perfusion System, which was
launched in late 1997, has now been on the market
for a full year and is selling well in the US.

Organization
The business area has been comprehensively reor-
ganized in order to adjust to the changed and much
tougher market conditions. A new production man-
agement team has taken over. A new R&D organi-
zation has also been introduced and a number of new
employees have been hired. During the past three
years, efficiency has improved by 5 percent on an
annual basis, despite the overall reduction in em-
ployees.

Perfusionist Gilbert Lavalle at the heart-lung machine at Ot-
tawa Heart Institute in Ottawa, Canada.
California-based company, Thoratec. When blood-
lines with the new coated surface are used, patients
bleed less and consequently feel better. Hepariniza-
tion of the surface is also avoided, which reduces the
risk of side effects in patients. This concept was re-
cently introduced in Europe and Canada.
Highlights of 1998
Adjusted for currency exchange rates, the Cardio-
pulmonary Care business area showed a 6.5-percent
decrease in revenues in 1998. Total revenues
amounted to SEK 1.152 M.
The US market showed a relatively favorable
trend, while trends in the group’s European markets
were weaker and reflected increased pressure on
prices.
Once again, the Gambro plant in Gloucester, UK,
received the Queen’s Award for outstanding export
achievements.
In November, an agreement was reached – which
is to be approved by the authorities – on the sale of
the Cardiopulmonary Care business area to an Ital-
ian company, Sorin Biomedica. Gambro’s manage-
ment had announced several years ago that it would
either sell or expand this business area, which the
company inherited when it acquired the U.S. com-
pany COBE in summer 1990. Following␣ the restruc-
turing and rationalization measures implemented in
recent years, it should have excellent prospects for
favorable development in combination with other
activities.

ABOUT CARDIOVASCULAR SURGERY

The oxygenator is based largely on
the same principle as the dialyzer. The
blood passes across one side of a mem-
brane, with oxygen on the other side.
Oxygen passes through the membrane
into the blood, while carbon dioxide
formed in the body leaves the blood via
the membrane.
The perfusion machine performs the
heart’s pumping function by transport-
ing the oxygenated blood from the oxy-
genator back to the patient. The ma-
chine is also used to collect blood from
the opened thorax, to deliver liquid
medications to the patient and to report
essential data during the operation.
Minimally invasive surgery: also
known as “keyhole” surgery.
Angioplasty involves dilating a blood
vessel with a balloon, which is inserted
with the aid of fiber-optical technology.
A stent is a tube made from fine
metal gauze that is inserted into a
blood vessel in conjunction with
angioplasty and remains there to ex-
pand the walls of the vessel and facili-
tate a free blood flow.

36

Research and development
Gambro’s research activities have always
acted as an engine for the company’s
business. During its entire 35-year
existence, the company has launched
pioneering products in the dialysis mar-
ket. In recent years, the highly active
research department in the Blood
Component␣ Technology business area
has been of crucial importance to the
business area’s success.
In 1998, the company invested SEK
637 M (585) in its R&D operations.
Organization
There are approximately 600 employees involved
in R&D in Lund, Sweden; Hechingen, Germany;
Lyon, France; Mirandola, Italy; Denver, Colorado,
USA; and in Koga, Japan. Activities are coordinated
by Gambro’s research director, who is based in Lund.
Gambro also supports research at a number of very
prominent universities that cooperate closely with
Gambro.
It is intended that Gambro’s research department
will be restructured during 1999. The guiding prin-
ciple will be the need to develop skills and share
knowledge within Gambro. Medical and technical
expertise will provide a basis for the development
of new, innovative products and therapies, which
will be tested and developed in close cooperation
with the customers.
The Blood Component Technology business area
will continue its substantial investment in the de-
velopment of new products. During 1998, coopera-
tion between the R&D departments of the Renal
Care and Blood Component Technology business
units has increased. Many of the ideas for a new tech-
nology platform for dialysis machines were derived
from the development of BCT’s TRIMA system.
R E S E A R C H A N D D E V E L O P M E N T
Membranes
Membrane technology is an area that has always been
well-established in Gambro’s research organization.
Today, it may be said that Gambro produces mem-
branes for all needs. The choice between high-flow
membranes (which permit the passage of large mol-
ecules) and low-flow membranes (used to reduce the
risk of infection) is a matter of the doctor’s choice.
The research organization focuses on continued im-
provements to the membrane’s biocompatibility
(that is, the extent to which the blood’s compo-
nents are activated by it) and on flexible, cost-ef-
fective production processes.
Monitors
Gambro’s dialysis machines are at the forefront of
machine technology. In order to further strengthen
Gambro’s market position, the company’s monitor
development activities are to be restructured during
1999. A common technology platform will receive
high priority and will form the basis for the intro-
duction of the dialysis machines of the 21st century.
The dialysis monitor development center will be in
Lund, Sweden.
New areas of research
New suggestions for research are being made con-
tinuously by subsidiaries, clinics and doctors in the
company’s network. The research department ana-
lyzes these ideas and their commercial viability in
close cooperation with marketing management. In
preparation for future research projects, the follow-
ing needs have been identified as the most decisive
for the development of new products for the Renal
Care business area:
• Longer survival time for dialysis patients
• Simpler start and completion phases for dialysis
treatment
• Equipment for daily home dialysis
• Equipment for limited-care centers
• Further development of dialysis solutions
• The biological effects and volume of PD fluid
37
H U M A N R E S O U R C E S
Human Resources
Systematic and continuous work is
conducted within Gambro with the aim
of attracting skilled workforce and
developing the competencies of employ-
ees. Gambro employees are the target of
a number of programs, all of which are
designed to support them and develop
their skills.
However, 1998 was a year of consoli-
dation, when the major organizational
changes in the company were prioritized
ahead of more long-term personnel
programs. It was also a year when sev-
eral upcoming programs were prepared
for an introduction in 1999.
Human Resources corporate staff
At group level, the role of human resources is to
• develop the ability to adapt and build manage-
ment skills
• create a common platform based on values,
corporate culture and visions
• develop policies and systems to support this
platform
• to be an advisor to group units
• ensure that quality is maintained in personnel
activities
The predominant portion of all personnel develop-
ment efforts are carried out locally in the group
companies. During the year the Human Resources
staff for the U.S. clinics organization was moved
from Norcross, Virginia, to Denver, Colorado.
Development projects
A number of development projects aimed at 1999
were prioritized during the year.
A program from management recruitment, called
the Leadership Development Program (LDP) is
being developed and will be realized with full effect
during the second half of 1999.
38
A management development program will also be
launched. The group has conducted an interna-
tional management development program since
1994, with slightly more than 250 participants. It
has now been finalized and a new program is being
developed in cooperation with the Swedish Insti-
tute of Management (IFL) in Brussels, Belgium, and
the Center for Creative Leadership (CCL) in Colo-
rado Springs, Colorado, USA. The program will
comprise approx. three weeks and be conducted in
Europe and the US. Three to four programs will be
initiated annually with approx. 25 participants in
each.
The rewards system for about 150 executives in
Gambro’s organization was reviewed and linked to
the company’s program for value creation.
The current trainee program was concluded on
January 31, 1999. All participants have been assigned
work within the Gambro organization. The next pro-
gram will start in 2000 and will be more interna-
tional, with participants from Europe, the U.S. and
Asia.
A European Works Council is being developed
as a result of EU regulations and should be estab-
lished in 1999. The council will meet at least once
annually. A proposed agreement is being drafted.
The first meeting is expected to be held in conjunc-
tion with the 1999 Annual General Meeting.
Employees by market %
● Nordic countries
● Rest of Europe
● North and South America
● Asia, Australia
Average number of employees by business area
● Renal Care Service
● Renal Care Products
● Cardiopulmonary Care
● Blood Component Technology
GAMBRO VALUES

All actions and programs initiated and implemented within Gambro shall
be based on and take into account the company’s fundamental values:

Excellent business performance Cooperative spirit High ethics

• Customer orientation • Patient commitment • Honesty and integrity
• Quality • Open and active communication • Good citizenship
• Leadership and initiative • Team work • Dedication to
• Performance ethics • Respect and trust environment
• Results orientation • People development • Courage
• Competency • One global company

39
E N V I R O N M E N T A L W O R K
Environmental work
If 1997 was the year when an environ-
mental program was officially introduced
in the entire Gambro group, 1998 was
the first year when the implementation
showed measurable results.
The strategic environmental plan
established in 1997 stipulates that eight
Gambro units are to have ISO 14001-
certified environmental management
systems prior to the end of 1999. The
target date for the 14 remaining manu-
facturing units is a year later.
General
Since group products are complex in many respects,
they contain many different components and mate-
rials. This gives rise to an environmental␣ challenge.
In addition, several of the group’s plastic prod-
ucts are disposable items which, for various reasons,
such as the need to avoid infection, may only be used
once. Following their use, disposable items must be
handled in a safe way. At present, there are no su-
perior alternatives to the incineration of such waste.
A large proportion of Gambro’s products, vari-
ous types of blood tubings and blood bags, are made
of PVC (polyvinyl chloride), primarily softened
PVC. There are currently no acceptable alternatives
to the use of PVC for these applications, after tak-
ing technical, financial and biocompatibility con-
siderations into account. The environmental prob-
lems resulting from the production of PVC have
been reduced considerably, in terms of both the
work environment and the external environment,
in the form of emissions. In addition, the improved
control systems used in modern incineration plants
have reduced the amount of hazardous substances
emitted in connection with the incineration of
PVC. Nonetheless, Gambro is continuing to work
to find alternatives to PVC.
Sterilization
Most of the group’s disposable items must be steril-
ized prior to sale. Sterilization is conducted in the
40
group’s own and external, subcontracted facilities,
by means of various types of processes. Ethylene ox-
ide (EO), steam, gamma or beta radiation are used
in these processes. Each sterilization method has its
own advantages and disadvantages from technical,
financial and environmental viewpoints.
EO sterilization is the method that generally has
the lowest impact on the material being sterilized. The
other methods require more from the materials, con-
tained in the products that are to be sterilized. Cer-
tain materials, used in these products, are not avail-
able in such forms that steam or radiation steriliza-
tion can be performed. In such cases, EO steriliza-
tion is the only possible alternative. Since EO is
classified as a carcinogenic substance, handling of the
gas and emissions to the external environment, as well
as the residual amount of the substance that remains
in the product following sterilization, are subject to
stringent requirements. Strict procedures have been
established for the handling of the gas.
To ensure that emissions to the external environ-
ment are contained within the limits imposed by
government authorities, the sterilization facilities
are equipped with various types of high-performance
purification systems, such as scrubbers.
The residual amounts of EO that are permissible
in the products delivered are extremely small,
namely just a few tens of ppm. Regular process con-
trols are implemented to ensure that the limits are
not exceeded. During 1998, there were no reports of
malfunctions of these systems that resulted in unac-
ceptable emissions.
ISO 14001
ISO 14001 resembles a checklist for the systematic
handling of environmental aspects. The ISO 14001
standard contains 17 sections, which are of funda-
mental importance to the performance-related han-
dling of Gambro’s environmental matters. These
sections include the establishment of procedures for
the identification of any environmental impact from
operations, contingency plans for emergencies and
communications with the world at large.
Gambro has already established such procedures.
The features added by the implementation of ISO
14001 is the connection of an environmental per-
spective to these procedures. This results in an envi-
ronmental management system, which yields many • Small and light-weight products are less expen-
advantages for the group. sive and easier to transport, thus reducing emis-
At present, there are 22 manufacturing locations sions from transportation vehicles.
at which Gambro’s medical devices or pharmaceu- • Smaller and lighter equipment is easier to handle,
tical products are produced. Eight of the locations will which generates savings in the entire transport
receive ISO 14001 certification before the end of chain.
1999. The AK200 dialysis machine was recently equipped
It is self-evident that implementation of an envi- with a counterflow heat exchanger as a standard fea-
ronmental management system is easier for small ture. The heat exchanger is used to heat the dialysis
units, compared with larger ones. The first unit to be fluid by using the heat from the dialysis fluid that is
granted environmental certification was a small plant, leaving the machine. This reduces energy consump-
namely the SECON dialyzer plant in Germany, which tion for the AK200 by approximately 40%. Although
underwent its certification inspection in June 1998. such a reduction would generate minor environmen-
Two other small units, COBE UK in Gloucester, tal improvements for a single machine, the benefits
England, and MTN in Neubrandenburg, Germany, are considerable in a clinic when one considers that
will be certified at the beginning of 1999. there are many machines that are in operation
COBE UK has already undergone pre-inspections, throughout the day.
with good results. As a result of the actions taken to
prepare for certification, the plant’s environmental
impact and costs were reduced, through such mea-
sures as shorter sterilization cycles and a standard-
ized procedure for the handling of transport pallets.
The unit in Lund is the most complicated one in
organizational terms, since it has seven different
operational organizations. Measures undertaken at
Lund during the year include environmental train-
ing for personnel and the formulation of written en-
vironmental management procedures. This will lead
to an environmental management system which is
scheduled for certification after the summer 1999.
Gambro Dialysatoren in Hechingen is another com-
plex unit with many different operational organi-
zations. However, the plant has made considerable
progress in its implementation of a joint environ-
mental management system, for which certification
is planned for the first quarter of 1999.
The manufacturing units in Denver, Colorado,
and the units in Medolla, Italy, and Lyon, France,
will complete the implementation of their environ-
mental management systems during 1999.

Significant events in 1998

The introduction of the BiCart Select system re-
sulted in a saving of 60% of the plastic used for the
conventional containers for dialysis concentrates.
Since it also leads to a radical reduction in the need
to transport water, which is the main ingredient in
dialysis concentrate, the total reduction in weight
amounts to 75%.
The savings of plastic and reduction in weight
yield the following benefits:
• Reduced use of plastic materials. Oil is saved and
less energy is used in production.
• Smaller and lighter products require less packag- Secon of Germany was the first Gambro plant to receive
ing. ISO 14001 certification.

41
I T S O L U T I O N S
New IT solutions facilitate growth
– and transition
to the new millennium
Gambro continued to develop new IT
solutions during 1998. Gambro’s strat-
egy is to use these solutions to help the
group to achieve key business objectives
and to facilitate growth. During the
year, measures to make Gambro’s IT
systems Y2K (millennium shift) com-
patible were given␣ the highest priority.
This project is proceeding according to
plan and is scheduled for completion on
September 30, 1999.
Gambro’s IT strategy is to focus on measures to en-
able the realization of important business and growth
objectives. As operations grow, it is essential that
paper-based or local solutions are decreased. Auto-
mated procedures and processes are prerequisites for
rapid growth based on acquisitions and swift inte-
gration of the acquired units.
Gambro’s IT activities are characterized by open-
ness to external cooperation, long-term vision in
order to support changes in the group’s business
operations and the desire to achieve continuous
change.
Gambro is concentrating its IT activities, in or-
der simultaneously to achieve:
• better and faster business decisions through ac-
cess to relevant information
• better and well-defined business processes through
standardized behavior supported by IT systems
• providing customers with added product and ser-
vice value, by providing access to information of
relevance to the products and services they purchase
42
• better utilization of the knowledge possessed by
the organization and better tools for achieving co-
operation within and between centers of excellence.
A total of SEK 135 M was invested in new IT
solutions within the Gambro group during 1998, in
addition to Y2K-related measures.
Renal Care Services
Within the Renal Care Services business area,
Gambro has developed a number of IT systems that
collect all information in these operations in a single
data base with comprehensive medical and admin-
istrative information about patients. The system will
be introduced gradually in all Gambro clinics. This
will result in considerable savings, improved data
quality and better treatment capabilities, while en-
abling the implementation of common processes
and quality systems.
Renal Care Products
In the Renal Care Products business area, Gambro
began in 1998 to replace local systems of various
origins and quality. The ERP system R/3 from SAP
was installed at the operations in Lund and Brussels
during the year. The system will successively be in-
stalled in all units. An expansion of the central da-
tabase will also be carried out, which will provide
improved access to information with better quality,
as well as the establishment of common processes.
Forthcoming work to introduce the new system will
be strictly linked to operational needs and comple-
mented with simultaneous initiatives in the field of
management information.
Joint IT structure
A group-wide IT infrastructure for Gambro has been
defined. The purpose of this infrastructure is to facili-
tate the integration of all parts of the group into a
global organization that works in unison, while con-
currently enabling communications and coopera-
tion with customers, suppliers and business partners.
Implementation of the new structure commenced
during 1998.
All locations with major Gambro operations and
all clinics in the US are connected to Gambro’s in-
ternational network for datacommunications. By the
end of 1998 all PCs were able to access Traffic, the
group’s Intranet, and of the 18,000 employees in
Gambro more than 10,000 had access to e-mail.
Gambro uses the Internet to provide information
to the interest group via the group’s web site
(www.gambro.com). The Internet is also used for
communications with external organizations. Inter-
nally, the Internet is used as a platform for cost-ef-
fective and encrypted communications with the
group’s smaller business locations via a Virtual Pri-
vate Network.
secure the supply of raw materials, production, dis-
tribution of products and the functionality of Gambro
clinics.
Gambro is dependent on external parties main-
taining their activities in their capacity as suppliers
of goods and services, trading partners, representa-
tives of central and local government authorities,
other agencies and public enterprises and bank and
insurance companies. Accordingly, Gambro’s Y2K
Project includes contacts with external interest
groups in order to ascertain the status of their efforts
to assure year 2000 compliance.
In order to improve readiness, Gambro has formu-
lated a total risk analysis and risk assessment, which
could serve as a basis for alternative plans in sen-
sitive parts of the group’s operations.
The costs for making Gambro’s IT systems Y2K
compliant will total slightly more than SEK 100 M
in addition to other systems investments.

Technological progress as a threat

Gambro’s intensive use of IT results in a dependence
on skilled employees, who are currently in short sup-
ply.
In order to eliminate this risk to the extent pos-
sible, Gambro has entered into long-term and in-
depth cooperation with a number of leading IT
companies. In addition, Gambro continuously as-
sesses which IT services are part of the group’s core
business and which services could generate cost,
flexibility and quality benefits if they were outsourced.

Preparations for the year 2000

The Gambro group’s Y2K Project was started up on
September 1, 1997. Project work continued during
1998 to eliminate the impact on group operations
of the date-dependence problem in connection with
the move into the 21st century.
The project was appraised by the group’s external
auditors in the autumn of 1998, in order to report on
Gambro’s Y2K status. Although the auditors’ state-
ment was generally favorable, they warned of the risks
related to having many high-priority group projects
in progress simultaneously.
The Y2K Project, which encompasses all group
units, is led by a corporate-level project group, which
reports to Group Management and which compiles
quarterly reports on the status of the project within
the group as a whole. The corporate team leads all
the work, coordinates all the Y2K measures in progress
within the group and provides support to the local
project groups.
Gambro applies the TFM 2000, IBM’s method for New IT solutions will help Gambro achieve key
assuring year 2000 compliance. The objective is to business goals.

43
E M U P R O J E C T S
New currency results in
new game rules
The start of European Monetary Union,
EMU, and the introduction of a new
currency (euro) at the beginning of
1999 are affecting large parts of Swedish
industry and commerce. The compre-
hensive preparatory work conducted
within Gambro during 1998 made the
group well equipped for the new situa-
tion. Work related to EMU matters
continues within Gambro on a continu-
ous basis in project groups at company
level within the euro area and at group
level.
EMU has both strategic and practical significance
for Swedish industry and commerce, particularly for
companies with international operations. It is highly
probable that it will accelerate the process of struc-
tural change under way many industries, since the
euro increases opportunities for comparing prices
in different countries, which will lead to improved
competition.
At the same time, Swedish companies will prob-
ably be able to report their shareholders’ equity and
figures in annual reports in euro as of the year 2000.
Worked aimed at changing Swedish legislation in this
area is in progress. In addition, it is possible for those
companies whose shares are listed on the Stockholm
Stock Exchange to have share prices quoted in euro.
As a result of this trend, Sweden will soon become
a country with two parallel currencies.
44
Gambro, which has very large international opera-
tions, with markets outside Sweden accounting for
99 percent of revenues, was well equipped for the
start of EMU, with preparations including the for-
mulation of a strategic policy at group level.
During 1998, in accordance with guidelines issued
at group level, EMU projects were initiated in all
Gambro companies based in Euroland. The aim of
these projects was to create an awareness of the EMU
issue, and to ensure that this awareness penetrated
the entire organization, not only the financial con-
trol and computer departments.
EMU work was conducted with the help of check-
lists that contained 200 to 300 questions, which were
prepared at group level as guidance in analytical work.
Gambro’s work in the EMU area did not cease
when the monetary union became a fact at the be-
ginning of the year. The projects remain in opera-
tion on a continuous basis and all group companies
in Euroland has their own steering and project com-
mittees for EMU issues and they report on a monthly
basis to the Parent company, to enable their work
to be monitored at group level.
In addition to adaptations of all of the group’s
IT systems to enable them to handle the new cur-
rency, the projects have also led to a number of other
measures. For example, Gambro often requests that
suppliers submit tenders in terms of euro and Gambro
customers can request invoices denominated in
euro.
Furthermore, the group’s cash-pool structure,
which is part of Gambro’s liquidity management, was
adapted to the new currency. (For more information,
refer to the Financial Risks section).