Why choose between making drugs and making medical equipment when you can do both? Baxter International makes a wide variety of medical products and medicines through two divisions. The company is a leading manufacturer of intravenous (IV) fluids and systems via its Medical Products division. The medical segment also makes infusion pumps, prefilled syringes, and inhaled anesthetics, as well as dialyzers and other products for the treatment of end-stage renal disease (ESRD). Baxter's BioScience division makes protein and plasma therapies to treat hemophilia and immune disorders, as well as vaccines and biological sealants used to close surgical wounds.
Baxter earns more than half of its annual revenues from sales in international markets. The company has about 50 manufacturing locations in more than two dozen countries, as well as 100 distribution centers and sales operations in 100 countries around the globe. Primary operating regions outside the US include Canada, Europe, Latin America, and the Asia/Pacific regions.
The Medical Products and BioScience divisions are both critical to Baxter's operations, respectively accounting for about 55% and 45% of Baxter's revenues. Baxter has a diversified product offerings in both the BioScience and Medical Products segments in areas such as plasma therapeutics, vaccines, regenerative medicine, dialysis, drug formulation, biosimilars (generic biotech drugs), packaging systems, and nutrition. Baxter goals include advancing new therapies, improving existing treatments, and enhancing global access to health care.
Sales and Marketing
The company markets its products to hospitals, nursing homes, dialysis centers, medical and research laboratories, and other health care centers, as well as to physicians and patients themselves. Baxter uses a combination of direct sales representatives and independent distributors and wholesalers.
By keeping its operations diverse and nimble, Baxter has kept its revenues on the rise. Its sales increased 2% to some $14.2 billion in 2012 due a 3% rise in the BioScience segments from sales of recombinant therapies (Advate), regenerative medicine (surgical sealants), and antibody therapies (immunoglobulin). A slight increase in the medical products division came from higher sales of IV therapies, injectables, and anesthetics.
A charge related to recalls of the company's Colleague infusion pumps caused a dip in profits in 2010 (down 55% to $1.4 billion), but the company recovered in 2011, reporting a net income rise of some 57% to $2.2 billion. Profits rose again in 2012 by 3% to some $2.3 billion due to higher revenues and other income from reduced contingent payment liabilities from historical acquisitions.
The strategic objectives of Baxter include advancing its core product portfolio (including international expansion into new markets), driving innovation through research and development, growing through collaborations and acquisitions, and establishing public-private partnerships with government agencies (primarily for hemophilia, renal dialysis, and plasma therapies).
In 2012 Baxter announced that it would expand capacity of its plasma-based medicines by building a new manufacturing facility in Covington, Georgia. The plant is expected to cost more than $1 billion over the next five years and will open in 2018. The company also started construction of a new dialysis equipment plant in Thailand that year, and it entered into a manufacturing services agreement with Netherlands-based Stichting Sanquin Bloedvoorziening (Sanquin Blood Supply Foundation) to supplement its incremental plasma fractionation capacity.
Baxter spent some $1.15 billion to pursue R&D efforts in 2012, up 22% over 2011 spending due to a large number of late-stage development projects. Research efforts within the Medical Products segment include the development of advanced home dialysis systems, especially for use in developing markets with limited clinical resources. In the BioSciences segment, Baxter is broadening its hemophilia, regenerative medicine, and antibody immunodeficiency product offerings. Some R&D programs are conducted through partnerships with entities including Chatham Therapeutics (hemophilia), Momenta Pharmaceuticals (biosimilars or generic biologic medicines), and Onconova Therapeutics (cancer).
Baxter has launched restructuring programs to offset some problems in recent years, including product recalls and harsh competitive conditions in some markets. For instance, at the start of 2011 the company simplified its operating structure by combining its former Medication Delivery and Renal divisions into one business called Medical Products. It also launched a multi-year restructuring effort to increase efficiencies by streamlining international operations, rationalizing manufacturing plants, and standardizing administrative processes. Money saved through the initiatives is being reinvested in R&D, product launches, acquisitions, and other sales growth measures.
Mergers and Acquisitions
In late 2012 Baxter made a bold move to expand its renal dialysis equipment operations by agreeing to acquire Gambro, a global manufacturer of dialyzers and related monitoring, software, filteration, and disinfectant supplies. The $4 billion purchase will boost Baxter's position in the global dialysis marketplace, extending its footprint in Europe and emerging markets in Latin America and the Asia/Pacific region.
Earlier in 2012 Baxter expanded the BioScience division's regenerative medicine and biosurgery operations by acquiring Synovis, a maker of soft tissue repair devices and blood vessel sealing instruments, for some $325 million. Previous acquisitions have expanded in fields including injectable medicines, drug delivery systems and equipment, and hemophilia treatments.
In 2013 Baxter acquired the 60% of SIGMA International General Medical Apparatus that it didn't already own for some $90 million. The purchase added clinical medication delivery solutions.
Capital World Investors owns a 10% stake in Baxter.