Baxter International Inc. (NYSE: BAX) today announced plans to create two separate, independent global healthcare companies -- one focused on developing and marketing innovative biopharmaceuticals and the other on life-saving medical products. Both will be global leaders in their respective markets.
Baxter has positioned both businesses to be successful, profitable and sustainable independent companies, and this decision reflects further evolution of Baxter's multi-faceted strategies emphasizing a commitment to innovation and operational excellence. To date, this has led to the development of a robust pipeline of novel and cost-effective therapies and numerous in-licensing collaborations within the biopharmaceuticals business, and the medical products portfolio was recently bolstered by the acquisition of Gambro AB, a global provider and leader of dialysis products, providing a number of longer-term growth opportunities as well as significant commercial and cost synergies.
''Baxter has an established history of executing successful spinoffs, and we have continued to evaluate the separation of these two businesses in response to diverging business dynamics and the rapidly changing macro-environment,'' said Robert L. Parkinson, Jr., chairman and chief executive officer. ''This decision underscores Baxter's commitment to ensuring its long-term strategic priorities remain aligned with shareholders' best interests, while improving our competitive position and performance, enhancing operational, commercial and scientific effectiveness and creating value for patients, healthcare providers, and other key stakeholders.''
The two businesses operate in distinct markets with corresponding underlying fundamentals, and each possesses unique and compelling growth prospects, investment requirements and risk profiles. The spinoff will create two, well-capitalized independent companies with strong balance sheets, investment grade profiles, and disciplined approaches to capital allocation. In addition, Baxter believes that the separation will result in other material benefits to the stand-alone companies, including:
Greater management focus on the distinct businesses of biopharmaceuticals and medical products
Ability to more effectively commercialize new and existing product offerings
Ability to drive innovation across the franchises and allocate necessary resources to the areas presenting the highest growth potential
Flexibility to pursue respective growth and investment strategies resulting in revenue acceleration, improved profitability and enhanced returns
The biopharmaceuticals business, with 2013 annual revenues of approximately $6 billion, consists of a diverse portfolio of recombinant and plasma-based proteins to treat hemophilia and other bleeding disorders, and plasma-based therapies to treat immune deficiencies, alpha-1 antitrypsin deficiency, burns and shock, and other chronic and acute blood-related conditions. This business's strategy is aimed at improving diagnosis, treatment and standards of care across a wide range of bleeding disorders and chronic diseases, enhancing capacity to meet growing demand for biotherapeutics, leveraging expertise into new emerging therapeutics through acquisitions and collaborations, and developing a robust new product pipeline focused on new and effective treatments that address unmet medical needs.
''Today's news represents a significant milestone that will result in material benefits for key stakeholders,'' said Ludwig N. Hantson, Ph.D., president, BioScience. ''We are confident that this decision not only strengthens our outlook, it positions us well to execute on our future growth prospects, new product pipeline and other opportunities as we enter a new era in the journey to achieve our aspiration as a premier biopharmaceuticals company.''
The medical products business, with 2013 annual sales of more than $9 billion, offers a broad portfolio of intravenous (IV) solutions and nutritional therapies, drug delivery systems and administration sets, premixed and other injectable drugs, as well as inhalation anesthetics and hospital-based biosurgery products. This business is also integrating the Gambro AB acquisition, which complements Baxter's existing renal therapies franchise and provides customers a comprehensive portfolio of products and services to treat end-stage renal disease across the full continuum of care. The medical products company will focus on strengthening its market leadership through geographic expansion and increased penetration, leveraging its extensive hospital presence and global footprint, developing comprehensive solutions to improve patient outcomes and safety, and enhancing profitability through a more streamlined and flexible cost structure.