5. Baxter International
$13.9 Billion
KEY EXECUTIVES:
Robert L. Parkinson Jr., Chairman & CEO
Philip L. Batchelor, Corporate VP, Quality
Michael J. Baughman, Corporate VP & Controller
Jean-Luc Butel, Corporate VP and President, International
Robert M. Davis, Corporate VP and President, Medical Products
Ludwig N. Hantson, President, Bioscience
Robert J. Hombach, Corporate VP & Chief Financial Officer
Norbert G. Riedel, Ph.D., Corporate VP & Chief Scientific Officer
NO. OF EMPLOYEES: 48,500
GLOBAL HEADQUARTERS: Deerfield, Ill.
The portrait is simply stunning. Far too striking, some might argue, for the cover of a corporate financial report. In the photograph, Kanyakorn Piasukho smiles demurely amid Thailand’s ancient ruins, her head tilted slightly, her Hershey bar-colored hair and eyes bathed in a soft golden light.
Piasukho’s portrait truly would be better suited for the cover of a travel brochure. But it graces the front of Baxter International Inc.’s 2011 annual report, providing both inspiration to company leaders and insight to industry observers curious about the firm’s commitment to overseas markets.
Piasukho was diagnosed with chronic nephritis in infancy and experienced acute kidney failure in 2009. As she awaits a kidney transplant, the Bangkok resident undergoes peritoneal dialysis (PD), an alternative to traditional hemodialysis (HD) treatment that increasingly is becoming popular in countries with limited healthcare resources. Piasukho is one of thousands of Thailand residents who have taken advantage of the 4-year-old “PD First” policy, which encourages the use of peritoneal dialysis over in-center HD to expand access to treatment, enhance patients’ quality of life, and control costs.
Response in Thailand to the government’s PD First policy has been overwhelming. The number of PD patients in the southeast Asian kingdom grew 10-fold between January 2008 and Dec. 31, 2011; over the next five years, Baxter projects the total (which stood at 10,000 at the start of 2012) to skyrocket another 250 percent to 35,000.
Thailand’s success with its PD First initiative has prompted neighboring Asian countries—including India, Malaysia, Taiwan and Vietnam—to evaluate similar policies to increase access to PD and manage the growing need for renal disease treatment among low-income patients within their borders. One of the most effective PD First programs exists in Hong Kong, where PD penetration encompasses about 80 percent of all dialysis patients (the city-state prioritized peritoneal dialysis as a treatment nearly 20 years ago).
Expansion of the PD First or a similar program in southeast Asia certainly would benefit Baxter, which increasingly has relied on the region for a good portion of its sales. In 2011, Asia-Pacific net sales totaled $2.1 billion, roughly one-sixth of the $13.9 billion in total revenue reported, according to the company’s annual report. Asia-Pacific sales have grown considerably over the last three years, jumping 16.2 percent in 2010 and 12.5 percent in 2011; Latin American/Canadian sales also rose during that same time period, but not as significantly—revenue in that region climbed 4.6 percent in 2010 and 11 percent last year.
Domestic sales have bounced around like a yo-yo since the Great Recession, falling a percentage point in 2010 but jumping 8.4 percent in 2011. European sales lagged behind all other regions, remaining flat in 2010 and climbing just 4.8 percent last year, Baxter’s annual report indicates.
“Baxter’s definition of success goes beyond sound financial performance,” Chairman and CEO Robert L. Parkinson Jr. wrote in a letter to shareholders at the start of Baxter’s 132-page annual report. “It reflects a commitment to responsible corporate citizenship and a will to make a difference in communities around the world.”
That commitment and desire to make a difference prompted the Deerfield, Ill.-based company to undertake several humanitarian efforts last year. Baxter shipped 70,000 units of saline solution and donated more than 4,000 units of intravenous (IV) solutions to northeast Japan after the deadly March 11, 2011, earthquake and tsunami. The company also sent 1.2 million containers of IV solutions to Thailand last fall to ensure that PD patients could still receive their therapy amid the worst flooding in recent memory. Flooding and mudslide victims in El Salvador, Guatemala, Honduras and Nicaragua received a helping hand from Baxter, too, as did Waterbury, Vt.-area residents left hobbled by a surprisingly powerful Eastern Seaboard hurricane.
Those humanitarian efforts, of course, benefitted Baxter as well by promoting customer/brand loyalty and securing a footprint in emerging markets. “We aid worthy causes around the world through volunteerism, product donations and financial support,” Parkinson noted in his shareholder letter. “Our ability to mobilize in times of crisis is matched by our focus on the long-term.”
Such a steady focus likely helped the company grow its sales by 8 percent and its net income by 57.1 percent in the year ended Dec. 31, 2011. On an adjusted basis (excluding special items), Baxter’s net income rose 4 percent, going from $2.4 billion in 2010 to $2.5 billion in 2011. Earnings per diluted share increased 8 percent to $4.31 from $3.98 in 2010.
A focus on long-term growth also was behind most all of the company’s major decisions last year, from its creation of an equity program for early-stage drug development firms to its acquisitions.
One of the most interesting steps that Baxter took toward ensuring long term growth occurred with the mid-summer creation of Baxter Ventures, a $200 million investment project aimed at helping new companies develop therapies that complement the firm’s existing product portfolio.
“Baxter’s mission is to apply innovative science to develop therapies and medical technologies that save and sustain patients’ lives,” Parkinson said when the announcement was made in late July. “As the company’s internal capabilities have advanced our late-stage pipeline, we have the capacity to further accelerate the early-stage development of essential therapies.”
About a month after creating Baxter Ventures, the company further invested in its future by paying $380 million for Baxa Corporation and its portfolio of pharmacy technology products that increase the efficiency and safety of oral and IV dose preparation and delivery. The deal broadens Baxter’s market leadership in nutrition and expands its presence in the pharmacy.
In mid-December, Baxter shelled out an additional $325 million for Synovis Life Technologies Inc., a St. Paul, Minn.-based provider of biological and mechanical products for soft tissue repair, including Peri-Strips Dry, Tissue-Guard and Veritas Collagen Matrix. The firm’s portfolio also includes products used in head, neck and hand microsurgery such as the Coupler, Flow Coupler and Gem Microclip.
These devices also are used to join small diameter vessels during autologous breast tissue reconstruction or to seal small blood vessels. The deal, according to executives, will help expand Baxter’s presence in the soft tissue repair market, estimated to be worth $1.6 billion by 2016.
Baxter incorporated Synovis into its BioScience business segment, a unit that posted $6 billion in sales last year. The company restructured its reporting segments in 2011, combining its former Medication Delivery and Renal units to create a Medical Products business. The newly-created unit generated more than half of the company’s 2011 sales, collecting $7.8 billion from global customers. The segment’s net sales rose 9 percent in 2011 and 3 percent in 2010, with renal products garnering the most revenue for the unit.
Renal device sales were driven by gains in the number of global PD patients—particularly in emerging markets with historically underserved patient populations—but the growth was somewhat stunted by the loss of domestic PD patients to another company. Still, sales rose 6 percent to $2.5 billion.
Global injectable products earned $2 billion for Baxter in 2011, a 6 percent increase compared with the $1.8 billion those goods generated in 2010. Executives attributed the increase to strong sales of certain enhanced packaging products and growth in the firm’s U.S. pharmaceutical partnering and international pharmacy compounding businesses.
Better pricing and higher demand for IV solutions and nutritional items helped Baxter’s IV Therapies division collect $1.8 billion in sales last year, a 7 percent jump compared with 2010.
Infusion Systems, however, experienced the most robust growth of any division within the Medical Products business (except for the category dubbed “Other,” which more than doubled its sales to $30 million), surging 38 percent in 2011 to $901 million. The company credited the expansion to increased sales of Sigma Spectrum infusion pumps and fewer charges relating to the damaging 2010 recall of its Colleague infusion pumps. Baxter executed its final Colleague recall plan through July 14, 2012, providing both service and support for customers still using the pump. The company incurred a special pre-tax charge of $400 to $600 million in Q1 2010 to cover the recall’s cost. That charge lowered first-quarter revenue in 2010 by $213 million but favorably impacted total sales in 2011 by 33 percentage points.
Emerging market growth spared the Anesthesia product category from losing ground in 2011 and reversing two consecutive years of gains. The division posted a 2 percent rise in revenue to $537 million, but further gains were offset by lower U.S. demand for inhaled anesthetics as well as competitive pricing pressures for generic sevoflurane, a sweet-smelling, nonflammable highly fluorinated methyl isopropyl ether used to induce and maintain general anesthesia.
While not as powerful an engine for growth as the new Medical Products segment, Baxter’s BioScience sector nevertheless delivered strong results last year, expanding 7 percent compared with 2010. Recombinants was the top revenue-generator with $2.2 billion in total sales, followed by plasma proteins with $1.4 billion in sales, antibody therapy with $1.5 billion in sales, regenerative products with $580 million in sales and “other” items, with $280 million in sales.
The “Other” product category was the only device class in either business segment to lose money in 2011. Strong sales of FSME-IMMUN, a tick-borne encephalitis vaccine, could not offset weak demand and low sales of the influenza vaccine (the 2011-2012 flu season began significantly later than normal last year and was remarkably mild in the United States, according to a World Health Organization review).
Regenerative medicine sales were driven by increased demand for surgical sealant products, including Floseal and Tisseel, while market adoption of Baxter’s advanced recombinant therapy, Advate, was responsible for much of the recombinant products sales surge.
$13.9 Billion
KEY EXECUTIVES:
Robert L. Parkinson Jr., Chairman & CEO
Philip L. Batchelor, Corporate VP, Quality
Michael J. Baughman, Corporate VP & Controller
Jean-Luc Butel, Corporate VP and President, International
Robert M. Davis, Corporate VP and President, Medical Products
Ludwig N. Hantson, President, Bioscience
Robert J. Hombach, Corporate VP & Chief Financial Officer
Norbert G. Riedel, Ph.D., Corporate VP & Chief Scientific Officer
NO. OF EMPLOYEES: 48,500
GLOBAL HEADQUARTERS: Deerfield, Ill.
The portrait is simply stunning. Far too striking, some might argue, for the cover of a corporate financial report. In the photograph, Kanyakorn Piasukho smiles demurely amid Thailand’s ancient ruins, her head tilted slightly, her Hershey bar-colored hair and eyes bathed in a soft golden light.
Piasukho’s portrait truly would be better suited for the cover of a travel brochure. But it graces the front of Baxter International Inc.’s 2011 annual report, providing both inspiration to company leaders and insight to industry observers curious about the firm’s commitment to overseas markets.
Piasukho was diagnosed with chronic nephritis in infancy and experienced acute kidney failure in 2009. As she awaits a kidney transplant, the Bangkok resident undergoes peritoneal dialysis (PD), an alternative to traditional hemodialysis (HD) treatment that increasingly is becoming popular in countries with limited healthcare resources. Piasukho is one of thousands of Thailand residents who have taken advantage of the 4-year-old “PD First” policy, which encourages the use of peritoneal dialysis over in-center HD to expand access to treatment, enhance patients’ quality of life, and control costs.
Response in Thailand to the government’s PD First policy has been overwhelming. The number of PD patients in the southeast Asian kingdom grew 10-fold between January 2008 and Dec. 31, 2011; over the next five years, Baxter projects the total (which stood at 10,000 at the start of 2012) to skyrocket another 250 percent to 35,000.
Thailand’s success with its PD First initiative has prompted neighboring Asian countries—including India, Malaysia, Taiwan and Vietnam—to evaluate similar policies to increase access to PD and manage the growing need for renal disease treatment among low-income patients within their borders. One of the most effective PD First programs exists in Hong Kong, where PD penetration encompasses about 80 percent of all dialysis patients (the city-state prioritized peritoneal dialysis as a treatment nearly 20 years ago).
Expansion of the PD First or a similar program in southeast Asia certainly would benefit Baxter, which increasingly has relied on the region for a good portion of its sales. In 2011, Asia-Pacific net sales totaled $2.1 billion, roughly one-sixth of the $13.9 billion in total revenue reported, according to the company’s annual report. Asia-Pacific sales have grown considerably over the last three years, jumping 16.2 percent in 2010 and 12.5 percent in 2011; Latin American/Canadian sales also rose during that same time period, but not as significantly—revenue in that region climbed 4.6 percent in 2010 and 11 percent last year.
Domestic sales have bounced around like a yo-yo since the Great Recession, falling a percentage point in 2010 but jumping 8.4 percent in 2011. European sales lagged behind all other regions, remaining flat in 2010 and climbing just 4.8 percent last year, Baxter’s annual report indicates.
“Baxter’s definition of success goes beyond sound financial performance,” Chairman and CEO Robert L. Parkinson Jr. wrote in a letter to shareholders at the start of Baxter’s 132-page annual report. “It reflects a commitment to responsible corporate citizenship and a will to make a difference in communities around the world.”
That commitment and desire to make a difference prompted the Deerfield, Ill.-based company to undertake several humanitarian efforts last year. Baxter shipped 70,000 units of saline solution and donated more than 4,000 units of intravenous (IV) solutions to northeast Japan after the deadly March 11, 2011, earthquake and tsunami. The company also sent 1.2 million containers of IV solutions to Thailand last fall to ensure that PD patients could still receive their therapy amid the worst flooding in recent memory. Flooding and mudslide victims in El Salvador, Guatemala, Honduras and Nicaragua received a helping hand from Baxter, too, as did Waterbury, Vt.-area residents left hobbled by a surprisingly powerful Eastern Seaboard hurricane.
Those humanitarian efforts, of course, benefitted Baxter as well by promoting customer/brand loyalty and securing a footprint in emerging markets. “We aid worthy causes around the world through volunteerism, product donations and financial support,” Parkinson noted in his shareholder letter. “Our ability to mobilize in times of crisis is matched by our focus on the long-term.”
Such a steady focus likely helped the company grow its sales by 8 percent and its net income by 57.1 percent in the year ended Dec. 31, 2011. On an adjusted basis (excluding special items), Baxter’s net income rose 4 percent, going from $2.4 billion in 2010 to $2.5 billion in 2011. Earnings per diluted share increased 8 percent to $4.31 from $3.98 in 2010.
A focus on long-term growth also was behind most all of the company’s major decisions last year, from its creation of an equity program for early-stage drug development firms to its acquisitions.
One of the most interesting steps that Baxter took toward ensuring long term growth occurred with the mid-summer creation of Baxter Ventures, a $200 million investment project aimed at helping new companies develop therapies that complement the firm’s existing product portfolio.
“Baxter’s mission is to apply innovative science to develop therapies and medical technologies that save and sustain patients’ lives,” Parkinson said when the announcement was made in late July. “As the company’s internal capabilities have advanced our late-stage pipeline, we have the capacity to further accelerate the early-stage development of essential therapies.”
About a month after creating Baxter Ventures, the company further invested in its future by paying $380 million for Baxa Corporation and its portfolio of pharmacy technology products that increase the efficiency and safety of oral and IV dose preparation and delivery. The deal broadens Baxter’s market leadership in nutrition and expands its presence in the pharmacy.
In mid-December, Baxter shelled out an additional $325 million for Synovis Life Technologies Inc., a St. Paul, Minn.-based provider of biological and mechanical products for soft tissue repair, including Peri-Strips Dry, Tissue-Guard and Veritas Collagen Matrix. The firm’s portfolio also includes products used in head, neck and hand microsurgery such as the Coupler, Flow Coupler and Gem Microclip.
These devices also are used to join small diameter vessels during autologous breast tissue reconstruction or to seal small blood vessels. The deal, according to executives, will help expand Baxter’s presence in the soft tissue repair market, estimated to be worth $1.6 billion by 2016.
Baxter incorporated Synovis into its BioScience business segment, a unit that posted $6 billion in sales last year. The company restructured its reporting segments in 2011, combining its former Medication Delivery and Renal units to create a Medical Products business. The newly-created unit generated more than half of the company’s 2011 sales, collecting $7.8 billion from global customers. The segment’s net sales rose 9 percent in 2011 and 3 percent in 2010, with renal products garnering the most revenue for the unit.
Renal device sales were driven by gains in the number of global PD patients—particularly in emerging markets with historically underserved patient populations—but the growth was somewhat stunted by the loss of domestic PD patients to another company. Still, sales rose 6 percent to $2.5 billion.
Global injectable products earned $2 billion for Baxter in 2011, a 6 percent increase compared with the $1.8 billion those goods generated in 2010. Executives attributed the increase to strong sales of certain enhanced packaging products and growth in the firm’s U.S. pharmaceutical partnering and international pharmacy compounding businesses.
Better pricing and higher demand for IV solutions and nutritional items helped Baxter’s IV Therapies division collect $1.8 billion in sales last year, a 7 percent jump compared with 2010.
Infusion Systems, however, experienced the most robust growth of any division within the Medical Products business (except for the category dubbed “Other,” which more than doubled its sales to $30 million), surging 38 percent in 2011 to $901 million. The company credited the expansion to increased sales of Sigma Spectrum infusion pumps and fewer charges relating to the damaging 2010 recall of its Colleague infusion pumps. Baxter executed its final Colleague recall plan through July 14, 2012, providing both service and support for customers still using the pump. The company incurred a special pre-tax charge of $400 to $600 million in Q1 2010 to cover the recall’s cost. That charge lowered first-quarter revenue in 2010 by $213 million but favorably impacted total sales in 2011 by 33 percentage points.
Emerging market growth spared the Anesthesia product category from losing ground in 2011 and reversing two consecutive years of gains. The division posted a 2 percent rise in revenue to $537 million, but further gains were offset by lower U.S. demand for inhaled anesthetics as well as competitive pricing pressures for generic sevoflurane, a sweet-smelling, nonflammable highly fluorinated methyl isopropyl ether used to induce and maintain general anesthesia.
While not as powerful an engine for growth as the new Medical Products segment, Baxter’s BioScience sector nevertheless delivered strong results last year, expanding 7 percent compared with 2010. Recombinants was the top revenue-generator with $2.2 billion in total sales, followed by plasma proteins with $1.4 billion in sales, antibody therapy with $1.5 billion in sales, regenerative products with $580 million in sales and “other” items, with $280 million in sales.
The “Other” product category was the only device class in either business segment to lose money in 2011. Strong sales of FSME-IMMUN, a tick-borne encephalitis vaccine, could not offset weak demand and low sales of the influenza vaccine (the 2011-2012 flu season began significantly later than normal last year and was remarkably mild in the United States, according to a World Health Organization review).
Regenerative medicine sales were driven by increased demand for surgical sealant products, including Floseal and Tisseel, while market adoption of Baxter’s advanced recombinant therapy, Advate, was responsible for much of the recombinant products sales surge.
| < Previous - Medtronic | Philips Healthcare - Next > |
