07.19.16
$10.0 Billion
KEY EXECUTIVES:
José E. Almeida, Chairman and CEO
Brik V. Eyre, Corp. VP and President, Hospital Products
Robert Felicelli, Corp. VP, Quality
Timothy P. Lawrence, Corp. VP, Operations
James K. Saccaro, Corp. VP and Chief Financial Officer
Jill M. Schaaf, Corp. VP and President, Renal
Marcus Shabacker, M.D., Ph.D., Corp. VP and Chief Scientific Officer
Paul Vibert, Corp. VP and President, International
NUMBER OF EMPLOYEES: 50,000
GLOBAL HEADQUARTERS: Deerfield, Ill.
At first glance, Baxter looks like a company with serious financial issues, as it dropped five places from last year’s position on this list, where it came in at No. 4. The reason behind the significant move, however, is much less ominous. In July 2015, Baxter continued as a medical device company with a primary focus on providing renal and hospital products. At the same time, Baxalta Inc. was launched, birthed out of the company’s former biopharmaceuticals business.
The move marks the goal of a plan that Baxter had been sharing with the industry for some time. Company executives predicted both firms would remain as leading entities in their respective markets, each boasting a global presence. At an investor conference a couple of months prior to the July 1 split, company members outlined the expectations for growth in Baxter’s sales—approximately 4 percent on a compounded annual basis from 2016 through 2020. Expectations for Baxalta’s sales growth were even more positive, with figures of 6 to 8 percent increases on a compounded annual basis during the same timeframe.
Perhaps recognizing the turbulence and uncertainty that would immediately follow the split, the company did not provide expectations for the 2015 year (ended Dec. 31), which was probably best since Baxter finished down 7 percent over the prior year. Still, sales for the company were up when compared with the three prior years (2011-2013).
Company executives also expected the split to lead to more targeted research and development efforts that ultimately benefit each company in a much more effective way. In 2015, Baxter dedicated $603 million toward expenditures for these programs, which was just shy of the $610 million dedicated to R&D initiatives in 2014 (again, still over 2013, which saw $582 million put toward research and development expenditures). Further, Baxter anticipates at least 20 new product launches over the span of several years following the split; expected innovations will focus on improved clinical outcomes, lowering healthcare costs, and enhancing patient convenience.
“The spin-off provides us with flexibility to bring our product portfolio to market more effectively and capitalize on global opportunities and emerging trends to address patient needs while enhancing profitability,” Robert L. Parkinson Jr., Baxter’s former chairman and CEO, said in a release issued at the time. “Healthcare providers are being tasked with delivering better care to greater numbers of patients in a more cost-effective manner. Baxter is a valued partner in addressing the challenges faced by governments, payers, and healthcare providers around the world.”
Baxalta announced a similar dedication to innovation, also expecting more than 20 new products, which would ultimately contribute an additional $2.5 billion to sales by 2020. The company planned to further expand its product offerings through external partnerships and strategic acquisitions. In fact, rumors swirled that the company was eyeing Cambridge, Mass.-based Ariad Pharmaceuticals Inc., which focuses on oncology.
“Baxalta’s vision is to be a global biopharmaceutical leader striving for excellence in advancing innovative therapies that improve patients’ lives,” said Ludwig Hantson, who then served as president of Baxter’s BioScience business. “This is an exciting time for Baxalta, as we have a solid foundation and strong momentum. Our transformation is well underway and our compelling strategy, clinical and scientific expertise, and financial strength will position us well to drive enhanced value for patients, customers, and shareholders.”
All of this talk and excitement was relatively short-lived for Baxalta, however, as it was announced in 2016 that the company was to merge with Shire, a Dublin, Ireland-based pharmaceutical company. Shire had reached out to Baxalta almost immediately after the split from Baxter in July 2015, but company executives were reluctant to consider a merger so soon. Also, Baxalta executives thought the offer Shire was making represented an undervaluation of the company. Once the deal was assured in June 2016, Shire announced that it expected to carry out more than $500 million in cost-cutting or “synergies” within the first three years after the deal officially closed. Possibly in anticipation of the pending transaction with Shire, Baxter had made almost all of its portion of the stock it still held in Baxalta available, which originally (following the split) was just under 20 percent.
Business Units Overview
Following the split, Baxter was left functioning with two primary divisions—the hospital products business and the renal business. Products from the hospital side include IV solutions and administration sets, pre-filled vials and syringes for injectable drugs, infusion pumps, and biosurgery products. The renal division offers products and services to treat end-stage renal disease, irreversible kidney failure, and acute kidney injuries.
The hospital products division is the primary source of sales for the company, posting a figure of $6.17 billion in 2015. The unit is further broken down into three main product categories. Fluid systems—IV therapies, infusion pumps, and administration sets—was down a small amount, posting sales last year of $2.1 billion compared to $2.12 billion in 2014. Integrated pharmacy solutions reported sales of $2.29 billion versus $2.53 billion. Surgical care saw a similar decrease—$1.32 billion compared to $1.37. The renal business unit contributed $3.78 billion to the sales total in 2015. Both division’s sales (hospital and renal) were down from 2014, however, ($6.54 billion and $4.17 billion respectively).
Overall company sales were virtually flat in the United States in 2015 compared to 2014—$4 billion versus $3.9 billion. International sales, however, fell from $6.72 billion in 2014 to $5.96 last year. The company cited fluctuating exchange rates between foreign currencies and a strengthening U.S. dollar as a primary reason for the drop in sales numbers internationally.
KEY EXECUTIVES:
José E. Almeida, Chairman and CEO
Brik V. Eyre, Corp. VP and President, Hospital Products
Robert Felicelli, Corp. VP, Quality
Timothy P. Lawrence, Corp. VP, Operations
James K. Saccaro, Corp. VP and Chief Financial Officer
Jill M. Schaaf, Corp. VP and President, Renal
Marcus Shabacker, M.D., Ph.D., Corp. VP and Chief Scientific Officer
Paul Vibert, Corp. VP and President, International
NUMBER OF EMPLOYEES: 50,000
GLOBAL HEADQUARTERS: Deerfield, Ill.
At first glance, Baxter looks like a company with serious financial issues, as it dropped five places from last year’s position on this list, where it came in at No. 4. The reason behind the significant move, however, is much less ominous. In July 2015, Baxter continued as a medical device company with a primary focus on providing renal and hospital products. At the same time, Baxalta Inc. was launched, birthed out of the company’s former biopharmaceuticals business.
The move marks the goal of a plan that Baxter had been sharing with the industry for some time. Company executives predicted both firms would remain as leading entities in their respective markets, each boasting a global presence. At an investor conference a couple of months prior to the July 1 split, company members outlined the expectations for growth in Baxter’s sales—approximately 4 percent on a compounded annual basis from 2016 through 2020. Expectations for Baxalta’s sales growth were even more positive, with figures of 6 to 8 percent increases on a compounded annual basis during the same timeframe.
Perhaps recognizing the turbulence and uncertainty that would immediately follow the split, the company did not provide expectations for the 2015 year (ended Dec. 31), which was probably best since Baxter finished down 7 percent over the prior year. Still, sales for the company were up when compared with the three prior years (2011-2013).
Company executives also expected the split to lead to more targeted research and development efforts that ultimately benefit each company in a much more effective way. In 2015, Baxter dedicated $603 million toward expenditures for these programs, which was just shy of the $610 million dedicated to R&D initiatives in 2014 (again, still over 2013, which saw $582 million put toward research and development expenditures). Further, Baxter anticipates at least 20 new product launches over the span of several years following the split; expected innovations will focus on improved clinical outcomes, lowering healthcare costs, and enhancing patient convenience.
“The spin-off provides us with flexibility to bring our product portfolio to market more effectively and capitalize on global opportunities and emerging trends to address patient needs while enhancing profitability,” Robert L. Parkinson Jr., Baxter’s former chairman and CEO, said in a release issued at the time. “Healthcare providers are being tasked with delivering better care to greater numbers of patients in a more cost-effective manner. Baxter is a valued partner in addressing the challenges faced by governments, payers, and healthcare providers around the world.”
Baxalta announced a similar dedication to innovation, also expecting more than 20 new products, which would ultimately contribute an additional $2.5 billion to sales by 2020. The company planned to further expand its product offerings through external partnerships and strategic acquisitions. In fact, rumors swirled that the company was eyeing Cambridge, Mass.-based Ariad Pharmaceuticals Inc., which focuses on oncology.
“Baxalta’s vision is to be a global biopharmaceutical leader striving for excellence in advancing innovative therapies that improve patients’ lives,” said Ludwig Hantson, who then served as president of Baxter’s BioScience business. “This is an exciting time for Baxalta, as we have a solid foundation and strong momentum. Our transformation is well underway and our compelling strategy, clinical and scientific expertise, and financial strength will position us well to drive enhanced value for patients, customers, and shareholders.”
All of this talk and excitement was relatively short-lived for Baxalta, however, as it was announced in 2016 that the company was to merge with Shire, a Dublin, Ireland-based pharmaceutical company. Shire had reached out to Baxalta almost immediately after the split from Baxter in July 2015, but company executives were reluctant to consider a merger so soon. Also, Baxalta executives thought the offer Shire was making represented an undervaluation of the company. Once the deal was assured in June 2016, Shire announced that it expected to carry out more than $500 million in cost-cutting or “synergies” within the first three years after the deal officially closed. Possibly in anticipation of the pending transaction with Shire, Baxter had made almost all of its portion of the stock it still held in Baxalta available, which originally (following the split) was just under 20 percent.
Business Units Overview
Following the split, Baxter was left functioning with two primary divisions—the hospital products business and the renal business. Products from the hospital side include IV solutions and administration sets, pre-filled vials and syringes for injectable drugs, infusion pumps, and biosurgery products. The renal division offers products and services to treat end-stage renal disease, irreversible kidney failure, and acute kidney injuries.
The hospital products division is the primary source of sales for the company, posting a figure of $6.17 billion in 2015. The unit is further broken down into three main product categories. Fluid systems—IV therapies, infusion pumps, and administration sets—was down a small amount, posting sales last year of $2.1 billion compared to $2.12 billion in 2014. Integrated pharmacy solutions reported sales of $2.29 billion versus $2.53 billion. Surgical care saw a similar decrease—$1.32 billion compared to $1.37. The renal business unit contributed $3.78 billion to the sales total in 2015. Both division’s sales (hospital and renal) were down from 2014, however, ($6.54 billion and $4.17 billion respectively).
Overall company sales were virtually flat in the United States in 2015 compared to 2014—$4 billion versus $3.9 billion. International sales, however, fell from $6.72 billion in 2014 to $5.96 last year. The company cited fluctuating exchange rates between foreign currencies and a strengthening U.S. dollar as a primary reason for the drop in sales numbers internationally.