07.01.06
$9.8 Billion
Key Executives:
Robert L. Parkinson Jr., Chairman and CEO
Peter Arduini, Corporate VP, President—Medication Delivery
Joy A. Amundson, Corporate VP, President—BioScience
John J. Greisch, Corporate VP and President, International
Robert M. Davis, Chief Financial Officer
Norbert G. Riedel, Sr. VP, Chief Scientific Officer
J. Michael Gatling, Corporate VP, Global Manufacturing Operations
Lawrence T. Gibbons, Corporate VP, Quality
No. of Employees: 47,000
World Headquarters: Deerfield, IL
While it appeared that Baxter was climbing out of its former financial and regulatory doldrums, the medical device company hit some snags as more regulatory problems developed, especially in its infusion systems business.
The medical device manufacturer has been rebuilding over the last year-and-a-half, after CEO Robert Parkinson took over for Harry Kraemer, who experienced several quarters of poor earning results and accounting irregularities. And the company was still reeling from deaths of 53 patients in 2002 due to contaminated dialysis filters made by a Baxter subsidiary.
In October 2005, regulators seized 6,000 Colleague infusion pumps and approximately 850 Syndeo PCA syringe pumps that Baxter had withheld from shipping earlier in 2005. In March that year, Baxter reported to customers that the there were problems with certain Syndeo models that could disrupt infusions of intravenous therapies. Later, in July, the FDA had classified the recall as Class I, the most serious of the three classes. In all, three deaths and six serious injuries may have been associated with the devices. For fiscal 2005, the company recorded a $77 million charge for remediation costs associated with correcting design issues for the infusion pump.
In the 2005 annual report, Parkinson (who came over from Abbott Labs in 2004) said that the company was working to resolve the issue with the FDA. “I believe we already have made substantial progress in addressing these challenges,” he noted. “This includes the establishment of a Device Center of Excellence focused on ensuring the quality of sophisticated, electromechanical devices like IV pumps.”
Despite the recall problems, the company was financially flourishing as its profit for 2005 almost tripled to $956 million—it appears the company’s reorganization plan to trim the fat from the corporation was working, since it reduced its debt by almost $1 billion. The company also registered a modest 4% rise in sales to $9.8 billion. It matched that in the first quarter of 2006, as it collected $2.4 billion in revenues.
“We made considerable progress during 2005, meeting or exceeding virtually all of our key financial objectives, despite the challenges with the Colleague Infusion Pump,” said Parkinson, who additionally noted that the company added 20 new R&D alliances. “During 2005, we also increased our spending on R&D and accelerated the pace of business development initiatives, which reflects our commitment to reinvigorating innovation within our company.”
Some of the more beneficial alliances include one with Nektar Therapeutics and Lioxen Technologies in developing longer-acting forms of Factor VIII and other blood-clotting proteins, as well as with Cangene Corporation to market and distribute WinRho SDE, an antibody therapy to treat immune thrombocytopenic pupura (an autoimmune disorder).
In addition to the problems with the Colleague, Baxter informed the FDA in November that it was withdrawing the 6060 Multi-Therapy Infusion pump because of problems occurring when the device was used to distribute pain and other critical medications. The pump delivers intravenous medications, commonly in home and non-hospital settings. According to Baxter, it had received reports of one death and two injuries that may have been linked with the pump. The company recorded a $49 million charge for fiscal 2005 for the costs of withdrawing the 6060.
The company has three major segments: BioScience, Medical Delivery and Renal. Although each unit sells products that also contain non-medical devices such as drugs, many of these are marketed in conjunction with devices. The company does not break out revenues by device and non-device products.
While the company’s largest segment is its Medication Delivery segment, the recalls reduced its revenues by 1%. And with the BioScience division growing by 10%, it put the two units almost equally in the sales leadership position at Baxter.
While Baxter is hurting in its infusion systems business, the company received a boost from sales of its Advate Antihemophilic Factor, a recombinant for treatment of hemophilia A that doubled to more than $600 million as part of its BioSciences segment.
Regionally, more than half of the company’s sales and earnings came from outside the United States. China is particularly lucrative, with some of Baxter’s products for peritoneal dialysis (PD) doing quite well and poised to do even better, since that industry is growing at 25% annually. Baxter is focusing on growing PD as a therapy of choice for people with end-stage kidney failure. In 2005, the company surpassed 7,500 PD patients in China. Also in China, Baxter launched sevoflurane, an inhalation anesthetic.
In the first quarter of 2006, the company started a $60 million investment to expand production capacity at its four manufacturing facilities in China to accommodate the expected growth in its PD and intravenous solutions products.
In 2005, Baxter launched several new products, many of which stemmed from the renal division, including the release of Extraneal, Nutrineal and Physioneal, all specialty PD solutions. The BioSciences division released Gammagard liquid, a ready-to-use intravenous immunoglobulin for treating immune deficiencies. In addition, the medication delivery segment launched sevoflurane.
On a sad note, former CEO William B. Graham, who was the head of the company for 28 years (1953 to 1980), died in January 2006. Graham led Baxter through some of the bigger innovations in the field, including the first flexible intravenous container system, the first artificial kidney, the first plastic blood-collection system, the first clotting factor for people with hemophilia and the introduction of continuous ambulatory peritoneal dialysis.
Key Executives:
Robert L. Parkinson Jr., Chairman and CEO
Peter Arduini, Corporate VP, President—Medication Delivery
Joy A. Amundson, Corporate VP, President—BioScience
John J. Greisch, Corporate VP and President, International
Robert M. Davis, Chief Financial Officer
Norbert G. Riedel, Sr. VP, Chief Scientific Officer
J. Michael Gatling, Corporate VP, Global Manufacturing Operations
Lawrence T. Gibbons, Corporate VP, Quality
No. of Employees: 47,000
World Headquarters: Deerfield, IL
While it appeared that Baxter was climbing out of its former financial and regulatory doldrums, the medical device company hit some snags as more regulatory problems developed, especially in its infusion systems business.
The medical device manufacturer has been rebuilding over the last year-and-a-half, after CEO Robert Parkinson took over for Harry Kraemer, who experienced several quarters of poor earning results and accounting irregularities. And the company was still reeling from deaths of 53 patients in 2002 due to contaminated dialysis filters made by a Baxter subsidiary.
In October 2005, regulators seized 6,000 Colleague infusion pumps and approximately 850 Syndeo PCA syringe pumps that Baxter had withheld from shipping earlier in 2005. In March that year, Baxter reported to customers that the there were problems with certain Syndeo models that could disrupt infusions of intravenous therapies. Later, in July, the FDA had classified the recall as Class I, the most serious of the three classes. In all, three deaths and six serious injuries may have been associated with the devices. For fiscal 2005, the company recorded a $77 million charge for remediation costs associated with correcting design issues for the infusion pump.
In the 2005 annual report, Parkinson (who came over from Abbott Labs in 2004) said that the company was working to resolve the issue with the FDA. “I believe we already have made substantial progress in addressing these challenges,” he noted. “This includes the establishment of a Device Center of Excellence focused on ensuring the quality of sophisticated, electromechanical devices like IV pumps.”
Despite the recall problems, the company was financially flourishing as its profit for 2005 almost tripled to $956 million—it appears the company’s reorganization plan to trim the fat from the corporation was working, since it reduced its debt by almost $1 billion. The company also registered a modest 4% rise in sales to $9.8 billion. It matched that in the first quarter of 2006, as it collected $2.4 billion in revenues.
“We made considerable progress during 2005, meeting or exceeding virtually all of our key financial objectives, despite the challenges with the Colleague Infusion Pump,” said Parkinson, who additionally noted that the company added 20 new R&D alliances. “During 2005, we also increased our spending on R&D and accelerated the pace of business development initiatives, which reflects our commitment to reinvigorating innovation within our company.”
Some of the more beneficial alliances include one with Nektar Therapeutics and Lioxen Technologies in developing longer-acting forms of Factor VIII and other blood-clotting proteins, as well as with Cangene Corporation to market and distribute WinRho SDE, an antibody therapy to treat immune thrombocytopenic pupura (an autoimmune disorder).
In addition to the problems with the Colleague, Baxter informed the FDA in November that it was withdrawing the 6060 Multi-Therapy Infusion pump because of problems occurring when the device was used to distribute pain and other critical medications. The pump delivers intravenous medications, commonly in home and non-hospital settings. According to Baxter, it had received reports of one death and two injuries that may have been linked with the pump. The company recorded a $49 million charge for fiscal 2005 for the costs of withdrawing the 6060.
The company has three major segments: BioScience, Medical Delivery and Renal. Although each unit sells products that also contain non-medical devices such as drugs, many of these are marketed in conjunction with devices. The company does not break out revenues by device and non-device products.
While the company’s largest segment is its Medication Delivery segment, the recalls reduced its revenues by 1%. And with the BioScience division growing by 10%, it put the two units almost equally in the sales leadership position at Baxter.
While Baxter is hurting in its infusion systems business, the company received a boost from sales of its Advate Antihemophilic Factor, a recombinant for treatment of hemophilia A that doubled to more than $600 million as part of its BioSciences segment.
Regionally, more than half of the company’s sales and earnings came from outside the United States. China is particularly lucrative, with some of Baxter’s products for peritoneal dialysis (PD) doing quite well and poised to do even better, since that industry is growing at 25% annually. Baxter is focusing on growing PD as a therapy of choice for people with end-stage kidney failure. In 2005, the company surpassed 7,500 PD patients in China. Also in China, Baxter launched sevoflurane, an inhalation anesthetic.
In the first quarter of 2006, the company started a $60 million investment to expand production capacity at its four manufacturing facilities in China to accommodate the expected growth in its PD and intravenous solutions products.
In 2005, Baxter launched several new products, many of which stemmed from the renal division, including the release of Extraneal, Nutrineal and Physioneal, all specialty PD solutions. The BioSciences division released Gammagard liquid, a ready-to-use intravenous immunoglobulin for treating immune deficiencies. In addition, the medication delivery segment launched sevoflurane.
On a sad note, former CEO William B. Graham, who was the head of the company for 28 years (1953 to 1980), died in January 2006. Graham led Baxter through some of the bigger innovations in the field, including the first flexible intravenous container system, the first artificial kidney, the first plastic blood-collection system, the first clotting factor for people with hemophilia and the introduction of continuous ambulatory peritoneal dialysis.