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Baxter International Inc. is an American multinational healthcare company with headquarters in Deerfield, Illinois.[2]
The company primarily focuses on products to treat kidney disease, and other chronic and acute medical conditions. The company had sales of $10.6 billion, across two businesses: BioScience and Medical Products. Baxter's BioScience business produces recombinant and blood plasma proteins to treat hemophilia and other bleeding disorders; plasma-based therapies to treat immune deficiencies and other chronic and acute blood-related conditions; products for regenerative medicine, and vaccines. Baxter's Medical Products business produces intravenous products and other products used in the delivery of fluids and drugs to patients; inhalational anaesthetics; contract manufacturing services; and products to treat end-stage kidney disease, or irreversible kidney failure, including products for peritoneal dialysis and hemodialysis.[3]
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Baxter International was founded in by Donald Baxter, a Los Angeles-based medical doctor, as a manufacturer and distributor of intravenous therapy solutions.[4] Seeing a need for products closer to the Midwest, the company opened a manufacturing plant in Glenview, Illinois, in .[4] Baxter's interest was bought out in by Ralph Falk, who established a research and development function.[5] In the company developed a vacuum-type collection container, extending the shelf life of blood from hours to weeks.[5] In , the company expanded operations outside of the United States by opening an office in Belgium.[6] In Baxter International introduced the first functioning artificial kidney, and in became a member of the Fortune 500.
In , Baxter built a major manufacturing plant in Ashdod, Israel, and as a result, the company was placed on the Arab League boycott list in the early s.[7]
Throughout the s and s the company expanded to deliver a wider variety of products and services (including vaccines, a greater variety of blood products) through acquisitions of various companies. Sales and production facilities also expanded throughout the world.[4]
In , Baxter acquired Medcom, Inc., a New York-based firm founded by Richard Fuisz and his brother, that had large markets in the United States and Saudi Arabia.[8][9][10] Baxter chief executive Vernon Loucks fired Fuisz who then brought anti-boycott charges against Baxter to the U.S. Commerce Department Office of Anti-Boycott Compliance (OAC). Fuisz alleged that Baxter had sold their profitable Ashdod facility to Teva Pharmaceutical Industries in [11] while simultaneously negotiating the construction of a similar plant in Syria in partnership with the Syrian military in order to be removed from the Arab League blacklist in .[7][12][13] In Baxter pleaded guilty to a felony in relation to an anti-boycott law in the United States.[11][14]
On July 15, , American Hospital Supply Corporation CEO Karl D. Bays and Baxter's then-CEO Vernon R. Loucks Jr. signed an agreement that merged two of the United States' "largest producers of medical supplies".[15] This was a "one-Baxter approach" in which the company provided "70% to 80% of what a hospital needed."[16]
In , Baxter's home infusion subsidiary, Caremark, "was accused by the government of paying doctors to steer patients to its intravenous drug service"[17] In Caremark spun off from Baxter International.[17] Caremark was fined $160 million for the "four-year-long federal mail-fraud and kickback" scheme in which the "home-infusion business unit made weekly payments to scores of doctors that averaged about $75 per patient for referring those patients to its services. Some doctors earned as much as $80,000 a year from the kickbacks, according to government documents."[17]
In , the company entered into a four-way, $640 million settlement with haemophiliacs in relation to blood clotting concentrates that were infected with HIV.[18] Under pressure from shareholders due to poor performance and an unsuccessful merger, Loucks was forced to resign.[14]:&#;115&#;
Baxter acquired medical device firm Baxa on November 10, .[19] In , Hikma Pharmaceuticals PLC completed the acquisition of Baxter Healthcare Corporation's US generic injectables business (Multi-Source Injectables or MSI).[20][21]
In July , EU antitrust regulators approved Baxter's bid for Sweden's Gambro.[22]
In March , Baxter announced plans to create two separate, independent global healthcare companies&#;one focused on developing and marketing bio-pharmaceuticals and the other on medical products. The medical products company retained the name Baxter International Inc. and the bio-pharmaceuticals company is named Baxalta and spun-off as a new public company that showed on trading boards as of July 1, .[23]
In July , Baxter announced that it was exiting the vaccines business&#;divesting its commercial vaccine portfolio to Pfizer (with the sale expected to close by the end of the year) and exploring options for its vaccines R&D program, including influenza.[24] In October , José E. Almeida was named chairman and chief executive officer.[25] In January Shire PLC agreed to acquire Baxalta for $32 billion.[26]
In December , Baxter announced it would acquire Claris Lifesciences injectables subsidiary, Claris Injectables, for $625 million.[27]
In December , the company announced it would acquire Seprafilm from Sanofi for $350 million.[28][29]
In September , Baxter announced it would acquire Hill-rom for $12.4 billion.[30] The acquisition was completed in December for $12.5 billion.[31] [32]
In May , Baxter announced it was selling its biopharma solutions business, which offers drugmakers support in the form of products like injectable delivery systems and services that include regulatory resources, help with drug formulation and development, and packaging capabilities, to private equity firms Warburg Pincus and Advent International for $4.25 billion in cash.[33][34]
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During the tenure of Vernon Loucks, who was Baxter's CEO from to and chairman from to , company sales "more than quadrupled to $5.7 billion while its workforce rose from 30,000 to 42,000." During that time, Loucks hired and groomed staff who went on to become CEOs elsewhere. Baxter alumni groomed by Loucks included Terry Mulligan of MedAssets, Lance Piccolo at Caremark, Mike Mussallem of Edwards Lifesciences Corp and CEOs of Boston Scientific Corp. and Cardinal Health.[16]
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In , a report produced by the company indicated that changes made to reduce environmental impacts generated savings that exceeded their cost, producing a net profit. Reporting was company-wide, with a variety of aggregation and reporting, including on the company's internet and intranet sites.[35] The company was an early joiner in the "green and greedy" movement, which aims to lessen the environmental impacts of manufacturing its products while saving the company money.[36] In the company announced it had reached a variety of its environmentally friendly goals, and that it would continue to try to reduce waste, emissions, energy use and environmental incidents over the coming years.[37]
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The company had sales of $16.7 billion, across two businesses: BioScience ( sales - $6.6 billion) and Medical Products ($8.7 billion).[3] Sales in were 42% in the United States, 30% in Europe, 16% in Asia Pacific, 12% in Latin America and Canada. In , Baxter had approximately 61,500 employees. The breakdown of regional employees in was 36% in the United States; 34% in Europe; 16% in Asia Pacific; 14% in Latin America and Canada. In , Baxter International spent more than $1.2 billion on research and development.[40] As of December 31, , the company had approximately 48,000 employees.[41]
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In William Graham became the company's CEO. Vernon Loucks became president and CEO in . Loucks was forced to resign by shareholders.[14] When shareholders forced Loucks to resign,[42]
In January, as Baxter International Inc.'s Vernon Loucks relinquished his CEO duties after 18 years, directors handed him a special stock-option grant of 950,000 shares "for the specific purposes of motivating" him "to implement a smooth transition of his responsibilities." If Mr. Loucks sells all the 400,000 shares he can exercise at year end and Baxter's stock price remains at its current level, he will make more than $4 million.
&#;&#;The Wall Street Journal, April
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Loucks was succeeded by Harry Kraemer, who was succeeded by Robert Parkinson, who took the CEO position in .[4]
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In July , Baxter International announced completion of the first commercial vaccine for the H1N1 ("swine flu") influenza.[43] The company has been one of several working with the World Health Organization and United States Centers for Disease Control and Prevention on the vaccine, and uses a cell-based rather than egg-based technology that allows a shorter production time.[44]
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In , Baxter launched Science@Work: Expanding Minds with Real-World Science, which supports teacher training and student development in healthcare and biotechnology in Chicago Public Schools.[45]:&#;17&#;
In , the company was included in The Civic 50, a list of the most community-minded companies in America from The National Conference on Citizenship and Points of Light, published by Bloomberg.[46]
In , roughly 6,300 Baxter employees volunteered in their communities through The Baxter International Foundation's Dollars for Doers program, addressing local concerns such as healthcare, the environment and education.[47]:&#;104&#; In , Baxter and The Baxter International Foundation gave over $50 million.[48]
Baxter was included for the 13th year in Corporate Responsibility magazine's 100 Best Corporate Citizens list in for its social responsibility performance.[49]
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In August , Baxter / Travenol withdrew a clotting factor product Hemofil after the product was associated with an outbreak of hepatitis B.[50]
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Baxter, unknown to the FDA, continued to use prison plasma in factor concentrate production until October , despite having entered into an agreement with the FDA (11 months earlier) that they would no longer use US prison plasma, which posed a high risk of virus transmission.[51]
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It was announced in quarter 1 of that Baxter had agreed to settle a lawsuit involving 200 Japanese haemophilia patients who had become infected with HIV as a result of using contaminated haemophilia products which were unheated. The Japanese courts ordered for each victim to receive $411,460 by March 29 that year.[52]
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The Baxter Althane disaster in autumn was a series of 56 sudden deaths of kidney failure patients in Spain, Croatia, Italy, Germany, Taiwan, Colombia and the USA (mainly Nebraska and Texas). All had received hospital treatment with Althane hemodialysis equipment, a product range manufactured by Baxter International, USA.[53][54]
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In , the quality of blood thinning products produced by Baxter was brought into question when they were linked to 81 deaths and 785 severe allergic reactions in the United States according to the FDA.[55] Upon inspection, one of the raw ingredients used by Baxter was found to be contaminated &#; between 5 and 20 percent &#; with a substance that was similar, but not identical, to the ingredient itself. The company initiated a voluntary recall, temporarily suspended the manufacture of heparin, and launched an investigation.
The investigation into the contamination has focused on raw heparin produced by one of Baxter's subcontractors Changzhou Scientific Protein Laboratories, a China-based branch of Scientific Protein Laboratories, based in Waunakee, Wisconsin. Changzhou SPL's facilities were never subjected to inspection by US FDA officials. In addition, Changzhou SPL's products were also never certified as safe for use in pharmaceutical products by Chinese FDA officials, due to Changzhou SPL's registration as a chemical company rather than a pharmaceutical manufacturer.[56][57][58]
Upon investigation of these adverse events by the FDA, academic institutions, and the involved pharmaceutical companies, the contaminant was identified as an "over-sulfated" derivative of chondroitin sulfate, a closely related substance obtained from mammal or fish cartilage and often used as a treatment for arthritis.[59][60] Since over-sulfated chondroitin is not a naturally occurring molecule, it costs a fraction of true heparin precursor chemical, and mimics the in-vitro properties of heparin, the counterfeit was almost certainly intentional as opposed to an accidental lapse in manufacturing.[61] The raw heparin batches were found to have been cut from 2&#;60% with the counterfeit substance, and motivation for the adulteration was attributed to a combination of cost effectiveness and a shortage of suitable pigs in Mainland China. In mid-January Baxter voluntarily recalled some lots of multi-dose vials of Heparin in February in consultation with the FDA Baxter recalled the rest of their Heparin products.[55]
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In early , samples of viral material supplied by Baxter International to a series of European laboratories were found to be contaminated with live Avian flu virus (Influenza A virus subtype H5N1).[62] Samples of the less harmful seasonal flu virus (subtype H3N2) were found to be mixed with the deadly H5N1 strain after a vaccine made from the material killed test animals in a lab in the Czech Republic. Though the serious consequences were avoided by the lab in the Czech Republic,[63] Baxter then claimed the failed controls over the distribution of the virus were 'stringent' and there was 'little chance' of the lethal virus harming humans.[64]
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On July 2, , Kentucky Attorney General Jack Conway announced a settlement between the state and Baxter Healthcare Corporation, a subsidiary of Baxter International, worth $2 million. The company had been inflating the cost of the intravenous drugs sold to Kentucky Medicaid, at times as much as %.[65]
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In , a jury in Las Vegas, Nevada, ordered Baxter and Teva Pharmaceuticals to pay $144 million to patients who had been infected with hepatitis C after doctors wrongly reused dirty medical supplies to administer propofol to patients, although the label for propofol clearly states that it is for single-patient use only and that aseptic procedures should be used at all times.[66] Per a indemnity agreement between Teva (the manufacturer) and Baxter (acting as a distributor on behalf of Teva), the litigation and related settlements were defended and paid by Teva.[67]
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In , Baxter was ordered by the FDA to recall all of their Colleague infusion pumps from the market due to 87 recalls and deaths associated with the pump.[68]
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In December , the non-partisan organization Public Campaign criticized Baxter for spending $10.45 million on lobbying and not paying any taxes during &#;, instead getting $66 million in tax rebates, despite making a profit of $926 million.[69]
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For more information, please visit icu bed manufacturer.
Our Tech Pick of the Year Oneview Healthcare (ASX:ONE) just signed an agreement with the largest hospital bed supplier in the US, Baxter International.
NYSE listed Baxter is in the S&P 500, and capped at $23BN after its acquisition of hospital bed maker Hill-Rom for US$10.5BN.
Hospital beds are in addition to the vast array of other medical devices Baxter produces for hospitals and hospital rooms.
ONE sells hospital bedside tech - connecting the patient in the hospital bed to nurses, meal service, medical images and records, educational content, entertainment and other in room systems to help make the hospital run better.
There are ~920,000 hospital beds in the US.
Baxter has ~75% market share of these beds (according to prospect.org).
ONE currently has a ~1% market share of these US beds.
Today ONE has announced a &#;value added reseller agreement&#; with Baxter to sell ONE&#;s technology into certain customers in Baxters&#; current customer base (75% of the US hospital bed market).
ONE has stated that there is potential this deal &#;may lead to additional sales of 3,000 to 5,000 beds per annum&#; for ONE.
Source: ONE announcement
This would be a ~20% to ~33% increase in ONE&#;s current contracted beds per year of this initial two year term.
We think that if ONE can impress Baxter on the initial 2 year term of this value added reseller agreement, then there should be scope to expand it.
According to Baxter&#;s shareholder meeting, one of Baxter&#;s four &#;strategic pillars&#; going forward is &#;connected care&#;:
Connected care is essentially what ONE does.
In , Baxter acquired dominant hospital bed maker Hill-Rom, and with them came 75% of US hospital beds.
To understand why the acquisition of Hill-Rom hospital bed maker and their market share was so important to Baxter, take a look at this Baxter slide deck that outlines the acquisition and its benefits:
According to the acquisition deck, a key part of Baxter&#;s Hill-Rom acquisition strategy is &#;investment in complementary connected care capabilities&#;, which is where it looks like the Baxter-ONE agreement fits into the picture.
Hill-Rom Holdings was a company growing quickly prior to its acquisition by Baxter - that&#;s probably why Baxter took them over
We also watched the latest Baxter AGM to see what they plan to do, now that they own Hill-Rom&#;s hospital bed business:
~27 minutes into the briefing there was this:
Source: Baxter Annual meeting CEO presentation recording
It looks like a connected hospital room is part of the Baxter plan.
Baxter now has the beds. ONE specialises in providing this bedside connectivity.
Baxter&#;s strategy post-acquisition is to inject tech into every aspect of the hospital, and now it looks like ONE&#;s going to help them do it.
As we noted above, ONE announced potential for this agreement to add between 3k and 5k contracted beds per year over the initial two year term. This would be a ~20 to ~33% increase on ONE&#;s current contracted beds in a single hit in the first two years of this contract.
ONE&#;s tech is a digital control centre for a patient when they&#;re in a hospital. It provides a data rich way to improve both the patient&#;s experience and hospital efficiency. We&#;ve seen how the tech works first hand.
Here is a video showing how ONE&#;s hospital bedside tech works and how it helps the patient:
We&#;ve long maintained that hospitals need ONE&#;s tech.
Now, ONE has signed a deal that could deliver a big step change in the number of beds it generates revenue from.
Today, ONE announced that it has agreed a two year deal with the largest hospital bed supplier in the US (Baxter International), starting immediately.
The US is the biggest healthcare market in the world.
We&#;re confident ONE has the tech to dramatically reshape the patient experience and make hospitals run better. We Invested in ONE to see its tech in as many US hospitals as possible.
As of , there are ~920,000 hospital beds in the US and ONE&#;s tech is installed in just ~1% of them.
With Baxter as ONE&#;s new &#;big brother&#; and access to 75% of US hospital beds, we think ONE now has a clear pathway to rapid growth (contracted beds, the equivalent of active users), and progressive material improvements in recurring revenue.
Assuming of course ONE can wow Baxter with their technology on the first few Baxter led installations - which we are confident in given ONE is a mature product already used in 15,000+ hospital beds.
These types of deals that open up potentially deep market penetration don&#;t come along often.
In fact, potentially only once. That&#;s how big we think this is (assuming of course it delivers over its term).
It's a testament to ONE&#;s relentless hard work over the last couple of years since our Investment, it&#;s validation that the product stacks up, and most importantly, we think it may result in unlocking the compounding, rapid recurring revenue growth that the market, tech investors and big funds love.
Baxter made the Hill-Rom acquisition to become the primary provider of a connected, tech driven approach to hospital care in the US.
Smart beds were the two fastest growing segments of Hill-Rom&#;s business prior to it being acquired:
Source: Baxter International Presentation
Which emphasises how hard Baxter is going at building out their tech capabilities.
ONE will now be part of this push. Today&#;s deal signals to us that Baxter intends to test out ONE&#;s tech for the duration of the current 2 year contract, and if ONE can impress, it will be very interesting to see what happens next.
ONE expects this agreement to add between 3k and 5k contracted beds per annum over the initial two year term.
For context, that could be an up to ~33% increase in ONE&#;s current contracted beds in a single hit.
Given the sticky customers, long-term deals (usually 5 years) and accelerating growth in contracted beds that ONE has already delivered since we Invested - we think ONE&#;s product will resonate with Baxter&#;s customers and Baxter will find it an essential addition to its portfolio of offerings to hospitals.
In turn, ONE&#;s product may quickly become the new standard for US hospitals - not &#;nice to have&#; but a baseline expectation for both patients and hospital administrators.
We&#;ve previously shared ONE&#;s statements that its sales pipeline is very strong since the pandemic - and this could prove to be the biggest sales converter of them all.
This is due to the well publicised nursing shortages that have affected the US and Australia.
We think this Baxter deal represents a genuine breakthrough - despite shedding share price value during the NASDAQ tech wreck and small cap bear market, ONE has kept a laser-like focus on delivering this kind of deal (as well as doing some much needed corporate belt-tightening to preserve enough cash runway).
Since our last note, ONE moved from ~8 cents in late April to ~30c this morning - a re-rate over 300% in just 6 weeks.
According to a change in substantial holder notice released on June 2nd, Major ONE shareholder Will Vicars bought 5.7 million shares on-market in the last few weeks through various entities he controls, increasing his position in the company to 29.3%.
Will Vicars is Caledonia&#;s co-chief investment officer, and is ranked Australia&#;s 110th richest person with a personal fortune of $1.27 billion.
The recently buoyant market for US tech stocks likely helped ONE move up the charts as well.
Another example of how market sentiment can drive small cap stocks up or down despite fundamentals not changing.
We&#;ve been watching ONE even more closely since it announced a &#;bring your own device&#; (&#;BYOD&#;) solution in the last quarterly released in late April.
This upgrade in ONE&#;s tech could well have triggered the deal with Baxter, but we can never know for sure.
This tech upgrade makes ONE&#;s platform available on a patient&#;s own (instead of via a bedside tablet and TV screen in the hospital).
We&#;re a device centric society - this was a natural extension of ONE&#;s tech that only promised more market penetration.
We think ONE is the full package for hospitals - and now it may have a shot at becoming nearly ubiquitous in the largest healthcare market in the world (US) - the &#;final destination&#; we&#;d always wanted for our ONE Investment.
While no specific commercial terms were outlined in today&#;s announcement, we&#;ll get a better sense for the impact of the agreement as ONE&#;s next few quarterly reports roll in.
In turn we hope that this rapid revenue growth (especially recurring revenue) will underpin valuation uplift for ONE. This is our Big Bet...
&#;ONE will sign on enough new hospital beds at an accelerating rate to achieve a $1BN valuation (based on 5x to 10x forward annual recurring revenue) and be acquired by a large health tech provider.&#;
NOTE: our &#;Big Bet&#; is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved, and it will require a significant amount of luck. There is no guarantee that it will ever come true. Some of these risks we list in our ONE Investment Memo.
To see how ONE is going against our Big Bet - we&#;ve got a Progress Tracker which provides a quick summary of ONE&#;s progress since we Invested:
At one point, our ONE Investment was up 858% from our Initial Entry Price of 6.5c in June , going as high as 57.5 cents.
But after a great share price run, ONE was progressively sold down from what we think was a combination of:
... which combined, all saw ONE trade all the way down to the ~8 cent range in April this year.
When ONE delivered its March quarterly in late April, we featured the company in this note, commenting on it hitting the 15,000 bed milestone.
From there, the ONE share price really started to move, which we think could have been triggered by a number of anticipated major deals that ONE said were in the pipeline (as per the March quarterly) and the promise of a new bring your own device (&#;BYOD&#;) solution that could look a bit like this:
We liked the bring your own device (&#;BYOD&#;) solution, as it could make it much easier for ONE to get its tech into hospitals. And we&#;re waiting to hear more about this upgraded ONE functionality.
Today&#;s announcement is a &#;value added reseller agreement&#; between Baxter and ONE.
Source: Relevize
For context, ONE has over 15,000 beds contracted right now - so today's agreement with Baxter could mean ~20-33% growth in the first year if ONE&#;s forecast of 3k to 5k new beds per annum is achieved.
Hopefully this will be the start of even more US market penetration and we hope eventually leading to a near ubiquitous presence.
Here&#;s a quick diagram of how a Value-Added Reselling Agreement would work for ONE:
In simple terms, under the agreement, Baxter International will re-sell ONE&#;s technology as a &#;value add&#; in its existing offering to its customers.
Future ONE quarterlies will give us a better insight on the revenue from this agreement.
But for now, here&#;s why we think Baxter has the marketing expertise and deep reach that ONE needs in a &#;big brother&#;...
We&#;re looking for ONE to further define its expectations for the rest of the year and coming years in the wake of this breakthrough deal.
We plan to release a new ONE Investment Memo as we learn more about ONE&#;s own plans.
For now though, here&#;s what we want to see based on recent developments:
&#; 4x new hospital network deals
As ONE exited its trading halt, it noted that there were 4 new hospital network deals in the pipeline in &#;advanced&#; negotiations. These deals are in addition to the Baxter International deal announced today.
We want to see at least one of these deals close in the near term - ideally, all of them.
&#; Update on bring your own device (&#;BYOD&#;) solution
We want to hear more about this important new way of delivering ONE&#;s tech into a hospital. We think this is where ONE can get deep market penetration.
Here are the risks from our ONE Investment Memo:
Sales risk - there&#;s always a chance that reseller agreements don&#;t deliver expected revenue for a variety of reasons. Baxter International could fail to successfully push ONE&#;s product out to its customers.
Baxter could also refocus its marketing efforts away from selling ONE&#;s product for any number of reasons (we don&#;t know the precise agreement terms so it&#;s hard to precisely forecast these risks).
Additionally, Baxter&#;s acquisition of Hill-Rom Holdings is the subject of interest by the US Federal Trade Commission (FTC).
The FTC sent Baxter a letter last October, saying that even though the deal was closed, the agency could still opt into reviewing the deal and challenge the merger. If this happens then it might somehow hamper ONE&#;s ability to penetrate the US market via this agreement with Baxter.
Competition risk - a big tech company could launch a competitor product.
Funding risk - ONE had &#;4.2M ($6.7M) in cash at 31 March . Growth companies like ONE need cash to achieve their goals. Whilst it generates revenue, to deliver accelerated growth, ONE may need to raise more capital at some stage, which dilutes existing shareholders.
Technology risk - ONE will need to add functionality to its products over time as the health tech industry advances. ONE has flagged that a range of additional features are in the pipeline, in particular the bring your own device (&#;BYOD&#;) solution. If the rollout is slow or doesn&#;t happen the ONE share price could suffer and in turn increase sales risk.
In our ONE Investment Memo you&#;ll find:
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