Baxter International Inc. 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.
The corporate headquarters of both companies will be located in northern
Illinois. Robert L. Parkinson, Jr., will serve as chairman and chief executive
officer of the medical products company, which will retain the Baxter
International name. Ludwig N. Hantson, Ph.D., who currently serves as
president, BioScience, will be named chief executive officer of the new
biopharmaceuticals company, which will be named at a later date. Hantson
joined Baxter in 2010 from Novartis Pharmaceuticals Corporation where he
served in a number of roles of increasing responsibility, the most recent of
which was chief executive officer, Pharma North America. Prior to Novartis,
Hantson spent 13 years at Johnson & Johnson. Wayne T. Hockmeyer, Ph.D., who
joined Baxter's board in 2007, has agreed to serve as non-executive chairman
of the board of the new biopharmaceuticals company. Dr. Hockmeyer founded
MedImmune, Inc., and served as its chairman and chief executive officer.
Transaction Details
The transaction is intended to take the form of a tax-free distribution to
Baxter shareholders of a new publicly traded stock in the new
biopharmaceuticals company. The transaction is expected to be completed by
mid-year 2015, subject to market, regulatory and certain other conditions,
including final approval by the Baxter Board of Directors, receipt of a
favorable opinion and/or rulings with respect to the tax-free nature of the
transaction, and the effectiveness of a Form 10 registration statement that
will be filed with the Securities and Exchange Commission.
Baxter expects to incur one-time charges related to the transaction during the
reporting periods preceding the separation and does not otherwise expect this
to impact the company's financial guidance for 2014.
Conference Call
Baxter will host a conference call with financial analysts and investors to
discuss this news release today at 7:30 a.m. Central Daylight Time (8:30 a.m.,
Eastern Daylight Time). To access the call, please dial 877-894-0694
(domestic) or 347-983-2217 (international). The conference ID for the call is
20483460. Please dial into the call several minutes prior to the start of the
call to allow sufficient time for the operator to connect participants. A
simultaneous webcast of the conference call for investors and other interested
parties may be accessed by visiting the Baxter website at
www.baxter.com. Slides relating to the investor presentation are available on
the investor relations section of Baxter's website. A replay of the webcast
also will be available approximately two hours after the live webcast by
visiting www.baxter.com.
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