Baxter International

Baxter International Inc.

Type	Public
Traded as	NYSE: BAX
Industry	Medical equipment
Founded	1931
Headquarters	Deerfield, Illinois, U.S.
Key people	Jose Almeida, (CEO & President) Jay Saccaro, (CFO Chief financial officer) Jill Schaaf, (CVP & President of Renal) Tim Lawrence, (CVP of Operations) Bass Agamiri, (VP Engineering) Brik Eyre, (CVP & President of Hospital Products)
Products	Medical supplies to treat hemophilia, kidney disease and provide intravenous therapy
Revenue	US$16.3B (FY 2014)
Net income	US$2.012B (FY 2014)
Total assets	US$25.9B (FY 2014)
Total equity	US$8.5B (FY 2014)
Number of employees	61,500
Website	www.Baxter.com

Baxter International Inc. is an American health care company with headquarters in Deerfield, Illinois. The company primarily focuses on products to treat hemophilia, kidney disease, immune disorders and other chronic and acute medical conditions. The company had 2013 sales of $16.3 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 solutions and other products used in the delivery of fluids and drugs to patients; inhalation anesthetics; contract manufacturing services; and products to treat end-stage renal disease, or irreversible kidney failure, including solutions and other products for peritoneal dialysis and hemodialysis.

History

Baxter International was founded in 1931 by Donald Baxter, a medical doctor, as a manufacturer and distributor of intravenous therapy solutions. Baxter's interest was bought out in 1935 by Ralph Falk, who established a research and development function. In 1939 the company developed a vacuum-type collection container, extending the shelf life of blood from hours to weeks. In 1954, the company expanded operations outside of the United States by opening an office in Belgium. In 1956 Baxter International introduced the first functioning artificial kidney, and in 1971 became a member of the Fortune 500.

In 1971, 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 1980s.

Throughout the 1980s and 1990s 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.

In 1982 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. 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 1988 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 1989. In 1993 Baxter pled guilty to a felony in relation to an anti-boycott law in the United States.

In July 15, 1985 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 State's "largest producers of medical supplies." This was a "one-Baxter approach" in which the company provided "70% to 80% of what a hospital needed."

In 1991 Baxter's home infusion subsidiary, Caremark, "was accused by the government of paying doctors to steer patients to its intravenous drug service" In 1992 Caremark spun off from Baxter International. 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."

In 1996, the company entered into a four-way, $640 million settlement with haemophiliacs 1999 in relation to blood clotting concentrates that were infected with HIV. Under pressure from shareholders due to poor performance and an unsuccessful merger, Loucks was forced to resign.

Baxter acquired medical device firm Baxa on November 10, 2011. In 2011, Hikma Pharmaceuticals PLC completed the acquisition of Baxter Healthcare Corporation's US generic injectables business (Multi-Source Injectables or MSI).

In July 2013, EU antitrust regulators approved Baxter’s bid for Sweden’s Gambro.

In March 2014, 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, 2015 CE.

In July 2014, Baxter announced that it was exiting the vaccines business—divesting its commercial vaccine portfolio to Pfizer (with sale expected to close by the end of the year) and exploring options for its vaccines R&D program, including influenza. In October 2015, Jose Almeida was named Chairman and Chief Executive Officer.

Baxter Boys

During the tenure of Vernon Loucks who was Baxter's CEO from 1980 to 1998 and chairman from 1987 to 1999, 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 a number of 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.

Environmental activities

Baxter International is recognized as a leading company in environmental performance and reporting, having an explicit focus on environmental issues since 1976; actions included an environmental policy and manual, a series of audits, regular environmental conferences, efforts to prevent and clean up site contamination and staff dedicated to environmental improvements. In 1997, 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. 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. In 2009 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.

Structure

Baxter International by businessline

Name	Focus	2013 sales (In billions)	Percentage total sales
BioScience	Hemophilia therapy; antibody therapy; critical care therapy; pulmonology therapy; biosurgery products; vaccines	$6.4	43%
Medical Products	IV solutions, premixed drugs, infusion pumps and administration sets; parenteral nutrition products; anesthesia; drug formulation and pharma partnering; peritoneal dialysis products; hemodialysis products; continuous renal replacement therapy	$10.3	57%

The company had 2014 sales of $16.7 billion, across two businesses: BioScience (2013 sales - $6.6 billion) and Medical Products ($8.7 billion). Sales in 2013 were 42% in the United States, 30% in Europe, 165% in Asia Pacific, 12% in Latin America and Canada. In 2011, Baxter had approximately 61,500 employees. The breakdown of regional employees in 2013 was 36% in the United States; 34% in Europe; 16% in Asia Pacific; 14% in Latin America and Canada. In 2013, Baxter International spent more than $1.2 billion on research and development.

Corporate governance

In 1953 William Graham became the company's CEO. Vernon Loucks became president and CEO in 1980. Loucks was forced to resign by shareholders. When shareholders forced Loucks to resign,

"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 April 29th, 1999

Loucks was succeeded by Harry Kraemer, who was succeeded by Robert Parkinson, who took the CEO position in 2004.

H1N1 vaccine

In June 2009, Baxter International announced it expected to have the first commercial vaccine for the H1N1 ("swine flu") influenza as early as July of the same year. 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.

Philanthropy

In their 2014 sustainability report Baxter claimed that,

"In 2008, Baxter launched Science@Work: Expanding Minds with Real-World Science, a multi-year commitment to Chicago Public Schools (CPS) to support teacher training and student development in healthcare and biotechnology. In the 2013-2014 school year, the program reached nearly 32,000 students and more than 450 teachers through in-depth biotechnology teacher training and module lesson plans. This increased the total to more than 132,000 students and 1,525 teachers since 2008."

— Baxter

In the same report Baxter claimed that,

"In 2014, nearly 6,300 Baxter employees volunteered more than 128,000 hours in their communities, addressing local concerns such as healthcare, the environment and education. Baxter encourages employee volunteerism through The Baxter International Foundation’s Dollars for Doers program. The Dollars for Doers Program provides matching grants to U.S. charitable organizations for employee volunteer hours. The Foundation also matches employees’ financial contributions to eligible U.S. charitable organizations through the Matching Gifts Program."

— Baxters 2014

As well,

"During 2014, Baxter and The Baxter International Foundation gave more than $50 million, including product donations, cash contributions and foundation grants. The company has contributed nearly $332 million over the last five years. Foundation grants aim to increase access to dental care, mental health and other healthcare services for children, the uninsured, veterans and the elderly. Specifically, in 2014, the Foundation donated $2.9 million in cash (excluding future commitments) in 21 countries. This included over $900,000 to more than 860 organizations through the Foundation’s Dollars for Doers and Matching Gifts programs that support employees’ philanthropic contributions. The majority of grants resulted from recommendations from Baxter facilities and targeted programs that improve the quality and accessibility of healthcare for the disadvantaged and underserved in local communities."

— Baxter 2014

In 2014, Baxter was included for the 13th year in Corporate Responsibility magazine’s 100 Best Corporate Citizens list for its social responsibility performance. In 2013, 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.

Controversies

2001 Althane disaster

Main article: Baxter Althane disaster

The Baxter Althane disaster in autumn 2001 was a series of 56 sudden deaths of renal 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.

2004

On July 22, 2004, The Deerfield-based company restated earnings from 2001 through 2003 mainly because of an error in the way it recognized revenue and inadequate bad-debt provisions in Brazil.

2005

On March 14, 2005, Baxter International Inc. restated its financial statements for the years 2001 through 2003 and for the first three quarters of 2004, because of errors in income tax accounting.

2008 Chinese heparin adulteration

Main article: 2008 Chinese heparin adulteration

In 2008, the quality of blood thinning products produced by Baxter was brought into question when they were linked to 19 deaths in the United States. 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.

Investigation into the contamination has focused on raw heparin produced by Changzhou Scientific Protein Laboratories, a China-based branch of Scientific Protein Laboratories, based in Waunakee, Wisconsin. Due to procedural errors, Changzhou SPL's facilities were never subjected to inspection by US FDA officials, as required by FDA regulations. 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. Though Baxter was first to recall heparin because of increased adverse reactions, after the contaminant was identified and testing protocols were shared with other manufacturers globally, over a dozen other companies in nearly a dozen countries issued recalls, which linked back to certain supply points in China.

2009 Avian flu contamination

In early 2009, 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). 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, 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.

2009 drug cost inflation

On July 2, 2009, 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 1300%.

2010 Hepatitis C infections

In 2010, a jury in Las Vegas, Nevada ordered Baxter 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. The jury granted the award, despite the fact that the label for propofol clearly states that it is for single-patient use only and that aseptic procedures should be used at all times.

2010 infusion pump recall

In 2010, 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.

2008–2010 tax dodging

In December 2011, the non-partisan organization Public Campaign criticized Baxter for spending $10.45 million on lobbying and not paying any taxes during 2008–2010, instead getting $66 million in tax rebates, despite making a profit of $926 million.

External links

• Official website
• Pharmaceutical Sales Jobs at Baxter