Speaking to Forbes, the ceo of Baxter International has said that as the global market for medical products and biopharmaceuticals has become more complex, it plans to split its businesses in two to compete more effectively in both of these growth areas.
The company is known for its intravenous solutions and medication delivery devices yet has also had success with drugs such as Advate for haemophilia treatment.
“Baxter has an established history of executing successful spin-offs, and we have continued to evaluate the separation of these two businesses in response to diverging business dynamics and the rapidly changing macro-environment,” Robert L Parkinson Jr, chairman and chief executive officer, told Forbes.
Parkinson will head up the medical products business which will retain the Baxter name. Speaking to Wall Street analysts and investors, he said that the companies will be more successful on their own, developing new products faster due to quicker decision-making and better focus.
The biopharmaceutical business, which generates more than $6 billion in annual sales, will be led by current Baxter bioscience president Ludwig Hantson. Its name is yet to be decided.
“We are confident that this decision not only strengthens our outlook, it positions us well to execute on our future growth prospects,” Hanston said.
Parkinson agreed that the spinoff could reduce the weight the current company has when leveraging its diverse range of products in selling to customers and governments around the world.
But he told Forbes, the medical products and biopharmaceutical products have become more complex and therefore each business needed more attention. Baxter, he said, is more than just a drug business with Advate and plasma products but has grown in the areas of oncology and haematology as well as biosimilars, which are a quickly growing form of cheaper copies to some of today’s blockbuster biotech drugs.
On the medical product side, Parkinson said Baxter will be able to focus more attention on research. For example, the company is working on developing “nocturnal dialysis” which allows patients to have the therapy at home in the evenings.