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Baxter Thrives on Injectable Medicine

By Dan Weil   |   Tuesday, 04 Oct 2011 11:58 AM

Baxter International (BAX) has built a diverse business making blood products and intravenous drugs. Its biosciences unit accounts for about 44 percent of sales. Its products include recombinant and plasma-based proteins to treat hemophilia and other bleeding disorders and plasma-based therapies to treat immune deficiencies and other conditions.

The medication delivery unit accounts for about 37 percent of sales. It makes products used in the delivery of fluids and drugs, including intravenous (IV) solutions and administration sets, premixed drugs, and drug-reconstitution systems.

The renal business accounts for about 19 percent of sales. It provides home-based therapies, such as peritoneal dialysis, and offers other products and services for people with end-stage kidney disease.

In biosciences, Baxter makes the world’s top-selling hemophilia drug Advate, with sales of $1.8 billion in 2010. It’s working on expanding the use of its immunoglobulin treatment, including a subcutaneous therapy, with a launch planned for 2013. Baxter is experimenting with the medicine to see if it can treat Alzheimer's disease.

High-quality earnings

Baxter reported earnings of $615 million in the second quarter, up 15 percent from $535 million a year earlier. Sales gained 11 percent to $3.54 billion.

"Earnings quality was high in our view as higher sales and better-than-expected gross margins more than offset higher SG&A and R&D," David Roman, an analyst with Goldman Sachs, wrote in a report.

Standard & Poor’s analyst Herman Saftlas has a four-star buy rating on Baxter shares. “Despite pricing headwinds in the U.S. and Europe, we expect solid growth in key plasma proteins, antibody therapies, and regenerative medicine lines over the coming quarters,” he writes.

“We are encouraged by BAX's launch of new products and other strategies designed to grow the plasma business, as well as by greater efforts to expand in emerging markets. We also see promise in Baxter's R&D pipeline, which includes new vaccines, hospital products, and drugs.”

The company next reports Oct. 20.

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Baxter International (BAX) has built a diverse business making blood products and intravenous drugs. Its biosciences unit accounts for about 44 percent of sales. Its products include recombinant and plasma-based proteins to treat hemophilia and other bleeding disorders and...
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