Baxter International

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Baxter International Inc.
Public
Traded as NYSEBAX
S&P 500 Component
Industry Medical equipment
Founded 1931; 86 years ago (1931)
Headquarters Deerfield, Illinois, U.S.
Key people

José E. Almeida, (Chairman & CEO)

Jay Saccaro, (CFO)
Products Medical supplies to treat hemophilia and kidney disease and provide intravenous therapy
Revenue IncreaseUS$10.163B (FY 2016)[1]
IncreaseUS$4.965B (FY 2016)[1]
Total assets DecreaseUS$15.546B (FY 2016)[1]
Total equity DecreaseUS$8.290B (FY 2016)[1]
Number of employees
48,000 (December 2016)
Website www.baxter.com

Baxter International Inc. is a Fortune 500[2] American health care company with headquarters in Deerfield, Illinois.[3] 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 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 renal disease, or irreversible kidney failure, including products for peritoneal dialysis and hemodialysis.[1]

History[edit]

Baxter International was founded in 1931 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 1933.[4] 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.[5]

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.[4]

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.[6][7][8] 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[9] 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.[5][10][11] In 1993 Baxter pleaded guilty to a felony in relation to an anti-boycott law in the United States.[9][12]

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 States' "largest producers of medical supplies".[13] This was a "one-Baxter approach" in which the company provided "70% to 80% of what a hospital needed."[14]

In 1991, Baxter's home infusion subsidiary, Caremark, "was accused by the government of paying doctors to steer patients to its intravenous drug service"[15] In 1992 Caremark spun off from Baxter International.[15] 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."[15]

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.[16] Under pressure from shareholders due to poor performance and an unsuccessful merger, Loucks was forced to resign.[12]:115

Baxter acquired medical device firm Baxa on November 10, 2011.[17] In 2011, Hikma Pharmaceuticals PLC completed the acquisition of Baxter Healthcare Corporation's US generic injectables business (Multi-Source Injectables or MSI).[18][19]

In July 2013, EU antitrust regulators approved Baxter's bid for Sweden's Gambro.[20]

In March 2014, Baxter announced plans to create two separate, independent global health care 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.[21]

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.[22] In October 2015, José E. Almeida was named chairman and chief executive officer.[23] In January 2016 Shire PLC agreed to acquire Baxalta for $32 billion.[24]

In December 2016, Baxter announced it would acquire Claris Lifesciences injectables subsidiary, Claris Injectables, for $625 million.[25]

Former employees[edit]

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.[14]

Environmental activities[edit]

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.[26] 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.[27] 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.[28]

Structure[edit]

Baxter International by businessline[29][30]
Name Focus 2013 sales (in billions) Percentage of 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).[1] Sales in 2013 were 42% in the United States, 30% in Europe, 16% 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.[31]

Corporate governance[edit]

In 1953 William Graham became the company's CEO. Vernon Loucks became president and CEO in 1980. Loucks was forced to resign by shareholders.[12] When shareholders forced Loucks to resign,[32]

"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 29, 1999

Loucks was succeeded by Harry Kraemer, who was succeeded by Robert Parkinson, who took the CEO position in 2004.[4]

H1N1 vaccine[edit]

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.[33]

Philanthropy[edit]

In 2008, 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.[34]:17

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.[35]

In 2014, 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.[36]:104 In 2014, Baxter and The Baxter International Foundation gave over $50 million.[37]

Baxter was included for the 13th year in Corporate Responsibility magazine's 100 Best Corporate Citizens list in 2014 for its social responsibility performance.[38]

Controversies[edit]

1975 Hemofil hepatitis B outbreak[edit]

In August 1975, Baxter / Travenol withdrew a clotting factor product Hemofil after the product was associated with an outbreak of hepatitis B.[39]

1983 prison plasma collection[edit]

Baxter, unknown to the FDA, continued to use prison plasma in factor concentrate production until October 1983, 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.[40]

1996 Japanese haemophiliac HIV lawsuit[edit]

It was announced in quarter 1 of 1996 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.[41]

2001 Althane disaster[edit]

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.[42][43]

2008 Chinese heparin adulteration[edit]

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.[44] 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.[45][46][47] 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[edit]

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).[48] 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,[49] 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.[50]

2009 drug cost inflation[edit]

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%.[51]

2010 hepatitis C infections[edit]

In 2010, 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.[52] Per a 2009 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.[53]

2010 infusion pump recall[edit]

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.[54]

2008–2010 tax avoidance[edit]

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.[55]

See also[edit]

References[edit]

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  2. ^ "Baxter International". Fortune. Retrieved June 26, 2017. 
  3. ^ "Contact Us." Baxter International. Retrieved on February 2, 2011. "Corporate address: One Baxter Parkway Deerfield, IL 60015-4625."
  4. ^ a b c d "History". Baxter International. Archived from the original on June 2, 2009. Retrieved July 8, 2009. 
  5. ^ a b Feiler, Gil (2005). From Boycott to Economic Cooperation: The Political Economy of the Arab Boycott of Israel. Frank Cass Publishers. p. 70. 
  6. ^ Morris, Steven (March 17, 1990). "Baxter Told To Pay Firm $15 Million". Chicago Tribune. 
  7. ^ "Fuisz Technologies Ltd Form 10-K (Part III, Item 10)". Edgar Online (Form 10-K). December 31, 1996. 
  8. ^ Kupper, Thom (January 29, 1992). "'Whistle-blower' Left L.v. For Career". The Morning Call. 
  9. ^ a b "The case against Baxter International". Bloomberg. October 6, 1991. Retrieved October 17, 2015. 
  10. ^ Curtiss, Richard (July–August 1994). "People Watch". Washington Report on Middle East Affairs. p. 45. 
  11. ^ Morris, Steven (March 26, 1993). "$6 Million From Baxter". Chicago Tribune. 
  12. ^ a b c Mintzberg, Henry (2004). Managers Not MBAs: A Hard Look at the Soft Practice of Managing and Management Development. San Francisco, Calif: Berrett-Koehler Publishers. ISBN 1-57675-275-5. 
  13. ^ Crudele, John (July 16, 1985). "Baxter's Merger Bid Accepted Published: July 16, 1985". New York Times. Retrieved October 17, 2015. 
  14. ^ a b Finkel, Ed (March 27, 2006). "Profile of Vernon Loucks Spinning off success: Loucks helped mentor a cadre of future leaders at Baxter". Modern Healthcare. Retrieved October 17, 2015. 
  15. ^ a b c Yates, Ronald E. (June 19, 1995). "Caremark Wounds Not Deep Penalty Could Have Been More Damaging". Chicago Tribune. Retrieved October 17, 2015. 
  16. ^ Feldman, EA; Bayer R (1999). Blood feuds: AIDS, blood, and the politics of medical disaster. Oxford University Press. pp. 49–50; 320. ISBN 0-19-513160-6. 
  17. ^ "Baxter Int'l finishes $380M Baxa Corp purchase". The Boston Globe. 
  18. ^ "Hikma Pharmaceuticals Plc Completes Acquisition of Baxter Healthcare Corporation's Multi-Source Injectables Business". Reuters. Retrieved May 3, 2011. 
  19. ^ "History". Hikma Pharmaceuticals PLC. 
  20. ^ Foo Yun Chee (10 July 2013). "EU to clear Baxter's $4 billion buy of Sweden's Gambro: sources". Reuters. 
  21. ^ "Baxalta Added and QEP Resources Deleted". SandP500changes.whw1.com. July 1, 2015. Retrieved July 1, 2015. 
  22. ^ http://www.baxter.com/press_room/press_releases/2014/07_30_14_vaccines.html
  23. ^ Russell, John. "Baxter names new CEO". The Chicago Tribune. The Chicago Tribune. 
  24. ^ Ward, Andrew. "Shire agrees $32bn takeover of Baxalta". FT. 
  25. ^ "Baxter Buys Claris' Generic Injectables Subsidiary for $625M - GEN Genetic Engineering & Biotechnology News - Biotech from Bench to Business - GEN". GEN. Retrieved July 16, 2017. 
  26. ^ Bennett M; James P (1999). "The Evolution of Integrated Environmental Performance Evaluation and Reporting". In Klinkers L; Bennett M; James P. Sustainable Measures: Evaluation and Reporting of Environmental and Social Performance. Greenleaf Pubns. pp. 253–282. ISBN 1-874719-16-0. 
  27. ^ Adelson, G; Engell J; Ranalli B; Van Anglen KP. Environment: An Interdisciplinary Anthology. Yale University Press. pp. 254–5. ISBN 0-300-11077-4. 
  28. ^ "Baxter Cuts GHG Emissions by 21%". Environmentalleader.com. June 19, 2009. Archived from the original on June 21, 2009. Retrieved July 3, 2009. 
  29. ^ "Corporate Overview". Baxter International. Archived from the original on November 20, 2010. Retrieved November 5, 2010. 
  30. ^ Davis, JA (2003). "Purifying an image: Baxter International and the Dialyzer Crisis". In Feigenbaum AV. The power of management capital: utilizing the new drivers of innovation, profitability, and growth in a demanding global economy. McGraw-Hill Professional. pp. 349–364. ISBN 0-07-021733-5. 
  31. ^ "Corporate overview". 
  32. ^ Schellhardt, Timothy D. (April 29, 1999). "To a Pile of CEO Perks, Add the 'Special' Bonus". The Wall Street Journal. Retrieved October 18, 2015. 
  33. ^ "Baxter to release flu vaccine in July". United Press International. June 13, 2009. Archived from the original on June 16, 2009. Retrieved July 2, 2009. 
  34. ^ "Education and Critical Community Needs" (PDF), Baxter, Baxter sustainability report, 2015, retrieved October 18, 2015 
  35. ^ "The Civic 50 website, 2013 results". Civic50.org. Retrieved July 16, 2017. 
  36. ^ "Employee Involvement" (PDF), Baxter, Baxter sustainability report, 2015, retrieved October 18, 2015 
  37. ^ "Community Support" (PDF), Baxter, Baxter sustainability report, 2015, retrieved October 18, 2015 
  38. ^ "Press Room: Press Releases - Baxter". www.Baxter.com. June 2014. Retrieved July 16, 2017. 
  39. ^ http://health.gov.ie/wp-content/uploads/2014/04/Tribunal-of-Inquiry-into-the-Infection-with-HIV-and-Hep-C-of-persons-with-Haemophilia-and-Related-Matters.pdf
  40. ^ Class Action Complaint (2004) Case No. C032572 PJH. Page 24.
  41. ^ Letter, The Pharma. "Baxter Agrees To Settle Japan HIV Lawsuit". www.ThePharmaLetter.com. 
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  47. ^ "China Washes Hands on Heparin Purity", Wall Street Journal (Online edition) February 27, 2008
  48. ^ "Baxter Sent Bird Flu Virus to European Labs by Error". Bloomberg L.P. February 24, 2009. Retrieved August 8, 2009. 
  49. ^ "Baxter admits flu product contained live bird flu virus". CTV. The Canadian Press. February 27, 2009. Archived from the original on March 2, 2009. Retrieved July 4, 2009. 
  50. ^ Jack, A (March 16, 2009). "WHO mulls stricter transport of bio products". Financial Times. Retrieved June 16, 2009. 
  51. ^ Tracy, B (July 3, 2009). "Conway Announces Multi-Million Dollar Settlement With Drug Company". Kentucky Post. E. W. Scripps Company. Retrieved July 3, 2009. 
  52. ^ "Teva, Baxter Will Fight $500 Million in Damages Over Propofol", Business Week, May 8, 2010
  53. ^ "2011 annual report, page 87". Baxter.com. Retrieved July 16, 2017. 
  54. ^ "FDA Issues Statement on Baxter's Recall of Colleague Infusion Pumps". FDA. FDA. Retrieved May 3, 2010. 
  55. ^ Portero, Ashley. "30 Major U.S. Corporations Paid More to Lobby Congress Than Income Taxes, 2008–2010". International Business Times. Archived from the original on December 26, 2011. Retrieved December 26, 2011. 

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