Baxter International Inc.
) revealed plans to expand its Opelika manufacturing plant in
Alabama in order to expand the production of dialyzers, which are
artificial kidneys capable of cleaning blood in end-stage renal
disease (ESRD) patients.
BAX has been experiencing burgeoning demand for dialyzers across
the globe as more people are getting inflicted by ESRD due to
growing incidence of diabetes, blood pressure and other
kidney-related diseases. It has been estimated that due to these
reasons, the need for dialysis is growing at a fast rate of 6-7%.
Dialyzers are an important part of life-sustaining hemodialysis
therapy (HD) for treating ESRD patients. With the help of this
therapy, waste and excess fluids are excreted from the body by
processing blood with the help of dialyzers. Thereafter, the
purified blood is returned to the patients' body.
BAX intends to invest roughly $300 million in the Alabama plant for
adding 230,000 square feet and several production lines. The
expansion would need 200 additional workers at the plant by 2016,
when the commercial production is scheduled to begin at the new
lines. The plant currently employs 170 people.
Recently, pharmaceutical behemoth Pfizer Inc. (
) agreed to acquire a couple of marketed vaccines from BAX for $635
million. The two vaccines include meningitis vaccine NeisVac-C and
tick-borne encephalitis vaccine FSME-IMMUN/TicoVac.
The two vaccines are sold in some European countries and other
markets outside the U.S. As part of the deal, Pfizer will gain
partial control of BAX's Orth facility in Austria where these
life-saving vaccines are produced.
BAX is on the verge of splitting its business into two entities -
biopharmaceuticals/bioscience and medical device. The company took
the decision to split up its business in order to put greater
management focus on the two segments, effectively commercialize
product offerings, efficiently allocate resources to high growth
areas, and bring flexibility in deciding on growth and investment
strategies. The split-up is expected to be completed in mid-2015.
BAX's BioScience business will focus on immune deficiencies and
blood-related disorders and includes the plan to form a partnership
or sale of its drug development programs based on the flu and Lyme
diseases. On the other hand, BAX's medical device business will
continue to focus on intravenous (IV) solutions, injectable drugs,
anesthetics, and other equipments.
BAX posted a 5.0% rise in adjusted net earnings to $692 million or
$1.26 per share for the second quarter of 2014 from $659 million or
$1.20 per share in the same quarter a year back. With this,
earnings per share not only surpassed the company's previously
issued guidance of $1.18 to $1.22 but also the Zacks Consensus
Estimate by 5 cents.
Revenues in the quarter went up 16.2% to $4,264 million globally
and exceeded the Zacks Consensus Estimate of $4,112 million.
Excluding the $408 million contribution from the Gambro
acquisition, revenues in the quarter grew 5%.
For the third quarter of 2014, BAX expects revenues to grow between
12 and 13%, barring the impact of foreign currency. The company
also expects adjusted earnings in the range of $1.28 to $1.32 per
share for the quarter. The current Zacks Consensus Estimate of
$1.31 lies within the guided range.
For full year 2014, BAX now expects higher revenue growth of 10 to
11% compared with the prior view of 9 to 10%, excluding the impact
of foreign exchange.
However, BAX narrowed its adjusted earnings per share guidance to
$5.10 to $5.20 for the year from the earlier band of $5.05 and
$5.25. The Zacks Consensus Estimate of $5.16 for the year lies
within the guided range.
Currently, BAX retain a Zacks Rank #3 (Hold). Some better-ranked
stocks in the medical products industry include ICU Medical, Inc. (
) and Symmetry Medical, Inc. (
). ICU Medical carries a Zacks Rank #1 (Strong Buy) while Symmetry
Medical retain a Zacks Rank #2 (Buy).
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