Baxter has laid out plans to spin off its global kidney care operations into a new, publicly traded enterprise. The move follows a string of major medtechs in the past year pushing their internal business units to take flight as separate companies or going independent themselves from under a larger conglomerate.
Leaving the Baxter nest within the next 12 to 18 months will be its renal care and acute therapies divisions—with a portfolio of dialysis machines, supplies and services, as well as organ support hardware, that collectively brought in about $5 billion in sales during the 2021 fiscal calendar.
Describing the moment as a “major inflection point” in Baxter’s transformation, President and CEO Jose Almeida said in the company’s announcement that realizing the full benefits of the split will take time—while Baxter also considers slimming down even further by finding a new home for its biopharma solutions business.
“The healthcare landscape has never been more dynamic,” said Almeida, who will stay on as chief of the remaining Baxter. “Our learnings over the past year and beyond require a fundamental rethinking of our profile and operating model.”
Elsewhere in the industry, Medtronic said in May 2022 that it would hive off its own kidney care business through the formation of a new joint venture with the dialysis giant DaVita. Later that year, Medtronic also announced it would be letting go of its patient monitoring and respiratory care segments, including its hospital ventilator portfolio that saw high demand at the peak of the COVID-19 pandemic—with Siemens and GE HealthCare reportedly showing interest in picking up the $2.2 billion divisions.
At the same time, BD saw its diabetes spinout launch last year as Embecta, with a portfolio that got its start in 1924 with specialized insulin syringes; 3M said its $8 billion healthcare business would go solo; Zimmer Biomet begat ZimVie to house its spine and dental offerings; and just this week GE Healthcare turned into GE HealthCare by taking its first steps as an independent outfit on the Nasdaq.
Baxter’s new kidney company, meanwhile, would carry on a nearly 70-year history of renal therapies—with devices in the home, clinic and ICU currently reaching more than one million patients in over 70 countries, the company said, and about 75% of its income being collected outside the U.S.
About 60% of its total sales would come from peritoneal dialysis systems, totaling about $2.8 billion, while 23%, or $1.1 billion, would be supplied by hemodialysis sales. Acute care, such as continuous renal replacement therapies and life support hardware, makes up about 17%, or around $800 million.
According to the company, its R&D pipeline also includes products under development that are expected to launch in 2023 or 2024, around the same time the kidney business would go independent. They include digital patient monitoring and management tools, plus diagnostics for acute kidney injuries and sepsis. Beyond that, future research plans include automated home dialysis solutions and artificial kidney technologies.
The newly streamlined portfolio of the remaining Baxter business will include its drug delivery division, frontline care monitors and ventilators, smart patient beds and motorized tables, advanced surgery devices and clinical nutrition support products.
The proceeds from the spinoff—as well as the potential sale of its biopharma solutions business, which, along with Baxter’s own drug sales, bring in about $3 billion—will be used to help pay down Baxter’s debt, following its $10.5 billion acquisition of Hillrom in December 2021.