Baxter spin-off to focus on biosimilars and haematology growth
In 2012 Abbott announced it was spinning out its biopharma manufacturing business (along with its topselling monoclonal antibody drug Humira) into AbbVie, and yesterday – in what some commentators are viewing as a similar split – Baxter International announced it was to separate its biopharmaceutical business from its legacy medical product business.
“The biopharmaceuticals company has the opportunity to enhance profits with new biopharmaceutical offerings while optimising its international commercial focus,” Baxter CEO Bob Parkinson said during a conference call yesterday.
Parkinson will continue to lead the legacy business but named current President of BioScience, Ludwig Hantson, as CEO of the biopharma company, which will be named at a later date.
Currently Baxter’s bioscience division plays second fiddle to the medical product business, with 2013 sales clocking in at $6.6bn (€4.81bn), compared with $8.7bn. However, following the split the company has predicted its biopharma division will grow 4-5% annually with sales upwards of $11bn from 2017, building on its current haemophilia and plasma-protein portfolio.
“We will enhance our portfolio with new products, new indications and new formulations,” Hantson told investors yesterday, adding: “We are also building our businesses to capitalise on attractive opportunities, and these include a focus on haematology [and Oncology] and biosimilars.”
Biosimilars especially are an attractive growth opportunity for the company, he continued, with “approximately $70bn in branded biologics going off-patent by 2021, and increasing regulatory clarity.”
Last September the firm teamed up with Coherus Therapeutics in a $246m deal to develop and market a biosimilar version of Amgen/Pfizer’s drug Enbrel (Etanercept) which, according to Hantson has demonstrated PK equivalence and is advancing into phase III trials.
Baxter also has “an ongoing relationship with Momenta for earlier stage opportunities,” in biosimilars, he added. “We are transforming our pipeline into a robust portfolio of products.”
Management said the deal would not go through until the first half of 2015 and therefore specific details are still being worked on. However, Hantson said the new biopharma company would “continue to enhance [its] manufacturing capacity footprint with internal expansion and external collaborations,” with the building of a new plasma site in Covington, Georgia, being one example.
Current CFO Bob Hombach added, when asked, that the current network was already very distinct between the two business areas, and separation would not be too much of a problem.
“I would suspect that the biopharmaceutical business will have the opportunity to have a fairly streamlined international footprint given the markets they operate in today,” he told listeners, “but also we see opportunities going forward to further streamline.
“While there may be some operating dilution right at the time of spin we think over several years there will be cost structure, streamlining, as well as other margin improvement opportunities we might find through portfolio mix.”