Baxter International Inc. provides a portfolio of renal and hospital products. The company operates through two segments, Hospital Products and Renal. The Hospital Products segment manufactures intravenous (IV) solutions and administration sets, premixed drugs and drug-reconstitution systems, pre-filled vials and syringes for injectable drugs, IV nutrition products, parenteral nutrition therapies, infusion pumps, inhalation anesthetics, and biosurgery products. This segment also provides products and services related to pharmacy compounding, drug formulation, and packaging technologies. The Renal segment provides products to treat end-stage renal disease, irreversible kidney failure, and acute kidney therapies. This segment offers products for various treatment continuums, such as technologies and therapies for peritoneal dialysis, hemodialysis, continuous renal replacement therapy, and additional dialysis services. The company sells its products for use in hospitals, kidney dialysis centers, nursing homes, rehabilitation centers, doctors' offices, and by patients at home under physician supervision. It offers its products through direct sales force, independent distributors, drug wholesalers, and specialty pharmacy or other alternate site providers in approximately 100 countries. The company has a collaboration agreement with JW Holdings Corporation to co-develop and distribute parenteral nutritional products containing a novel formulation of omega 3 lipids; and agreement with Celerity Pharmaceutical, LLC to develop certain acute care generic injectable premix and oncolytic molecules. It also has a strategic partnership with ScinoPharm Taiwan, Ltd. to develop, manufacture, and commercialize five injectable drugs for cancer treatments, such as lung cancer, multiple myeloma, and breast cancer, as well as medication to treat nausea and vomiting, and side effects of chemotherapy. Baxter International Inc. was founded in 1931 and is headquartered in Deerfield, Illinois.
Business Analysis of Baxter International
The Life Sciences Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Baxter International compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Baxter International to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Baxter International with an interactive chart.
- Revenue Growth: Baxter International reported a revenue growth of 2.0% year-on-year during 2016. Medical Devices Industry grew at 20.5% in the same period
- COGS share of Revenues: As a percentage of revenue, Baxter International spent 59.6% of its total revenues on COGS. Medical Devices industry average (COGS share of revenue) in the same period was 41.0%
- R&D share of Revenues: As a percentage of revenue, Baxter International spent 6.4% of its total revenues on R&D. Medical Devices industry average R&D spending in the same period was 7.2%
- SG&A share of Revenues: As a percentage of revenue, Baxter International spent 27.0% of its total revenues on Sales, Marketing, and General Administration (SG&A). Medical Devices industry average SG&A spending in the same period was 33.2%
- Inventory share of Revenues: As a percentage of revenue, Baxter International spent 14.1% of its total revenues on Inventories. Medical Devices industry average Inventory spending in the same period was 14.8%
- Accounts Payable share of Revenues: As a percentage of revenue, Baxter International invested 25.7% of its total revenues on Accounts Payable (A/P) Medical Devices industry average Accounts Payable investment in the same period was 9.1%
- Accounts Receivable share of Revenues: As a percentage of revenue, Baxter International invested 16.6% of its total revenues on Accounts Receivable (A/R). Medical Devices industry average Accounts Receivable investment in the same period was 17.3%
- PP&E share of Revenues: As a percentage of revenue, Baxter International invested 42.2% of its total revenues on Property, Plants, and Equipments (PP&E). Medical Devices industry average PPE investment in the same period was 22.2%
- Intangibles share of Revenues: As a percentage of revenue, Baxter International invested 36.5% of its total revenues on Intangibles. Medical Devices industry average Intangibles investment in the same period was 124.7%
- Net Margins: Baxter International Net Margins in the year 2016 were 48.9%. Medical Devices industry average Net Margins in the same period were 11.7%
Sector and Industry Association of Baxter International
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
Baxter International is associated with Healthcare Sector Group, Life Sciences Sector, and Medical Devices Industry.
Life Sciences sector is comprised of the following industries: Pharmaceuticals; Medical Devices; Biotechnology; Diagnostics & Scientific Instruments. The definitions for each of the industries is as follows:
- Pharmaceuticals industry includes companies that discover, develop, manufacture, and market medicines licensed for use as medications. In general these companies offer pharmaceutical products that can be described as prescription or over-the-counter medicines. Many Pharmaceutical companies also offer a diverse portfolio of animal health products, services and solutions. Many diversified pharmaceutical companies operate in more than two operating segments like consumer health products, medical devices and pharmaceutical.
- Medical Devices industry includes manufacturers and distributors of medical equipments and medical supplies. Medical equipments include large scale capital equipmets such as X-Ray machines and MRI scanners and other nondisposable medical devices like stents and pacemakers. Medical supplies include makers of contact lenses, eyeglass lenses, bandages and other disposable products.
- Biotechnology industry includes Biotechnology product companies, subscription companies, and service companies. Biotechnology product companies offer pharmaceutical drug products that are manufactured in, extracted from, or semi synthesized from biological sources. Subscription-based companies develop genome databases, which can be used to develop medicinal drugs. Service companies offer solutions based on a common technology or generic tool of other large pharmaceutical or biopharmaceutical companies.
- Diagnostics & Scientific Instruments industry includes companies that provide testing products, diagnostic reagents, instruments and diagnostic services to aid in the detection and treatment of a wide range of diseases. It also includes molecular diagnostic and genetic testing companies that develop, manufacture, market and provide diagnostic tests, diagnostic systems and related products and services. Also included are companies that manufacture and market analytical instruments, equipment, reagents and consumables, software and services for research, manufacturing, analysis, discovery and diagnostics.
Industry Ranking of Baxter International
With $10.2 billion revenues, Baxter International ranked number 4 of all the companies in the US Medical Devices industry. There were a total of 81 public companies in the US Medical Devices industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Medical Devices industry by revenues during 2016 were:
- Medtronic ($28.8 billion)
- Becton Dickinson ($12.5 billion)
- Stryker ($11.3 billion)
- Baxter International ($10.2 billion)
- Boston Scientific ($8.4 billion)
- Zimmer Biomet ($7.7 billion)
- Dentsply Sirona ($3.7 billion)
- C. R. Brad ($3.7 billion)
- Varian Medical Systems ($3.2 billion)
- Edwards Lifesciences ($3 billion)
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.
- Conduct a holistic benchmarking; to identify and target additional sources of value
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