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Baxter carves out biopharma division

Following the recent path of other diversified healthcare firms, Baxter is splitting its biopharmaceutical operations from its medical products division. The newly formed drug business will retain a portfolio consisting mostly of treatments for hemophilia and other bleeding disorders. The restructuring will also allow the Deerfield, Illinois–based company to focus on opportunities to innovate in hematology, oncology and biosimilars—areas where Baxter has recently begun to invest. Baxter's lead drug product is Advate, a full-length, recombinant factor VIII for treating hemophilia, which accounts for about 15% of its pharmaceutical business. It also sells an extended half-life (pegylated) version of the molecule, Bax 855, and other blood factors and biotherapeutics. But it has been branching out, too. In April, Baxter obtained a phase 1 gene therapy for hemophilia B by acquiring collaborator Chatham Therapeutics, of Chapel Hill, North Carolina, for $70 million upfront. In November 2013, Baxter paid $60 million upfront for rights to Seattle-based Cell Therapeutics' small-molecule pacritinib, now in late-stage trials for treating the bone marrow disorder myelofibrosis. Two months earlier, it inked a deal with Coherus Biosciences in Redwood City, California, to develop a biosimilar version of Enbrel (etanercept) in Europe, Canada, Brazil and other markets, a program now advancing to phase 3 trials. Baxter is also working with Cambridge, Massachusetts–based Momenta Pharmaceuticals to develop biosimilars (none have entered the clinic: two anti-inflammatory compounds are preclinical). Baxter also holds European rights to the Newtown, Pennsylvania, biotech Onconova's rigosertib, which recently failed a phase 3 trial in severe myelodysplastic syndromes and is also in late-stage trials in pancreatic cancer. The decision to carve out its biopharma division, announced in March and expected to be completed next year, took analysts by surprise, given management's previous assertions supporting a diversified medtech company model. That said, Baxter has made similar decisions in the past, having spun out cardiovascular device specialist Edwards Lifesciences in 2000, its Allegiance hospital supply business in 1996, and the at-home intravenous drug and nutrition services unit Caremark in 1992. The current spinoff, however, is the first aimed at bolstering the company's biopharmaceuticals development. The move mirrors those of fellow Illinois medtech company Abbott Laboratories, in Abbott Park, which spun out its pharmaceutical operations (as AbbVie) in 2013, and Dublin-based Covidien, which separated its pharmaceutical business Mallinckrodt, also last year. They are “comparable examples where shareholders benefitted from a separation with divisions that had divergent end-markets, customers, capital needs, risk profiles and interested investor bases,” commented analyst Danielle Antalffy of Leerink Research in Boston.

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Ratner, M. Baxter carves out biopharma division. Nat Biotechnol 32, 504 (2014). https://doi.org/10.1038/nbt0614-504

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