Medical Design Briefs - September 2022 - 10

Inside the OEM: Baxter
Sites of Care:
Hospital
Care
Innovation
Focus:
Connected Care
Devices or software that can connect,
communicate, and/or analyze data to help
transform healthcare
" Smart " Devices
Communications
Analytics
Home
Care
Core Therapies
Core therapies and essential products
designed to address patient and provider
needs
Alternate
Site Care
fied a good M&A target (see Figure 5).
" We have done this in the past when we
found that Hillrom and Baxter would
Generating ~$800M In Anticipated Incremental New Product Revenue By 2025
Generating ~$1 In Anticipated New Product Revenue Through 20251
Fig. 3 - Innovating with connected care and core therapies. (Source: Baxter 2022 Investor Conference)
Revenue Synergies
✓ Utilizing Baxter
geographic footprint
to introduce Hillrom
portfolio
✓ Expanding valueadded
services
Geographic Expansion
✓ Prioritizing targeted
geographies
✓ Introducing products
into attractive
markets
Channel Expansion
✓ Broadening access to
new customers
✓ Furthering expansion
with connected
devices
Market Development
✓ Increasing adoption
of underpenetrated
therapies
✓ Providing education
and advocacy to
improve access
Contributing ~$300M Incremental Sales Through Market Expansion Efforts By 2025
Fig. 4 - Executing market expansion through focused initiatives. (Source: Baxter 2022 Investor
Conference)
Enterprise-Wide M&A Themes
Hospital Automation &
Connectivity
Hospital & Remote
Monitoring
Point-of-Care (POC) &
Companion Diagnostics
Cardiology
Workflow
* Prioritizing investments in key adjacencies
* Supplementing the core portfolio with
strategic bolt-ons
* Investing in transformative technology
through Baxter Ventures portfolio
Optimization
POC Diagnostics
& Monitoring
Acute POC
Diagnostics
Clinical
Decision Support
Smart Medication
Management
Acute
Monitoring
Fig. 5 - Optimizing Baxter's profile with strategic portfolio management. (Source: Baxter 2022 Investor
Conference)
" Bringing Hillrom into Baxter will give
us really good leverage on synergies. Something
that we do understand is how capital
allocation will drive growth in the future.
The first thing that we think about for capital
allocation is that patient safety and
quality are our number one priority when
we allocate capital. We will continue to invest
money in facilities where we are the
single source to a market. We will fulfill
10
our responsibility and obligation as a market
leader in healthcare, " Almeida said.
Almeida said the company will allocate
internally to businesses that are growing
faster - businesses that can provide for
the future and also return money to
shareholders via dividends. He notes that
M&A is Baxter's preferred way to deploy
cash and that share repurchasing will be
used only if the company has not identiwww.medicaldesignbriefs.com
Home
& Alternate Site
Therapies
make a powerful combination. If you think
about these strategies derived from our
market dynamics, how does that affect our
market growth and what markets we are in?
What we found in the acquisition of Hillrom
is an uptick of our weighted average
market growth rates (WAMGR). So today
we have a sustainable market growth of 3-4
percent, " said Almeida. " The opportunities
and the CAGR [compound annual growth
rate] growth of our businesses are disproportionately
allocated to the Hillrom businesses
that came into Baxter because the
markets are shifting into more connected
health rather than solely capital products.
In the total market of $130 billion, we have
a WAMGR of 3-4 percent in each our businesses
today. In every single market, Baxter
growth is above or at market growth. "
To achieve this growth, Almeida says
the company will focus on connected
care and then core therapies (see Figure
3). But connected care is not just jargon, he
says. " It is an enablement for better insight.
So how are we going to create
smart devices? We're planning to connect
devices - smart devices and the
ability to communicate and integrate
with hospital systems and integrate
amongst themselves to create sites. "
He says that although there is an advantage
to connecting devices and moving
data around, the ultimate goal, the aspiration,
is to create intelligence behind them
with algorithms that help clinicians in
such a tough market, particularly as hospitals
and clinics struggle in terms of human
resources. " The resources in hospitals
are difficult to come by. Nursing is
expensive, technicians are expensive.
There is significant overload on nursing
staff. So we've got to create a pathway -
the opportunity for them to do their jobs
in a more effective way. And that [pathway]
is to create alternate site care. It's
more so than just connecting devices. "
" We have a phenomenal lineup of new
products. We will primarily grow with
revenue synergies, geographic expansion,
channel expansion, and market development
- these four driving tenants
will create $300 million in incremental
sales through market expansion efforts
by 2025, " said Almeida. " You will see an
uptick in our R&D expenses because
we're allocating more money to businesses
that are growing faster. "
Medical Design Briefs, September 2022

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Medical Design Briefs - September 2022

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