Medical Design Briefs - September 2022 - 8

Inside the OEM: Baxter
[to do that] cost effectively. So that combination
becomes more and more important
as we go forward and pivot the
company in a new direction. "
Another way that Baxter broadened its
markets was through the development of
care sites (see Figure 2). Almeida said
Baxter was always strong in both the
acute care market and the home care
market with peritoneal dialysis and parenteral
nutrition therapies. " We are now
becoming more present with other business
such as PSS [patient support systems]
and GSS [global surgical solutions]
and frontline care, which are the legacy
Hillrom businesses. "
The Effect of COVID-19
on Healthcare
" Once we went through COVID-19, we
found that a significant amount of care
has moved away from the hospital, " said
Almeida, noting that this change will take
hold in the next 5-10 years. " You're going
to see those changes, and Baxter wants to
be present. And to be present there,
[we've] got to have products and innovation
that create that opportunity for us to
be a participant in those markets. "
When setting the strategy for the company,
he said, " The first thing we do is to look
at the trends that are currently in front of
us. " Because of the number of more complex
disorders, he said, will accelerate the
digital health transformation post
COVID-19. " I'm not saying that COVID-19
is gone, but looking at the transformation
took place, the circumstances of how care
is delivered today is very different. The era
of 2018-2019 and how healthcare was delivered
is pretty much behind us. We've got
to look forward at the factors that are driving
better healthcare and better access.
How things are reimbursed are changing
significantly as well as shifting from hospitals
to lower cost [care] settings. Access to
healthcare is not equal across the globe,
and Baxter is driving to create products
and technologies that are more accessible
in many more countries in the world so
people can get treated more effectively. "
Supply Chain: Putting the Plants
Where the Products Are Sold
One significant change that Almeida
said the company never spoke about in
the past was implementing an integrated
supply chain and how supply chain plays
a role in product development. In the
past, the company always looked at the
8
Hospital
Care
Emergency, Surgical,
Med Surg, Critical Care,
Pharmacy, Care Comms
Renal Care
Pharmaceuticals & BPS
Medication Delivery
PSS & GSS
Frontline Care
Advanced Surgery
Clinical Nutrition
Acute Therapies
Fig. 2 - Compelling strategy for value creation. (Source: Baxter 2022 Investor Conference)
supply chain to deliver patient safety and
quality first and then addressed the
cost-effectiveness in making products to
" get the right product at the right cost at
the right time. "
" Things have probably most radically
changed in this area more than anywhere
else. We grew up with putting
manufacturing locations [in areas] to
drive lower costs and taxes effectively.
When you look at the trend going forward,
it's that you've got to put the plants
where you sell the product, " said Almeida.
" And you've got to buy the components
where you have your plants because
of the supply chain cost of moving
things around the world.
During Goldman Sachs' annual global
healthcare conference in June, Almeida
noted Baxter's philosophy is to " make
where you sell. "
" That [philosophy] will guide us in the
future on where to locate plants to alleviate
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some transportation issues. You always have
this fragility that you as a company cannot
avoid, so how you prevent that is by maximizing
the locations versus putting the
plants [in locations] that may be the most
advantageous for labor or tax rates. "
Four Strategic Pillars for Growth
Baxter's strategies for value creation
are innovation, market expansion, operational
efficiency, and capital allocation.
Its innovation will focus on connected
care and core therapies (see Figure 1).
Market expansion will encompass revenue
synergies, geographic expansion,
channel expansion, and market development,
while operational efficiency will
involve cost synergies and digital transformation,
as well as quality, safety, and
supply chain resilience. Finally, its capital
allocation will entail portfolio management,
debt repayment, dividends,
and share repurchases (see Figure 4).
Medical Design Briefs, September 2022
Home
Care
Acute & Chronic
Home Care
Alternate
Site Care
Primary Care, Dialysis Clinic,
Ambulatory Surgery Centers,
Immediate Care, Outpatient
Cardiology, Infusion Clinics
Innovation
Market
Expansion
Operational
Efficiency
Capital
Allocation
Connected Care
Core Therapies
Revenue Synergies
Geographic Expansion
Channel Expansion
Market Development
Cost Synergies
Digital Transformation
Quality, Safety, and
Supply Chain
Resilience
Portfolio Management
Debt Repayment
Dividends
Share Repurchases
Delivering Enhanced Value For All Stakeholders
Fig. 1 - Broadened presence across the care continuum. (Source: Baxter 2022 Investor Conference)

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Medical Design Briefs - September 2022

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