Baxter International to Slash 1,400 Jobs Worldwide
October 28, 2015
By Alex Keown, BioSpace.com Breaking News Staff
CHICAGO – Following a drop in revenue during the third quarter, Illinois-based Baxter International plans to lay off 1,400 non-manufacturing employees as part of an effort to reduce costs following the spinoff of Baxalta, the company announced Tuesday during an earnings call.
The bulk of the layoffs, about two-thirds, will impact employees outside of the United States, with the remaining one-third in positions across the U.S. Layoffs are expected to be completed by the end of the year, Chief Executive Bob Parkinson said during an earnings call, Reuters reported. Of those jobs, about 70 percent of the positions represent existing jobs, with the remainder representing open positions, the Chicago Tribune reported. Baxter expects the cuts to save the company approximately $130 million annually.
“With the Baxalta spin-off behind us, the company is clearly focused on enhancing operational efficiency through disciplined financial execution and implementing discrete actions to drive savings from our cost structure, some of which we began to realize in the third quarter,” James Saccaro, corporate vice president and chief financial officer, said in a statement. “We are very pleased with the solid progress we achieved during the quarter to reduce operating expenses and expect additional improvements going forward.”
During the third quarter, Baxter said worldwide sales totaled $2.5 billion, declining eight percent as compared to the same quarter the previous year, driven by a negative impact from foreign exchange. The company said sales of its hospital products division totaled $1.5 billion, a decline of seven percent. Baxter said hospital sales were primarily driven by sales of infusion pumps, anesthetic and parenteral nutritional products, and increased demand for the company’s injectable drug compounding services. Baxter’s Renal Products saw sales of $943 million, a decline of 11 percent. Excluding the impact of foreign exchange, sales of Renal Products rose one percent, driven by demand for peritoneal dialysis products and continuous renal replacement therapies, the company said.
In all, Baxter said if the foreign exchange impact was dismissed, the company would have seen a two percent growth during the quarter.
Despite the negative news, Baxter’s stock increased to $37.25 per share Wednesday afternoon.
Although foreign exchange rates negatively impacted sales, Baxter did see good news earlier this month when the U.S. Food and Drug Administration granted clearance for the AMIA automated peritoneal dialysis system with the SHARESOURCE web-based remote connectivity platform to provide peritoneal dialysis for the treatment of end-stage renal disease. Additionally, the company said it is seeing continued progress in the launch of Baxter’s next-generation SIGMA SPECTRUM infusion pump in North America.
Baxter also received FDA approval for Cefazolin injection in the company’s proprietary flexible container. Cefazolin injection is a cephalosporin antibacterial indicated for preoperative prophylaxis treatment. When used for preoperative prevention, it may reduce the incidence of certain postoperative infections for high-risk patients undergoing surgical procedures, the company said.
Spinning off Baxalta cost the company approximately $223 million during the quarter. In July, Baxalta Incorporated, a pharmaceutical spinout of Baxter launched with hopes of fielding 20 new products by 2020. The company broke away from Baxter with a value of six billion dollars and a robust portfolio that will help the company meet that 2020 goal. In March 2014, Baxter announced plans to spin out two separate, independent companies. One, Baxalta Incorporated, would focus on developing and marketing biopharmaceuticals. The other company, which retains the Baxter International name, will focus on medical products.
Since its spinoff, Ireland-based Shire Pharmaceuticals has been going back and forth with Baxalta in an attempt to acquire the company. Nine days after Baxalta launched, Shire approached the company with a stock-only deal worth almost $31 billion.