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Baxter International Inc. (BAX): One Pharma Stock Investors Should Watch

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Baxter International Inc. (NYSE:BAX), one of the fastest-growing healthcare multinational corporations of America, has a long history of strong financial credentials. With a single-point agenda of emerging out as a clear leader in its core area of operations, Baxter International Inc. (NYSE:BAX) has repeatedly proven its might.

Baxter International Inc. (NYSE:BAX)

The FY 2012 growth story

With FY 2012, the company wrapped up another successful business year. It achieved 5 % year-over-year growth in revenue (exclusive of foreign exchange effect) to reach an astounding $14.2 billion. Net income for the year was $2.3 billion and cash flow from operations amounted to $3.1 billion, up 10% year-over-year.

And the story continues ….

Baxter International Inc. (NYSE:BAX) kept up its steady performance in the first quarter of 2013, satisfying Wall Street’s earnings expectations. The company reported net income of $581 million (excluding the special items) registering year-over-year growth of 2%. The adjusted earnings per diluted share were reported at $1.05, up 4% year-over-year, meeting the company’s earnings guidance.

The strategy

The recent past has seen Baxter make strategic acquisitions with a view to gain a competitive advantage and to achieve inorganic growth. The acquisition of Gambro has successfully placed Baxter International Inc. (NYSE:BAX) in the running to achieve the top spot in the renal market space.

In addition, Baxter, through its newly established venture capital arm, has been active in occupying stakes in new entities in the healthcare segments. This will enable the company to enhance its product portfolio and promote development and innovation, which will drive future growth and profitability of the company.

Keeping inline with the above, the company has recently acquired an $8.5 million stake in Ocular Therapeutix, a growing company involved in the development of ophthalmic-therapeutic products, with the intention to achieve a significant competitive edge in the long term.

Furthermore, the company has made a $38 million investment in Naurex, an Evanston, Ill.-based start-up, which develops solutions to treat depression and other nervous system disorders such as Alzheimer’s disease and schizophrenia.

Strengths and opportunities

The demographic transition caused by declining fertility and a lower mortality rate has led to longer lives and an ageing world, which has a direct effect on the demand for healthcare facilities. The rising rates of diabetes and diabetes- induced diseases have created enormous opportunities for the healthcare players to dwell upon.

Baxter International Inc. (NYSE:BAX) healthcare provides unique solutions for critical diseases and has developed successful therapies for treating blood disorders and renal complications.

Source: Annual report 2012

The company has established itself as the world leader in haemophilia care. It has recently launched the first protein-free recombinant factor VIII to treat haemophilia.

Baxter International Inc. (NYSE:BAX) sells its products across 100 countries. Approximately 60% of sales are accounted for by countries other than the United States. The company has a fast-growing base in regions like Latin America, Canada, Asia-Pacific, Europe, Middle East and Africa, which together comprise about 57% of the total markets. This provides enormous opportunity for growth in the developing economies. The medical-products business is comprised of the medical delivery and renal segments, which together account for approximately 56% of the company’s total revenue.

The healthcare giant has developed a diverse portfolio of segments over the years and its continued commitment to innovation and development provide for solid growth prospects going forward.

Competitive Scenario

Fresenius Medical Care AG & Co. (ADR) (NYSE:FMS) is a leading player in the healthcare industry with a market capitalization of $ 21.6 billion. With a diversified business portfolio, Fresenius Medical Care AG & Co. (ADR) (NYSE:FMS) is a tough contender in the healthcare segment. The company beats Baxter to occupy the leading position in dialysis care with Fresenius Medical Care AG & Co. (ADR) (NYSE:FMS), the company’s wholly owned subsidiary specializing in renal care, contributing to about 54 % of the consolidated sales of the group entity.

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