USA — Baxter International has announced plans to spin off its renal care and acute therapies businesses into a separate, publicly traded company.

With the separation of its kidney units, the company joins the growing number of medtech companies that have decided to spin off specific business units to streamline manufacturing during supply chain challenges.

Medtronic, a competitor, announced the spinoff of its renal business in May 2022, as well as the spinoff of its patient monitoring and respiratory interventions businesses in October 2022.

According to Baxter, the spinoff should be completed in 12 to 18 months and will continue with its current product portfolio.

It will have its own investment priorities and management focus as a standalone company, putting it in a better position to pursue growth opportunities and investments.

Global sales of kidney units are expected to reach US$5 billion by 2021. Furthermore, the renal care and acute therapies units reported sales of US$2.77 billion and US$519 million, respectively, for the nine months ending September 30, 2022.

Going forward as a spinoff, “the business will operate in market segments totaling approximately $15 billion that collectively are estimated to grow between 3% to 4% on a compound annual basis over the next three years,” according to Baxter.

Along with the spinoff announcement, the company stated that it is finalizing a new operating model that will be implemented concurrently with the business separation.

The model includes the implementation of a restructuring plan that will optimize the company’s manufacturing footprint.

Baxter intends to provide more details about these initiatives during the company’s fourth-quarter earnings conference call on Feb. 9.

Baxter’s biopharma solutions business may also undergo significant change in the near future.

According to a press release, the company is pursuing strategic alternatives for the business, including potential sale or other separation options, because its business model and client focus have limited strategic alignment with the rest of Baxter’s portfolio.

The company notes that: “A potential sale of, or other strategic transaction involving this business would help Baxter further streamline its focus while providing an opportunity for capital redeployment in accordance with its stated capital allocation priorities, including debt repayment.”

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