Baxter (NYSE: BAX) continues to streamline, announcing today that it will sell its pharma and biotech contract manufacturing business.
The Deerfield, Illinois-based medtech company — maker of diagnostic, critical care, kidney care, nutrition, hospital and surgical products and services — will sell its BioPharma Solutions (BPS) business to private equity firms Advent International and Warburg Pincus. Baxter expects the $4.25 billion sale to close in the second half of 2023, pending customary regulatory approvals and closing conditions.
After taxes, Baxter will receive roughly $3.4 billion from the deal.
“Today represents an important step in Baxter’s ongoing transformation journey as we continue to execute against our strategic priorities, enhance our focus and create additional value for all our stakeholders,” Baxter CEO José (Joe) E. Almeida said in a news release.
“BPS has long been recognized worldwide as a trusted and preferred partner of contract manufacturing services for the pharmaceutical and biotech industries. Advent International and Warburg Pincus have extensive experience helping innovative healthcare companies advance their mission and strategic priorities. I am confident that under their stewardship, BPS will continue to build on its leadership position, foster world-class talent, invest in new capabilities and capacity, and provide leading-edge, high-quality solutions for its clients.”
BPS is but the latest business that Baxter is carving out
The news of the BioPharma Solutions sales plans comes about four months after Baxter announced plans to spin off its renal care and acute therapies units. Baxter officials expect to complete the spinoffs by July.
The company is also in the midst of implementing a new operating model. That model included cost-cutting measures that led to a workforce reduction of less than 5% (up to 3,00o employees), announced in February. Baxter expects to report quarterly performance in line with that new operating model in the second half of this year.
During the first quarter of 2023, Baxter saw a 38% bottom-line slide on a sales decline of 1.6% year over year. The results, however, beat the consensus of Wall Street analysts. Baxter expects sales growth between 1% and 2% on a reported basis this year.
More about the BioPharma Solutions business
For decades, BPS has provided sterile contract manufacturing solutions, parenteral delivery systems and customized support services to the pharma and biotech industries. As a standalone company and in partnership with Advent and Warburg Pincus, BPS will support everything from clinical research to commercial deployment for its customers. With roughly 1,700 employees in Bloomington, Indiana, and Halle, Germany, BPT is set to have roughly $600 million in annual revenues this year.
“BPS is a premier asset at the forefront of the biopharma industry, and one we’ve been closely following for a number of years,” said John Maldonado, a Managing Partner at Advent. “Leveraging our deep sector expertise and significant strategic resources, we believe this partnership can unlock multiple opportunities for growth and help the business realize its full potential by serving blue-chip customers, including Baxter, with high-value, specialized and end-to-end capabilities as a standalone company.”