Baxter Recalls Products – Analyst Blog

Baxter International Inc. (BAX) has recently initiated a voluntary recall of all lots of its Hylenex recombinant as a result of glass particles found in vials of the product. Hylenex increases the absorption of fluids to boost injected drugs and for fluids and drugs administered under the skin.

Baxter licenses the Hylenex recombinant technology from Halozyme Therapeutics Inc. (HALO). The company has the exclusive rights to market and sell Hylenex recombinant globally. Hylenex recombinant is a standalone formulation of recombinant human hyaluronidase. The product was launched in the United States in October 2009 for use in pediatric rehydration.

Baxter is working with Halozyme Therapeutics to investigate the root cause of the issue and rectify the same. The company has not reported any customer complaints regarding the issue till date.

We think that the product recall will hurt Baxter’s bottom line. The company reported first quarter fiscal 2010 earnings of 93 cents per share, in line with the Zacks Consensus Estimate and higher than the year-ago figure of 83 cents.

Baxter is a leading global medical products and services company that develops, manufactures and markets products to treat hemophilia, kidney disease, infectious diseases, etc. Baxter’s main competitors are Becton, Dickinson and Company (BDX) and Johnson & Johnson (JNJ).

Currently, we are ‘Underperform’ on Baxter.