Baxter International (BAX), a global diversified medical products company, recently announced that the Austrian Agency for Health and Food Safety recently granted approval of a European repeat mutual recognition procedure (“rMRP”) for its Preflucel seasonal influenza vaccine. The license will be formally implemented by 13 European nations, including Germany, the U.K. and Spain, to render Preflucel widely available during the 2011-2012 influenza season.
Preflucel, which is a seasonal vaccine comprised of inactivated and purified split influenza virions, is the outcome of a committed product development effort to provide a tolerable and useful vaccine that can be reliably manufactured during each and every influenza season. It is produced using Baxter’s Vero cell technology, which ensures an innovative methodology for producing vaccine, versus the traditional embryonated chicken egg production.
Preflucel is indicated as a prophylaxis of flu for adults including the elderly. It is deemed suitable for those who suffer from egg or antibiotic-related allergies. The vaccine is free of antibiotics, preservatives as well as egg proteins.
Baxter is enthused by the approval of Preflucel in Austria. Also, a recent study pointed to tolerability and effectiveness of Preflucel as a safeguard against seasonal flu. It found 78.5% protective efficacy against the flu strains in the vaccine and relatively minor adverse event profile.
The immunogenicity, safety and protective efficacy of Preflucel was established by a randomized, double-blind, placebo-controlled phase III trial conducted with over 7,200 fit volunteers, in the U.S., during the course of the 2008-2009 flu season.
The news regarding Baxter remains mixed. On the positive side, Baxter’s focus on life-sustaining products, which are not commoditized, partly insulates it from an economic downturn. The company is able to generate recurring revenues, and consistent cash flow, due to its focus on chronic diseases.
On the flip side, despite recent improvement in Plasma Proteins and Antibody Therapy sub-segments, we are concerned about stagnation in sales, a still somber outlook for hospital spending and tightening of reimbursement.
The lingering bearishness surrounding the stock can be lifted by consistent execution. Baxter is a good bet for value investors willing to wait as fundamentals improve. Among others, it competes with Becton, Dickinson and Company (BDX) and Talecris Biotherapeutics Holdings Corp. (TLCR) in certain niches. We currently have a Neutral long-term rating on Baxter supported by a short-term Zacks #3 Rank.
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