Baxter International (BAX) received approval from the Austrian Agency for Health and Food Safety (AGES) for Preflucel, its trivalent seasonal flu vaccine developed with Vero cell technology. While the vaccine is now available in Austria, it will also be available in the Czech Republic during the 2010 to 2011 flu season. Baxter will be working toward getting the vaccine approved in other European countries as well. On approval of Preflucel in other regions, we expect, the company’s BioScience segment to record higher revenues going ahead.
Earlier, in March 2010, Baxter along with DynPort Vaccine Company (DVC), [a Computer Science Corporation (CSC) company] had presented phase III data which studied the clinical effectiveness of Preflucel. The study found 78% overall effectiveness against influenza. The study was conducted on more than 7000 participants in the 18-49 years’ age group in the U.S. The two companies were working on the development of the vaccine as part of a U.S. Department of Health and Human Services (HHS) Office of Public Health and Emergency Preparedness contract awarded to DVC in May 2006.
Successful commercialization of Preflucel can lead to robust revenue growth for Baxter, since globally, influenza results in 250,000 to 500,000 deaths per year. As a result, The World Health Organization (WHO) recommends vaccination as the most effective way to prevent this disease.


The largest segment at Baxter, BioScience processes recombinant and plasma−based proteins to treat immune deficiencies and other blood-related disorders. This segment, accounting for 42.5% of revenues, also offers products for regenerative medicine such as biosurgery products and vaccines.
 
Baxter derives revenues of the BioScience segment primarily from Recombinants, Plasma Proteins, Antibody Therapy and Regenerative Medicine. Revenues from this segment declined 4% during the last reported quarter to reach $1.4 billion. The decline was primarily due to the U.S. healthcare reform which had a negative impact on Recombinants, Plasma Proteins, and Antibody Therapy product categories.
 
Baxter has been generating consistently recurring revenues banking on its focus on chronic diseases. We are also encouraged by the company’s strong product pipeline. However, we remain concerned about the fundamentals of plasma proteins business, a dismal outlook for hospital spending, and tightening of reimbursement. We are currently Neutral on the stock.
 
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