Baxter International (BAX) recently revealed that the European Commission has given it the authorization for marketing Vepacel in all member nations and Norway, Iceland and Liechtenstein.
Pre-pandemic vaccine grants a measure of safety against an unfolding extremely pathogenic influenza strain before an official pandemic is declared. Vepacel is a pre-pandemic influenza vaccine to be used for immunizing adults, at least 18 years of age, against the H5N1 category of influenza A, frequently called avian or bird flu. The commercialization of pre-pandemic vaccines, useful against H5N1, is a vital tool in the preparedness planning of national health departments.
According to Baxter, the green light for Vepacel is another example of the company’s determination to make pandemic and pre-pandemic vaccines, which protect people from the H5N1 virus. In fact, Vepacel provides cross-protection against a large number of H5N1 strains. Vepacel has been found to be duly tolerated and negative incidents have been relatively minor, such as localized pain, fatigue and headache.
The H5N1 influenza is very pathogenic and strikes birds as well as humans often resulting in death. In early 2012, the World Health Organization (“WHO”) had received 589 confirmed cases of human infection with avian flu, in the period starting from 2003.
The news regarding Baxter still 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. Among other positive factors, Baxter retains a strong product pipeline with several products in late-stage clinical development.
Baxter, in November 2011, completed its acquisition of Baxa Corporation. The takeover highlights the company’s continued commitment toward patient safety and nutrition. It also permits Baxter to provide a wider set of solutions for the safe preparation and delivery of IV medication. Baxa’s know-how will benefit patients across the globe.
Moreover, Baxter struck a deal, in December 2011, to buy Synovis Life Technologies, a well-known provider of mechanical and biological products for the repair of soft tissue utilized in a large number of surgical operations. The acquisition will further expand Baxter’s offerings in the area of biosurgery and regenerative treatment.
On the flip side, despite resilience in Plasma Proteins and Antibody Therapy sub-segments, we are concerned about stagnation in sales, a slightly somber outlook for hospital spending and tightening of reimbursement. We also account for the unfavorable impact of foreign exchange translation and possible dilution associated with the company’s acquisitions of Baxa and Synovis.
Improved execution has lifted sentiment somewhat toward Baxter. It is a good bet for value investors willing to wait as fundamentals improve further. Among others, the company competes with Becton, Dickinson and Company (BDX) in certain niches. We currently have a Neutral long-term rating on Baxter. The stock currently retains a Zacks #4 Rank, which translates into a short-term Sell recommendation.
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