Baxter Acquires Gambro, Becomes Integrated Renal Therapy Leader

Article preview from IN VIVO - December, 2012 

Baxter’s offer of $4 billion for Swedish hemodialysis manufacturer Gambro may be one of the largest medtech acquisitions of the year, but Baxter CEO Bob Parkinson describes the deal as a bolt-on for Baxter’s existing market in renal therapy. Of course the magnitude of the deal makes it “an adjacency with a capital A”, Parkinson quipped.

 Baxter Acquires Gambro, Becomes Integrated Renal Therapy Leader

Article preview from IN VIVO - December, 2012 

Baxter International Inc.’s offer of $4 billion for Swedish hemodialysis manufacturer Gambro AB may be one of the largest medtech acquisitions of the year. Baxter CEO Bob Parkinson describes the deal as a bolt-on for an existing product space and well within Baxter’s announced strategy of growing its existing clinical markets. Of course the magnitude of the deal makes it “an adjacency with a capital A” Parkinson quipped in a conference call on December 4.

The dialysis industry has several segments divided between chronic and acute renal failure. The product segments include equipment for in-center hemodialysis, hospital-based dialysis, peritoneal dialysis, and an emerging market in home dialysis. Dialysis (the extracorporeal cleansing of the blood of patients with dysfunctional kidneys) is also a service industry and the leading equipment manufacturer in the space, Fresenius Medical Care AG (a division of Fresenius SE & Co. KGAA) also owns and operates dialysis centers.

Baxter is a leader in peritoneal dialysis (a home-based therapy that uses the membrane of the peritoneal cavity and dialysis solutions to cleanse the blood of toxins) with 72% of the market, and also offers equipment for home hemodialysis. Gambro is a leader in hemodialysis products for both the chronic and acute-care segments of the market. With the acquisition, Baxter thus gains a new breadth and scale in renal therapy. It transforms itself from a leader in one segment with 2011 sales of $2.5 billion into a new, larger, and diversified competitor with pro forma renal therapy sales of $4.2 billion. The deal values Gambro at a multiple of 14x (enterprise value/EBITDA) while Baxter and the rest of the sector trade at 8x.

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