baxter

Businessmodel of Baxter

Customer Segments

Baxter has a niche market business model, with a specialized customer segment. The company targets its offerings at providers of health care services, including hospitals, kidney dialysis centers, rehabilitation centers, nursing homes, and doctors’ offices.

Value Proposition

Baxter offers three primary value propositions: accessibility, innovation, and brand/status.

The company creates accessibility by providing a wide variety of options. It markets products in a broad range of therapeutic areas, including Anesthesia & Critical Care, BioSurgery, Drug Delivery, Infusion Systems, Intravenous Access, Nutrition, Renal Therapies, and Pharmacy Workflow. It is able to do so because it has acquired numerous companies since its founding, enabling it to diversify its portfolio. These include Hyland Laboratories; Flint, Eaton and Company; Fenwal Laboratories of Boston; Medcom; American Hospital Supply Company; Caremark; and Baxa.

The company has embraced innovation from its very start. Its product breakthroughs include:

  • The first commercially-manufactured intravenous (IV) solutions
  • The first portable (home-based) kidney dialysis machine
  • The Transfuso-Vac blood collection system, a sterile vacuum-type collection unit for blood that enabled storage for up to 21 days, giving rise to the practice of blood banking
  • The Plasma-Vac container, which enabled the separation of plasma from whole blood
  • The first disposable total bypass oxygenator for open-heart surgery
  • The Autoplex anti-inhibitor coagulant, a major innovation in the treatment of hemophilia

  • Continuous ambulatory peritoneal dialysis, an alternative to hemodialysis for kidney failure The company has established a powerful brand due to its success. It manufactures its products in 25 countries and sells them in 120 countries. Its offerings can be found everywhere, from clinics and hospitals to homes in major cities and rural areas. They are used on millions of patients daily, with over a million units of IV solutions being shipped to its U.S. customers each day. Lastly, it has won many honors, including the following:

  • Recognition as one of “America’s Best Employers” by Forbes
  • Recognition as “Most Socially Responsible Enterprise of the Year” by Health News — China
  • Ranking as a Top 50 Employer by Workforce Diversity for Engineering & IT Professionals
  • Recognition as one of the “100 Best Corporate Citizens” by Corporate Responsibility *Magazine *
  • Ranking in the Civic 50 by The National Conference on Citizenship and Points of Light ### Channels

Baxter’s main channel is its direct sales team. It also sells its products through independent distributors, drug wholesalers, and specialty pharmacies. The company promotes its offering through its website, social media pages, direct mail campaigns, catalogs and merchandising bulletins, trade publications, advertising, and participation in trade shows and conferences.

Customer Relationships

Baxter’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. The company’s website provides an “eServices Center” where product users can access useful resources and obtain information. That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

Baxter’s business model entails designing, developing, manufacturing, and distributing its products. The company manufactures 90% of its offerings.

Key Partners

Baxter’s key partners are the suppliers around the world who provide raw materials for use in the manufacture of its products. It maintains a long-term supply relationship with Baxalta, which manufactures ARTISS, FLOSEAL, TISSEEL, and stand-alone thrombin.

Baxter relies on independent distributors, drug wholesalers, and specialty pharmacies to assist in the distribution of its products.

Baxter’s BioPharma Solutions business unit partners with pharmaceutical firms to support their commercialization goals by offering scientific expertise, parenteral delivery systems, sterile contract manufacturing solutions, and customized support services.

Lastly, Baxter operates Baxter Ventures, which identifies young firms with innovative and promising products, technologies, and/or therapies, and provides them with capital and expertise. Its specific areas of focus for investment are Healthcare Information Technology, In-Hospital Solutions and Therapeutics, Medical Devices, Monitoring and Diagnostic Tools, Pharmacy Technology Tools, Renal Therapies, and Surgical Tools.

Key Resources

Baxter’s main resource is its intellectual property, which includes its patents, trademarks, copyrights, and trade secrets. The company depends upon these to maintain its competitive position. Baxter also relies heavily on physical resources in the form of its 50 manufacturing facilities and more than 100 distribution facilities in the United States, Canada, Europe, Latin America, and Asia-Pacific. Lastly, it depends heavily on its R&D and engineering staff for the design and development of its products.

Cost Structure

Baxter has a cost-driven structure, aiming to minimize expenses through low-price value propositions. Its biggest cost driver is cost of sales, a variable expense. Other major drivers are in the areas of sales/marketing and research/development, both fixed costs.

Revenue Streams

Baxter has one revenue stream: revenues it generates from the sales of its products and related services. Its offerings are sold through contracts formed with its clients, often long-term in nature.

Written on October 25, 2017