Long known as a hospital supply and pharmaceutical maker, Illinois-based Baxter International Inc. is now setting its sights on becoming L.A.’s next biotech giant.
The company has turned its attention to its biotech arm, Glendale-based Hyland Immuno, pumping hundreds of millions into its expansion and concentrating heavily on investor relations in an effort to get more recognition from Wall Street.
“Baxter feels biotechnology holds a lot of promise,” said Thomas Glanzmann, president of Hyland Immuno. “We believe there is a significant market opportunity there.”
In the last two years, Baxter has hired a new executive team for the Hyland Immuno arm, including Norbert Riedel, a former head of worldwide biotechnology for Hoescht Marion Roussel (now Aventis) who now heads Hyland’s genetically engineered drug division.
Until now, Hyland’s main product has been drugs used to treat hemophilia and other blood disorders. Baxter has poured $100 million into upgrading its Los Angeles facility for those drugs. And last month, it pledged $400 million more on upgrades, including expanding its Thousand Oaks facility over the next year and boosting the L.A.-area workforce by several hundred employees to make a new generation of gene-based products.
Meanwhile, Baxter will have to convince Wall Street that it’s a biotech company.
Even with an estimated $1.7 billion in biotech product sales last year, it is still widely perceived as a medical supply company. As a result, its stock has benefited little from Wall Street’s recent love affair with biotech stocks.
Baxter initially moved into biotech in 1996, with the purchase of Glendale-based Hyland Immuno, whose main biotech branch is located in Thousand Oaks, not far from biotech leader Amgen’s headquarters. There, Hyland Immuno makes its recombinant Factor VIII, a genetically engineered drug that treats people with the most common form of hemophilia and is one of the company’s best sellers, generating $500 million in sales last year.
While most of its L.A. business has been with its plasma operation, which makes blood-related products using technology so old it isn’t considered a biotech operation, Riedel said the company is now moving into using its plasma division partly for gene-based therapies.
“They have ambitions to do other things,” said Ahmed Enany, executive director of the Southern California Biotechnology Council. “The bulk of their employment is not in biotech. But the future is wide open.”
Rick Wise, senior managing director of Bear Stearns & Co., said Baxter faces an uphill climb in convincing Wall Street to regard it as a biotech firm. “Baxter is a diverse company,” Wise said. “It’s one of the global market leaders and a major player in intravenous solutions, but it’s not regarded as a biotech company.”
