Dive Brief:
- Baxter is planning significant investment in its U.S. manufacturing of peritoneal dialysis (PD) technologies, the company announced on the heels of President Trump's executive order Wednesday aimed to overhaul American kidney disease care.
- In light of the federal push to transition patients away from using costly dialysis centers in favor of in-home treatment, Baxter said it expects both adding and bolstering facilities for making and distributing PD solutions, devices and cassettes.
- Renal care is already Baxter's largest source of revenue, though sales in the unit fell last quarter from the prior year. The boost to the kidney business could also help offset persistent weakness in the company's medication delivery unit.
Dive Insight:
Medicare spends about $114 billion on kidney disease each year. One key way to cut costs, the Trump administration believes, is to reduce reliance on dialysis centers, which is good news for device makers in the business of in-home renal care.
According to a note Wednesday from RBC Capital Markets, about 88% of dialysis is currently done at centers, with the remainder through in-home treatment. Peritoneal dialysis accounts for approximately 78% of that in-home care, the analysts said, and Baxter leads the medtech industry in U.S. PD market share.
Hemodialysis treatment uses a connected artificial kidney machine to pump blood out of, and back into, a patient. Conversely, peritoneal dialysis uses an inserted catheter and cleansing fluid.
In its most recent quarter, Baxter's renal care business brought in $858 million, down about 2% from 2018. RBC analysts estimate Baxter's PD business accounts for 60% to 70% of its U.S. renal care revenues, projecting an 8% compound annual growth rate through 2023, but noting the Trump administration's new plans could drive that estimate higher.
Baxter began a clinical trial in January for its on-demand PD solution generation system, which allows patients to make PD solutions in small batches at home using tap water, a filtration device and concentrates in conjunction with its automated remote patient management platform.
"We are excited to partner with the administration and healthcare providers to bring the benefits of peritoneal dialysis (PD) to more patients and improve dialysis care overall," Baxter CEO José Almeida said in a company statement Wednesday. "In support of this effort, we are committed to investing in additional U.S. manufacturing capacity that will bring our industry-leading technology and services to new patients, while also creating jobs for Americans."
The renewed emphasis on kidney care could help Baxter amid a lingering drag on its small IV bag businesses from Hurricane Maria.
DaVita Dialysis and Fresenius Medical Care, which both operate outpatient dialysis centers, indicated they will also increase emphasis on home care technologies.
"In partnership with nephrologists, we are best positioned to deliver in the home dialysis space, as the largest provider of home dialysis in the U.S.," DaVita CEO Javier Rodriguez said in a company statement Wednesday. "We're accelerating home growth with our investments in technologies, such as home remote monitoring and a telehealth platform, to make it easier for patients to treat at home."
And Fresenius CEO Rice Powell touted the company's $2 billion acquisition of home hemodialysis machine maker NxStage as key to its efforts in home care going forward.
"We are also investing in technologies for the future, including new innovations for remote patient monitoring and telehealth that, combined with predictive analytics and artificial intelligence, will make it easier to help patients between visits to a doctor and avoid unnecessary hospitalizations," Powell wrote.
