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Baxter Partners ScinoPharm, Expands in Generic Injectables

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Global medical technology company Baxter International Inc. (BAX - Free Report) , to expand in the field of generic injectables, has formed a strategic partnership with Taiwan-based process R&D and active pharmaceutical ingredient (API) manufacturer, ScinoPharm Taiwan, Ltd.

The alliance aims at developing and commercializing five injectable drugs to be used in a range of cancer treatments, including lung cancer, multiple myeloma and breast cancer. This apart, these drugs can be useful for the treatment of nausea and vomiting which are the common side effects of chemotherapy. Baxter will hold commercialization rights for the products covered under this partnership. The products are expected to be launched from the beginning of 2020.

In addition to both the companies’ agreement for these five drugs, Baxter also has the option to partner with ScinoPharm on as many as 15 additional injectable molecules.

According to Baxter, the deal is perfectly strategic as this will strengthen the company’s position in the huge and growing global market of generic injectables. The partnership will combine Baxter’s differentiated manufacturing expertise and global commercialization capabilities with ScinoPharm’s recognized API experience. This will enable Baxter to increase patient access to difficult-to-manufacture, high-quality oncolytic medicines.

In this regard we note that, the company has recently been focusing on expanding in this field. This is reflected in its decision to acquire India-based generic injectables pharmaceutical company, Claris Injectables Limited for almost $625 million.

Of the synergies, through the acquisition of Claris, Baxter expects to launch seven to nine new products annually over the next few years. This indicates a stellar 10–15 new launches a year after 2019. The partnership with ScinoPharm, which initially promises the five injectable drugs will no doubt augment the company’s aim to get a further foothold in this niche.

In this regard, we note that, the current branded sales of the initial five products included in this partnership total more than $4 billion annually. With the alliance, these products will get included within Baxter’s existing generic injectable medications portfolio that already includes difficult-to-manufacture oncology drugs and a broad portfolio of standard-dose, ready-to-use premixed injectable products such as anti-infectives, analgesics and critical care medicines.

Meanwhile, the stock’s price performance represents a solid return of almost 16.38%, comparing favorably with the Zacks categorized Medical Products sub-industry’s gain of 11.3%. Shares of Baxter followed the favorable market trend and inched up a nominal 0.3% to close at $45.09 following the news release.

Additionally, a long-term expected earnings growth rate of 11.4% and an earnings yield of 4.24% compared with the industry’s 1.22%, instill confidence among investors on the stock.

Zacks Rank & Stocks to Consider

Currently, Baxter carries a Zacks Rank #3 (Hold). Some better-ranked medical stocks include Glaukos Corporation (GKOS - Free Report) , Cardiovascular Systems and Neogen Corp. (NEOG - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Glaukos gained over 100% in the last one year compared with the S&P 500’s gain of 18.9%. The company has a stellar four-quarter average earnings surprise of over 100%.

Cardiovascular Systems surged over 100% in the last one year compared with the S&P 500. It has a four-quarter average earnings surprise of 67.8%.

Neogen gained 26.4% in the past one year, better than the S&P 500 mark. The stock has an impressive long-term earnings growth rate of 16.7% for the next five years compared with the industry average of 15.2%.

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