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Baxter International Inc. (NYSE:BAX) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.
New Reporting Structure
David Lewis – Morgan Stanley: Bob, obviously there is a lot of reclassification with the new reporting structure, I want to just – give me just the high level commentary. Your year-over-year core Baxter is slowing incrementally just a little bit into ‘13, just maybe give us some high level commentary on some of the significant headwinds and tailwinds to growth. And obviously there is incrementally more headwinds in ‘13 and sort of some of those are?
Robert L. Parkinson, Jr. – Chairman and CEO: So, a couple of things, I’d say in 2012 we benefited from the acquisitions of Synovis and Baxa which are now fully in our base and as you rightly pointed out we are facing some headwinds here as we go into 2013. Starting with government austerity measures which we project to total approximately $90 million, which includes approximately $30 million for the U.S. medical device tax which we are putting through sales and margin. The other $60 million relates to a combination of austerity measures in Europe but also in Asia Pacific particularly and Chin as well. So, an even larger austerity impact this year than what we’ve seen in the last couple of years. I would also just remind everyone we will remain constrained for plasma production here in 2013 as we work through bringing the old LA facility back online and ramp up our new LA and Rieti facilities, but that is definitely on track. We should have increasing product availability throughout the course of the year. So, the other thing I would mention is we’re going to anniversary some of the recombinant Factor VIII tender impact related to Australia but that doesn’t really happen until the middle of the year.
So, in particular if you look at the guidance for the first quarter the plasma product constraints are most acute for us. In the first quarter we have increasingly robust supplies and move throughout the year. As I mentioned we anniversary the Australia tender impact until the middle of the year. The austerity measures that I’ve mentioned will be impacted immediately as we begin the year. What’s going to accelerate growth from the 2% to 3% that we’ve got in the first quarter as we move towards approximately 4% for the full year, relates to a couple of things, one of which is the timing of tenders particularly in plasma derived products such as FEIBA and plasma-derived Factor VIII those are more concentrated in the second and third quarter than have been in prior years. We do expect to begin to start shipping to Brazil related to recombinant Factor VIII in the second quarter as well and as I mentioned increased product availability throughout the course of the year on plasma-derived side will also help us drive accelerated growth beyond the first quarter.
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