From improved corporate culture to less bureaucracy to internal innovation, CEO José Almeida has been priming Baxter for success since taking over a year and a half ago.
The former CEO of Covidien, who led the company to it $50 billion merger with Medtronic in January 2015, jumped at the opportunity to lead Baxter. The company “started with a great mission, products essential to health care,” Almeida said last week at Healthegy’s Medtech Conference in Minneapolis.
The company among other things sells lifesaving renal and medical products, including intravenous (IV) solutions, systems and administrative sets, IV infusion parenteral nutrition, perioperative care, pharmacy devices and software, acute renal care, and home and in-center dialysis.
“What a chance to take this portfolio,” Almeida said. “What an opportunity financially as well, when I look at the balance sheet, the great leverage opportunity. And also coming to a company that had in the past a culture of innovation that may have lost its way. So why not bring what I know, what I’ve learned, from so many good people in my career to Baxter.”
Besides, Almeida was ready for new challenges after the Medtronic-Covidien deal: “How many rounds of tennis can you play every day?”
Since Almeida officially stepped into Baxter’s CEO spot in January 2016, the company’s stock has risen more than a third in value, to about $60 per share. During its most recent quarter, sales and profits beat analysts’ expectations. Baxter is now in the position to shop for other companies to acquire, Almeida said.
Here are 2 changes Almeida brought to Baxter since he took over:
1. Reducing bureaucracy and improving the workplace
Almeida recalls that Baxter had culturally developed a bad habit of people saying, “Let’s do more analysis.”
“I used to take 2 pieces of paper and rub them against each other. I said, ‘This is the sound of our company working. This paper going back and forth,'” Almeida said.
Almeida has worked to reduce layers in the organization and encourage employees to make decisions on their own. Overall, he wants to make sure Baxter is a great place to work because a company can’t accomplish its strategic goals if its employees are miserable on the job.
Almeida admits that improving corporate culture is a never-ending process.
“Culture is like having a garden. You don’t plant it, you don’t take care, … pretty quickly it goes away from you. It will revert back. So it is like Nitinol,” Almeida said.
2. Boosting innovation
Almeida said accelerating innovation can start with better portfolio management.
“So the first thing we did was to understand where the money was being spent, and unfortunately, it was being spent in areas which had very little effect on the growth of the company, and even clinically they were very difficult to produce results., as well as technically to produce results. So the first thing was to reallocate money,” Almeida said.
In the process, innovations were discovered sitting on the shelves. For example, one in-house innovation was a system to generate sterile solutions at home, on-demand, for home peritoneal dialysis. The system could be a game-changer for at-home dialysis because patients presently need enough space in their home for a month’s supply of solution, up to 40 boxes. Some simply don’t have the space. Baxter in May received clarification from FDA on the regulatory pathway for the on-demand solution technology, which is expected to have its first clinical trial in 2018 and regulatory submission in 2019.
Baxter employees are also becoming more aware of what is being developed elsewhere at universities and hospitals. Baxter is also revamping its venture capital business.
“We did not have any contacts in Israel. You think about. If you were a med tech and you don’t have a foot in Israel, you’re missing a big part of innovation. So we are inking a couple of agreements with universities in Israel. We just did a [Mayo Clinic] deal, and we’re going to [do] more in terms of strategic portfolio management in venture capital, then financial returns,” Almeida said.
“You gotta make sure that you have eyes and ears everywhere, because I can guarantee there’s always somebody else as smart or smarter than we are doing something much more focused 24/7, and none of us are doing 24/7 anything singularly.”
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