Any investment in the dollars and cents world is a calculated risk. Essentially with a financial “bet,” the risks and rewards often rise with the amount of capital being wagered, er, invested. Baxter International Inc. understands this and is currently making a solid bet that the global market for plasma-based therapies will create a tremendous opportunity, not only for their organization, but for the millions of people worldwide suffering from a range of chronic and debilitating immune disorders and other critical conditions.
How big is big? How about a billion dollars? In April 2012, Baxter International announced that it would be making the biggest capital outlay in its corporate history; investing a billion dollars over five years to build a state-of-the-art plasma products manufacturing facility near Covington, Ga., one ready to meet the fast-growing demand for plasma-based Albumin and IG treatments. At the time, Robert L. Parkinson Jr., Baxter’s Chairman, said, “The announcement represents our confidence in the long-term global growth of our protein business.”
This confidence continues to be inspired, no doubt, by the robust market potential of IGs. Global Industry Analysts (GIA) recently released a comprehensive global report revealing the global market for IGs is projected to exceed $11.8 billion by 2018, driven in part by growing diagnostic awareness and an increasing number of indications for plasma-based therapies. Currently, an industry source pegged the 2012 market value of IGs at approximately$7 billion, climbing from an estimated $5 billion in 2010.
Playing a key and leading role in the inception of the Covington project, Julie Kim, the global head of BioTherapeutics for Baxter, took the opportunity to debut the project to the industry, addressing the attendees of this year’s International Society of Pharmaceutical Engineers (ISPE) 2013 annual meeting. In her keynote, Kim framed the business case for Baxter’s milestone investment but opened with a case study describing how effective and versatile IG treatments can be. The therapeutic benefits of IG are becoming better known, and diagnostically the medical community is gaining a greater understanding of its indications and outcomes.
As her remarks continued, the case study served as a compelling introduction to Baxter’s equally compelling business case for the Covington facility. “One way to think of plasma,” said Kim, “and not everybody likes this analogy, but it’s easy to understand — is similar to when you pull oil out of the ground. You can pull a number of different products out of that oil. The more products that you can pull out, the more beneficial it is …”
From a plasma perspective, she explained, one always gets Albumin, which next to IG, is one of the primary products Baxter will process at the Covington facility. Next come IGs, which are the driver of plasma fractionation volume, said Kim. Following those are a number of different plasma proteins — with a primary potential to treat rare diseases.
Over the years demand for these therapies has been increasing, said Kim. “Part of the demand growth is driven by the fact that you … have better awareness and diagnosis. Another [reason for demand growth is] one of the disease areas that we treat is primary immunodeficiency disorders. This group … represents approximately 200 or so specific disorders. Even in the United States the diagnosis rate is less than 50%, and on average it takes over 12 years for a patient to be diagnosed.” While conditions indicating IG are under-diagnosed, this trend will abate, giving way to increased penetration, explained Kim, a dynamic that will generate sustainable, long-term demand globally; a macro-market force sure to drive the exponential growth in plasma protein sales over the coming years. Expansion of healthcare in developing markets will also drive growth in countries like China, a nation touted to emerge as one of the leading Albumin-consuming markets.
USA: PLASMA CENTRAL
With demand for IG and plasma protein-derived therapies expanding globally, a strategic business decision of the magnitude Baxter is making might beg the question: “Why site the plant in the U.S. when China represents such a lucrative market? According to Kim, because IG is a product based on human plasma, it’s an issue of balancing supply with demand. In order to be able to manufacture therapies, explained Kim, a producer needs to have the “right” plasma available to process into IG. “The way the world works today,” intoned Kim, “unfortunately the only universal plasma that is accepted across the entire globe is from the United States. European plasma is accepted in certain geographies, but the U.S. supply is the only one that’s accepted universally. This represents a challenge for manufacturers in terms of being able to collect enough plasma to turn the plasma proteins into therapy.”
GREEN LIGHT TO BREAK RED CLAY
Baxter’s Kim explained there are many risks associated with creating and commercially sustaining such a large-scale production facility of this magnitude. Chief among them: correctly anticipating product supply and demand far into the future, staying current with advancing technologies and regulatory expectations, and operationally committing to relatively inflexible processing trains not easily or practically reconfigurable to pursue other biological products. With such a strong business case backing the project, support of both executive management and Baxter’s board was earned every step of the way, culminating in the corporate decision to green light the project and begin the monumental task of matching Baxter’s vision with reality.