Can Baxalta deliver on its big growth promises? Baxter says yes

Ludwig Hantson

As Baxter ($BAX) prepares to spin off its biopharma unit into new drugmaker Baxalta, it's touting strong, independent futures for both companies. But just how strong does Baxter expect its fledgling Baxalta to be?

For starters, it's looking at sales growth of 6% to 8% in constant currencies, it said Monday. That'll come, in part, from its anchor hematology products and immunology portfolio, which includes new launch HyQvia. And the company expects 20 new product rollouts by 2020, which will chip in more than $2.5 billion in annual sales by that point, it said.

"We have a solid foundation and strong momentum," future Baxalta CEO Ludwig Hantson said in a statement.

All told, that sales growth should buoy Baxalta's operating margin from about 29% in the second half of this year to between 30% and 31% in 2020, it predicted, and its adjusted EBITDA margin should jump from 33% to between 35% and 36% over that same span. It foresees a speed-up in free cash flow, too, to around $1.3 billion.

But with competition ramping up for key hemophilia moneymakers like Advate--Biogen ($BIIB), for one, has a long-acting competitor that's priced on par with the older med, and others are on the way--Baxalta still has some moves to make. The company "plans to further augment its pipeline through external partnerships and strategic acquisitions," it said, prioritizing those efforts around its core areas of focus.

Baxalta has already shown it's willing to shell out for marketed therapies, too, such as the Oncaspar leukemia treatment it recently agreed to buy from Italy's Sigma-Tau Finanziaria for $900 million. That buy will chip in $100 million in annual sales from countries including the U.S., Germany and Poland, Baxter said last week, bolstering a burgeoning oncology unit that Baxalta will need if it cedes any ground in the hemophilia space.

- read Baxter's release

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