Baxter Sells Core Kidney Care Business to Carlyle for $3.8 Billion

On August 13, global dialysis giant Baxter announced the sale of its kidney care business to global investment firm The Carlyle Group for $3.8 billion (approximately RMB 27 billion). Under the terms of the definitive agreement, subject to certain closing adjustments, Baxter will receive approximately $3.5 billion in cash, with an after-tax net gain of around $3 billion.

Dialysis giant Baxter is the first company globally to achieve commercial production of dialysis systems. Its kidney care business has a 70-year history, covering more than 70 countries worldwide and serving over 1 million patients. In 2023, Baxter’s kidney care revenue reached $4.45 billion (approximately RMB 32 billion), accounting for 30% of its total revenue. In the first half of 2024, revenue from this segment was $2.22 billion (approximately RMB 15.9 billion).

In 1956, building upon the artificial kidney developed by Dutch physicians, Baxter launched the world’s first commercial renal dialysis system, formally entering the kidney care business. Throughout its century-long history, kidney care has remained a core component of its business portfolio. In the late 1970s and early 1980s, Baxter introduced continuous ambulatory peritoneal dialysis (CAPD) along with associated home-use devices, establishing a competitive advantage in the home dialysis sector and securing an early-mover market position.

In the new century, Baxter has continued to innovate in peritoneal dialysis products, launching the HOMECHOICE automated peritoneal dialysis system, Extraneal (a glucose-free peritoneal dialysis solution), and Theranova dialyzers, which feature higher permeability and effective selectivity for large proteins.

In 2013, Baxter acquired Gambro, a Swedish innovator in global kidney care, further solidifying its industry leadership in dialysis.

Under the influence of digital technology, Baxter’s dialysis equipment has begun to evolve from automation to intelligence. For instance, in 2015, Baxter and SHARESOURCE jointly launched AMIA, the first automated peritoneal dialysis system with user-friendly features, which helps patients achieve more efficient home peritoneal dialysis treatment by staying connected with remote healthcare providers.

In 2020, the FDA approved Baxter’s HomeChoice Claria automated peritoneal dialysis system and its Sharesource connectivity platform for use in adult and pediatric populations. Reportedly, Sharesource is the only bidirectional remote patient management platform in the United States designed for patients undergoing peritoneal dialysis.

In this process, Baxter is also actively expanding across the upstream and downstream segments of the dialysis industry chain. In 2017, Baxter China established its first independent dialysis center in Xiamen, China; in 2018, Baxter began establishing kidney care centers in the United States, initiating a close integration of services and products.

This major divestiture came as no surprise. In 2023, Baxter announced plans to combine its Kidney Care and Acute Therapies businesses into an independent publicly traded company named “Vantive” to achieve more refined operational management. However, amid changing market conditions and strategic adjustments, Baxter shifted its approach from a spin-off IPO to an outright sale.

In fact, Baxter is continuing to streamline its operations. In 2023, Baxter sold its biopharmaceutical business to Advent International and Warburg Pincus for $4.25 billion; laid off approximately 5% of its workforce, nearly 3,000 employees; and closed its Opelika, Alabama plant, in which it had previously invested over RMB 2.8 billion.

Fresenius Medical Care, one of the “Big Three” in dialysis, is also streamlining its business, just like Baxter.

In 2023, Fresenius Group announced the spin-off of its largest renal dialysis division, Fresenius Medical Care. In 2024, Fresenius merged three of its subsidiaries to establish InterWell Health, aiming to provide kidney care services. Through these strategic moves, including spin-offs and mergers, Fresenius seeks to enhance operational efficiency and strengthen its overall competitiveness.

Furthermore, Fresenius also announced plant closures and layoffs in 2024, transferring its dialysis production line from its California facility to Mexico, and declared the sale of its dialysis clinic network in Brazil, Colombia, Chile, and Ecuador to another industry giant, DaVita, for $300 million.

In July, B. Braun, a globally leading supplier of medical equipment, pharmaceutical products, and surgical medical devices, also announced that it had transferred its bone biologics business to Octane Medical Group, a global leader in regenerative medicine, as part of strategic streamlining and resource optimization efforts. B. Braun’s dialysis division, Amedcare, which encompasses hemodialysis, acute dialysis, and plasma separation, operates more than 360 kidney care centers worldwide.

Unlike industry leaders such as Baxter and Fresenius, which are continuously streamlining their operations, DaVita, a provider of hemodialysis services, is steadily expanding. In addition to acquiring Fresenius Medical Care’s dialysis clinic network as previously mentioned, DaVita has partnered with Medtronic to establish Mozarc Medical, a company focused on blood purification that will develop differentiated therapies for patients with kidney failure.

According to statistics and forecasts from Global Info Research, the global hemodialysis market sales reached $12.054 billion in 2022 and are projected to reach $18.129 billion by 2029, with a compound annual growth rate (CAGR) of 6.17%, indicating a relatively steady growth pace.

Turning our focus back to China, domestic companies such as Weigao, Shanwaishan, and Biolight are striving to catch up in the hemodialysis machine market, where foreign enterprises hold more than 70% of the market share.

On August 2, the Shanghai Stock Exchange updated the IPO progress of Weigao Blood Purification, changing its review status to “Under Inquiry.” Known as the “King of Hemodialysis in China,” Weigao Blood Purification primarily offers hemodialysis and hemoperfusion products for the treatment of kidney diseases and other related blood disorders.

According to its prospectus, Weigao Blood Purification reported operating revenues of RMB 2.64 billion, RMB 2.91 billion, RMB 3.43 billion, and RMB 1.68 billion in 2020, 2021, 2022, and the first half of 2023, respectively; net profits attributable to ordinary shareholders of the company were RMB 297 million, RMB 260 million, RMB 315 million, and RMB 229 million, respectively. The achievement of cumulative net profits exceeding RMB 1 billion over three years is particularly remarkable amid the current market downturn.

Shanwaishan, which listed on the STAR Market in December 2022, also delivered impressive performance. In 2023, it recorded revenue of RMB 690 million, a year-on-year increase of 80.67%, and net profit attributable to shareholders of the parent company of RMB 194 million, up 227.64% year on year. Recently, Jafron Biomedical announced its second-quarter 2024 results, reporting revenue of RMB 1.496 billion, a 47.77% year-on-year increase, and net profit of RMB 553 million, up 99.1% year on year.

As the pace of domestic substitution accelerates and leading Chinese companies such as Shanwaishan, Weigao Blood Purification, Biolight, and Jafron Biomedical catch up, the landscape of China’s blood purification market is poised for change. Policy developments are further accelerating the transformation of China’s hemodialysis market.

In January, the Henan Provincial Healthcare Security Administration released the "Announcement on the Proposed Winning Results of the Inter-Provincial Alliance Procurement for Hemodialysis Medical Consumables." Among the results, domestic manufacturers secured first place in multiple categories. For instance, the top ten brands in the high-flux hemodialyzer category were all domestically produced, and the top nine brands in the non-high-flux hemodialyzer category were also all domestically produced.

On May 14, the Henan Provincial Healthcare Security Administration issued a notice stating that the volume-based procurement (VBP) of hemodialysis medical consumables, led by Henan Province and involving 23 provinces, will officially enter the implementation phase on June 1. Although several regions—including three cities in Jiangsu, seven cities in Shandong, Anhui Province, four cities in Shanxi, Heilongjiang Province, and Liaoning Province—had previously conducted centralized procurement for dialysis-related products as early as October 2019, this 23-province alliance VBP represents the largest-scale and most extensive centralized procurement effort in the field of hemodialysis to date, with its impact on the industry being self-evident.

Also in May, the Tianjin Municipal Government held a press conference to explicitly expand the scale and volume of the Beijing-Tianjin-Hebei “3+N” Pharmaceutical Alliance procurement, incorporating more suitable products such as hemodialysis medical consumables and in vitro diagnostic reagent medical consumables into the centralized procurement scope. This move signifies that the Beijing-Tianjin-Hebei “3+N” Procurement Alliance has officially joined the ranks of centralized procurement for hemodialysis consumables.

Overall, with the approval of various blood purification products from domestic companies and the continuous enhancement of their brand competitiveness, the curtain has been raised on industry transformation, and Chinese hemodialysis companies are set to enter a new development cycle.