Limitations on ordering are meant to help prevent stockpiling and boost the likelihood of equitable access to available products.
“We will spare no resource — human or financial — to restart operations and help ensure patients and providers have the products they need,” Baxter CEO José Almeida said in today’s announcement.
Baxter is also increasing allocation levels for high-concentration dextrose and sterile water and expects to make additional increases for certain products by early November. Meanwhile, the company has boosted the availability of IV solutions and nutrition products for children’s hospitals to full capacity.
Baxter’s North Cove plant, located in Marion, N.C., was shut down Sept. 29 after it sustained damage from Hurricane Helene, which has devastated much of the Southeast. The plant, which is the largest manufacturer of intravenous and peritoneal dialysis solutions in the country, was flooded following rain and a storm surge, which ultimately flooded the facility, Baxter said.
There appears to be no structural damage, however, Baxter said earlier this week, adding that it expects to receive engineering certification within the next two weeks.
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As the company continues to work to restore manufacturing production at the North Cove site, Baxter says it is importing products from its other facilities and is working with the U.S. Food & Drug Administration to temporarily import products.
While the site is offline, hospitals across the U.S. were trying to conserve IV fluid supplies, while others were already experiencing shortages. The American Hospital Association this week called on the White House to help increase the supply of IV solutions.
Now other IV fluid manufacturers, such as ICU Medical, Fresenius Kabi and B Braun, are working to expedite production, but it’s unlikely they have the capacity to match Baxter’s pace. Fresenius Kabi, a German drugmaker with its U.S. headquarters in Lake Zurich, says it could ramp up IV solution production at a recently opened plant in Wilson, N.C., which was not impacted by Helene. But the availability of products would still be months away.
"While we do not currently have capacity at this site to serve additional customers, we are assessing several options to startup further production lines faster than initially planned at the site," Fresenius Kabi said in an emailed statement. "However, such a ramp-up of U.S. production at our Wilson site would take several months and would not be sufficient to make up for a prolonged loss of production by Baxter.”
Business implications
The plant closure is expected to hurt Baxter’s earnings. Evercore ISI analysts wrote in a report today they anticipate fourth-quarter revenues being impacted by at least 100 basis points. Even still, assuming Baxter is able to resume most of production by the end of the year, Evercore ISI does not expect the closure to impact the company's fiscal year 2025.
Baxter’s IV fluid business brings in about $1 billion in annual revenues, half of which is from the U.S., according to the Evercore ISI report.
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If Baxter’s plant stays offline for too long, the company could risk losing market share — at least temporarily — in the IV therapy market. When Abbott Laboratories was forced to close a baby formula plant in Michigan following contamination concerns, the North Chicago-based company lost 20% of its share of the baby formula market, Crain’s reported at the time. It has since recovered its share.
Right after Baxter shut down the plant, the company’s shares dropped as much as 4%, but were up 3% on today’s news, trading at about $38.
Baxter employs more than 2,500 people at its North Cove plant, the vast majority of which were accounted for, according to an Oct. 7 announcement from the company. It said it was still working to reach a small number of employees, who were likely experiencing limited cellphone service.
This story first appeared in Crain's Chicago Business.
