Baxter, one of the larger firms in the dialysis business (but nowhere that powerful in the clinic business), made an announcement that it is planning to spin off its renal care and acute therapies unit into another public company.  It expects to complete the divestiture in 2024 or so.

This brought up a slew of memories for me.  After I invented my artificial kidney, I continued to work in the field that was becoming known as the dialysis industry.  As a matter of fact, I had actually started a small dialysate concentrate division, supplying just a few hospitals.

That was how I met Ed Simon.  Ed was a pioneer in the supply of dialysates.  (The company name was EdLaw Pharmaceuticals.)  Not the way we thing of dialyzate concetrates now, but how they were really used back in the late 1960s and 1970s.

EdLaw did precision weighing of the chemicals that comprised the dialysate.  These were easily (and cheaply) shipped to the units that then mixed the salts in  water, which was then used  to effect dialysis for the patients.  At one point in time, EdLaw controlled 90+% of the dialysate supply business.

Ed was approached by one of the pioneers in dialysis, Pim Kolff . (Pim’s real name was Wilhelm, but we all used his moniker.) Pim’ had become famous for the kidney device he perfected since the middle of World War II-  a twin coil kidney that was submerged in a reservoir of dialysate.  (See diagram below.)

Pim wanted Ed to start making a liquid concentrate.  To maker a liquid concentrate meant there needed to be change in the buffer from the anatomically correct sodium bicarbonate to sodium acetate, due to solubility considerations..  But a liquid concentrate- even without the buffer change, had higher basic costs- and expensive shipping costs.

That buffer change didn’t bother Ed.  What bothered Ed was making a water solution that would require the shipping of 1 gallon of concentrate (about 9 pounds) instead of the ½ pound of powder that was currently being delivered.  Ed thought no one in their right mind would buy this liquid concentrate, with the higher attendant costs.  So, Ed demurred.

Pim was convinced he was correct about the future of dialysis; so he went and convinced a supplier in Chicago to make his dialysate concentrate.  That company, Travenol Laboratories), basically took over the entire dialysis supply business with their liquids.

Travenol became part of Baxter, which shortly thereafter acquired American Hospital Supply Corporation, which was the distributor of Baxter’s products. At that point in time, Baxter was a major medical vendorl

And, that’s the way it stayed at least until the Kidney Center in Boston (under the direction of Harvard Med professor, Constantine “Gus” Hampers) started up- and quickly added their own dialysate production unit, Erika, which became the largest supplier of dialysate.  (It didn’t hurt that Gus’ primary company already owned a slew of clinics which were required to use Erika solutions.)

Overnight, EdLaw went from being the big supplier on the block to having to sell just components of the dialyzate; affording the  hospital or clinic to customize the dosage for the patient.  (As an example, many hospitals would buy dextrose-free dialysate in bulk, and then would add dextrose additives from EdLaw to accommodate those patients who needed that component; another big additive sold was potassium (the liquid dialysate would be void of potassium, Edlaw would supply a packet that could adjust the potassium level to 1 or 2 mEq/L for patient need.)

Back then, most dialysates were diluted with tap water that without much other purification.  That meant that the chlorine in the water (for disinfection)  could create problems for  (or even kill) the dialysis patient.  We had determined that ascorbic acid added to the dialysate would almost instantaneously “neutralize” the chlorination, and EdLaw added that to its offerings.

That’s where the business stood for a long time. Until much more efficient dialyzers were being used and the sodium acetate buffer in the concentrate was found to be a problem.  (Acetate would slowly metabolize back to bicarbonate by the body, but it led to a series of disequilibria.)  So, a nascent movement to modify the 1 gallon concentrate led to a 1 gallon concentrate that was devoid of the buffer and EdLaw supplied the bicarbonate or the bicarbonate/sodium chloride component.  With this new demand, EdLaw became a pretty profitable dialyzate supplier once again.[At this point in time, Ed Simon had retired and turned the company over to his daughter, Edwina Hilton.)

In early 1980, at an National Institute of Health meeting (dialysis discussions were held annually back then), Baxter announced that it had developed a new dialysate- obviating the need for the power bicarbonate. When we went to lunch after the presentations, Edwina was in total panic mode.

Edwina wanted to preempt Baxter.  She didn’t want to lose her precious dialysis business to Baxter a second time.  So, we entered into a joint venture (Edlaw lacked the funds and expertise to develop such product), hoping to develop a liquid bicarbonate dialysate.  Which we achieved- and found that Baxter’s announcement was but a pipe dream.  (Had they not so announced, who knows if a bicarbonate-based dialysate would ever have been developed.)

That is the background that set me thinking about all the changes in dialysis that have occurred and the part that Baxter/Travenol played in them.

Now, this divestiture is not a total abandonment of the dialysis business by Baxter.   The clinics that Baxter operates in Latin America and Europe are not included in this divestiture, nor will its peritoneal dialysis systems or dialyzer units or renal replacement units.  (When it comes to clinics, you should recall that Fresenius (which took over National Medicare Care and Erika) and DaVita are the two largest providers of free-standing dialysis in the world.)

Nevertheless, this divestiture will affect about 1 million folks in 70 different countries.  I am fairly certain that Baxter is effecting the divestiture is that growth in this sector is expected to be miniscule (on the order of 3 or 4% a year).    And, this is Baxter’s largest revenue segment, having total revenue of $ 3.9 billion n 2021, about 1/3 of Baxter’s total revenue.

It’s also easier to pull off, since last year Baxter acquired the medical gan, HillRom.  By shedding the low/slow growth units, Baxter expects it share price to greatly benefit.

It will be interesting to follow these developments.