Base Product in Baxter's Heparin Came from China!

Implications: 1)  Baxter was producing 50% of the worlds heparin requirements, which provided short term anticoagulation for hemodialysis and various interventions for cardiovascular disease. 2)  The base product of heparin comes from porcine intestines. 3)  The base product of Baxter's heparin was produced in a non-FDA inspected plant in China. 4)  The Chinese company that produced the "fake" heparin was partly, American owned. Bottomline:  Abraxis and APP are now the main providers of heparin in the United States, and possibly, the world.

Analysis: I've been following this story for the last three months and there is now doubt that Baxter is in deep trouble.  However, the FDA has a great deal of culpability in this issue.

The Chinese company that produced the "fake" heparin, had been operating for over seven years, without one FDA inspection.  Having been in the healthcare business for over thirty years, I can tell you that this has only happened since we have begun open trade with China.

For example, the FDA has never had a problem going down to Mexico or Italy to stop import of medical products when manufacturers in these nations failed to live up to the FDA's standards.  And, they were inspected prior to allowing import of their products into the USA.

That being said, I feel little sympathy for Baxter, as they are well aware of the reporting processes that should have taken place through the FDA.  They're not new at this game.

More disturbing is the fact that heparin is not a new, complex medication.  It was discovered back in 1916 and became readily available in the 1930's.  So, it's not rocket science to produce this simple medication.

In my opinion, Baxter has damaged it reputation and are at risk of losing hundreds of millions of dollars because they took a short cut to save chump change.

My advice:  Dump your Baxter stock and wait for it to bottom out before you buy back in.