Description
This assignment explores the extensive amount and type of information included in a company’s
Annual Report, also known as Form 10-K, filed with the Securities and Exchange Commission
(SEC) and certain other quarterly disclosures by the company. Baxter International, Inc.
(“Baxter”) Annual Report can be found on the course Blackboard site under the Assessments
link for assignment 1.
You are asked to answer the following questions about Baxter. Be sure to address all parts of
each questions for full credit.
Unformatted Attachment Preview
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________________________________________
FORM 10-K
_____________________________________________________________________________________________
(Mark One)
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
☐
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-4448
_____________________________________________________________________________________________
Baxter International Inc.
(Exact Name of Registrant as Specified in its Charter)
_____________________________________________________________________________________________
Delaware
36-0781620
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
One Baxter Parkway, Deerfield,
Illinois
60015
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s telephone number, including area code 224.948.2000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common stock, $1.00 par value
BAX (NYSE)
0.4% Global Notes due 2024
1.3% Global Notes due 2025
1.3% Global Notes due 2029
BAX 24
BAX 25
BAX 29
New York Stock Exchange
Chicago Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
_____________________________________________________________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes ☐
Yes ☐
No ☑
No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes ☑
No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Emerging growth company
☑
☐
☐
Accelerated filer
Smaller reporting company
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of
an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐
No ☑
The aggregate market value of the voting common equity held by non-affiliates of the registrant as of June 30, 2022 (the last business day of the registrant’s most recently completed
second fiscal quarter), based on the per share closing sale price of $64.23 on that date and the assumption for the purpose of this computation only that all of the registrant’s
directors and executive officers are affiliates, was approximately $32 billion. The number of shares of the registrant’s common stock, $1.00 par value, outstanding as of January 31,
2023 was 504,672,166.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive 2023 proxy statement for use in connection with its Annual Meeting of Stockholders expected to be held on May 2, 2023 are incorporated by
reference into Part III of this report.
TABLE OF CONTENTS
Page
Number
Item 1.
Business
1
Item 1A.
Risk Factors
9
Item 1B.
Unresolved Staff Comments
26
Item 2.
Properties
27
Item 3.
Legal Proceedings
27
Item 4.
Mine Safety Disclosures
27
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
29
Item 6.
Reserved
29
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
29
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
53
Item 8.
Financial Statements and Supplementary Data
54
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
117
Item 9A.
Controls and Procedures
117
Item 9B.
Other Information
117
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
117
Item 10.
Directors, Executive Officers and Corporate Governance
117
Item 11.
Executive Compensation
118
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
118
Item 13.
Certain Relationships and Related Transactions, and Director Independence
119
Item 14.
Principal Accountant Fees and Services
119
Item 15.
Exhibits and Financial Statement Schedules
119
Item 16.
Form 10-K Summary
119
PART I
Item 1.
Business.
Company Overview
Baxter International Inc., through its subsidiaries, provides a broad portfolio of essential healthcare products, including acute and chronic dialysis
therapies; sterile intravenous (IV) solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable
pharmaceuticals; surgical hemostat and sealant products, advanced surgical equipment; smart bed systems; patient monitoring and diagnostic
technologies; and respiratory health devices. These products are used by hospitals, kidney dialysis centers, nursing homes, rehabilitation
centers, doctors’ offices and by patients at home under physician supervision. Our global footprint and the critical nature of our products and
services play a key role in expanding access to healthcare in emerging and developed countries. As of December 31, 2022, we manufactured
products in over 20 countries and sold them in over 100 countries.
Baxter International Inc. was incorporated under Delaware law in 1931. As used in this report, “Baxter International” means Baxter International
Inc. and “we”, “our” or “us” means Baxter International and its consolidated subsidiaries, unless the context otherwise requires.
Recently Announced Strategic Actions
In January 2023, we announced the following planned strategic actions that are intended to enhance our operational effectiveness, accelerate
innovation and drive additional stockholder value: (a) a proposed spinoff of our Renal Care and Acute Therapies product categories into an
independent publicly traded company, (b) our development of a new operating model to simplify our operations and (c) our pursuit of strategic
alternatives (including a potential sale) for our BioPharma Solutions (BPS) product category.
This proposed spinoff of our Renal Care and Acute Therapies product categories (the proposed spinoff) is currently expected to be completed
during the first half of 2024, approximately 12 to 18 months from the date of the related announcement. In 2022 we generated $4.4 billion of
combined net sales from our Renal Care and Acute Therapies product categories, representing approximately 29% of our consolidated net
sales. We intend for the proposed spinoff to qualify as tax-free to Baxter and our shareholders for U.S. federal income tax purposes. The
proposed spinoff is subject to the satisfaction of customary conditions, including final approval from our Board of Directors, the filing and
effectiveness of a registration statement on Form 10, receipt of an Internal Revenue Service (IRS) ruling or related tax opinions from counsel,
satisfactory completion of financing arrangements, consultations with works councils and other employee representative bodies and any
necessary regulatory approvals.
To strengthen our ability to deliver on our vision to transform healthcare, we are designing a new operating model intended to simplify and
streamline our operations. Once the simplified model is implemented, we expect to be a more integrated and nimble organization that can
respond more effectively to changes in the macroeconomic environment, while enhancing our ability to drive innovation in our product portfolio.
As part of these actions, we are working to create a more resilient supply chain and better align our manufacturing footprint and supply chain to
our commercial activities. Under the new model, our business will be managed across four global business units consisting of: (1) Medical
Products and Therapies, which will include our Medication Delivery, Advanced Surgery and Clinical Nutrition product categories, (2) Healthcare
Systems and Technologies, which will include the Patient Support Systems, Front Line Care and Global Surgical Solutions product categories
obtained in the Hillrom acquisition, (3) Pharmaceuticals, which will include our BPS product category, for which we are exploring strategic
alternatives, and our Pharmaceuticals product category and (4) Kidney Care, which will include our Renal Care and Acute Therapies product
categories that we are proposing to spinoff into an independent publicly traded company.
We expect to have our new organizational designs substantially finalized in the second quarter of 2023. The new operating model will have
significant impacts on our systems and processes across our entire company and we expect to have those broader operational changes,
including our updated management reporting framework for the new operating model, fully implemented during the second half of 2023. At that
time, we expect that our reportable segments will be changed to align with the new operating model.
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We are pursuing strategic alternatives (including a potential sale) for our BPS product category, which includes contract manufacturing services
provided to pharmaceutical and biopharmaceutical companies. In 2022 we generated $644 million of net sales from that product category,
representing approximately 4% of our consolidated net sales. A potential sale of, or other strategic transaction involving, BPS would help us
further narrow our strategic focus as a company while providing an opportunity for capital deployment, including debt repayment.
Following these planned strategic actions (including completion of the proposed spinoff), we intend to emerge as a stronger hospital solutions
and connected care company. As a more focused business, we expect to be better positioned to make strategic investments to accelerate our
vision and to deliver differentiated value to our stakeholders with our unique combination of products, therapies and connected care platforms.
There can be no guarantees that the proposed spinoff, the simplified operating model or the sale of, or other strategic transaction involving, our
BPS product category will be completed in the manner or over the timeframes described above, or at all.
Acquisition of Hillrom
On December 13, 2021, we completed our acquisition of all outstanding equity interests of Hill-Rom Holdings, Inc. (Hillrom) for a purchase price
of $10.5 billion. Including the assumption of Hillrom’s outstanding debt obligations, the enterprise value of the transaction was approximately
$12.8 billion. Hillrom was a global medical technology leader and its products and services help enable earlier diagnosis and treatment, optimize
surgical efficiency, and accelerate patient recovery while simplifying clinical communication and shifting care closer to home. Hillrom made those
outcomes possible through digital and connected care solutions and collaboration tools, including smart bed systems, patient monitoring and
diagnostic technologies, respiratory health devices, advanced equipment for the surgical space and more, delivering actionable, real-time
insights at the point of care. In 2022 the Patient Support Systems, Front Line Care and Global Surgical Solutions product categories of our
Hillrom segment collectively generated net sales of $2.9 billion. During 2022, we also recognized $2.8 billion of goodwill impairments and $332
million of indefinite-lived intangible asset impairments related to goodwill and trade name intangible assets that arose from the Hillrom
acquisition. See Notes 2, 4, 5 and 17 in Item 8 of this Annual Report on Form 10-K for additional information about the Hillrom acquisition,
goodwill and intangible asset impairments, Hillrom acquisition financing arrangements and Hillrom segment results, respectively.
Business Segments and Products
We currently manage our global operations based on four segments, consisting of the following geographic segments related to our legacy
Baxter business: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia-Pacific), and a global segment
for our recently acquired Hillrom business. As discussed above under “Recently Announced Strategic Actions,” we are designing a new operating
model intended to simplify and streamline our operations and we expect that our reportable segments will be changed to align with that new
operating model when it is fully implemented.
The Americas, EMEA and APAC segments provide a broad portfolio of essential healthcare products, including acute and chronic dialysis
therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable
pharmaceuticals; and surgical hemostat and sealant products. As discussed above under “Recently Announced Strategic Actions,” we are
pursuing the proposed spinoff of our Renal Care and Acute Therapies product categories and strategic alternatives for our BPS product
category. The Hillrom segment provides digital and connected care solutions and collaboration tools, including smart bed systems, patient
monitoring and diagnostic technologies, respiratory health devices and advanced equipment for the surgical space.
For financial information about our segments, see Note 17 in Item 8 of this Annual Report on Form 10-K.
Business Strategy
Our business strategy is focused on driving sustainable growth and innovation aligned with our mission to save and sustain lives and our vision
to transform healthcare with a customer focus to improve patient outcomes, enhance workflow efficiency, and enable cost-effective care. Our
diversified and broad portfolio of medical products that treat life-threatening acute or chronic conditions and our global presence are core
components of our strategy as we
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work to achieve these objectives. We are focused on four strategic pillars as part of our pursuit of industry leading performance: innovation;
market expansion; operational efficiency; and capital allocation.
Innovation
Our innovation strategy is focused on connected care and core therapies offerings. Connected care offerings include devices or software that
can connect, communicate and/or analyze data to help transform healthcare and improve patient outcomes. Our acquisition of Hillrom has been
a key driver in developing our connected care offerings, as its product portfolio includes digital and connected care solutions and collaboration
tools such as smart bed systems, patient monitoring and diagnostic technologies, respiratory health devices, advanced equipment for the
surgical space and more, delivering actionable, real-time insights at the point of care. Our core therapies product offerings include medical
devices and consumable medical products designed to address essential patient and provider needs across the continuum of care.
As part of this strategy and consistent with our recently announced strategic initiatives, we are shifting our investments to drive innovation in
product areas where we have compelling opportunities to serve patients and healthcare professionals while advancing our business. We are
accelerating the pace in which we bring these advances to market to support our future growth. We are in the midst of launching several new
products, geographic expansions and line extensions including in such areas as chronic and acute renal care, smart pump technology, hospital
pharmaceuticals and nutritionals, surgical sealants, smart beds, respiratory vests and more. These comprise a mix of entirely new offerings,
improvements on existing technologies and the expansion of current products into new geographies.
Market Expansion
The market expansion component of our strategy includes capturing revenue synergies through the integration of Hillrom, expanding our
portfolio geographically, broadening our portfolio through channel expansion and increasing utilization of our products and therapies through
market development activities. These initiatives include using Baxter’s geographic footprint to introduce the Hillrom product portfolio into new
markets, as well as expanding value-added services, increasing adoption of underpenetrated therapies and providing education and advocacy to
improve access to our products.
Operational Excellence
As discussed above under “Recently Announced Strategic Actions,” we are designing a new operating model intended to simplify and streamline
our operations. Once the simplified model is implemented, we expect to be a more integrated and nimble organization that can respond more
effectively to changes in the macroeconomic environment, while enhancing our ability to drive innovation in our product portfolio. As part of these
actions, we are working to create a more resilient supply chain and better align our manufacturing footprint and supply chain to our commercial
activities. We also continue to focus on increasing efficiencies through automation and digitization and we remain committed to deliver on the
targeted cost synergies expected to be achieved from our acquisition of Hillrom. We intend to continue to actively manage our cost structure to
help ensure that we are committing resources to the highest value uses. Such high value activities include supporting innovation, building out the
portfolio, expanding patient access and accelerating growth for our stockholders.
Maintaining Disciplined and Balanced Capital Allocation
Subject to market conditions and our investment grade targets, our capital allocation strategies include the following:
•
debt repayments to support our deleveraging commitments;
•
active portfolio management through the identification of attractive acquisition and divestiture transactions, including our recent
acquisition of Hillrom, the proposed spinoff and our pursuit of strategic alternatives (including a potential sale) for our BPS product
category; and
•
return capital to stockholders through dividends. We also intend to reinstate share repurchases over the longer term.
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We paid down approximately $900 million of debt during 2022 and we continue to be committed to an investment grade rating, including taking
actions toward achieving our 2.75x net leverage commitment. We currently expect to apply proceeds from the proposed spinoff and potential
BPS divestiture toward reducing indebtedness and addressing near-term debt maturities. During this deleveraging period, we currently intend to
maintain our dividend, not make any share repurchases and be highly selective with respect to any potential acquisitions.
Sales and Distribution
We have our own direct sales force and also make sales to and through independent distributors, drug wholesalers acting as sales agents and
specialty pharmacy or other alternate site providers. In the United States, third parties, such as Cardinal Health, Inc., warehouse and ship a
significant portion of our products through their distribution centers. These centers are generally stocked with adequate inventories to facilitate
prompt customer service. Sales and distribution methods include frequent contact by sales and customer service representatives, automated
communications via various electronic purchasing systems, circulation of catalogs and merchandising bulletins, direct-mail campaigns, trade
publication presence and advertising.
Sales are made and products are distributed on a direct basis or through independent distributors or sales agents in more than 100 countries as
of December 31, 2022.
International Operations
The majority of our revenues are generated outside of the United States and geographic expansion remains a component of our strategy
(including with respect to the Hillrom business). Our international presence includes operations in Europe, the Middle East, Africa, Asia-Pacific,
Latin America and Canada. We are subject to certain risks inherent in conducting business outside the United States. For more information on
these risks, see the information under the captions “Risks Related to Baxter’s Business —We are subject to risks associated with doing business
globally” and “—Changes in foreign currency exchange rates and interest rates could have a material adverse effect on our operating results and
liquidity” in Item 1A of this Annual Report on Form 10-K.
For financial information about our foreign and domestic revenues and segment information, see Notes 10 and 17, respectively, in Item 8 of this
Annual Report on Form 10-K. For more information regarding foreign currency exchange risk, refer to the discussion under the caption entitled
“Financial Instrument Market Risk” in Item 7 of this Annual Report on Form 10-K.
Contractual Arrangements
Our products are sold through contracts with customers, both within and outside the United States. Some of these contracts have terms of more
than one year and place limits on our ability to increase prices. In the case of hospitals, governments and other facilities, these contracts may
specify minimum quantities of a particular product or categories of products to be purchased by the customer.
In keeping with the increased emphasis on cost-effectiveness in healthcare delivery, many hospitals and other customers of medical products in
the United States have joined group purchasing organizations (GPOs), or formed integrated delivery networks (IDNs), to enhance purchasing
power. GPOs and IDNs negotiate pricing arrangements with manufacturers and distributors and the negotiated prices are made available to
members. We have purchasing agreements with several of the major GPOs in the United States. GPOs may have agreements with more than
one supplier for certain products. Accordingly, in these cases, we face competition from other suppliers even where a customer is a member of a
GPO under contract with us. Purchasing power is similarly consolidated in many other countries. For example, public contracting authorities
often act as the purchasing entities for the hospitals and other customers of medical products in their region and many hospitals and other
customers have joined joint procurement entities and buying consortia. The result is that demand for healthcare products is increasingly
concentrated across our markets globally. Additionally, our contractual pricing arrangements with GPOs, IDNs and public contracting authorities
limit our ability to increase prices in order to offset raw materials or component price increases or otherwise.
Raw Materials and Component Parts
Raw materials and component parts essential to our business are purchased from numerous suppliers worldwide in the ordinary course of
business. While many of these materials are generally available, we have experienced and may in the future experience shortages of supply.
Additionally, certain of these materials are secured from single
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source suppliers or on a spot basis and not pursuant to a contractual arrangement. In recent periods, we have experienced increased costs and
shortages of raw materials and component parts (including resins and electromechanical devices), which has had a negative impact on our profit
margins, due to the increased costs, and on our sales for certain product categories, due to our inability to fully satisfy demand.
In an effort to manage risk associated with raw materials and component supply, we work closely with our suppliers to help ensure availability
and continuity of supply while maintaining high quality and reliability. We also seek to develop new and alternative sources of supply where
beneficial to our overall raw materials procurement strategy. Refer to Item 1A. Risk Factors of this Annual Report on Form 10-K for further
information regarding risks related to the supply chain, raw materials and component parts.
We are not always able to recover cost increases for raw materials and component parts through customer pricing due to contractual limits,
where applicable, and market forces. This circumstance occurred during 2022 and our profit margins were adversely impacted because we were
unable to fully offset all such cost increases through customer pricing adjustments or other pricing actions. We seek to utilize long-term supply
contracts with some suppliers to help maintain continuity of supply and manage the risk of price increases. Our ability to do so in the face of
limited supply of certain raw materials and component parts and inflationary environment may be limited.
Competition and Healthcare Cost Containment
Our businesses benefit from a number of competitive advantages, including the breadth and depth of our product offerings and our strong
relationships with customers, including hospitals and clinics, GPOs, IDNs, physicians and patients, many of whom self-administer home-based
therapies that we supply. We also benefit from efficiencies and cost advantages resulting from shared manufacturing facilities and the
technological advantages of our products.
Although no single company competes with us in all of our businesses, we face substantial competition in each of our segments from
international and domestic healthcare, medical products and pharmaceutical companies and providers of all sizes, and these competitors often
differ across our businesses. In addition, global and regional competitors continue to expand their manufacturing capacity and sales and
marketing channels. We believe customer purchasing decisions are primarily focused on cost-effectiveness, price, service, product performance
and technological innovation. There has been increasing consolidation in our customer base and by our competitors, which continues to result in
pricing and market pressures.
Global efforts toward healthcare cost containment continue to exert pressure on product pricing. Governments around the world use various
mechanisms to control healthcare expenditures, such as price controls, the formation of public contracting authorities, product formularies (lists
of recommended or approved products), and competitive tenders which require the submission of a bid to sell products. Sales of our products
are dependent, in part, on the availability of reimbursement by government agencies and healthcare programs, as well as insurance companies
and other private payers. In the United States, the federal and many state governments have adopted or proposed initiatives relating to Medicaid
and other health programs that may limit reimbursement or increase rebates that we and other providers are required to pay to the state. In
addition to government regulation, managed care organizations in the United States, which include medical insurance companies, medical plan
administrators, health-maintenance organizations, hospital and physician alliances and pharmacy benefit managers, continue to put pressure on
the price and usage of healthcare products. Managed care organizations seek to contain healthcare expenditures, and their purchasing strength
has been increasing due to their consolidation into fewer, larger organizations and a growing number of enrolled patients. We face similar issues
outside of the United States. In Europe and Latin America, for example, the government provides healthcare at low cost to patients, and controls
its expenditures by purchasing products through public tenders, collective purchasing, regulating prices, setting reference prices in public
tenders or limiting reimbursement or patient access to certain products. For further discussion, refer to Item 1A of this Annual Report on Form
10-K.
Intellectual Property
Patents and other proprietary rights are essential to our business. We rely on patents, trademarks, copyrights, trade secrets, know-how and
confidentiality agreements to develop, maintain and strengthen our competitive position. We own a number of patents and trademarks
throughout the world and have entered into license arrangements relating to various third-party patents and technologies. Products
manufactured by us are sold primarily under our own trademarks and trade names. Some products distributed by us are sold under our trade
names, while others are sold under trade names owned by our suppliers or partners. Trade secret protection of unpatented confidential and
proprietary information is also important to us. We maintain certain details about our processes, products and
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technology as trade secrets and generally require employees, consultants, and business partners to enter into confidentiality agreements. These
agreements may be breached and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become
known or be independently discovered by competitors. To the extent that our employees, consultants, and business partners use intellectual
property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
Our policy is to protect our products and technology through patents and trademarks on a worldwide basis. This protection is sought in a manner
that balances the cost of such protection against obtaining the greatest value for us. We also recognize the need to promote the enforcement of
our patents and trademarks and take commercially reasonable steps to enforce our patents and trademarks around the world against potential
infringers, including judicial or administrative action where appropriate.
We operate in an industry susceptible to significant patent litigation. At any given time, we are involved as either a plaintiff or defendant in a
number of patent infringement and other intellectual property-related actions. Such litigation can result in significant royalty or other payments or
result in injunctions that can prevent the sale of products. For more information on patent and other litigation, see Note 7 in Item 8 of this Annual
Report on Form 10-K.
Research and Development
Our investment in research and development (R&D), consistent with our portfolio optimization and capital allocation strategies, helps fuel our
future growth and our ability to remain competitive in each of our product categories. Accordingly, we continue to focus our investment on select
R&D programs to enhance future growth through clinical differentiation. Expenditures for our R&D activities were $605 million in 2022, $534
million in 2021, and $521 million in 2020. These expenditures include costs associated with R&D activities performed at our R&D centers located
around the world, which include facilities in Belgium, Sweden, India, Italy, Germany, China, Japan and the United States, as well as in-licensing,
milestone and reimbursement payments made to partners for R&D work performed at non-Baxter locations
