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Baxter to Make Surgical Equipment in Moscow Missile Plant

November 15, 1992

DEERFIELD, Ill. (AP) _ In a case of ″swords into plowshares,″ Baxter International Inc. announced plans Sunday to manufacture surgical equipment at a Moscow plant that once made missile components for the Soviet military.

Baxter agreed to make hand-held instruments such as vascular clamps, scissors and needle holders, said Tony L. White, Baxter’s executive vice president for global businesses.

″This could be just the beginning of our investment in the Russian economy and people,″ White said.

The joint venture, called Rosoptimed, plans to begin operations next June in a plant that formerly made missile guidance systems and components for the Mir space station.

Baxter will invest $10 million for a 75 percent stake in the venture, while the other 25 percent will belong to NIIAP, a newly privatized manufacturing company formerly controlled by the Soviet defense establishment.

By 1994, Rosoptimed plans to furnish supplies to 2,800 Moscow and St. Petersburg-area hospitals with a total of 710,000 beds, officials said.

White said the need for high quality surgical instruments in Russia is intense, with Russian producers able to supply only 30 percent of the current demand.

″We find that they can’t produce enough now, and the instruments they do produce don’t last as long as ours,″ he said. ″There’s no problem with the Russian metals - we’ve lined up suppliers there who can meet our specifications - but there isn’t the manufacturing expertise. We’re going to be bringing Russian managers and workers over here to train them in our techniques.″

Since the Moscow plant was used for high-precision machining and has relatively modern equipment, it can easily be adapted for the manufacture of surgical equipment, White said. He added almost all of the 200-person workforce will be Russian, as will all of the raw materials.

Although other American health care supply companies are already operating in the former Soviet Union, White said Baxter’s joint venture includes several innovations which may have important implications for the Russian economy. He said Baxter plans to recruit and train local residents for sales and marketing positions - a rarity for Western companies doing business in Russia.

More importantly, White said, the operation will be ruble-based. Most American companies operating in Russia, where inflation has been running at 25 percent per month, have demanded payment in hard currencies.

Some industry observers say any rubles earned by Baxter may be worthless by the time the company wants to bring its profits home, but White said that is a risk Baxter is willing to take.

White noted that Baxter, which had global sales of $8.92 billion in 1991, can afford to wait a long time for its return on the Moscow venture.

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