Kraemer, Harry M. Jansen, Jr.

(1955-)
Baxter International, Inc.

Overview

Harry Jansen Kraemer is chair and chief executive officer (CEO) of Baxter International, Inc., a $30.8 billion company with some 45,000 employees worldwide. A medical technology company, Baxter provides products and services related to medically critical conditions. During Kraemer's tenure, Baxter's stock prices, earnings, and market value have risen markedly.

Personal Life

Harry M. Jansen Kraemer Jr. was born in 1955. A high achiever in school, he attended Lawrence University in Appleton, Wisconsin. He graduated with highest honors with a bachelor of science degree in mathematics and economics in 1977. Over 20 years later, Lawrence mathematics professor Bruce Pourciau remembered Kraemer as a student, telling Investor's Business Daily, "He was a perfect combination of being very smart and very hardworking, combined with having a great personality." After graduating from Lawrence, Kraemer pursued an advanced degree at Northwestern University's J. L. Kellogg Graduate School of Management. Two years later, he earned a master of management degree in finance and accounting. Kraemer is also a certified public accountant.

Active in many roles in business and civic affairs, Kraemer serves on numerous boards of directors, including Comdisco, Inc., Evanston Northwestern Healthcare, and Science Application International Corporation. He also serves on the Dean's Advisory Board of North-western University's J. L. Kellogg Graduate School of Management and on the Board of Trustees of Lawrence University and Northwestern University. He is a member of the Business Roundtable, the Business Council, the Healthcare Leadership Council, the Chicago Club, and the Commercial Club of Chicago. In 1996 he was presented with the Schaffner Award from Kellogg Graduate School of Management for outstanding leadership and service.

Kraemer lives with his wife, Julie, and their four children in Wilmette, Illinois. Julie was an investment banker until the birth of their fourth child at which time she stepped back to spend more time with her family. Kraemer takes an active role in the lives of his children and prides himself on being a strong family man.

Career Details

Early in his career, Kraemer worked for Northwest Industries in the field of planning and business development. He was also employed as a corporate banker for the Bank of America. In 1982 Kraemer began his career with Baxter International, Inc., a worldwide leader in blood–related critical therapies for life–threatening conditions. Kraemer started out at Baxter as the director of corporate development. Over the next eleven years, he was assigned to an array of positions within the company, holding senior positions both in domestic and international operations. In 1993 he advanced to the position of senior vice president and chief financial officer (CFO). Kraemer's assigned responsibilities included all financial operations, business development, communications, and European operations. Over the course of the next four years, he also became responsible for the Renal, Medication Delivery, and Fenwal divisions, along with operations in Japan. Kraemer enjoyed the four years he served as the company's CFO, telling CFO.com, "I loved to dig through the numbers, challenge the assumptions, and play with my calculator."

In 1995 Kraemer was appointed to the Board of Directors, and in April 1997, he was named president of Baxter. The move, widely expected, was welcomed by investors and employees alike. Vernon R. Loucks Jr., chairman and CEO at the time of Kraemer's appointment as president, noted in a company press release, "For over 15 years, Harry has played key roles in furthering Baxter's global leadership in its chosen fields. And, since becoming CFO in 1993, he has spearheaded Baxter's financial strategies and operational discipline, which has resulted in the company's delivering solid returns on a consistent basis." Kenneth Abramowitz, an analyst for Sanford Bernstein, told the Wall Street Journal that the company's stock was "very lackluster" prior to Kraemer's appointment as CFO. "Since Harry," Abramowitz commented, "it still hasn't been a stellar performer, but it has been a solid one."

Less than two years later, in January 1999, Kraemer was tapped to become the company's CEO, after Loucks announced his retirement from the position. One year later Loucks also retired from his position as chairman, and Kraemer became both CEO and chairman of Baxter. On the occasion of the announcement, in November 1999, of Loucks's pending retirement at the end of that year, Loucks remarked, "Baxter is fortunate to have Harry as its chairman and CEO. He has continually demonstrated leadership and a passion for driving significant value both at Baxter and in the health–care industry. His integrity, intellect and enthusiasm make him the perfect person to lead Baxter. I couldn't leave Baxter, or the board, in better hands."

Chronology: Harry M. Jansen Kraemer, Jr.

1955: Born.

1982: Joined Baxter International, Inc. as director of corporate development.

1993: Appointed senior vice president and chief financial officer.

1996: Presented with the Schaffner Award from Northwestern J. L. Kellogg Graduate School of Management for outstanding leadership and service.

1997: Named as the company's president.

1999: Appointed chief executive officer.

2000: Added the duties of chairman.

2001: Faulty filters manufactured by Baxter and used in dialysis linked to 51 deaths worldwide; Baxter offered production of smallpox vaccine.

Kraemer entered the office of CEO and chairman with three specifically stated goals. His first key objective, according to a Baxter press release, was to create an environment "that challenges, motivates and supports Baxter team members worldwide." Second, Kraemer committed himself to maintaining and further developing Baxter's position as the worldwide leader and first choice of people around the world. Finally, Kraemer asserted his desire to continually seek to increase Baxter's profitability. It appears that Kraemer has done a better than adequate job fulfilling his goals.

First, Baxter, considered a member of the "new generation of CEOs," is widely known for its employee–friendly working environment. As a result, in 1999 Industry Week named Baxter to its list of the world's 100 Best–Managed Companies because they "invest in their employees, new technologies, the environment, safety, and their local communities." Employee programs include resource and referral services, adoption assistance, back–up child–and elder–care, and alternative work arrangements like working part time, shortened (compressed) work week, flexible office hours, and telecommuting. Kraemer walks the talk, too. He leaves his office regularly by six o'clock in the evening to get home in time to have dinner with his wife and children. "In any company, people are looking for signals," he told Forbes. "When they see me leave at a reasonable hour, they know this isn't being done for effect." To ensure company–wide cooperation, Kraemer allows employees to rate their superiors on how well they do in promoting a work/life environment and then ties the responses to managerial raises and promotions.

Second, when it comes to protecting Baxter's favored position as the worldwide leader in the medical technology industry, the deck is stacked in Kraemer's favor. Baxter can be divided into four major businesses—intravenous fluid, renal therapy, blood therapy, and cardiovascular–related products and services—each branch very successful in its own right and together posting combined sales of nearly $7 billion. Baxter has been in the intravenous fluids business for over five decades. As one of the first companies to provide hospitals with sterile intravenous fluids and the associated equipment, Baxter holds the largest worldwide share of the market.

The company has also pioneered the development of renal therapy, primarily kidney dialysis, and is the worldwide leader in this business. Blood therapy entails breaking down blood plasma into separate components useful in a variety of illnesses, and Baxter is the largest fractionator of plasma in the world. Although Baxter does not lead the market in the production of cardiovascular products, such as tissue heart valves, valve repair rings, critical care catheters, and oxygenators, this leg of the business pulls in close to $1 billion in annual sales and was spun off as a separate company, Edwards Life-sciences, in 2000. "Three quarters of our sales come from products that have market leading positions," Kraemer told The Wall Street Transcript. "Now, looking at the geographical diversity of the company, more than 50 percent of our sales and almost three quarters of our earnings come from outside the United States. . . . So basically we've got a portfolio of very strong market leading positions, providing therapies for patients suffering from life threatening illnesses."

Finally, Kraemer has managed to keep shareholders happy with consistent earnings. For the fiscal year ending in December 2000, Baxter posted a net income of $740 million on sales of $6.9 billion, representing an increase of over 8 percent from the previous year. Figures for 2001 continued to improve. For the first nine months of 2001, earnings rose by 15 percent to $739 million, compared to $645 million reported for the first three quarters of 2000. According to Market News Publishing, on the announcement of third quarter sales and earnings gains, Kraemer noted, "We will continue to build on our strong momentum with continued focus on operational excellence while significantly increasing our sales and earnings growth rates over time. In order to achieve these goals, we will increase our investments in research and development and capital expenditures." In 2001, Baxter was named third among health–care companies on Fortune's list of most–admired companies. Also worth noting, Baxter's market capitalization increased approximately 67 percent in the first two years of Kraemer's tenure as the company's leader.

Social and Economic Impact

Baxter has been providing life–saving technology since 1931. During World War II, the U.S. Armed Forces used Baxter's blood collection devices and solutions for treating injured soldiers. Throughout the years, Baxter made significant advancement in kidney dialysis, was one of the first companies to produce plasma for commercial sale, and was the inventor of the plastic IV bag. Also, in 1962 Baxter delivered the first disposable total–bypass blood–oxygenator, which made open heart surgery possible. In 1991 the company introduced the InterLink IV Access System, the first "needleless" IV system, thus protecting health care workers from needle–stick accidents. In the twenty–first century, Baxter provides a wide array of products and services in areas of critical care, which have been developed through research or obtained by acquiring other companies. Baxter makes the equipment that collects and separates blood and blood components; the company developed plasma protein therapies to treat such conditions as hemophilia, and it operates more than 200 kidney dialysis clinics in twelve countries outside the United States. In all, Baxter's products and services are used by health care professionals to treat critically ill patients in 112 countries.

In 2001 Baxter stepped forward after the September 11 terrorist attacks on the World Trade Center and the Pentagon and the ensuing war in Afghanistan. Having acquired Immuno International AG, an international leader in infectious disease research in 1997, Baxter had the ability to manufacture vaccines and other drugs. In mid–October 2001, Baxter announced that it could produce just about any vaccines required within a six–to nine–month time frame. With the U.S. population in fear of the possibility of biological terrorist attacks, Kraemer declared his company was ready if called upon. In Reuters Business Report, Kraemer said, "We have the ability, given the production and the manufacturing we have, to be able to ramp up very quickly the necessary vaccines. So for example, when Secretary Thompson talks about the fact that he may need hundreds of millions of doses of smallpox vaccines, that's something we could ramp up to help with very quickly, and we're prepared to do that."

In the month following Baxter's pledge to help protect the United States against bio–terrorism, tragic news hit: the deaths of 51 people around the world had been linked to the use of a faulty dialysis filter, called a dialyzer, manufactured by Baxter. All victims—23 in Croatia, 15 in Spain, seven in Taiwan, two in Columbia, and two in both Texas and Nebraska—were using dialysis filters. At first Baxter denied any connection to the deaths, but it did shut down a plant in Sweden, suspend the production of the product, and issue a recall on three models of dialyzers; however, in early November, the company confirmed that a chemical solution used to test for leaks in the filters during production was not completely removed and the solution, known as 5070, may have entered the victims' bloodstreams.

In a widely covered story, CNN reported Kraemer's response: "We are greatly saddened by the patient deaths, and I would like to extend my personal sympathies to family members of those patients." By the end of November, Baxter had settled a lawsuit brought by ten families of patients in Spain; Baxter agreed to pay each family $289,000. According to AP Online, Kraemer commented on the settlement: "Our goal is to do the right thing. While nothing we do will replace the loss these families have experienced, we understand their need to bring closure to this tragedy. Our hope is that this settlement helps to minimize the distress to the families involved."

Kraemer, known for his sincerity and compassion for others, has done his best to bring his company through the difficult days. Although earnings dropped off after the announcement of Baxter's liability in the deaths, Kraemer believes the company is strong enough to weather the storm and rebound quickly with no long–term negative effects. The key to his business approach? He told Investor's Business Daily, "An awful lot of it for me I think comes down to understanding everybody's perspective. . . . Nothing I've done since second–semester calculus is that complicated. Most of what you do in business is common sense. How do you lead? By example, so people know you're not just talking."

Sources of Information

Contact at: Baxter International, Inc.
1 Baxter Pkwy.
Deerfield, IL 60015
Business Phone: (847)948–2000
URL: http://www.baxter.com

Bibliography

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