Agreed that the sudden shakeup in the heparin market with removal of a large unsafe-product marketer should have meant that the remaining, safe-heparin, marketers see a price jump. Not at all sure this helps those safe-heparin sourcers on their own supplier side, though. Surely the whole point was that some Chinese pig intestines were contaminated. These are (one hopes) no longer in the supply chain. That reduction in supply must have helped the pricing power of other intestine suppliers to a roughly similar extent as enjoyed by the downstream marketers on BAX's exit. So it's not obvious what the net profit effect will be on the surviving marketers. Then there's the question of how long these effects last. Will Baxter clean up its act and get back in, restoring the old profit shares, more or less?
Anyway, you would surely agree that BAX should have lost value from this escapade. Dew was making the point that their stock seems to have been pretty unscathed. Unless they had some other countervailing pleasant surprise to offset the loss of the heparin business, this is indeed odd.
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