News Release

BAXTER EXPANDING ITS CONTRACT MANUFACTURING SERVICES TO BETTER SERVE ITS PHARMACEUTICAL AND BIOTECHNOLOGY CLIENTS

DEERFIELD, Ill. and BLOOMINGTON, In., June 4, 2003 -- Baxter Healthcare Corporation today announced plans to enhance its parenteral contract manufacturing services for pharmaceutical and biotech companies by expanding its Baxter Pharmaceutical Solutions LLC manufacturing facility located in Bloomington, Indiana.

A 120,000-square-foot expansion unveiled today will support additional syringe filling and vial filling lines, a lyophilization suite, a new research lab and additional laboratories and administrative offices. Baxter, which currently is a parenteral contract manufacturing leader of pre-filled syringes in North America, will almost double its capacity in pre-filled syringes alone. Pre-filled syringes provide an efficient delivery method for drugs used to treat chronic conditions such as rheumatoid arthritis and multiple sclerosis, as well as numerous vaccines.

In addition, the expansion will provide clinical and commercial manufacturing for pharmaceutical and biotech companies' insoluble formulation technology needs, a first for a Baxter facility. Baxter's total investment is expected to be approximately $100 million spread over seven years. The initial phase of the facility is expected to open for registration batch production in 2005, leading to new client product launches in 2006.

It is anticipated that Baxter will add more than 700 new jobs, including professional, hourly and management employees. Currently Baxter employs 562 people at the facility. Many of the professional positions to be added will require scientifically trained personnel, including chemists and microbiologists. Of the 700 new jobs, 400 will be a direct result of the expansion initiative, with the remaining 300 coming from normal business growth between 2003-2006.

"This expansion will provide greater capacity for our existing clients, as well as help us meet their future needs," explained Joel Tune, general manager of Baxter's Global Drug Delivery business. "First, we will be able to provide our existing pharmaceutical clients with higher levels of service by providing development and clinical services through commercial manufacturing all in one location in Bloomington. We can reduce time in the pipeline for transfers between sites, while maintaining the technical knowledge gained throughout each phase to ensure robust processes are designed for ongoing commercial production. Second, we will be able to provide our clients with a more fully integrated offering, including clinical and commercial manufacturing for their insoluble formulation technology needs."

Small- to medium-sized pharmaceutical and biotech companies, poised to bring 50 percent of the new drug molecules to market in the next decade, view "outsourcing" or "contract services" as an important part of their manufacturing strategy. Many of these companies do not possess internal manufacturing capabilities and are seeking long-term partners who can provide the manufacturing capacity and clinical expertise to help them bring new, life-saving drugs to market. By further expanding its Bloomington facility, Baxter will be well positioned to become the partner of choice for these pharmaceutical and biotech companies.

Today, Baxter Pharmaceutical Solutions LLC provides development and clinical/commercial contract manufacturing services including high-speed syringe, vial and cartridge filling, lyophilization and labeling/packaging. Also, for the past several years, Baxter has been addressing key formulation challenges facing many new drug entities. Approximately 50 percent of new drug molecules in the development pipeline are insoluble, leading to the potential for sub-optimal formulations or many otherwise promising compounds never reaching the market due to problems with insolubility. In 2001, Baxter introduced NANOEDGE technologies, a "toolbox" of formulation and manufacturing technologies, including insoluble drug delivery (IDD) technology licensed from RTP Pharma, Inc. This initiative helps pharmaceutical companies solve their problems with insoluble drug molecules. In 2002, Baxter added controlled-release protein and pulmonary delivery formulation technologies with its acquisition of Epic Therapeutics, Inc.

"Outsourcing specialized services is becoming a more efficient solution for many of our pharmaceutical partners, especially biotech companies," Tune added. "Once we've helped our customers solve their insoluble drug molecule needs, the expansion at our Bloomington facility will provide the fill and finishing services. This will uniquely position us to bring injectable nanoparticle systems to market in the very near future."

Baxter has received tremendous support from the Indiana Department of Commerce, the Bloomington Economic Development Corporation, Monroe County Commissioners, Monroe County Council and the City of Bloomington. These government entities have helped provide local
incentives, which may total approximately $20 million including property tax abatements, tax increment financing, employee training grants and infrastructure assistance.

"In the short time that Baxter has been part of the Bloomington business community, they have already made significant contributions to our economy by creating new jobs and making capital investments," said John Fernandez, mayor of Bloomington. "The City of Bloomington wishes to do whatever it can to ensure that future expansion opportunities for the company take place here."

Baxter's Drug Delivery business is committed to becoming the global partner of choice for pharmaceutical and biotechnology companies seeking innovative solutions for their medication delivery needs.

Baxter Healthcare Corporation is the principal operating subsidiary of Baxter International Inc. (NYSE:BAX). Baxter International Inc., through its subsidiaries, assists health-care professionals and their patients with treatment of complex medical conditions, including cancer, hemophilia, immune disorders, kidney disease and trauma. The company applies its expertise in medical devices, pharmaceuticals and biotechnology to make a meaningful difference in patients' lives.

For additional information, please visit www.baxter.com.

(NANOEDGE is a trademark of Baxter International Inc. and its subsidiaries. IDD is a trademark of RTP Pharma, Inc.)

This news release contains forward-looking statements that involve risks and uncertainties, including actions of regulatory bodies, market demand, the impact of competitive products and pricing, technological advances in the medical field and other risks detailed in the company's filings with the Securities and Exchange Commission. These forward-looking statements are based on estimates and assumptions made by management of the company and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results or experience could differ materially from the forward-looking statements.

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