The gulf between the C-suite and the research and development lab is often wide. The skill sets are different, and what passes for job satisfaction in one environment may seem like torture in the other. As the chief scientific officer for the pharmaceutical company Baxter International Inc., Norbert Riedel has been able to operate in both worlds by keeping his feet firmly planted on both sides of the divide.

"There is no higher reward than applying science to improve human health," says the German-born Riedel, who spent nine years studying how viruses cause diseases such as cancer. "It has been deeply satisfying to connect the business strategy and R&D and enabling it through external relationships."

Riedel is the point person for Baxter's acquisition and alliance activity, a critical element of the company's business strategy in the face of escalating drug development costs. Baxter has three key business areas: bioscience, medical devices and renal therapies. Sales were $9.5 billion in 2004, up 7% from 2003.

Partnerships are especially important in the bioscience business, where Baxter seeks out allies conducting early-stage research and development, allowing it to remain focused on what it does well - manufacturing, marketing and sales. The company sponsors academic research and either acquires or, more commonly, partners with biotech companies, such as San Diego-based Halozyme Therapeutics Inc., focused on the development and commercialization of recombinant human enzymes. Though Baxter (like many other pharmaceutical companies) has worked to get better at forging and managing alliances, they remain a challenge. Riedel, who splits his time monitoring the vast landscape of biotech research and easing skittish, entrepreneurial CEOs into partnerships with Baxter, estimates that 60% of Baxter's strategic alliances pan out.

The challenges, of course, are largely cultural - a matter of harnessing the creativity, agility and limited experience of a startup to the money, manufacturing capabilities, global reach and often ponderous structure of a much larger company. "There aren't many decisions we can make in a day," Riedel concedes. "In my experience, small companies have insufficient experience to bring a product all the way to the finish line. The challenge is to enable the smaller company without putting them in handcuffs."

Riedel's years in the lab are surely an asset when negotiating partnerships, but to increase the odds of creating a winning alliance, Riedel has learned to anticipate hurdles and negotiate accordingly. For instance, Riedel has had biotech CEOs express concern that an alliance may scare off venture capitalists, who might assume that the company's assets and expertise are tied up with its larger partner. To dispel that notion, Baxter keeps its equity stakes low, typically less than 20%. Baxter is also flexible when negotiating intellectual property rights. Say a molecule has the potential to treat high blood pressure and diabetes, "then we will negotiate exclusive rights to just one indication," Riedel says.

In addition, an alliance steering committee, ideally with equal representation from both companies, is convened at the outset. Riedel and the biotech CEO either sit on the steering committee or oversee it. Alliance champions, leaders and advisers - each with specific responsibilities from creating functional teams to identifying cultural issues - are selected and remain active throughout the life of the alliance.

All this adds up to making Baxter an attractive partner, Riedel says. And with competition fierce in the pharmaceutical industry, every little bit helps. "The 'wow' opportunity is relatively rare," he says. "Once you find it, you're all over it. But without the right alliance philosophy, you won't even be looked at as a partner." - Suzanne Stevens

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