A handful of people mill around a conference room at Baxter International's headquarters in Deerfield, Illinois, sugaring their coffee or shaking hands in greeting. Windows look out on Interstate 94 as morning commuters pick their way down the Edens Expressway into Chicago. Norbert Riedel, the company's chief scientific officer, smiles as he strides into the room. "Share price yesterday gained 80 cents, which is a good sign," Riedel tells his staff.
It's the morning after Baxter's investor conference in March of this year, and by the look on Riedel's face, it went well. Everyone sits down for Riedel's regular senior staff meeting, which includes the heads of R&D and regulatory affairs, and representatives from finance, human resources, and communications. A number of items are on the agenda, including a presentation on ethics and compliance, and a finance update, but they also spend about 20 minutes talking about the conference.
Translating Science into Therapies
Riedel earned his PhD in biochemistry in 1983 from the University of Frankfurt in Germany. He took a postdoc at Harvard, and then a position as an associate professor of medicine at Boston University. He studied the genetics of viral envelopes until 1991, when he returned to Frankfurt to move into industry and a role leading the molecular biology laboratory at Hoechst (now part of Sanofi-Aventis).
At the time, Riedel says, there was a shift in drug-discovery thinking, particularly in German pharmaceutical companies, from a chemistry-based approach to a biology-based strategy. The chemistry "was very sophisticated, but the test systems were pretty crude," Riedel says. Companies became more interested in the molecular biology behind disease, the pathways and cellular receptors that go awry, and the ways to fix dysfunction. Riedel found the shift appealing. "One major reason I joined industry was I liked translating science into therapies, rather than purely the academic satisfaction."
At Hoechst, Riedel found himself at home with the industrial atmosphere: The health applications satisfied him more than pure academic pursuits. Not to mention the resources. "In those years there were much more significant resources available to researchers than in academic labs. We could do the same research with much better technology, much more money, and less restriction." Hoechst offered the ability to analyze high-resolution gene chips and had equipment to synthesize tens of thousands of molecules in one year. "It was absolutely state of the art."
In one year Riedel moved into a managerial position, and back across the Atlantic to Hoechst-Roussel Pharmaceuticals in Somerville, NJ. At a new $20 million facility, "my job was to put in top-notch researchers from around the world and start new R&D programs," Riedel says. Again the move pleased him, but his focus never strayed far from science.
Frank Douglas met Riedel in 1995, when Hoechst merged with Marion Merrill Dow to become Hoechst Marion Roussel. Douglas was the global head of research, and Riedel continued to lead the research branch for the central nervous system. Douglas gave Riedel a mandate to introduce more molecular biology - genomics, in particular - into the company's drug discovery research. Riedel proposed a solution: collaboration with Ariad Pharmaceuticals, a comparatively small but innovative company in Cambridge, Mass. "It was a very creative solution because it got us going very quickly," Douglas says.
By the second half of the 1990s, Ariad had already developed expertise in functional genomics and gene discovery, says Ariad's chair and CEO, Harvey Berger. Norbert paid a visit to Ariad and formed a 50-50 collaboration between the two companies. "Probably the most telling about his commitment to ensuring it would succeed," says Berger, "was that he personally moved his global office and global center for biotechnology to an office core that we built for him in our building."
Berger said uprooting the research team was a move out of the ordinary from Hoechst Marion Roussel's usual practice. But Douglas supported the decision to move: "It ensured the group we were building there was not isolated and could interact with a very good, established group." The venture was a success for Hoechst Marion Roussel, says Douglas, and the group has since become the Sanofi-Aventis Genomics Center. The center contributes basic research to Sanofi-Aventis' drug discovery in areas such as diabetes and central nervous system disorders, and it has doubled in size since its inception. "He was one my best leaders," says Douglas, who recently resigned as executive director of the Massachusetts Institute of Technology's Center for Biomedical Innovation.
Intruding, But Getting Results
Baxter started out in 1931 as a four-person operation making intravenous solutions in a Glenview, Ill., garage. Over the decades it evolved into making medical plastic containers, developing peritoneal dialysis, and generating therapeutics from blood plasma. Riedel says innovation was Baxter's "lifeblood" during much of its development. The company currently generates more than $10 billion in sales each year.
When Riedel first joined Baxter to run its recombinant therapy business in 1998, the company had never appointed a chief scientific officer. That, he says, was symptomatic of the company's lack of focus on research and development, which dawned on him over the next few years. "It wasn't the driver," he says. "It was sitting in the second to last row." Riedel says the company was more focused on financial, manufacturing, and marketing concerns.
After discussions with Baxter's CEO about the future direction of the company, Riedel became chief scientific officer of Baxter International in 2001. Riedel decided that to strengthen R&D at Baxter, two things had to happen: Projects needed to be prioritized in terms of how quickly they might make it to market, and how risky their outcomes were; and different R&D groups needed to communicate about their projects in order to eliminate redundancies. "We didn't necessarily have consistent valuation metrics," says Parkinson.
Baxter comprises three divisions: bioscience, medication delivery, and renal, but Riedel says they acted autonomously. The result was that businesses didn't perform proper risk assessments on projects, nor did they partner on objectives that had shared goals. Riedel gives an example: In the 1980s the drug-delivery and renal companies were both developing pumps for their products, but they didn't collaborate. "As a result, the company suffered historically," Parkinson says. After 2003, when Baxter's stock prices dove after the company didn't meet its profit expectations, nearly every top executive position turned over. Riedel stayed, committed to turning the company around.
Riedel began to implement his new policies to prioritize projects and centralize certain R&D decisions. Initially, he says, he was met with skepticism and reluctance from managers. "At the time it felt a little bit like intruding on their business," Riedel says. Looking back, he says that communicating with them more and including them in making decisions about policy changes could have eased transitions.
Ultimately, Riedel was able to convince company managers and executives. "In the past three years we've invested a lot of time to increasing spending in R&D, which is an objective that Norbert and Bob Parkinson and all of us in executive management have as a goal," says John Greisch, president of Baxter International.
Parkinson says that Riedel's policies improved the way Baxter funds R&D. "Sometimes projects had a way of languishing, but now because of this centralized process those programs are not allowed to languish. It frees up dollars to spend on other projects." Achieving product goals has increased from 60% four years ago to 80% in 2006, Parkinson adds.
With R&D reinvigorated, Riedel says he is excited about a number of research lines Baxter is investing in, including cardiac stem cell therapy and influenza vaccines. Greisch says the efficiency in getting products to market since Riedel implemented prioritizing policies allows the company to look at more long term projects. Two to three years ago the company was not in a position to invest $20 million in a long-term adult stem cell project, Greisch says. It is now.
As Parkinson told a room full of investors in March 2007, such turnaround has Baxter committed more than ever to R&D. As of mid-June, Baxter's stock had continued to climb, nearly recovering completely from the 2003 dip. Some of that has resulted from Riedel's way of changing R&D, Parkinson says. "He was really the catalyst to define and then institutionalize those [policies]."