This division of responsibilities is new to biopharmaceutical R&D, but is well established in the business world. Many successful companies in a variety of industries have concluded that setting the direction on the one hand, and managing day-to-day operations on the other, entail too diverse a range of activities, and are too time consuming for a single individual to excel at both. Examples of well-known organizations that have separated the responsibilities of CEO and COO include Medtronic, Boston Scientific, Sun Microsystems, United Airlines, and Ford Motor Company. Among pharma R&D organizations, the newly established Novartis Institutes for BioMedical Research is one of the few to have a senior executive with a COO title.

The COO's Job The COO should assume responsibility for five areas:

• Operations
• Management of external parties
• Portfolio-Project-Resource Management (PPRM)
• Management of initiatives
• Support functions.

Operations Operations deals with how teams manage projects, how efficiently functions perform their tasks, and how well discovery, pre-clinical, and development work together. Interactions between R&D and commercial operations also fall in this area. The COO will assume responsibility for areas that have a significant operations element and a correspondingly lesser scientific element. These areas are characterized by repetition and lend themselves to some level of standardization. Examples of such activities include clinical operations, compound library management, clinical supplies, preparation of regulatory filings, and so forth.

The interaction between R&D and commercial is another area with significant potential for improvement. The emerging consensus among pharma executives is that R&D projects require more and earlier input from commercial, to set priorities on which indications to pursue and which product attributes to emphasize. In addition, though commercial and R&D both interact regularly with physicians—in their roles as prescribers and clinical investigators—they often do so with little or no coordination. The COO will implement new processes and manage the ongoing R&D-commercial interaction.

Management of external parties R&D organizations outsource many activities to external service providers. Frequently outsourced activities include clinical monitoring and data management, laboratory services, electronic data capture, interactive voice response systems, animal trials, and lead optimization. Traditionally, pharmaceutical R&D organizations have not done a good job of deciding which activities to outsource—or of managing them once outsourced. (See "R&D Outsourcing That Works" Pharm Exec, March 2000.) Outsourcing is becoming further complicated by the emergence of offshore service providers. A business-minded COO can help the organization determine which activities to outsource, how to evaluate and select service providers, and how best to manage them.

R&D partnerships and co-development efforts present similar challenges. R&D labs involved in collaborations with external partners need to resolve many operational issues, such as who will perform which activities, whose processes will be used, how data will be captured and consolidated, and so forth. The active involvement of a senior executive will ensure that these and other issues are resolved in a timely manner, enabling project teams to proceed along well-defined paths.

Portfolio-Project-Resource Management (PPRM) Most R&D organizations put a high priority on optimizing the value of the R&D portfolio within the constraint of limited resources. Optimization requires the organization to follow well-defined processes and to collect appropriate, timely, accurate data. (See "The Path to Smart R&D" Pharm Exec, November 2003.)