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Pharmaceutical Project And Portfolio Management: Effective Organization And Decision-Making For Long-term GrowthPublished by: Business Insights Published: Jun. 1, 2005 - 162 Pages Table of ContentsTable of Contents Executive summary 10 The portfolio management challenge 10 Portfolio management processes 11 Project evaluations 12 Portfolio management in practice 13 Project management in practice 14 Portfolio management in context 15 Chapter 1 The portfolio management challenge 18 Summary 18 Introduction 19 Pharmaceutical business environment 19 The rising cost of drug development 19 R&D productivity shortfall 21 Key drug patent expirations 22 Intensive regulatory processes 23 Healthcare cost containment 24 Investor confidence in the pharmaceutical sector reduced 25 Portfolio management - driving growth and shareholder value 25 Defining portfolio management 26 Key drivers of portfolio management 27 Corporate strategy and portfolio management 28 A dynamic feedback process 28 Portfolio management, corporate strategy and shareholder expectations 30 Portfolio management as a growth vehicle 31 Managing shareholder expectations through portfolio management 33 Enhancing corporate communications 34 Chapter 2 Portfolio management processes 38 Summary 38 Introduction 39 Integrated portfolio management 39 The R&D portfolio 41 The marketed portfolio 42 The portfolio management system 44 Organizational processes 44 Periodic portfolio reviews 45 Milestone reviews 47 Reactionary reviews 50 Combined review processes 51 Project evaluations 54 Analysis and decision-making 54 Efficiency measures 55 A balanced portfolio 58 Aligning portfolios and strategy 60 Top-down model 60 Bottom-up model 63 Top-down and bottom-up 64 Budgeting and resource management 65 Portfolio management best practices 69 Chapter 3 Project evaluations 72 Summary 72 Introduction 73 The project management discipline 73 The project evaluation process 76 Project identification 76 Project evaluation 77 Scoring methods 78 Project value and risk profile 81 Measuring value 82 Risk assessments 82 Financial evaluation techniques 86 Net present value 87 NPV - a worked example 88 Decision tree analysis 90 Expected NPV - a worked example 92 Monte Carlo simulations 95 Real options 100 Real options valuation 102 Portfolio evaluation best practices 106 Establishing a ‘level playing field’ for project evaluations 106 Improving risk assessment 106 Increasing the sophistication of financial evaluations 107 Chapter 4 Portfolio management in practice 110 Summary 110 Introduction 111 Case study: Portfolio management-led growth at Novartis 111 Case study: Prioritization in portfolio development at Genentech 114 Case study: Portfolio and resource management at Bristol-Myers Squibb 117 Case study: Small company portfolio management at PowderJect 119 Case study: Portfolio planning, strategy and risk management at Aventis 121 Chapter 5 Project management in practice 124 Summary 124 Introduction 125 Case study: Integrated project planning and budgeting at Roche 125 Case study: The mid-tier company approach to project management at Schering AG 126 Case study: Project management in new product development at GlaxoSmithKline 128 Case study: Project management support at AstraZeneca 130 Case study: Project manager development at Amgen 131 Chapter 6 Portfolio management in context 134 Summary 134 Introduction 135 Managing a portfolio of external assets 135 Portfolio management through licensing contracts 137 Globalizing the portfolio management process 141 Post-merger integration of portfolio management approaches 143 Industry best practice: An interview with Richard Bayney, Vice President, Portfolio Planning, J&J Pharmaceutical Research & Development 144 Interview transcript 147 Aligning the portfolio with top-level strategy… 148 Project versus portfolio management… 149 Sophisticated portfolio evaluation tools… 150 Strategic versus financial evaluations… 152 Adapting portfolio management to industry trends… 153 Integrating internal and external portfolio management… 154 Critical success factors… 155 Chapter 7 Appendix 160 Glossary 160 Sources 162 List of Figures Figure 1.1: R&D expenditure for PhRMA members, 1980-2004 20 Figure 1.2: Increasing cost of drug development, 1975-2000 21 Figure 1.3: R&D productivity trends, 1990-2004 22 Figure 1.4: US patent expirations for top-10 leading drugs, 2004 23 Figure 1.5: Portfolio management enables both the implementation and development of corporate strategy 30 Figure 1.6: Portfolio management as a driver of shareholder value 32 Figure 2.7: A “portfolio of portfolios” - integrated portfolio management 40 Figure 2.8: Integrated internal and external portfolio management 41 Figure 2.9: Milestone review process 48 Figure 2.10: The portfolio management process 52 Figure 2.11: Project utilization based on efficiency measures 57 Figure 2.12: Portfolio optimization over time 58 Figure 2.13: Portfolio balance - risk versus return 59 Figure 2.14: Top-down approach to resource allocation 61 Figure 2.15: Managing resources over time 67 Figure 3.16: Project rankings by attractiveness scores 81 Figure 3.17: Risk assessments - a distribution of potential outcomes 83 Figure 3.18: Risk assessment in project evaluations 84 Figure 3.19: Risk assessment in practice 86 Figure 3.20: Net present value of an R&D project 89 Figure 3.21: Decision tree analysis for pharmaceutical projects 91 Figure 3.22: Expected NPV of an R&D project 93 Figure 3.23: Expected NPV versus Monte Carlo simulation 96 Figure 3.24: Decision tree analysis and Monte Carlo simulations 97 Figure 3.25: Monte Carlo simulation outcomes 98 Figure 3.26: Expected NPV of an R&D project incorporating an abandonment option 101 Figure 4.27: An example of the decision-making process found at Novartis 113 Figure 4.28: An example of the cross-option comparison charts used at Genentech 115 Figure 4.29: An example of the multi-value measure rankings used at Genentech 116 Figure 4.30: An example of the aggregate demand charts used at BMS 118 Figure 4.31: An example of the R&D portfolio management process employed at PowderJect 120 Figure 4.32: An example of the management of risk with respect to near-term value at Aventis 121 Figure 5.33: An example of the decision-making structure at Schering AG 127 Figure 5.34: An example of project management commissioning at Schering AG 128 Figure 5.35: An example of key project management objectives at GlaxoSmithKline 129 Figure 5.36: An example of the initial PMSO organization at AstraZeneca 131 Figure 5.37: An example of project organization in a large biotechnology company such as Amgen 132 Figure 6.38: Clinical survival rates for internally developed and licensed compounds 136 Figure 6.39: The value of option 1 in GSK’s Theravance agreement 138 Figure 6.40: The value of option 2 in GSK’s Theravance agreement 140 Figure 6.41: A global development study for Iressa 142 Figure 6.42: J&J’s sales and earnings, 1994-2004 145 Figure 6.43: J&J’s portfolio of potential new filings, 2005-2011 146 Figure 6.44: J&J’s portfolio of potential new filings, 2005-2011 (cont’d) 147 List of Tables Table 2.1: Investment efficiency 56 Table 3.2: Project scoring model 79 Table 3.3: Expected NPV of an R&D project 94 AbstractPharmaceutical companies operate in multi-project, multi-product environments: the challenge facing pharmaceutical executives is to determine which projects - each potentially having a strong value proposition and being championed by different business units - should receive investment. Portfolio management aims to meet the challenges of operating in a multi-project/product environment by determining the optimal mix of projects and products within a portfolio. Pharmaceutical Project and Portfolio Management: Effective organization and decision-making for long-term growth, is a strategic management report which provides expert analysis on budget and resource allocation decision-making, enabling you to convert promising product portfolios into highly profitable revenue streams. Recent trends in increased R&D spend and falling productivity levels have put increased pressure on managing the portfolio in order to maximize returns. Effective portfolio management will steer pharmaceutical companies through periods of slow growth and deliver shareholder confidence in future growth.Get Full Details About This Report >> |
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