Strategic Management of Resources and Portfolios

Strategic Management of Resources and Portfolios

Structuring Risk to Maximize Opportunity in Pharmaceutical R&D

As a company develops its business, resources will always be limited and risk will always be involved. This is especially true for companies operating in the high-risk life science industry. To stay on top of the changing pharmaceutical R&D environment, certain measures must be implemented. This report analyzes:

• Types of risk that must be faced;
• Ways that various risks can be assessed and managed;
• How corporate resources can be allocated to meet the goals and create maximum value according to the corporate strategy.

Management of risks, resources, and portfolios are key challenges for any life science company that seeks to survive the difficult times through which the industry is now passing. There is ample evidence that the entire sector is in the process of restructuring, initially taking a defensive stance to defend earning streams but actually building momentum toward renewed initiatives on a broad front. The restructured industry that will come roaring back within the next few years will consist of leaner and more effective companies. Certainly, all of these survivors will have learned how to manage their risks and resources strategically.

For a life science company, risk comes in many forms, with compound attrition being the most obvious. Strategic Management of Resources and Portfolios: Structuring Risk to Maximize Opportunity in Pharmaceutical R&D examines the types of risks that must be faced (e.g., candidate failure, regulatory risk, legal risk, risk management for launched drugs, commercial and competitor risk, intellectual property risk, operational risk) and shows that these risks can be mitigated and managed if addressed proactively.

Intimately associated with the risk issue is the valuation of projects and portfolios. We outline the major approaches by which objective and quantitative valuation of drug development can be attempted.

Many resource-intense corporate operations show extensive potential for streamlining. We present process optimization and quality control approaches that can result in remarkable savings. These include the ""Lean"" and ""Six Sigma"" concept, and the proactive management of laboratory equipment (including service contracts) and inventories.

On a strategic level, resource allocation management can largely be equaled with portfolio management. We evaluate models and approaches for optimal portfolio planning and management, demonstrating that implementation of sound, data-driven, transparent decision processes is paramount. Also described are advanced software suites that are available to help manage the huge corporate data streams on the operational plane (i.e., enterprise resource management) and on the level of business intelligence, where internal data warehouses are analyzed to provide key figures and profiles that aid in decision-making.

Case studies illustrate how companies of various sizes and types (including Pfizer, Wyeth Pharmaceuticals, Bayer Schering Pharma, and Genzyme) have addressed their portfolio management issues. Strategic Management of Resources and Portfolios: Structuring Risk to Maximize Opportunity in Pharmaceutical R&D concludes by distilling our evaluation of this mission-critical function into actionable recommendations for sound project evaluation and portfolio management.

Contents

• Chapter 1
• Accepting Structured Risk to Realize Opportunity: The Essence of Entrepreneurship
  • 1.1. Nature and Dictates of The Risk/Resource Relation
  • 1.2. Business Complexity: Home-Grown Risk or Business Perspective
  • 1.3. Projects, Portfolios, and Strategy
  • Development Strategies of Life Science Companies
  • Portfolios: High-Level Implementation of Strategy
  • Projects: Tactical Materialization of Strategy within The Portfolio
• Chapter 2
• Drug R&d as An Environment Tasked to Deliver Efficacy
  • 2.1. from Return on Resources to Return on Investment
  • 2.2. Proactive R&d Inventory Management and Optimization
  • 2.3. Outsourcing Equipment Asset Management
  • 2.4. User-Based Management of Consumables and Soft Assets
  • 2.5. Process Engineering and The Six Sigma Concept
  • Six Sigma in Pharmaceutical Marketing and Sales
  • Six Sigma and Clinical Development
  • 2.6. Reporting and Reviewing in R&d
• Chapter 3
• Understanding and Assessing Drug Development Risk/Benefit Balance
  • 3.1. Real Options Analysis: Financial Metrics for R&d Valuation
  • Valuation in Development Projects
  • Real Options Analysis as A Solution to The Valuation Dilemma
  • Implementing Real Options Analysis
  • 3.2. Valuation of Intellectual Property
  • Patents
  • Patent Valuation
  • 3.3. Predictive Safety from Discovery to The Phase I Clinical Stage
  • 3.4. Phase Ii Study Designs and Relevance of Data
  • 3.5. Phase Iii Programs and Prediction of Field Performance
• Chapter 4
• Risk and Resource Requirement throughout The Drug Life Cycle
  • 4.1. Scientific and Clinical Development Risk
  • Risk and Resources from Discovery to Ind
  • Phase I Risks and The Consequences of The Tgn-1412 Affair
  • Phase Ii
  • Phase Iii
  • 4.2. Regulatory Risk
  • 4.3. Legal Risk
  • Legal Challenges during Development
  • Lawsuits Concerning Approved Drugs
  • 4.4. Risk Management for Launched Drugs
  • Formal Postmarketing Surveillance Systems
  • Handling Unexpected Adverse Events
  • 4.5. Commercial and Competitor Risk
  • Market Risk from New Scientific Data
  • Market Risk from A Changing Competitive Situation
  • 4.6. Intellectual Property Risk
  • Evolving Patent Regulations
  • Patent Reform Act of 2007
  • Circumvention of Patents and Challenge by Claiming Different Use
  • Circumvention Risk Case Study #1: Amlodipine
  • Circumvention Risk Case Study #2: Viagra and Levitra
  • Circumvention Risk Case Study #3: Gabapentin
  • 4.7. Operational Risk: Failure of Execution
• Chapter 5
• Portfolio Management: Acting on Portfolio Risk/Return-on-Investment Balance
  • 5.1. Prioritization as The Key Issue
  • 5.2. The Human Factor in Portfolio Management
  • 5.3. Portfolios and The Planning Process: Building The Models
  • Benchmarking in A Dynamic R&d Environment
  • Managing Portfolio Resource Bottlenecks
  • Classical Decision Analysis
  • Monte Carlo Simulation of Outcomes
  • Robustness against Multiple Outcome Scenarios
  • Adaptive Clinical Trials: An Emerging Challenge to Resource Management
  • 5.4. Enhancing The Portfolio through M&a and Inlicensing
  • 5.5. Decision Support Software from Contact Management to Business Intelligence
  • CRM, Plm, Scm: Operating with Basic Resources
  • Enterprise Resource Planning Software: The Great Operative Integrator
  • Portfolio Management Software for The Life Sciences
  • Decisioniris (Visual I/O)
  • Enrich Portfolio System
  • Pdware Portfolio
  • Promodel Portfolio Simulator and Pharma R&d Solutions
  • Data Warehouses and Business Intelligence Software for Strategy Support
  • Explicit Risk Analysis Software Tools
  • Product Life Cycle Management
  • 5.6. Managing Data Security in The Digital Business
• Chapter 6
• Case Studies in Portfolio Resource Allocation
  • 6.1. Pfizer
  • 6.2. Wyeth Pharmaceuticals
  • 6.3. Bayer Schering Pharma
  • 6.4. Genzyme Corporation
  • 6.5. Three Examples from The Strategic Decisions Group
• Chapter 7
• Synopsis and Recommendations
  • 7.1. Evaluation of A Project
  • 7.2. Portfolio Management
  • References
  • Company Index with Web Addresses
  • Tables
  • Table 1.1. Typical Business Strategies for Life Science Companies
  • Table 3.1. Basic Differences between Financial Options and Real Options
  • Table 3.2. Cost Estimates for A Basic Preclinical Safety Pharmacology Program
  • Table 3.3. Recent Licensing and Collaboration Deals for Compounds in Phase Ii
  • Table 4.1. Leading Insurance Companies in Clinical Trials Coverage
  • Table 5.1. A Selection of Erp Software Packages with Tailored Life Science Industry Solutions
• Figures
  • Figure 1.1. Schematic Representation of Strategy, Portfolios, and Projects in Relation to Corporate Objectives
  • Figure 2.1. Deployment and Adoption Stages of Process Improvement
  • Figure 2.2. Lean Versus Six Sigma Approaches to Process Optimization
  • Figure 3.1. Patent Applicant's Decision Points in The Patenting Process
  • Figure 3.2. Complexity of Implementation and Relative Cost of Discovery-Stage Predictive Safety Testing Approaches
  • Figure 4.1. European Postmarketing Surveillance Implemented for Tracleer, A Drug for Pulmonary Hypertension
  • Figure 4.2. Chemical Differences between Sildenafil and Vardenafil
  • Figure 5.1. Strategic Versus Operational Issues in Portfolio Management
  • Figure 5.2. Portfolio Plan, Strategic Plan, and Business Plan
  • Figure 5.3. Simplified Decision Tree for A Drug Development Project
  • Figure 5.4. Efficient Frontiers Resulting from Portfolio Optimization, as Optimized from Raw Productivity Rankings
  • Figure 5.5. Portfolio Bubble Plot Screen from The Enrich Portfolio System
  • Figure 6.1. Operational Planning at Pfizer
  • Figure 6.2. Wyeth's New Learn and Confirm Clinical Development Strategy, Compared to The Classical Concept
  • Figure 6.3. Drug Development Portfolio Management Process at Bayer Schering Pharmaceuticals after The Integration of Schering Operations

Related products