Focused Portfolio Measures to Support Decision Making Throughout the Pipeline
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0092-8615/2002 Copyright 0 2002 Drug Information Association Inc.
623-630. 2002
Printed in the USA. All rights reserved.
FOCUSED PORTFOLIO MEASURES TO SUPPORT DECISION MAKING THROUGHOUT THE PIPELINE SUEE. STEVEN,PHD, MBA Executive Director, Portfolio Planning and Resource Management, Centocor, Inc., Malvern. Pennsylvania
The amount and type of information available for investigational drug assets varies a lot depending on where the individual asset lies in the research and development pipeline. Therefore, when considering the key elements of asset valuation (risk, time, cost, and value) and the key portfolio measures (flow rate, volume, value, strategy, and balance), the dependence upon any one element or measure changes. The focus in research is to understand the number of discovery programs in each area, the productivity of each program based on effort, and the risk associated with each. In early development you want to anticipate and evaluate the options that exist i f the current plan is unsuccessful. In late development the key is matching your final product development to the market needs to ensure a good return on what is now a large investment. As one gets closer to commercialization, opportunities to comarket and/or copromote should be evaluated to drive up market share. With life cycle management, cannibalization and patent extension become key issues. Finally with in-licensing, filling gaps becomes of paramount importance and thus, you may permit lower hurdles than those set f o r internal investigational drug assets. Kev Words: Portfolio; Decision; Risk; Value; Strategy
INTRODUCTION DECISION ANALYSIS AND asset valuation tools and processes provide insights into decision making in a high-risk environment. Applying these tools and processes to support the management of a drug development pipeline (eg, investing in the right drug candidates, terminating or out-licensing the misfits) is termed portfolio management. Portfolio management and decision support have become quite popular in the pharmaceutical industry over the last five years (1,2). As the industry’s research and development (R&D)
Presented at the DIA 37th Annual Meeting, July 8- 12, 2001, in Denver, Colorado. Reprint address: Sue E. Steven, 78 W. Indian Lane, W. Norriton. PA 19403.
spending (per published analyst reports) has increased faster than the concomitant rise in Food and Drug Administration approvals, having the information and ability to make the best decisions has become more important. Many companies initially launched their quantitative decision modeling techniques and processes to support late phase development where the largest R&D funds are spent (1,2). A pitfall that an organization can easily make is to subsequently apply one successful decision support tool and process across the entire portfolio. This paper addresses the rationale for emphasizing different measures as an investigational drug asset progresses along the pipeline. In order to discuss the use of different portfolio measures, a thorough understand-
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