Abstract
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.
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