Portfolio management, pharmaceutical

Portfolio management concepts have been an accepted component of the financial services realm for decades, and the need to diversify risk continues to be an effective organizing principle for many financial instruments and analytic techniques. Risk assessment is also a key component in the pharmaceutical world, where as few as 1 in 5000 laboratory-tested compounds ever makes it to the market. As such, the pipeline portfolio is a critical indicator of the future of a pharmaceutical firm, and the process of analyzing and managing it effectively is of vital strategic importance. 

D3mamic modeling methodology provides a unique way to address portfolio management problems in the pharmaceutical industry. 

A zoell-p)lanned and managed pharmaceutical research and development (R D) portfolio can be defined as "The combination of a// R D projects, that based on past company and industry performance. 

Pharmaceutical coverage is skewed towards the U.S. and Europe, while the biotechnology and drug discovery publications better represent the Asian and the rest of the world markets. Recent pharmaceutical titles include U.S. Alzheimer s Disease Medications Markets, World Emerging Anti-Obesity Prescription Drug Markets, U.S. Parkinson s Disease Therapies Markets, and R D Portfolio Management. 

Zipfel A (2003) Modeling the probability-cost-profitabihty architecture of portfolio management in the pharmaceutical industry. Drug Information Journal 37 185-205. 

Large pharmaceutical companies and management firms have moved the concepts of portfolio management back into the R D stages, with more detailed analysis of requirements for successful outcomes. 

Nevertheless, rapid progress through Phase 111 development will allow a longer effective patent life, which will increase the commercial return on a new medicine. In recent years, this factor alone has been a major driver for large pharmaceutical companies to project manage their product portfolios more efficiently. 

Precisely because biopharmaceutical players are not yet under as much pressure as small-molecule pharmaceutical producers, managers should observe the forces at work very attentively as they seek to innovate product portfolios and business models. 

Rogers M.J., Gupta A. and Maranas C.D. 2003. Risk Management in Real Options Based Pharmaceutical Portfolio Planning. POCAPO, 241—244. 

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