ABSTRACT
Introduction ...................................................................................................... 34 What is research and development (R&D) portfolio management? ........ 34
Why is portfolio management required? ................................................. 35 What characteristics of the R&D portfolio need to be managed? ........ 35
Portfolio risk profile ............................................................................... 35 Sources of risk ......................................................................................... 36 Risk correlation and impact .................................................................. 36 Breadth versus depth, aka diversification versus focus ................... 37
Alignment with top-level organization strategy ......................................... 37 Unique aspects of portfolio management in pharmaceutical industry ......................................................................................................... 37
Portfolio management prerequisites ............................................................. 38 Organization readiness and expectations ................................................ 38 Transparent process, accountability, and decision ownership ............. 39
Translation of company strategy into portfolio goals and measures ....... 39 Alignment on uncertainties that impact portfolio goals ....................... 40 Infrastructure, technical, and people capabilities ................................... 40
Best practices in portfolio management ....................................................... 42 Annual portfolio prioritization versus dynamic portfolio prioritization ................................................................................................ 42 Addressing immediate constraints versus managing constraints for the longer term ...................................................................................... 42 Balance between the qualitative and quantitative approach ................ 43 Illustrative framework for approach and decision level for portfolio models .......................................................................................... 44
Assessment of project-level risk ........................................................... 44 Conclusion ........................................................................................................ 46 Acknowledgments ........................................................................................... 47 References .......................................................................................................... 47
Introduction The objective of this chapter is to share the importance of portfolio management concepts, especially in a resource constraint environment, in meeting a company’s strategic goals. In particular, the chapter focuses on the following key areas:
• Overview of portfolio management and what it entails • What is needed to optimally align the portfolio to deliver on strate-
gic and operational goals • Best practices and innovative approaches to portfolio management • Recommendations on frequently encountered challenges with man-
agement of a portfolio of drug development projects
In the context of this chapter, a portfolio is defined as a collection of assets and projects that are in the preclinical to registration phase of development, including line extension and enhancements to products that are already on the market.
