Current and Cutting Edge Methods of Portfolio Decision Analysis in Pharmaceutical R&D

Chapter

Abstract

The R&D, regulatory, and marketing process in the pharmaceutical industry have distinct differences in timing, risk, opportunity, compliance, and cost structure compared to most other industries, making portions of portfolio decision analysis (PDA) significantly different. We will cover these differences and how PDA methods need to adapt to be most useful. We will address concepts of project valuation, portfolio prioritization, portfolio uncertainty, portfolio balance, and portfolio optimization. One goal of this chapter is to introduce the readers to concepts and methods which may not be used or even considered in their organizations, as well as to put the methods currently being used into context. We will present a methodology growing in popularity within PDA of discovery and early development portfolios– multiple objective decision analysis (MODA). A major theme throughout this chapter is a focus on portfolio objectives, rather than project goals, values, and risks. So many companies still focus their analytical efforts on project level valuation and prioritization, missing chances to help the organization meet portfolio level goals, fill company levels gaps, and help leaders conduct portfolio level risk management. We explore the idea that subportfolios exist, and different PDA methods may be more successfully implemented in one subportfolio than others. Finally, maximizing value, managing risk, and aligning decision making with company values requires an integrated portfolio management process, which we address at the end of the chapter.

References

  1. Belton V, Stewart T (2001) Multiple criteria decision analysis, Kluwer Academic PublishersGoogle Scholar
  2. Buede D, Maxwell D (1995) Rank disagreement: a comparison of multi-criteria methodologies. J Multi-Criteria Decis Anal 4(1–2):1–21CrossRefGoogle Scholar
  3. Figueira J, Greco S, Ehrgott M (eds) (2005) Multiple criteria decision analysis. State of the art surveys. Springer, New YorkGoogle Scholar
  4. Grelk B, Kloeber J, Jackson J, Parnell G, Deckro R (1998) Making the CERCLA criteria analysis of remedial alternatives more objective. Remediation 8(2):87–105CrossRefGoogle Scholar
  5. Howard R (1988) Decision analysis: practice and promise. Manage Sci 34(6):679–695CrossRefGoogle Scholar
  6. Keeney R (1992) Value focused thinking: a path to creative decision-making. Harvard University Press, CambridgeGoogle Scholar
  7. Keeney R, Raiffa, H (1993) Decisions with multiple objectives, Cambridge books. Cambridge University Press, CambridgeGoogle Scholar
  8. Keisler J (2004) Value of information in portfolio decision analysis. Decis Anal 1(3):177–189CrossRefGoogle Scholar
  9. Keisler J (2011) Portfolio decision quality. In: Salo A, Keisler J, Morton A (eds) Portfolio decision analysis: improved methods for resource allocation. Springer, New YorkGoogle Scholar
  10. Matheson D, Matheson JE (1998) The smart organization. Harvard Business School Press, BostonGoogle Scholar
  11. McNamee P, Celona J (1990) Decision Analysis with Supertree, Second edition. South San Francisco, California: The Scientific PressGoogle Scholar
  12. Parnell GS, Bennett GE, Engelbrecht JA, Szafranski R (2002) Improving resource allocation within the national reconnaissance office. Interfaces 32(3):77–90CrossRefGoogle Scholar
  13. Salo A, Keisler J, Morton A (2011) An invitation to portfolio decision analysis. In: Salo A, Keisler J, Morton A (eds) Portfolio decision analysis: improved methods for resource allocation. Springer, New YorkGoogle Scholar
  14. Sharpe P, Keelin T (1998) How SmithKline Beecham Makes Better Resource-Allocation Decisions, Harvard Business Review, March-AprilGoogle Scholar
  15. Spilker B (2009) Guide to drug development: a comprehensive review and assessment. Lippicott, Williams and Wilkins, PhiladelphiaGoogle Scholar
  16. Spradlin T, Kutolksi D (1999) Action-oriented portfolio Management. Res Technol Manage 42(2):26–32Google Scholar
  17. U.S. Congress (2005) Congressional Base Realignment and Closure ActGoogle Scholar
  18. U.S. Department of Homeland Security (2008) Bioterrorism risk assessment: a call for change, committee on methodological improvements to the Department of Homeland Security’s Biological Agent Risk Analysis. National Research Council National Academies PressGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.Kromite, LLCBoulderUSA

Personalised recommendations