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KILL OR CURE PORTFOLIO MANAGEMENT

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PPM is good at providing retrospective insight, but to use it solely for that purpose is to ignore its most powerful capabilities. PPM has evolved considerably during the last few years; it can now accurately identify and manage the most promising R&D projects from the initial-idea stage. It can even be used to generate those ideas by looking at therapeutic areas, competitors' pipelines and general market research. This represents a fundamental new way of thinking in the pharmaceutical industry.

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									PORTFOLIO MANAGEMENT




                               KILL OR CURE
                               PORTFOLIO MANAGEMENT
                               David Munt, Managing Director, The GenSight Group suggests why the pharmaceutical




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                               industry needs to rethink its approach to project portfolio management.
                                                     n 1993 Henry Mintzberg authored              from 1977 to 1995 the number of clinical trials required
                                                     a book entitled The Rise and Fall of         to bring a new drug to market doubled, and the number of
                                                     Strategic Planning.1 A year later, he        patients involved in those trials nearly tripled.3 It can now
                                                     penned a Harvard Business Review             take 16 years to complete FDA-regulated development,
                                                     (HBR) article with the same name.2 In        testing and review processes.
                                            both, Mintzberg argued that so-called ‘strategic         Given today’s market conditions, PPM is a particularly
                                             planning’ was hindering strategic thinking.          good tool to ensure that limited budgets and resources
                                                The tendency to analyse and extrapolate           are focused on the ‘right’ projects and that failures are
                                                   data from the past was misleading              minimized. Although PPM tools are widely used across the
                                                   managers into thinking they were               industry, they are primarily used retrospectively, to record
                                                working to improve future performance,            project progress and communicate decisions taken, rather
                                             when in fact they were doing anything but.           than as a tool to inform strategic decisions about where to
                                            Fast-forward a decade and a half, and the             invest time and resources.
                                            pharmaceutical industry should collectively
                                           head to Amazon.com or the HBR archives.                A New Way of Thinking
                                                                                                  PPM is good at providing retrospective insight, but to use
                               The Perfect Storm                                                  it solely for that purpose is to ignore its most powerful
                               The industry is facing a crisis that some industry watchers        capabilities. PPM has evolved considerably during the last
                               have called the ‘perfect storm’: falling stock prices, downward    few years; it can now accurately identify and manage the
                               pressure on drug prices, less capital to invest in R&D, the        most promising R&D projects from the initial-idea stage.
                               imminent expiration of a number of blockbuster patents and         It can even be used to generate those ideas by looking at
References                     the resulting flood of cheaper generic alternatives. In the face   therapeutic areas, competitors’ pipelines and general market
1. H. Mintzberg, The Rise
   and Fall of Strategic       of these challenges, the industry urgently needs to produce        research. This represents a fundamental new way of thinking
   Planning, 1993.             new strategies to ensure a strong and sustainable product          in the pharmaceutical industry. Ask the average industry
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