Portfolio Management P1 Flashcards
Week 21 - 16th Jan 2025
What is a portfolio?
A collection of brands (approved products) and development assets (unlicensed molecules) owned by a company.
What are the benefits of companies specialising in product types or disease areas?
- Efficient use of existing capabilities across multiple products.
- Expertise in therapeutic areas, regulatory pathways, access, reimbursement, and clinical trials.
What is portfolio management?
- A global strategic process prioritizing developing assets and brands to optimize returns and balance risks.
- It affects resource allocation in R&D, marketing, sales, and medical affairs.
- Drives long-term business planning and global development strategies, including launch decisions.
What is Net Present Value (NPV)?
NPV is a method used to determine the current value of a series of future cash flows, discounted back to the present using a specific discount rate (usually the cost of capital).
What is the importance of portfolio management?
- Manages profit and loss (P&L) to meet investor expectations.
- Respond to challenges like patent expirations, competitive threats, and lifecycle extensions.
- Facilitates strategic focus on competitive areas.
- Leads to major corporate transactions such as mergers, acquisitions, sales, and partnerships.
What is Expected Net Present Value (eNPV)?
eNPV extends the NPV concept by incorporating risk and uncertainty. It is the probability-weighted average of the NPVs of all possible outcomes. This method is particularly valuable for projects with high uncertainty, such as drug development or R&D projects.
What are the key components of portfolio management?
- Existing marketed brands
- New indications
- New formulations
- New brands
- Development pipeline
- Business development (BD)
Existing Marketed Brands
- Evaluate growth potential in current territories
- Explore geographic expansion opportunities via affiliates or licensing
- Ongoing studies - company vs independent
- Commercial resource in place vs case for additional investment
New indications
- Assess potential value by adding new indications.
- Balance development time with patent/IP protection.
- Evaluate reimbursement and access impacts.
New formulations
- Improve product value through innovative delivery methods (e.g., extended-release, weight-based dosing).
- Associated with more technical risk than anything else.
New brands
- Plan global launch sequences
- Mitigate risks in regulatory, reimbursement, and pricing processes.
- Indication sequencing as part of global development plans
Development pipeline
- Assess risks and potential value of assets at different stages
- Commercial risk and capability.
- Out-licensing to de-risk/maximise revenue/organisational focus.
Business development
- Address growth gaps by acquiring assets at various stages.
- Manage risks through structured deals and partnerships.
- Late stage assets are more expensive (lower risk) than early stage (higher risk).
Risks in Pharmaceutical Portfolio Management
- Regulatory
- Safety
- Development
- Reimbursement
- Commercial
- Operational
- Competitive
- Legal
- Code
- Supply
- Manufacturing
- Political
Forecasting in Portfolio Management
- Critical for anticipating portfolio performance.
- Requires collaboration across global functions (e.g., marketing, R&D, finance).
- Enables companies to evaluate and manage risks dynamically.
Case studies discussed in this lecture
- Botox: Expanded from treating strabismus (1970s) to diverse therapeutic and cosmetic uses.
- Diclofenac: Introduced innovative formulations (e.g., topical, extended-release) to address safety concerns.
- Sunosi: Jazz Pharmaceuticals’ example of global launch sequencing and divestment for efficiency.
