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views, represent the most valuable aspect of the process. It is the only way informed decisions about the project's place in the portfolio can be made. The graphs and charts that follow this process are really of secondary importance; their only value is to communicate to the rest of the company the major conclusions coming from the portfolio discussions. |
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B. Dimensions and Criteria for Portfolio Analysis |
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Evaluation of the portfolio should take place in two stages. First, each project needs to be assessed for its individual strengths and weaknesses. Next, the projects need to be assessed as a group, either by therapeutic class, or the portfolio in its entirety. The group assessment gives an overview of the strengths and weaknesses of the aggregated portfolio. |
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All criteria used to assess projects can be classified in one of two dimensions. Risk is one dimension and measures the likelihood of success, based on feasibility factors. The other dimension is reward, which measures the financial return of the product, given that it is successful. The choice of evaluation criteria is critically important for a successful analysis, and the criteria must be quantitative. Unfortunately, criteria that are measurable are often irrelevant, and those that are relevant are usually unmeasurable [15]. The number of risk and reward factors does not have to be comprehensive, but the factors must be relevant and representative characteristics of the risk and reward value of the project, respectively. A well-defined corporate mission is helpful in selecting criteria that are in line with the strategic priorities of the company for reaching targeted markets and long-range sales objectives. |
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In order to compare one project with another, the evaluations must be quantitative [14]. It is important to keep the scaling simple and consistent with the precision of the projects being measured. Especially for projects in early development, there are probably far more characteristics that are unknown about the drug than those that are known; therefore, much of the assessment is educated guesswork, rather than soundly defensible fact. It is easy to fall into the traps of defining parameters with greater precision than what is known about the product and using statistical analysis schemes that are more complex than the conclusions that can be drawn from the available information. Both the rating scales and the calculations from them should be consistent with the relative uncertainty of the assessments themselves. |
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The portfolio analysis should be conducted separately for research projects and substances under development. The single event that distinguishes discovery projects from development projects is the identification of a development candidate. Discovery portfolios should focus on evaluation of the research approaches, since the value of a yet-to-be-named development candidate cannot be measured. Development portfolios, on the other hand, can evaluate |
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