|
|
|
|
|
|
|
B.
Development Risk Management |
|
|
|
|
|
|
|
|
It is a salutary fact that most of what we do in development is aborted or completed but never reported. Indeed, in their whole careers in development, many people never work on projects that become products. The impact of attrition is well illustrated in Table 3. This is a steady state portfolio, a mathematical model which has, as its key parameters, the failure rate at each development phase and the time taken in each phase. The model is framed around an objective to bring one new chemical entity to market each year. Based upon the indicated phase durations and failure rates, the portfolio would contain about 22 compounds with most in early development. The failure rate is generically very high in early development. Phase 1 and 2 are particularly severe. It is vital to cull weak projects as soon as possible. Such decisions are rarely if ever taken in a state of total certitude. In recent times it has been increasingly recognized that terminating projects is something to be regarded as an achievement, not a failure. Because resource utilization increases considerably at each phase of development, postponement of a termination decision, in effect, wastes resources on a redundant project but costs the organization by denying resources to other projects. Termination decisions are difficult at any development stage but become increasingly difficult in later development because investor expectations are often factored into the company stock price. Portfolio modeling also illustrates the importance of speed in development which is generally discussed in the context of competitor time lines. Faster development also means that a smaller portfolio can sustain a desired product flow with much reduced resource demand. |
|
|
|
|
| | Project Failure and the Portfolio (Target1 NDA per year) |
| | Phase | | | | | | | Input | 9 | 7.5 | 2.5 | 1.25 | | | Output | 7.5 | 2.5 | 1.25 | 1 | | | Elimination | 1.5 | 5 | 1.25 | 0.25 | | | Elimination rate | 1/5 | 2/3 | 1/2 | 1/5 | | | Phase duration | 0.9 yr | 1 yr | 1.5 yr | 1.75 yr | | | Chance of NDA | 11% | 13% | 40% | 80% | |  |
|
|
|
|
A goal of 1 NDA per year results in the following steady-state portfolio |
|
|
|
| 8.1 | 7.5 | 3.75 | 2.19 | |
|
|
|