Asset Portfolio Strategy for a Major Biotech Company Facilitates Launch of a Therapeutic to Treat a Serious Complication of Chemo

A global pharmaceutical company was looking for a better way to evaluate its early development projects, one that would take an integrated, comprehensive view of the portfolio and facilitate consistent trade-offs. The solution was an innovative multi-attribute prioritization methodology, using multi-attribute utility theory and value-focused thinking within the framework of decision quality. This new prioritization model provided a coherent mechanism for measuring early-stage projects across diverse disease areas, fostering consistent trade-offs based on agreed-to decision criteria.

Situation Analysis

An important driver of success in any global pharmaceutical organization is the strength of its R&D pipeline. The ability to produce a continuous stream of highly differentiated products is critical; any gaps in the pipeline can undermine competitive advantage. Sustained productivity requires the selection of truly valuable projects in the early stage, when long-term results are still highly uncertain. Pharma companies will sometimes apply common late-stage portfolio prioritization models to the early-stage pipeline, but these models are not effective due to the difficulty in assessing financial criteria in the early stage and capturing long-term value potential. This can lead to short-sighted decisions.

The leadership team of one global pharma company was faced with just such a challenge. Due to the lack of actionable, long-term assessments, the company’s process for prioritizing early-stage projects was not yielding the required number of quality projects. Previous attempts to resolve the problem were inadequate. Evaluation measures were ill-defined and often varied across functions. There was no alignment on the criteria for prioritizing projects or on the rules for making trade-offs among objectives. Hence, evaluation results were frequently challenged and the entire process often contested.

The company sought a solution that would generate an integrated view of early- and late-stage projects and provide a consistent evaluation of early-stage projects. The leadership team wanted to be able to continually update the portfolio review as new information came to light, enabling more dynamic, agile decision making. Furthermore, there was a need to facilitate trade-offs across projects in a heterogeneous set of disease areas based on commercial, technical, and social criteria that, ultimately, would lead to actionable resource allocation decisions and a commitment to follow through.

Discovery & Solution

Strategic Decisions Group was entrusted with the development of a new portfolio management methodology. SDG used multi-attribute utility theory and value-focused thinking—both known from decision analysis research—to enable rapid, fact-based decision making. The approach was designed in collaboration with researchers from RWTH Aachen University, a leading research university in Germany and backed by the university’s decision support tool, available at this link.

Drawing from interviews with key stakeholders, the SDG team generated a clear structure of what the decision makers understood to be the fundamental value drivers of early-stage projects. SDG developed an assessment structure that was applicable to all early-stage projects and evaluated these projects against the identified value drivers. Incorporating debiasing measures within the assessment templates, SDG ensured quality assessments even beyond their active engagement during the project.

The assessments were a means to facilitate portfolio decisions based on a portfolio’s fundamental value drivers. In a second round of interviews, SDG determined the preferences of key stakeholders by applying a rigorous trade-off methodology. The trade-off methodology reduced biases in judgment and made the decision criteria clear to the organization. Decision makers cited insights from the trade-off methodology as a key benefit of the exercise.

Results & Impact

By implementing the portfolio management methodology in the organization, the leadership team was able to quickly identify valuable projects, enabling timely and agile decision making. The results and impact on the organization and its portfolio were threefold.

  • The methodology unearthed the strengths and weaknesses of projects in the portfolio. Looking at how each project performed across the different fundamental objectives in a deconstructed way led to a reprioritization of projects and a corresponding reallocation of investments.
  • The engagement fostered transparency and visibility into the criteria for how portfolio decisions would be made, so that each project team could work toward making their project a better fit within the portfolio.
  • The effort improved the efficiency of the decision-making process. We separated discussions about scientific expectations from discussions about preferences and strategic objectives. Consequently, the projects were assessed by expert teams, while objective weights were assigned by decision makers. As a result, the overall portfolio decision discussions became highly focused, resulting in specific decisions that had previously taken much longer, often without reaching a decision.

To ensure that the whole process did not end up as a one-time effort, SDG built a tool that automatically integrated the inputs of various early-stage assets. A dashboard summarizing key insights fostered trade-off conversations and decision making. The debiasing measures put into place worked to continuously improve the quality of the assessments and model inputs.

Overall, with SDG’s assistance, the organization launched a change in the way it approached portfolio management. The insights revealed during the engagement provided a foundation and guidelines for future decision making.

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