Expanding an R&D Portfolio
Our client, a major global pharmaceutical firm, invests substantially in research that leads to new pharmaceutical therapies. It also invests heavily in marketing its products and has made acquisitions to bolster its portfolio of R&D programs and on-market products.
In an era when the R&D costs of bringing a new pharmaceutical product to market are increasing dramatically, the marketing "arms race" is bringing declining returns, and pricing pressure is acute, our client had a fundamental question: is the existing product and R&D portfolio sufficient to achieve growth goals, and, if not, what kind of incremental investment, including acquisition, will do so optimally for shareholder value?
A joint Analysis Group-client team focused on two critical gaps to address this challenge. First, the client had several sophisticated models of its business -- focused on the R&D portfolio, marketed products, or business development options -- but it lacked a single scenario planning tool that could effectively quantify the interaction among these parts of the business. Over an intense six-week period, we developed a model to integrate these areas and produce scenario results under a wide range of investment options across R&D, marketing, and business development activity.
The second critical gap addressed by the team was utilizing the business modeling work to allow the senior decision-making team to consider a series of options for the business and engage in a dialogue informed by much clearer information about the trade-offs than had previously been possible. Drawing upon the team's work, the client significantly adjusted its business development targets and reallocated investment into a smaller set of therapeutic areas.