Xyz Pharma

In: Business and Management

Submitted By bailey7733
Words 294
Pages 2
Part 1 – Framing the Project Portfolio Management Problem

• What are the objectives? To research and develop pharmaceutical products based on the selection that maximizes value
• What are the constraints? Drug discovery and development is an extremely risky, time consuming and expensive process. Lower priced generic drugs and their competitors impose constraints along with risky drug discovery and development and uncertain return on investments.
• What are the risks involved? A large fraction of drug development costs are spent on drugs that do not reach the market illustrating the high technical risks. Even the drugs that reach the market only 30 percent achieve the commercial success to recover the development costs to yield a healthy return, illustrating the additional commercial risk involved.
• What are you alternatives? Development with lower costs, optimal research, reducing costs elsewhere and increasing sales
• What information is required for project portfolio management at XYZ and how can it be collected? All independent research and development projects including their cost. Technical success probability. Projected launch year, pre-launch cost, return on investment and market risk. This information can be collected by comparison from competitors costs and sales or previous years costs and sales.

Part 2 – Project Valuation
How would you determine the value of the following project (Project 1) in XYZ’s portfolio, a project in the pre-clinical phase, part of the Oncology therapeutic area?
I would determine the value by evaluating all of the risk associated with the projects, figure the probability of success and failure, along with calculating the projects cost and present value.

What additional information would you collect? I would compare previous year success and failure ratios from internal and competitor reports.…...

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