Research & development portfolio management

The issue

A major pharmaceutical company identified a need to improve its research & development (R&D) portfolio evaluation and prioritisation process. Seeking advice, the company turned to the pharmaceutical specialists in PwC UK valuation & strategy’s group for help.

Our approach

As a first step, the UK team worked with the client to refine its existing R&D portfolio methodology. One important refinement helped managers calibrate the impact of technical and commercial uncertainties and funding options on the expected value of specific R&D projects. The team also made a significant contribution to the development of R&D portfolio-related tools which now support the company’s portfolio review process and has continued working with the client to continuously improve their R&D process and tools.

The outcome

As a direct result of PwC's contributions, the client is now able to make accurate estimates of the value of investment opportunities in new chemical entities (NCE) and product line extensions (PLE); generate risk/return calculations that support the R&D management team’s resource allocation decisions; and identify expected revenue gaps to be filled by in-licensing compounds. At the completion of a yearly portfolio review session, a client Research & Development (R&D) executive reported to the manager of the portfolio group: “Robust insights are instrumental in ensuring a successful portfolio review process --- and it is clear that a great deal of hard work and thought has gone into developing the portfolio-related tools.”