Info

95%

Does company have enough resources to get work done?

% Total 120 Resources 100 Allocated

Per product

Clinical Departments-

% Total 120 Resources 100 Allocated

Per product

Projects:

CRAs Data Med Aff Stats CRO Regul Mgr

Perform gap analysis:

Projects:

CRAs Data Med Aff Stats CRO Regul Mgr

Fig. 2.36. PPM Analysis: Resource Gaps? Availability?

r Progress of activities over time vs milestone targets r ROV of product (Return on Value) r Balanced Scorecards r NPV of product (Net Present Value) r Value of Pipeline; Criteria Scoring Fig. 2.37. PPM Summary Product Analyses disagreement between regulatory authorities and the company with the NDA because of safety or inadequate efficacy. Another reason to kill a product after phase 3 is that the market assessment, given the full knowledge of the product profile after phase 3, suggests unmet need and related market share will be inadequate compared with sales and marketing costs including launch costs ($25 million to $100 million) and annual selling costs. A measure of a best practice company is it's products fail early versus late in the development cycle [45].

A company's R&D success will be dependent on their staffing and expertise as well. Do we have enough people with the correct expertise to perform that work needed to be done for all our molecules? The staffing for the development operation is displayed in Figure 2.36 with a histogram approach. The key departments are listed on the x-axis for CRAs, data managers, medical affairs or safety group (AEs), statistics, regulatory, and the CRO outsourcing groups. The y-axis shows the percentage of resources allocated per project. Each product project is given a resource use value by a department and entered on the graph; and a total of all product resource use per department is given. Then, a gap analysis can be performed to determine excesses capacity and underage needing shoring up with outside resources (more CROs). Another solution is to do less work and slow down the advancement of a molecule that is lower priority or kill a very low priority project altogether. This gap analysis is best done as projections going forward into future years as well, which will permit the hiring and training of new staff members or education of internal staff, which easily can take from 3 to 6 months for this orientation process [9].

The last set of analyses to be discussed covers overall assessments of pipeline status or product status, especially the concept of value, which incorporates scientific and marketing principles (Fig. 2.37). Two pipeline assessments will be addressed in subsequent discussions (e.g., the balanced score-card and then pipeline value with criteria scoring). More general product assessment may include progress of activities over time, an example of which will be described in the later project management topic, return on value of a product, and net present value, which will be covered below.

The balanced scorecard approach for R&D can assess a very broad scope of parameters focusing on components, process, and evolution (flexibility) of R&D and not just products at a company. The assessment has a positive outlook for staff and management, in that it focuses on making organizational improvements. Five areas are addressed and scored: customer satisfaction, process excellence, sustainable innovation, learning and growth, and value in financial and commercial terms (Fig. 2.38). Customers are potentially any internal staff member or external resource. Within each of the five areas, a set of key characteristics is assessed at four levels, ongoing and okay, ongoing and needs improvement, inadequate

Financial/Commercial Value:

+ NDA Strategy

! Project Success Rate

+ Development Cost

X Development Timeline

Sustainable Innovation:

High Performance of PRCs Use of RDC

Pharmacogenomics Use Financial Forecasting Protocol Design

Learning & Growth:

Retain Staff Team Working Leadership Potential Develop & Support Staff Information Assets

Process Excellence:

High Performance of PRCs Use of RDC

Pharmacogenomics Use Financial Forecasting Protocol Design

Retain Staff Team Working Leadership Potential Develop & Support Staff Information Assets

Process Excellence:

+ NDA Strategy

! Project Success Rate

+ Development Cost

X Development Timeline

Sustainable Innovation:

Learning & Growth:

Fig. 2.38. PPM Analysis: Balanced Scorecard for R&D (Reprinted with permission from Pharmaceutical Executive, Vol 23, No. 10, 2004, pages 84-90. Pharmaceutical Executive is a copyrighted publication of Advanstar Communication Inc. All rights reserved.)
Fig. 2.39. PPM Analysis: Summary - Net Present Value (Copyright © 1998 by R.G. Cooper, S.J. Edgett and E.J. Kleinschmidt, reprinted by permission of Perseus Books PLC, a member of Perseus Books, L.L.C.)

performance or not being done. The diagram shows these three scores by the "x" for not done, "+" okay, and "!" needs improvement. An underpinning of this type of assessment is a focus on improving productivity especially with the high and rising cost of R&D. Cost savings and efficiencies can be made by examining processes or the work activities, which should result in more productivity. The final product is an executive summary identifying strengths and weaknesses of R&D operations and outcomes for improvement [53].

Net present value is a frequent calculation made to gauge the overall future value for individual pipeline products considering the whole life product cycle for R&D and S&M (Fig. 2.39). The key variables incorporated are costs of research, development, and marketing (launch and commercialization), the estimated probability at three transitions (research to development, development to launch, and launch to commercial success), and future earnings (discounted for inflation). A net present value (NPV) is calculated for each product in the particular review cycle, (e.g., annual) and is used with other data to help make the go-no go decisions for product advancement. For more innovative products, prediction of its value is more difficult with more assumptions lessening the reliability of the assessment [42].

Scoring of the pipeline to judge potential success of the product portfolio can be done using the company's own key corporate criteria and a standardized rating scale that broadly engages the whole organization. Individual products are scored and then ranked together to get the collective picture of the pipeline and its components. Figure 2.40 presents a sample pipeline scoring system, incorporating a scale from 0 (worst) to 15 (best) and seven criteria, such that a product score can theoretically range from 0 to 105. The seven criteria cover science and marketing, and operations and strategy: strategic alignment of the product to corporate overall science and marketing strategy, novelty in the science (MOA, product category, actions safety), market attractiveness (number of patients with disease, addressable patients with such a product, growth in patients, chronicity of therapy), competitive advantage (no classes to treat disease, first-in-class, best-in-class for a important product property), resources available to do the research (R&D), capability to produce the product (manufacturing capacity and skills), sell the product (marketing expertise, sales people), and the NPV. The ratings are quantifiable but still subjective, warranting caution in fair scoring between products with a minimum of bias. The senior team may score the products and not the team members. Let us use the fictional example of a FIPCO company that researches

Fig. 2.40. PPM Analysis: Criteria Scores for Pipeline (Copyright © 1998 by R.G. Cooper, S.J. Edgett and E.J. Kleinschmidt, reprinted by permission of Perseus Books PLC, a member of Perseus Books, L.L.C.)

and markets cardiovascular products for hypertension, infectious disease drugs for pneumonia, and neurologic drugs for eplilepsy. A product like Vytorin®, a new and more effective hyperlipidemia product, could be scored as strategy (3), science (3), market (4), competitive advantage (3), resources (3 and 4), and NPV (3), which results in a good score of "80." Another example is an antibiotic for urinary tract infections in the existing quinolone family that can be given once a day (a moderate opportunity); its ratings could be Stra-3, Sci-1, Mkt-2, Comp-2, Res-3&4, NPV-2, with an overall moderate score of 50. This company may market both products because the first one is expected to be a market leader in cardiovascular, and the second product could be approved when a gap exists in new products for the company and the sales force will have time to devote to such a product, even though it will be a smaller financial opportunity [42].

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