Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,*,资料仅供参考,不当之处，请联系改正。,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,June 4-8,2004,*,资料仅供参考,不当之处，请联系改正。,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,June 4-8,2004,*,资料仅供参考,不当之处，请联系改正。,Outline,Optimizing New Drug Pipeline,one business opportunity,Ding and Eliashberg,2002,Management Science,From Pipelines to Portfolios,many business opportunities,Some theoretical insights,An empirical demonstration-GlaxoSmithKline,June 4-8,2004,1,Terms Used in Presentation,Indications,Also known as disease,Each indication is considered as one business opportunity,e.g.,AIDS,We use the terms“,pipeline or project,”to represent the NPD structure for a given indication,We use“,approach,”to represent a specific way(e.g.,a compound,a biological molecule)of drug development tailored for a given indication.,Therapeutical,Classes,Also known as therapeutical,areas,groups,or categories,e.g.,Anti-infective products,Each class has many different indications,We use the term“,portfolio,”to represent the NPD structure for many different indications,within or across different therapeutical classes.A portfolio has many different pipelines(or projects).,June 4-8,2004,2,Optimizing New Drug Pipeline,An Example,Bristol-Myers Squibb wants to develop a preventive HIV vaccine.,NPD in Pharmaceutical Industry,Alternative approaches:,subunit vaccine,recombinant vector vaccine,peptide vaccine,virus-like particle vaccine,plasmid DNA vaccine,“naked DNA”vaccine,whole-inactivated virus vaccine,live-attenuated virus,etc.,Question:How many alternative approaches should the firm pursue at each NPD stage?,Pre-clinical,trial,Clinical,Phase I,Clinical,Phase II,Clinical,Phase III,launch,1,June 4-8,2004,3,Optimizing New Drug Pipeline,Model Output,For each phase in development,we derived the expected reward,variance,and likelihood of having a successful drug candidate.For example,for Phase III,they are,respectively,We solve for the optimal number of approaches to be supported at each phase in development,June 4-8,2004,4,Optimizing New Drug Pipeline,One Key Insight-A Pattern of Underspending?(Ding and Eliashberg,Management Science,2002),June 4-8,2004,5,Firms Target Multiple Business Opportunities,a survey of new drug portfolios in 1450 firms on 12/31/2002,Most firms work on multiple indications.,June 4-8,2004,6,From Pipelines to Portfolios,A conventional approach to portfolio construction,Portfolio construction is the sum of pipelines.,Process:,Develop a(not necessarily optimal)pipeline for each business opportunity independently and calculate the expected value,Rank order each business opportunity,Build a portfolio by supporting those business opportunities whose expected values are above a threshold(e.g.,marginal return,IRR),Example:SmithKline in mid-1990s(HBR,1998),June 4-8,2004,7,From Pipelines to Portfolios,State of Art Practice GlaxoSmithKline,2003,Cardiovascular and Urogenital,Metabolic and Viral Diseases,Microbial,Musculoskeletal and Proliferative Diseases,Neurology and Gastrointestinal,Psychiatry,Respiratory and Inflammation,Six,Centers of Excellence(Therapeutic Class)for Drug Discovery(CEDDs),Indications Supported,In Each CEDD,9(,Stroke)and 3(ED),5(,Obesity)and 7(HIV),7(,Sepsis),2(osteoporosis)and 9(cancers),11(,Alzheimers)and 5(Irritable bowel synd.),9(,Depression),4(,Asthma)and 3(Rheumatoid arthritis),June 4-8,2004,8,From Pipelines to Portfolios,Where does the state of the art practice succeed and fail?,Succeeded:,Correctly recognized the importance of cross-project effects in structuring portfolio,Developed the necessary organizational structure(e.g.,3 tier structure at GSK),Failed:,Risk has not received sufficient attention,ENPV is the most commonly used metric.,No rigorous portfolio evaluation process and optimization model exist.,June 4-8,2004,9,From Pipelines to Portfolios,Research Objectives,Understand how risk and expected reward change as the nature of a pipeline changes.,Today:How Phase III variance and expected reward change as the degree of correlation changes,Indication level,Area level,Develop optimal portfolio,given a certain managerial objective,Today:An application for Glaxo-Smith-Kline(GKS)s Phase III subportfolio,June 4-8,2004,10,From Pipelines to Portfolios,Indication Level-Scenario,Scenario:One indication with two approaches,whose success is conditional on overcoming a common obstacle,Indication 1,Approach 12,Approach 11,p,1,:joint probability of overcoming the common obstacle in Phase III AND other obstacles related to Phase III,p,1i,:probability of overcoming the common obstacle related to Phase III,June 4-8,2004,11,From Pipelines to Portfolios,Indication Level Some Insights(Risk-Reward),Variance,Expected Reward,Variance,Expected Reward,Case 1.Low p,1,Case 2.High p,1,As p,1i,increase