The pharmaceutical industry is an incredibly complex and complicated field, with an average company having to navigate regulatory requirements, multiple concurrent projects, and market risks. Project portfolio management is a methodology that helps pharmaceutical companies achieve desired outcomes by doing the right projects at the right time.  

In this article, we’ll explore what portfolio management in the pharma industry is, how to implement it, and what are the best practices associated with it.

Key takeaways:

  • Portfolio management is a strategic approach to managing projects and resources that allows pharma companies to analyze, plan, and execute their complex portfolios more efficiently.
  • Effective pharma PPM combines project prioritization, resource capacity planning, scenario analysis, and portfolio optimization to ensure critical initiatives receive the right expertise and funding at the right time. 
  • Pharmaceutical companies can expect a better visibility into constrained resources, reduce bottlenecks across departments, and improve the predictability of project delivery. 
  • Unique challenges of the industry lie in the inherent complexity of a typical pharma portfolio, long timelines in both development and regulatory compliance, competitive pressures, confirmation bias, and risk of market disruption.
  • Best practices include bias mitigation strategies, formulation of structured reviews, discontinuing low-impact high-risk projects early, and using multi-project management software for visibility and proactive planning.

What Is Pharmaceutical Portfolio Management?

Project portfolio management in the pharmaceutical industry is a formalized approach to managing the complex pharma portfolios with long product lifecycles and compliance projects which aims at reaching strategic business goals more effectively by implementing the right projects.

This process includes project selection in alignment with strategic objectives, prioritization, planning project execution according to resource constraints, and monitoring it to ensure timely delivery and business value maximization. 

Benefits of Pharmaceutical Portfolio Management for Pharma Organizations

Some organizations can run without a structured enterprise project portfolio management approach, but their processes are not going to be as efficient. Here are the main benefits of adopting PPM in the pharmaceutical industry.

  • Improved portfolio visibility. Many pharmaceutical companies have a set of diversified products and resources. Adopting a structured approach lets you account for all internal processes in a centralized system.
  • Improved understanding of resource constraints. PPM places more focus on resource constraints, allowing for understanding resource capacity, and more precise project planning.
  • Optimized resource utilization. Portfolio management allows pharmaceutical companies to optimize the use of available resources, resulting in reduced lead times and increased throughput.
  • Improved strategic alignment. Project prioritization processes allow to align the portfolio with the company’s strategic interest.
  • Maximizing business value. Optimizing the pharmaceutical portfolio allows businesses to invest resources into project portfolios with an optimal business value potential.
  • ROI improvement. As a result of all these factors, implementing project portfolio management in pharmaceutical companies often leads to a higher return on investment on most projects.

Key Components of Pharmaceutical Portfolio Management

Portfolio management in the pharma industry is a complex, multifaceted process. Its main components are:

  • Portfolio planning. PPM involves analytics, forecasting, and strategic planning of company activities with the aim of achieving long-term goals.
  • Project prioritization. A big part of the process is developing prioritization criteria and applying them across the portfolio to focus on the highest priority projects.
  • Strategic alignment. Implementing PPM practices allows pharmaceutical companies to align their efforts with long-term strategic vision.
  • Resource management. A core component of PPM is managing resources involved in projects, planning projects according to resource capacity, and resolving bottlenecks.
  • Risk management. PPM allows for spotting operational risks like bottlenecks and resource conflicts early on and managing them.
  • Budget management. Resource management allows for more precise budgeting as resource costs are a large part of the budget.
  • Balancing R&D and production. In the pharmaceutical industry specifically, a large part of the portfolio management process is managing resource allocation between production and research and development.

Pharmaceutical Portfolio Management Process in 7 Steps

Managing a portfolio of pharmaceutical projects is a complicated process, but it can be divided into seven major steps. Here is a brief overview of each of them.

Map out strategic goals

Before you start creating a pharmaceutical portfolio management strategy, you need to fully understand the larger company goals. To do this, typically you can familiarize yourself with the company’s strategic documentation or conduct a series of interviews with C-level executives.

Inventorize the portfolio

The next step is taking inventory of your portfolio. Gather all of the available data on projects that are currently in execution and the resources you have available. If some data is stored in different departments, you will have to find a way to consolidate it.

For best results, integrate all of the necessary data into your portfolio management tool and automate data import.

Prioritize projects

With this data, you can start prioritizing projects to understand which should be left in the portfolio and which can be postponed. There are multiple approaches for project evaluation, including using analytical tools like the Eisenhower matrix, Value-Risk matrix, or different advanced scoring models.

Typically, you’ll have to develop a set of evaluation criteria for the type of risk matrix you’re using, and evaluate each project across all criteria, creating a uniform score that can be compared between projects.

Some projects, like governance and compliance projects, can be excluded from prioritization as they are necessary for the company to function and their usefulness can’t be measured by the same metrics as market-oriented projects.

Read more: How to Prioritize Projects in a Portfolio: Benefits, Steps, and Best Practices

Analyze resource constraints

Project priority data is not the only factor for deciding which projects should be in your pharmaceutical company’s portfolio. Another important piece of the puzzle is data about resource constraints.

The amount of available capacity your company can dedicate to projects in the portfolio and resource demand coming from different projects determine how many initiatives you can realistically fit into your portfolio.

Use capacity planning software to compare available capacity with current project load. This will give you an understanding of how many additional projects you can deliver.

Rationalize the portfolio

Sort the portfolio of projects based on data on project priority and business value projections. Sorting them hierarchically and comparing that list to your company’s resource capacity gives you an understanding of which projects can realistically be left in the portfolio at the time, and which can be postponed to save resources for the more important ones.

Read more: What Is Portfolio Rationalization? A Guide to Streamlining Your Business Portfolio

Plan resource allocation decisions

Allocate resources to projects and tasks based on:

  • Resource availability.
  • Task priority.
  • Task interdependencies.
  • Skill match between resources and tasks.

To balance your portfolio and ensure that you’re planning the number of high-priority projects that are optimal for your resource constraints, you can use scenario simulation software. It gives you the ability to experiment with project acceptance and resource allocation decisions in a simulated environment.

Run a few simulations and find the scenario that allows you to execute as many projects as possible without overloading the company resources.

Monitor portfolio performance

Monitor portfolio performance continuously to ensure projects remain aligned with planned timelines and budgets. When deviations occur, reassess timelines, priorities, or resource allocations to restore alignment. 

Read more: 10 PMO KPIs: Essential Metrics to Drive Project Portfolio Performance

Review portfolio management approach regularly

The final point that should be mentioned is the need to review portfolio management practices. Implement a schedule for reviewing your workflows at least quarterly and do an immediate reassessment if you find a significant issue caused by a flaw in your approach.

Challenges in Pharmaceutical Portfolio Management

The pharmaceutical industry has a set of challenges tied to its complicated nature. Here are the main ones.

High portfolio complexity

One of the main challenges in the pharmaceutical industry is the inherent complexity of the portfolio a typical company in this industry is dealing with. With multiple concurrent projects and the need to balance the company resources between R&D portfolios, governance, and production creates a difficult situation to manage.

That’s why a successful pharma company needs to pay more attention to portfolio management techniques.

Resource conflicts

Given the high complexity of an average pharmaceutical portfolio and a limited pool of resources to choose from, resource conflicts tend to arise often. When projects compete for resources, they become overloaded, which leads to bottlenecks and delivery delays.

Fixing this often comes down to setting priorities straight across the organization, ensuring that everyone is on board, and analyzing resource load to ensure that no resource is overloaded.

Long timelines

Drug development is not a thing that’s done overnight. It might take years of trial and error to take it from the initial hypothesis to a finished marketable product. This makes the process of managing a portfolio of projects in the pharmaceutical industry more challenging as you need to account for multiple factors when making decisions on project acceptance and deal with significant risks.

The same goes for regulatory approval, which can take plenty of time before a product is approved to enter the market.

Competitive pressures

The pharma industry has a tightly packed market, and in every niche, there are dozens of competitors trying to create a better product. This puts additional pressure on decision making.

Risk of disruption

On top of the competition, there’s always a risk of disruption from generics and analogous products. This places the need to do a lot of market research before deciding whether to proceed with a project or not.

Confirmation bias

A problem that specifically affects R&D and drug trial projects is confirmation bias, and a related concept of champion bias.[1] These cognitive biases are often present in testing and clinical trials and lead to picking only the data that supports your hypothesis, ignoring data that contradicts it.

This bias has a chance of leading to accepting projects that are unrealistic and wasting resources and budget as a result. Successful pharma companies need to find a way of dealing with the bias.

Key Strategies for Pharma Portfolio Management    

The pharmaceutical industry is a hard one to manage. Here are a few portfolio management strategies employed by the market leaders based on McKinsey research.

Discontinue projects early

The research shows that market leaders discontinue a large part of their projects early on. In a period between 2018 and 2023 most companies that were surveyed increased the number of projects that were cut in the initial phases or clinical studies.

This approach, if founded on concrete data, can save a lot of resources and funds for a pharma company, as it supports investing only in projects that have higher chances of success, be it in terms of drug effectiveness or its market success.

Read more: Project Portfolio Optimization: A Guide to Maximizing Business Value

Balancing specialization with breadth

Many leading companies are also typically focused on one type of medicine or one therapeutic area. It makes sense to specialize, sometimes, quite narrowly, as existing experience in one field will create more competencies within the company over time and lead to better hypotheses and better outcomes.

Some companies also extend their research to tangential fields where their expertise can help improve results, or try their hand at new potentially promising areas of research. Balancing your portfolio between the two options should be a strategic choice based on your investment possibilities and existing competencies.

Structured reviews

Successful pharmaceutical companies employ a set of formally structured reviews to obtain data on project feasibility. You need to create a review workflow and reassess it periodically to ensure it does its job well.

Bias mitigation strategies

Finally, to avoid confirmation bias disrupting your understanding of the portfolio, you need to employ a set of bias mitigation strategies. Typically, this involves increasing the role of data in the decision making process, creating double-blind studies, or implementing AI-first analytical systems.

Consistent continuous monitoring

Monitoring progress of projects in the pharmaceutical portfolio allows the management to learn about problems in project delivery early on and take the necessary steps to fix them. If you see that one or more projects are at a risk of being delayed, investigate to find what is behind it.

In most cases, delays are caused by resource overload. To fix it, you’ll need to find the reason behind the overload and reschedule projects with lower priority to free up resources to perform well on the more important ones.

Pharmaceutical Project Portfolio Management Software

Portfolio management in the pharmaceutical industry requires specialized software. Here is what that software can do for you on an example of Epicflow.

  • Visualize the portfolio. View all the projects and their status in one place, the pipeline and dashboard.
  • Plan projects realistically. Use capacity planning software to plan projects with resource constraints in mind.
  • Utilize available resources most effectively. Allocate resources to the most appropriate and high-priority projects and tasks.
  • Manage bottlenecks. Find overloaded resources and resource groups and use workload balancing to improve their productivity.
  • Scenario modelling. Use what-if analysis to predict how changing projects affects the portfolio as a whole.
  • Automatic portfolio optimization. Epicflow AI-based Portfolio Optimizer can automatically arrange projects in the portfolio  based on resource constraints and business value.

Book a call with our team to learn how Epicflow can help your pharmaceutical organisation.

Case Studies: Successful Pharma Portfolio Management

Let’s look at an example of a successfully implemented project portfolio management in the pharmaceutical industry.

VieCuri is a clinical teaching hospital with 3,000 staff and five clinical locations. With that large number of resources, and many ambitious goals, the company struggled with:

  • Understanding how many people are needed to start a project.
  • Predicting how starting a new project affects the portfolio as a whole.
  • Lacking the planning capabilities to predict when 350 projects in the backlog can be handled.

After implementing Epicflow, the company was able to:

  • Prioritize projects by urgency.
  • Balance between project priority and budgetary demands.
  • Project future resource needs and resolve conflicts before they arise.

References

  1. Linn Bieske, Maximillian Zinner, Florian Dahlhausen, Hubert Trübel, Trends, challenges, and success factors in pharmaceutical portfolio management: Cognitive biases in decision-making and their mitigating measures, Drug Discovery Today, Volume 28, Issue 10, 2023, 103734, ISSN 1359-6446, https://doi.org/10.1016/j.drudis.2023.103734. (https://www.sciencedirect.com/science/article/pii/S1359644623002507)

Frequently Asked Questions

How project portfolio management improves business results in the pharmaceutical industry?

PPM can positively impact business results in the pharma industry by providing a centralized source of truth for project and resource data, analytical and forecasting capabilities, and largely improving the quality of project planning and execution.

How do pharmaceutical companies manage their drug portfolios?

In pharma product portfolio management, pharmaceutical companies use data on trials, market share, and market potential of drugs in their portfolio to understand which are worth investing into and which should be discontinued.

What tools are used in pharmaceutical portfolio management?

Primarily, you’d use multi-purpose portfolio management software like Epicflow. Tools like these help you consolidate all data related to projects and resources, analyze it, plan project execution with resource constraints in mind, and ensure value delivery

How does AI help pharmaceutical portfolio management?

AI can be integrated with portfolio management software to ease the complexity of decision making and to analyze vast amounts of data better. In Epicflow, for instance, AI is currently used in a virtual assistant system and in portfolio optimization, allowing to automatically sort the portfolio, leaving the highest priority projects that can be executed under the current resource capacity.

What is portfolio management maturity in the pharmaceutical industry?

Portfolio management maturity is a scale that measures how complex are the portfolio management processes in a company, ranging from the absence of a formalized approach to a formal, documented, integrated, and constantly reviewed process. Pharmaceutical companies should strive to reach the high level of maturity as the complexity of their portfolios requires a higher degree of professionalism.