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European Biopharmaceutical Review

Portfolio Management


Situated somewhere between classic academic research and the biotech industries, translational research institutions require portfolio management that is pragmatic, flexible, and holistic enough to reconcile high project heterogeneity, plus is able to ensure adequate funding and prioritisation of the most promising translational research areas and projects. The conversion of academic scientific discoveries into novel medicines or technologies is playing an increasingly important role in the development of new therapeutic approaches for the 21st century. A large proportion of this activity is currently conducted by translational research institutions or departments, placing them somewhere between classic academia and the biotech industry.

The ever-increasing complexity of the science required to develop truly novel and useful therapeutics and diagnostics has led to high demand for institutions that operate in this high-risk environment, from which many biotech companies and larger pharmaceutical companies shy away. The unique positioning of the translational institute between academia and established biotech companies also allows for attractive funding mechanisms through technology transfer or associated biotech companies. Funding of translational research and institutes continues to grow rapidly. The announced funding increase for translational research in the UK – £775 million over five years a 30 per cent increase over the previous five years – and the enormous investment into technology and translational research in New York – about $2 billion to develop a new applied sciences/ translational research campus – present just two such examples (1,2). The number of top-tier academic institutions that have translational research or technology transfer units, or even small biotech spin-offs, has risen from about 20 to over 250 over the past two decades (3).

Project Funding and Evaluation in Academia and Translational Institutes

The funding mechanisms for a typical academic research institution differ from those with a more translational focus. At a purely academic institution, individual researchers are required to obtain their own grants, thereby creating essentially autonomously funded units. Scientific quality is the gold standard for project evaluation and the basis for grant applications and funding processes: peer review groups decide on project funding according to the presented data and future development plans. The ongoing, perpetual nature of academic research facilitates this style of decision making; publications mark milestones and lead to follow-on experiments and questions.

In contrast, most translational institutions (at least partially) fund research activities and projects from organisational budgets. While researchers at translational centres are still expected to acquire outside, grant-based funding for their research, the additional funding support from the institution generates a hybrid mechanism for projects and programmes. While this provides security and promotes cross-departmental, cross-functional collaborations, it also creates a situation in which resources need to be distributed amongst the different projects and trade-off decisions need to be made. This requirement to allocate scarce resources amongst (often) too many projects requires portfolio decisions and prioritisation. In short, a systematic process to review and prioritise projects, that is based not only on scientifi c merit but also on technical feasibility and commercial attractiveness is required.

Portfolio Management in the Pharmaceutical Industry Portfolio management, the strategic management of projects in a company’s R&D and marketed portfolio, has become common practice in the pharmaceutical industry (4). While the specifi c approach followed varies between companies, the underlying principles are very similar. On a project level, a review process starts with a clearly defi ned project and product vision (for example, a target product profile) and a roadmap of the development path. On that basis, projects are evaluated along the three dimensions of risk, return and strategic fi t. This creates a basis for prioritisation, resource allocation and strategic decision-making at a portfolio level.

Project reviews in the pharmaceutical industry often have a strong quantitative focus, with project net present values (NPVs) based on sophisticated forecasts and developmental cost projections. This generally works well when analysing projects in later stage development and thereby with lower degrees of uncertainty. However, such a numbersdriven quantitative review of early stage projects is often misleading, due to the high degree of uncertainty around the project, the market and the competition. In this environment, a qualitative or semi-quantitative review is more logical. Such a review should focus on defining a competitive product vision and understanding the key drivers of commercial potential, in addition to a thorough review of technical and conceptual risks (5).

A Customised Approach for Translational Research

Translational research institutions face portfolio decisions similar to those of the pharmaceutical industry; however, just copying the processes of the pharmaceutical industry will not suffice. Portfolio management needs to support both the academic research goals, as well as the translational, productdriven objectives of the institution. The implementation of a management tool in an environment that is creativityled has to be done with great caution. There are many examples from various industries where overly bureaucratic structures and processes have suffocated the inventive spirit that was the organisation’s lifeblood. A great deal of cultural sensitivity is required, but the goal of a structured portfolio evaluation process must be clearly stated and communicated – there is little value in ‘dancing around the issues’.

The structures of academic research projects are characterised by subprojects at varying stages and with no defined end-points. This inherent lack of clarity on what actually constitutes a project poses a fundamental challenge to portfolio management. In such a setup it is extremely difficult to compare projects and to obtain an even basic overview of the portfolio. The sheer number of (sub-) projects, and the fact that project goals are often a moving target, require a very pragmatic and simplified approach to portfolio analysis when compared to the pharmaceutical industry.

Most researchers in translational institutes are used to the peer review funding mechanisms of academia. However, the funding structure at translational institutes is usually a combination between this and institutional funding. While this provides funding security, it also results in a certain degree of operational independence that complicates portfolio management decisions, such as prioritisations and resource allocations.

Due to these specific reasons the portfolio management approach of the pharmaceutical industry needs to be adapted for use in translational institutes.

Translational Project Review Approach

In collaboration with one innovative translational research institute – CIMA, Pamplona, Spain – the following approach to portfolio management was developed, which has significantly enhanced the strategic focus and the portfolio’s translational potential. The portfolio review process can be broken down into the following four steps:

Step 1: Portfolio Categorisation

Portfolios of translational research institutes are usually very heterogeneous. In one example, the portfolio comprised more than a hundred research projects and subprojects that were often ill-defined and at very different stages of development. As a basis for the portfolio review, all projects had to be summarised and categorised according to their respective developmental stage: basic research projects, early translational projects or advanced translational projects. A set of comparable, yet slightly different criteria is used for the review of projects from the different developmental stages. This ensures a fair and adequate analysis of projects with different maturity and helps focus review efforts.

Step 2: Definition of Project Vision

Defining the product vision and identifying which project and subprojects contribute to a translational programme are essential. This ensures that the project review focuses on the correct and relevant scientific concept, market, and competition. In many instances, only a small fraction of projects have a clearly defined translational vision at the start of the portfolio review. Defining the product vision for all advanced projects helps to focus the review efforts, refine project goals and provide guidance for the next steps.

Step 3: Project Reviews

Based on the defined product visions and stage of development, projects are reviewed in four dimensions:

  • Scientific concept: analysing the scientific merit of a project goes beyond the scope of a pragmatic approach. It is, however, important to review the scientific translational approach and vision for the project with respect to the therapy area, indications, apparent feasibility and degree to which the translational approach is rooted in an established scientific concept. A quantitative summary of the scientific literature and ongoing developmental projects, as well as a look at the marketed products, provides a good overview as to whether the novel project concept is groundbreaking or established. In summary, the balance between novelty and project risk, product vision, and confidence in the scientific approach are captured and evaluated.
  • Commercial potential: the development of products that can be commercialised is a key goal for translational institutes and therefore a critical review dimension. For most projects, the addressable patient population, the overall market size for the indication in question, and the average treatment price are reviewed to assess the commercial potential of the targeted market segment and its accessibility. The nature, mission and size of the institution determine what type of market segment and target population may be attractive, thereby affecting the overall evaluation of the project.
  • Competitive pressure: analysis of the pipeline and research and treatment trends for the targeted indication provides a comprehensive picture of the competitive landscape. As part of the analysis, the differentiation potential of the translational project is defined and evaluated.
  • Patent landscape: a pragmatic, quantitative approach is used to gain an insight into the patent landscape by analysing the total number of patent citations and the history of patent publications. The total patent citations give an indication regarding the freedom to operate by analysing the competitiveness of the field and major patent holders. The patent timeline provides insights on the maturity and activity in the field. However, it is important to note that this purely quantitative analysis can by no means substitute for the in depth review of the intellectual property landscape required later in the commercialisation process.



Step 4: Portfolio Analysis and Overview

The multitude and heterogeneity of portfolios requires a pragmatic approach to summarising the results of the project analysis. A simple summary of each dimension into one of three categories – ‘clarity’, ‘OK’, ‘promising’ – can be used to consolidate and visualise the results and provide the basis for portfolio discussion (see Figure 1). While this summary method is just one way of visualising the portfolio, it highlights the benefits of a pragmatic and structured portfolio review. Generating such a portfolio overview and defining the goals of the individual projects and departments has a number of tangible benefits for the overall productivity of the institution:

  • Comparability of projects and therapy areas. Being able to compare and prioritise projects or therapy areas to one another is a critical aspect for the management of such institutions (see Figure 2). Portfolio discussions provide a platform for a structured dialogue that identifies strengths and weaknesses of the translational and academic activity of the institution and drives project prioritisation, affecting funding and resource decisions. 
  • Identify synergies and redundancies. A structured project overview allows the identification of synergies or redundancies within the portfolio. Projects from different therapy areas or from different disciplines may often have synergies that could lead to scientific or translational breakthroughs, but these are missed due to lack of communication or unclear definition of product vision. Conversely, the overview may also identify areas of redundancy, which may free up resources for more promising activities.
  • Recognise commercial opportunities. A clear portfolio overview may identify additional commercial opportunities. Analysis of the different dimensions for each project may identify opportunities that previously went unnoticed, or where small changes in product vision and direction may open up new business opportunities (spin-out, internal development or licensing).



Key Success Factors for Implementation

The approach described here highlights some of the critical success factors for a portfolio review process at a translational institute. Strong leadership is required from the functional leaders, institutional senior management and the portfolio group. Senior personnel from all three groups must ensure that all aspects of the review process are conducted with the highest quality of information and data and within the given time.

The review approach also needs to be pragmatic so that it can be carried out for a large number of projects in a limited amount of time, while still generating insights and the basis for a portfolio overview. Although a common structure needs to be the basis for all project reviews, the approach must also be flexible with somewhat broad review dimensions to allow for different stages and visions of the projects. The flexibility also ensures that scientific freedom and creativity are not limited by the process. Lastly, the criteria for the review must be objective to avoid misinterpretation and favouritism.

The buy-in of the researchers and functional leaders is crucial for the success of any portfolio review, as it ensures that information is shared in a free and timely manner, and that discussions are open and productive. This buy-in is usually achieved by engaging the relevant experts at various inflection points during the process, such as during the initial portfolio organisation and product vision workshops.

A portfolio review has significant resource requirements and is best performed and driven by a dedicated portfolio group. This ensures that the work is carried out in a thorough and timely manner and that it does not interfere with the research activity of the scientists. The portfolio function can be performed by internal or external personnel, as many aspects of the described process can mostly be done remotely.

Finally, an external perspective is often beneficial during a portfolio review, as it is often more objective and not bound by internal alliances or politics. Furthermore, external experts likely have additional information or experience in portfolio management and can provide additional insight and information.


Looking at all the projects in the portfolio in a unified way allows a strategic view of the overall translational research activities. It helps to identify areas of strength or weakness, and potential synergies or necessary project re-alignments. Additional opportunities and projects that may need to be de-prioritised (from a translational project standpoint), despite their high scientific merit, can also be detected.

Ultimately, using a unified approach for the review of the projects in a portfolio provides a common basis for strategic decisions. With the growing importance, but also growing complexity, of translational research projects, strategic decisions regarding funding and prioritisation will become ever more crucial. Establishing a review process that is pragmatic, objective, informative and holistic will provide the foundation for this decision making process.

Using this approach, a portfolio review of more than 100 projects can be conducted within a few months by a small dedicated team. The portfolio should be reviewed and focused, project prioritisations made based on objective, data-driven project reviews, and the commercial potential of many translational projects uncovered. The evaluation and focusing of the portfolio can support an institute in funding and commercialisation initiatives and highlight the institution’s commitment to excellence in the field of translational medicine.


  1. Mann A, New Organisation pledges scientific expertise for viral outbreaks, Nature Medicine 17(4): p394, 2011
  2. New York City Press Release, The Economist, pp35-36, 7th Jan 2012, available at article/SB10001424052970204879004 577107190097493490.html?mod=wsj_ share_tweet
  3. Testimony of William T Tucker, PhD, MBA Executive Director, Research Administration and Technology Transfer University of California, Office of the President Before the United States House of Representatives House Committee on the Judiciary, Subcommittee on Courts, the Internet, and Intellectual Property Hearing on HR 1908, ’The Patent Reform Act of 2007’, April 26, 2007
  4. Aurentz et al, Revitalising portfolio decision-making at Merck Serono SA – Geneva; Journal of Commercial Biotechnology 17(1): pp24-36, 2011
  5. Catenion Commentary: Recombinant portfolio management – recognizing and enabling innovation, available at www. comment_3_pm_1207.pdf

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Jan-Philipp Kruse is an Associate of Catenion. Jan-Philipp has worked on a number of strategic client engagements for several large and mid-size companies in the life sciences. His focus has been on market and product evaluation and forecasting, portfolio management and strategic partnering. He also has experience in market access and marketing, as well as on the various aspects of sales force organisation. He holds a PhD from Columbia University, where he studied the regulation of p53, a major tumour suppressor. Prior to his graduate studies at Columbia, he studied Biochemistry at the University of Bristol, and gained industry experience during a one year internship in the Bioprocess R&D department at Merck & Co in New Jersey.

Markus Thunecke is a founding Senior Partner of Catenion. Markus has helped numerous clients around the globe in the pharmaceutical and medical products industries create competitive advantage. In addition to his work on strategy, Markus specialises in developing leading-edge analytical tools and combining them with organisational development capabilities. Markus is the developer of a number of Catenion's proprietary tools for portfolio management and risk assessment. In recent engagements, Markus has helped clients develop and realign their R&D strategies, review their discovery and development portfolios, and create organisational models that foster innovation. He holds a PhD in Biochemistry from the University of Heidelberg, where he generated transgenic animal models for Alzheimer's disease.

Jesús M Hernández, MD, PhD is currently the Chief Operating Officer at Center for Applied Medical Research, University of Navarra (CIMA). Prior to this role he served as Vice President of Clinical Research and Medical Affairs in Eli Lilly and Company, where he held other leading positions in R&D. He is a specialist in Microbiology and Infectious Diseases and received a business education at IESE Business School, London Business School and Harvard Business School.

Jan-Philipp Kruse
Markus Thunecke
Jesús M Hernández
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