Question: How many alternative approaches should the firm pursue at each NPD stage?
June 4-8, 2004
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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,
From Pipelines To Portfolios
Min Ding Jehoshua Eliashberg
Pennsylvania State University University of Pennsylvania
Choice Symposium June 4-8, 2004
Outline
Optimizing New Drug Pipeline – one business opportunity
Ding and Eliashberg, 2002, Management Science
From Pipelines to Portfolios – many business opportunities
June 4-8, 2004
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Optimizing New Drug Pipeline
An Example
Bristol-Myers Squibb wants to develop a preventive HIV vaccine ...
Pre-clinical trial
NPD in Pharmaceutical Industry
• 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.
Hypertension
130 3078 2036 655 d firm
BMS Monsanto
Merck Eli Lilly
Novartis
Pfizer WarnerLambert
BMS
actual pipeline
Clinical Phase I
Clinical Phase II
Clinical
1
launch
Phase III
Alternative approaches: subunit vaccine, recombinant vector vaccine,
peptide vaccine, virus-like particle vaccine, plasmid DNA vaccine, “naked DNA”vaccine, wholeinactivated virus vaccine, live-attenuated virus, etc.
Some theoretical insights An empirical demonstration -- GlaxoSmithKline
June 4-8, 2004
2
Terms Used in Presentation
Indications
Also known as disease Each indication is considered as one business opportunity
Indication
E ($ m)
Infectious
AIDS
NSAID
Arthritis
Depression
Neuropharmacolo gical Class
Migraine
Alzheimer’s Disease
Arrhythmia
Cardiovascular Class
High Cholesterol
E[1(n1)] [1 (1 p1)n1 ]E[0 (s1 0)] n1c1
V[1 (n1 )] (1 p1 ) n1 [1 (1 p1 ) n1 ]E[0 (s1 0)]2
L1 (n1 ) 1 (1 p1 ) n1
We solve for the optimal number of approaches to be supported at each phase in development
June 4-8, 2004
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Optimizing New Drug Pipeline
One Key Insight - A Pattern of Underspending? (Ding and Eliashberg, Management Science, 2002)
Therapeutical Class
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).