The Case for a Portfolio View

Finding new sources of value in bio/pharmaceutical products, services and operations is a key executive challenge. Taking a portfolio view of how products are developed, brought to market and managed over their lifecycles offers viable solutions. Consider two situations:

Case #1: Through a scientific breakthrough, a mid-sized bio/pharmaceutical firm discovers a biologic representing a new way to control obesity. While plans are underway to develop the compound in a program of clinical testing, the firm is also negotiating to purchase another company with two late-stage products, each of which is designed to treat type 1 and type 2 diabetes. Over the next five years, how can the firm best combine the promise of three potential blockbusters so that patients, physicians, payers and other customers could benefit from them while its shareholders reap the highest possible returns?

Case #2: A large pharmaceutical firm known for developing innovative cardiovascular (CV) treatments acquires a firm with a promising line of next-generation, early-stage compounds, some of which would launch in the same indications as its in-line brands, while others would represent novel, first-in-class treatments. Over a five-year window after the acquisition, there is a high chance that the combined company would launch four new products while continuing to manage the lifecycles of eight in-line products. How would the firm best manage this portfolio of 12 products so that opportunity was maximized and its customers—patients, physicians, payers and institutions—benefitted from products meant to address a wide variety of CV conditions?

The Portfolio View

In these situations, building a portfolio approach into the drug development continuum has advantages such as:

Streamlining potentially disparate clinical trials for compounds in a portfolio, such that compound-specific trials provide synergistic results that complement each other. Devising trials that provide complementary data can also reinforce distinct positions for two or more potential products in the treatment paradigm.

In Case #1, this implies designing clinical trials that focus on developing a comprehensive evidence base involving patients diagnosed with type 1 diabetes, early-stage type 2 diabetes (and pre-diabetes), moderate to severe type 2 diabetes and obesity. Positioning its three compounds in the portfolio at distinct, non-overlapping points along the continuum of diabetes care (which are based on outputs from complementary trials conducted in parallel that facilitate design and execution of synergistic portfolio development) ensures that the compounds are commercialized effectively under a powerful, global umbrella positioning. Each brand would derive parts of its positioning from elements of the portfolio’s clinical locus, while retaining specific clinical differentiators of its own.

Generating a wealth of clinical outcomes that support the totality of benefits derived by using a portfolio of brands from the same firm. A portfolio approach provides opportunities to design controlled, multiple-armed studies that generate evidence databases, which can be mined for comprehensive proof of the outcomes-related benefits of using a chronic care portfolio across several types of diagnosed patients.

The portfolio of compounds cited in Case #1 aims to establish significant improvement in reducing CV- and kidney-related comorbidities commonly associated with pre-diabetes, type 2 diabetes and obesity, and a reduction in associated costs to payers. Collectively, such evidence provides a comprehensive value base for convincing managed care that products offered in the portfolio need to be covered for maximum combined access, rather than being forced into competing one entity at a time against branded alternatives.

Providing a rational basis for allocating developmental costs and ensuring effective resource utilization. Designing and conducting clinical trials under a portfolio approach potentially realizes efficiencies in significant cost drivers such as patient recruitment, global representation, trial duration, trial complexity and the number of trials necessary for a successful new drug application. Designing trials with complementary objectives aimed at obtaining a range of synergistic data for multiple products sharing one or more patient-focused clinical objectives could lead to internal organizational efficiencies. These efficiencies can pool required scientific, regulatory and commercial development resources into smaller workstreams than necessary for single, disparate brands.

A portfolio view offers firms a variety of benefits in the realm of commercialization, including:

Consolidating seemingly different paths to laying the commercial foundation for multiple brands in the portfolio. A well-founded portfolio serves similar physician specialties at multiple care sites. Developing portfolio level segments, understanding physician prescribing processes and developing portfolio level targeting priorities can infuse marketing strategies with common purpose and efficiency.

In Case #2, such objectives are facilitated by conducting systematic portfolio level analyses that result in integrated market maps defined by segments of cardiologists and their patients in each region of interest—with measures of market value imputed to combinations thereof. Such maps provide the basis for setting sales and marketing priorities for decisions impacting portfolio-driven targeting, sales force sizing and marketing mix allocations. No longer is it necessary for costly resources to be spread inefficiently over multiple brands targeting similar specialties and patient segments. A portfolio view offers the potential to streamline strategy and tactics across brands by recognizing common commercial purpose.

Enabling pricing and market access strategies that offer win-win propositions to distinct customer segments. One advantage of this approach to pricing multiple brands and shaping their market access is the ability to construct creative tradeoffs between specific brand characteristics, such as time in market, perceived strength of clinical data and availability of outcomes information with price to customer.

In Case #2, a firm can balance terms of sale to customers such as payers, hospitals and long-term care facilities so that relatively new brands in the CV portfolio with distinct and proven benefits are available at attractive prices contingent upon continual concomitant purchase of other, mature brands in the same portfolio that are facing patent expiry and/or stiff competition. Setting prices with key customer segments can assure wider access for multiple brands from the same firm while increasing trial potential for new brands, sustaining patient loyalty to mature brands and enhancing the firm’s equity with customers as a provider of a wide range of proven brands in the CV space.

Offering significant opportunities to improve commercial operations. A portfolio approach helps structure decisions about which compounds or in-line products may be acquired or divested to bolster a firm’s current commercial position. Also, operational improvements in how the firm’s commercial organization functions are apparent as never before.

In Case #2, a portfolio approach suggests developing marketing messages that promote cross-selling. Messages are developed so that two or more brands are viewed as complementary to patient well-being across the CV chronic care continuum. Medical affairs are aligned through the development and execution of value propositions that leverage academic learning on multiple CV conditions in the service of a patient’s condition.

Portfolio identity is reinforced through a highly trained sales force that addresses the benefits of treating the totality of impact from CV disease and its adverse effects through the use of distinctly positioned, multiple brands from the same firm. A firm can be seen by its customers as the “cardiovascular” company—with all its benefits—not the least of which is setting the stage for rapid gains in market share within the CV space, compared to the status quo of marketing single brands.

Sidebar: 5 Steps to Creating an Effective Portfolio View

1. Understand internal and external scientific perspectives on developmental compounds to gauge the extent to which inherent promise can be translated into a meaningful portfolio, if at all.

2. Assess commercial viewpoints on the feasibility of purchasing a mix of compounds and/or in-line brands as a portfolio, especially in terms of providing access, inducing utilization and sustaining patient adherence over a sufficiently long time.

3. Develop a business case for the portfolio(s) of interest, especially along the lines of relevant customer segments and their buying processes, profiles of patients that may benefit from the portfolio, possible pricing and market access strategies, and integrated positioning platforms that establish the substantive value of a portfolio compared to its constituents taken one at a time.

4. Model key business measures and metrics that will enable rational decisions about the feasibility of a portfolio to generate profits, including assessing costs associated with development, commercialization and lifecycle management, as well as predicting top line forecasts of portfolio performance under a range of practical commercial strategies in the markets of interest.

5. Infuse the corporation with a culture that strives to realize the potential in developing and marketing entire portfolios of products that aim to serve a continuum of patient and provider needs over a lifecycle of one or more chronic diseases—thereby aligning the corporation purposefully with the noble mission of serving the sick in as best a way as possible.

  • Sanjay Rao

    Sanjay K. Rao, PhD is Vice President in the Life Sciences practice at CRA International. Since 1990, Sanjay’s projects have impacted product and portfolio development strategy, clinical trial investments, pharmaceutical brand development, new product commercialization, clinical and geographic market development, sales force design and optimization, product lifecycle management, and new product and portfolio pricing, access and evolution strategies. Sanjay is regarded as one of the leading strategy consultants in the global bio/pharmaceutical industry.


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