Getting the most out of your product portfolio
pharmafile | March 17, 2009 | Feature | Research and Development, Sales and Marketing |Â Â portfolio, productÂ
Portfolio planning should be a practical process that delivers a programme of work to take you to sunnier shores. All too often portfolio planning is an elaborate, laborious process that is carried out every few years and then slowly forgotten just in time to start afresh a few years later with a different group of managers and no doubt a different consultancy.
Portfolio planning should not be massively time and resource hungry, since it is when you have the least of these that you need it most, e.g. when a key product fails and crisis management takes over.
So, what is the most appropriate way of practical portfolio planning in a time- and resource-efficient manner? Let's take a brief look at the five key steps:
* What is the challenge ahead?
* Where do you want to be?
* What is stopping you getting there?
* What is required?
* How do you do it?
What is the challenge ahead?
You need to focus on where you are now and what you face in the future. You may be all too aware of the current situation and the issues you face, but it is important that this doesn't blind you to what lurks around the corner. The future factors that require consideration fit into three areas:
* Predetermined inevitable truths (e.g. loss of patent)
* Uncertainties that you think might be coming (e.g. pipeline product fails to get authorisation, existing key brand is challenged by NICE, new products cannibalising existing products)
* Blind spots that you don't yet know are coming (e.g. the unforeseen depth of the credit crunch)
The predetermined factors and uncertainties can be built into different possible 'futures' that the company needs to allow for if it is to a have a future-proofed portfolio strategy. Brainstorming possible futures also allows you to hypothesise blind spots that might be unlikely but devastating to the current plan. For example, the collapse of the availability of credit and funding in the current climate for biotechs may yet be felt by an industry that has become dependent on making up for failing pipeline through in-licensing. Yet would you ever have anticipated that situation two years ago? Probably not without a lot of future gazing. How these 'futures' potentially impact on the company can then be understood and the future key success factors for the company identified.
You can then apply this process one level down to assess the therapy areas that are of potential interest/opportunity. The attractiveness of therapy areas can be assessed in light of the threats and opportunities for each therapy area under the different possible 'futures'. The other axis to consider is the company's currently projected capability to compete in each area given the planned products and resources.
Where do you want to be?
Within this scope of expected future key changes, you can then clearly envisage where you want to be in that future – the strategic vision.
The vision needs to give clear guidance to the product portfolio selection process. So to be a top-10 pharma company in all major markets is good to have as a vision, but is of limited value to guiding the portfolio planning process. You need to be more specific in the strategic vision, clarifying, for example, the therapy areas you will dominate or the types of therapeutic you will focus on (e.g. biologics, small molecule, genotype-specific drugs, orphan drugs, new classes).
What is stopping you getting there?
You need to question what is it about your currently planned product range (in-license and pipeline) that is insufficient to enable you to achieve these aspirations.
If you plan to dominate certain therapy areas, are your current and future products going to work in harmony together or is their a risk of cannibalisation? Market segmentation is critical to understanding which segment is best served by which of your products, so that you can position each of your products to have its own space. The financial returns of a harmonious product portfolio strategy by therapy area can then be forecast through wrapping up the penetration by sized segment.
What is required?
By having a clear understanding of where the company can go in each therapy area, you can begin to understand what is required to get there. Some products can just be repositioned through marketing perception; others will require further clinical trials or development of health economic evidence to give them the power to cultivate a credible positioning in the target segments evaluated.
Certain segments will be identified as attractive but inaccessible with the current product range. This directs your in-licensing and clinical development teams to the target product profiles that meet the needs of the unserved segments, to allow a more dominant position across the therapy area.
How do you do it?
Once confirmed, therapy area strategies can then be translated into effective brand plans that define what you are going to say and do to develop and promote the product. By working this through, you can start to involve the wider organisation in investigating the individual elements of the portfolio plan: a detailed due diligence process.
By consolidating the costs of the proposed plans individually by brand, plus identifying the company structures and resource required to support them, you can see the financial attractiveness of not just one product relative to another, but crucially one therapy area relative to another. By then taking the net present values (NPVs) of each therapy area, you are positioned to optimise what time, resource and investment should be committed to each therapy area (given the product arsenal within it), and then how that breaks down by product.
This stepwise process is a practical way to envisage the future whilst keeping an unswerving focus on the customer segments you service, rather than being a servant to the products you have.
Alex Blyth is a senior consultant in marketing sciences at The MSI Consultancy. He can be contacted via www.msi.co.uk.
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