Portfolio Harmony in five easy steps
pharmafile | February 5, 2010 | Feature | Sales and Marketing |Â Â product portfolioÂ
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 and 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’s the challenge ahead?
• Where do we want to be?
• What’s stopping us getting there?
• What’s required?
• How do we do it?
• What’s the challenge ahead?
We need to focus on where are we now and what we face in the future. However, we are commonly all too aware of the current situation and the issues we face, but that fixation can blind us to what lurks around the corner.
The future factors that require consideration that may come into play fit into three areas:
1. Predetermined inevitable truths (e.g., loss of patent)
2. Uncertainties 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)
3. Blind spots you don’t yet know are coming (e.g. the unforeseen depth of the credit crunch).
The predetermined 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 future scenarios also allows us to hypothesise possible 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 we 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.
We can then apply this process one level down to assess the therapy areas that are of potential interest/opportunity. Their attractiveness 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 companies currently projected capability to compete in each area given the planned products and resources.
Where do we want to be?
Within this scope we can clearly envisage where we 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, such as in which therapy areas you will dominate, or the types of therapeutic you focus on (e.g., biologics, small molecule, orphan drugs, new classes etc).
What’s stopping us?
Question what is it about our currently planned product range (in-licence and pipeline) that is insufficient, in order to enable us 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 – listed by therapy area – can then be forecast through wrapping up the penetration by sized segment.
What’s required?
By having a clear understanding of where the company can go in each therapy area, we begin to understand what is required to get there. Some products can just be repositioned through marketing perception – but 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 we do it?
Once confirmed, therapy area strategies can then be translated into effective brand plans that define what we are going to say and do to develop and promote the product. By working this through we can start to involve the wider organisation in investigating the individual elements of the portfolio plan: a detailed due diligence process.
By consolidating costs of the proposed plans individually by brand, plus identifying the company structures and resource required, we 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 we 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 is a practical way to envisage the future while keeping a focus on the customer segments you serve, rather than being a servant to the products you find yourself with.
Alex Blyth is a senior consultant in marketing sciences at pharmaceutical consultancy firm, The MSI Consultancy. He can be contacted via www.msi.co.uk.
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