Biomedical Engineering Reference
In-Depth Information
A related question is whether a pharmaceutical firm should invest more efforts
into fundamental science or be opportunistic with regard to external partnerships
and licensing while focusing efforts on the execution of portfolios as well as market-
ing new drugs. Recent trends suggest that big pharmaceutical firms are better suited
to the operational nous required for large-scale clinical trials and marketing drugs
whereas small biotechnology firms explore niche areas with a strong science-based
focus. This requires further research in terms of the balance between in-house
research and external partnerships, and how this depends on the firm's strategy.
Acquisitions, which seem to be increasingly popular, combine new drug portfolios
of the acquiring and acquired organizations and it is unclear how best to “optimize”
value from two sets of portfolios which may have significant overlap.
Various papers have looked at how to prioritize projects both as a dynamic and
static problem. One stream of work uses decision trees, whereas another stream exam-
ines strategic choices under competition. There would be value in bringing the streams
together to simultaneously consider dynamic project prioritization given competition.
In other words, pharmaceutical firms are often pursuing similar therapeutic areas and
indications in parallel, and viewing the prioritization decision as a purely internal
exercise may not bring enough external emphasis in the sense of the battle between
portfolios of firms. Theoretical work could examine this issue as it may be difficult to
empirically examine how competition affects portfolios of multiple firms.
Pharmaceutical firms are frequently changing their R&D organizational struc-
ture, ranging from centralized to decentralized units. Each camp has its advocates,
yet there is insufficient empirical evidence to conclude which approach is better, or
at least which types of firms would prosper under each structure. The relationship
between organizational structure and incremental/radical innovation appears to be
strong and requires attention so that firms can understand the optimality of the
choices they make. Additionally, understanding the relationship between the fre-
quency of change and its impact on performance is crucial as pharmaceutical firms
have to manage a careful balancing act between flexibility and stability. The trend
in portfolio management seems to favor more flexible and accountable drug devel-
opment units, and more research is needed to evaluate this approach and how it
impacts portfolio optimization.
Attention is also needed on understanding how incentives affect managers and
scientists in terms of their motivation to take actions aligned with firm interests. The
firm is often seen as a single entity deciding and executing strategies, but the reality
of multilevel hierarchical organizations executing and adapting new drug portfolios
cannot be ignored. Recent theoretical work suggests that killing projects can be
challenging, and that motivating riskier radical innovation may be more challenging
than expected. This may be one reason why smaller firms, which perhaps have less
agency issues, are able to take larger risks than large firms. The question for inves-
tigation is whether this is in fact the optimal arrangement for larger firms.
The new center for advancing translational sciences (NCATS) created by the
NIH appears to be a public-private partnership effort to promote better practices in
quickly delivering new drugs to patients by overcoming current bottlenecks (NIH
2012 ). Given the recency of the announcement (Collins 2011 ), there is no existing
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