2011_10_20_slide-deck_AZ_SB6

Sophisticated Portfolio Management
Techniques: supporting the backbone
of the industry
Dr. Stefan Busch
VP Strategic Planning and Portfolio-Management
AstraZeneca GmbH - Germany
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portfolio management techniques2
Title of Contents
1. performance of the pharmaceutical industry (PI)
2. new PI and drivers for portfolio-managment
 focus on core competences
 society`s voice into R&D
 diversification or ...
 ...forward integration
 new business model
3. marketing company portfolio management
 basics
 identify, prioritize, understand – the marketing company consultation model
 interpret and recommend – the eNPV-market access grid
 the composite of resource allocation - pipeline projects and marketed products
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| Title of presentation | 00 Month Year (Go Header & Footer to edit this text)3
Performance of the
Pharmaceutical Industry (PI)

4
PI march of consolidations ...
• organic growth – modern PI evolved from the growth of national, family-owned business
that built international franchises. This was boosted during....
• 1950: antibiotics, 1960: cardiovasular, 1970: anti-ulcer, 1980: asthma-era...
• the 1980s R&D companies diversified adding
- diagnostics,
- OTC-consuming health,
- veterinary health,
- dental health,
- Generics and built parallel sales forces to maximise franchise power to influence prescriber practice.
• the 1990s brought a move back to pure play pharma – divesting non-core interests or the
alternative strategy to create pure “life science” entities (eg Zeneca, Aventis).
• the 2000...Niche plays “let’s be like biotech”.
focus on life sciences defending existing therapy.
franchise by bold-on acquisitions:
- drug delivery; formulations; generics
- Rx to OTC switch
- massive cost cutting
- BD fully established as a profession for reshaping the portfolio by product- & company acquisitions, licensing and
partnering or divestments
- own R&D vs. external deals: 50% : 50%
portfolio management techniques
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R&D spending has soared but the number of NMEs &
biologics approved is down
Year R&D (bn USD) # on NMEs approved Ratio
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
15
17
19
20
22
25
28
30
35
38
40
44
46
30
55
40
30
35
30
25
20
25
38
20
22
20
2,0
3,2
2,1
1,5
1,6
1,2
0,9
0,7
0,7
1,0
0,5
0,5
0,4
* FDA/CDER Data
from 2000 to 2009 the PI spent >400bn in R&D but lost 1/3 of ist market capitalization in the
same time.
e.g. Seroquel patex costs AstraZeneca 40% of its operating margin
e.g. J&J: Pharma = 35% of its sales and 40% of its profit but 65% of its invest into R&D
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• outcome data
• customer oriented
• portfolio selling
• more R&D invest, more studies
• added value-based pricing negotiations
• sales model: efficient, multi -channel
• no chance without maximizing efficiency
Pharmaceutical Industry – further march of consolidations?
• success driven by surrogate parameter
• marketing driven
• focus on blockbusters
• less studies , less proven evidence
• accepted pricing
• sales model: push, mono-channel
• no need for efficiency
past today…
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7
The time of the low hanging fruit is over...

New PI and Drivers for Portfolio-
Managment

time
Investments will increase and sales will decrease
R&D process Marketing period
Patent Protection Off Patent
Discovery
Pre-clin. test
PhI, Ph 2, Ph 3, approval Launch, growth, defend Generic erosion
sales

Focus on Core Competences

11
New R&D...
develop when confident that mechanism of action works
Discovery
& Screening
Leading
Development
Preclinical
Evaluation
Phase I
Phase II
CIM / CIS
Phase III Submission Phase IIIb/IV
RWESubmission
Mol.
Development
Early human
Studies (POC)
Testable
Hypotheses
Contextual
Pathophys
Disease
Knowledge
Today
Tomorrow
• Biol
• Epid
• Genomics
• …
• International
Understanding
• Disease subtype
• Mechanisms
• Targets
• Biomarkers
• Safety
• Incidence
• Economics
• Different.
• Targets
• Mol. Entities
• Subpopulations
• disease-spec. Biomarkers
• Efficiency Biomarkers
• Safety Biomarkes
• Pharm. Science
• Clinical Biomarkers
• Device/Diagnostics
• Regulatory Toxic.
• Eff. & Safety clin. Trials
• Preparation of submission
evidence to make a case
Pathophysiology
CIM CIS
Launch
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12
focus on areas with unmet medical need
-established markets: e.g. Dementia, Osteoporosis
-emerging markets: e.g. COPD, infections
-both: e.g. diabetes
understand pathophysiology beyond genetic engineering
more comprehensive study programs
-meaningful endpoints,
-stratified patient-sub-segments
-RWE
-post approval commitments
commercial input to R&D
-payers
-marketing
…focus on the right candidates
Achievement for R&D

Secure Society`s Voice into R&D

14
Analytical process for a payer:
• medical need: how strong is the need
for this drug treatment
• does it help in the most incriminating
diseases
• effectiveness: does this new drug
address the unmet need in a substantial
way
• evidence: is the evidence of
effectiveness and safety compelling
• economic impact: how will approval
impact the budget
• ability to control: can the payer control
prescribing volume once pricing and
reimbursement is granted
• political importance: would a negative
decision have public repercussions
1. adding the payer perspective to the R&D
process requires intensive, complex
collaboration and trade off analysis
between multi-company disciplines
2. development programmes with increased
payer focus are more expensive, more
time-consuming and more risky
3. R&D incentives rapid development
irrespective of commercial value of the
drug
4. influence or check Phase3 trial design in
appropriate choice of indications,
comparator, meaningful study endpoints,
etc. because they need to offer compelling
evidence of payer-relevant benefits over
existing options.
incorporate the payer perspective into drug
development decisions
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Cost management systems
1. Therapeutic Referencing (EU, RSA, SArab., Japan)
systems limit pricing and reimbursement on the basis of an assessed innovation value
relative to an assigned comparator drug
2. Competitive Insurance (USA)
federal program to subsidize the costs of prescription drugs for Medicare beneficiaries.
Formulary tier driven patient co-payment and restrictions are increasingly driving
prescribing behaviour.
3. Health Economics (UK, Cdn, Aus)
system primarily uses cost-effectiveness as a basis for coverage decision making
4. Emerging Cash (India, China, CEEMEA, LatAm)
systems with small meanigful health coverage – pay out of own pocket
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Diversification or...

17
L. Palich, L. Cardinal and C. Miller, 2000,
Strat.Mgm.Journ., 21: 155-174
The Linear Model
Diversification
Single Related Unrelated
Performance
Diversification
Perfomance
The Inverted-U Model
The Intermediate Model
Diversification
Performance
Diversification
Firms diversified into related business were more profitable than other diversified firms
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Diversification
• diversification lowers a firm`s business-specific risk (but does not affect its
system-wide risk)
• PI is the paradigma for related diversification so further diversification is not the
answer to current challenges:
Nevertheless....
• PI has been busy shedding non-core assets
- Service provider
- Integrated care
- Disease management programmes
• but ambitious and commitment remain limited due to still higher “pill-margins”
• expand the value proposition responsibility by broadening the value chain or
outsourcing to contract service providers (according to the automotive sector: car
manufactory is just the assembler with part-manufacturing as well as car sales outsourced).
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...Forward Integration

Forward Integration
• Comprehensive
LCManagement
• biologicals
• devices
• diagnostics
• better solutions for
subsegments
• services
• compliance managem.
• disease-related drug
portfolio
• personalized medicine
• genomics (eg genotype
based elimination of side
effects)
• integrated care
• cooperations with
sick-funds
• nanotechnology
• proteomics
• tailor made drugs
(eg vaccines)
sick patient ... ... today: just pills
...
healthy
patient
look for more comprehensive solutions in the value chain
Will decrease costs due to
-decreasing number of adverse drug reactions
-decreasing number of failed trials
-time to approval shortens
-length on medication for pts
-finding effective therapy faster
-etc…
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New Business Model

22
Sales Potential
time
s
a
l
e
s
•prevelance,
•diagnosis rate
•number of competitors
•price
•etc.
LoE
Sophisticated end of
life-cycle management

2011
Jan Feb Mar Apr May Jun
Rep visit
Patient
adherence
programme
– Canada,
Crestor
4
Rep visitRep visit Birthday email
Doctor Müller, Berlin
Reference
Follow-up
service
Reacting to
HCP
comment
Request for
support
Product-
related
question
HCP looks
up in internet
Call center
information
Service team visit Call center
information
Web based
detailing
Multi-channel-sales-model reduces costs and allows for
individualized customer approach
Multi-channel-sales-model needs
professional co-ordination
tool task exchange product costs
LC-phase
medical manager education bi-directional launch high
sales force product bi-directional launch high
promotion growth
service teams support bi-directional mature medium
promote
web-based support bi-directional mature medium
detailing promote
call center support one-way after LoE medium/low
information
customer service support one-way all the time low
portal
push pull
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Mix depending
on customer
segmentation

Summary 1 - The goals for PI is....
strategical
• To drive continued success in a competitive
business environment
• To shape our behaviour and our activities to
support our strategic priorities.
operational
1. bringing the late stage pipeline to market
2. improve R&D productivity again
3. focus on patients and payer/society`s
needs
4. deliver more comprehensive solutions
5. reshape your business-model
24
Corporate
strategy
Posi tioning
Products
Services
Support
Partnering
Healthcare
professionals
Investors
Government
& NGO’s
The public
Employees
Suppliers
Patients
Pharmacists
Partners
Payers
Regulators
Media
... and Portfolio Management is needed to drive
balanced decisions on resource allocation
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Portfolio Management
It`s all about TIME, RISK
and MONEY

27
Portfolio Theory and Portfolio Management
Modern Finance Portfolio Theory:
A rational investor chooses more value over less,
and prefers less risk to more risk.
There are many optimal portfolios that investors
can select to support their goals.
The portfolio, by diversification, increases the
probability of success over time.
Managers focus on selecting portfolios --
collections of assets -- based on their overall risk-
reward characteristics
The basic concepts of the theory are based on,
what has come to be known as, the Markowitz
diversification or the efficient frontier
Rationality is modeled by supposing that an
investor choosing between several portfolios with
identical expected returns, will prefer that portfolio
which minimizes risk.
Only limited applicably to PI problems due to
asynchronous project status and definition of
readiness to assume risk
Project Portfolio Management:
managing a group of current or proposed projects
based on key characteristics
Determine the optimal mix and sequencing of
proposed projects
Best achieve the organizations overall goal
Expressed in hard economical numbers (top line, MS or CSR)*
Attributes of projects being analyzed in PPM:
-total expected costs
-consumption of resources (human and other)
-schedule of investment
-nature, magnitude and timing of benefits (sales)
-inter-dependencies with other projects
Treat all projects as part of an overall investment PF
Manage the continious flow of projects (continue or delete)
`Add –on side effects´: transparency, common language,
mindset, shift away from ad-hoc approaches
* Locally = not shareholder value
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• shaping the portfolio-candidates
• prioritize the frontrunners
• interpretation and recommendation
• the composite of resource allocation
Project Portfolio Management
done in a `neutral´, un-biased department only focussing on the overall goal of the company

time
Investments will increase and sales will decrease
R&D process marketing period
patent protection off patent
discovery
pre-clin. test
PhI, Ph 2, Ph 3, approval launch, growth, defend generic erosion
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Shaping the Portfolio-Candidates

31
Corporate Strategic Planning
corporate strategy guides local strategy
Corporate
R&D
strategy…
Disease /
TA
segment.
Med.&
market
analysis
Opportu-
nity
review
Attractive-
ness
evaluation
Strategic
options
Options
quantifica-
tion
TAs,
Pipelin
e, LCM
Licen-
sing
Overvie
w of po-
tential
indi
cations
Qual. &
quan.
Des-cript.
of
segments
Re-view
of op-
portu-
nities
Grid
and
seg-
ments
Opt. 1-n
Stratified
by time,
invest,
risk
Sales,
costs,
ROI, top
line,
bottom
line, etc.
• Where are the unmet needs ?
• Which disease do we want to treat?
• What are our core-competences ?
• Where do we want to be in the future?
• What kind of treatment would it be ?
• Who are our competitors ?
• Which options exist ?
• Which risk are we willing to take ?
• Which targets exist ?
• How will the target group look like ?
• How does a business case look ?
• What is needed to succeed in each case ?
• How much to invest ?
• What will be the return ?
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Broadest possible input before going to Phase III
investment decision
Discovery
& Screening
Leading
Development
Preclinical
Evaluation
Phase I
Phase II
CIM / CIS
Phase III Submission Phase IIIb/IV
Launch
Launch & LCM
• brand strategy plan
• brand operational plan
TG 2,5 TG 3 TG 4
Phase I
first time in man
Proof of Principle
further pre-clinical testing
Phase II
safety efficacy
dose finding
market preparation
Phase III
-placebo / competitor
-stat. powered
-med. and Hecon endpoints
Phase IV
postlaunch
LCM
Proof of Concept
• TPP / TPC (draft)
• go/no-go criteria
• clin. progr. (draft)
• indications
• RA strategy
Phase II Results
• POC
• Ph. III Programm
• brand strategy
• pricing /market access
• RA strategy
• forecast
• trademark
Tollgates
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Input from Strategic Markets
1. therapeutic referencing (EU, RSA, SArab., Japan)
2. competitive insurance (USA)
3. health economics (UK, Cdn, Aus)
4. emerging cash (India, China, CEEMEA, LatAm)
established markets – emerging markets
geographic focus might drive portfolio decisions into
• the same direction (eg diabetes) or
• different directions (eg speciality care, gxs vs. primary care, vaccines, etc.)
nevertheless a consolidated view is important
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Input during the Marketing Company Consultation
Early and optimal adressing of stakeholder needs
• medical – physicians, patients
• Clinical study program, cost of trials, clinical meaningful endpoints, KOL engagement
• adressing unmet need, meaningful clinical advance, improved QoL, demography, epidemiology,
• understanding the disease, validated targets, IP status, ideas on LCM
• commercial
• market: market size, CAGR, # of competitors
• product: MoA, order of entry, mee too, LCM (eg formulations, switch to OTC, etc.), emerging competition
• costs: A&P spending, FTE
• company: core TA, heritage, experience, etc.
• market access – payers/HTAs
• likelihood of reimbursement, pricing,
• outcome or surrogates, value for money, innovative and/or incremental value over soc, budget impact,
• competition, value proposition
• regulatory
• better/comparative efficacy, safety, risk benefit assessment, biomarkers
• packeging
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Corporate Consolidated Cross Market View
and its feedback to the local marketing companies
low medium high
lowmediumhigh
Overall risk
Commercialattractiveness
16
21%
14 62%
8
41%
5
56%
20
32,5%
8
16%
5
56%
8
41%
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overall
position of the
project in the
company`s
project
portfolio
35

Identify, Prioritize, Understand
8
41%

-0,2
0
0,2
0,4
0,6
0,8
1
0 20 40 60 80 100 120 140
20 40 60 80 100
0
20
40
60
80
100
AIM: comprehensive view on all candidates

`Handle´ all the Pipeline Projects
comprehensive view on all candidates – principle approach
sales
•Number of pts
•Diagnosed
•Treated
•Compliance
•…
costs
•Taxes
•Ammortization
•…
forecast
P&L
M
o
n
e
y
/
t
i
m
e
Cash flow
costs
•SF needed
•A&P
•Competitors
•…
costs
•Interest rate
•Period of validity
•…
NPV
Market access
•HTA
•Pricing
•Reimbursement
•…
R&D risk
•Number of pts
•Probability on
failure in
development
•…
risk
eNPV
Synchronized
eNPV/market
access-grid
Payer`s voice into R&D
New commercial model/forward
integration
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Cash Flow Statement & NPV , base case, m€
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 TOTAL
SALES (US) - - - - 6 90 210 320 390 440 460 480 490 500 3386
Discount US 12% - - - - (1) (11) (25) (38) (47) (53) (55) (58) (59) (60) (406)
SALES (EU) - - - - 1 20 40 70 100 115 120 125 130 135 856
TOTAL NET SALES - - - - 6 99 225 352 443 502 525 547 561 575 3836
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
COGS 8% - - - - (1) (9) (20) (31) (39) (44) (46) (48) (50) (51) (339)
Royalty 15% - - - - (1) (15) (34) (53) (66) (75) (79) (82) (84) (86) (575)
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CONTRIBUTION 1 - - - - 5 76 171 268 338 382 400 417 427 438 2921
GM - - - - 76% 76% 76% 76% 76% 76% 76% 76% 76% 76% 76%
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Marketing & Sales - - - (50) (100) (100) (100) (75) (75) (50) (50) (50) (50) (30) (730)
R&D (40) (40) (40) (2) (1) - - - - - - - - - (123)
Other payments
Amortization - - - - (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (20)
Payment not to be capitalized (50) - - - - - - - - - - - - - (50)
Pre tax profit (90) (40) (40) (52) (98) (26) 69 191 261 330 348 365 375 406 1998
Taxes 40% 36 16 16 21 39 11 (28) (76) (104) (132) (139) (146) (150) (162) (799)
Net profit (54) (24) (24) (31) (59) (16) 41 114 156 198 209 219 225 244 1199
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Payment to be capitalized - - - - (20) - - - - - - - - - (20)
Net profit (54) (24) (24) (31) (59) (16) 41 114 156 198 209 219 225 244 1199
Change in working capital 11% - - - - (1) (11) (15) (15) (11) (7) (3) (3) (2) (2)
Amortization - - - - (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (20)
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Annual cash flow (54) (24) (24) (31) (78) (25) 28 101 147 193 208 218 226 244 1129
Cummulative cash flow (54) (78) (102) (133) (211) (236) (208) (107) 40 233 441 659 885 1129
Annual discounted cash flow 10% (49) (20) (18) (21) (48) (14) 14 47 62 74 73 70 65 64 300
Cumulative NPV (49) (69) (87) (108) (157) (171) (156) (109) (47) 28 101 170 235 300
Launch
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-0,2
0
0,2
0,4
0,6
0,8
1
0 20 40 60 80 100 120 140
Risk-score(0-100 )
NPV in € over period in time e.g. 5 yrs
20 40 60 80 100
0
20
40
60
80
100
comprehensive view on all candidates - asynchronous
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Phase Transition Probabilities
Pre-clinical
Phase I
Phase II
PhaseIII
Registration
Approval
Launch best case
Launch worse case
stop
stop
stop
stop
stop
41%
70%
51%
67%
90%
50%
50%
59%
30%
49%
33%
10%
Example: termination of a pre-clinical
project after phase III:
p= 41% x 70% x 51% x 33%
p= 4.8%
www.tufts.edu
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PhaseIII
Registration
Approval
Launch best case
Launch worse case
stop
stop
67
%
90
%
50
%
50
%
33
%
10
%
Phase Transition Probabilities – example
Includes the R&D risk and makes all projects comparable
success Failure NPV eNPV cNPV
30% 300*) 90,4 150,1
30% 70**) 21,2 35,1
6.7% (108) (7,3)
60%
33%
40%
(87) (28,7)
75,7 185,2
*) base case
**) worst case
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Local Market Access Riskscore
has to be taylored along the different cost management systems
Produkt X
weighting yes (5) probable(3) no (0) Risk-score
unmet medical need 3 0
indication with generic competition 1 0
reference pricing most probable 2 0
achieved daily therapy costs above comparator 2 0
reimbursement unsecure 3 0
payer market research without further interest 1 0
patient benefits evident in clinical studies 4 0
fullfilling IQWiG criteria 3 0
forecasted PYS spotting the compound in the system 1 0
total risk 0
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-0,2
0
0,2
0,4
0,6
0,8
1
0 20 40 60 80 100 120 140
Risk-score(0-100 )
eNPV in €
Bubblesize GM or CSR in yr. 3; colour = therapy area
20 40 60 80 100
0
20
40
60
80
100
Comprehensive view on all candidates - synchronal
In-licensing-
candidate
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45
In-licensing as Part of PFM
to be treated the same way
•key value driver for PI
•strategic driver to achieve corporate goals
•fill gaps in own pipeline
-quick expansion of the portfolio
-no risk and costs in R&D
-better utilization of development
capacities
-high complement with in-house
technologies
• tradable IP rights (e.g. platform
technologies)
• compounds
• distribution agreements (Co-marketing,
co-promotion, co-branding)
• etc.
nine of the top ten PI companies have inlicensed more than 40% of their marketed new molecular entities
In-licensing-
candidate
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Interpretation and
Recommendation

-0,2
0
0,2
0,4
0,6
0,8
1
0 20 40 60 80 100 120 140
Risk-score(0-100 )
eNPV in €
20 40 60 80 100
0
20
40
60
80
100
in-licensing-
candidate
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comprehensive view on all candidates – synchronal
most projects aligned along an hyperbole

48
Portfolio-evaluation helps driving productivity
1. Understand:
1. NPV of entire portfolio
2. NPV of entire portfolio with risk adjustement
3. # of products per development phase
4. Ratio of NCE vs. NBE and vs. LCM opportunities
5. Do we have a healthy balance ?
6. Ratio of high risk vs. low risk projects
7. Expected new launches per year
8. Needed resourcing for
1. further development
2. unlocking the entire potential of the
portfolio
3. efficient commercialization of the portfolio
9. Evaluate licensing opportunities to streamline
your business shape
2. Actions
• kill projects early , if PoC failed
• identify the the right assets
• take only the best projects into late stage clinical
development
• understand their comprehensive potential –
don`t be afraid of niches
• where are the synergies ?
• identify gaps or lags in your distribution and
shape as early as possible
• bring your organization to `think, act and
speak the same language´
• identify needs for broader customer solutions
(diagnostics, personalized medicine, …)
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-0,2
0
0,2
0,4
0,6
0,8
1
0 20 40 60 80 100 120 140
Risk-score(0-100 )
eNPV in €
20 40 60 80 100
0
20
40
60
80
100
comprehensive view on all candidates – synchronal
kill unprofitable and high-risk projects
in-licensing-
candidate
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The Composite of
Resource Allocation –
1. Pipeline Projects

-0,2
0
0,2
0,4
0,6
0,8
1
0 20 40 60 80 100 120 140
Risk-score(0-100 )
eNPV in €
Bubblesize= ROI/rep; colour = therapy area
20 40 60 80 100
0
20
40
60
80
100
areas of resource allocation
“priority-resourcing
business“
“appreciation of values“
“minimal resourcing“
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0
0,2
0,4
0,6
0,8
1
0 20 40 60 80 100 120 140
Risk-score(0-100 )
eNPV in €
Bubblesize= ROI/rep; colour = therapy area
20 40 60 80 100
0
20
40
60
80
100
Areas of prefered business modells
rep-based sales model
portfolio-selling
innovative commercial
model
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53
Recommend the Development of the Products along of
this three Buckets...
• Rep-Based-Sales model:
achieve maximal commercialization
- detailing plans - # FTEs, detailing position, time period of detailing
- capacity utilization
- carry over effects
- ...
• Portfolio-Selling:
achieve maximal commercialization with minimal FTE resourcing
- synergies in marketing mix
- synergies in customer group
- related products in one sales line detailing different customer groups (e.g. pain) or various products in one detailing
approach (e.g. antibiotics)
- bridging, when justified
- ...
• Innovative-Commercial-model:
achieve maximal commercialization without FTE resourcing
- most efficient channel mix without FTE allocation
- fast achievement of Cost to sales ratio
- ...
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One Resource Allocation Proposal per Project...
for call plans, budget planning, etc.
Year 1 Year 2 Year 2 Year 4 Year 5 Year 6
Budget:
personal
SF: 100FTE
Det.pos.: 1
Core cust.gr. :
Ret.: 15.000
Hos.: 5000
Budget:
Non-personal
A&P: 2m€
Medical: 2m€
MA: 0.5m€
Budget:
personal
SF: 100FTE
Det.pos.: 1
Core cust.gr. :
Ret.: 15.000
Hos.: 5000
Budget:
Non-personal
A&P: 1m€
Medical: 2m€
MA: 0m€
Budget:
personal
SF: 30FTE
Det.pos.: 2
Core cust.gr. :
Ret.: 15.000
Hos.: 5000
Budget:
Non-personal
A&P: 1m€
Medical: 1m€
MA: 0m€
Budget:
personal
SF: 15FTE
Det.pos.: 2
Core cust.gr. :
Ret.: 8.000
Hos.: 1000
Budget:
Non-personal
A&P: 1m€
Medical: 1m€
MA: 0.5m€
Budget:
personal
ST: 100FTE
Det.pos.: 1
Core cust.gr. :
Ret.: 15.000
Hos.: 5000
Budget:
Non-personal
A&P: 0.5m€
Medical: 0m€
MA: 0m€
Budget:
personal
SF/ST: 0 FTE
Det.pos.: /
Core cust.gr. :
Ret.: 15.000
Hos.: 5000
Budget:
Non-personal
Multi channel
A&P: 2m€
Medical: 0m€
MA: 0m€
INN: X; Indication: x Business modell: rep-based
KPI:
Message recall: 18% 35% 48% 69% 75% 80%
Sales: 9% 19% 31% 49% 73% 95%
…
1455300/11

The Composite of
Resource Allocation –
2. Marketed Products

time
Investments will Increase and Sales will decrease
R&D process marketing period
patent protection off patent
discovery
Pre-clin. test
PhI, Ph 2, Ph 3, approval launch, growth, defend generic erosion
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56
sales

57
The Portfolio of the marketed Products/Projects
Total budget – committed budget (e.g. ISIT, HR, etc.) = free allocatable budget
1455300/11
must dos
can dos
Product 1
Product 2
Product 3
Product 4
Product …
Project 1
Project 2
Project 3
Project 4
Project 5
Project 6
Project …
product/project
planning
qualitativ
budget planning
incl. scoring
quantitativ
Implementation
learnings
Measurement
target
performance
comparism

Input-Output-Relations Goal-Trade-Offs Pay-Off-Timing
Different activities may have the
same output but incur completely
different cost levels
Different activities works towards
different goals, however, there are
also optimal combinations
Portfolios may visualize the
distribution of pay-offs over time
20 40 60 80
20
40
60
80
Goal 2
Goal 1
A
B
C
„Effective Border“
D
20 40 60 80
20
40
60
80
Input
Output
C
D
B
A
20
40
60
80
Time horizon
Output
Short-term Mid-term Long-term
A
B
C
D
Reports support decisions concerning input-output, goal-trade-offs or pay-off timings
Investment-decisions driven to the efficient border
1455300/11
58 portfolio management techniques

Multi-stage evaluation results in output score covering
effectiveness and efficiency
= quantitative = quantitative
& qualitative
= qualitative
Score
qualitative
Score
quantitative
Score
qualitative
Score
qualitative
Score
quantitative
Score
strategic
fit
Score
customer
retention
Score
Customer
perception
Output-
Score
=
stage 5
costs
Input
Non-personal
costs
Expenditure
of time+ = total costs
Efficiency-
Score
Output-Score
proportional
to costs
stage 1 stage 2 stage 3 stage 4criteria
Strategic Fit
Customers
retention
Customers
perception
Output(Effectivity)
Frage 1

Frage 1

Frage 1

Welche Größe (z.B.
Auflage) hat die
Maßnahme?
Wie viele Zielpersonen
werden durch die
Maßnahme erreicht?
werden durch die
Maßnahme positiv
beeinflusst?
Größe Reichweite Aktivierung
1 2 3
Welche Größe (z.B.
Auflage) hat die
Maßnahme?
werden durch die
Maßnahme erreicht?
werden durch die
Maßnahme positiv
beeinflusst?
Größe Reichweite Aktivierung
1 2 3
1455300/11

Different kinds of reports for all hierarchic levels
Project Rankings Project Portfolios Product Comparisons
20 k €75P2l
40 k €71P3s
15 k €72P2m
80 k €84P2s
40 k €89P1l
60 k €95P1s
40 k €67P3m
15 k €68P3l
20 k €76P1m
BudgetScoreProject
List of all Marketing Projects
20 k €75P2l
40 k €71P3s
15 k €72P2m
80 k €84P2s
40 k €89P1l
60 k €95P1s
40 k €67P3m
15 k €68P3l
20 k €76P1m
BudgetScoreProject
List of all Marketing Projects
Cut
200k €
25 50 75
25
50
75
Output 2
(Customer Retention)
Output 1
(Strategic Fit)
Quick and helpful overview of the
type and location of top projects
Insight to which extent the mix of
projects supports the achievement
of different objectives (Outputs)
Pragmatic comparisons of products
and business units
80
70
90
75
65
0 25 50 75 100
Output
(Average per project)
Efficiency
(Average per project)
Product 1
11
16
10
16
15
0 5 10 15 20
Scores Scores
Average = 76 Average = 14
Product 2
Product 3
Product 4
Product 5
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All functions in the organization have to learn the
usage of resources in a entrepreneurial way
Learnings
forces to actively think about intent and goals of activitiesStrategic Thinking
……
Evaluation shows that more expensive activities are not always more
powerful
Input-Output
Relations
Writing down estimations about activities’ success creates a sense of
liability
Commitment and
Liability
The process stimulates a rather responsible way of dealing with
resources
Stewardship
stimulates benchmarking across products and business unitsBenchmarking
Efficiency gains in planning process will show that thorough planning
in the first step pays-off
Benefit of planning
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Summary

The mindset of portfolio management benefits in…
Consistent prioritization and decision making criteria
Comprehensive and detailed overview of all projects provides insight into the
allocation of budgets in the entire organization
Transparency
1
The evaluation allows an easy and early detection and elimination of inefficient or
futile projects
Savings
7
Constant force to think about effectiveness and efficiency of projects establishes
a new culture of cost-consciousness
Mindshift
2
Comprehensive and detailed project overview allows quick budgeting decisions
and saves time in planning reviews
Planning Efficiency
3
Evaluation of each single project according to same criteria allows only
implementation of the most efficient projects
Selection
4
Evaluation process spurs continuous quest for more innovative projects and
approaches
Innovativeness
5
Comparability of projects enables fair and company-wide competition for
resources
Competition
6
1455300/11

stefan.busch@astrazeneca.com
1455300/11

2011_10_20_slide-deck_AZ_SB6

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