R&D Performance Management

Transcription

1 R&D Performance Management What is in for me to drive the biotech opportunity? Gerd Grimm Reutlingen, December 2015

2 Agenda 1. What is R&D Performance Management? 2. A way of thinking about decisions rules of the game 3. Drive the next step in your growth plan 1

3 You might ask yourself R&D Performance Management Only for big pharma? Only for the science guys? Only a process or system to buy & install? Only a consultant service to book? 2

4 Why this is of importance to you R&D Performance Management is a way of thinking about decisions integrates know how from various functions processes and systems are secondary helps to drive the next step in your growth plan positive and optimistic about the future 3

5 This is what R&D Performance Management aims for Align the winning factors of value creation To win you need Not to scale Mio Product Value 1 Drug Candidate Clinical Proof of Concept (PoC) Clinical Phase II Clinical Phase I CT-supplies Formulation Design Molecular Biology Bioanalytics Toxicology Regulatory Strategy Strategic Marketing Project Management Product Definition Product Development months A strong product idea and a clear strategy Excellent and innovative people communicating and working together Effectiveness and efficiency of R&D Transparency and reliability of your partners and supplier Prepare a convincing story for investors 4

6 A way of thinking about decisions Key Elements Developing control over the new medical business opportunity Analyzing different indicators (science and finance) turn them into one picture of the future Being roughly right is better than precisely wrong Not a numbers game of scale and quantities 5

7 A way of thinking about decisions Common understanding of Forecasting as key risk indicator Resources, budgets and deadlines On project level Better to be roughly right than precisely wrong Thresholds when to approve a new reference value (latest approved plan) 6

8 Drive the next step in your growth plan The objective is to develop a forwardoriented portfolio map future project scenarios Science e.g. opportunities/risks related to scientific progress (breakthrough?) Uncertainty / risk Stakeholders and Markets e.g. market opportunities/risks (approval, marketability in x years ) Test 1 Test 2 Test 3 Number of different options create time and awareness such that options can actually be exercised thereby increase R&D efficiency Costs and resources Value conflict The flexibility to switch between options 7

9 Drive the next step in your growth plan Qualitative decision support (Organizational alignment) Method: More standardized and better comparable determination of individual project opportunities and risks through Portfolio Management Team Quantitative decision support (Financial modelling) Method: Defined and acknowledged procedures oriented on KPIs Results: Quantitative project assessment Results: Common understanding of risks and opportunities and agreed on investment prioritization Program management Checklists Expert opinions Make different options comparable Fits to innovative and early project character Portfolio Management Team* Clear structure Methodical approach Standardized criteria Financial KPIs Workshop Decision * A Team is not a department 8

10 Drive the next step in your growth plan Portfolio Management Group / Task Team Objectives Approach How Enablers Bring all parties together and ensure commitment to decisions - No I understood the decision criteria differently situations Understand project uncertainties - Internal knowledge (historic data, etc.) - External experts (partner, academia, suppliers, investors?) Create a simple and transparent framework for decisions Understand options for action and make them comparable Look ahead and identify potential follow-up options Maximize valuable results and minimize negative effects Balance internal risks with external risks Work as a team: - Evaluate data and facilitate its understanding - Create a culture of open and mandatory debate Document the basis for decision making and track its changes (e.g. assumption tracker) Write a guidance for project assessment together Make a structured list of questions to identify and assess risks Organize joint workshops with external partners and advisors Think about Medical Affairs as a BioTech Qualitative decision support through organizational alignment 9

11 Drive the next step in your growth plan Value Decision tree Phase driver Judgment Development Transfer to market Market Development costs, Development duration 60% Start of development 40% 2 years 70% development 3m p.a. 30% 4 years 70% development 2m p.a. 30% Decision tree shows possible outcomes and the respective probabilities Probability weighted expected value Success probabilities 75% 25% 50% 50% Duration of market phase, market volume, market share, EBIT margin 13y. x 950m x 14% x 13% 15y. x 950m x 6% x 6% 10y. x 950m x 8% x 10% 16y. x 950m x 12% x 10% Presentation of simple interdependencies between value drivers Limited usefulness in case of complex structure 49.2m 6.5m -6.5m 10.6m 23.4m -5.7m EV = 19.1m 32% 10% 18% 14% 14% 12% 100% Expected NPV Model is static and gives limited decision relevance High focus on financial goals, less information on strategic considerations and resource constraints Marked dependency on quantitative estimates and their (potential lack of) accuracy Does not look at the balance of the portfolio (high vs. low risk projects, balance across markets/technologies) Runs Cumulative Frequency of Stochastic NPV Portfolio Analysis (Monte Carlo) m Distribution curve of financial outcome is a result of probabilistic scenario simulation In roughly 68% of all runs project yields a positive NPV In approx. 43% of all runs project yields a NPV between 10m and 30m In only 10% of all runs NPV exceeds 36.0m In only 5% (10%) of all runs NPV falls below -8.8m ( -7.6m) ~ VaR 95% (VaR 90% ) 10

12 Finally what is R&D Performance Management? R&D Performance Management in Biotechology A set of accepted rules to align people towards one direction Know where you are and reach safely your next objective Provides a common language for finance and science Guidance to use the invested money in the most value creating way Hedge your internal options 11