Students in ISDS 3711 are introduced to different quantitative tools. They practice how to apply these...

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Students in ISDS 3711 are introduced to different quantitativetools. They practice how to apply these tools, how to formulateproblems and how to solve them using Excel and different Exceladd-ins in the HW assignments. Problems in HW assignments aretypically well structured. The students are told which tool theyshould apply and they are provided with the data that they need.These structured HW assignments do not teach students how toapproach an unstructured decision situation where it is not clearwhich tools to apply and which information to collect. Thefollowing HW assignment has been developed as a way for students topractice these important skills.
The assignment is based on the Case: Project PortfolioManagement at XYZ Pharma that was developed at London School ofEconomics. The case describes the R&D project selection andprioritization problem at a major pharmaceutical company, arecurrent issue of strategic importance to the company. Studentswill not be asked to conduct an actual quantitative analysis but tostart thinking about how they would frame the project, whichquantitative tools they might use and which information tocollect.
Students will work on this assignment individually. They will beasked to read the case and then answer the following questions. Wedo not ask the students to actually conduct a quantitative analysisbut we ask them to formulate the problem in the context aquantitative analysis.
Part 1 – Framing the Project Portfolio ManagementProblem
Develop a decision framework for project portfolio management atXYZ:
What are the objectives?
What are the constraints?
What are the risks involved?
What are your alternatives?
What information is required for project portfolio management atXYZ and how can it be collected?
Part 2 – Project Valuation
Before thinking about appropriate portfolio decisions, the valueof each project in the portfolio needs to be determined. How wouldyou determine the value of the following project (‘Project 1’) inXYZ’s portfolio, a project in the pre-clinical phase, part of theOncology therapeutic area? What additional information would youcollect? Which quantitative tool(s) might help you in determiningthe value of the project?
Project 1
Phase Pre-Clinical
Launch Year 2009
Probability of Technical Success 5%
Net Sales (if success) $4,753 million
Pre-launch costs (including R&D cost) $152 million
Part 3 – Project Risk
When implementing project 1, you face technical and market risk.How would you assess the risks embedded in Project 1? Whatadditional information would you collect? Which quantitativetool(s) might help you in determining the project risk?
Part 4 – Project Portfolio Decisions
Suppose that next year’s R&D budget for the oncology areahas been reduced to $50 million. How would you decide whichprojects to continue, and which to put on hold? What additionalinformation would you collect? Which quantitative tool(s) mighthelp you in determining the best portfolio?

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Part 1 Objectives To aid the RD project selection and prioritization in order to develop a product that reduces costs and maximizes the revenue Constraints Competition is usually between brandname drugs Constraints for the study include risky drug discovery and development which could cause harm to participants and also waste money used on development Other restrictions include the amount of time spent on Research and Development which leads to increased costs There is also the concern with low return on investments and the emergence of generic drugs and competitors Risks There are both technical and commercial risks involved The most risky aspect of the project is within the research and development See Answer

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Transcribed Image Text

Students in ISDS 3711 are introduced to different quantitativetools. They practice how to apply these tools, how to formulateproblems and how to solve them using Excel and different Exceladd-ins in the HW assignments. Problems in HW assignments aretypically well structured. The students are told which tool theyshould apply and they are provided with the data that they need.These structured HW assignments do not teach students how toapproach an unstructured decision situation where it is not clearwhich tools to apply and which information to collect. Thefollowing HW assignment has been developed as a way for students topractice these important skills.The assignment is based on the Case: Project PortfolioManagement at XYZ Pharma that was developed at London School ofEconomics. The case describes the R&D project selection andprioritization problem at a major pharmaceutical company, arecurrent issue of strategic importance to the company. Studentswill not be asked to conduct an actual quantitative analysis but tostart thinking about how they would frame the project, whichquantitative tools they might use and which information tocollect.Students will work on this assignment individually. They will beasked to read the case and then answer the following questions. Wedo not ask the students to actually conduct a quantitative analysisbut we ask them to formulate the problem in the context aquantitative analysis.Part 1 – Framing the Project Portfolio ManagementProblemDevelop a decision framework for project portfolio management atXYZ:What are the objectives?What are the constraints?What are the risks involved?What are your alternatives?What information is required for project portfolio management atXYZ and how can it be collected?Part 2 – Project ValuationBefore thinking about appropriate portfolio decisions, the valueof each project in the portfolio needs to be determined. How wouldyou determine the value of the following project (‘Project 1’) inXYZ’s portfolio, a project in the pre-clinical phase, part of theOncology therapeutic area? What additional information would youcollect? Which quantitative tool(s) might help you in determiningthe value of the project?Project 1Phase Pre-ClinicalLaunch Year 2009Probability of Technical Success 5%Net Sales (if success) $4,753 millionPre-launch costs (including R&D cost) $152 millionPart 3 – Project RiskWhen implementing project 1, you face technical and market risk.How would you assess the risks embedded in Project 1? Whatadditional information would you collect? Which quantitativetool(s) might help you in determining the project risk?Part 4 – Project Portfolio DecisionsSuppose that next year’s R&D budget for the oncology areahas been reduced to $50 million. How would you decide whichprojects to continue, and which to put on hold? What additionalinformation would you collect? Which quantitative tool(s) mighthelp you in determining the best portfolio?