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Monthly Archives: July 2012

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29 07, 2012

Pharmaceutical and Biotech Portfolio Management: How Easy is it to Spend 10 or 20 Billion?

By |2017-05-23T15:42:04-08:00July 29th, 2012|Blog|0 Comments

What is an R&D-driven company with $10-50 billion of cash in the bank to do?

In the last twelve months, Merck, Pfizer, HP, AstraZeneca, and Bristol-Myers Squibb have announced stock buybacks totaling over $25 billion, and layoffs of over 30,000 employees. So apparently, for many firms, the best use of their cash hoard is a stock buyback, or to stand pat, secure in the notion that they can defend against a hostile take-over. This trumps increased R&D spending as well as retaining current sales staff.

Last week, venture capitalist Peter Thiel posed a related question, of sorts, to Eric Schmidt of Google during the Fortune Brainstorm Summit in Aspen, CO:

Google also has 30, 40, 50 billion in cash.  It has no idea how to invest that money in technology effectively.  So, it prefers getting zero percent interest from Mr. Bernanke, effectively the cash sort of gets burned away over time through inflation, because there are no ideas that Google has how to spend money.


22 07, 2012

Pigs, Chickens, and Discount Rates: Improving Project Valuations for R&D Portfolio Management

By |2017-05-23T15:42:04-08:00July 22nd, 2012|Blog|2 Comments

Finance and R&D can get along

Finance and R&D can get along

You’ve just finished briefing the executive committee on the methods for project valuation that you have worked so hard to establish in your R&D group. The team has finally acknowledged that risk needs to be managed in all its potential forms. You’ve reached consensus on the following set of risks that will be characterized as ranges, using probability distributions in your business models:

  • Market share
  • Willingness to pay
  • Product yield
  • Product cost
  • Technology feasibility/R&D cost and schedule


15 07, 2012

In R&D Portoflio Management, Failure is an Option

By |2017-05-23T15:42:04-08:00July 15th, 2012|Blog|0 Comments

Innovation is inherently risky. By definition, you’re doing something that you haven’t done before so there are no guarantees it will work. The mindset in many organizations is to “minimize” risk as if it were a disease, but it isn’t that simple. The best companies face risk head-on and manage it both systematically and transparently.


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