Portfolio planning and risk management in the pharmaceutical industry 1

Published on March 29, 2017   53 min

Other Talks in the Series: Topical Talks

0:00
I am Joachim Greuel, Managing Director at Bioscience Valuation, a company engaged in portfolio management and risk management as well. And I'm going to talk about Portfolio Planning and Risk Management in the Pharmaceutical Industry.
0:21
Before I begin, a few words about myself, I studied biology in Germany and in the UK, and received a PhD in neuroscience from the Max-Planck-Institute for Brain Research. I also hold an MBA from the Wharton School of the University of Pennsylvania in the US with a healthcare management and finance focus. I also served as academic director and professor at the IE Business School in Madrid, teaching courses related to pharmacoeconomics and also related to portfolio managements in the pharmaceutical industry. Before I co-founded Bioscience Valuation more than 18 years ago, I worked for Bayer Pharmaceuticals as head of a research group for couple of years and also as investment manager for a venture capital fund in Switzerland.
1:21
The presentation is divided into four parts. I will start with a short introduction and then move on to the evaluation of individual projects. The evaluation of individual projects is a prerequisite for portfolio management. The third part will talk about portfolio planning and risk management, and the final section will focus on project and portfolio value maximization.
1:51
I'll begin with a short introduction.
1:56
What is the objective of portfolio management? Well, first, it's to promote project and portfolio related decisions that are in line with company's strategy. For example, if a company is an expert in oncology and develops only drugs related to cancer, it does not make sense to in-license a project from the cardiovascular field for example. Now this may be obvious. The second bullet may be less obvious, but it's a very important one. So, primary objective of portfolio management is to allocate available resources to individual projects such that overall portfolio value is maximized. The reason behind that second bullet is that a company's goal typically is to maximize company value in order to satisfy the investors in a company. And company value can only be maximized if the value of the portfolio is maximized. So a good portfolio management therefore is related to finance and you will see in some of the later slides that we will talk also about some fundamental concepts of finance because at least we at Bioscience Valuation do not support portfolio management that would not be linked to financial measures. As the portfolio is the sum of individual projects, this also means that we have to focus first on individual projects and analyze individual projects in order to, as a second step, analyze the entire portfolio. Although, the final objective of portfolio management is to maximize portfolio value, there are some subtle differences between big pharma, midsized, and biotech companies.
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Portfolio planning and risk management in the pharmaceutical industry 1

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