September 2005

Project Portfolio Management at XYZ Pharma
Early morning, Monday 29th August 2005. John Smith, head of portfolio management and strategic planning, was paging through the slides he had prepared for the Portfolio Management Board (PMB) meeting which would start at 9 am, and which was scheduled to last until Friday. “We have been preparing this meeting for weeks”, he thought, “and it seems the PMB has some tough decisions to make”. The PMB of XYZ Pharma, the pharmaceutical division of XYZ, one of the world’s leading companies in the life science sector, convenes yearly in August to review the composition of the research and development (R&D) project portfolio. It also meets on a monthly basis to monitor the project portfolio and make decisions regarding new developments. According to John Smith, “The PMB is an important decision making body because it shapes the future of the company by determining its product pipeline”.
The PMB members include the CEO of XYZ, the CEO of XYZ Pharma, the heads of the different business units, the heads of Development, Research, Global Marketing and Strategic Planning, the regional heads for the US, Europe and Japan and the functional managers for Regulation, Clinical,
Licensing, Technical Research and Development, and Patents.
The portfolio group, led by John Smith, had analysed the project portfolio carefully and had highlighted several potential threats that required action. According to John, “There will be an indepth discussion of which projects will be allocated additional resources, and at expense of which other projects this will be”.

The Pharmaceutical Industry
The lion share of the pharmaceutical market is captured by approximately hundred manufacturers, which account for more than 90% of global sales. Exhibit 1 contains the top twenty pharmaceutical companies ranked by sales.
Since