In search of innovative techniques to evaluate pharmaceutical R&D projects

Abstract This paper is a conceptual paper that examines a new integrative evaluation approach for pharmaceutical R&D projects. It describes recent changes in the health care economy and the underlying scientific and technological revolution that has markedly altered the business environment in which the pharmaceutical industry operates. Changes in cost and technology resulting from managed care organizations, marketing, generic drugs, new drug development risk, and scientific and technological evolution forced us to think of a new way to evaluate R&D projects in the early phase of the project. These changes have placed increased emphasis on the need for improvements in technology management methodologies. A real options approach, especially when combined with other project risk management processes, offers a significant improvement in project selection and review, and resource allocation decisions.

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