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Scimitar Inc

Portfolio Strategy and Placing Bets in Biopharma

| Key Takeaways

  • M&A activity is increasing as companies look for new products and revenue streams, and the pace of innovation is rapid, with CRISPR and personalized therapies being key interest areas.
  • A clear portfolio approach can help companies align their strategy, portfolio, and business development transactions, from research and development through commercial opportunities.
  • Disease areas can be evaluated across a lifecycle curve, with innovative, growing, and mature disease areas having different characteristics and potential opportunities.
  • A clear target selection approach can help companies understand the risk and align governance and teams.

| Introduction

So far, 2018 and 2019 have been off to a flying start with over $200B in M&A activity. Just a few major examples include:

| Drivers For Increased Biopharma M&A Activity

  1. Across the industry big pharma blockbuster drugs going off patent – several key products are set to lose patent protection over the next decade. Companies are therefore looking for new products and revenue streams, which they are taking on through acquisition.
  2. US tax reforms, too, are having a significant positive impact on M&A activity. The new tax structure brings the corporate tax rate down from a top rate of 35% to 21% and allows for full expensing of certain capital investments (e.g., machinery and equipment). The tax reforms have also enabled biopharma companies to access billions of dollars of cash that was trapped overseas by encouraging capital repatriation, given these more favorable tax rates. This is undoubtedly a key consideration for a number of deals.
  3. The pace of innovation in the biopharma industry has been rapidly changing, and M&A allows companies a quick entry into a new platform or modality. Some key interest areas in the future may include:
  • CRISPR–(Clustered Regularly Interspaced Short Palindromic Repeats) is a bacterial defense system to forms the basis for CRISPR-Cas9 genome editing technology.
  • Personalized Therapies–The promise of personalized medicines and vaccines has been elusive for 30 years, but with new innovations companies have made strides in developing robust pipelines and have started to bring such products to the market.

| Background

With new innovations and the increase in M&A activity, how do new innovations and acquisitions inform corporate strategy? This white paper summarizes and frames a company’s strategy, portfolio, and business development transactions. This includes investments made across different modalities and platforms, different disease areas, in-house and licensing opportunities, etc. This approach supports the entire value chain from Research, Development through Commercial opportunities. 

  1. Research: Enabling Research teams and leaders to have an approach and set of considerations that result in a transparent portfolio enabling the Research management team to objectively review and prioritize targets 

  2. Development: Allowing a portfolio committee to review the risk and balance in their Development portfolio, including licensing opportunities, and whether the portfolio aligns with the corporate strategy 

  3. Commercial: Evaluating new products from development, licensing opportunities, and the current commercial portfolio’s position and strategy to inform future investments 

The result is not a portfolio that is balanced – unless that’s the company’s goal. The result is a portfolio that is transparent and aligned with the corporate strategy. The approach also addresses a problem – many companies focus on process, analytics, resources – which are all important. However, the strategy itself is ambiguous and is seen as opportunistic or a gut instinct. Scimitar Inc. proposes a different approach that aligns our strategic, scientific, and business objectives to allow executives to establish a clear strategy and make portfolio decisions align with the corporate direction.

| Applied Examples: Enabling Large Pharma & Pre-Commercial Biotech's Portfolio Strategy

Disease Area Lifecycle Curve for Disease Areas

Companies often evaluate products by thinking about a product’s natural growth and maturity phase. Looking at a disease area across several competitive products we find a similar lifecycle effect –sometimes lasting 30 years based on one initial discovery, followed by several similar and/or better products.

A lifecycle may include working in a Novel, Growing or Mature Disease area. To further define these:

  • Innovative Disease Area–Significant unmet medical need with almost no therapeutic options (e.g., Alzheimer’s Disease)

  • Growing Disease Area–Growing disease area with new products and mechanisms introduced (e.g., Diabetes)

  • Mature Disease Area–Significant pressure from generic competition resulting in market maturity or decline (e.g., Cardiovascular Disease, Schizophrenia)*
* A new mechanism in Mature Disease Area that addresses an unmet medical need has the potential to reinvigorate that market shifting it to a Growth Disease Area

Target Selection Approach

Similarly, we can look at the specific targets and assess the level of target validation for what we call the “Scientific” or Innovation axis. A company needs to define these for itself, but an example includes:

Proven Mechanism – Marketed product.

Emerging Mechanism – Definition depends on a corporate level and company wide use. Some companies have stated Phase II POC data (p value > X).

Novel Mechanism – Only animal or human target validation data (e.g., pharmacology, genetics, pathophysiology, early efficacy indicators).

Defining the level of validation across a variety of scientific measures may include:

Pathophysiology–do the physiological changes from this disease make this region and target a viable option?

Pharmacology–is this a druggable target and are we seeing traction?

Early Efficacy–have we or a competitor established early efficacy indicators based on Phase 2A studies?

Genetics–Is there genetics data (e.g., GWAS) that validate the target?

The level of strength across some or multiple categories allows a company to understand the risk with target selection, it makes the process transparent, and drives alignment across governance and teams as to why leadership has chosen these specific targets for the portfolio.

A large pharmaceutical company’s legacy approach was a novel, highly risky and invalidated mechanisms, along with an attrition-based approach. This led to projects failing to advance through the pipeline and almost no candidates advancing to Phase III and Launch. The new approach reinvigorated their pipeline and resulted in several launches across a variety of disease areas, completely turning around the company’s direction.

And if one combines these –the Disease Area and Scientific axes –they end up with an extraordinary framework for thinking about how business and science intersect.

| Application Of The Framework

Within this framework, companies can take a variety of different approaches. Further examination shows that each has its own challenges and implications:

Note: The colors may indicate difficulty of entry (e.g., orange), but doesn’t exclude a company from working in that particular space. As an example, Cardiovascular Disease was a mature disease area with generic competition, and it was saturated with “me-too” products that were going off patent. However, companies developed products targeting PCSK9 to help patients with high LDL. This re-invigorated the market and transformed the Disease Area from a mature to a growing market disease arena.

Portfolio Managers and Portfolio Committees can look at their Programs, Modalities, Disease Areas, and Licensing Opportunities to understand strategic fit, risk, value, etc. that drive corporate “go/no-go” decisions.

| Conclusions

It’s an exciting time in the BioPharmaceutical industry with therapies being developed that Bolster, Treat, and Alter the immune system to fight disease. As depicted in the Figure below, the competitive environment and treatment options for patients is growing at significant rate.

For companies developing their internal strategy across Research, Licensing, and Acquisitions, the portfolio mix of options is remarkable –each company’s blueprint and final offering of products can be quite unique.

Scimitar, Inc. is positioned to help companies develop their R&D, Business Development, Disease Area and Life Cycle Management strategies to enable for long-term company success and supporting organizations to help patients live better lives.

| Case Study


Top 5 Pharma Company had a highly risky portfolio.

Majority of their R&D focus was on highly innovative, very risky programs which was counter to their corporate strategy.


Presented the discrepancy between their Corporate Strategy and actual pipeline execution.

  • All of their products and successes came from internal R&D programs with novel mechanisms, and they identified several missed opportunities for best-in-class and me-too drugs with tremendous value
  • Implemented Disease Opportunity Profile similar to Target Product Profile to guide Research teams.


  • They changed their pipeline across all disease areas resulting in new launches.
  • After a massive drought, they launched several products in ophthalmology drugs, a sleep drug, a next generation oncology blockbuster, cardiovascular drug, etc.

This has been applied at small biopharma and large pharma companies to inform Business Development and portfolio advancement decisions

| About The Author

Amit Bhatia practices operational strategy management consulting in the areas of post-merger integration, strategic workforce planning, and early & late stage development. He focuses on strategy, performance management, and team dynamics.

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