A robust R&D project portfolio optimization model for pharmaceutical contract research organizations

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Kwasi Amoako-Gyampah, Professor and Department Head (Creator)
Hamid R. Nemati, Associate Professor (Creator)
Institution
The University of North Carolina at Greensboro (UNCG )
Web Site: http://library.uncg.edu/

Abstract: Pharmaceutical drug Research and Development (R&D) outsourcing to contract research organizations (CROs) has experienced a significant growth in recent decades and the trend is expected to continue. A key question for CROs and firms in similar environments is which projects should be included in the firm?s portfolio of projects. As a distinctive contribution to the literature this paper develops and evaluates a business support tool to help a CRO decide on clinical R&D project opportunities and revise its portfolio of R&D projects given the existing constraints, and financial and resource capabilities. A new mathematical programming model in the form of a capital budgeting problem is developed to help revising and rescheduling of the project portfolio. The uncertainty of pharmaceutical R&D cost estimates in drug development stages is captured to mimic a more realistic representation of pharmaceutical R&D projects, and a robust optimization approach is used to tackle the uncertain formulation. An illustrative example is presented to demonstrate the proposed approach.

Additional Information

Publication
International Journal of Production Economics, 158, 18-27
Language: English
Date: 2014
Keywords
Pharmaceutical contract research organization (CRO), Research and Development (R&D), Project selection and scheduling, Uncertainty, Robust optimization

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