European cdmo uses p2mt

Project On A Page : Modelling Portfolio Growth & Risk

A private equity backed, medium sized Contract & Development Manufacturing Organisation (CDMO) based in Europe. Following rapid growth and acquisition of new sites, the CEO required a hands-on practical tool to manage the portfolio. According to therapeutic category and phase of development, how would the portfolio evolve and how much risk would this entail? Secondly, could this better inform the sales team when answering Requests for Proposals? 

The Model 

Future Expected Revenues = CV x PoS x SF adjusted by T

· CV is Current Value - the contract with the customer or likely value with a prospect

· PoS is Probability of Success -  that the molecule will transition to the next phase(s)

· SF is the Scale Factor – how much revenue and volume in plant will subsequent phases produce

· T is time it takes to complete the phase(s)

Model parameters were from the client’s own data, industry and academic sources, including the Massachusetts Institute of Technology. Client financial strength and molecule complexity are factored in.

How Is The Model Used

The portfolio overview is presented once a quarter at the established S&OP meeting. 

It estimates the revenues and gross margin by therapeutic category, clinical phase and factory. It is a supplementary tool to the formal budget. The same assumptions inform a decision support tool for the sales team. The tool provides a view of how an early-stage contract win might develop. The team can then price aggressively or conservatively. 

Benefits

· The CEO & Board now have a quarterly, updated view of their portfolio – a rolling 5 year business plan and an indication of progress towards their ambition to double revenues. 

· The salesforce and sites have a common language and tool to assess opportunities. `

Interested?

Pharmagro provides Models on Demand. Clients often want to model scenarios quickly. Why? You do not have the time or budget for a full consulting project; you want to test an idea before investing in a software programme; or your boss has just given you a seemingly insoluble problem with a short time line. Our team combines industry experience and youthful intelligence. Our solutions are

Quick – weeks Practical – Simple to use Insightful – Financially & Operationally