The Role of Project Portfolio Management in Actavis Pharmaceuticals

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One of the main challenges facing pharmaceutical organizations is how to remain competitive in an ever changing industry. To facilitate better management of their programs and structures within their, many companies are implementing portfolio management, which allows them to focus on a group of projects that will eventually bring substantial benefits. From the case study, the hypothetical organization selected is Actavis Pharmaceuticals, one of the largest pharmaceutical companies in the US. The success of the organization can be largely attributed to its effective portfolio management and product methodologies. Over the past fifty years, healthcare demands have continued to increase to a great extent, and are expected to rapidly increase in the future. As a result, many pharmaceutical companies have the highest Research and Development needs. With the increased R&D costs for drug development and rapid competition in the pharmaceutical industry, Portfolio management in the company has gained widespread importance. Actavis is a large multinational corporation and therefore, the portfolio management is broken down into smaller units per departments, linked to the overall corporate strategy.

Actavis Pharmaceuticals has implemented an effective project portfolio management designed to support the development of new drugs and to enhance better streamlining and control overall its processes. The implementation of project portfolio management in Actavis dates back to 2011, and has largely benefited from the solution since its implementation. The PPM is composed of a team of project managers from all departments of the organization. The team is composed of the corporate project manager, representatives from R&D, finance department, regular affairs, sales and marketing, IP, operations, and launch department. The team members work together to come up with new ideas for projects that will improve productivity. The selected team members have distinct set of skills and qualities. Simultaneously managing a large number of projects can be a sophisticated and complex process. For this reason, the company utilizes PPM which is highly reliable and effective in new product development. The competitiveness of Actavis is rooted upon being the first in the industry to be the marketer of new generic drugs. Since it produces and markets its own generic drugs, Actavis has many projects and programs that need to be managed simultaneously. In addition, the company sells to other pharmaceutical companies in many countries. Currently, it has branches in more than 100 countries, and employs thousands of employees. The main growth and development strategies of Actavis include acquisitions and mergers. Over the past ten years, Actavis has acquired companies such as Allergan and Alpharma.

Actavis has a corporate portfolio management division that deals with business development and evaluation of the overall portfolio of projects. The corporate portfolio management within the company ensures that all the projects and programs are balanced in terms of their risk needs, technical difficulties and values to the organization. The PPM of the company ensures that the selected projects objectives are aligned with its overall goals. Actavis is among many pharmaceutical companies that have implemented PPM in drug development and R&D. The PPM of the organization is an integrated process that is conducted in a set of different stages. In generic drug development, the portfolio management team first comes up with new ideas after conducting extensive research on the current healthcare needs. All the new product ideas are analyzed by different functions in the department. The ideas are selected on the basis of their life cycle management, expiry dates, market orientation, and their ability to meet the immediate healthcare needs. The company has a team of corporate project managers that are tasked with evaluating all the viable projects aligned with the organizational objectives.

After the selection process of new drugs, Actavis uses a top down approach for seeking the approval of the project. All the new projects must be approved by the senior management before a pipeline committee. Before the project is presented to the senior management, all the portfolio managers hold meetings with the stakeholders, who evaluate the effectiveness of the project in meeting the organizational needs. They also ensure that all the new projects meet the selection criteria of alignment. The financial project evaluation is conducted after the projects have been selected. Actavis uses the NPV algorithm to evaluate all the investments by new generic drugs. The augmented NPV model is used, whereby the probability of success at individual milestones of each project is used. One of the main benefits of using the augmented NPV model is that it allows for changes in the development plans.

After all the viable drugs have been selected, the market research conducted, and approval has been gained, the portfolio is evaluated twice year. The reviews also contain quantitative and qualitative individual projects evaluation. The overall pipeline review is not conducted systematically, but on the extent to which they meet the current healthcare needs. The evaluation first begins with the single projects, where they are reviewed at distinct pre-determined stages. For instance, they are reviewed before they are transferred to the regulatory, and in the R&D stage. In addition, they have to be carefully analyzed before major spending can be incurred, such as the purchase of new technological equipment. Some of the criteria used to evaluate the projects include failure to meet deadlines, new opportunities in the market, price changes, and the reporting status. Projects which do not meet the criteria are discarded, while those that meet all the requirements are invested upon.

Finally, Actavis uses a bottom up PPM approach on the overall projects that have been selected. The first stage in the approach entails the overall evaluation of the project pipeline in relation to their distribution across all departments. The PPM team ensures that the selected projects are equally distributed, and that there is no bias. They ensure that the projects meet all the identification gaps and expected launch frequencies. The second step is prioritization of projects. After review of pipelines and all viable projects identifies, the managers must decide which projects should take priority over the others. The projects are ranked on the basis on their risk profiles, opportunities in the market, healthcare needs, sales volume, and time required to market, and deadlines. In Actavis, the project priorities are defined on the basis of their expiry dates and ability to meet the current health demands, regardless of the costs. The projects are then ranked and those of high value are implemented first.

Project Hierarchy

Differences between Project, Program, and Portfolio Management

There exist substantial differences between program, project, and portfolio management. In project management, the projects are managed individually, separate from other projects within the organization. Portfolio management, on the other hand, manages a group of different programs in an organization simultaneously. PPM incurs large amounts to resources, compared with project and program management. Consequently, program management is concerned with individual components within a project. For instance in Actavis organization, the company deals in the development of new generic drugs. The R&D conducts research on different types of drugs which are then sold to other pharmaceuticals, or to healthcare organizations. The company has a portfolio management department, in which different drug projects are managed simultaneously. In other times, Actavis deals with a single generic drug. Each drug requires the development of different components and substances, which entail a program.

In spite of the differences, there are several similarities between program, project, and portfolio management. Management at all levels requires careful planning and execution, and the projects must go through the stages of the life cycle development. The management must first begin with the initiation, implementation, execution, and then monitoring. Another similarity is that in all levels, there is a distinct project team, composed of members with varying skills and capabilities.

Advantages of Managing a project at Portfolio Level

One major benefit of PPM is that it increased involvement of different types of employees in the attainment of organizational objectives. In PPM, many projects are carried out at the same time, and this brings employees from different departments together towards achieving the same objectives.

Another advantage of PPM is equal distribution of resources. Due to the large number of projects involved, the PPM managers plan on how to effectively distribute resources equally to each project. After prioritization, the most impotent projects are allocated the most resources, while the least important ones get few resources.

PPM facilitates better productivity within and organization. Every team member in a project aims at improving their productivity and contributing to the team. New ideas are shared, conflicts are easily solved, and projects are completed within set time. PPM allows the project managers to move people around and adjust the resource needs of each project to meet the organizational needs.

Advantages of Managing a Project at Program Level

Unlike PPM, one advantage of project management is that it incurs fewer resources. Dealing with a single project at a time is beneficial in resource utilization. Another advantage is that the employees can focus on completing one task at a given time, therefore minimizing the possibilities for errors. In addition, at project level, fewer employees are tasked with the given activities, and there are fewer conflicts.

The most advantageous organizational structure for project and portfolio management is large multinational corporations. In these organizations, there are distinct and autonomous business units, specializing in different types of operations. Such organizations employ large numbers of diversified employees, and have locations in different countries. Due to their large size, they undertake different projects at the same time. Without portfolio or project management, there is increased likelihood of confusion over projects or unfinished programs. Incorporating PPM in such companies has huge impacts for their productivity. PPM will allow them to manage many projects simultaneously, thereby saving substantial amounts of time and other resources. In addition, PPM will allow the coordination and interdependency across different organizations. Employees from different departments will join forces and work together towards attainment of common organizational strategies. As a result, the overall growth and development of the organization will be significantly improved.

Project Methodology

Advantages of Project Methodology

One of the main advantages of having a project methodology in an organization is that it facilitates clarity of roles and responsibilities. In an effective project management, all the employees understand what is expected of them. The roles and responsibilities are clearly defined, and the firm becomes organized in structure and all its processes. In PPM, the managers lay out all the tasks required to complete the project. Clarity of roles facilitates efficiency, and activities are completed in time. There is no confusion over tasks not finished, as every member of the organization has a purpose and role to play in the success of the project. In addition, clarity allows for an effective decision making process in the company. The employees are accountable for their actions, and coordination is enhanced. The project initiation phase is also sped up as a result of having common processes that are used repeatedly.

Another advantage of project methodology is effective utilization of resources. In project management, all activities required to be completed within a given time are laid out in advance. The roles are assigned to each employee, and the resources required to complete each activity is budgeted for. The project managers put all the variables into consideration, and effectively allocate resource. As a result, wastage is minimized, as all resources needed to complete a given task area accounted for.

Project methodology in organizations improves their profitability and productivity, as the chances of reaching the set objectives significantly increased. Successful organizations have effective project management departments in place. They allow for control and coordination among all team members, which makes it easier to identify problems they occur. The project managers control the scope of the project and all other variable affecting completion. In addition, effective allocation of resources minimizes wastage by allocating finances where necessary. Every individual affiliated with the project has a unique setoff skills and qualifications that contribute to effective implementation.

Another benefit or project methodology is that it facilitates risk identification. Over the years, the business environment has been changing at a rapid rate. With the increased innovations and advancements in technology, new risks emerged. When not planned for, these risks have the potential to harm the productivity of the business. However, with effective project management, such risks are minimized and advocated for. The project team plans for all risks that may face the project and hinder the completion of activities. One of the main elements of PM is risk management. Effective risk management allows companies to be prepared for any uncertainties. Moreover, the project manager set aside contingency funds, which cater for new and emerging risks.

Project management brings all individuals of the organization closer, and facilitates motivation of the employees. A project team is composed of employees from different departments, with varying sets of skills and qualifications that are vital for the project completion. These employees must work together and share useful skills and knowledge vital to the project. Conflicts may arise, but these are quickly resolved because they have common objectives. Lasting relationships are built and maintained, and teamwork is facilitated. Employees play a significant role in the success of any organization, and they are the most important resources. Therefore, through project management, all individuals must work together for the overall wellbeing of the organization, sharing ideas and correcting each other. A happier and more motivated team will facilitate high performance of the project.

Components of Project Methodology at each Stage of Program Life Cycle

The project life cycle has five distinct stages, beginning with the initiation of the project to the review and monitoring stage. The first component of the life cycle is the project the initiation. In this stage, all the ideas for the project are assessed, and the most viable idea is selected. Afterwards, a business case for the project is established. A project team is then selected, whereby members with distinct skills, knowledge and qualifications for the project are assembled. After the assembly of the project team, the project manager then assigns the different tasks and responsibilities.

The second stage in the life cycle is the project planning. The stage entails the design of the project, and has a number of activities aimed at establishing how the project will be carried out. In the planning phase, the team members crate a financial plan, resources allocation, risk management, and quality plans. They decide how the established objectives will be achieved. Additionally, all the suppliers of the raw materials needed for the execution of the project are contacted, and a procurement plan is created. The members also establish and effective communication channel and review the phase to assess whether all the components required to complete the project are in place.

The third stage in the life cycle is execution. After all the resources have been allocated, team members selected, and roles and responsibilities assigned, the project is implemented. The members begin to perform all the tasks laid out in the project. The execution place is usually the longest and most important phase. The stage determines the overall success of the project. All the components in the planning phase, including quality management, risk management, financial planning, and procurement are performed.

Monitoring and evaluation are the next stages of the project life cycle. Once all the activities have been performed, and the project has been completed, an evaluation is conducted. The main purpose of monitoring and review is to assess whether all objectives of the project have been met. The team members perform a careful analysis of all the risks, the financial plans, quality plans and procurement. In case there are any deficiencies in the project, corrective action is undertaken.

Project closure is the last stage of the project life cycle. It entails wrapping up of the project after all the tasks have been performed. The project team is dissolved, and the organization starts preparing for the next project.

Project Methodology Consistent with Actavis’ Organizational Design

There are many types of project methodologies suitable for different organizational models. Actavis is a large multinational cooperation employing thousands of employees, with branches in over 100 countries. Therefore, the best strategy for such a business is agile project methodology. Agile methodology is best suited for large and complex projects that have high levels of risks and uncertainty. Actavis pharmaceuticals deals with new generic drugs expected to be produced in the market within a short expiry date period. The healthcare industry is highly volatile, affected by increased changes in technology and patient demands. The pharmaceutical industry must strive to produce new drugs in the market to deal with the increased changes in patient conditions and medical specifications. Agile is highly adaptive, and will allow the organization to deliver products on a timely manner. Some of the main principles of the methodology include simplicity, flexibility, continuous improvement, and collaboration.

Challenges of Agile Methodology

One of the main limitations of using agile project methodology in the organization is that it is highly complex. The technique requires the collaboration of different stakeholders within and outside the organization. Extensive planning and execution is required before the project can be completed, which consumes substantial amounts of resources in terms of time and money.

While agile is a highly flexible method, it is not suited for large projects. The flexibility of the technique means that it is highly adaptive, and requires the members to constantly adapt to the changes and uncertainties. Agile therefore requires highly skilled employees who can think creatively and easily adapt to changes. Resistance to change is not allowed, and whole this may be beneficial to the company, it can take a toll on employees who do not respond well to unforeseen changes.

Metrics and Measurement

Some of the most common metrics used to measure the alignment of the project to the organizational goals include: balance scorecards, goal question metrics approach, and common measurement framework. Goal question metrics approach implements strategies at the project levels. The project managers first identify a goal and then set of measurements is used to evaluate its viability. The questions are then formed based on the quantity of the identified goals. Common measurement framework uses a top down alignment to ensure that all the goals set by the project managers are in line with the organizational strategy.

Standard Balance Score card

Financial Perspective

Improved cash

Increased productivity

Higher profit margins

Learning and Growth

Develop effective communication skills

Enhance employees personal growth

Enhance information to all


Ensure all the needs are met

Facilitate customer satisfaction

Quality products and services

Internal processes

Use of latest technologies

Effective leadership

Cross selling

Advantages of a balance Scorecard

One of the main advantages of a balance scorecard is that it allows the project team managers to effectively communicate the strategy of the project with stakeholders. It shows the alignment between the project goals and the organizational strategy. In addition, the scorecard is simple to understand, and enables the employees to identify the key goals of the company. They can understand their roles and responsibilities, which improves their performance. Another advantage is that the employees can clearly see how the different objectives of the company affect one another. They stick to the organizational goals, as the scorecard provides them with clarity on what is expected of them. The scorecard also allows their employees to make their own personal goals, and in doing so, they can align them to the company strategies. Finally, the scorecard allows the organization to effectively manage and allocate resources.

Disadvantages of a Balance Scorecard

A major limitation of the scorecard is that it is complex, and requires significant amounts of resources to complete. It can become overwhelming to the employees, as it distracts them from completing their assigned tasks and responsibilities. For successful implementation, the balance scorecard requires strong and sophisticated leadership. Many leaders do not believe that the scorecard can be a viable option and therefore, they do not give it much importance. Another limitation of the scorecard is that it requires people to be on the same page, which can be a difficult task to accomplish. All organizations are composed of diverse employees, with varying needs and qualifications. Therefore, getting people to think and act the same is hard, and can result into conflicts. Lastly, the balance scorecard focuses on the final objectives of the organization and as a result, individual goals can be ignored. Employees may not be motivated to improve upon their performance, since the managers only look for the end results.

January 19, 2024

Business Health



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