A planning model of pharmaceutical research and development

Despite the popular view that pharmaceutical research is a random process, and by inference unplannable, the long-term survival and development of a pharmaceutical company must be based on a steady flow of new products with a full understanding by management of the relationships between research expenditure and the likely revenues they will produce. In this paper is developed a model of the R&D function which uses probabilistic assumptions to compute the expected stream of revenues from a portfolio of projects involving the major development routes from which pharmaceutical products usually arise. The model is based on expected values of market and technical research performance and hence gives expected or indicated sales in the future as output.