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Models and software for improving the profitability of pharmaceutical research

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  • Yu, Jiun-Yu
  • Gittins, John

Abstract

The pharmaceutical industry is highly competitive, and the discovery and development of new drugs is extremely expensive and time consuming. This paper is a contribution to the task of improving the effectiveness of pre-clinical research. Our model investigates for any given project the number of lead series which should if necessary be optimised in the search for a development compound which is sufficiently promising to proceed to clinical trials. The numbers of scientists which should be allocated to each research stage are also investigated. Two widely-applied profitability criteria are considered. Computer software designed to implement the optimisation calculations is described and shown to produce reasonable results, leading to a potentially dramatic improvement in profitability.

Suggested Citation

  • Yu, Jiun-Yu & Gittins, John, 2008. "Models and software for improving the profitability of pharmaceutical research," European Journal of Operational Research, Elsevier, vol. 189(2), pages 459-475, September.
    • Handle: RePEc:eee:ejores:v:189:y:2008:i:2:p:459-475
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    References listed on IDEAS

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    1. Ming Ding & Jehoshua Eliashberg, 2002. "Structuring the New Product Development Pipeline," Management Science, INFORMS, vol. 48(3), pages 343-363, March.
    2. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
    3. Boschi, R. A. A., 1982. "Modelling exploratory research," European Journal of Operational Research, Elsevier, vol. 10(3), pages 250-259, July.
    4. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
    5. Jeffrey S. Stonebraker, 2002. "How Bayer Makes Decisions to Develop New Drugs," Interfaces, INFORMS, vol. 32(6), pages 77-90, December.
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    Cited by:

    1. Lütkemeyer, Daniel & Heese, H. Sebastian & Wuttke, David A. & Gernert, Andreas K., 2022. "Pricing and market entry decisions in personalized medicine," International Journal of Production Economics, Elsevier, vol. 253(C).
    2. Creemers, Stefan & De Reyck, Bert & Leus, Roel, 2015. "Project planning with alternative technologies in uncertain environments," European Journal of Operational Research, Elsevier, vol. 242(2), pages 465-476.

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