Pharmaceutical companies are generally organized into Strategic Business Units (SBUs). These SBUs are usually defined by therapeutic area (e.g. Oncology, CVS, Respiratory...) or Client group (Governmental business, private business...).

Dividing business into strategic business units helps the company to harness it competitiveness, adapt to changing market environment, optimize it resources allocation and achieve management efficiency.

Each SBU should contain products targeting similar clients, have minimal share of resources with other SBUs, and has its own decision makers.

Each product has certain life cycle starting from development, passing through launch then maturation and finally becoming obsolete. Portfolio management can keep balance of key business factors as investment and risk between all products.

Thanks to portfolio management, the company can be represented as an integral whole with mutual relation between different business units.

Portfolio management is an important stage of marketing strategy development, it helps to evaluate which products require more investment and to lower the investment of inefficient projects depending on the relative attractiveness of the market as well as the competitive ability of each and every product

Steps of portfolio analysis¹

1- Choice of levels to analyze the portfolio

2- fix unit of analysis

3-define parameters

4-data collection and analysis

5-construction of product portfolio matrix

6-determine product portfolio

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Portfolio Analysis tools

Some portfolio analysis tools help in managing strategic business units across the company, among them BCG Matrix, GE/McKinsey Matrix, and Ansoff Matrix

1. BCG Matrix

The Boston Consulting Group (MCG) Matrix is a simple tool to help a company decide which products to keep, which it should let go and which it should invest in more.

• Question Marks: Rapidly growing products with low market share. They consume large amount of cash but they don't generate much cash. A question mark can become a star through gaining market share. It may also become a dog if the market growth declined. A question mark require careful analysis to determine if it worth the investment required to gain market share.
• Dogs:
• Cash cows

2. GE/McKinsey Matrix

3. Ansoff Matrix

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References:

1. Vixancky, О. (1998). Strategic management. Analysis of the portfolio of businesses. Moscow: Gardarika.
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