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Massachusetts Biotechnology Council

November 19, 2004


Cambridge, MA

Using Project Management


Information Systems (PMIS) To
Improve R&D Portfolio Decisions
Martin D. Hynes III, Ph.D.
Director, Operations & Quality,
Pharmaceutical Product Research & Development
Lilly Research Laboratories
A Division of Eli Lilly and Company
Lilly Corporate Center
Indianapolis, Indiana 46285 U.S.A.
www.lilly.com

Agenda
I.

Introduction

II.

Integrated Business Process for Portfolio


and Project Management

III. Portfolio Management


IV. Project Management
V.

Capacity Management

VI. Financial Management


VII. Conclusion
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

I. Introduction

The Challenges of Drug Development


November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

We Are Confronted With


Increasing
Development time
Costs

Low probability of technical success


Hostile political environment
Global development organizations
Unmet medical needs

November 19, 2004


Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

Drug Development Cycle Time


Time from First Pharmacological Testing to New
Drug Approval, 1963 - 1997

Years

1960s
1970s
1980s
1990s

3.8

1.9

4.4

2.4
4.3

5.2

2.1
5.6

5.6

2.8
6.7

0.0

5.0

2.0

10.0

15.0

Time (Years)
1st Pharm Testing to IND File

IND File to NDA Subm

NDA Subm to Approval

Source: Parexels Pharmaceutical R&D Statistical Sourcebook, 2002/2003


November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

Dollars (Millions)

Rising Cost of New Drug


Development
900
800
700
600
500
400
300
200
100
0
1987

1990

1994

1996

2001

2002

Year
Cost

Represents a 250% increase from 1987 2002!


November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

NMEs Approved 1990 - 2003


50
40

35

30

2003

12

2002

1999

10

2001

19

1998

16

17

2000

18

1997

13

14
18

1996

11

13

16

19

1995

1994

12

14

12

1993

15

11

1992

10

16

1991

20

30

1990

Number of Approvals

60

Years
Priority Review

Standard Review

www.FDA.gov
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

NMEs and BLAs Approved 1990 2003


50
40
30
20

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

10
1990

Number of Approvals

60

Years
New Molecular Entities

Biologics License Application

www.FDA.gov
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

Biologics License Applications (BLA)


Approved 1996 - 2004
Number of Approvals

5
4
3
5

2
1

2
1

2
1

1
0

1996 1997 1998 1999 2000 2001 2002 2003 2004*


Years
Approvals
www.FDA.gov
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

* As of April 2004
9

U.S. Pharmaceutical Industry


Adjusted R&D Expenditures and
NCE Approvals, 1963-2001

Source: Tufts CSDD Approved NCE Database; PhRMA


November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

10

Indexed growth
(1991 = 100)

Trends in R&D Expenditure, Sales,


and Number of NMEs 1991 - 2005
200
175
150
125
100
75
50
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Year

R&D Expenditure

Sales

Number of NMEs

Source: News from CMR International, March 2002


November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

11

Declining R&D Success Rates


Number of Compounds Entering Phase

Cumulative
%
Success Change
Rate

Historical
(1995 2000)

14%

Current
(2000 2002)

13

8%

Phase I

Phase II

Phase
III/File

Launch

Preclinical

43

Source: Windhovers In Vivo: The Business and Medicine Report, Bain Drug Economics
Model, 2003
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

12

Safety-Based Market Withdrawals


Post-Launch
Withdrawal Year
(Approval Year)
1998

1999

2000

2001

2002

2003

2004

Mibefradil
(1997)

Astemizole
(1988)

Alosetron*
(2000)

Cerivastatin
(1997)

Vioxx
(1999)

Bromfenac
(1997)

Grepafloxacin
(1997)

Cisapride
(1993)

Rapacuronium
(1999)

Seldane
(1985)

Troglitazone
(1997)

* Returned to market in 2002 with restricted distribution

www.FDA.gov
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

13

Recouping the Cost of Development


Only 3 out of every 10 drugs brought to
market generate enough revenue to recover
the average cost of its development

7 out of every 10 drugs brought to market


never generate enough revenue to recover the
average cost of development

H. Grabowski et.al. 2002


November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

14

We Are Confronted With Unmet


Medical Needs
In the last 40 minutes there have been.
10 new victims of schizophrenia
132 U.S. cancer deaths
20 osteoporosis-related hip fractures
1,296 cases of anxiety disorder
1,523 procedures requiring pain treatment
72 U.S. deaths from cardiovascular disease
365 new cases of HIV/AIDS diagnosed

There continues to be challenges in medical science


Age-old ailments (cholera, pneumonia, malaria, dysentery,
tuberculosis)
Emerging pathogens (Legionnaires' disease, AIDS, Ebola,
SARS, West Nile Virus)
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

15

How Do We Respond to These


Challenges?
Total despair
Revamp the drug
development process
One project at a time

November 19, 2004


Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

16

How Do We Respond to These


Challenges?
Total despair
Big Pharma sentiment shifts from pessimism to
hopelessness
Jami Rubin - Morgan Stanley
Not viable
Patients on a global basis
are depending upon us

Not necessary
Our industry is staffed with
bright and creative people

www.thestreet.com
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

17

How Do We Respond to These


Challenges?
Revamp the Drug Development Process?
Viable in the long term

The Critical Path to New Medical Products


On March 16, FDA released a report addressing the recent slowdown in innovative
medical therapies submitted to the FDA for approval, "Innovation/Stagnation:
Challenge and Opportunity on the Critical Path to New Medical Products." That
report describes the urgent need to modernize the medical product development
process -- the Critical Path -- to make product development more predictable and
less costly.
According to Acting FDA Commissioner Lester M. Crawford, "A new focus on
updating the tools currently used to assess the safety and efficacy of new medical
products will very likely bring tremendous public health benefits."
Source: www.FDA.gov
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

18

How Do We Respond to These


Challenges?
One project at a time
Viable approach in the near term

November 19, 2004


Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

19

How Do We Respond to These


Challenges?
Better management of drug development
projects can lead to reductions in cost and
cycle time

November 19, 2004


Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

20

How Do We Respond to These


Challenges?
There are interventions that will help, for
example:
Cutting development cycle times by 50%
would lower cost by 30%
Improving clinical success rate by 30% would
reduce cost by 22%
Cutting one year from phase III clinical trial
would save an average of $71 million USD

November 19, 2004


Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

21

How Do We Respond to These


Challenges?
You cant manage what you cant measure
Hence, we need to be able to measure
Timelines
Cost
Probability of technical success
Value

for drug development projects as well as the portfolio of


projects

This data should be used to drive:


On time, on budget, and on scope performance
Improvements in the drug development process
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

22

Confronting the Challenges


Business processes and supporting tools are
needed that will allow us to:
Deliver:
on time
on budget
products that add value
Increase the probability of technical success
Allow for the rapid redeployment of
resources once a compound fails
Effectively manage global development
projects
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

23

II. Integrated Business Process for


Portfolio and Project Management

November 19, 2004


Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

24

Business Process for Portfolio and


Project Management
How much
can we afford
to spend?
Financial
Financial
Process
Process

Portfolio
Portfolio
Mgmt
MgmtProcess
Process

Uncertainty
Attrition
Change

What resources
Capacity
Capacity
will it take in
Mgmt
MgmtProcess
Process
both people
and dollars?
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

What
molecules
should we
work on?

Project
ProjectMgmt
Mgmt
Process
Process
What studies
will we have to
do to bring
these molecules
to market?

25

IT Tools for Portfolio and Project


Management
Portfolio
Portfolio
Optimizer
Optimizer

Portfolio Optimization
Tools provide the
organization with
"intelligent" options

SAP
SAP

SAP consolidates
project, resource, and
direct expense
information across the
Portfolio

MS Project
captures detail
critical path
timelines
Microsoft
Microsoft
Project
Project

November 19, 2004


Mass. Biotech. Council, MDH, acb

Local Capacity Tools


Local
Local
(STAR) provide
Capacity
Capacity
detailed resource
Tools
Tools(STAR)
(STAR)
estimates by
function by role
Company Confidential
Copyright 2004 Eli Lilly and Company

26

The Project Management Information


System
Net Present
Value
Probability
of Technical
Success

Portfolio Tool
Portfolio
Reports

Optimizer

Actual
Financial
LRL Global
Employees
Time Entry

SAP Portfolio
SAP

Data
Repository

Business
Warehouse

Project
Reports
Web
mySAP.
com

Plan
Project
Management
Functional
Capacity
Planner

November 19, 2004


Mass. Biotech. Council, MDH, acb

STAR
STAR
Database
Database

Company Confidential
Copyright 2004 Eli Lilly and Company

Capacity
Reports

27

III. Portfolio Management

What Molecules Should We Work On?


November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

28

Business Process Integration


How much
can we afford
to spend?
Financial
Financial
Process
Process

Portfolio
Portfolio
Mgmt
MgmtProcess
Process

Uncertainty
Attrition
Change

What resources
Capacity
Capacity
will it take in
Mgmt
MgmtProcess
Process
both people and
dollars?
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

What
molecules
should we
work on?

Project
ProjectMgmt
Mgmt
Process
Process
What studies
will we have to
do to bring
these molecules
to market?

29

Portfolio Management: R&D Model


Key question - How many projects need to be in
the pipeline to meet corporate growth targets?

FHD
To
FED

FED
To
FPD

FPD
To
FS

FS
To
Launch

MARKETED
PRODUCTS

Revenue $$

DRUG
DISCOVERY

FTD
To
FHD

2001

November 19, 2004


Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

2002

2003

2004

2005

2006

2007
30

Governance: Review and Approval


Process Balancing Portfolio
Portfolio and Operational
Committees review workin-progress vs research
and development model

Buy-Ups
In-License

FTD
To
FHD

FHD
To
FED

FED
To
FPD

FPD
To
FS

FS
To
Launch

Consider Buy-Up
Proposals, Acceleration
Strategies, or In-License
Opportunities to fill critical
gaps

Acceleration

Trade-Offs, Park,
Out-License, Alliance

November 19, 2004


Mass. Biotech. Council, MDH, acb

Make Trade-Offs, Park,


Out-Licensing, or Alliance
Decisions to moderate
phases are over-capacity
Company Confidential
Copyright 2004 Eli Lilly and Company

31

Portfolio Governance: Portfolio


Review Process
All projects in the
portfolio are assessed
using the same
parameters and
methodologies
Senior Management
decides what project to
add to the portfolio
Project priorities are
then established

Market
Valuation

Probability
of Technical
Success

Portfolio
Prioritization

Resource
Intensity

Cycle
Time

Short term and


long term
capacity
requirements
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

32

Portfolio Inputs To Project


Management Information Systems
Net Present
Value

Portfolio Tool
Portfolio
Reports

Optimizer

Probability
of Technical
Success
Actual
Financial

Inputs to the
Portfolio
Resource intensity
Cycle time

LRL Global
Employees
Time Entry

SAP Portfolio
Data Repository

SAP
Business
Warehouse

Project
Reports
Web
mySAP.
com

Plan
Project
Management
Functional
Capacity
Planner

STAR
STAR
Database
Database

Capacity
Reports

Probability of technical success


Market valuation
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

33

Portfolio Reporting From Project


Management Information Systems
Net Present
Value
Probability
of Technical
Success

Portfolio Tool
Portfolio
Reports

Optimizer

Actual
Financial
LRL Global
Employees
Time Entry

SAP Portfolio
Data Repository

SAP
Business
Warehouse

Project
Reports
Web
mySAP.
com

Plan
Project
Management
Functional
Capacity
Planner

November 19, 2004


Mass. Biotech. Council, MDH, acb

STAR
STAR
Database
Database

Capacity
Reports

Company Confidential
Copyright 2004 Eli Lilly and Company

Examples of Portfolio
Reports
8Q Rolling Forecast
8Q Forecast Plan by
Project
Project Milestones, Cost,
and Revenues
Plan vs Actual Spend

34

Portfolio
Reporting

Net
Net Present
Present
Value
Value

Portfolio Tool
Optimizer

Probability
Probabilityof
of
Technical
Technical
Success
Success

Portfolio
Reports

Data from SAP

8 Quarter Rolling Forecast


$60

Do we have adequate


resources to deliver portfolio?
$50
How are we progressing
toward key milestones?
$40
Do we need to slow, stop or
accelerate any resource
utilization?
$30
Are we appropriately
resourcing our priorities?
$20
Do we have the capacity to add
new projects?
$10
What are the rate limiting
functional areas?

Example Portfolio Resource Forecast

$004Q1 04Q2 04Q3 04Q4 05Q1 05Q2 05Q3 05Q4

November 19, 2004


Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

35

Net
Net Present
Present
Value
Value

Portfolio
Reporting

Portfolio Tool
Portfolio
Reports

Optimizer

Probability
Probabilityof
of
Technical
Technical
Success
Success

Data from SAP

8 Quarter Forecast: Plan By Project vs Functional Budget


Probabilized Spend Per Quarter

Cost ($$$)

Direct
People
Target

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

Cost ($$$)

Probabilized Spend Per Quarter

Direct
People
Target

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

Plan By Project (Demand)


exceeds Target (Supply)

Plan By Project (Demand) less


than Target (Supply)

Trade-offs necessary to meet


target

Consider additional Buy-Up


Opportunities

November 19, 2004


Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

36

Portfolio Capacity Management


Project Demand vs Supply (On-Board Headcount)

Supply vs Demand

115%

Compare supply vs
demand over
periods of time

105%

Used to identify
chronic bottleneck
functions

November 19, 2004


Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

Project Mgmt

Regulatory

Medical Affiliates

Medical Operations

Clinical Pharm

CT Materials

Product Dev

Process Dev

pK

ADME

Toxicology

Chemistry

85%

Biology

95%

Is the bottleneck
where you want it
to be?
Trade-off
decisions, strategic
hiring
37

IV. Project Management

What Studies to Get the Molecules to


Market?
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

38

Business Process Integration


How much
can we afford
to spend?
Financial
Financial
Process
Process

What resources
will it take in
both people and
dollars?
November 19, 2004
Mass. Biotech. Council, MDH, acb

Portfolio
Portfolio
Mgmt
MgmtProcess
Process

Uncertainty
Attrition
Change
Capacity
Capacity
Mgmt
MgmtProcess
Process

Company Confidential
Copyright 2004 Eli Lilly and Company

What
molecules
should we
work on?

Project
ProjectMgmt
Mgmt
Process
Process
What studies
will we have to
do to bring
these molecules
to market?

39

The Project Management Planning


Process
Discovery
Hit
To
Lead

Target
To
Hit

Target
Milestones Target

Hit
Hit

Lead
To
PgS

Lead
Lead

Early Development

Late Development
Launch

Lead
Optimization

Pre-Clinical
Development

Phase I

Phase 2

Global
Launch

Phase 3
Registration

PgS
PgS

CS
FTD

FHD
FHD

FED
FED

PD/RD
FPD

FS
FS

FA
FA

FL
FL

GL

Planning Horizon?
Level
of
Detail?
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

40

Project Planning Process


Utilize Microsoft Project for
detailed project planning
(timelines)
Utilize SAP project systems
for timeline and cost
integration
Conduct critical path
analysis to optimize crossfunctional plan
Use rolling wave methodology across planning horizon
Use phase specific templates as starting point for each
phase of development

November 19, 2004


Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

41

Project Inputs To Project


Management Information System
Net Present
Value

Portfolio Tool
Portfolio
Reports

Optimizer

Probability
of Technical
Success
Actual
Financial
LRL Global
Employees
Time Entry

SAP Portfolio
Data Repository

SAP
Business
Warehouse

Project
Reports
Web
mySAP.
com

Plan

Project Management
Inputs

Project
Management
Functional
Capacity
Planner

STAR
STAR
Database
Database

Capacity
Reports

The project plan


Timeline/Milestones
Expenses
Direct
Indirect
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

42

Project Reporting From Project


Management Information Systems
Net Present
Value
Probability
of Technical
Success

Portfolio Tool
Portfolio
Reports

Optimizer

Actual
Financial
LRL Global
Employees
Time Entry

SAP Portfolio
Data Repository

SAP
Business
Warehouse

Project
Reports
Web
mySAP.
com

Plan
Project
Management
Functional
Capacity
Planner

November 19, 2004


Mass. Biotech. Council, MDH, acb

STAR
STAR
Database
Database

Capacity
Reports

Company Confidential
Copyright 2004 Eli Lilly and Company

Example Reports
Planning Board
Capacity
Cost
Dollars
People (Project Hours)

43

Project
Reports

November 19, 2004


Mass. Biotech. Council, MDH, acb

Portfolio Tool
Optimizer
Actual
Financial
Time Entry

Company Confidential
Copyright 2004 Eli Lilly and Company

SAP Portfolio
Data
Repository

Project
Reports

44

V. Capacity Management

What Resources Will It Take?


November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

45

Business Process Integration


How much
can we afford
to spend?
Financial
Financial
Process
Process

What resources
will it take in
both people and
dollars?
November 19, 2004
Mass. Biotech. Council, MDH, acb

Portfolio
Portfolio
Mgmt
MgmtProcess
Process

Uncertainty
Attrition
Change
Capacity
Capacity
Mgmt
MgmtProcess
Process

Company Confidential
Copyright 2004 Eli Lilly and Company

What
molecules
should we
work on?

Project
ProjectMgmt
Mgmt
Process
Process
What studies
will we have to
do to bring
these molecules
to market?

46

Functional Capacity
Management
There is a significant
amount of detail at
the functional level
that feeds the Project
Level information
This level of detail is
managed at the
functional level

Project Level Planning


High Level
Functional
Deliverable

Detailed
Activities

Roles

Skill Set
Capability
Training
Flexibility
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

Detailed
Activities

Physical
Plant
Facility
Equipment
Technology

Detailed
Activities

External
Capacity
Vendor Mgmt
Contract
Negotiation
Alliances
47

Capacity Management Inputs To Project


Management Information Systems
Net Present
Value

Portfolio Tool
Portfolio
Reports

Optimizer

Probability
of Technical
Success
Actual
Financial
LRL Global
Employees
Time Entry

SAP Portfolio
Data Repository

SAP
Business
Warehouse

Project
Reports
Web
mySAP.
com

Plan
Project
Management
Functional
Capacity
Planner

STAR
STAR
Database
Database

Capacity
Reports

Functional Capacity Inputs


Project plans
Capacity plans
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

48

Capacity Management Reporting To


Project Management Information Systems
Net Present
Value
Probability
of Technical
Success

Portfolio Tool
Portfolio
Reports

Optimizer

Actual
Financial
LRL Global
Employees
Time Entry

SAP Portfolio
Data Repository

SAP
Business
Warehouse

Project
Reports
Web
mySAP.
com

Plan
Project
Management
Functional
Capacity
Planner

November 19, 2004


Mass. Biotech. Council, MDH, acb

STAR
STAR
Database
Database

Capacity
Reports

Company Confidential
Copyright 2004 Eli Lilly and Company

Example Reports
Plan, Actual, and Forecast
for:
each project
the portfolio of projects
function
division
49

Capacity Reports
From PMIS

November 19, 2004


Mass. Biotech. Council, MDH, acb

Portfolio Tool
Optimizer
SAP Portfolio
Data Repository
Plan
Project Mgt.
Capacity Plan

Company Confidential
Copyright 2004 Eli Lilly and Company

STAR
Database

Capacity
Reports

50

VI. Financial Management

How Much Can We Afford to Spend?


November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

51

Business Process Integration


How much
can we afford
to spend?
Financial
Financial
Process
Process

Portfolio
Portfolio
Mgmt
MgmtProcess
Process

Uncertainty
Attrition
Change

What resources
Capacity
Capacity
will it take in
Mgmt
MgmtProcess
Process
both people and
dollars?
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

What
molecules
should we
work on?

Project
ProjectMgmt
Mgmt
Process
Process
What studies
will we have to
do to bring
these molecules
to market?

52

Financial Process
The corporate
budgeting process
defines the R&D budget
Fiscal process to
establish annual
budget for upcoming
year

Total Budget

R&D
R&D

Mfg
Mfg

Mrktg
Mrktg

$$$

$$$

$$$

8 quarter forecasting
process for refinement
throughout the year
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

53

Budget Reconciliation
Supply
(Budget)

Total
Project
Demand

The financial budgeting


process defines the
spending limit (Supply)

The total project


projection provides
the cost of the desired
work (Demand)

Reconciliation of Supply and


Demand through "Buy-Up"
and "Trade-Off" Processes
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

54

Financial Inputs
Net Present
Value

Portfolio Tool
Portfolio
Reports

Optimizer

Probability
of Technical
Success
Actual
Financial
LRL Global
Employees
Time Entry

SAP Portfolio
Data Repository

SAP
Business
Warehouse

Project
Reports
Web
mySAP.
com

Plan
Project
Management
Functional
Capacity
Planner

STAR
STAR
Database
Database

Capacity
Reports

Inputs to Financial Process


The project plan
Time entry data
Global cost project data
Clinical trial data
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

55

Financial Reporting From Project


Management Information Systems
Net Present
Value
Probability
of Technical
Success

Portfolio Tool
Portfolio
Reports

Optimizer

Actual
Financial
LRL Global
Employees
Time Entry

SAP Portfolio
Data Repository

SAP
Business
Warehouse

Project
Reports
Web
mySAP.
com

Plan
Project
Management
Functional
Capacity
Planner

STAR
STAR
Database
Database

Capacity
Reports

Financial Reports Available


Plan vs Actual Expense
Direct
Indirect
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Copyright 2004 Eli Lilly and Company

56

Financial Reports
From PMIS

Portfolio Tool
Optimizer
Actual
Financial

SAP Portfolio
Data
Repository

Time Entry

Project
Reports

Top 20 Compounds by Spend


Total 2004

(Compound, % Total)
Drug Candidate 1
Drug Candidate 2
Drug Candidate 3
Drug Candidate 4
Drug Candidate 5
Drug Candidate 6
Drug Candidate 7
Drug Candidate 8
Drug Candidate 9
Drug Candidate 10

Top 10 ^

Drug Candidate 11
Drug Candidate 12
Drug Candidate 13

Lilly FTE $

Drug Candidate 14

Direct $

Drug Candidate 15
Drug Candidate 16
Drug Candidate 17
Drug Candidate 18
Drug Candidate 19
Drug Candidate 20

$ thousand

November 19, 2004


Mass. Biotech. Council, MDH, acb

500

1,000

1,500

2,000

Company Confidential
Copyright 2004 Eli Lilly and Company

2,500

3,000

3,500
57

Financial Reports
From PMIS

Portfolio Tool
Optimizer
Actual
Financial
Time Entry

SAP Portfolio
Data
Repository

2004 Plan

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Company Confidential
Copyright 2004 Eli Lilly and Company

2004 Actual

Project
Reports

2005 Plan

58

VII. Conclusion

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59

The Benefits of Project Management


Information Systems to the Project Manager
Consolidated source of project information:
More timely and consistent information for
controlling projects
Information more appropriate for cross project
comparison
Senior Management reporting
Fewer tools to maintain
Reduced risk of different data

November 19, 2004


Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

60

The Benefits of Project Management


Information Systems to the Financial Process
Provides Project and Financial Manager with
integrated financial management tool:
Utilizing data provided by the function
Plan and Actuals tied to Project Plan
Cost and resource information more visible to:
Project Manager
Global Research Organization
Better, more current information for
controlling projects

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Company Confidential
Copyright 2004 Eli Lilly and Company

61

Benefits of Project Management Information


Systems to the Portfolio Management Process
SAP Project Systems has provided more
accurate, comprehensive, and timely
information collected in a consistent manner
for decision makers.
Better data should lead to better decisions:
Decisions made by people
Dependent upon on the quality of the inputs

Facilitates the consideration of


Buy-ups and in-licenses
Trade-offs and out-licenses
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62

Key Question
Can small companies benefit from this type
of approach?

Yes
Significant benefit is derived from
Project management tools
Business process

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Project Management Tools


Can a small company afford the tools for
portfolio, project and capacity management?
Can you afford not to measure?
Probably not
Significant choice of tools at a variety of
costs

November 19, 2004


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Company Confidential
Copyright 2004 Eli Lilly and Company

64

Project Management Tools


Types of tools available to small pharmaceutical and
biotech companies
Examples
Project management tools
Excel
Microsoft Project
Microsoft Project Server Edition
Artemis
Scitor
Primavera
Reporting/ Communication tools
PowerPoint
Web sites
Lotus Notes database
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Copyright 2004 Eli Lilly and Company

65

Business Process
Significant benefit can be derived from
Establishment of a business process for:
Project management
Portfolio management
Resource / capacity management
Project governance / gate reviews / project
charters / approvals
Establishment of a dictionary for key terms
Examples First Human Dose
Submission
Establish a common language
November 19, 2004
Mass. Biotech. Council, MDH, acb

Company Confidential
Copyright 2004 Eli Lilly and Company

66

Business Process
Significant benefit can be derived from
Making data driven decisions
Projects
Portfolio
Function
Disciplined execution
Proactive risk management
Frequent communication

November 19, 2004


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Company Confidential
Copyright 2004 Eli Lilly and Company

67

Conclusion
As an industry, we need to continue to adapt
by:
Reinventing the drug development process
FDAs Critical Path initiative
Controlling drug development cost and cycle
times
Project management
Capacity management
Resource management

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Copyright 2004 Eli Lilly and Company

68

Massachusetts Biotechnology Council


November 19, 2004
Cambridge, MA

Thank You
Using Project Management Information Systems
(PMIS) To Improve R&D Portfolio Decisions
Martin D. Hynes III, Ph.D.
Director, Operations & Quality,
Pharmaceutical Product Research & Development
Lilly Research Laboratories
A Division of Eli Lilly and Company
Lilly Corporate Center
Indianapolis, Indiana 46285 U.S.A.
www.lilly.com

November 19, 2004


Mass. Biotech. Council, MDH, acb

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