Portfolio Management

The Challenge of Drug Development

The drug development process requires many years of translational research and clinical testing, costs hundreds of millions to billions of dollars, and often results in failure. In fact, drug development productivity—the ratio of the number of new drugs approved to R&D spending each year—has declined steadily over the past 50 years despite scientific and technical progress.

Eroom’s Law (the reverse of Moore’s Law) suggests that the cost of developing new drugs has doubled approximately every nine years since the 1950s.

The total average research and development investment required to bring a new therapeutic agent to market ranges from $314 million to $2.8 billion.

The average phase I to approval success rate across all therapeutic areas is 13.8%.

Using Financial Engineering, We Can Reverse Eroom’s Law

At QLS, we apply quantitative biomedical portfolio management tools—including portfolio optimization, factor-model correlation analysis, and Monte Carlo simulation—to help drug developers and investors de-risk and optimally scale their portfolio positions. We offer our clients a practical solutions platform, enabling them to access previously untapped pools of capital for supporting translational medicine. By spreading the risk of biomedical investment across a larger pool of investors and increasing the number of shots on goal, the risk to all investors can be lowered. For example, the chance of at least three successes out of fifteen uncorrelated late-stage programs, each with a 42% probability of success, is 98%.

Unlock Your Portfolio’s Potential

At QLS, we take a data-driven and fully integrated view of portfolio and risk management. Our Portfolio and Risk Management Subscription platform includes easy-to-use financial simulation software in Microsoft Excel and opportunities for customization with respect to potential financing options and business structures for our clients.

To learn more, schedule a meeting with us.

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