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The Value of Holistic Modeling

To many people, holistic modeling may seem a novel practice. Actually, holistic modeling is rather old, seen in 1772 in a letter by Benjamin Franklin to English philosopher Joseph Priestly, who had reached out to Franklin to get some help with a personal dilemma. Priestly had been offered a job, and while both financially and personally appealing, Priestly struggled with whether to accept or not as his current life was already comfortable and productive. And Franklin, he was smart. Instead of giving direct advice, Franklin demonstrated a method to Priestly on how to arrive at a decision. Franklin suggested taking a piece of paper, and over the course of a few days, every time Priestly thought of something about his decision, he was to write it down on the paper and structure it so he would get a pro and a con column. And finally, when he ran out of new pieces of information, he would take a look at all the information and make a decision. The main idea according to Franklin was to make sure that Priestly had a holistic view of the problem before he made a decision. (Read the letter by Benjamin Franklin at the bottom of this article). A Holistic Modeling Application in Pharma

According to the Merriam-Webster dictionary, holism is relating to, or concerns the flow of complete systems, rather than the analysis of, or dissection, into parts. In the pharma R&D domain, we talk about parts. For example a clinical study is part of a drug project, which in turn is part of a portfolio. As such, there are ample risks in focusing on decisions in the different parts, and miss the holistic view. Let's start with one example.

Figure 1.

In the illustration above we are looking at a recruitment process in a clinical study. Typically, we would start by initiating the countries involved. Then, as they come on board, they initiate the study sites. As the sites start working, they screen subjects, of which some will be randomized into the study. The goal is to either hit a certain date of the last patient randomized, or perform the study even faster. There are a lot of aspects to this process. We have the number of subjects, number of countries and sites, the recruitment rates, and cost rates, all these are things you can affect by different types of design. The output is the date of getting the last subject randomized, and the total cost is of interest when looking at this process. However, there are other questions that are related to this as well.

Figure 2.

If we put this recruitment phase into a context of a whole project, we see that we get a trial setup phase prior to getting into the first country. We also have a treatment phase after the last patient is randomized, and a reporting phase. We could change the number of subjects, since the fewer subjects we have to recruit, the faster the study will go. In doing so, we may run the risk of reducing the power of the trial results, which may lead to a an incorrect decision leading into phase three of the development process. In Figure 2 we have modeled in a phase activity, which includes all the different activities that are not part of this clinical trial. That gives us a minimum duration for the phase. Thus, if we reduce the recruitment time, so that the study takes less time than the rest of the phase, then we won’t gain anything from that. Further, if we can shorten the recruitment period, we may actually get to market earlier, which means that the increased costs of the recruitment process may be more than offset by increased revenue. In many cases, it'll be worth it. So that's the idea of going from the study up to the project, or at least look at the study in the context of the project. Then we can take the project and look at the project in the context of a portfolio. Normally, drug companies view their portfolio as the sum of a number of independent projects. Every project will run at its own pace, the success rates will be independent of each other, etc.

Figure 3.

If we look at the fictitious portfolio in Figure 3, consisting of four projects, we get a total value of $600 million, and we have a 90% probability of making money on this portfolio. Now, let's say that one of these projects is a first shot at using a novel delivery mechanism, and so we're looking at one substance to be delivered through this mechanism. After that we will have three other projects that take different substances, but are using the same delivery mechanism in the body. To first find the proof of concept for this delivery mechanism, we start with only the first substances and leave the other three on hold. I.e, the other substances will not start phase three until we've seen that the first project actually succeeds in phase three. This because if the delivery mechanism doesn't work in the first project, it most likely won't work in the other ones either.

Figure 4.

If we model this relationship into the portfolio, what happens is that we lose a third of the value, see Figure 4. Also, the probability of actually making money on this portfolio is reduced. The holistic view of the portfolio demonstrates the effect of interdependencies between the projects, interdependencies that impact the overall value of the portfolio and reveal risks that otherwise would have stayed hidden if the projects were looked at independently. This is one way of just showing that even on the portfolio side, what happens in the individuals project will affect the overall portfolio. If the first project also is one of the projects that we've done the recruitment optimization on, then that affects the other three projects as well. In summary, we always need to consider the cross-functional aspects and the end to end context of any model, and make sure to include all relevant drivers. That will lead us to find the balance between the opportunity value on one side, and cost risk on the other. By doing so, we can get more realistic results and outputs from our models, and elevate the level of information we use in our decision-making. And what happened to Joseph Priestly? He wrestled for some time with the decision, and using the method suggested to him by Franklin, he eventually accepted the offer he had been given.

*** Do you want to know more about how to leverage holism in your portfolio? Contact Us, or email us directly at team@captario.com.

Parts of the Letter Sent by Benjamin Franklin to Joseph Priestly

…my Way is, to divide half a Sheet of Paper by a Line into two Columns, writing over the one Pro, and over the other Con. Then during three or four Days Consideration I put down under the different Heads short Hints of the different Motives that at different Times occur to me for or against the Measure. When I have thus got them all together in one View, I endeavor to estimate their respective Weights; and where I find two, one on each side, that seem equal, I strike them both out: If I find a Reason pro equal to some two Reasons con, I strike out the three; and thus proceeding I find at length where the Balance lies; and if after a Day or two of farther Consideration nothing new that is of Importance occurs on either side, I come to a Determination accordingly. And tho’ the Weight of Reasons cannot be taken with the Precision of Algebraic Quantities, yet when each is thus considered separately and comparatively, and the whole lies before me, I think I can judge better, and am less likely to make a rash Step; and in fact I have found great Advantage from this kind of Equation…

London, September 19, 1772


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