The Use of Portfolio Management in Biotech and Pharmaceutical firms - Techocious- The Tech Blog

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Monday 21 December 2015

The Use of Portfolio Management in Biotech and Pharmaceutical firms

Portfolio management can be defined as the art as well as science of increasing the return on a portfolio. Being the centralized management of one or more portfolios, it comprises various steps such as searching, categorizing, approving, handling and supervising the projects in order to accomplish business objectives.

What is Portfolio?

Portfolio is a collection of financial assets like shares, stocks, bonds, debt instruments, mutual funds, cash equivalents, etc. It is planned to minimize the risk of non-performance of the marketable securities or various pools of investment.

Why is Portfolio Management Important?

Portfolio Management directs the investor regarding the selection of the best available securities providing the estimated rate of return for any given degree of risk. Being a strategic decision by the top managers, it also helps an organization to reduce the risks.

Advantages of Portfolio Management for Biotech and Pharma

  • In order to achieve company goals and earn long term profits, taking right decisions is very crucial for biotech or pharma industry. Portfolio Management for Biotech and Portfolio Management for Pharma help the firms to implement correct funding strategy. Planning helps an organization to grow in the right direction, by categorizing the projects in an appropriate manner.
  • It also helps to yield steady returns by reinvesting the same earned returns in profitable projects. With the purchase of growth securities, this also guarantees the growth of capital.
  • Portfolio management includes the type of investment which can be promoted and traded. Hence, it makes the investment portfolio more flexible. A portfolio containing unlisted or inactive shares can make trading difficult. Hence, biotech and pharmaceutical companies should invest only in shares and securities that are not only listed on major stock exchanges but also actively traded.
  • It maintains the liquidity by ensuring that enough funds are available so that a start-up pharma or biotech company could get the maximum benefit from upcoming opportunities in the market.
  • With investments in different types of securities, portfolio management minimizes the risk of loss of capital or income. However, the investors must keep in mind that there is no such thing as a ‘zero risk investment’.
  • Portfolio management helps in maintaining favorable tax status by reducing the tax burden. A good portfolio must provide a favorable tax shelter to the investors and be evaluated after an analysis on income tax, capital gains tax, and other taxes.

In The End

Portfolio Management for Biotech and Portfolio Management forPharma are very important. Good Portfolio management software is easy to use, scalable and has prioritized analysis algorithms.

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