An affordable way to implement real options to select optimal R&D portfolio

Real option Analysis (ROA) is acknowledged as a powerful tool to evaluate uncertain projectswhose uncertainty depends heavily on alternatives available along the project life. The R&Dprocess in the pharmaceutical industry has a long and dynamic life then it is an ideal field ofapplication for ROA.Actually, ROA implementation, as widely demonstrated in literature, is narrowed to very limitedcases because its perceived complexity.This research wants to suggest a simplified method, respect the ones available in literature, thatcould foster the use of ROA: we built up an integer linear programming model, based on a modelavailable in literature, useful for selecting the optimal R&D product portfolio from a set ofcandidate drugs.This model is quiet easy to implement in a spreadsheet, as shown in developed application able tosolve an actual pharmaceutical portfolio selection case study.