Strategy & Due Diligence in Pharma Business Development

A Framework for Evaluating Opportunities Before Formal Diligence

Data is exploding, timelines are shrinking, and competition is fierce.

Long-term growth in pharma increasingly depends on a company’s ability to source, evaluate, and secure the right external innovation. Internal R&D productivity continues to decline, development timelines remain long, and within the past decade, more than 50% of FDA-approved drugs originated from small biotechs rather than large pharmaceutical companies. As a result, business development (BD) is a critical lever for sustaining a competitive pipeline and offsetting revenue erosion.

Yet the quality of BD decision-making varies widely across the industry. Opportunities are often evaluated reactively rather than systematically, with priorities shifting based on leadership changes, internal advocacy, or short-term pressures. Without a clear framework for deciding which therapeutic areas, modalities, and program stages deserve focus, BD teams are left to rely on individual judgment rather than organizational strategy. This inconsistency leads to misaligned investments and missed opportunities.

A durable BD strategy addresses this gap. It provides a structured way to determine: 

• where the organization should play
• why certain opportunities matter more than others 
• how to evaluate external assets with consistency and discipline. 

This article outlines a practical framework for pharmaceutical BD leaders to clarify strategic priorities, understand organizational capabilities, and build a repeatable approach for evaluating external opportunities. 

A Strategic Approach to Evaluating External Innovation in Pharma BD

The following framework outlines the foundational elements for BD teams to determine which therapeutic areas, technologies, and program stages deserve investment, and which are merely a distraction. 

1. Clarify disease area priorities

Before a company can meaningfully evaluate external opportunities, it must establish clear guidelines for priority therapeutic areas. This requires identifying where unmet patient need, market dynamics, and the organization’s long-term mission intersect, rather than pursuing attractive individual assets without considering whether the broader disease category aligns with their scientific strengths and long-term goals.

Clarifying disease area priorities ensures that BD teams focus on opportunities that can create durable value rather than short-term wins. Key questions to consider include: 

• Which diseases new to us present meaningful unmet need or emerging scientific breakthroughs?
• Where do market dynamics suggest long-term opportunity rather than temporary momentum?
• How do these disease areas align with our existing or future strategic identity?
• Is our goal to build a core franchise, expand into an adjacency, or opportunistically complement the current pipeline?

Grounding BD efforts in clearly defined disease priorities reduces distraction, aligns global teams, and helps organizations better allocate resources and make more coherent investment decisions over time.

2. Map internal competencies and structural advantage

Mapping internal competencies provides an objective view of where the organization has structural advantages and where significant gaps remain. Even the most attractive asset can underperform if it requires expertise the company does not possess, or cannot build in time. Any competency assessment should consider:

• Scientific and technical depth: Do we understand the underlying biology, target classes, mechanisms, or modalities well enough to meaningfully advance a program?
• Clinical development strengths: Do we have the clinical development capabilities required for this disease? Have we designed and executed trials in similar patient populations, disease settings, or endpoint frameworks?
• Regulatory familiarity: Do we understand precedent, approval pathways, evidentiary expectations, and known risks, and have we navigated comparable submissions?
• Commercial capabilities: Do we already sell to, market to, and engage the customer segments relevant to this disease area? Do we understand their decision-making dynamics, care pathways, and adoption drivers well enough to support a successful launch?

Each new therapeutic area or modality introduces new operational complexities, making it essential to assess whether the company is positioned to execute effectively. Conversely, without understanding internal capabilities, organizations may undervalue therapeutic areas where their existing scientific, clinical, or commercial strengths could create disproportionate advantage.

3. Define the right development stage for external opportunities

Companies vary widely in risk tolerance and the stages of development where they can create the most value. Some are equipped to engage at discovery or preclinical stages, while others need programs with established clinical data. Defining preferred entry points requires explicit alignment on risk appetite, time horizons, and organizational readiness.

BD teams must consider:

• Engagement timeline: Do we have the scientific depth and infrastructure to support discovery or preclinical assets, or are we better positioned for assets with early clinical validation?
• Alignment with development and commercial strategy: Should our focus center on Phase 1, Phase 2, or late-stage programs?
• Risk and uncertainty appetite: Can the organization commit resources to programs with limited human data, or is a higher level of clinical de-risking required?

Clarifying stage fit ensures BD teams pursue opportunities the organization can realistically advance and avoid investments that exceed capability, timeline, or risk tolerance. 

4. Recognize internal biases + map decision making

Every organization and individual brings implicit preferences to BD evaluation. These preferences are shaped by historical successes, past failures, scientific culture, leadership experience, and organizational identity, and influence how opportunities are perceived. Making biases explicit is essential for building a consistent and defensible BD strategy.

BD teams should ask:

• Which targets, modalities, or technologies align with internal scientific or strategic preferences?: Understanding these preferences helps explain why certain opportunities naturally rise to the top of discussion, regardless of their objective fit.
• Which therapeutic areas or modalities carry historical bias?: Have past failures made us overly cautious? Have prior wins created overconfidence? What assumptions are no longer supported by current science or market data?
• How will decisions be made when opportunities align or conflict with these biases?: Is there a defined process for elevating high-potential opportunities that fall outside organizational comfort zones? Is there agreement on categories that should not be pursued, even if assets appear to be attractive?

While eliminating internal biases is not realistic, ensuring they do not distort opportunity assessment is. When organizations understand the preferences that shape decision-making, they can evaluate opportunities with more objectivity.

5. Codify learnings from prior wins and losses

Every company accumulates experience through successful programs, missed opportunities, and deals that fall short of expectations. Translating these experiences into institutional knowledge is critical for informing future decision-making.

Learning from prior wins and losses requires asking:

• What programs historically worked or failed, and why?: Which scientific assumptions, development decisions, or commercial dynamics differentiated successful programs from unsuccessful ones?
• Which lessons should guide future diligence?: Do certain modalities, mechanisms, or partnership models consistently generate better outcomes? Can we find patterns that suggest particular approaches should be deprioritized?
• How can these insights be institutionalized?: Rather than having silos of knowledge, codifying learnings allows organizations to build strategic guardrails, investment principles, or decision-making frameworks that endure leadership changes and team turnover.

Codifying learnings ensures BD teams can make more consistent decisions, avoid repeating mistakes, and better recognize opportunities that align with proven organizational strengths.

6. Identify Capability Gaps

Finally, a strategic BD framework also requires a clear understanding of the capabilities an organization lacks. As important as acknowledging strengths, identifying gaps helps clarify where external innovation is essential to advancing the long-term strategy. 

To round out a pharmaceutical BD framework, organizations should ask:

• Which scientific or technological areas require external innovation?: Are there emerging modalities, target classes, or enabling technologies that are strategically important but beyond our capacity to build?
• Where do we lack the development or commercial capabilities needed to compete?: Are there gaps in trial execution, biomarker strategy, manufacturing, or commercial infrastructure that would limit success in particular disease areas or modalities?
• Where are partnerships or acquisitions the most effective path forward?: Could external collaboration accelerate entry into new modalities, expand platform capabilities, or provide access to validated assets more efficiently than internal development?

Identifying capability gaps is a critical input to a disciplined BD strategy. It enables organizations to target external opportunities with purpose, prioritize collaborations that extend their competitive advantage, and avoid investments that require disproportionate internal build-out.

A cohesive framework for pharmaceutical BD evaluation

Taken together, these six elements form a clear, strategic framework for evaluating external opportunities. With defined priorities, an honest view of strengths and gaps, explicit stage fit, and a structured decision logic, BD teams can focus only on opportunities that advance the company’s long-term direction.

This framework works because it transforms BD evaluation from a collection of individual judgments into a disciplined, repeatable decision system. Each component serves a specific strategic function:

• Disease priorities define the opportunity universe rather than letting deal flow determine focus.
• Capabilities and gaps define where the organization can win and where it cannot.
• Stage fit defines the acceptable risk envelope, ensuring BD decisions are made within realistic execution constraints.
• Bias mapping exposes the implicit preferences that distort evaluation, allowing teams to correct for them.
  Historical learnings establish the organization’s investment principles, grounding decisions in evidence rather than memory.

Most importantly, the framework aligns BD activity with the organization’s long-term strategic direction. It ensures that evaluation is not driven by momentum, internal advocacy, or shifting enthusiasm, but by a stable set of strategic filters. This is what allows BD teams to build a resilient, differentiated pipeline over time.

To help teams operationalize the principles outlined in this article, we’ve distilled the key elements into a concise, practical checklist that you can download by submitting your email below: