This paper reviews the need for risk management in pharmaceutical industry research and development and the analytical procedures available for that purpose. These are shown to be inadequate. We propose two new measures of risk which are illustrated with the use of current pharmaceutical research and development (R&D) data. Our most important findings are twofold: that risk quantification in pharmaceutical R&D today often does not capture the full extent of a company's exposure to financial risk, and that better methods such as our new risk measures can and should be developed. We hope that our work both in this literature review and in the creation of new risk measures will inspire companies to take a closer look at their current R&D management strategies, and to refresh and update their risk mitigation policies accordingly.