3 main challenges in pharma forecasting
Gary Johnson and Sam Johnson, CELforPharma faculty members of our popular 2-day The Pharma Forecasting Course, have been involved in the pricing and/or forecasting of half of the new molecular entity launches over the past 5 year. We asked them what the 3 main sales forecasting challenges are in the pharma industry. This is what they replied:
1) Understanding the principles of evidence-based forecasting
There are myriad ways to forecast. And people are inventing new ways – like machine learning applications – all the time. However, there are only a few timeless, proven principles to good forecasting. If you know the proven principles, you can easily judge each new forecasting approach as it comes along.
2) Applying standard forecasting techniques to the pharmaceutical market
Very, very few forecasting techniques were developed by or for the pharmaceutical industry. And yet “generic” forecasting methods are applied uncritically to the pharmaceuticals. Forecasting techniques often have to be adjusted to reflect the realities of the pharma environment. This includes adapting forecasts to handle co-prescription, lines of therapy, market access and so on.
3) Maintaining a strong sense of humility over the accuracy of your own judgment
Many of us feel that the judgment of experts who have worked in the pharma industry for many years must make good forecasts. Unfortunately, vast numbers of studies have shown over and over that simple “dumb” models outperform expert judgment by a wide margin. That is not to say that judgment is never useful. But understanding the very limited circumstances where it adds value is vital. (As is an understanding of the simple models that outperform judgment.)
Last update: November 2022