PHARMACEUTICAL
Project C becomes a high-risk
decision, Project B is a low-risk decision, and Project A represents a
more;balanced;risk;profile.;In;this
example, the decision maker can
now incorporate risk in project
selection as well as the expected
net present value. The selection
decision between projects has
become more informed and well
considered.
This example illustrates the fore-caster’s;role.;Not;simply;to;create;a
point forecast, but to communicate
the “story” behind each forecast:
•;What;is;leading;to;the;uncertainty?
•;Can;it;be;resolved;in;the;plan-ning process?
•;How;were;the;uncertainty;ranges
determined?
•;What;is;causing;the;value;for
Project C to tend towards the high
side of the uncertainty range?
•;What;is;driving;the;forecast;for
Project B towards the lower potential?
What questions do you have to
ask?
Here’s;a;brief;look;at;a;representa-tive case study.
Let’s say PharmaCo is about to
launch a product called Steadertin.
Already included in their portfolio
are;Cytoflux,;Chizophrin,;Focali-
tine and Listromycin, among oth-
ers. PharmaCo’s forecasting direc-
tor, Sharon Spring, has been tasked
with drawing up a forecast for the
entire portfolio. Without getting
too far down into the weeds, here
is;just;a;selection;of;the;34;ques-
tions;I;indicate;that;Sharon;has
to answer to develop a reasonable
forecast:
Question 1: Demand sales for Cy-toflux have been steadily increasing, while ex-factory sales have
had spikes, dips and cyclical variation. What are some of the causes
for this, and how can Sharon correct for it in her analysis?
Question 2: To what extent can
PharmaCo influence or control
these cycles, and how?
Question 6:;In;a;patient-based
forecast, the result of a market-share calculation is the number
of patients on each product. Why
might we be interested in calculating days of therapy or TRxex by
product?
Question 8: Calculate the minimum volume of product that must
be produced to satisfy the demand
suggested by average days of
therapy per patient, overall compliance and resultant forecasted
days of therapy.
The job is not simply to
create a forecast, but to
communicate the story
behind it.
Question 11: Despite a marked
increase in the number of treated
patients;for;Focalitine,;the;total
market TRx has been declining.
What are some possible explanations?
Question 14: How;do;you;explain
the;difference;between;Focalitine’s
TRx;data;and;demand;sales?;Is;this
desirable?;How;might;PharmaCo
maintain (or reduce) this trend?
Question 18: Can cannibalization
be a problem when a new formulation is launched for an existing
product?;How;could;it;be;poten-tially advantageous?
Question 23: Total drug treated
patients for the entire portfolio
are growing, but total diagnosed
patients are decreasing. What possible explanations are there?
Question 28: Do you think it’s
possible to score a product across
too many attributes? At what point
might increasing the number of
attributes detract from the insight
of the forecast.
And that isn’t even half of the list!
Where is the industry going?
In;the;history;sidebar,;I;mention
alternative futures. This is also referred to as “game theory” or “war
games,” and allows a company to
evaluate potential strategies. Your
forecaster should be able to:
•;Draw;insights;from;historical
data
•;Capture;expert;judgment
•;Evaluate;these;effects;in;struc-tural modeling
•;And,;ultimately,;couple;identifi-cation of various scenarios (
alternative futures) to help in decision-making
Pressure is incredibly high that
predictions be accurate. There
is no magic eight ball when it
comes to making predictions, but
today there are more thoughtful
methodologies that help various
stakeholders strategize efficiently,
effectively and insightfully.
What are some of the challenges in
the industry right now? Biosimilar
versions of blockbuster drugs are
about to make a grand entrance as
nine;of;the;10;largest;and;highest
revenue drugs go off patent in the
next;10;years.;Pharmacos;are;keen
to learn a) what the financial losses
