In pharmaceutical world, Forecasting and market research is an art or science or rather in between. Oxford dictionary describes forecasting as “a statement about what will happen in the future, based on information that is available now.” As pharmaceutical companies begin expanding to new patients, so does the need to expand in new geographies is imminent. Pharmaceutical healthcare environment is becoming complex and investment heavy, hence the need to have accurate market research and forecasting to represent the local international market is crucial to the success of the firm. It is Circa 2023- We are in a world where AI & data science in pharma is exploding exponentially, and large amounts of data are being collected every single day. Unfortunately, there isn’t a clear way to sort through or analyze this data leave alone decide within a reasonable timeframe and this phenomenon made many organizations data rich and insight poor. Symptoms of being Data rich and Insight poor include the use of an abundance of indicators and the predominant use of a variety of retrospective medical and sales data from various sources. Often, too many indicators are used because the organization is still subscribing to a traditional quality assurance methodology for performance improvement.
No decision is made in the pharmaceutical world (or any sector) for that matter without looking at the numbers. More importantly, companies are forward looking on how they will perform, how they will enter and capture the international market, how they will eventually win?
In the pharmaceutical world, forecasting holds an important role and function in the central decision-making process. Typically, this function resides in the commercial excellence or business excellence function. There might be a global function and a local function which is responsible for the forecasting role. Forecasting influences many other functional areas within an organization. These relationships may be in one direction (where forecasts feed into decisions made by the other functional areas) or in many directions (where the forecast is used to generate the changes proposed by other cross functional areas). The relationships reflect the various uses to which a forecast can be applied such as R& D forecasting, pipeline planning, revenue planning, sample and free goods, safety stock, supply & production planning, resource and budget allocation, project prioritization, partnering decisions, compensation plans, market access efforts etc. These varied uses, and the effect of forecasting on many functional areas in an organization, reflect the first major challenge of forecasting – meeting the needs of varied and diverse stakeholders.
The described above process becomes increasingly complex when it is layered on the international footprint. The legal, infrastructure, intellectual property, financial, and geo-political macro environment plays a vital role and hence must be considered with utmost detail when conducting market research or forecasting a brand.
To successfully conduct market research & forecasting in international markets, pharmaceutical organizations need an in-depth understanding of the environment in which they are planning to operate, and this can be tricky as many lack reliable data intelligence.
Custom market research can plug the gaps in knowledge and help marketers make more effective strategic decisions. The healthcare landscape in each market especially emerging markets is complex and does not follow a structured drug approval process, as compared to the developed markets. Carrying out market research in these lesser-known markets can be challenging, requiring a strong understanding of the local health care environment and an awareness of cultural and behavioral nuances.
How does the pharma market research and forecasting function, function in international scenario?
Typically forecast are created at a global, regional, country, or business unit level. Each forecast is unique as the nature of the inputs determines the outputs and usage of the numbers. For example, if doing a regional forecast for a product in MENA countries does one assume one MENA launch date or individual launch dates in each of the key countries? Is there a ‘pan-MENA’ uptake curve for the product or should individual country’s adoption patterns be modelled? The answer to these, and many other, questions dictate the design of the forecast model.
In the sales and marketing areas, forecasts are used to drive resource allocation decisions. What products are the most responsive to sales and marketing efforts? Do we apply 80:20 Pareto principle? Is there a tangible impact when sales or marketing resources are changed? These nuances lead to a different construction of the forecast than that required for the other functional areas. These flows are multidirectional – changes in the initially assumed resource level are analyzed and the forecast adjusted appropriately. Whereas forecasts used for research and development, new product portfolio planning also require different methodology and outputs than the other functional areas. In these types of forecasts, we need to adjust for risk and uncertainty in the forecast. Finally, forecasts feed into the finance function: various financial ratios – such as net present value, return on investment, breakeven dates, and so forth – need to be calculated from the forecast revenues. Thus, the many functional areas that interact with the forecast create tremendous pressure on the forecast, the analytics, the inputs, and the outputs of the forecast. In other words, every function develops its own model, based on a different set of assumptions with little or no consistency across the board. The key challenge to forecasting is to create a process where the needs of function can be met without compromising the integrity of the forecast approach. The Key challenge is how will we create the “one source of truth” across the organization, especially when we have monthly, quarterly, annual, and other time intervals of forecasts. It also depends upon the frequency of inputs or data arriving in to churn out as forecast deliverables. The backbone of accurate forecasts are strong, rigorous models that can be deployed across various market scenarios. This provides a structured and articulated view of resource needs for operations, a key competitive advantage that reduces risk.
Conclusion:
For pharma organizations, factoring the impact of market access into product forecasts is becoming increasingly complicated. An analytical approach can help refine the forecast for treatment opportunity, brand selection and patient fulfillment. Coordinating forecasting capabilities across forecasting functions to ensure consistency in analysis, reporting, operationalized analytics is the key to successful long-range planning, insights, strategy and action.
About the Author
Sanobar Syed is a subject matter expert in the field of pharmaceutical business strategy & forecasting in North America. With a master’s degree in Organic chemistry coupled with MBA in Marketing, she has established and successfully led strategic forecasting and business analytics across geographies for multi-million-dollar brands across distinguished organizations. She is considered a proven industry subject matter expert in this field.
