How to integrate functional knowledge into your forecast
Carl Gerrard, Shire’s senior manager business analysis and forecasting, explains how forecasters can leverage company resources to optimize forecastsBy Aug 22, 2011 on
Forecasts sit within a complex and ever-changing ecosystem.
On one side, there’s sales and marketing, on another there’s finance, on another there’s R&D.
All of these departments and more can make changes that affect a product’s trajectory from pipeline to market, thereby impacting the inputs on which a forecast is built.
It’s critical therefore that forecasters reach out to this ecosystem while building their forecasts and integrate each department’s expertise into the resulting product.
“If [other teams] are building part of the process and contributing to the wealth of knowledge, all of a sudden you get a rollercoaster effect, so that the outcome at the end becomes everybody’s property and not just yours,” said Carl Gerrard, senior manager business analysis and forecasting, Shire, who presented on the topic at eyeforpharma’sForecasting Excellence Summit in Madrid.
The key is to know which department to reach out to for which information so that you can best leverage your company’s resources and proficiencies.
The ultimate goal is not for forecasters to pass work off on others, said Gerrard, but rather to optimize their own work, concentrate on what they do best, and integrate external expertise into the building blocks of their forecasts.
Leveraging market research
Market research is the forecaster’s oldest ally.
Many forecasters were once market researchers themselves, or vice versa.
Oftentimes, though, forecasters don’t take advantage of the resource the way they should or as much as they could.
Forecasters spend time doing their own in-market performance research, for example, when this is something market research is more adept at.
“Don’t drag IMS data when you’ve got a colleague who’s playing with it and monitoring it on a day-to-day basis,” said Gerrard.
“Why should you reinvent the wheel? Just ask the question.”
Market research is equally valuable for determining likely comparators in the future as well as for illuminating market segmentation and for calculating current or future product share potential.
“Yes, you’ve got analogs in your forecasting software,” said Gerrard.
“We’ve got a battery of them, but [in this case] we’re looking for something else. You can give market research the specs and they’ll find the product for you.”
Leveraging sales and marketing
As the shapers of brand strategy, sales and marketing can provide forecasters with valuable information as well.
On the most basic level, sales and marketing can inform how a product will be situated in market and where it will be launched.
Additionally, sales and marketing can provide insight into promotional direction and targeting.
“Who are you going to take the business from?” asked Gerrard.
“You’re not going to say ‘We’re the best thing since sliced bread in this marketplace or disease area.’ You’re going to have a promotional message.”
That message will likely be targeted at a subset of the market, which means you’ll be reaching a smaller percent of the marketplace.
“So if you forecast on 100 percent volume and you’re only seeing 50 percent volume, you’re not going to reach the targets you’ve set,” said Gerrard.
Sales and marketing can also provide insights about people resources—using traditional sales reps versus medical science liaisons will impact who’s putting you on product formulary—and about changes in relative production position that will affect your ability to gain market share.
R&D is useful when it comes time to get a realistic picture of development times and cost.
Sure, marketers may say you’ll be in market in two or three years, but if R&D knows that your 12-month trial will take three-and-a-half years to complete because of recruitment time, well, you better adjust your inputs.
R&D is also a good place to look for product compliance information, as they’re conducting trials that calculate pill counts and dropout rates.
“Granted this is a controlled environment, but it’s better than your marketing director saying it’s going to be 300 days a year,” said Gerrard.
“If you run a 12-month trial and you’ve got that they’ve only complied 210 times on average, that’s a good sound researched-based judgment.”
Likewise, R&D is useful for outcomes and value propositions; they’re fundamentally involved in probability discussions that calculate the likelihood of success.
“You don’t have to go trolling the Internet to find out the success rate in a cardiovascular program from phase 1 to phase 2,” said Gerrard.
“They just go click and they’ve got it in their database all the time.”
Forecasters should use other resources, too.
Pricing & Reimbursement can help with launch delays and discrepancies between registration and reimbursement; competitive intelligence “can run your pipeline analysis in a number of minutes when it would take you an hour to do it,” said Gerrard; finance can help with costs of goods and gross to net ratios.
“You’re not a finance person,” said Gerrard.
“Why not get the guys that really know all those ins and outs to provide you the information so that can go in. Therefore, we as a team provide a much better forecast for senior management to make decisions on.”
And that’s the end goal: a sounder forecast that includes inputs from each department’s expertise.
For more on forecasting, join the sector’s other key players atForecasting Excellence USA on October 4-6 in Boston.
For an overview of eyeforpharma’s forecasting coverage, see ‘Highlights from eyeforpharma’s Forecasting coverage’.
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