Pharma and global forecasting
Eckhard Scheufler, director of forecasting EMEA, Janssen-Cilag, on the rewards of building an integrated global forecasting system
By on Mar 21, 2012Numerous forecasts pass through the walls of a global forecasting unit each year. There are strategic marketing forecasts for in-line and pipeline products and M&A forecasts for newly acquired products. There are short-term and long-term financial forecasts and supply chain forecasts.
Harmony from one to the next often goes lacking. Forecasts generally function on different time horizons and different methodologies since they’re generated by different organizations in different regions and countries. The resulting discrepancies are taxing, but trying to consolidate into a single, streamlined system is equally daunting.
Eckhard Scheufler, director of forecasting EMEA, Janssen-Cilag, believes that the rewards of forging a new, integrated global forecasting system outweigh the challenges. In the past half decade, he’s overseen such a transformation at Janssen-Cilag. It’s a transformation that requires a change in tools as well as a change in mindset and approach. “Process and technology must go hand in hand,” he said at eyeforpharma’s Pharma Forecasting Excellence conference in Berlin. “You can’t implement a software and then hope that the organization follows. You have to develop this together.”
Semi-centralization
One cornerstone of Janssen-Cilag’s integration process was the value of centralization. In the past, data warehousing had been fragmented, as various departments used various databases to store information. Domains often ranged from SAP to Oracle and so on. Janssen wanted to create a master database where all data would be stored transparently to other departments and stakeholders. At the same time, the process by which that data was transformed into forecasts for different departments would likewise need to be centralized, or at least “semi-centralized.”
Janssen used to forecast from the bottom up, “and it didn’t work well,” in Scheufler’s words. Local teams sometimes skewed statistics in order to look good, and often only revenue numbers aligned with reality. In the new system, Scheufler envisioned a process by which forecasts would be generated centrally, then reviewed by local OpCos in regular feedback sessions. Hence the term “semi-centralization.”
The old approach was simply not “a very efficient process,” Scheufler said. “It involves a lot of resources when you run bottom-up forecasting. You often do not know the assumptions behind it.”
Keep it flexible
A second cornerstone of the new, integrated global forecasting system was flexibility. Although centralization is important, it can’t be mistaken for a rigid system that conflicts with the transitory nature of forecasting. “From the process point-of-view, we need extremely flexible solutions,” Scheufler said, “because we have to speak to people, we have to negotiate a lot things, and things [change] too fast.”
Flexibility allows forecasters to react to change and build acceptance for their forecasts. In this respect, Scheufler was reluctant to transition to a system that automated most forecasting tasks. Instead, he espoused using a combination of manual, semi-automatic, and automatic processes.
“I have simply given up on the global solution which fits everything,” said Scheufler. “A little bit of handwork or semi-automated interfaces can be quite efficient.”
Rolling out the new system
Over the span of a few years, Janssen-Cilag developed a centralized, intranet-based system that allowed access to stakeholders across the board. The system had an access security component so that some users could control and see more than others; some had edit rights, whereas others were granted read only rights. The forecasting team tried to keep the look and feel of traditional forecasting models, so that the new system felt like “Excel on the Web.” “We’ve incorporated Excel in because you can’t kill Excel,” said Scheufler. “Although [sometimes] I would have like to do that, you simply cannot.”
The new system also maintained an offline layer for display and analysis, a layer that utilized traditional forecasting software likeExcel, PowerPoint, iThink, Forecast Pro, and Crystal Ball.Lastly, the new system made it a priority to benchmark quality control. Janssen wanted to ensure that there were minimal standards for forecast model data. So it devised a common standard for forecasting small molecules and an alternative standard for forecasting biologics with long or irregular dose intervals. (For more on biologics, see Forecasting the future of biologics, Will biobetters beat biologics? and Pharma forecasting: Stress-testing the business case for biosimilars.)
These standards allowed forecasters anywhere in the world to know that within Janssen Cilag, a piece of data like price, for example, was always calculated the same way (price per milligram).
Keys for success
Looking back on the new system’s implementation, Scheufler offered some words of advice. First is to allow an organization ample time to evolve. An integration like this requires all stakeholders to get on board, which in a decentralized organization like J&J can take years. “You really have to move rather slowly,” Scheufler said. A lot of agreements must be hashed out with local operating companies, and instilling a common sense of purpose and process requires patience.
A second key is to get IT involved and onboard. Janssen-Cilag experienced a lot of IT trouble during the development phase; integrating external programs with internal system programs proved a challenge. IT needs to be championing the development and implementation, rather than resisting it. “Otherwise you really get lost,” Scheufler said.
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