Pharmaceutical Forecasting Models
In the pharmaceutical world, forecasting plays a crucial role in shaping strategy and ensuring market success. For decades J+D have been building custom forecasting models designed to meet the specific needs of our clients. This article highlights our expertise in pharma forecasting and our commitment to listening closely to our clients, understanding the evolving questions they face at each stage of the product lifecycle, and applying best practice forecasting principles to deliver models that effectively support their strategic goals.
Addressing Key Questions from Development to Market
Forecasting approaches in the pharmaceutical and biotech industries evolves significantly across the product lifecycle. From the earliest stages of drug development to post-launch market analysis, the nature of questions asked by clients shifts in focus, reflecting the dynamic landscape of product potential, market demand, and competitive threats. Let’s explore the different kinds of questions clients ask during each phase of the product lifecycle and the forecasting models they should employ to answer them effectively.
Early Development Stage: Identifying Opportunity and Unmet Need
At the inception of a product’s lifecycle, typically during preclinical and early clinical phases (Phase I and II), the key questions revolve around understanding the opportunity and the level of unmet need. Clients are focused on determining:
The goal here is to assess whether the product can meet significant unmet needs that are not addressed by current treatments. This involves evaluating potential improvements in metrics such as efficacy, administration (e.g., switching from infusion to oral formulations), patient compliance, and side effect profiles.
Forecasting Models: During this stage, the resource allocation is typically limited, so clients may rely on simpler forecasting models. Consensus forecasting is often used, where existing market data is analysed to understand the current landscape and size of the market. Analogues may be utilised to look at detail such as the revenues achieved by past products launching into similar situations, to gauge opportunity feasibility. Data monitoring tools and basic epidemiology models may be employed to estimate the size of the patient population and potential market share. Syndicated forecast models that provide forecasters with a starting point, that can be easily iterated further are also a useful tool at this stage.
Mid-Development Stage: Assessing Product Potential and Competitive Landscape
As the product moves into Phase II and early Phase III clinical trials, the focus shifts to assessing the product’s potential based on emerging clinical data. Key questions include:
During this stage, understanding the competitive landscape becomes crucial. Clients need to identify and monitor key competitors and market dynamics that could impact the product’s success.
Forecasting Models: More sophisticated models are required at this stage. Clients will begin building custom forecasting models to simulate different scenarios, such as varying levels of efficacy and safety, and their impact on market share. Sensitivity analysis becomes important to understand which assumptions have the most significant impact on the forecast and to identify areas where data needs to be strengthened.
Pre-Launch Stage: Planning for Market Entry
As the product approaches market launch (late Phase III), forecasting becomes more granular and detailed. The questions asked are focused on launch strategy and market adoption:
Clients are also concerned with internal alignment across global, regional and country teams, ensuring that all stakeholders understand the product’s positioning and potential impact on existing portfolios.
Forecasting Models: At this stage, clients often develop tailored, granular forecasting models that allow for market-specific considerations to be taken into account, such as regional variations in healthcare systems and patient access. These models need to be flexible to accommodate different scenarios and to project sales at a detailed level, such as monthly forecasts for specific regions / countries. Advanced patient-based models are used to estimate market uptake and long-term product performance.
On-Market Stage: Managing Product Performance
Once the product is on the market, the focus shifts to managing and optimising its performance. Clients ask questions like:
Teams also need to address the implications of Loss of Exclusivity (LOE), planning for potential revenue declines and strategizing to minimise impact.
Forecasting Models: During this stage, both short-term and long-term forecasting models are used. Sales-based forecasting becomes more prominent, especially for products that have stabilised in the market. Event-based models help to account for potential market shifts due to new product launches or regulatory changes. Clients may also use scenario analysis to plan for different LOE strategies.
Business Development & Licensing (BD&L): Evaluating External Opportunities
Throughout the product lifecycle, but particularly during the BD&L phase, clients are focused on evaluating external opportunities for licensing or acquisition. Key questions include:
In BD&L, a key question is often, “How big is this opportunity?” Consider a scenario where you’re looking to in-license a product in a specific disease area. If you’re already operating in a related field—say, you’re established in rheumatoid arthritis (RA) and are now exploring psoriasis—you likely have a good handle on the broader immunology space. However, if psoriasis is new to your portfolio, you may lack detailed insights into this specific indication. In this case, understanding the size of the opportunity, the competitive landscape, and how this potential product aligns with your existing strategy becomes crucial. This drives the need to gather detailed data, assess market dynamics, and carefully evaluate the potential threats and opportunities that will impact the product’s performance.
Forecasting Models: In BD&L, quick yet comprehensive forecasting is required. Clients may use simplified models to get a rapid assessment of market size and potential, often relying on external reports and market data. As the due diligence process progresses, more detailed patient-based models and scenario analysis are used to assess the impact of different market conditions and strategic options.
Closing Comments
The nature of forecasting questions evolves significantly across the product lifecycle, reflecting the changing needs and focus of clients as they move from identifying opportunities to managing market performance. Understanding these shifts and employing the right forecasting models at each stage is crucial for accurate prediction and strategic decision-making. By aligning the forecasting approach, and models, with the lifecycle stage, clients can better navigate the complexities of the pharmaceutical market and maximize the potential of their products.
Author
Andrew Ward, Consulting Director at J+D Forecasting. An expert in the pharmaceutical analytics space since 2002 and leading a consultancy team in delivering forecasting solutions including software application development at J+D since 2014.
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