“How could the forecast have been this far off?”
Sound familiar? It’s one of the most hotly debated yet vital tools in pharmaceutical and biotech companies.

The forecast, per se, is simply a prediction or estimate of future events. It sounds innocuous enough, yet it’s hard to imagine any work product more integral to virtually every commercial decision and investment. Boards and C-Suites need the best decision support possible for strategic corporate decisions. Finance and Manufacturing rely on the accuracy of the forecast to make long-cycle planning and operational decisions. Marketing and Sales teams base promotional investments, resource allocation and incentive compensation decisions on the forecast.

So, is your forecast right?
Let’s come back to that question in a moment.

The forecast, typically expressed in units of measure such as dollars, units, market share or patients, is the product of a complex process (forecasting) incorporated into a technical tool (forecast model).

In our work with a wide variety of pharmaceutical and biotech companies, we see a range of different approaches to this vital function. The individuals charged with creating and maintaining the forecast can be as diverse as junior analysts, experienced modelers, or senior executives. All of them experience pressure to “get it right.” But creating accurate, trustworthy forecasts is difficult, and updating them to adequately account for changing scenarios and different markets is complex and time-consuming.

The importance of alignment
We have learned from our clients the importance of aligning the design imperatives of the forecast model with the application of the forecast.

For example, when developing a forecast model to support valuation of an acquisition target, especially with a looming due date for the bid, speed is the driver. The model must accommodate all fundamental inputs, provide range forecasts and scenario summaries, have a clean design and be completed in 30 days or less. However, flexibility is the hallmark for a forecast model created for a pipeline candidate. The model must be designed to accommodate changes to the profile of the drug and the market landscape into which it will launch, and be seamlessly updated over months or years. Once a product is on market, accuracy matters most. Regardless of the distribution model, and no matter how many forms and sources of data inform the model, stakeholders need to have confidence in the accuracy of the forecast.

So, is your forecast right? Wrong question!

There is a better question: How can I increase confidence in the forecast?

There is an old adage that says “…the forecast is wrong as soon as it’s published.” While amusing and maybe even true, today’s stakeholders demand more and deserve better.

Consider whether a forecasting specialist can help you reinvigorate this vital planning resource and performance measurement tool, and increase your forecasting confidence.