Companies regularly produce long-term forecasts for existing and new products. Forecast models may be built at an overall product or indication level, and then consolidated by product, indication, therapeutic area, sales force groupings, geography, or total company level.
Due to the central role that these long-term forecasts have in the planning and management of a company, they need to be accurate and realistic. They also need to provide information to aid decision-making.
Most companies have some form of long-term forecasting process in place.
Limitations of the Typical Solution
Existing long-term forecasting systems may have any of the following problems:
- Models are not consistent across products and are not well-documented and sourced.
- Models are not designed to easily allow frequent “what-if” analyses. For example, what if the product launches a quarter later?
- Models are not “parametric.” Inputs are entered at too high a level, hiding relevant information and preventing the review of detailed assumptions.
- No consolidation tool is available to easily roll up data to the product, indication, therapeutic area, sales force grouping, geography, or total company level.
- Measuring risk is nearly impossible without the use of simulation and modeling techniques such as Monte Carlo simulation. Companies may think they are incorporating risk by using upside/downside scenarios, but there is no quantitative way to determine how much risk these scenarios represent.
Objective Insights’ Solution
Objective Insights’ Long-Term Forecaster (LTF) provides a standardized format for generating strategic forecasts from a patient or procedure basis. With LTF, multiple indications and products can be easily consolidated and analyzed on a portfolio basis.
LTF incorporates Monte Carlo simulation, allowing you to incorporate risk management into your forecast. You can easily estimate the variability of your forecast, as well as determine the likelihood of reaching your revenue goals. LTF also includes sensitivity analysis to help you identify the key variables in your forecast.
Using the Portfolio component of LTF, you can consolidate multiple products and indications to develop and understanding of product-line sales or the future direction of your company on a portfolio-wide basis.
LTF is developed in Microsoft Excel, allowing you to start working in LTF immediately rather than having to learn yet anther software program. Objective Insights customizes Long-Term Forecaster for your specific application, and provides comprehensive training and indefinite support.
Contact Objective Insights for a fully functional demonstration version of Long-Term Forecaster.
Example Model Inputs
- Product name
- Launch date
- Discount rate
- Returns percentage
- Tax rate
- Cost of goods sold (COGS)
- Allocated overhead
- Marketing headcount
- Marketing cost per headcount
- Marketing promotional expenses
- Sales headcount
- Sales cost per headcount
- Sales promotional expenses
- Other promotional expenses
- Other headcount expenses
- Probability of success at each development phase
- Development phase timing and launch timing
- Research and development expenses
- General population
- Incidence or prevalence of disease/Number of procedures
- Disease diagnosis rate
- Proportion of patients eligible for treatment
- Proportion of patients treated
- Market access restrictions
- Peak share & lifecycle
- Competition & events
- Treatment days per year
- Patient dosing
- Compliance rate
- Gross-to-net/Discounts by payer segment
- Gross price per unit of treatment
- R&D reimbursement rates
- Milestone rates
- Cash advances
- Weighted shares outstanding
- Collaborator’s royalty or profit split percentage tiers
- Cash flow adjustments
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