FUTURCAST: Pharmaceutical Products Assumption-Based Forecasting Solutions

Optimal Sales Forecasting for Pharmaceutical Companies

Sales forecasting plays a critical role in the order fulfillment process of a pharmaceutical company as it is portrayed in Figure 1.

The Order Fulfillment Process Graph

FUTURCAST is the sales forecasting and assumption reporting software that provides excellence in managing value for a pharmaceutical organization. As Figure 2 displays, it is designed to provide a unique, transparent forecast to accurately plan the production of finished goods and active ingredients, and to determine commercial expectations in gross to net financial environments.

Managing Value with FUTURCAST


FUTURCAST is an artificial intelligence system that is based on a tradition of academic knowledge. It filters data, uses pattern recognition principles and selects the best methodology to statistically forecast the filtered data. It incorporates business intelligence and has evolved from a PC application package to a fully integrated enterprise software, making use of the MS SQL or the Oracle database environments for assumption-based forecasting. FUTURCAST has been continuously upgraded over the last 30 years in close collaboration with world leaders in the life sciences at both the local and global levels.

The FUTURCAST Forecasting Process and System

Figure 3 illustrates the FUTURCAST Forecasting Process and its components. In Figure 3, we see that FUTURCAST’s forecasting activities are not performed in isolation of the ERP solution. New data are required on a periodic basis (daily, weekly, or monthly) and forecasts need to be uploaded in order to become the driving inputs for manufacturing, budgeting and other planning activities

The FUTURCAST Forecasting Process Graph.

 


Key Characteristics of the Pharma FUTURCAST Forecasting Process

The four key characteristics of the FUTURCAST forecasting process and system for pharmaceutical companies are marketing led assumption/event-based forecasts, an expert forecasting engine for in-line products and a patient-based module for new and strategic products, bird’s eye view executive analysis, and enterprise application integration and on-going accuracy monitoring

Marketing Led Assumption/Event-Based Forecasts

FUTURCAST’s principal objective is to provide management with fact-based information to improve planning accuracy. Senior managers are eager to find out what happens to product sales at various locations, countries and markets in order to better assess underlying risks and opportunities. They want to know the reasons behind the forecasts and their impact on the future growth of product sales.

FUTURCAST delivers for both in-line and new products, through standard and custom designed web-enabled data or population driven tools, the sales demand forecast and the associated market driven and pricing/rebate assumptions. It offers to marketing managers the ability to elaborate, from a unique planning base, the sales, financial, supply chain and strategic plans; each plan representing a different set of assumptions and/or impacts. The assumption/event database stores, in a structured way, the explanations on the key forecast changes in units and currency for all products. Values can be modified in milligrams or currency at any level of the product hierarchy in order to derive the stock keeping units volumes. Organizations can therefore gain a more in-depth understanding of their past performance and projected future growth.

Expert Forecasting Engine

The forecasting engine is the motor of a forecasting system. Its main purpose is to analyse historical data in order to generate the planning base forecast. The planning base forecast is the benchmark or point of reference from which all forecast modifications are made. The more accurate the planning base, the fewer manual overrides are required to correct it.
Five dimensions can be used to rate the performance of a forecast engine. They are:

1 Type objective vs. subjective
2 Horsepower statistical vs. non-statistical
3 Class extrapolative vs. causal
4 Method single vs. multiple
5 Selection best fit vs. expert system

FUTURCAST’s engine attains the highest THCMS rating. It is classified as objective, statistical and extrapolative; it uses multiple methods and incorporates an expert system selection process. By definition, an expert system will reproduce how a person with great knowledge and skills in statistical forecasting would go about making decisions as to which method to use. An expert will first look at the data after having filtered outliers, then identify the first observation to be used, and depending on the trend-cycle pattern visually observed, it will then choose among a small select set of methods the most appropriate one to apply. This process corresponds to the automatic expert system which has been refined over the last 30 years and is incorporated in the FUTURCAST multiple methods forecast engine.

For new products, the Expert Forecasting Manager allows to triangulate population driven forecasts established by applying the patient-based segmentation tool that covers both general medicine and specialty product markets.

Bird's Eye View Executive Analysis and Enterprise Application Integration

Reporting is an essential function of a forecasting system. The purpose is to deliver to senior managers, a “bird’s eye view” of business performances in volume and value for both historical and forecast data, and to provide drill-down and slice-and-dice functionalities to identify and assess “best” and “worst” performances, risks and opportunities.
FUTURCAST EASY on the Web OLAP reporting tool allows one to easily query the database, slice-and-dice, drill down or up, and produce “on the go,” top-line macro, detailed micro, budget gap, year-to-date performance, perspective, and price/volume/exchange rate reports and analyses.

On-going Accuracy Monitoring

FUTURCAST’s method of monitoring accuracy is the evaluation function of the system. It consists of several user-customized and pre-defined reports that are used to compute key performance process indicators. Its purpose is to measure forecast accuracy and stability, recommend safety stocks and to provide, to the owners of the forecast, the necessary feedback for assessing and reviewing their future assumptions.

FUTURCAST Advantages

FUTURCAST delivers:

  • A framework and standard tool to plan volumes, prepare the annual budget and revisions, while maintaining consistency with strategic planning
  • The explanation of the rationale behind the forecast to all stakeholders through marketing assumptions
  • An audit trail of how the forecast was built to help manage change and assess return on investments
  • Forecasts that are accurate, stable and transparent to all, covering the short, medium and long term planning horizons
  • Balancing of supply and demand with integrated S&OP analytical views
  • An integrated patient-based module for new products

FUTURCAST Business Analysis Solutions for In-Line Products

To improve planning accuracy, FUTURCAST business analysis solutions rely on the most commercially sound technology platforms and employ market forecasting and planning methodologies that are grounded in proven academic principles. With more than 30 years of recognized international forecasting experience and expertise in the life sciences, you can rest assured that FUTURCAST’s risk-free solutions will exceed your expectations, on time and within budget.

These may be “Universal” with near zero learning or “Glocal” in nature, aimed at meeting specific local forecasting needs. This ability to configure the client’s applications in line with the characteristics of local market dynamics is one of the differentiating characteristic of FUTURCAST. As a result, the reliance and need for Excel spreadsheets are significantly reduced, if not eliminated.

These custom configured enterprise solutions for in-line products may be grouped into 2 methodological classes:

  • Product Forecasting
  • Total Market Forecasting

Product Forecasting Configuration

By definition, a product forecasting configuration pre-supposes that products evolve in an open, undefined market space. Assumptions, events or forecast adjustments are therefore applied independently of their impact on the market. Market growth is therefore unrestricted.

FUTURCAST Assumption-based forecasting offers the technology and Oracle infrastructure to harmonize the various operational forecasting activities and databases into a single environment. It is the ultimate in product forecasting in pharma. For an organization, it provides a common database and transparent forecasting process to drive both operations and budgeting functions for the short, medium and long term. Moreover, it lays the foundation to integrate new product and in-line product forecasting within the same platform. The methodology truly delivers an up to 72 month “one number” forecast.

FUTURCAST Assumption-based Forecasting Solution

short term, medium term, long term

This proven methodology has been developed in close collaboration with global leaders in the healthcare industry. Long production lead-times for the active ingredients of the medicinal products and a global manufacturing structure with highly efficient single-product factories producing for a global demand characterize these companies.

Simply speaking, assumption-based forecasting focuses on explaining the sales growth of a product through a structured system of qualitative reasoning. It is a structured approach to classifying quantitative impacts on a historical trend and the qualitative chain of reasoning behind the impacts.

The FUTURCAST Assumption-based forecasting methodology forces the review of assumptions on an on-going basis and is built on three components which are:

  1. A single structured set of assumptions universally applied
  2. The definition of the trend line as the planning base, which is fixed in units and remains unchanged over the forecast horizon until it is reviewed at a “deep dive” planning exercise (at least once a year)
  3. A market signal labelled the FUTURCAST reference that is statistically re-computed monthly and based on the updated historical sales


As Figure 4 illustrates, assumption-based forecasting defines the final demand forecast as the sum of the fixed planning base and the structured assumptions. Because of its principal focus on the consolidation of the reasons behind the forecast, senior managers have turned to this approach since the explanations of what may happen strongly influence capacity planning accuracy and investment decisions.

FUTURCAST Total Market Forecasting Configuration

The primary function of Total Market Forecasting is to develop a comprehensive picture of the future market including the forecasted shares of your own product and that of your competitors. In contrast to the product forecasting models, the market is clearly defined and closed. It represents the sum of those products that have been assigned to constitute a specific market. The focus is on market share. Assumptions may grow the market, gain shares from others in the market, or act as a combination of both.

FUTURCAST Total Market Forecasting applies the principles of assumption-based forecasting in order to allow for the systematic and detailed accounting of projected changes in the marketplace. Individual product assumptions become group product assumptions. Market share assumptions allow for shifts in sales “to” and “from” competing products. What one gains must, in part, be lost by others. In doing so, the effects from the changes on both your own products and those of your competitors, and the overall market, are captured and clearly mapped.

Creating a Common Language Graph

 

Total Market Forecasting is the key to full operational forecasting integration. It creates, for pharma companies, as represented in Figure 5, a common language between the functional areas, which is linked to future assumptions or events.

Monthly market shares are converted to gross monthly revenue dollars. These in turn, are then transformed into monthly ex-factory sales units. The derived ex-factory sales forecasts are then compared to the financial numbers in the budget and the later revisions having factored in rebates and discounts.

Total Market Forecasting, coupled with Patient-Based Forecasting, delivers clear advantages over Product Forecasting.

FUTURCAST Total Market Forecasting:

  • Imposes a reality check on all forecasts; markets cannot grow to infinity
  • Promotes the participation of product managers and marketing research; it forces collaborative market thinking
  • Aligns forecasting activities with the elaboration and review of marketing strategies and/or initiatives
  • Stores in a central data repository all internal supply chain, financial and external audit data that management can refer to and access in a consistent way
  • Provides a common methodology for market share/growth analysis
  • Offers a “one stop shop” explanation of the forecast
  • Virtually eliminates Excel spreadsheets, avoiding “do, undo, and redo” exercises

The diagram displayed in Figure 6 presents the local forecasting landscape under a FUTURCAST Total Market Forecasting solution.

FUTURCAST Total Market Forecasting Local Landscape for Healthcare Companies

 

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