To understand the prevalence of demand forecast inaccuracy – and the struggle to bring new products to market – Patheon commissioned ORC International to conduct in-depth interviews with 50 pharma industry executives with experience creating or implementing demand forecasts for commercial launches.
The study confirms Mullen’s assessment. Every respondent said their forecasts either over- or under-estimated demand – indeed, future demand, they said, was the most difficult variable to predict. The majority of respondents said they over- or under-estimated demand by up to 25%, with some indicating that they were off by 26%-50% or even 100%. Nearly all respondents said that demand forecasting influences manufacturing decisions “a great deal.” They also noted that the consequences of inaccurate demand forecasting can be reputational damage, market share loss, lost days of production, destruction of inventory, and layoffs.
A large majority of survey respondents said they plan to invest in improving their forecasting tools; almost all said they will be honing their inputs and assumptions over the next few years. And as long as there’s a satisfactory rate of return on investment, pharmaceutical companies should continue to try to improve the accuracy of their forecasts.
But that’s not all they should be doing.