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Pharmaceutical forecasting: throwing darts?

Nature Reviews Drug Discovery volume 12, pages 737–738 (2013)Cite this article

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Furthermore, given the vicissitudes of the external environment, the uncertainty of drug development and the unpredictable actions of competitors, weaving an array of scientific, clinical, regulatory and commercial data into a numerical representation of value for a drug is a substantial challenge. However, such forecasting is a crucial activity that affects many decisions inside a pharmaceutical company: for example, designing a clinical programme; deploying sales force resources; making decisions on geographic resource allocation; or acquiring a company or licensing assets. Additionally, drug forecasts are one of the most important inputs into investors' decisions to buy or sell shares of a company.

Given the importance of forecasting, we set out to investigate three questions. First, how good have drug forecasts been historically? And, more specifically, how good have estimates from sell-side analysts been at predicting the future? Second, what type of error has typically been implicated in the misses? Third, is there any type of drug that has been historically more easy or difficult to forecast?

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Figure 1: Inaccuracy in pharmaceutical forecasting.
Figure 2: Forecast accuracy across various segments of drugs.

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Authors and Affiliations

  1. Myoung Cha, J.D., M.B.A., Bassel Rifai, Ph.D., and Pasha Sarraf, M.D., Ph.D., are at McKinsey & Company, 55 East 52nd Street, New York, New York 10055, USA.,

    Myoung Cha, Bassel Rifai & Pasha Sarraf

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  1. Myoung Cha
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  2. Bassel Rifai
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  3. Pasha Sarraf
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Correspondence to Myoung Cha.

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The authors declare no competing financial interests.

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Cha, M., Rifai, B. & Sarraf, P. Pharmaceutical forecasting: throwing darts?. Nat Rev Drug Discov 12, 737–738 (2013). https://doi.org/10.1038/nrd4127

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