One of our most sought-after commercial strategy services is the creation of revenue forecasts. As such, we’ve spent numerous projects ruminating on the most influential uncertainties in building revenue forecasts, and how to best converge on a reliable estimate. We’ll share our thoughts below, and hope they are helpful, whether in assisting you in building out your forecast or understanding our approach during a possible collaboration. Please keep in mind these are not the only factors that go into a forecast, but they tend to be the source of most of our support requests.
Epidemiology / addressable patients: This always sounds simple on the surface, but once you dive in, it can be layered with uncertainties depending on the indication of interest. Are you targeting a rare disease? Are the epidemiology reports reliable? What specific patient population or line of therapy are you targeting? Do you expect to enter global markets beyond the US? How well known is the epidemiology in other countries? What percentage of the population is diagnosed? Treated? Should an incidence or prevalence model be used (usually determined by the degree of chronicity of the disease)? These are difficult questions to answer and require triangulating data but will lay the foundation of your forecast, so it is imperative to address them thoroughly.
Market share: For earlier stage, small-cap companies this assumption usually has the largest uncertainty and causes the most internal debate. What does the competitive landscape look like - what therapies are currently on the market and what therapies are in external pipelines? Is the product first-in-class? A follow-on that is expected to become best-in-class? How effective is the current standard of care? Are physicians happy with current treatment options or eagerly awaiting new therapies? Depending on your company’s knowledge of the current market or availability of market reports, we have had success improving share estimates through exhaustive competitive scoping and/or conducting custom primary market research with clinicians.
Pricing, Reimbursement, and Market Access: Narrowing in on an accurate pricing range can be difficult, but health economic analyses, price benchmarking, and primary market research with payers can help to attain confidence in these numbers and build an early pricing strategy (variables include burden of disease, therapeutic options, duration of therapy, and many more). It is important to understand what portion of addressable patients may not have access to the therapy due to coverage or other factors. The market access rate can have a huge variance based on the specifics of a given disease (market size, standard of care, unmet medical need, etc.). Understanding important barriers to market access can bring you closer to estimating an access rate. (More great insights that primary market research with both physicians and payers can provide).
Compliance/Adherence and Persistence: Compliance and adherence are usually used interchangeably, depending on terminology preferences. Compliance/adherence rates refer to the extent to which patients take medications as prescribed, including the frequency, dose, or other recommendations. A persistence rate refers to the degree to which patients continue treatment for the duration prescribed. Depending on the indication and therapy route of administration, patients may be highly adherent, but not persistent with their therapy or vice versa. Disease severity, perceived benefit, route of administration, and dosing frequency are some of the main factors that impact these rates.
Geography: While understanding the US commercial opportunity is usually an important indicator for a given program, it is also important to accurately account for the ex-US opportunity to form a comprehensive commercial strategy. All four topics described above can vary significantly by geography. How does the standard of care differ in Europe? What should your pricing strategy be in Japan? What regional differences are there in epidemiology? These are important questions to consider when building a forecast. We have strong expertise in building global forecasts and the ability to conduct primary and secondary research for many global markets.
That concludes our top 5 uncertainties for a revenue forecast. In the past 6 months, we have supported 16 different program/indication forecasts across a wide range of therapeutic areas, geographic regions, and modalities (gene therapies, cell therapies, biologics, and microbial therapies). If you need help with this or other commercial strategy, BD/M&A, or portfolio/R&D needs, please feel free to contact us.