Business strategy and forecasting: How generics pharma can befriend them?

The generic pharma industry has come a long way. Pharmaceutical forecasting and business analytics have come longer. The speed at which the industry is turning, even more after the COVID-19 aftermath, is nauseating. According to a Deloitte study, the cost to take a drug candidate from the discovery stage to market launch hit $2.3 billion—a $298 million rise from 2021. This is based on an examination of the current state of R&D returns by analysing projected return on investment (ROI) from late-stage pipelines of the 20 biggest pharma companies.

With the growing emphasis on oncology, rare and orphan diseases and ever-growing multiple indications approvals there is a huge opportunity for generics to build momentum.

While costs began to creep up in the industry, generic companies need to be able to keep a sharp eye on the forecasts. To keep up with this rapid pace pharma companies need to keep an expert eye on the opportunities via forecasting and business analytics. After all the forecasting process churns the revenues and most importantly, lets the senior leadership invest billions of dollars annually.

Introduction

The most unnerving question for pharma companies with the recent shift towards consumer-oriented markets and a rapid spurt of new contenders in the generics market is how to ensure ‘cost transparency’.

Be it the release of new pharma drugs, or the cost of servicing a big account (doctor/hospital), understanding the cost relationship and drivers, and maintaining the optimum level of visibility, is the need of the hour. But as a generic industry which is facing massive price competition and consolidation, it is imperative more than ever to tap into the ROI of the launch. The growing number of challenges faced by generics is in expanding access to new markets or a crowded market where they clash with cutthroat and crowded pricing of treatments whose benefit to patients is marginal. The big challenge for the industry is that this is normal and not an exception. However generic companies are now foraying into ‘biosimilars which is a niche and expensive space. The likes of Tier 1 players – Teva, Sandoz etc are pioneers in this space and haven’t forgotten about these things. But the speed at which the Tier 2 generic players are scaling across their holistic portfolios and geographies could probably be accelerated with the usage of analytics and usage of forecasting.

There is no cookie-cutter solution as the development of the specific analytics and strategy depends upon various factors namely – the size of the company, the vision and mission, the short-and-long-term strategic imperatives, the resources and capabilities, and most importantly, the budget. Generic companies and industry stakeholders have acknowledged the need to address to move beyond “the back of the envelop” forecasting and analytics.

There are many ways data analytics and forecasting can bridge the generic and innovator companies’ knowledge gap, but it needs to be smarter to evaluate and assess its objectives. The companies can warm up to the fact that they can roll out analytics and forecasting in specific critical functions. But to really harvest the benefits requires a different way of looking at data. Here are five ways that pharma companies can use data analytics to generate business value and drive innovation. Where can data analytics help?

Supply chain and inventory planning

Variations in primary and secondary sales may send erroneous signals to planners, leading to excess or less inventory. Supply chain forecasting depends on various factors like raw material lead times, dependency on export-import, historical trend, seasonality purchase etc. Analytics and forecasting can help a lot of companies to centralise procurement and plan efficiently – Analysing rate variances for the same materials across geographies and vendors to arrive at the most optimum rate for procurement. Mapping of marketing spend to key customer segments and tracking it. It can be used in freight and landing cost analytics – Analysing the trend in distributing freight and landing costs due to the non-utilisation of rates and ensuring transaction executions at spot rates is a key cost-saving critical step in any generic pharma.