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

Sanobar Syed, Associate Director, Beigene explains how and why pharma companies need to leverage forecasting and business analytics to generate business value and drive innovation

By Sanobar Syed On Apr 13, 2023

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. This also helps to reduce the cost of transportation of goods to the end destination.

Finance

Finance controllers and finance business partners are always looking for insights and opportunities to generate and add value. Advanced analytics, coupled with data modelling, can provide valuable insights and support “What-if” scenarios; thereby permitting risk-driven decision-making. This can also help in consolidating the humongous number of orders and transactions the pharma industry goes through. Key questions like what is the cost and profitability of each territory? In terms of current ROI, what is the additional spend required to generate target revenue? Do we need to restrict or consolidate certain efforts and spending on certain territories and invest more in others? How is the product portfolio moving? Is there a need to spend increased advertising to penetrate further? How are our channel segments performing? What is the impact of discounts and other schemes on channel behaviour?

Compliance

With a dynamic market, frequent regulatory changes are required to maintain a healthy and sustainable business. This regulatory change a.k.a. ‘compliance’ needs to be addressed firsthand. Data analytics can help keep a check on the key financial risks defined as per the risk and control matrix (RCM) by utilising workflow-based analytics and interactive dashboards.

Evaluation of credit notes, assessment of additional cost incurred due to excess quantity returned and possibility of the return of spurious drugs; claims submitted for same supplies done to the same customer at special rates. It can be used in analysing spends on doctors – identification of doctors who have duplicate entries in the system using advanced fuzzy matching algorithms and determining dispatch of promotional materials, leading to non-compliance with statutory requirements.

Marketing and sales performance

With increasing competition from generics, companies are getting smarter about analyzing and driving effectiveness in their sales and marketing operations. New, niche and underserved markets may be spotted by analysing information from social media, demographics, electronic medical records and other sources of data. Equally, analyzing the effectiveness of sales efforts and capturing the feedback received by the sales force during client visits and using it effectively can help pharmaceutical companies get an edge on their competition. Creating a more centralized way of capturing information about sales, marketing and distribution data which had previously been managed in multiple excel sheets spread throughout the organization is the key to achieving a faster integration of analytics. This data can then be used to forecast effectively and in real-time. This will also alleviate the pain of having to maintain multiple excel sheets. The solution helps to better understand how often doctors are prescribing a given medication, track the effectiveness of sales pitches, track competition, and understand the performance of individual sales representatives. To summarise, that will allow them to make better-informed decisions, faster than ever before.

Conclusion

There are many ways analytics and forecasting can be integrated into the DNA of the company. For a generic firm, the biggest learning from the innovators can be that they can create efficiencies to anticipate the “future”.

Actionable Insights help generate enhanced assimilation of business information which helps in quick access to critical business insights. Decision Support Easy comprehension of data using analytics to arrive at meaningful business decisions is going to create a competitive edge in the market. Near Real-Time Reporting Periodic refresh of dashboards as per data availability and business requirements is the key to go and disseminate timely information. It also helps to maintain business continuity in case the employee quits the organisation.

In the end, driving business value and innovation is the outcome of incorporating analytics, market research and forecasting which has led to years of business excellence and it’s time for the generic industry to step up and play the game.

References