Actual sales miss the revenue forecast by an average of 50 percent – an alarming number. What can pharmaceutical companies do to achieve their desired commercial performance and improve forecast accuracy?
The success of mid- to long-term planning in pharma relies heavily on the commercial alignment and accurate forecasting of future revenue from new product launches. However, this continues to be a difficult exercise to predict. From 2015 to 2018, 65 percent of new products across the pharmaceutical industry failed to achieve their forecasted revenues, with 14 of 23 new oncology products failing to reach their forecasted revenue by an average of 50 percent (Figure 1). There continues to be debate around what is considered to be an acceptable variation in actual vs. forecasted peak sales two-years prior to launch. The general consensus from industry experts considers a 6-15 percent variation in forecast vs. actual peak sales to be acceptable, however market share assessments from primary research more often than not overstate the real world share that is actually captured (Simon-Kucher & Partners Chicago Forum Survey 2019). To successfully achieve desired commercial performance, companies must go beyond just capturing health care provider preference share estimates by taking a multi-faceted approach to develop alignment across several real world factors.
Figure 1: Forecasted revenue vs. actual sales (2015-2018 U.S. billions of dollars), based on data taken from Globaldata.com
Poor outcomes are due to a lack of alignment between patients, payers, prescribers, and the brand, causing forecasts to be unrealistic and critical brands falling short in terms of value and sales potential. While we don’t believe that major pharmaceutical companies neglect any of these four key stakeholders in isolation, poor planning across activities for these customers can significantly derail a new product launch (and by extension its forecast). For example, a brand team might capture prescriber perception and preference share for a new brand without accurately capturing how payer access and authorization requirements will impact provider decisions. Therefore, planning across these diverse commercial activities needs to be carefully carried out and accounted for to improve commercial performance and forecast accuracy.
One way that Simon-Kucher focuses on getting commercial alignment correct is by analyzing an event that we refer to as the “Prescribing Epicenter”. The “Prescribing Epicenter” captures four key drivers or cornerstones of brand strategy that serve as the pivotal juncture where patients can be helped by a new brand (Figure 2). These four drivers include: 1) brand differentiation and the customer journey, 2) dynamic patient events that create opportunities to start or change therapy, 3) physicians’ willingness to prescribe based on brand interest and experience, and lastly 4) available access through payer and organized customer engagement. Balancing these elements requires a complete assessment of the levers across all relevant stakeholders and segments. By comprehensive commercial alignment and optimization across each of the four drivers of the Prescribing Epicenter, companies can maximize the potential value for a new brand while ensuring commercial performance matches forecasts.
Figure 2: Drivers of Prescribing Epicenter Performance
The Prescribing Epicenter for each product is unique and may require different activities to ensure balance is achieved across the four cornerstones. Each cornerstone requires different key considerations to help determine which activities are needed to ensure a comprehensive commercial alignment. The first Prescribing Epicenter cornerstone is the brand differentiation of a new product. A product’s brand must articulate the differentiating factors between alternatives, highlight key value messages and engage stakeholders at the right time to achieve success. Patients and prescribers might display an interest in a product, but if the brand is not agreeable with payers, then restricted access can limit commercial performance at launch.
The cornerstone around dynamic patient events is the next key driver that can easily fall out of alignment within the prescribing epicenter. Events such as the diagnosis of a new disease or when a prior therapy has been identified as not meeting the patient’s needs are the natural start, stop, or inflection points in the patient journey. When a relevant event occurs, it is critical that the product is both clinically appropriate and available to the customer. For example, if the brand is not top of mind for physicians at the time of an event, readily accessible from payers or amenable to patient needs, this could derail product adoption. To deal with these challenges it is important to assess how elements such as digital engagement, direct to consumer marketing or patient support programs can help overcome these gaps. In order for adoption to fit into the natural progression of care, products must be marketed effectively across patient segments so that they are in the decision set at the right time of the patient journey.
Next, when considering the “willing prescriber” cornerstone, it is helpful to think both of the prescriber as an individual but also the environment in which they operate. For example, most commercial organizations track the communication preferences of their physician tar-gets. However, what is less common is looking at how the environment in which they operate affects the way the physician is engaged with the manufacturer. Take as an example two specialists who both prefer digital communications, but one practices in City A and the other in City B. Now, consider that City A has access challenges for your product and only 20 percent of lives have unrestricted access to your product. In this geography, it would be more impactful to prioritize communications related to the strength of access support programs and approaches to help patients initiate treatment onto a product quickly while they are working through the authorization process. For the alternative physician in City B (assuming very good access) those same messages may be of lower priority. What might be unique about City B is the low level of patient events in the area relative to the size and demographics of the population. This might create a scenario where messaging on the importance of accurate diagnosis and early treatment to help bring the disease under control should be prioritized for physicians in City B. Shifting focus across different commercial activities to account for these differences across geographies can make the difference between achieving high levels of prescribing from both providers versus only achieving high levels of prescribing from one. The winning result is prescriber strategies and education that reinforce the brand in the context of that prescriber’s local Prescribing Epicenter.
The last cornerstone is focused on available access for a new product. While this is an area that all pharma companies prioritize, payer activities need to be carried out mutually in conjunction with the other three cornerstones. Often times there is misalignment within the manufacturers’ teams at this step – for example when a brand team positions the product as a first line option while the vast majority of payers expect to have access requirements of two or more competitor therapies. Companies should be cognizant that gaining access alone will not guarantee the best commercial performance of a new product. If the product gains access but doesn’t account for the other three cornerstones, patients and prescribers could fail to see the need for the new product even if payers do.
Creating harmony across all four cornerstones of the Prescribing Epicenter allows for a new brand to be launched at its maximum potential. Identifying short-comings ahead of time helps commercial activities and forecasts to be adapted for potential suboptimal factors and reasonably account for future commercial performance. These exercises require investment across multiple groups within a given company to prevent future miscalculations that can damage the commercial performance of a new product.
Case 1: What do you mean I won’t hit my forecast? Missing the mark
It is well understood that physician-stated preference share from market research needs to be adjusted to create more realistic expectations for real world market share. While there are a variety of approaches to do this, there are still a number of manufacturers who only conduct physician research and then apply an off-the-shelf haircut of 50 percent to their preference shares to help adjust forecast estimates. This approach is a common mistake and can be a big contributor to why so many forecasts significantly miss the mark. Simon-Kucher applies a different approach – by developing custom estimates of actual market factors across the Prescribing Epicenter for each brand and competitive situation. In the following blinded example, four key market-based adjustments were used to help achieve a more accurate real world share expectation including: (1) Payer access, (2) sales force reach, (3) physician uptake and (4) awareness and impact of competition. These factors were then applied for one brand across four possible patient events. The key findings were that the “haircut” factor a) ranged from 50-75 percent and b) varied across patient events for the same product. By an order of magnitude, applying a typical 50 percent adjustment factor rather than Simon-Kucher’s comprehensive commercial alignment approach would have led to an overestimate of >$1 billion per year in peak revenue forecast.
Figure 3: Percent peak preference share by pre- / post-market factors
Case 2: Predicting regional pockets of opportunity
As a brand gets closer to launch, forecasting and strategic planning needs to be taken a step further to look at how the business will perform in a local sales region. Simon-Kucher uses a quantitative regional assessment known as the Top Line Power Commercial Engine to elucidate the effects of comprehensive commercial alignment on prescribing. In this example, advanced analytics (Tableau for data management and data visualization, Python for prediction models) is used to assess competitor performance in the market environment to draw competitive insights for the product of interest. Data from US census data, CDC prevalence, MMIT formulary status, # of specialists & TRx data (IMS), CMS open payment data and Google was used to evaluate the variation in prescribing as it relates to factors such as sales / marketing spend to prescriber, % of covered lives facing no step edits, number of specialists in an area, and Google searches for the competitor product. Given the power behind this approach, there is the flexibility to use a range of data inputs including a client’s sales force effectiveness data, target call lists, and advertising spend to name a few.
This Top Line Power Commercial Engine approach serves two important functions. First, it helps better refine forecasts closer to launch as sales estimates are rolled up from a detailed geographic territory view to an aggregate whole. Second, it helps advance from strategic planning to comprehensive commercial alignment readiness, in order to make a launch as successful as possible. This approach serves as a quantitative bridge to launch readiness and critical success factor planning.
In the graphic below, this detail illustrates tremendous variation across the USA in terms of launch environment including: a) drivers of competitors’ commercial performance, b) areas of opportunity with low treatment rates today, c) geographies where the competitor seems to focus less on its sales and marketing efforts and d) relevant actions around payer strategy, physician targeting and disease awareness. For example, one takeaway was that competitors were facing access hurdles in Alabama – most likely caused by access of the product at Prime / BCBS Alabama. We estimated that 40 percent of the competitor volume was untapped due to this access position (Figure 4). Another key insight from this type of analytical approach debunks the use of traditional physician targeting based on prescriber deciles to identify markets. The result could be rather than targeting competitor entrenched areas that will put the manufacturer head to head with its competitor, focus on opportunities in low disease treatment areas or low marketing spend areas with high untapped potential. New tools are making it easier to evaluate this type of added complexity and return more targeted and actionable opportunities for manufacturers.
Figure 4: Categorization of launch environments based on competitor Y performance vs. expectations
Future challenges and opportunities
Redefining a multifaceted approach for strategic initiatives and tactics is vital for successful commercial performance as well as creating a path forward. With a huge percentage of new products failing to reach their forecasted numbers, expanding the considerations in commercial activities for a product launch can improve accuracy and help to identify blind spots in launch readiness planning. Strategies around the four cornerstones of the Prescribing Epicenter all contribute to the potential success of a launch and accuracy of forecasting commercial performance. Systematically evaluating the Prescribing Epicenter for a product helps to identify short-comings of a product’s go-to-market strategy and improve the ability to more accurately forecast and prepare mid- to long-term planning. We strongly believe that comprehensive commercial alignment is a critical factor to both significantly improving forecasting accuracy and creating a solid foundation for long-term brand performance.
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