Andrew McKee shares and elaborates upon the key factors that go into building a revenue forecast model.
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.
Key points include:
- Pricing, Reimbursement, and Market Access
- Compliance/Adherence and Persistence
- Geography
Read the full article, Top 5 uncertainties we tackle when creating revenue forecast models, on HeadlandStrategyGroup.com.
