A new study by McKinsey published in Nature Reviews Drug Discovery casts doubt on the accuracy of sales forecasts for new drugs. The study examined drug launches from 202-2011 and studied 100's of sales forecasts. The study found that more than 60% of the consensus forecasts were off by 40% or more from actual peak sales. That's right 40%. Some critics have pointed out that these forecasters might as well be weathermen or perhaps monkeys throwing darts at a revenue target.
But surely these prognosticators improved like a fine wine with time the product was on the market. Surely that was so! Well, not exactly, turns out they were still off by 45% five years after the product launch. So much for revised data based on learning and experience. What's more? The forecasts for follow on therapies were no more accurate than those for first in class therapies. So much for effects of market uncertainty (except in the forecast accuracy).
This suggests to me that forecasters are driven more by personal agendas than by data. Many of these 'analysts' make their living as touts for one company or another. These folks have a dog in the fight and it is making money for themselves. There's gold in them thar forecasts for somebody -- but probably not for the investors systematically following the forecasts. Stick to throwing the darts. See In the Pipeline and Pharmalot.
Posted by Bruce Lehr Oct 8th 2013.