Key Factors That Affect The Forecasting Models In The Pharma Industry
When designing a pharma forecasting model, it is essential that you consider certain crucial factors like seasonal trends, fluctuations in sales volume, etc. A forecast model is heavily impacted by many factors, which we will see in this post. Most of the forecasting solutions for the pharma industry take into account all these factors in order to get the most accurate model.
General Business Conditions
These conditions include population, wealth distribution, the country’s economic situation, seasonal fluctuations, government policies, general customs and traditions, fashion, per-capita income, etc. All of the conditions affect the sales forecasting of any business and industrial enterprise. They are beyond the control of the organization as well as the forecasting solutions for the pharma industry.
Conditions Within The Industry
The many factors and conditions within the industry also affect the sales forecasting of a pharma company. These factors include the types of products, number of units in the industry, characteristics of the product, product line, pricing policy, potential improvements in the products, situation of the competition within the industry, strategies and policies of competitors, etc. All of these factors are carefully considered while preparing the sales forecast.
Internal Factors Of The Organization
The enterprise’s internal factors affecting sales forecasting include quality, price, plant capacity, resources, advertisement policy, etc., unlike the general business conditions, which the organization can very much control. Other internal factors like operating budgets, people and hiring budgets, product pricing, marketing initiatives, logistics, and inventory and supply also affect the forecast model.
Factors Affecting Export Trade
These factors are the conditions of the import-export policy of the Government, international policies, conditions imposed upon the enterprise by its foreign purchasers, etc.
Factors Relating To The Competition
Other factors that should be considered when creating a forecast model are related to the competitors. The number of competitors the enterprise has, stage in the life-cycle of the products of the competitors, quality of products of the competitors, popularity of the competitors’ products, advertisement policy of the competitors, brand packaging color, etc., are all factors that impact the sales forecasting model of an enterprise.
Consumer Trends
These include pantry loading and channel preference. The forecasting models are affected by whether the product is stacked up, is short or long shelf life, if the consumers would reduce buying the products soon, if the consumers have changed preferences, etc.
Product Trends
These trends include the new-normal demands like how these categories behave, whether there is a remarkable increase or decrease in demand, if this demand is likely to be an ongoing trend, and if the complementary or supplementary categories impact through increased buying or decreased buying, etc.
Some other factors that affect the sales forecasting models are:
The type of goods: This is important as forecasting may introduce new techniques that deliver different results when you demand forecasting for products that already exist in the market instead of products that will be launched for the first time.
When forecasting for new goods, it is difficult to access competition, demand, and alternative product information.
Since demand is a dynamic concept, the more product alternatives and competitors present in the market, the more difficult demand forecasting, this competition level also contains other sub-factors like the number of alternative products and competitors.
Another important factor affecting the forecasting model is the price of the products, as even the slightest changes in the pricing policy can influence the demand forecasting process. In fact, pricing is one of the top factors that affect the forecast model.
Technological achievements can also influence demand forecasting. This factor can make forecasting extremely difficult.
Economic development is also a factor that impacts sales forecasting as the positive and negative developments in the country’s economies can also make the demand forecasting positive or negative. The percentage of points of sale in which the drug is available and of changing prices of preparation of the particular type of drugs in the commercial market.
The number of visits to a doctor during the current month.
The price of the drug tested
Period of conducting the marketing activities.
The share of product in the gross sales volume of the commodity group, in the full-scale sales volume of all drugs of the same type, and in the cost sales volume of all medications of the same kind.
The current season
The training sample and selling.
To Sum Up
These factors are extremely important to consider when forecasting demand to help pharma companies prepare despite the uncertainty. However, these businesses need to recognize that the refreshing forecasting models depend on the key factors, especially due to these factors being uncertain in nature. Hence, a mindset and capability must be needed to make decisions through constant testing and learning.
