This course provides a practical introduction to the creation and use of business forecasts for informing pharmaceutical drug development strategy. While the primary emphasis will be on commercial forecasting, we will examine other areas such as trial duration, probability of clinical and regulatory success, trial costs, and portfolio optimisation. Forecasts can play an important role in helping to evaluate the value and risk inherent in strategic alternatives. The exercise of developing and analyzing forecasts also leads to important insights that can help managers to develop higher value strategies, to mitigate downside risks, and to capture upside opportunities. For managers in a drug development team, collective forecasting exercises improve communication between different specialty areas, and help to ensure consistency and continuity of key assumptions across the long development lifecycle. For analysts looking at drugs in development, forecasts can provide a critical window into understanding value and fit within a portfolio of investments. In this course, we will review the key strategic decision points in the development process, and discuss the types of forecasts that can be useful to inform those decisions. Advantages and disadvantages of using forecasts will be analysed, and students will be introduced to the use of sensitivity analysis and scenario modeling to bridge these challenges. This course will provide a special focus on forecasting in areas where little market or clinical data exists. Through case studies and project work, students will learn practical Excel tools for building models, performing sensitivity analysis, challenging forecasts, and sourcing data. We will take a cross-functional approach, and focus on “real-world” problems currently facing senior managers in drug development organisations. We will spend time each week discussing current news in the industry, and postulating the potential impacts of key events on development teams’ decision making. While emphasising the drug development perspective, this course will be useful for students interested in careers in pharmaceuticals and biotechnology, as well as management consulting, investment banking, equity research, venture capital, and private equity, given the large and growing healthcare/ pharmaceutical practices of such firms.
Ellynne Dec was a Columbia Business School faculty member from 2012 to 2018.