The Importance of “Defensible” Revenue Forecasts

Hand drawing upward revenue forecast

Anyone who has ever led a biotech product launch knows the importance of an accurate and defensible revenue forecast.  Having spent many years in the industry, I have seen the downsides of poor forecasting.  Whether the numbers are too high or too low, they can have a devastating impact especially on 1st product to market-emerging biotech companies.  Some of the fallout of poor forecasting include:

  • Missed expectations on Wall Street
  • Revenue gaps to fund company expansion and new clinical development
  • Changing the sales plan (especially revised upwards) with the Sales Force (ouch!)
  • Over or under inventory of drug supply available for sale
  • Manufacturing team facing expired stock or shortages

When developing a revenue forecast for a drug, it is important to build it from the ground up with defensible assumptions. And by “defensible”, we mean sourced information assembled in a logical format that other industry experts would deem credible and find difficult to refute.

Gather or develop these top three foundational elements of the forecast:

1. Market sizing based on expert epidemiology for each key geography that nets out “treatable patient populations”. Note, at Bridge, we rely on Tessellon inc. for our defensible epidemiology, (, 636-299-0487).

2. Foundational health care professional (HCP) and payor market research.

3. Analyze the competitive landscape through the lens of today’s standard of care (SOC) and changes in the SOC that may occur by the time of your drug launch.

A thorough understanding of the data ensures you are making the right assumptions and if don’t have the commercial assessment / revenue forecasters in house – “rent” some experts.

Lastly, but as importantly, the launch forecast and a 5 year post launch forecast are used as an anchor for how large the Commercial & Medical Affairs organizations are (e.g. FTEs) and the “dollar spend” for all the commercial imperatives. What you do and how much you spend for a 5-year to peak revenue of $250m is very very different than what you do for a 5-year peak revenue of $1B. If your company is challenged by revenue forecasting and/or defining the size of the Commercial/Medical Affairs organization contact us.