Epi-based vs. sales-based forecasting in pharma: a false dichotomy?

Pharmaceutical forecasting often sparks debate: Should forecasts be based on epidemiology or sales data?

Some argue that every forecast must start with epidemiology, because unless you start with epidemiology, you might miss opportunities for market expansion and greater sales. While others claim that sales-based forecasting provides a more accurate and reliable approach.

Gary Johnson and Sam Johnson’s answer? Neither approach is inherently better. In their The Pharma Forecasting Course, they teach a practical framework that blends both methods to ensure the approach is right for your specific product.
 

Understanding the Two Forecasting Approaches

What is Epi-Based Forecasting?

Epi-based forecasting builds projections from the ground up, starting with:

• The total population with a condition.
• How many are diagnosed and treated?
• How many receive a specific therapy class?
• How many get my brand?
   

What is Sales-Based Forecasting?

Sales-based forecasting starts with existing market sales data and analyses:

• Historical sales trends of the therapy class.
• Market share growth or decline.
• Competitive dynamics and commercial effectiveness.
   

A Smarter Way to Forecast

Rather than choosing one method over the other, Gary and Sam recommend a progressive approach that anchors forecasts at the most stable level in the epi cascade.
 

Step-by-Step Process:
 

1. Start with your brand’s sales.
   
   Start at the bottom of the epi-cascade with the sales of your brand. 
   And ask a question: Are sales of your brand following a stable trend and do you expect that trend to remain stable for the duration of the forecast? 
   Then consider what would stop a trend being stable to get the right answer. If you expect the trend to remain stable, you use it. You project the trend into the future, and that is your forecast.
    
2. Analyse therapy class sales.
   
   If you do not expect the trend to remain stable, jump up a level in the epi cascade – to the sales of the therapy class. 
   And ask the same question: Are the sales of your class following a stable trend and do you expect that trend to remain stable for the duration of the forecast? 
   Again, if you expect the trend to remain stable, use it. Project the trend for the class into the future, and that is the starting point for your forecast. Then work out your brand’s future share of the class. 
    
3. Move up in the cascade.
   
   Each time you reach a level in the epi-cascade, if you find stability, anchor your forecast on it. If not, proceed upwards.
    
4. Move to epidemiology if needed.
   
   Sam and Gary show in their course that this journey up the epi-cascade starts your forecast on the most solid and predictable starting point for your forecast. Sometimes that has to be epi. Often it is not.
    

The result? Once you master these principles, you will never feel the need to argue for epi-based forecasts or sales-based forecasts. You will understand just how they both have their place.