Pre-launch forecasting of a pharmaceutical drug

Abstract

Purpose The emergence of a pharmaceutical drug as a late entrant in a homogeneous category is a relevant issue for strategy implementation in the pharmaceutical industry. This paper aims to suggest a methodology for making pre-launch forecasts with a complete lack of information for a late entrant. Design/methodology/approach The diffusion process of the emerging entrant is estimated using the diffusion dynamics of pre-existing drugs, after an appropriate assessment of the drug’s entrance point. The authors’ methodology is applied to study the late introduction of a pharmaceutical drug in Italy within the category of ranitidine. Historical data of seven already active drugs in the category are used to assess and estimate ex ante the dynamics of a late entrant (Ulkobrin). Findings The results of applying the procedure to the ranitidine market reveal a high degree of accuracy between the ex post observed values of the late entrant and its ex ante mean predicted trajectory. Moreover, the assessed launch date corresponds to the actual date. Research limitations/implications The category has to be homogeneous to ensure a high degree of similarity among the existing drugs and the late entrant. For this reason, radical innovations cannot be forecast with this methodology. Originality/value The proposed approach contributes to the still challenging research field of pre-launch forecasting by estimating the dynamic features of a homogeneous category and exploiting them for forecasting purposes.