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Planning, budgeting and forecasting – Winning strategies and actionable plans

Life sciences companies can improve their planning, budgeting and forecasting capabilities and drive competitive advantage.

Overview

In the face of slow growth in mature markets, drug patent expirations, and regulatory pressures, life sciences companies have an urgent need to find ways to better anticipate risk and uncertainty and plan for the future.

This evolving business climate increases the importance of a strong planning, budgeting and forecasting function for companies as they strive for high performance and a sustainable competitive advantage.

It has been our experience that when it comes to planning, budgeting and forecasting, high-performance life sciences companies are more likely to take immediate steps to help improve their capabilities. The central focus is gaining a better understanding of past performance. Insights captured can then be translated into forward-looking targets that are closely aligned with actual business conditions. This improved precision and development in forecasting can help contribute to greater shareholder value.

Recommendations

We have identified four major activities that can help drive value.

Scenario-based enterprise performance management integrates scenarios into all planning and performance management processes, becoming a core capability for helping to manage the business.

Life sciences companies can achieve high performance forecasting using techniques that balance insight and action:

  1. Linking tolerance thresholds for key volatility and material factors to dynamic forecasting methodology.

  2. Re-evaluating forecasting timelines for enhanced insight and efficiency.

  3. Using structured processes to leverage forecasts for driving proactive and corrective actions.

Integrated Business Planning models attempt to balance a company’s financial performance with its demand, supply and market realities. This holistic and flexible approach to planning can help coordinate product demand with R&D, product supply, and financial planning.

An accurate evaluation of sales returns, chargebacks and rebates can be crucial during the forecasting process to determine the correct impact on revenues for extended periods.