The dangerous quest for certainty in market forecasting
This paper shows how a large pharmaceutical firm developed a series of market forecasts in probabilistic terms, explicitly incorporating the principal uncertainties affecting the future sales of new pharmaceutical products. Such probabilistic forecasting methods have now been applied successfully by many pharmaceutical companies. Initially these methods require some management education to explain the basic concepts and staff training to introduce the necessary methods and techniques, but once these start-up costs have been overcome, a much deeper understanding of the market and more effective management decisions are possible. The paper explains in detail the steps needed to prepare a probabilistic market forecast and demonstrates how these methods can help avoid errors in the subsequent task of capacity planning.
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