Instead of investing in pharma maybe you should go to Vegas instead. You’ll have a lot more fun and, a new study suggests, your chances of winning are just as good.
The key to understanding the pharmaceutical industry is predicting sales of individual drugs. But, in a study published in Nature Reviews, 3 consultants at McKinsey & Company determined that drug companies, and the sell-side analysts that watch them, have a really poor record when it comes to predicting future sales of drugs, not just unapproved drugs not yet on the market but also even approved drugs with existing sales.
Myoung Cha, Bassel Rifai, and Pasha Sarraf first assessed the accuracy of 1700 analyst’s estimates for 260 drugs launched between 2002 and 2011. Their findings were striking: