Lies, damned lies & statistics Communication Research week 10.
Lies, damned lies and statistics - · PDF fileLies, damned lies and statistics ... The Pharma...
-
Upload
nguyentruc -
Category
Documents
-
view
228 -
download
6
Transcript of Lies, damned lies and statistics - · PDF fileLies, damned lies and statistics ... The Pharma...
Lies,damnedliesandstatistics
StewartAdkinsStewartAdkinsAdvisorsLimited/PharmaForensic Ltd
ThePharmaIndustryisAwashwithData
1
Data
DataData Data Data
Data Data
Data
CRMSystem
CRM
ACRMisParticularlyGoodatCollectingData
2
CRM
ButNotSoGoodatDeliveringUsefulInformation
3
ThereisaGenuineLackofTalentinDataScience
4
HittingtheSweetSpotisDifficult
EmploymentSweetSpot
5
CorrelationandCausationcanbeConfusing
6
7
IsPharmaRuledbyDashboardsandKPIs?
8
Introduction– APeekintoaDisruptiveFuture• Thepharmaceuticalindustryisdatarich(commercialdata)butreluctant(oratleastglaciallyslow)toembraceitsmyriadpossibilities.• Notconfidentinthedataintegrity?• Tooacceptingoflinearrelationshipsbetweenvariables?• Confusescorrelationandcausality?AbigproblemwithBigData.• ToofocusedondashboardsanderroneousKPIs?• Lackingaccesstotalent?
• Makingdataacorecompetencewithintheindustryoffersenormousupside.• Competitiveadvantageforfirstmovers• Bettersalesandmargins• ScopetoreinvestsavingsinR&Dorlowerpricesforsocietalgood.
9
MakeDataaCoreCompetenceforCompetitiveAdvantage
10
BenefitsofDataasCoreCompetence
• Bettersales• Highermargins• Lessvolatilityinheadcount• HigherMarketValue• Optionality• Cutpricesbutpreservemargins• BoostR&Dbutpreservemargins
11
ABitofFunwithCorrelation
• Correlationdoesnotimplycausality• Forsomethingtobeshowntobecausal
a) AmustprecedeBb) TheremustbeaplausiblemechanismforAtoleadtoBc) Allotherpossibleorprobablecausesmustbeabletobediscounted.
• Thisrequirescomplextechniquesandgoodqualitydatameasuredovertime.
12
Correlation:0.992558
CanAnyoneClaimaCausalLink?
13
Correlation:0.992082
HowAbouttheCausationHere?
14
“…all modelsarewrongbutsomeareuseful”*
*GeorgeE.P.Box15
“…all modelsarewrongbutsomeareuseful”*
*GeorgeE.P.Box16
TheUseofLinearRegressionhereExaggeratestheRelationshipbetweenCallsandSales
17
What’sWrong?• MostPharmaceuticaldataviolatestheassumptionsthatunderpinlinearregression.• Excelbasedmodelsfrequentlyoverestimateresults.• Thismeansthat• SalespredictionsforROIheavilyoverestimatetheeffectofactivities.• Non-significantactivitiesarereportedassignificant
• Inthisverysimpleexampletheincorrectmodelinflatestheslopebyafactorof9.
18
Anscombe’s QuartetSoundsaDiscordantNote
19
R2=0.67,Y=3+0.5xForeachdataset!!
050000100000150000200000250000300000350000400000
MarketCappreandpostadjustmentaftercutting15%ofSG&A
MarketCap$bn Additionalmarketcap=additionalearningsxPEmultiple
TheBenefitsofSmartAnalyticsSavingjust15%ofSG&Acanadd$2-34bnofMarketCap
20
TheBenefitsofSmartAnalyticsTranslatestoadding4-39%toMarketValue(dependingonPEmultiple)
00.20.40.60.81
1.21.41.6
MarketCapadjustedforSG&Asavingsin%
MarketCap Additionalmarketcap=additionalearningsxPEmultiple
21
Conclusion• Analyticscanaddenormousvaluetoacompanyanditscompetitiveposition.• Useofthewrongmodelcanleadtoerroneousconclusionswithexpensiveresults– lostsalesandlowermargins.• ThePharmaceuticalindustryneedstomakeanalyticsacorecompetence• Establishstrongrelationshipswithuniversitiestoencouragemorestudents• Showleadershipinpromotinganalyticsasanexcitingcareerchoiceintegraltothecommercialorganisation.• DemonstratetopayershowlesswastedspendingcanbereinvestedinR&Dorlowerpricesforthebenefitofpatientsandsocietyasawhole.
22