Rezaur Rahman Siddiqui, M Pharm (Jahangirnagar University) Product Manager, UniMed UniHealth Mfg Ltd.
BACKGROUND OF BRAND
The word brand comes
from the Old Norse brandr, meaning ‘to burn’, and it was by this means
that early man stamped ownership on his livestock. With the development of
trade, buyers would use brands as a means of distinguishing between the cattle
of one farmer and another, and brands quickly became associated with quality
and reliability. Thus brands provided buyers with a guide to choice, a role
that has remained unchanged to the present day. Some of the earliest
manufactured goods in mass production were clay pots, the remains of which can
be found in great abundance around the Mediterranean region. There is
considerable evidence among them of the use of brands, which in their earliest
form were the potter’s mark, but these gradually became more sophisticated
through the use of the maker’s name or devices such as a cross or star. Under
the civilizing influence of the Romans, and with the growth of towns and
cities, shopkeepers – including apothecaries, the earliest dealers in medicines
– would use signs to advertise their trade. In Rome, principles of commercial
law developed which acknowledged the origin and title of potters’ marks but
this did not deter makers of inferior quality pots from imitating the marks of
well-known manufacturers in order to dupe the public. Examples of fake Roman
pottery, manufactured by crafty Belgian potters and exported to Britain for
sale to the gullible natives, can be found today in the British Museum.
With the decline and
fall of the Roman Empire, the elaborate and highly sophisticated system of
trade that had bound together the Mediterranean and Northern European peoples
gradually crumbled. Brands continued to be used but mainly on a local scale, a
situation which remained for almost 1000 years until the Renaissance. This
period of stunning artistic and scientific advance expanded so did recognition
of brands, typically on such desirable items as high quality furniture,
porcelain and tapestries. The widespread use of brands, however, is essentially
a phenomenon of the late 19th and 20th centuries. The Industrial Revolution,
with its improvements in manufacturing and communications, opened up the
civilized world and allowed the mass marketing of consumer products. Indeed,
many of today’s best-known brands date from that period. Singer sewing
machines, Coca-Cola soft drinks, Bass beer, Quaker Oats, Cook’s tours, Sunlight
soap, Shredded Wheat, Kodak film, American Express travellers cheques, Heinz baked
beans and Prudential Insurance are just a few examples.
The modern brand was
born at the end of the eighteen and beginning of the nineteenth century.
Significant changes to consumer markets took place in the 1980s and 1990s with
the introduction of distributor own brands and the globalization of the trade. There
are many brand models of FMCG, service and B2B but pharmaceutical branding
doesn’t fit easily into any of the models due to its inherent complexity.
The new brands grew
in success, and, over the following decades, as the original founders of the
business grew older and retired, responsibility for protection of the brand
moved from individuals to large corporations and multinationals. The brand
themselves therefore became the focus and brand management was born in the
First Moving Consumer Goods (FMCG) sector, where most of the marketing and
advertising innovations happened.
INTRODUCTION TO PHARMACEUTICAL BRANDING
Pharmaceuticals, to
some extent, moved in parallel during this period. A number of founders started
their pharmaceutical business in the late eighteen century such as Thomas
Beecham with his famous Beechams Powders preparation. But by the time the major
innovations of the twentieth century were made, many of the founders had
retired, the business had grown through acquisitions and the responsibility had
passed to large organizations and multinationals such as SmithKline Beecham. A
second example would be Sandoz, which was founded in 1886 by Dr. A Kern and E
Sandoz as a chemical company during the same decade that saw Coca-Cola invented
by a pharmacist in
Atlanta. Pharmaceutical substance production started in 1895 and later major
milestones included the 1982 introduction of Sandimmun (an immunosuppressant)
and the merger with Ciba-Geigy in 1996 to from Novartis. The Sandoz brand then
disappeared for a short spell before being born in 2003 uniting all the
generics business of Novartis under one single brand name.
Classical high-tech,
industrial, and pharmaceutical marketing has assumed that customers are only
interested in the technical attributes a product has, and base their decisions
solely on selection of those attributes. Pharmaceutical products do become
product brands, but their development is often not planned, whereas, in the
past, the industry has focused on creating global blockbuster products to
drive double-digit annual sales growth.
In comparison to consumer
brands, which heavily use emotional arguments in their communication,
pharmaceutical brands appear to be limited by short exclusivity periods and
have suffered from total withdrawal of investment (brand destruction) once a
generic version becomes available. Pharmaceutical branding theory has advanced
over the last decade, creating a clearer understanding of the role of the
pharmaceutical product brand, helped by advances in neuroscientific thinking.
We know there is a hierarchy of brand functions for physicians that range from
simple authentication and differentiation, through need fulfillment and
contract forming to orientation and creation of charisma.
The pharmaceutical
industry has so far been successful with classical marketing techniques allied
to an R&D focus, aggressive defense of patents, and overuse of the key
promotional tool—large sales forces. The environment is now changing, and
merging to maximize R&D productivity and achieve economies of scale in the
sales and marketing area isn't going to be the sole long-term solution for the
industry.
By
developing strategic pharmaceutical brand logic, pharmaceutical branding could
move from being an advertising agency activity to become a tool to develop the
business and safeguard future profitability, i.e., a strategic discipline.
Branding could provide a competitive advantage by maximizing return on
investment for new product brands while offsetting the inevitable growth of generics
in the future.
WHAT IS A BRAND
Despite the recognition,
scant attention is paid to the practice of branding. Despite all the confusions, we will firstly
examine the range of definitions on brands.
Kelvin
Keller in this book strategic Brand Management refers to the
American marketing Association’s definition of brand: “a brand is a name, term,
sign symbol, or design, or a combination of these intended to identify the
goods and service of one seller or group of sellers and to differentiate them
those of competition”
David
Aaker talks about brand equity as “a set of assets (and
liabilities) linked to a brand’s name and symbol that adds to (or subtracts
from) the value provided by the producer or service to a firm and/or that
firm’s customers”.
Stephen
King
of WPP Group, London, differentiates between product and brand as follows: “a
product is something that is made in factory; a brand is something that is
bought by a customer. A product can be copied by a competitor; a brand is a
unique. A product can be quickly outdated; a successful brand is timeless.”
Don
Williams, Creative Director and head of P.I. Global offers this
definition: “… you can say its name and people immediately think of imagery
that is not just the product … a product evokes a function … a brand evokes
emotion,”
However, not one of them refers to the fact that
the brand resides in the customer’s head – it is not tangible, whereas a
product is. And this – the fact that it resides in the customer’s head – is to
my mind the key point. “The Brand” can come across as a deceptively simple
concept. It is not a singular thing! Rather it comprises a complex vessel of
strategic meaning. Successful have clear and differentiated positioning and are
emotionally relevant. The Volkswagen Beetle is a good example of a successful
brand – it came to represent simplicity, freedom of expression and anti –
establishment sentiments.
PRODUCT BRAND VS COMPANY BRAND
It is important to
understand that there are two main brand cultures which have converged. There
is the brand culture of the west, which have been about product branding
(largely shaped by companies such as P&G and Mars). This relies on carving
up and segmenting the market. Key words here are targeting and positioning.
Then there is the brand culture of the East, which is about Company brands such
as Sony, Toshiba and Mitsubishi. This relies on building trust based on one
name one name only. The name of the company is perceived to be the best
candidate brand name as it personifies power and continuity and status.
For the pharmaceutical
industry, given the frequency with which mergers and acquisitions take place, I
believe the emphasis has to be on the product brand. However, it is well worth
looking more closely at, and capitalizing on, the company name. My thinking is
that the company brand should be used to build trust in “target” therapeutic
areas. The product(s) should then be used to differentiate themselves from
other products and/or services in this therapeutic area, leaving the company
brand as part of its source of authority.
ALLEN and HANBURY ARE in THE UK (A
SUBSIDIARY COMPANY BELONGING TO GLAXOSMITHKLINE) IS RECOGNIZED AS LEADING
RESPIRATORY BRAND. ANY PRODUCT COMING OUT OF THE ALLEN AND HANBURY’S STABLE HAS
IMMEDIATE ADVANTAGE OVER SIMILAR PRODUCTS BECAUSE OF ITS ASSOCIATION WITH THE
ALLEN AND HANBURY’S BRAND.
WHAT IS BRANDING
Branding can be
extremely confusing to the pharmaceutical marketer. Having said that, it's
worth stating a few definitions as a way of ill-lustrating that there are
definitions of real value out there and they can make sense. They aren't quite
picked at random:
• Branding is
"a set of consistent processes, aimed at a specific purpose, that define,
differentiate, and add value to the organization."
• A brand "is
a name or a symbol given to a product that will differentiate it versus other
products and that will register it in the mind of consumers as a set of tangible (rational)
and (irrational) benefits."
Given that there
is general confusion concerning branding, even in the fast moving consumer
goods (FMCG) area, there is little real surprise that an industry dominated by
mass sales forces, multiple customers, patent defense lawyers, and huge
R&D organizations is going to find branding difficult to pin down. The
brand concept, as indicated in the above definitions, goes beyond the product
concept. A product delivers certain tangible benefits. A brand offers
additional values that are both tangible and intangible, adding emotion to
rational choice. A brand can be considered as the added value of marketing
investments made in a certain product.
IMPORTANCE OF PHARMA BRANDING
With the cost of
R&D rising and the success rate static at best, the need to exploit fully
those new products that come to market has never been so crucial. A way in
which such success can be enhanced is by branding. This is because when values
other than sheer technical excellence are cultivated in the brand name it is
possible to create benefits for health authorities, prescribers
and patients alike, which in time will come to strengthen the bond between
buyer and seller. Drawing upon established branding practice, mainly in the
non-prescription drugs world, some of the potential advantages for the brand
owner are as follows.
■ A powerful brand provides the platform to build a relationship
with customers on an individual basis, and for the manufacturer to ‘reach
over the shoulder of the middle man’, as HG Wells famously wrote, ‘direct to
the consumer’. The strength of the Nike brand with consumers has made the Nike
range a ‘must have’ for any shoe retailer, and no retailer worth his (or her)
salt can afford not to stock the brand. Pharmaceutical manufacturers whose
brands enjoy ‘must have’ status with health authorities, prescribers and
healthcare professionals can enjoy similar advantages. The rise of DTC
advertising and the ubiquity of the Internet can help brand owners create such
a relationship – and there is little that those government and regulatory
bodies who, Canute-like, wish to resist the encroaching tide
of
information can do about it.
■ A powerful brand provides significant competitive
differentiation, of a type that is extremely difficult for rivals to copy.
Recognition is gradually being given to the role that branding can play in the
post-patent stage of a product’s life, as strong branding may confer additional
time for the owner to maximize return on its original investment. For a major
brand with sales of $1 billion a year, the extension of its primacy by only 100
days would be sufficient to recover the total cost of its R&D. The patent
to Glaxo Wellcome’s aciclovir has now expired. As a result, topical Zovirax,
Glaxo Wellcome’s OTC variant for the treatment of cold sores, is starting to
feel the effect of generic competition. Bayer launched Soothelip (topical aciclovir)
in December 1997 but Glaxo Wellcome, by managing the heritage and established
recognition of Zovirax as the prescribed product, made it significantly more
difficult for Bayer to compete in this sector.
■ A powerful brand can cross the borders of countries and markets.
Virgin is a classic example of a brand that has successfully translated into a
number of sectors – air travel, record shops, financial services, mobile
telephony – often on an international basis. Brands with broad-based appeal can
provide a cost-effective way of leveraging value for their owners, and a
guarantee of consistency of satisfaction for their customers. In the
pharmaceutical market, the opportunity to carry brand value over into new
market sectors is becoming increasingly attractive with the growth of the OTC
sector. Examples of brands that have managed the transition are Diflucan, Canesten
and Zovirax. The jury is perhaps out with Zantac and Tagamet. Powerful brand
can influence behaviour and attitudes. As consumer attitudes towards
personal computers have changed radically since the advent of Microsoft, so
attitudes towards depression have undergone a transformation since the
introduction of Prozac in the late 1980s. Books have been written about the
Prozac generation and this immensely successful brand has acquired almost
iconic status, which should help it to withstand some of the worst ravages of
the post-patent era.
■ A powerful brand which attracts customer loyalty can
provide one of the greatest sources of wealth for a business, by its ability to
secure, through customer commitment, more predictable cash flows (‘quality
earnings’ as the financial community lip-smackingly refers to it). Branding has
now become a management tool, and through financial evaluation techniques it is
now possible to measure the value creation performance of brands within a given
portfolio, and to plan marketing investment accordingly. As has been
demonstrated in so many other industries, successful brands can deliver
enhanced shareholder value
and add
significantly to the worth of the business.
BRANDING IN THE GLOBAL PHARMACEUTICAL INDUSTRY
In view of the
widespread acceptance nowadays of brands as valuable strategic assets, it seems
strange that little evidence exists that the pharmaceutical industry takes
long-term brand building very seriously. Perhaps this is because of the
characteristics of the industry which, apart from the over-the-counter (OTC)
sector (which functions in much the same way as other retail markets),
is completely unlike
any other. The prescription-only medicine (Rx) sector – which contributes
around 90% of global pharmaceuticals revenue – is highly regulated and subject
to government and political intervention. Access to information about products
has hitherto been restricted to doctors and healthcare professionals only.
Direct-to-consumer (DTC) advertising is a very recent
development and
available, largely, only in the USA. And buyers and consumers of products
remain in effect separate parties. For manufacturers, the traditional sources
of value creation have lain in successful research and development (R&D) –
an increasingly difficult and elusive goal – and in agile sales and marketing.
The industry retains many old-fashioned, supply-driven characteristics,
overlain with government paternalism. The ‘Nanny knows best’ syndrome still
thrives. The emphasis on product development as the key to commercial success
is, of course, no bad thing. Any attempt to eradicate the world’s diseases must
be applauded and we should not begrudge the profits that might flow from this.
Equally we should not criticize the very high level of competitiveness that
exists in the industry.
Speed to market with
new, patented products can bear rich rewards – and manufacturers would argue
that the prices they set are not just to reward investment in one successful
new product line, but in the many other, unsuccessful, products that never see light
of day. Unlike other consumer goods industries, therefore, the chief motivating
force in mergers and acquisitions within the pharmaceutical industry is not the
desire of one company to acquire and exploit more successfully the brands of
another. Rather it is the R&D and sales and marketing assets that provide
the attraction. This would explain all the major mergers and planned mergers of
recent years – Pharmacia & Upjohn with American Home Products, Ciba with
Sandoz, Astra with Zeneca, Glaxo Wellcome with SmithKline Beecham, Pfizer with
Warner-Lambert. Yet despite all this merger activity the biggest grouping –
GlaxoSmithKline – will still have only 8% value share of the global
pharmaceuticals market. (A word of caution. A recent article in the Financial
Times (October 2000), commenting on the Pfizer–Warner-Lambert merger, said:
‘The deal is going well. Cost savings, at $400 million this year and $1.6
billion by 2002, are ahead of schedule, allowing Pfizer to predict earnings
growth of at least 25% a year for the next three.’Yet investors should not be
that easily mollified. Drug mergers usually produce an early boost from one-off
savings. Few, if any, have delivered a higher long-term growth rate for the
enlarged company.)
Indeed, over 100
years ago, Thomas Beecham recognized the importance of branding his safe and
effective new laxative ‘Beechams Pills’. This started a new trend in the
marketing of medicines by attaching a personal guarantee of the product’s
effectiveness, enabling it to stand out from the plethora of other products on
the pharmacist’s shelves which were likely to cause as much harm as good. As
knowledge grew and medicines began to become effective for a whole range of
previously untreatable symptoms and conditions, so the pharmaceutical industry
prospered. However, as the market expanded, so too did restrictions on product
claims and the communication of information, as cautious governments, no doubt
for the very best of motives, sought to control consumer demand.
DRIVING FORCES FOR PHARMA BRANDS
Pharmaceuticals have
followed a similar path over the last thirty years as consumer goods. As
successful multinational pharmaceutical companies have had to continue to look
for sources of new growth, they have extended their geographic boundaries. Only
fifteen years ago, many of the top-ten players were not represented in Japan,
while those Japanese companies with presence in Europe and the United States
were even fewer. Nowadays, we are rapidly approaching the stage where the same global
companies complete in all markets on approximately the same scale. There are,
however, relatively few mid-cap companies and biotechs that can genuinely call
themselves global-but that will come in time with the targeting of new products
to more specialized patient and physician populations. As in the consumer goods
industry, having exactly the same brand name in every market is not mandatory,
the name itself should not make or break a product. The GSK SSRI paroxetine is
marketed under the brand names Seroxat, Deroxat, and Paxil (among others),
while even the world’ biggest selling drug in 2010, Viagra (Sildenafil), Lipitor (atorvastatin), is
also sold as Sortis in Germany, Tahor in France, and Citalor in Brazil. Some
local brands, especially in Japan, still thrive within individual markets but
are becoming less significant as the industry changes. What is clear is that
local brands are not going to drive growth across the world pharmaceutical
markets during the next decade.
A number of synergies or
economies of scale are thought to come from global pharmaceutical branding and
its worldwide implementation. A single R&D positioning and consistent
branding throughout the long clinical trials phase of drug development are
difficult to argue with. Manufacturing less variations of the standard dosage
form and concentration of production in fewer sites are also easy to accept.
Similarly, harmonization of treatment algorithms around the world for a
particular disease means that everyone talks in the “same medical or scientific
language” and, therefore, assesses the data in a similar, consistent fashion.
In addition, the simplification of key opinion leader communication, the way
they interact with other physicians and, later, their willingness to provide
endorsement on a global scale are simplified by a global brand. Last, but not
least, the preparation of OTC switches is able to benefit from cross-border
advertising and awareness in an increasingly mobile world.
When looking at the
increase in global communications and the convergence of customer segments, it
becomes clear that the same phenomenon is happening in the pharmaceutical world
too. Patients now access the Internet, watch global television networks, and
even participate in global support networks (at one extreme), suggesting indeed
that segmentation of patients as well as consumers is becoming more relevant
across country rather than merely within. Physicians, our main target audience,
travel more frequently, and they are more likely to be involved in global peer
groups, especially if they are working in specialist disease areas. We may also
assume that diseases are the same the world over, as a result of which the
pressure to globalize will be even stronger. Some important regional
differences do exist, such as the problem of malaria in Africa and Asia, but
there is little variation when considering the top seven markets (the top seven
being the United States, Japan, Germany, France, United Kingdom, Spain, and
Italy). So, a number of the major arguments for the creation of global brands
in the consumer
world are fulfilled. In
additions, it is a moot point whether or not global brands in pharmaceuticals
have managed to create the positive “aura” that branded consumer goods appears
to have, but it could be argued that the ever-increasing regulatory standards
demanded nowadays (and global standardization across regulatory agencies) does
create that reassurance for physicians and patients in the know. Free movement
of goods impacts pharmaceuticals in a manner similar to the consumer world; it
allows “grey" goods to be shipped from low-price markets to high-price
markets (like Levi jeans).
This phenomenon, called
“parallel trade,” is the same in pharmaceuticals, and is one of the major
points that detractors of the global branding model make. Like consumer goods
companies, pharmaceutical firms are starting to be under increasing pressure
from the financial communities and shareholders to go global, in an
increasingly cost-conscious industry sector.
There are, however, several
aspects that don’t yet hold true. Global pharmaceutical distributors don’t
exist as such, although many national companies are expanding across borders or
entering into alliances. The pharmaceutical business model is not put under the
same kind of margin pressure by global distribution companies wielding huge
buying power, but instead we are restricted in virtually every market by the
governments and insurance companies that foot the bill. But, perhaps the most
controversial point, and therefore most surprising, is whether or not
globalization in pharmaceuticals leads to economies of scale.
In theory, it is easy to
imagine that this must be the case, e.g., clinical studies that can be used for
multiple regulatory agencies must be cheaper than separate development
programs. Single product brand name global promotion must save money locally
when it comes to awareness building. Local sales, marketing, and public
relations activities must be more efficient and cheaper if it is done once
centrally rather than reinvented by every product manager or local agency
everywhere. That’s the theory but, at this stage, unfortunately, there doesn’t
appear to be evidence of major savings-so what the take is out? It may be as
simple as the fact that due to pharmaceuticals being an industry where cost
containment is not the driving force for margin improvement, we just do it (or
measure it) very badly! This happens at all level, and an easy example can
usually be found in global marketing. Most global teams will be able to tell stories
of how local affiliates have spent huge amount of money on trying to beat the
global campaign.
FMCG VS PHARMA BRANDS?
PRODUCTS NOT BRANDS?
LOGIC BEHIND THE PHARMA BRAND?
