Tuesday, December 31, 2013

Introduction of Pharmaceutical Branding

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.
Two notions are of particular importance lo understand the brand concept: the brand identity and the brand image. The brand identity is the set of tangible and intangible benefits that the firm has to select to differentiate its product versus competitive ones. The identity is therefore based on a company decision. The brand image is the perception of this identity in the minds of consumers.




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?


No comments:

Post a Comment