The New ‘Stylized’ Brands in Pharma – Part One of Two

6 Jan
P. Mohan Chandran
Wednesday, September 19, 2007

BRANDED FOREVER

Even if you did not invent, discover or patent the drug, now you can give your name to the medicine and claim rights on it! Since times immemorial, men started “branding” their cattle with hot irons to distinguish theirs from others’. That initial concept of branding has evolved into branded products, licensing revenues, distribution channels, and franchising. Using creative brands and expanding the reach of their products, pharmaceutical industry – to a large extent – was still working with drug names, which were reminders of the chemical entities in the medicine. But, the industry has witnessed a change in the past decade. Pharmaceutical companies have started launching drugs with innovative names, and have been advertising to gain popularity for the brand names. There is now a significant focus to promote the brand names as company’s name to create a market advantage.

A research study in 2003 emphasized the importance of brands when blind taste tests proved that people actually liked Pepsi more than Coke. But when Coke brand name was associated with the drink, people’s brain activity intensified and the preferences shifted drastically from Pepsi to Coke. In other words, the branding of a product can do more than the product itself. In case of food and beverages, this shift in brand may be ignored, but when it comes to drugs, and especially life-saving drugs, this is very significant and can have a major impact on the patient’s life. So, if a company’s patented drug is not as good as generics, or if it is expensive than generics, then branding the drug will enable the company to push its sales. Realizing the importance of branding, the Big Pharma companies in 2003 spent about $25.3 billion on marketing, which was almost as much as on R&D ($33.2 billion).

Branding is a very important aspect in pharmaceutical industry. Brands have become synonymous with corporate value. While corporate brands distinguish one company from another, product brands differentiate the products of one company from that of the other. Product brands give unique identity to a company’s product even in the most competitive of markets. A successful brand is considered as a company’s most valuable asset, as it not only ensures repeat sales for the company but also leverages its intangible value. Reinforcing the importance of branding in pharma industry, Tara Rehl (Rehl), Relationship Marketing Manager for Brand Development at Pfizer, said, “Historically, product branding has been prominent in the industry due to greater technological differentiation and to the patent system. Additionally, the intellectual property rights granted to a new molecule contribute to the ‘product brand on a pedestal’ approach to branding in the pharmaceutical industry.”1

According to industry analysts, most companies (such as Astra Zeneca, Novartis, and Aventis) have traditionally focused more on corporate branding than product branding. These companies were of the opinion that corporate brand would automatically sustain the product brand and leverage sales. Says Mike Rea, MD of IdeaPharma, “The corporate brand does the work of the product brand before launch – it builds a reputation. That’s why people are doing it.”2 The companies focusing on corporate branding felt that it would work well even with doctors, since a doctor would prefer to meet the sales representative of a well-branded company than a poorly branded one. Since decades, the system followed in pharma industry was this: invent a new drug, patent it, introduce it to a doctor through a sales representative, and get the prescriptions filled by the doctor. This automatically generated sales and ensured profits, as the drug was patented, which means that there would be no competitors.

However, few other companies (such as P&G) have focused on product branding because they felt that corporate branding is a very time-consuming process. Moreover, the consumer is more concerned about the efficacy of the drug than the name of the company that invents it. P&G emphasizes more on its individual products and promotes them as its brand driver. Unfortunately, most pharma companies still have not understood the significance of product branding, with the exception of a few companies such as Pfizer, GlaxoSmithkline, Eli Lilly, Merck, Bayer, Bristol Myers Squibb, Abbott Labs, etc., who have branded some of their products that became very popular worldwide. Eli Lilly branded its drug “Prozac,” and introduced it in 1986. When Prozac was introduced, not a single study submitted by Eli Lilly to the US Food & Drug Administration (USFDA) mentioned that the drug, when taken alone, was efficacious in curing depression. However, once the drug was approved by USFDA, Eli Lilly aggressively marketed Prozac as a revolutionary substance that selectively targeted serotonin, a brain chemical. Their marketing campaign highlighted the fact that, unlike the cheap generics, Prozac did not affect norepinephrine, which produced side effects. This marketing programme catapulted Prozac to a blockbuster drug category. Prozac is now a very popular medicine and the most prescribed anti-depressant across the world. Prozac is taken by more than 35 million people globally, and it contributes more than $3 billion annually to Eli Lilly’s sales. Eli Lilly has branded several of its drugs, which have paid rich dividends to the company’s topline and bottomline (See Table-1).

TABLE-1

SALES OF ELI LILLY’S POPULAR DRUG BRANDS

Brand Name of Drug

$ Million 2005

$ Million 2006

Zyprexa

4,202

4,364

Gemzar

1,335

1,408

Humalog

1,198

1,300

Evista

1,036

1,045

Strattera

552

579

Forteo

389

594

Cialis

170

216

Source: http://www.lilly.com

Similarly, Bayer branded the drug “Aspirin” and introduced it in 1899. The brand attained a dominant position in the world within a short period. In the U.S., more than 50 million people take Aspirin in a day, which comes up to 15 billion tablets a year. Bayer’s sales revenues also soared because of its initiatives in branding its drugs.
Several of its branded drugs became global best sellers (See Table-2). In October 1999, Aspirin received the prestigious ‘Smithsonian award’ and the drug was added to the Smithsonian Institution’s National Museum of American History’s collection of over 9,000 patented drugs. Interbrand and Business Week ranked Pfizer 38th in the top 100 best global brands of 2006, with a brand value of $9.59 billion. Novartis was ranked 43, with a brand value of $7.88 billion, while Johnson & Johnson was ranked 88, with a brand value of $3.19 billion.

TABLE-2

BAYER’S BEST SELLING PHARMA BRANDS – 2006

Brand Name of Drug

€ Million

Betaferon/Betaseron

991

Yasmin/YAZ/Yasminelle

794

Ascensia

788

Kogenate

787

Adalat

657

Ciprobay / Cipro

513

Aspirin

465

Avalox / Avelox

396

Magnevist

323

Levitra

314

Glucobay

308

Source: http://www.bayerhealthcare.com

GENERIC NAME Vs BRAND NAME

After a drug is developed, it is given a name that indicates the chemical composition of that drug. This is called a generic name, chemical name, or the scientific name. It describes the active ingredient in the drug or its chemical structure. However, some companies also give the drug a ‘brand name’ for marketing it. The brand name is owned by the brand company and other companies cannot use this brand name to distinguish their generic versions of the drug. All prescription drugs usually have generic names. A brand name is usually easier to say and remember than a generic name. Doctors and patients know a new drug by its brand name. For instance, Prozac is a brand name widely known to all, while its generic name – fluoxetine – is known to few people. Similarly, Zantac is a brand name known to millions of people, and few would identify it by its generic name, Ranitidine.

Generic medicines3 are copies of brand name drugs with the same active ingredients, and hence are much cheaper than the brand name drugs. However, sometimes, different non-active ingredients may also be used to produce the final generic medicine, as in creams or nasal sprays. Generic medicines have the same chemical name and same therapeutic effect as equivalent brand name drugs. The approval process for generic medicines is very stringent in many countries, including Western countries. A company manufacturing generic medicine has to prove its efficacy on par with the brand name drug in terms of indications, dosage, labeling, strength, quality, purity, performance, usage, and safety. Moreover, the generic medicine manufacturer has to prove that his generic medicine has the same effect in the body, and is manufactured with the same high standards as that of a brand name drug. USFDA evaluates and approves a generic medicine as therapeutically equivalent to the brand name drug. In the December 1999 issue of the Journal of the American Medical Association, the then USFDA Commissioner, Dr. Jane E. Henney allayed widespread apprehensions about the therapeutic value of a generic medicine, and said “Practitioners and the public may be assured that if the FDA declares a generic drug to be therapeutically equivalent to an innovator drug, the two products will provide the same intended clinical effect.”4

According to pharma experts, ‘Creating a generic name is a science; creating a brand name is more of an art.’ They believe that branding is more conspicuous at the corporate level than at the product level, and building a strong brand identity is still in its nascent stage in the pharma industry. For this reason, there was not a single pharma brand or company name in the Top 25 list of the Interbrand / Business Week’s ‘Most Valuable Brands’ in 2002.

If the branding is right, then sometimes the product brand may overtake the corporate brand. For instance, more people remember the product brand ‘Viagra’ more vividly than the corporate brand ‘Pfizer.’ Viagra was patented in 1996 and was approved by the USFDA in 1998. Sildenafil Citrate (Viagra) was originally developed as a medicine for chest pain in men and was later discontinued in the wake of unsatisfactory results in a phase-I angina study. However, it was observed that men who took 50 mg and 75 mg doses of Sildenafil Citrate reported increased tendency for erections. This shifted the focus of the drug from angina to erectile dysfunction (also called impotence). Within one year of its launch in the market, Viagra achieved sales of $ 1 billion, thus becoming a block-bluster drug. In 2006, Viagra’s sales touched $ 1.87 billion.

Similarly, ‘Aspirin’ is more popular than ‘Bayer.’ Many of P&G’s individual products such as Pampers, Crest, Head & Shoulders, Mr. Clean, Old Spice, Lacoste, Oral-B, Pantene, etc., are identified better by their brand names than the company that produces them. Recall of a brand name is higher and faster compared to a generic name (See Table-3). Brands evoke feelings of trust, integrity, value for money, association, and pride in the consumer.

The recall of branded drugs that were advertised had a deeper impact on the consumers. According to a survey conducted by the Kaiser Family Foundation of patients in November 2001, 44% of the patients who saw a branded drug being advertised for a particular ailment and asked the doctor to prescribe it were indeed prescribed by the doctor.

Branding plays a decisive role in the pharma industry. For prescription drugs, it plays a B2B role while for OTC drugs, it plays a direct role with the consumers. For instance, Pfizer sells its fertilizer products directly to the consumers. In this scenario, branding becomes indispensable for any pharma company, since its drugs comprise both prescription drugs as well as OTC drugs. The idea of brand has caught on with the consumers so much so that patients now associate a disease with the brand name of the drug. Prozac has become synonymous with depression; high cholesterol elicits the name of Lipitor; and hay fever (also called pollinosis) reminds of Claritan. The following table presents a list of branded drugs that have become synonymous with the ailment and evokes instant brand recall:

TABLE-3

RECALL OF BRANDED DRUGS

Brand Name

Ailment / Indication

Dettol / Savlon / Band- Aid

Burns, cuts, wounds, germ-killer

Burnol

Anti-septic, cuts, scalds, burns

Viagra

Erectile dysfunction

Aspirin

Headaches, migraines

Coldarin / D’Cold

Cold

Benadryl

Cough

Krack Cream

Cracked heels, corns

Iodex / Amrutanjan / Tiger Balm / Zandu Balm/ Moov

Sprains, headaches, spasms

Colgate

Dental hygiene

Itch Guard

Itching, skin ailments

Dermi Cool / Nycil

Prickly heat

Eno

Indigestion (Dyspepsia), antacid

Baygon Spray

Insect-killer

Branding helps the company in extending its product line and product lifecycle. Whenever the company wants to introduce new products or value-added services, it will always try to combine them more proximately with the already created brand awareness. Says Jeff Smith, Associate Partner at Prophet Management Consultancy, “Without the presence of a valuable brand, line extensions become merely a regulatory tactic. With the existence of an extendable brand, a franchise is able to capture the minds and hearts of individuals and is able to leverage the trust that has been built up over the years.”5

Many studies have shown that there is a difference between generic drugs and brand name drugs when we compare the ‘therapeutic index’ between the two. Therapeutic index refers to the difference in a drug’s effective amount in the body and the level at which the drug causes a disagreeable or harmful effect. Also, branded drugs are considered to be more efficacious and safer than generic drugs. Moreover, branded drugs are more costly than the generic drugs. The prices of branded drugs are double that of generic drugs, or sometimes even more. It is estimated that for an equivalent average generic drug that costs $17, the branded drug costs $72. When Sildenafil Citrate, a formulation used in Viagra, was first introduced in the U.S., the international price went up to $20,000 per kg. Sometimes, when a company owns both the branded drugs and the generic drugs, it may deliberately price the generic drugs higher to dissuade the consumer from buying it. According to one estimate, branded drugs are expected to grow by 6% over the next five years, while global generic-drugs market is worth about $60 billion.

A good brand also offers the company adequate time to respond to competitive threats of other companies, which may be unexpected and sudden. Brand loyalty provides the company the necessary time to plan and execute its strategies to counterattack its competitors, as the brand loyal customers will not switch to a competitor brand immediately.

TO BE CONTINUED – (Coming up: Jumping on a “Brand” Wagon; Stealing ‘Brand’ in a ‘Grand’ Way; Market Vigilance is Key)

ENDNOTES:

1. Colyer, Edwin, “Products That Rise Above Their Corporate Brands,” http://www.brandchannel.com, December 8, 2003.

2. Ibid.

3. ‘Generic medicines’ are the copied version of the original brand name drugs; ‘generic name’ refers to the name given to the drug after it is first developed.

4. http://www.barrlabs.com.

5. Brown, Helen, “Dealing With the Generic Threat,” http://www.prophet.com, September 14, 2005.

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