Brand Opportunity In The Pharmaceutical Industry


By Tom Dougherty

Umbrella Brands and Umbrella Companies

Brand Opportunity In The Pharmaceutical IndustryPharmaceutical giants such as Pfizer, Merck, Abbott Labs, among others, have done an excellent job creating new drugs.  These “umbrella” companies have had some success in branding and marketing, but they could be doing so much more for their parent brands. There is brand opportunity in the pharmaceutical industry  to be had with individual brands, but where the real brand power lies is not the apple, it is the tree. The shift in marketing strategy from calling on doctors to prescribe new drugs to advertising directly to consumers has transformed the pharmaceutical marketing industry, an industry that formerly took root purely within advancements in chemistry and science.  New and better drugs are constantly entering the market, and drugs like Viagra are becoming household names. The average consumer knows all about Viagra from commercials, stand-up comedy, and famous spokesman such as Raphael Palmeiro and Mark Martin.

If you were to ask those same consumers who actually made Viagra, you would be hard pressed for an answer. As we all know, the pharmaceutical business lives and dies by Research and Development. R&D costs are so incredible that new companies can go out of business without ever producing one drug.

Companies cannot predict which line of research will result in the next wonder drug, so it is difficult to divvy up their eggs amongst R&D efforts. Focus on R&D results in larger companies buying smaller companies that develop promising drugs. However, as research gets more expensive, drug prices do too. Acquisitions and mergers always bring obstacles in the path of brand development.

On the whole, pharmaceutical marketing invest in creating separate brands (a house of brands model) for each drug they create, which, although aiding in the merger issue, does little for brand equity for the parent company.  Rather than building on an established brand promise, drug companies reinvent the wheel when developing a new drug. Outside of Wall Street, brands like Merck and Pfizer have little to no meaning. Consumers may only know Merck after watching news coverage of the Vioxx lawsuit. With such ardent focus upon R&D, it is easy to see how drug companies loose their parent brands.  The brand quickly becomes secondary to the drugs. This absence of brand is evident by the lack of meaning with any drug other than the description of the malady the drug treats.

Where is the Customer?

A house of brands identifies a singular customer without adding the umbrella brand value of the manufacturer (Think of Apple or BMW as the ultimate branded house) (Read more about the BMW Brand Opportunity In The Pharmaceutical Industrybrand model here) This description provides no equity in the drug itself or the company who produces the drug. Nor does this basic description facilitate connection with the customer. Pharmaceutical companies have untapped potential to differentiate. Most pharmaceutical marketing groups create what we call “a house of brands” because there is arguably more equity in a drug company’s individual drugs than in the company itself. Although this is not the ideal business model, it can be effectively managed and profitable.

In order for companies to succeed in the utilization of the Proctor & Gamble model, they must re-evaluate how they market their drugs and how they create a brand strategy that connects with the target market. This analysis goes beyond using fear tactics that are commonly used in today’s drug advertising under the guise of being a consumer’s partner in health. Instead, drug companies must look for ways that connect with consumer beliefs. This understanding must be evident in everything for which the brand stands, starting with naming.

Drug names border on the ridiculous. While there are regulatory imposed restrictions for the naming process of drugs, there is clearly room for companies to better address the complexity of naming. The name of the drug must in someway mean something to the consumer and represent something more than the “healing attribute” of the product. The name of a product cannot accomplish everything for the consumer and does not encompass all of what the brand entails, but it certainly can form an initial brand connection and recognition. In contrast to the house of brands model, the second and much stronger option for pharmaceutical companies is to create branded houses. This strategy creates specific meaning for the parent brand, and all offerings thereafter function as vehicles of that meaning.

A Better Model

This model would involve a great expenditure of resources in order to properly bolster the parent brand. However, creating a branded house would be less expensive over time as consumers could then start to build relationships with the company rather than a seemingly unattached individual drug. Subsequent product offerings would not be nearly as costly because brand meaning would have already been established through the parent brand. This model also aids in the difficulty of naming new drugs because the drug would already have an immediate connection to the parent brand name. Clearly, there is plenty of room for brand development within the pharmaceutical industry. At Stealing Share, we make it our business to seize these brand opportunities within the market place, providing actionable and strategically sound tactics. Branding is more than creating a great looking logo or a catchy name. Brand, like pharmaceuticals, must be researched, tested, and developed before it is of any value. It is about time that pharmaceutical brands go beyond theory to take hold of the identities they deserve.

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