It really pinches hard when you spend million of dollars and time in research and brand building only to have someone flood the market with copies. ‘Innovator’ pharmaceutical companies have adopted different ways of fighting their traditional enemies. Arshiya Khan explores a few strategies that these companies have up their sleeves
Products maybe lifeless, but they still have personalities. In the same manner as Abhay Joshi or Bhavesh Desai would differentiate themselves from other human beings. When we talk about, say Joshi, we are talking about a person with specific features and personality. We may say he is short, and has a curly hair, etc. We may quickly add that Joshi is a nice person and is trustworthy even though we may like or dislike him. Obviously, this does not imply to the entire human race. Joshi, though made up of the same cells, with two legs and two hands, has a distinct character. In the same manner, a brand has a distinct character. A doctor or a consumer may trust Becosules more than any other vitamin tablets available at Princess Street, Mumbai for this reason.
|“Unlike generics, a brand’s ‘equity’ is at stake if they go wrong”
– Gauri Chaudhari
Brands like any other human being can be trusted, hated, preferred or not but fundamentally they stand for what they do. “Unlike generics, a brand’s ‘equity’ is at stake if they go wrong,” avers Gauri Chaudhari, Brand Consultant, FCB Ulka.
Face value of a brand
There is a very strong need for ownership, which makes the brand unique in the way it connects to its customers. It can also be an emotional differentiation. In the pharma context, generics can claim that they give the same benefits to the patients, so the doctor very often does not consider it incorrect to substitute a generic for a branded product. This is where strategy can decide a hit or a miss: How can I be different from others? Will it be the pricing strategy, packaging or something else?
|“Because when everything is on par… it is the emotions with which you differentiate your brand”
– Susan Josi Managing Partner
At this point, it is more about the intangible benefits to doctors and customers. “Because when everything is on par especially with generics, it is the emotions with which you differentiate your brand,” exclaims Susan Josi, Managing Partner, Sorento Healthcare. So pharma manufacturers have to create a tangible difference for their brand with a claim, and a condition with which the consumer associates with it and within that the company creates a very strong emotional anchor for the brand. That is what the brand is all about. A brand is a combination of the tangible and the intangible. It is the intangible that will make the originator score over the generics. And that is where the role of positioning and market size, strong communication hook with the customers and consumer understanding comes in and builds a brand.
The big fight
What has been happening in India is that as soon as MNCs introduce their innovator brands/molecules, generic players have a tough time in fighting the brand. This also applies to generic companies who have launched their products even before international brands came in the market. In due course of time, these domestic brands have created a name and following for themselves.
Now when a generic company tries to launch a molecule for the first time, it will look at creating brand memorability and differentiation in the minds of doctors. In the Indian scenario, which consists largely of branded generics, brand building is very important, as it is the brands, which help build volume and sales of a company. It helps in differentiating from competition and creating a positive mental association as well as emotional relationship with the customer leading to long term customer loyalty. This is due to the fact that often there are more than ten brands in any molecule category in the market, all with similar physical and chemical properties.
To counter their traditional enemies, brands have adopted different strategies to fight generic competition. They have initiated lifecycle management strategies to fight generic competition. These strategies may involve prescription (Rx) to Over-the-counter (OTC) switch, indication expansion, reformulation, authorised generics, second-generation launch and divestitures. They are protecting existing brands from patent challenges and generic competition through litigation. The other strategy is ever greening of patents and switching patients to next-generation drugs to balance existing brand defense strategies.
The other way of doing it is by creating brand differentiation and ownership. “In case of MNCs, the biggest hook or the identifier for them is the huge amount of information and data that they have on their brand. So they always share the originality and the sound knowledge on the subject of the diseased condition and also on the brand,” avers Josi. This is what will win the trust and confidence of doctors because they can get all information pertaining to the brand and the diseased condition. “So they play on the emotion that we give you more authentic information, we give you much more original knowledge of the subject and that’s the way a lot of pharma MNCs who have built their brands here from the beginning, have built their strategies around it,” adds Josi.
Josi illustrates her point with Novartis’ Voveran. It was a number one brand almost from the day of launch even though there were many diclofenacs already in the market. This is because when it was launched, the company had a lot of authentic data on diclofenacs, which they shared with doctors. With this, they showed their authenticity, knowledge and differentiation from the other products in the market. At the same time, the company also showed that Voveran targeted many indications. The second thing that they did was they created a very interesting picture of how ‘Voveran’ is the brand that one should trust in acute pain management as opposed to other imitators who may not be giving you the right information.
Indian players have also played the same game. Trica, an Indian company along with their tie up with an international company (Up John), launched a molecule alprazolam during the period when patients were having diazopam which was used as a tranquiliser.
Previous products in the market were positioned as sleep aids. There were negatives attached to the sleep aid positioning, as doctors thought it was addictive. Trica therefore wanted to associate its brand with ‘tranquillity’ in the doctor’s mind and they created a single-minded proposition around this benefit. Instead of taking ownership of sleep, they said ‘NO’ to sleep aid. So they built on the anxiety factor, played up the tranquillity positioning. The positioning was visualised as a very beautiful mnemonic of a butterfly resting on the fingertip, which has become very memorable and historical for this brand.
So there is a plethora of alprazolam brands in the market but not one has been able to displace the emotional attachment that the Trica brand has in the doctor’s mind. So this is where actually brand building plays a role. “If you are creating an emotion of benefit, you are able to dramatise that benefit, in a much stronger and emotional manner,” claims Josi. The game is seen by the doctor and he is able to relate to that single-minded proposition that you are putting in front with the brand. It has to be so strong that even if new brands come, the doctor is not able to displace that brand from the mind. So with brands, you are getting mind share and with mind share you will get market share.
An authorised generic (AG) is a drug that is distributed by a generic company with permission from the brand company. Switching to AGs is an ideal way for a branded pharma company to continue making profits even after patents expire. Also an AG can compete in the market during the 180-day exclusivity period awarded to generic companies. One perspective is that AGs increase competition and result in lower prices for consumers and the overall health care system. “But the other side sees AGs as violating the very essence of the risk-reward trade-off that characterises generic drugs and acts as an incentive to generic manufacturers,” feels Utkarsh Palnitkar, Partner Transaction Advisory Services, Leader – Policy & Investment Advisory Services and Industry Leader – Health Sciences, Ernst & Young.
But Josi claims that we have not seen much of that happening in India, because the patent issue is not an issue in our country. “We have never been a witness to such kind of areas where companies have passed on their patented/ or going off patent to another company in the same country. Worldwide it has happened because while they are doing it, they are also building another molecule,” points out Josi. She cites the example of AstraZeneca’s molecule Omeprazole. As the patent expiry date came closer, the company very strategically decided to launch Nexium, which was Esomeprazole. This is another way how pharma companies find ways and means of ‘ever greening’ the original molecule. By doing this they also create an experience of the disease condition as well as the brand.
Ownership of category
Josi points out how company have started owing a category. Pfizer innovated the entire erectile dysfunction category, with a brand called Viagra. What will happen when Viagra goes off patent? Josi suggested that most probably Pfizer will have a lot more products in that category because the experience that they have in the condition has actually made them wiser about what are the issues they are dealing with the customer and this product. This strategy is also adopted by Indian companies like Sun Pharma, Cipla, Alkem, Torrent etc. They start claiming ownership of a category, rather than building a particular brand molecule. They build their brand by saying that we are absolutely knowledgeable about a particular portfolio.
If a drug goes off patent they know their customers very well, and have an excellent rapport with them. This will add value to their products and over a period of time it builds value in the therapy area. And that is really what is happening globally. People are taking ownership of category, building the brand as a corporate in their category and trying to ward off the impending patent cliff. This is a very good way forward for many companies in the world; it has happened in the oncology, psychiatry, diabetes categories. It has happened in the case of Eli Lilly, Novo Nordisk etc, that are strong diabetes companies. Even if a product goes off patent, they have the next product in the pipeline and can thus extend/strengthen their customer relationship by launching the next product.
The other way of countering the generics assault is giving rebirth to the drug i.e. new indications. For example, Viagra was reborn as Revatio, a drug to treat pulmonary hypertension, a rare, fatal lung disease caused by constrictions in blood vessels that supply the lungs. The only problem that arises with this strategy is that people are more familiar with and recognise the brand Viagra, for erectile dysfunction, so they may or may not associate it with the new product/indication.
According to Josi, in the pharma business, unless the brand is taken in the life cycle, you are creating another indicationship, or they are shifting to OTC, or moving into a different segment like DTC (direct to customer). There is always a threat that the brand never remains life long in that category as number one. It will always reach its pinnacle of success and get stagnant. What is also happening in India is that companies are penetrating the market by finding slots where it can be prescribed more often, so they do a lifecycle management of their brand. So if you see today, there are now so many indications for Sildenafil citrate/Viagra that have come in. Why are companies doing this? Because they want to extend the lifecycle of the brand in different areas.
So while you milk current consumers and newer consumers in the same indication, you are also finding strategies of extending the brand into other areas. And consumers are very familiar with this strategy in FMCG products. Consider a brand like Lifebuoy, or Surf. It has never remained stagnant and has always perpetuated itself. The same applies to Coca Cola. Coca Cola is Coca Cola, but within that brand the kind of flanking that they have done for the product is perpetuating the brand through different SKUs, diet option, through a different combination. So that’s the way they perpetuate the mother brand.
This is the same strategy that is being applied in pharma as well. It is just that the market does not see it that way. The company’s reasoning is that if a brand expires, they need to launch another to take its place. “It is very sad to say, that we really don’t build brands in pharma,” feels Josi. There are very few brands that you can count on your fingertips, like Becosules, Corex, Viagra etc. which have become memorable. But if you look at the top ten brands as per IMS-ORG ratings since five years and today, few brands will figure in both lists. So it’s always moving, it’s always changing. But if you take Colgate in the consumer group as number one, it is difficult to shake that number one with other brands; it takes a huge amount of effort and tenacity for one to get to that position. Pharma companies are finding ways to perpetuate the mother brand, brand characters the tenacity. This is important because consumers are changing, the need gaps are different, they are moving with time. So they have to find a way of connecting to the new dimensions of the market.
Josi points out that there was a time when we used to look at antibiotics as antibiotics alone. But today we have a combination. May be in the near future, doctors can also ask us to take a Lactobaccillus preparation with the antibiotic. These are things, which are showing you ways and means of extending a brand’s lifecycle. If one considers pain management, there are different kinds of pain areas that are coming up and how people are managing pain. So it only tells you that you start owning the condition instead of a brand.
In this way, the company takes ownership of the customer at different segment levels which may be condition, demographic, price, penetration etc. This is called ‘brand architecture’. Josi reveals that companies are creating brand architecture for their products. They are trying to visualise the look of their brands two to five years down the line. They are asking themselves, ten years hence, how do I take my brand to the next level? And for that they are adopting flanking strategies, like positioning, penetration, price, segmentation, customer chain etc. This is important because the environment is never going to remain the same. It’s always going to change. And in that environment, you will have to constantly keep on innovating. So it’s a huge challenge to take on.
Rx to OTC
“The rationale behind the Rx to OTC switch is very clear. Once, during the patent period, when the brand equity is built, no one likes to let go of it,” claims Chaudhari. Going off patent is a world wide phenomenon. For instance, Claritin, which was Loratidin,, When Scherring found that it was going off patent they went all the way and switched from Rx to OTC. And they created a strong consumer pull for the brand.
Another example is the cholesterol lowering drug Simvastatin. When Merck saw that Zocor (simvastatin) was going off patent, they created Zocor Proheart, which was directly marketed to consumers. This strategy is practised world wide, because in regulated markets patent laws regarding prescription products (Rx) are very stringent. And similarly the OTC regulations are very clear.
“Unfortunately in our country, things don’t work like that, because tomorrow if you tell Glaxo to take Osteo Calcium OTC, there would be lots of ‘ifs’ and ‘buts’ and issues that come along with it, in terms of marketing,” feels Josi. Indian pharma marketing managers have just gone and built brands without even thinking whether it is patented or non-patented. So that rule doesn’t really apply in our country.
But essentially what happens in our country is that brands go OTC when companies start feeling the pressure. When a particular product gets a huge repeat prescription, say of 80-90 per cent, companies feel this is a great opportunity to take the brand OTC because even though the doctor is not prescribing it, the consumer is buying it. So they do some responsible marketing / advertising and get consumers to buy it on their own. And that is why products like Crocin, Benadryl, Gelusil, etc. opted for the OTC route. It was not because they were off patent but because of marketing needs and because of some other circumstances, which made them do with it, opines Josi.
The next in line is DTC advertising. “DTC advertising in the US has made the common American familiar with pharma brands. If the US FDA approves, taking a brand OTC is the next logical step to leverage the brand equity that has been created through the DTC period. But not every drug can take the OTC route as US FDA simply refuses to give OTC status to a brand, says Chaudhari. Many brands that were advertised through mass media like Prilosec and Claritin went OTC to maximise the mileage.
Besides opting for product expansion and newer indications, pharma companies are also going for ever greening of patents as a line extension strategy. Ever greening, in one common form that occurs when the brand-name manufacturer literally “stockpiles” patent protection by obtaining separate twenty year patents on multiple attributes of a single product. These patents can cover everything from aspects of the manufacturing process to tablet colour, or even a chemical produced by the body when the drug is ingested and metabolised by the patient. The most logical of all is the line extension. But the bad news is that, line extension strategies are now frowned upon by regulatory authorities, especially US FDA, until and unless they are clinically proven to be superior in efficacy and safety, informs Palnitkar. In recent times, line extensions are being classified as part of ever greening of patents and regulatory authorities do not encourage such practices.
India and the patent cliff
Pharma consultancy IMS Health says that, by 2011, drugs worth some $60 billion will come off patent. Makers of generic drugs, which already hold 60 percent of the US prescription market, have nowhere to go but up.
These huge losses for Big Pharma translate into opportunities for Indian players. The patent cliff would throw up opportunities for Indian generic firms to introduce products in regulated and lesser-regulated markets all over the world. “It would not affect India to a large extent since most of these are already present in one way or other in the domestic market,” feels Palnitkar. The only benefit would be lowering of prices of certain patent protected drugs due to multiple generic players getting into play.
NGOs are trying to get governments to promote use of generics over prescription products, especially in countries like India where more than 50 per cent of the population is economically backward. Josi points out that the price difference between the original molecule and the generic version after patent loss is almost eleven to twelve times. Josi adds that if they do not allow generics’ manufacturers to manufacture off patent molecules, how are the masses going to benefit?
Josi is also aware of the other side of the argument. MNCs who have invested sales earnings to build molecules, need to recover their investments. So it is unfair to reduce the price in global markets, which could bring in huge volumes. In such cases, what is the way out? According to Josi, when the doctor / medical community realises the molecule is a complete blockbuster in terms of a medical breakthrough, and will benefit masses, then the government has to intervene and see how the price can be reduced to best serve society’s healthcare needs.
Also, companies can do away with fancy packaging and frills that add little value to the efficacy of the drug and thus reduce the price. Josi informs that this is happening with quite a few life saving drugs and HIV medicines as well.
Pharma companies are opting for line extensions to keep the brand as a brand and not a generic. Meanwhile the generics market would continue to grow along with greater penetration in health insurance and upswing in the economy.
In the uneasy truce between innovators and generic manufacturers, patients – with the help of the medical community – will have to be alert to these moves. As with human beings, brands with multiple/split personalities are best kept at arms length, pending the seal of approval from experts.