A quick test: Tylenol, Prozac and Viagra. Headache, depression and erectile dysfunction. Three different drug brands, three different conditions – can you match the ailment with the cure?

Chances are you’re well aware of these brand names and their uses – no matter whether you have ever needed them or not. And that’s the point.

The reason we know these drugs is because they are extremely powerful brands.

According to Stephen Godwin, Synovate Healthcare Group Research Director, branding pharmaceuticals is much like any other brand-building initiative. The goal is to make your brand distinguishable against products that are becoming increasingly similar in the decision-maker’s mind.

“If you are marketing the fifth drug in a class, you rather hope that you will be able to make doctors remember your brand,” says Godwin. “We all know that Michelin and Goodyear tyres look identical. The branding by each company is there to persuade us that their particular tyre is better. It’s no different with drugs.”

However, Robert K. Passikoff, Founder and President of Brand Keys Inc, feels that there are some peculiarities to branding in the pharmaceutical industry. “These companies are dealing with an intermediary controlling what consumers might or might not end up purchasing – the doctor,” said Passikoff in an interview with The Wise Marketer.

Passikoff points out that in the over-the-counter (OTC) category the situation is different, with consumers given wider access to traditional marketing information and issues of pricing, and placement becoming more complex.

“These issues don’t really apply to prescription drugs,” says Passikoff. “And as a result, promotion of the brand somehow needs to be managed in a way that’s far different than the usual packaged goods brand effort.”

Mike Rea, CEO of IDEA Pharma, a pharma strategy consultancy, sees things somewhere in between. “There are ways that [pharma branding] should differ, and unfortunately, fewer ways that it does differ,” he says.

What about the numbers?
Advertising, normally one of the strongest tools in a brand-builders’ arsenal, is another area where pharmaceutical companies differ from conventional brands. The United States and New Zealand are the only countries that allow direct-to-consumer (DTC) television advertising for pharmaceutical brands. In the US, debate has raged for years over the ethics and effectiveness of such advertising.

In the case of prescription drugs, it may seem a little odd that pharma companies would target an audience (the patients) that doesn’t directly decide what drugs they are prescribed.

However, Passikoff feels that there is still merit in creating awareness. “There was a need for people to have some sense of familiarity with the names of the drugs that they were going to be given, and drug manufacturers wanted there to be a resonance when a doctor made a recommendation.”

While Passikoff believes that DTC advertising has been effective in product acceptance, he grants that it is difficult to say whether or not sales have matched awareness. “I’m not sure that [DTC advertising] has done anything more or less in terms of sales because there the ‘gatekeeper’ has been the doctor.”

But this hasn’t stopped pharmaceutical companies from putting a lot of money behind their marketing. According to a study by the industry trade group Pharmaceutical Researchers and Manufacturers of America, drug companies spent US$2.5 billion on mass media pharmaceutical advertisements in 2000 – and that figure is estimated to be well over $3 billion today.

If you have seen a typical US drug commercial, it’s pretty clear where much of this money is going. Elaborate, dramatic scenes are concocted, with no heartstring left untugged. A report in Medical News Today highlighted the findings of researchers who found that 36 out of 38 unique TV ads for pharmaceuticals used emotional appeals, and none mentioned lifestyle change as an alternative to products. That same report found that the average US TV viewer sees up to 16 hours of pharmaceutical advertising each year.

“There is bitter controversy about whether DTC works in the US or not,” says Godwin. “Undoubtedly there are some cases where it has been effective, but in my opinion most of that money has been tipped down the drain.”

Innovate or die
All of that said, marketing costs pale in comparison to the price tag on getting a drug to market. From a colossal £800 million in 2000 to a staggering £1.7 billion in 2003 (the last available estimate), the cost is still rising. The shift is largely attributable to more stringent regulation – prompted in part by safety concerns following highly publicised drug withdrawals. The US Food & Drug Administration, for one, is demanding bigger and longer studies. To compound the situation, there’s an increasing requirement for post-marketing surveillance. 

With such a big hit to the purse strings, shelf life is fundamental to a brand’s survival. But generic drugs – copies after a patent expires – are always hot on its heels. According to the National Association of Chain Drug Stores in the US, the average price of a generic prescription drug is less than half that of a brand name one. 

The patent on a new drug may be 20 years, but with over a decade needed for R&D, testing and approvals, the profitable lifespan for a new drug can be short. 

Commented Bob Douglas, Managing Director of Global Custom Research for Synovate Healthcare, “Unlike the consumer industry, pharma brands are under constant threat from generics. Once a patent has expired, they lose significant market share overnight. If I were to fast-forward ten years, I would still expect to see Mars Bars and Kellogg’s cornflakes on supermarket shelves – but I would barely recognise a pharma company’s portfolio.” 

So having finally reached the marketplace, a brand has on average less than ten years of patent life in which to recoup investment costs and generate a profit. Branding is of course an important component in this – on one level, a short-term mechanism to claw back R&D costs in a short space of time.

A brand or class effect?
But is it a case of the industry wilfully pulling the wool over our eyes? In a word, no. Pharmaceutical branding has some positive, and indeed very necessary, effects.

Primarily, branding is a statement about quality – a strong brand is a guarantee of superior manufacturing and testing processes. Here, the brand is your warrantee.

Secondly, there is the issue of “bio-equivalence”. Take two similar drugs with similar molecules – similar, but not the same – and you are inviting a diversity of reaction. Drugs are increasingly complex and their effects on the body more variable, and an individual may well react differently to the different compounds.  Here, the brand is a signpost for doctor and patient alike.

Thirdly, brands are supported by comprehensive clinical trial results, which are a statement of their performance, not necessarily of the performance of the broader drug class to which they belong. In an age where evidence-based prescribing decisions are required, widespread clinical trial results provide justification for use and reassurance. 

Finally, patients recognise and trust brands. You may think, “so what?”, but non-compliance is a major issue for the healthcare industry. When a patient believes in a drug, it is far more likely that they will actually take it, and get the intended benefits.

The consumer response
Consumers are taking steps to cut through marketing with the help of online resources: sourcing drug information, pricing, effectiveness and so on. 

But big name brands continue to prosper, particularly in the OTC category where there is no doctor between marketer and consumer. Many prescription brands fight to make the switch to OTC for this reason. Yet with around 20 major drug brands coming off patent in 2008, an ever-growing market for generics and a more sceptical, inquisitive consumer base, brand names will have to rely on more than media firepower and well-dressed reruns to stay in the spotlight.

“The biggest challenge is the need to brand appropriately – to consider audiences like payers, prescribing decision makers (which may not always be physicians in the future) and patients,” says Rea of IDEA Pharma. “The same old challenges remain: persuading others that a brand is everything, and not just a nice logo that gets added before launch.”

Clearly, the industry is not shy of throwing big money at branding and advertising. But nor is it necessarily trying to hoodwink the consumer. The truth lies somewhere in between. It’s a risky business, which has latterly become even riskier. The pharma industry must stay innovative or it’ll die – and there are distinct benefits to the marketplace of it, being alive and innovative.