How Different Are Branding Strategies in the Pharmaceutical Industry Versus Fast Moving Consumer Goods?

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HOW DIFFERENT ARE BRANDING STRATEGIES IN THE PHARMACEUTICAL INDUSTRY VERSUS FAST MOVING CONSUMER GOODS?

Abstract

The objective of this paper is to analyse the branding strategies used currently in the pharmaceutical industry and compare it to the best practices in Fast Moving Consumer goods. First the authors review the differences in the way branding is defined and organised in

pharmaceuticals versus FMCG and identify why branding could be leveraged in the pharmaceutical industry to help it return to strong growth in the future. Second, the authors analyse in detail what branding The

strategies are currently used within pharmaceuticals and FMCG.

choice of brand names strategies, the level of brand globalisation, the use of brand extension and co-branding as well the situation of brand portfolio management are compared. Based on this benchmarking, the authors offer recommendations to guide future branding development successfully in the pharmaceutical industry.

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AUTHORS

Isabelle Schuiling is Professor at the University of Louvain School of Management in

Belgium. Prior to her academic experience, she was a former Marketing Director Europe and Belgium at Procter and Gamble. Her research Isabelle

interests are related to branding and international marketing.

holds a PHD from the University of Louvain and an MBA from the University of Chicago.

Giles Moss is Regional General Manager of S.E. Asia, Australia and New Zealand at UCB Pharma and has held varied sales and marketing positions at both an affiliate and global level in companies such as BMS, SmithKline Beecham and UCB. Giles is a pharmacist, holds an MBA from Henley and has an interest in brands.

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Introduction

The pharmaceutical industry has come relatively late to branding. During the 1980’s and 1990’s the pharmaceutical industry has enjoyed success over an extended period of time, achieving relatively easy double digit growth on a consistent basis. By in large this was through using traditional methods and there was no apparent urgency to change the way it marketed its products. The success of the industry relied on three factors; strong research and development (R&D), aggressive defence of patents and use of the dominant promotional tool - powerful sales forces. The industry has been therefore product and R&D driven and not market driven. Despite the size of the sales generated, there are over 40 blockbusters or products that generate in excess of $1Bn, drugs were treated as products and not as brands.

The picture has however changed, industry growth has been slowing down and firms have been searching for ways to maintain it. The three traditional success factors of the industry are less evident than in the past. First, it has become much more difficult to identify the blockbuster drugs that can fuel company momentum and additionally product innovation remains costly and more illusive than ever. Second, many of the most successful drugs will soon suffer patent expiry, more than half of the global top 50 best sellers will go off patent in the next 5 years. Moreover, in view of the concentration of sales in fewer big products, the sales at stake are much

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larger than in the past. Third, sales efforts are reaching a certain saturation level as the industry consolidates, it will not be possible in the future to base success just on increasing the number of sales representatives promoting a product (Datamonitor 2002).

Combined with this back drop generic competition has also been developing rapidly and constitutes an increasingly real threat for the industry. Generic companies benefit, not only from patent expiration, but also from the cost reduction pressures evident in every healthcare system around the world.

The industry has reacted via consolidation. In a series of significant mergers and acquisitions it has attempted to maximise R&D and reach economies of scale in the sales and marketing area.

Despite...
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