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When faced with generic competition, brands can use a balance of key values to maintain and strengthen their market position

Bathroom scalesWith many therapy areas undergoing fundamental shifts through new or upcoming competition from other generic molecules and biosimilars, pharmaceutical marketers are asking themselves how they can compete, as branded promoted product marketers, when they cannot win on price.

The simple answer is that a brand has to add value beyond price. However, achieving that is far from simple. In an era when the main competition for many brands is no longer from branded competitors, but from unbranded, and generally cheaper, generics, a deep understanding of how a strong brand can achieve a competitive edge is vital.

Considering that brands are widely accepted as valuable strategic assets nowadays, the pharmaceutical industry has been slower than others to realise this. In recent years, though, it has started to accept this is the case and to address the competition.

For manufacturers, the traditional sources of value creation have been successful research and development (R&D), which is becoming less and less productive, plus agile sales and marketing. With the cost of R&D rising and the success rate static at best, the need to exploit fully any new products that come to market has never been more important.

It is a well-known fact that customers for prescription-only medicines are becoming increasingly cost-conscious. The advent of the generic equivalents and biosimilars of well proven and clinically effective molecules make the task of establishing patent protected products ever more difficult.

There is plenty of evidence to show that success can be enhanced by building a strong brand. This is because when values beyond technical excellence are developed in the brand, it is possible to create benefits for payers, prescribers and patients, which will, in time, come to strengthen the connection between buyer and seller.

Drawing upon branding experience outside prescription medicines, some of the potential advantages for the brand owner are: 
• A powerful brand can provide the platform to build a relationship with customers on an individual basis. Pharmaceutical manufacturers whose brands enjoy 'must have' status with health authorities, prescribers and healthcare professionals can enjoy significant advantages. The idea here is to develop a brand that can successfully penetrate particular disease areas where it is less effective than its competitors, for example
• A powerful brand can give significant competitive differentiation of a type that is extremely difficult for rivals to copy.  Recognition is gradually being given to the role that branding can play in the post-patent stage of a product's life, as strong branding may confer additional time for the owner to maximise return on its original investment.  However, more importantly during the patent protected period, strong branding can drive choice and protect against switch
• A powerful brand can influence behaviour and attitudes. For example, just as consumer attitudes towards personal computers have changed radically since the advent of Microsoft, so too have attitudes towards depression changed significantly following the introduction of Prozac in the late 1980s, a brand which acquired almost iconic status
• A powerful brand which attracts customer loyalty can provide one of the greatest sources of wealth for a business through its ability to secure, through customer commitment, more predictable cash flows, ie regular sales.

Building brand values
At the heart of every brand lies a set of values.  Values, put simply, are beliefs that customers have about a brand that they find intuitively attractive and which are likely to influence their purchase decision. As such, they represent the foundation stones of the buyer–seller relationship.

These beliefs can sometimes be entirely rational, based on the functionality of the product, or they can be 'non-rational' in character and based on emotions. So in this way, some people buy Coke because it tastes better than Pepsi, while others buy Coke because it represents the values of 'optimism', 'togetherness' and 'authenticity' which resonate with them personally.

A host of different influences drives the development of consumers' beliefs in brands, including personal experience, advertising, other buyers and their experiences and so on. The ubiquity of the internet can also help brand owners create such a relationship within the regulatory constraints. Recent surveys show that brand perception does not always correlate with clinical data and can be influenced by other factors, including marketing, administration and cost. The more physicians know about a drug, the higher the overall score.

Values can be categorised as follows:
• Functional values: 'what the brand does for me'. For Lipitor, these values could be 'powerful', 'proven' and 'effective'
• Expressive values: 'what the brand says about me'. For Persil, these could be inferring 'a caring housewife and mother'
• Core values: 'what the brand and I share at a fundamental level'. For Coke these could be 'the Coke side of life'.

By their nature, functional values are innate to the product; expressive values are built through the brand's communications, environments and employees, and core values lie at the heart of the brand's aspirations.

What must also be taken into account is what these 'values' represent: the brand value equation; the balance of perceived benefits (functional and expressive) obtained from the brand versus the price paid for it.

Functional vs expressive
A notable example of actively developing expressive values was Zestril (lisinopril), marketed by the then-named Zeneca. The compound was first launched in 1991 in the UK where it competed with the Merck product Carace (same molecule – lisinopril, different company) for the treatment of hypertension.

The management at Zeneca chose a promotional campaign based on the promise that patients would regain a 'zest for life'. The expressive values were illustrated with humorous visuals demonstrating the lifestyle benefits ('become a new person') that would result from using Zestril. By contrast, Carace focused on functional values.

There was a particular plan behind the Zestril approach; beta blockers, which were the mainstay of treatment at the time, were known to have a low incidence of mild depressive-like symptoms. Therefore, the Zestril campaign combined the functional value of effectiveness without side effects with the expressive value of lifestyle enhancement.

Clearly the above example features brand versus brand, but how can the perception of 'value' be maintained in the face of lower priced competition?

How is a powerful and distinctive brand positioning developed? It involves a series of key steps, as summarised below:
• Understand the product and its area of competence (effectiveness)
• Understand the needs of different segments of the market
• Identify the most attractive segment(s)
• Develop the brand so that it can claim to own a benefit that is relevant to the needs of the target audience with full justification
• Evaluate the uniqueness and value of the benefit(s) to the target market
• Depending on the fit between the intended and perceived positioning (blend of benefits), refine the brand according to customer response.

Maintain an advantage
Managing a brand involves a careful balancing of the three basic elements of the brand value equation:
• 'Functional'; performance and quality (versus the 'good enough' generic alternatives)
• 'Expressive'; advertising/emotional equity/salience
• 'Price'; price differential and perceived value.

The art of good brand management lies in controlling, as far as possible, the influences that shape these beliefs, so that at the moment of truth – the point when the brand is chosen – the customer is satisfied.

Option 1: Focus on those patient segments where the brand can substantiate an advantage.
The fundamental challenge for any brand in the face of generic competition is to ensure that the perceived value of the branded option justifies the cost over that of the generic option. This requires the selection of those segments where the benefit of using the brand outweighs the lower cost of the generic.

Option 2: Develop a clearly focused positioning where the brand cannot be substituted, based on more 'expressive' values.
While the generic competition being discussed here is not the same molecule, more and more countries are considering therapeutic substitution where other comparable molecules can be used instead of the brand. To protect against this, the brand needs to develop a positioning built on its particular functional plus expressive values where the clinician will not allow this substitution.

Option 3: Focus on outcomes.
What payers, prescribers and patients really want are demonstrable outcomes. It is easy for authorities to insist on using cheaper alternatives, but if they do not deliver the desired outcomes, they represent an expensive option in the longer term. Humira is the only anti-TNF to demonstrate that it helps reduce absenteeism, improves productivity and ensures greater employment, on top of efficacy, safety and convenience. This is part of the basis for the forecast that it will become the top-selling anti-TNF and the world's biggest product in 2012, with global sales of $8.3bn and remain strong into 2016, even in the face of biosimilars.

Option 4: Convenience.
There is much evidence to suggest that people buy based on value, habit and convenience. Most generic companies limit their support for the molecule. As a brand there is always the option to make life easier for customers to stay with the brand rather than switch. However, ensure that this does not just add costs with no derived benefit.

Price is not as important as value. As Lipitor has shown, a premium-priced brand can be successful, provided that it maintains a performance/equity gap with cheaper alternatives.

Functional equity underpins every brand, but maintaining value over price often comes down to the building of expressive equity, thereby differentiating the brand further.

But there is a limit to how much of a price gap a premium-priced brand can maintain before this gap creates an impression that the brand is too expensive and generics win.

The challenge is to find the right space where value outweighs the cost and then work on building the perception of derived value for the brand.

The Author
Dr Paul Stuart-Kregor
is director of the MSI Consultancy
To comment on this article, email pme@pmlive.com

23rd November 2010

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