The rate at which competition is surging in Big Pharma is quickening. How do you break through the noise and single your company out?
In this article, we’ll discuss fatal but easy-to-ignore issues in the pharmaceutical industry and how branding can solve these problems.
By the end of this article, you’ll have a clear understanding of
- Threats that Big Pharma is facing
- What is branding in the pharmaceutical industry?
- The unmatched advantage of branding; And
- The 5 stages of developing a pharmaceutical brand strategy
Without wasting time, let’s dive in.
Threats the pharmaceutical industry is facing
The pharma industry is experiencing a profound change in multiple aspects. From increased competition, constant change in regulation, lack of innovation, and the rapid price increase of the R&D to name a few.
Companies back in the 1960s enjoyed great success with blockbuster drugs upon their approval. The drugs gain a price monopoly from the aggressive defense of its patent and as a result, annual sales soared up until the patent expires.
However, with the pressure of the flooding generic drugs, companies need to find other means to sustain their bottom line.
We’ll go into each threat and examine their risk at length. After that, we’ll explore possible solutions.
I) The increased cost of R&D and decreased annual sales for blockbuster drugs
Despite the increased cost of the R&D in the last decade, the new products approved by the FDA are roughly the same number as they were in the past. Companies more than ever, are spending billions in expenditure with little to no breakthrough findings.
In addition, the process of developing a new medicine is time-consuming. New products take at least 12 years to develop with a cost of more than $1 billion—an equivalent budget for launching a rocket to outer space.
With all these resources being thrown at the R&D, you’d expect a strong correlation between how much is spent and a long-lasting high annual sales. but that’s not the case.
There are mainly 3 factors as to why:
- Blockbuster drugs no longer possess the advantage of sales exclusivity: (the remaining period a drug will be protected from competition by its patent).
- With the ever-shrinking period of patents, blockbuster’s great impact on annual sales is diminishing.
- The stream of generic drugs.
- The competition from generic drugs is fierce. Once a generic equivalent is approved and enters the market, they are sold at a lower price thus, hurting the overall sales of their branded counterparts.
- The numbers of failed experimental drugs in the clinical stage are climbing
- In the clinical stage (when testing the drugs on people happens) the sheer amount of failed drugs is now staggeringly high at 93% record according to CRM international. This is not only disappointing but also disheartening to scientists who worked relentlessly on these products.
II) Decreased in R&D innovation
As the size of your pharmaceutical company grows, the company loses its agility. The processes become more complex, rigid, and inflexible.
To explain why this happens, let’s explore common trap companies fall into when they decide to enhance their performance.
Most firms tend to divide their company into separate divisions to achieve maximum efficiency, however, that only creates functional silos working at cross-purpose.
Therefore giving birth to problems like lack of communication, scientists losing the sense of mission, disconnected decision, and your staff starts sub-optimizing when you need all parts working together.
This rugged business model chips off of your R&D innovation-powerhouse. People get demotivated and their productivity fades away.
It stands to reason that if your stakeholders aren’t circled around a shared purpose, your work productivity will suffer. Costing your company wasted resources and incoherent workflow.
It is your job as the leader to supercharge your organization with a high sense of purpose. Everyone should know the impact of the role he/she plays inside the company. You want your staff to work under one umbrella towards a concrete goal.
III) The rate at which cutthroat competitions are emerging is getting faster
The barrier to competition is low compared to the past. For example, in 1965, Inderal the first beta-blocker for high blood pressure was launched 1965 and was not followed until 1987 with the launch of Lopressor.
Conversely, Cox-2 anti-rheumatic product Celebrex has launched in 1999 only 3 months ahead of Vioxx.
This increased competition will inevitably force you to cut down prices, leaving your company vulnerable to market commoditization and lower sales.
For companies to enjoy skyrocketing sales and profitability, the need for differentiation, RADICAL differentiation—is dire.
Often radical in business terms means uncertainty. That’s why most firms are reluctant to differentiate or change.
However, what if you could differentiate and speed up the rate at which you innovate, simultaneously? This is where branding comes in.
What is pharmaceutical branding?
First, A brand is not the logo, nor the visuals that make up your product design. A brand is not the product itself, the slogan, or the advertising campaign. A brand is not even controlled by the company behind it.
Rather a brand is a collection of perceptions and feelings that reside in the mind of the customer. While you may not have direct control over your brand, you most certainly are its steward.
Every interaction the customer has with your brand influences their preference-based judgment about it. The product experience, service, slogans, ads, and even product manuals all contribute to the customer perception of your company or product.
Your job is to cultivate, guard, and maintain a strong brand – the rewards of which are consistently loyal customers and a continual increase in sales and preference.
Second, you must differentiate. Whether it is a product brand or your corporate brand. It needs to be unique to break out of the market clutter.
This doesn’t mean that the product should be miles away in terms of ingredients or that your organization must reinvent new models.
Differentiation in branding is about perceptions. You need to position your company or product in the minds of your audience differently from competitors.
Positioning is the way your audience perceives your product **_in relation to _**other products in the market. If you’d like to see an example of positioning in the pharma industry jump to this section.
Third, you need to cultivate your brand. Your brand doesn’t exist in a vacuum, it needs community and stakeholders to thrive. You need to build an ecosystem around it.
We’ll go into the stages of building an authentic brand. But for now, let’s explore the advantages of an established pharma brand.
Advantages of branding in the pharmaceutical industry
Building a strong brand comes with perks only top pharma companies pose. We’ll go into some of the competitive advantages you gain when you develop an established brand for your company.
I) An established brand sustain longer drug’s sales exclusivity
Since the patent period is getting shorter, drugs will enjoy less and less annual sales.
For example in the 1980s, a product whose patent expired was able to obtain 60% of its sales turnover one year later. However, in the 1990s that number dropped to 40%, and with Prozac, it dropped even more.
This leaves pharma companies vulnerable to shorter sales exclusivity of their products. However, one way to sustain the drug’s high sales is by leveraging the parent’s company brand.
Leveraging the corporate brand is also a way to gain physician’s trust to prescribe the branded product rather than its generic counterpart.
According to a recent study by the University of the Sciences in Philadelphia, physician’s loyalty to a pharmaceutical company affects the prescribing volume of all company’s drugs.
Your corporate brand can also build momentum for the product, trigger sales, and establish differentiation.
We see this in action when Pfizer used its logo on Caduet’s pre-launch materials to create a relationship between the company, the therapeutic area, and the product.
II) Branding creates an unbreachable wall against the competition
With the flood of generic products and the rapid increase of competition in Big Pharma, not standing out is the same as being invisible.
The good news is, branding at its core, is differentiation. And by establishing a brand strategy, you cut through the noise of imitative products.
Branding your company means you build an established brand for which consumers believe there’s no substitute. It forms cult-like followers for your products.
Unlike mass advertising and other marketing tactics, this long-term approach comes with no expiring date. It creates predictable sales and slashes uncertainty of market change.
By building a strong brand, you create a gulf between your product portfolio and the clutter of the competition.
III) Advantages of branding in M&A transactions
Brand equity (the perceived worth of a brand in and of itself) plays a significant role when acquirers try to evaluate target firms. That’s because acquirers want to see whether or not the brand can benefit from their position.
And with the failure rate of M&A transactions is said to be between 70% to 90% and that a poorly conceived or executed M&A destroyed more than $200 billion in shareholder value in 20 years, having brand guidelines as a “decisional filter” to check back against is critical.
Will this company solidifies our position in the market? Will it purify or defocus our mission? Do their values and our purpose match or do they contradict each other?
To find a clear answer to questions like these, you need to let your brand’s core attributes guide your decisions.
Whether your company is an acquirer or target firm in a potential M&A deal, having an established brand to your company is vital in the pursuit of growth and ROI.
IV) Building a brand culture creates a non-stop innovation environment
Brand culture is the culture that a company cultivates in order to powerfully and consistently deliver its brand to the market. It’s how people work together to bring the brand alive for customers.
― Mark Di Somma
The old spreadsheet-driven business model is insufficient for today’s wicked problems. For companies to increase their innovation, they must build purposeful environments in which people thrive and feel valued.
When your staff starts feeling like “another cog in the machine”, their efficiency fizzles out. Scientist’s day-to-day work creates a monotony of mundane activities rather than thrilling ideas to pursue.
As a result, employees go about directionless without understanding the impact of their work or even why they do what they do. Thus creating a bureaucratic environment where work overshadows purpose.
Purpose gives your company a true north to head towards. It provides your employees with a reason for why they should fight for the same cause your company is trying to win.
GlaxoSmithKline was proactive about this and cultivated a purposeful brand to increase the R&D output. Many pharma companies are quick to realize the issue of their size and their effect on staff.
Today, developing a brand culture is imperative.
Brand culture is about developing a purpose-driven company where innovation is predictable rather than accidental. A company where R&D thrives as a consequence of a coherent and unified cause. It’s about establishing a strategic vision for your company and an overarching purpose that orients internal stakeholders.
In his book, Start With The Why, Simon Sinek shares his insight into why some companies flourish and others fail.
He proposes that most companies know what, and how they do what they do. But very few who know why they do what they do.
By which he means why would your company exist besides making a profit? Why would your staff wake up from bed each morning? And what’s the reason behind it?
Companies who can articulate —and are strategically vocal— about their reason for being, are the ones that dominate their market. They also tend to be the ones that have skyrocketed operational efficiency.
The reason for this is, when you’re communicating you’re why and cultivating a culture around it, you’re embedding a sense of mission into the organization. Your company becomes the playground in which people are motivated by the vision and the purpose your company holds.
The 5 stages of brand strategy
Now we’ve seen how branding can transform pharma brands to a higher arena, let’s see the make-up of a brand strategy and what each stage consists of.
Any brand strategy consists of 5 stages that, when combined, form a future-proof pharma brand.
Stage 1: Brand DNA
In this stage, we decide on what we call the brand core (its purpose, philosophy, and strategic vision)
We bring the leadership team to discuss the future of the brand and how we can pivot any potential hurdles that the company might face.
We also go into developing a purpose-driven approach to the company’s communication channels and cement the new philosophy that the brand will uphold.
This stage will be the central point from which everything else will branch.
Stage 2: Brand Positioning
The positioning stage is all about focusing on the brand and initiating a differentiation strategy for the company. It’s about creating new perceptions in the eyes of your audience. This will carve the brand’s place in the market and render the competition irrelevant.
Developing a differentiator for a product or an organization can be the deciding factor in its success. A differentiator is like a vaccine against the competition, once proven to be effective, it devours market share.
An example of positioning is Pfizer’s Viagra vs Lilly’s Cialis.
While Pfizer took the advantage of being the first mover into the erectile dysfunction field, Lilly’s powerful positioning of Cialis was enough to steal shares from Viagra.
When Viagra first came out, it was positioned for male demographics raising the flag of “Go back to your former manhood”
Viagra’s positioning was meant to empower man with impotence issues. The folk over Pfizer’s knew that what their target audience wanted was regained power, dominance, and competence.
VIAGRA - the name is a suggestion of vitality, virility, and vigor and because it rhymes with Niagara, hinting at force and endurance. The name also was inspired by the Sanskrit word “vyaghra” which means tiger.
Cialis on the other hand needed to steal the market share from its competitor. To do so, the need for effective positioning is irreplaceable.
Lilly took a different route when positioning its product. You see, unlike Viagra, Cialis lasts longer, making it useful if you have a more active and regular sex life.
Cialis stripped the sense of “rush” Viagra had with its short timespan. And focused more on providing a happier and hurry-free sex life. In their ads, commercial, and marketing, they are more focused on romantic and passionate sex.
The name Cialis comes from the root word “Ciel,” which is French and means “sky” and “heaven”. You can see already that the naming is intended to be more sentimental and fanciful.
In summary, although both Viagra and Cialis target the same audience, the same audience perceived them differently, thanks to positioning.
Stage 3: Brand Persona
This is the creative part of brand building. And it aims to inject humanized attributes into the brand at hand. This stage consists of 3 parts.
- Audience Archetype
- In this stage, we take a deep look into the brand’s target audience and what kind of patients we are focusing on.
- After that, we mark their archetype (A typical character that represents universal patterns of human nature). This will help us gain insight into the feelings, fears, and emotional buttons of your audience so we can easily align the brand towards them.
- Brand Persona
- In this phase, we “match” your brand’s values with your audience’s values. If your audience attributes and characteristics don’t match with your brand’s, there will be a conflict and it will not resonate with them. An example would be how Porsche relates to its customers. Their brand is aimed at high C-suite and wealthy personnel, So their communication promotes exclusivity and an extravagant lifestyle. This way the brand lives up to the values of its customer.
- Tone Projection
- The Tone Projection phase is about creating guidelines for your brand’s marketing channels and how it vocalizes itself to the public. Does your brand communicate with a serious tone (think CNN) or is it authoritative (Think Rolex)? Playful (think GEICO) or classy? (think NYC).
Stage 4: Brand Communication framework
In this stage, we will take all the internal properties of the brand that we developed in the Brand DNA (purpose, philosophy, and strategic vision) and then vocalize them strategically.
This framework will act as a compass for every touchpoint your audience has with your brand. Its goal is to create consistency across all contact points of the brand.
Techniques such as Storytelling, Core Messaging, True Lines will be used to facilitate the ability of your company to connect with a wide audience creatively.
If you’d like to gain a deeper understanding of such strategies, you can check our free healthcare branding series .
Stage 5: Brand Art Direction
Great visuals have the power to turn a commodity into a premium. And in this stage, we leverage the power of visuals to convey the message we already crafted in past stages.
Here’s what most companies fail to accomplish: they use the same color scheme, same design pattern, same overall aesthetics, and call that “consistent visual identity”.
You can be consistent, but consistently meaningless. Your visual identity is as good as the meaning behind it.
If your visuals do not reflect your brand’s or the product’s promise to your consumer, it has not succeeded to do its mission.
The good news is, your visuals will be based on your brand’s philosophy and purpose. The design aspect of the brand will mirror its values and what it stands for. Hence solidifying its market position and perception.
The truth about building a future-proof pharmaceutical brand
The global pharma industry is experiencing profound change.
It is evident that the competitive environment is more intense in the pharma industry. And branding represents a little-explored advantage.
And to slice through the rushing stream of non-stopping market changes, it is essential to build a vision-oriented brand that caters to their audience.
Innovation should be a predictable part of your company not accidental. And to achieve that you have to create a purposeful environment that facilitates such activities. Brand culture can catapult your R&D efforts to a fruitful landscape.
Branding your company will single you out apart from the competition. Leading to higher annual revenues and profitable product launches. It is the only weapon to render the competition irrelevant.
If you’d like to create a market-leading pharmaceutical brand, you can always reach us out .
