A healthy future for branded medicines?

Speculation that Glaxo SmithKline may sell its consumer brands has cast fresh doubt over the role of branding in pharma marketing.

Last week’s regulatory approval of the &£122bn merger of Glaxo Wellcome and SmithKline Beecham has fuelled speculation that the combined entity, Glaxo SmithKline, is likely to offload its consumer products, such as nutritional healthcare drinks.

The view is gaining credence following Smith & Nephew (S&N) Healthcare’s decision to sell its consumer brands – Simple and Lil-lets – to a management buyout team, so it can focus on being a “hi-tech medical company” (MW last week).

Many observers are beginning to question whether nutritional consumer goods can survive under the same roof as pharmaceutical products in the new consolidated market – especially when healthcare and pharma products provide greater top-line growth.

But some believe there is an opportunity for pharmaceutical products to embellish their branding to develop consumer perceptions of medicines and drugs as brands in their own right.

Dr Simon Conway, an analyst with Williams de Broe, believes consumers rely heavily on familiarity when they buy medicines. “Drugs do not achieve a global presence on the strength of brand loyalty. Consumers look at medicines for what they actually do,” he says.

Another analyst insists that in healthcare there is a strong place for branding both prescription and over-the-counter (OTC) drugs, “although maintaining a sustainable brand would always be an issue”.

Yet one of the main problems with branding medicines is that most of the names are just not user friendly enough to be recognised by consumers, a point which is not lost on Pfizer consumer healthcare marketing director Malcom Philips.

But, Philips says: “There is an increasing awareness about which company manufactures which drug, because many of them are waking up to the power of branding.”

Pfizer, the company behind possibly one of the best known drug launches in recent years, Viagra, now has a strong consumer nutritional business following its merger with Warner-Lambert, with brands such as Hall, Benadryl and Listerine. It is not known whether it plans to hive of this portfolio.

But while many agree that most consumers view pharma and healthcare products in terms of their efficacy and cost, one of the major obstacles to building brand loyalty, especially in the UK, are the restrictions on the marketing of drugs.

Not every country has such draconian legislation and globally the market is growing. This has led many of the world’s top advertising agencies to take over smaller healthcare marketing specialists to exploit the aggressive promotion of healthcare products. And, after all, the advertising industry rarely enters a market where there is little money to be made.

A few examples include WPP Group setting up Ogilvy Healthcare, after acquiring Shire Hall, a prominent healthcare PR agency; Interpublic forming Lowe Consumer Healthcare; and UK agency Adelphi being snapped up by Omnicom’s Diversified Agency Services.

Reckitt Benckiser senior vice-president of communications Tom Corran says: “Consumers buy brands – they do not buy into companies. We believe innovations are just as important to consumer products as they are to the personal care range.”

But not everyone is convinced that there is a healthy future for branded pharma products, despite the presence of strong brands in the market such as Boots the Chemist, which also markets personal care products and a range of nutritional goods.

As one observer puts it: “The pharma market simply isn’t moving – where healthcare services are concerned there is a tendency to get either free or not very highly priced prescriptions from the doctor. So where does that leave healthcare branding?”

He has a point. Why would consumers bother to go to the chemist for a branded medicine, if they can simply visit their local GP for a cheaper and, quite possibly, equally efficient alternative?

Perhaps these global giants don’t actually need strong brands – after all, they seem to have done quite well without them so far.

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