Why can’t pharma be more like this?
pharmafile | October 24, 2003 | Feature | Research and Development, Sales and Marketing | branding, corporate
Brands are compressed bytes of information. They contain myriad messages that create impressions. If these impressions net out in a positive way then the observer may favour the brand and include it within his or her repertoire.
Branding is the process of managing the messages and ensuring that impressions formed are optimal – and superior to those of competitors. What do we mean by messages? Not just those contained in advertising – although this of course has a role – but those based on experience and understanding and which may vary enormously.
Corporate branding is a relatively new phenomenon. It reflects the desire of organisations to be understood and appreciated, and to stand out within their peer group. If the corporate brand is viewed in a positive way then the process of competing for customers, investors, trade partners, employees and public esteem is enhanced greatly.
All businesses have corporate brands but relatively few manage these actively, either because the skills and/or the desire to do so is lacking.
Pharma bottom of the league
The pharmaceutical industry is not good at corporate branding. (This should not surprise us because the pharmaceutical industry is not terribly good at product branding either.) Each year, Interbrand publishes a league table of the world's most valuable brands. The pharmaceutical industry is not well represented, with only Pfizer and Merck making it into the top 100, at 28 and 33 respectively yet the pharmaceutical industry contains some of the world's wealthiest and most successful companies. Why should this be? The reason is that branding hardly features in the industry as a 'business driver'.
No long-term thinking
Within the pharmaceutical industry, all the emphasis is on product discovery and exploitation within relatively narrow windows of opportunity – the concept of branding implicit within, which is long-term commitment, is alien.
However, there are signs that the big pharmaceutical companies are beginning to place more emphasis on corporate branding, believing that with dwindling product differentiation this will give them a competitive edge. But achieving differentiation at corporate brand level is very difficult.
A dozen or so years of industry consolidation has blurred the distinction between companies hitherto recognised by their areas of expertise. What does 'Novartis' actually do? What an earth does 'GlaxoSmithKline' mean?
Corporate branding has to emanate from within the organisation. It should not be confused with the company's logo, which is (or should be) an external expression of the company's identity.
Based on what they say about themselves, there is little to help us differentiate (see below). How would you, as a potential customer, shareholder, supplier, employee or commentator, distinguish between these companies? Particularly as their products are all more or less the same and their share prices are subject to the same pressures.
Current pharmaceutical corporate branding
The leading companies have made valiant attempts to identify themselves to the outside world, as these extracts from five annual reports show:
AstraZeneca: "AstraZeneca's mission is to provide innovative effective medicines that make a real difference for patients in important areas of healthcare."
GlaxoSmithKline: "GSK's mission is to improve the quality of human life by enabling people to do more, feel better and live longer."
Eli Lilly:"Eli Lilly and Company creates and delivers innovative medicines that enable people to live longer, healthier and more active lives."
Novartis: "We want to discover, develop and successfully market innovative products to cure diseases, to ease suffering and to enhance the quality of life."
Pfizer:"Our innovative, value-added products improve the quality of life of people around the world and help them enjoy longer, healthier and more productive lives."
Do companies want to be the same?
Pharmaceutical companies are all deeply conservative businesses in a deeply conservative industry. At heart, none of these companies really wants to be seen as different: there is a none-too-difficult corporate norm to which they all aspire. This is all very well – after all, banks in the UK are exactly the same; they too operate within a sort of collegial comfort zone. But it does smack a little of protectionism. And with the pressure on from government, shareholders and, increasingly, consumers, the big pharmaceutical companies need to find a way of creating those positive impressions with their various stakeholder groups.
Where, then, to start? Certainly from within, but certainly not by hiring slick marketing consultants to write bland mission statements.
Strong corporate brands stem from strong corporate cultures. And corporate culture, at its simplest, is 'the way we do things round here'. Great companies like Apple, Virgin and Disney have corporate cultures that are off the clock, where they are known as much for what they stand for as what they do. These cultures emanate from visionary leadership, where the passion of the founders is reflected in the fundamental beliefs and behaviours of the organisations themselves.
Does the pharmaceutical industry number among its leaders a Steve Jobs, a Richard Branson or a Walt Disney – 'practical idealists' to the man? Probably not. Should it? Why not!
Perceptions of pharma
To those outside pharma, the industry seems distinctly colourless and when its leaders attract publicity they seem to do so for the wrong reasons. It is also an industry that operates under the most extraordinary constraints.
As Rob Benson says in Interbrand's book 'Brand Medicine': "[It is] still heavily dependent worldwide on government health expenditure for reimbursement-sourced revenue and product licence approvals, all controlled by powerful regulatory forces resistant to anything that they perceive might upset the public balance sheet". But so, to a certain extent, is the airline industry where Richard Branson has taken up the cudgels to such effect.
The pharmaceutical industry has few real friends and desperately needs leaders capable of inspiring respect and admiration. The first company to find such a leader will find itself at a distinct advantage.
And do the leading companies still have the passion of their founding fathers? Again: probably not. But go to the smaller, family-owned biotechs and there you will find companies with true passion and commitment to their science. And perhaps this is the problem; the industry is a victim of its own success, and the impression is the leading companies are now run more for the benefit of shareholders than the benefit of mankind.
But is there scope for such high idealism? Reading the mission statements of the leading companies would suggest that there is, and, in this sense, the industry remains true to its roots.
However, actions speak louder than words. The messages that lie at the heart of brands, which I referred to at the start of this article, are more powerfully influenced by experiences and understanding. The pharmaceutical companies need to produce clear evidence of the roles they play within society; in this way they can move much closer to the hearts of what is ultimately the most important of their stakeholder groups consumers.
A long-term investment
At the moment the industry is dominated by supply-side thinking. The present round of mergers and acquisitions taking place testifies to the very high value placed on innovation and the sheer cost of achieving this. There is a never-ending need for new and more effective products; patent laws exist to protect the interests of innovative companies and virtually guarantee that, if the product works and the marketing is good, then the company can more than recoup its investment and make a handsome profit. But the rights conferred in a patent rarely last more than 20 years, and as it can take up to 10 years to get a new product to market, the patent owner has only a limited period of exclusivity. The rights conferred in a brand (through trademark registration), however, can last indefinitely subject to the regular renewal of the registration and other rules of maintenance that are far from onerous.
While it is almost certain that patents will remain the chief source of corporate economic value added for many leading pharmaceutical companies, there are a series of important and irreversible developments taking place that militate in favour of brands.
Governments everywhere are seeking to mitigate the cost of state-subsidised healthcare. This is already huge, and with the forecast increase in the elderly population is likely to grow to unmanageable size. Transferring the cost of medicines from the public to the private purse will help partially to alleviate this, and encouraging the pharmaceutical manufacturers to make more products available over the counter will be an important part of this strategy. But in order for this to be effective, major changes will be required in consumer behaviour based on wider understanding of the nature of the medicines becoming available.
This will necessitate a revolution in communication, more widespread channels of distribution (including the Internet) and regulatory changes. Many of these things are already happening, such as the dramatic growth in direct-to-consumer advertising in the US, and some are still years away. Nevertheless, there is an irresistible force in the market, driven largely by governments, which will mean consumers must be encouraged to take much greater responsibility for their well-being. For them to do so they will require unfettered access to information, freedom of choice, first-class products and value for money – all delivered by corporate brands they know and trust.
Interestingly, these circumstances could well bring about a transformation in which industry creates value for its shareholders. The pharmaceutical industry is a highly successful and wealthy one; the leading players have for many years been the stars of the world's stock markets through ever-expanding sales and profits. Sales growth to a large extent has come about through huge economic improvements in the Third World, increasing longevity and the demands of the elderly, and success in the development of drugs for hitherto intractable diseases. These factors will continue to drive the growth of the industry, but there are signs that it is becoming increasingly difficult to sustain the levels of innovation necessary to deliver the new products of the future.
More huddling together for comfort is almost inevitable; the industry is still very fragmented and will continue to consolidate. Who comes out on top will be as much to do with corporate reputation – corporate brand as with balance sheet strength. Building strong corporate brands, in which people will wish to invest, do business with and make a career, must be next on the agenda of pharmaceutical companies. But to do so they must accept that they have to step outside the charmed circle and face the real world – market forces will always prevail, and here brands flourish.
Related Content
Purpose and people: the enduring power of brand and the evolution of employer identity
Two decades ago, terms like purpose and people were rarely at the forefront of branding …
ISIS Pharma changes name to Ionis to avoid ‘distracting’ militant association
After months of discussion, ISIS Pharmaceuticals has changed its name to Ionis to free itself …
COMPANY PROFILE: The secrets of that Merck rebrand
Merck’s recent rebrand may have left many scratching their heads, as the company moved away …
