BRANDING – AN INDISPENSABLE TOOL FOR THE PHARMACEUTICAL INDUSTRY
Author: Rochelle Sera Cherian
NMIMS Kirit P. Mehta School of Law, Mumbai
Protection and management of Intellectual Property is an important tool to foster growth, innovation, and to enable any organization to reap the fruit of its labour. Brands are considered to be intangible assets of a high worth and a company must ensure that there is maximum utilization and management of the relevant intellectual property in order to efficiently market the brand. In the pharmaceutical industry, branding plays an important role. While the fundamental strategies and principles for branding a pharmaceutical product is more or less the same as any other consumer goods product, due to various laws, regulations, and policies concerning drugs, there needs to be an increased sense of carefulness so as to not circumvent any law in force. It is also extremely important for pharmaceutical companies to implement effective marketing strategies so that even after the expiry of the patent, the drug will be able to survive in the market. There exists a certain lack of knowledge in the industry when it comes to managing intellectual property. Many businesses do not realize the significance and impact that they could create if they maximized the potential of their IPs. The pharmaceutical industry relies heavily on intellectual property especially patents, trademarks, and trade dress. Pharmaceutical branding is an important tool to increase awareness regarding new and improved medicines and drugs. The author aims to point out the significance of intellectual property rights management and its role in branding, especially in the pharmaceutical industry.
Intellectual property rights management is an essential element that guarantees the success of any company. The rise in mergers and acquisitions right from the late 1900s made high ranking executives realize the gravity and value of managing brands since they formed part of intangible assets of high worth. Strong brand names foster consumer recollection and recognition, consumer loyalty and therefore, increased growth and profits for the organization. Sometimes, this advantage could also enable a brand to claim a price which is considered as ‘premium’ as compared to other brands which offer the same kind of product or service. Due to these advantages, there is a rise in companies ensuring maximum utilization of their resources into creating and managing their brands and their intellectual property.
Jeff Bezos, Founder, CEO and President of Amazon rightly said, “Your brand is what other people say about you when you are not in the room”. In today’s world, the best way for a brand to be successful is to build a relationship with its consumers. This is why one can see the rise in including consumer interaction and feedback in modern branding strategies. However, a successful brand is not purely successful just because of its branding strategy, albeit a powerful weapon. A strong and comprehensive portfolio that includes strong intellectual property enforcement is what sets an organization apart. David Lammy, currently the Minister for Higher Education and Intellectual Property in the Department for Business, Innovation and Skills at WIPO stated that “Whether the brand is long-established or relatively young, it is the Intellectual Property rights within the brand that allows the businesses behind them to prosper.”
REVIEW OF LITERATURE
In an article by Marcel Corstjens and Marie Carpenter titled ‘From Managing Pills to Managing Brands’, the challenges faced by pharmaceutical companies when it comes to managing a brand is discussed. The possible strategies that can be used by these companies is listed. Brand owners are now in the constant mode of coming up with developing more advanced and innovative ways to distinguish their products from their competitors. An article titled ‘Procedures and strategies for pharmaceutical brands: India’ by Dheeraj Kapoor and Aprajita Nigam discusses the various kinds of acceptable conventional and non-conventional marks under the Trademarks Act, 1999 and the various marks that can be used by pharmaceutical companies to market their brands effectively.
Another goal of pharmaceutical companies while deciding on brand names is to “Stand Out”. They need to be able to distinguish themselves from their competition. However, if the name is too flashy, consumers might question the brand’s credibility. An article by R John Fidelino titled ‘IP for Business’ in the WIPO Magazine concludes that the penultimate driver in the development of a brand name is “credibility”.
In an article by Trevisan and Cuonzo titled ‘Creating strong pharmaceutical trademarks’, the naming process of a pharmaceutical product is listed down. The various regulatory authorities around the world dealing with this are also briefly listed along with their functions. In the World Trademark Review, Thomas J Daly has written an informative article called ‘Drug naming and non-traditional trademarks’ which informs the reader that the threshold for non-distinctiveness of trademarks in the pharmaceutical industry is low as compared to other industries. ‘Brands and Branding’ written by Rita Clifton and John Simmons mentions that companies must always ensure that they secure their IP rights as quickly as possible in order to enjoy market exclusivity.
IMPORTANCE OF MANAGING INTELLECTUAL PROPERTY RIGHTS
In the world today, there is a copious amount of products and services which have made it extremely challenging for all kinds of businesses. In order to be ahead of the competition, every company should strive to either innovate and create new products or services or improve their existing line of products or services. Businesses must, through effective marketing and brand strategies, make a conscious effort to constantly communicate the superior value and quality offered by their services or products. Companies should now register the fact that intangible assets can prove to be far more valuable than their tangible assets. These intangible assets include patents, trademarks, copyrights, trade dress and so on. A business can utilize the relevant IP suitable to its goals, vision or product/service. These IP tools can prove to be the key for any business to succeed. By using these IPs and configuring them into their business models, a business can ensure guaranteed success not only in domestic markets but in international markets as well.
Unlike tangible property, intellectual property is known to be an intangible form of property which is the result of creations of the mind. In the case of brands, intellectual property can be conveyed and indicated through physical forms such as symbols, names, images, designs, etc. An organization must always make sure that they have the rights over using their brand so that they enjoy exclusivity in the market place. Also, imitators and infringers can be put in place since the rights are legally enforceable in courts of law. This is the reason why it is wise to secure intellectual property rights for every business in order to protect its intellectual and creative investment.
BRANDING IN THE PHARMACEUTICAL INDUSTRY
Pharmaceutical companies spend notoriously on research and development in order to develop new and improved products. They must do so in order to always be two steps ahead of their competition. Also, due to the increase in the number of diseases due to many reasons such as globalization, industrialization, etc., there is an increased need for a wide variety of drugs to combat a wide range of diseases. However, since a huge chunk of the company’s money and resources goes into this R&D, they fail to successfully market their products as a result of which their product fails to stand out in the crowd. Also, due to the wide array of options available, the consumer has the upper hand to drive the price down.
While the fundamental aspect of branding a drug is the same or similar to any other good/product, there exist some variations in the pharmaceutical sector. For example, many strategies used by consumer goods companies to market their products can be treated as impermissible in the pharmaceutical sector. Regulations prohibit ‘buying’ the loyalty of healthcare practitioners in the form of expensive trips or gifts. Huge advertising and promotional methods to persuade consumers into buying their products are considered as unethical. Advertising cost, especially those involved in national advertising, are extremely high and pharmaceutical companies fear that they won’t be able to afford such high prices due to the fact that most of their revenue and resources are being poured constantly into the R&D of new drugs/products on a daily basis.
However, in recent times, the pharmaceutical industry has identified the significance and importance of having a strong branding strategy in place and they are now taking conscious steps towards re-structuring their marketing departments to include qualified personnel such as ‘brand managers’ for strategizing for their products.
STRATEGIES FOLLOWED BY CONSUMER GOODS COMPANIES
Consumer goods companies’ strategy includes establishing a strong brand identity in certain areas in order to counter product proliferation and low margins. They attempt to make their brand last longer out in the market. Some examples of notable brands can include Nestle, Coca Cola, Kellogg’s who have managed to remain at the top for decades altogether. This does not mean that the products of these companies are not evolving. The changes are made in the form of improvements and refinements instead of breakthroughs. The strategy employed by these companies mostly includes consumer perception, which is why they constantly innovate and come out with new or improved products to suit the environment.
Many consumer goods companies follow the strategy of corporate branding. This type of branding strategy focuses on building up on the brand name rather than the individual good or service. Consumers are drawn towards the outreach of the brand, rather than the product. It has proved to be a very successful marketing model. A few successful examples of corporate branding include Apple Inc., Coca Cola, Nike, among many others.
STRATEGIES EMPLOYED BY PHARMACEUTICAL COMPANIES
Pharmaceutical companies can follow the precedent set by these consumer good companies which focus not on their product technology alone, but more so on their marketing strategies. Consumers’ goods companies rely heavily on corporate branding and that model could actually work wonders in the pharmaceutical industry.
Intellectual property management is the most complicated when it comes to the pharmaceutical industry. Particularly because trademark applications are greatly regulated. The reason there exists such stringent processes and regulations is so that misunderstandings and confusion amid healthcare practitioners can be averted while using these drugs and other products, which could have the tendency to lead to serious health conditions. This is where the importance of pharmaceutical brand names comes into play. Had there been no such sort of regulations and processes in place, the pharmaceutical industry would not be able to function in a healthy manner. The Supreme Court of India has expressed the need for stricter measures and regulations in trademark infringement cases in the pharmaceutical sector. In the case of Cadila Healthcare Ltd. v/s Cadila Pharmaceutical Ltd, the Court held that “a confusion in drugs could be life-threatening and drugs should be treated as a poison since any confusion in medicinal products can have harmful consequences on the purchasers of such medicinal products”.
Pharmaceutical companies will not be able to rely exclusively on the three traditional success factors which include strong R&D, aggressive defence of patents, and use of a powerful sales force. But due to changes in the industry, certain implementation of branding strategies must be done. This is because although the amount invested in R&D has increased over the years, the rate of success of these new products has not been as high as then because of which there is significant burden on a few products to achieve sales.
Brand owners are now in the constant mode of coming up with new, improved and ground-breaking methods to set apart their products from those of their competitors. Commonly used conventional marks include words, letters, images, numerals, logos, or combinations of them. Non-conventional marks include colour marks, shape marks and now even cover holograms. In India, several sound and shape marks have been given pharmaceutical trademark registration. Though sound marks are not a novel concept, registration has been granted and explicit recognition has been given under the Trade Marks Rules 2017. Companies should opt for such kinds of auditory or musical branding in order to appeal to a large chunk of consumers instantly. One such sound mark registered in India by Hisamitsu Pharmaceutical Co, Inc. of Japan for pharmaceuticals is the sound of the words ‘HI’ ‘SA’ ‘MI’ ‘TSU’ which is chanted over a particular musical connotation. In India, colour combinations are protected and recognized, however the prospect of claiming exclusiveness with regards to one single colour still persists as a grey area.
IMPORTANCE OF BRANDING IN THE PHARMACEUTICAL INDUSTRY
In the case of pharmaceutical products, brand names play an extremely vital role. Brand names in this industry can literally be a life or death situation. Even if one single letter is missing from the name, the product itself changes along with the entire composition thereby making it eligible to treat a completely different type of illness. According to research statistics, in the United States Patent and Trademark Office itself, around 1000 names are filed under Class 5 which covers the international trademark classification for pharmaceuticals. Due to this increasingly crowded area of trademark classes, the pharmaceutical industry is constantly getting conscious of the importance that the brand name brings to a brand’s success. However, this doesn’t just apply to the pharmaceutical sector. Literally every possible sector requires this to be successful. The brand value and name that a business holds is what makes or breaks it as it plays a vital role in consumer recollection and recognition.
Another goal of pharmaceutical companies while deciding on brand names is to “Stand Out”. They need to be able to distinguish themselves from their competition. However, they also need to be innocuous, a statement which could be proved to be a paradox, most certainly. This is because if a pharmaceutical brand name fails to stand out, chances are that they will most definitely get lost in the crowd. However, if the name is too flashy, consumers might question the brand’s credibility. Therefore, it can be somehow concluded that despite everything, the penultimate driver in the development of a brand name is ‘credibility’.
Branding in the pharmaceutical sector is a significant tool that can be used to generate awareness among the general public with regards to the positive impact of various medicines and drugs. Branding is what imparts on the consumer, knowledge about a particular product and provides for a point of differentiation from its competitors, especially those selling similar products. Branding, therefore, provides these companies with a sort of competitive advantage over its peers.
Due to the existence of a solid brand name for a pharmaceutical company, the drug’s commercial life (strong sales) can easily be prolonged even after the lapse of the patent since it holds a certain brand value in the market as well as high consumer loyalty towards the brand. One more important factor to note that pharmaceutical companies should ensure that they get their return on investment (ROI) before the expiry of the patent on the drug because it is during that time that they hold the monopoly over the drug and can hence easily recover their costs, and more.
CHALLENGES OF BRANDING IN THE PHARMACEUTICAL INDUSTRY
There are many challenges when it comes to branding in the pharmaceutical sector which is why it ends up being a difficult affair. Some of these challenges include firstly, the external environment which includes patient demographics such as gender, age, population, education, income, prevailing diseases in the region and also their patterns. Secondly, regulatory and legal challenges because of the existence of a multitude of legislation, regulations, policies governing the pharmaceutical sector and brands need to ensure that they do not circumvent them in any manner. Thirdly, competition, since is a lot of manufactures for the same product during the same type of illness and it is difficult to establish a brand in this space unless the brand is already a well-known one for generations. Lastly, the war with the generic drug industry.
THE IMPACT OF GENERIC DRUGS ON THE PHARMACEUTICAL INDUSTRY
A Generic Drug is a pharmaceutical drug that has the same chemical combination as the drug which originally had patent protection. Generic drugs are allowed to be sold usually after the expiration of the patent of the original drug. The active pharmaceutical ingredient (API) of the generic drug is the same as that of the initial patented drug because of which it performs its functions equally well. Generic drugs, although they have the same API, they usually are different when it comes to colour, formulation, packaging, the process of its manufacture and colour.
The generic drug market has grossly impacted the branded pharmaceutical industry. This generic drug industry is completely changing the way that drug products are marketed (including their various marketing strategies) by pharmaceutical giants and has managed to affect brand names on a large scale. It has managed to emerge itself as a new competition and many companies have had to change the way they marketed their products because of these generic drugs.
The generic drug industry has emerged victorious for numerous reasons. In the world today, it has managed to enter into almost all categories. Manufacturers can no longer rely solely on their patents to receive protection for their products and processes which have resulted from their years of continuous research and development. This is also one of the reasons why the issuance of trademarks is of utmost importance in this pharmaceutical industry. When generic drugs were not yet significant or launched in the market, pharmaceutical companies often got their drugs trademarked and the trademark was generally descriptive or semi descriptive in nature. It described a certain class of drugs or compounds. To give an example, “AMOXICILLIN” was given the name “AMOXIL”. Many drugs which consisted of penicillin were given brand names such as “NAFCILLIN”, “OXACILLIN”, “AMPICILLIN”, etc.
Many pharmaceutical companies use this method of branding their products since they intend to create proprietary names and brands from the existing generic names. There are many more examples of this. Some of these are listed in the table below.
|Generic Name||Trade Name|
Now, there is a new emerging trend which is being adopted by the pharmaceutical industry. Now, a pharmaceutical company should make sure that they create a differentiation between their proprietary drugs and the generic drugs (which are considered as intruders by the industry). They should be able to do this by establishing and developing the brand names of the drugs which are in no way connected to the generic name or properties of the drug. They must be unique and distinctive and must also be such that they are difficult to imitate.
Generic drugs are considered to be easy to manufacture and they are also apparently profitable. Many years ago, when the patent protection of a drug expired after it was first invented, companies were not worried that their product or drug would be copied by some other company because that generally and usually did not happen. However, in today’s world, once the patent expires, it exposes the product to the generic drug market thereby meaning that the product or drug and its manufacture could no longer be controlled by that one particular pharmaceutical company anymore since the drug now becomes generic. Generic medicines do not require a trade name for themselves. It is pertinent to note that during their medical education, almost all medical practitioners learn the generic names of the drugs and not the brand name. The reason that generic names for drugs are used widely is because it makes it easier for the healthcare practitioner to identify and substitute a generic one in place of a branded one. This is one of the biggest challenges that is being faced. This is because once the patent protection expires, the company still wants to be able to protect its investment that it made, created and spend millions of dollars on. They also wish to protect their reputation and franchise that they created with a lot of hard work. This is why if a registered trademark or a brand name is imitated effortlessly or closely associated with that of the generic version of the drug compound, it would seem that the company sadly lost the battle long before the fight even begun. This is because the closer or similar the trade name or the brand name remains to the generic name, the more difficult it is to receive trademark protection. Hence, it gets simpler for a pharmacist to replace one drug with another without the knowledge of the patient.
Now one would ask why pharmacists and health care practitioners are willing to utilise generic drugs and also why are companies so keen on manufacturing generic drugs? The simplest answer is so that they can make money. They are able to do so in many ways. Firstly, generic drug manufacturers manufacture drugs after patent expiry based on the patented knowledge which comes into the public domain once the patent was initially granted to the original company. They do not have to invest in R&D at all since all the information is readily available by virtue of the patent application. Secondly, they are able to manufacture the generic drug at a much lower cost as compared to the branded one. Which is why they can sell it at significantly cheaper rates as well. Now given the obviousness of the situation, a generic drug company can definitely sell generic drugs and make a more than decent profit easily.
Even now, many pharmaceutical companies still go on to trade and market their drugs whose patents have long expired in the hopes of acquiring a sort of added remuneration and revenue which they can direct towards new drug R&D.
Due to the fact that patent protection is usually granted only for a period of 20 years post which the innovation falls into the public domain, there is an increased concern among pharmaceutical companies to build their brand, establish themselves and distinguish themselves from their competitors so that even though there may now be many companies manufacturing that same drug, consumers would still end up buying the drugs of only that reputed brand. Branding brings about consumer loyalty which results in repeat purchases and also word of mouth advertising. This is why pharmaceutical companies should bank on their IPs and ensure their effective management.
Given the fact that pharmaceutical companies spend a huge chunk of their money on research and development, a very little amount actually goes into the marketing of the novel drug. This is also due to the various regulations that govern the drug naming and advertising process. Pharmaceutical companies can actually follow the precedent laid down by consumer goods companies’ marketing strategies which focus not only on the product but more so on the impact and reach of its products to its consumers due to strong marketing. Using of non-conventional trademarks is now the in thing as it instantly engages a consumer due to its uniqueness.
It is not unusual for a pharmaceutical company to name its drug-using certain keywords and names through which not only the healthcare practitioners but also the consumers are able to associate and identify the product with either its API, the bodily organ or disease it is significant too. What is interesting to note is that in this industry, a certain amount of descriptiveness is absolutely acceptable, that is to say, the threshold for non – distinctiveness is much lower than other fields that seek trademark registration. This is particularly because there is a need for a pharmaceutical product to be instantly recognized by its consumers in order to immediately avert health risks which could be potentially caused due to non – identification of the right medication at the right time.
In conclusion, the author asserts that pharmaceutical companies need to effectively manage their intellectual property and create a strong brand in the market so that even after the expiry of the patent over the product, the product will still be able to effectively hold itself in the market place. The pharmaceutical industry itself is heavily regulated and companies must ensure that they take certain measures so that they don’t circumvent any existing law in force.
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