Guest contributor and industry insider, Giles Moss, explains how some generics continue to dominate the market, even in the face of strong brand opposition.
Giles Moss 
19 May, 2009
Why do generics dominate some markets?
Some therapy areas are very rapidly cannibalised by generics when some of the leading product brands lose their patent protection. Other markets seem to be almost immune to significant loss; occasionally we even see a fight back in branded market share after an initial fall when generics are launched.
The key insight is that there are nine factors which generally determine whether brands or generics dominate. How these factors are managed go a long way to determining whether brands or generics dominate.
Generally speaking successful long term brands bring added value to the market
place through either a tangible benefit such as perceived improvements in product
performance e.g. Gillette razors increasing the number of blades to suggest
a closer shave, or intangible benefits e.g. Coca Cola representing a lifestyle
rather than merely a fizzy carbonated drink.
The successful long term brands stay true to themselves over time, appreciating they are their own benchmark therefore managing to maintain or grow market share e.g. Coca-Cola has maintained its chosen brand strategy of availability, affordability and awareness over many decades. We know from extensive consumer work that there are nine significant factors involved.
Nine factors which favor generic Vs brand domination
- High volume
- Significant brand sales
- The offer remains static
- Brands expensive
- Customers perceive little risk in choosing
- Technology cheap & widely available
- Choice driven by visual characteristics
- Buyer has all relevant information
- Low switching costs
At first glance pharmaceutical brands should be in an extremely strong position: their offering changes regularly due to the creation of new clinical data; there is always risk associated with giving pharmacological agents to patients; the physician rarely gets to know everything about a patient (as investigations use up precious resources); poly pharmacy complicates decision making and as a result switching from one product to another can be unpredictable and at times dangerous.
So in theory pharmaceutical product brands appear to have many of the necessary attributes to dominate and therefore enjoy longevity.
Factors which should favour pharmaceutical brand domination
| Factor | Present |
|---|---|
| Low volume | On occasion |
| Small sales | On occasion |
| Offer changes | YES |
| Brands cheap or under-priced | On occasion |
| Customers perveive risk | YES |
| Technology expensive and not widely available | YES |
| Choice driven by multiple characteristics | YES |
| Buyer has limited information | YES |
| High switching costs | YES |
The problem is that all these positive factors are often out-weighed by a
single fact, that pharmaceutical product brands have limited patent life. The
industry has grown used to losing significant sales at patent expiry and this
has led to a lack of investment in brand management, often all that is talked
about is the timing of the all important US patent expiry. Too frequently the
brand is cast out of the promoted portfolio and tangible opportunities to maintain
sales over an extended period are given up as the organization moves on to
the next priority.
A lack of insight and market research has prevented the industry from protecting its long term future by developing new skills whilst the market was robust, predictable and growing. Therefore declining brands can be given too little attention and opportunities to save a significant segment of sales can be passed up by internally focused organizations.
Learn much more by taking the online course: ‘Durable brands’ at www.pharmabrandlogic.co.uk.
The course includes brand development in three steps, a Vioxx™ case study,
how global branding affects physician attitudes, the nine factors that determine
brand domination as well as the eight causes of brand decline.
www.pharmabrandlogic.co.uk/shop/page/4
Giles D. Moss is an industry insider and part time author who has extensive international sales and marketing experience and is author of the book "Pharmaceuticals - Where's the brand logic?". He has co-written with Mike in the past and adapted published work from Mike and Jon in creating cost effective sales and marketing training courses which are delivered online 24x7 anywhere in the world.
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