CORPORATE BRANDING IN THE PHARMACEUTICAL INDUSTRY - AN INVESTIGATION INTO HOW IMPORTANT IS CORPORATE BRAND FOR THE GENERAL PRACTITIONERS

By

KALINKA MARKOVA DE MONTILLE

KWAZULU NATAL (SOUTH AFRICA) NOVEMBER 2005

A research report submitted to Regent Business School, Durban, South Africa in part fulfilment of the requirements for the degree Master of Business Administration.

CHAPTER 2: LITERATURE REVIEW

2.1 INTRODUCTION

For the pharmaceutical industry, brands are the means by which the science is translated into a commercially viable reality (Robins, 2004:4).

Pharmaceutical companies face a series of significant challenges that are affecting their ability to maintain growth and sustain earning levels. To operate and succeed in the complex and highly regulated competitive environment, pharmaceutical companies know that brands are more than just products and services. They know that brands are also, what the company does and, more importantly, what the company is (Davis, 2002:1). What product branding doesnt allow are economies of scale, endorsements and instant credibility (Davis, 2002:3).

Despite the progress made in understanding and engagement with the dynamics of a rapidly changing market, companies are missing opportunities to leverage the corporate brand (Colyer, 2003, deLor, 2004, Doherty, 2004, Druckenmiller, 2002). Many prescription drugs reside in isolation with little visual corporate brand endorsement or visual connection to each other (deLor & Bowman, 2003:42).

As pharmaceutical companies communicate through an ever-widening spectrum of channels to an increasing number of audiences, putting a unified face on those communications will increase their impact and value. Corporate brand is important for building reputation, credibility, expertise, trust, and differentiation.

The purpose of the literature review is to set the study subject in a broader context through investigation of the relevant literature. Key theories and arguments in the literature will be identified.

2.2

THE CONCEPT OF A BRAND

Brands and branding, as traditionally understood, were subject to continuous review and redefining. There are number of definitions of brand. According to American Marketing Association, brand is a name, term, sigh, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors (Kotler, 2000:404). A more universally applicable definition describes brand as a cluster of functional and emotional values which promises stake holders a particular experience (de Chernatony and Dalllmo, 1999:4). In its simplest form, a brand represents the promises that the product makes (Blackett, 2004:4).

According to de Chernatony (2001:4), one way to explain the characteristics of the brand is through the brand triangle, shown on Figure 2.1, which is suitable for brands in different contexts. Using a laddering technique, the brand triangle shows how functional values are linked with emotional values, and the promised experience.

Figure: 2.1. The Brand Triangle

Source: Adopted from de Chernatony (2001) Would a brand smell any sweeter by a corporate name?

The concept of branding has developed over the years. Within traditional branding model, the goal was to build the brand and to create brand image, which derived short-term results (Aaker and Joachimsthaler, 2000). The modern concept of branding can be applied to anything from product and services to companies and even countries (Clifton, 2004:1). Kotler (2000:404) regards branding as a major issue of product strategy.

According to Kapferer (1997:25), the value of the brand comes from its ability to gain an exclusive, positive and prominent meaning in the minds of a large number of customers. Combinations of four factors determine the perceived value of the brand for the consumer: brand awareness, perceived quality, confidence, and image (Kapferer, 1997:37).

Figure: 2.2 Perceived Value

Brand Awareness

Image

Perceived Quality

Confidence

Source: Adapted from Kapferer (1997) Strategic Brand Management, London: Kogan Page.

Brand Equity and Brand Awareness

One method of assessing the success of a brand is through brand equity, which is the sum of all different values people attach to the brand. Brand equity can include the monetary value, the intangible value, and the perceived quality attributed to the product independent of its features. Aaker and Joachimstaler (2000:17) define brand equity as brand assets and liabilities connected to the brand that add to, or detract

from its value to the customer and to the business. Aaker (2004a:2) refer to the elements of brand equity as: brand awareness, brand reputation, brand differentiation, brand relevance and brand loyalty.

Figure: 2.3. Brand Equity

Brand Equity

Brand Awareness

Perceived Reputation

Brand Differentiation

Brand relevance

Brand Loyalty

Source: Adopted from Aaker (2004a) Even Brands Need Spring Cleaning, book excerpt from Brand Portfolio Strategy. Brandweek, March 8, 2004, vol.45. No10

Brand awareness describes how well the brand is known in the market place. Brand awareness is achieved through market communication to promote the brand identity (Aaker, 2004a:1). Because people like the familiar it links to other aspects of brand equity (Aaker and Joachimstaler, 2000:17).

Brand reputation reflects how the brand is regarded in the marketplace and does it have high perceived quality (Aaker, 2004a:2). Perceived quality influences brand associations and affect brand profitability (Aaker, 2004b:8).

Brand differentiation refers to any point of differentiation that brand has (Aaker, 2004a:2).

Brand relevance refers to whether the brand is relevant to todays customers and todays applications (Aaker, 2004a:2).

Brand loyalty refers to the commitment of customer segments to a brand (Aaker, 2004a:2). According to Travis (in Nissim, 2005:1), creating customer loyalty is 5

neither strategic nor tactic; rather, it is the ultimate objective and meaning of brand equity. Brand loyalty is brand equity.

Customer-Based Brand Equity (CBBE) model is based on the premise that the power of a brand lies in what customers have learned, felt, seen and heard about the brand as a result of their experiences over time (Keller, 2003:59). CBBE is derived from brand awareness and brand image.

Brand awareness is when customers recognize a brand for what it is and can identify it in different conditions. This does not mean they prefer that brand - brand preference, or attach high value to it. According to Keller (2003:67), Brand awareness consists of brand recognition and brand recall. a) Brand recognition is the consumers ability to confirm prior exposure to the brand when given a brand as a cue (Keller, 2003:67). b) Brand recall is the consumers ability to retrieve the brand from memory when given the product category, the needs fulfilled by the category or a purchase or usage situation as cue (Keller, 2003:67).

Aided awareness is when the customer recognizes a brand only after hearing or seeing it. Top-of-mind awareness is when a customer is asked to name brands within a category and your brand comes first to mind.

Brand image is consumers perceptions as reflected by the association in their minds when they think of the brand. According to Keller (2003:70), brand image is created by marketing programs that link strong, favorable and unique associations to the brand in the memory. These associations are created also through direct experience or with the brands identification with a certain company, person, place or event.

Growth Codes

From an analysis of over 1000 winning brands Buchholz and Wrdemann (2000) suggest that winning brands achieve outstanding growth in terms of sales and market

The significance of brand equity has been demonstrated by various studies. One of them is Interbrands annual study on the worlds most valuable brands which receives substantial coverage in the pages of Business Week. In the latest (2005) study there is no pharmaceutical company within the top 20 best global brands. The pharmaceutical industrys powerhouse Pfizer, with 11 products, each earning more than $1 billion in annual sales in 2004, is in 31st position, down from 29th in 2004 (Business Week,2005:68, 2004:69)

2.3

THE ROLE OF BRANDING IN THE PHARMACEUTICAL INDUSTRY.

2.3.1

Pharmaceutical Industry Background

The origins of the modern pharmaceutical industry can be traced to the 19th century. Pfizer and Merck in America, Roche, Ciba-Geigy and Sandoz in Europe all started out as family chemical companies. Slowly but steadily many companies moved into synthetic pharmaceuticals and eventually to global players.

During the 1940s and 50s, research and development become firmly established within the pharmaceutical industry. Discovery of penicillin in 1940s was a major sensation throughout the scientific community and Pfizer made medical history when it became the first company to successfully mass-produce penicillin (Rodengen, 2000:11).

In the 1960s, the industry expanded, benefiting from new discoveries. The healthcare spending boomed as economies prospered. There were no strict controls on research and development (R&D), drug approvals and marketing. However, during this time, the new legislation was passed in the USA that completely transformed the pharmaceutical industry. By 1978 the average time needed to discover and develop new drugs to meet the FDAs expanded requirements and then undergo regulatory review had reached 14years or more (Rodengen, 1999:96). Thus, consuming an increasing percent of the 17 years - the length of time then covered by patents. As a consequence, it became much harder for the pharmaceutical companies to recoup their investment in order to fund future research. By year 2000, the time taken for drugs to

share by adhering to specific lows when activating a specific purchase motive in the customers mind. They are called Growth Codes, which form the basis of a new approach to brand marketing (Buchholz and Wrdemann, 2000:5). The authors arranged the Growth Codes behind five portals in the consumers mind: benefits and promises; norms and values; perceptions and programs; identity and selfexpression; and emotions and love. According to the authors, the success of migration principle (e.g. to migrate into a different or even unexpected mental drawer where your brand can better unfold) can be replicated in any market, any product, service, or institutions.

Emotional Branding

Gob (2001:28) believes that building the right emotion in a brand is the most important investment. According to his view, the concept of emotional branding replaces the traditional concept of brand awareness and brings a dimension of personalized relationship into equation. Shifts from old concept of brand awareness to this new model are illustrated by the ten commandments of emotional branding:

Table: 2.4. Ten Commandments of Emotional Branding

1 2 3 4 5 6 7 8 9 10

Shift from consumers to people Shift from product to experience Shift from honesty to trust Shift from quality to preference Shift from notoriety to aspiration Shift from identity to personality Shift from function to feel Shift from communication to dialogue Shift from ubiquity to presence Shift from service to relationship

Source: Adopted from Gob, (2001) Emotional Branding: The Ten Commandments of Emotional Branding, New York, Allworth Press.

make from laboratory to market increased by nearly seven years. Most of the increase occurred in the clinical development phase. The average number of trials and the number of patients for each new drug application also have increased (IMS, 2004:1). The pharmaceutical industrys success lay in discovering, developing, and marketing innovative medicines. The quality of the medicine was the most important differentiating factor. As there are huge risks involved in discovering, developing, and bringing a new drug to market, companies are looking for ways to improve productivity of R&D, widen product portfolios and optimise sales and marketing costs. It typically costs more than $500 million to bring one new drug to the market and for every drug successfully brought to the market, there are 5 000-10 000 unsuccessful compounds screened and 250 that undergo preclinical testing (Pharma Marketing News, 2005:8). In response to these challenges, pharmaceutical industry continues to undergo a period of consolidation and rationalisation. The latest mergers and acquisitions within the industry testify to the high value placed on innovation, and the cost of achieving this (Blackett & Robbins, 2001:2).

2.3.2

Pharmaceutical Industry in South Africa

S.As health system is both First World and Third World with less than 17% having access to the best walk-in healthcare while the majority remains reliant on a public health system (DoH, 1995:2). In 2002, private sector spending and out-ofpocket payments accounted for 63% of total health expenditure (Health Systems Trust, 2002). Since coming to power in 1994, the ANC government has been determined to redress the many years of health care deficiencies, most notably the lack of equity in access to essential drugs.

In the past, prices of pharmaceuticals in South Africa were uncontrolled and high. The National Drug Policy (NDP) and its amendments have a direct impact on pharmaceutical industry with special reference to transparent pricing system and reduction of cost of medicines; compulsory generic substitution at pharmacy level; the Essential Drug List (EDL) and its selection criteria; compulsory licensing; international tendering and parallel importation (DoH, 2002). The new changes affect

every player in the private sector medicine chain - manufacturers, distributors, wholesalers, pharmacists, and private hospital groups. The latest regulations bring SA into line with developed nations such as the UK, France, Canada, and Australia that have introduced similar laws to control healthcare expenditure and drug selection/availability.

SA pharmaceutical market is the largest in Africa and was estimated at US$1.5 billion at retail prices in 2002 (IMS Health, 2003). The two local corporations, Adcock Ingram and Aspen represented 23.7% of the market. There are 15 leading multinational pharmaceutical companies represented in SA, and the leading prescription product on the market is Pfizers Lipitor (IMS Health, 2003:30-32). 2.3.3 Pharmaceutical Brands

There are three categories of pharmaceutical brands: 1. Original brands or ethical drugs which are Prescription-only medicines, represented in 2002 38.1% of the market share by value and 15.5% by volume. (IMS, 2003:32) 2. Branded and identical generic drugs, which according to IMS Health data (2003:32-33), accounted for 22.4% of SA private drug market by value and 36% by volume in 2002. 3. Over-the-counter (OTC) medicines purchased without a prescription. They are branded or generic. Each of the three categories requires very different marketing and branding strategies.

Pharmaceutical brands are also primary care products and specialist products. Primary care products are generally prescribed by GPs, whereas treatment with specialist products is typically initiated in hospitals. Sales volume, marketing spend and skills required differ for these two categories. Many companies have all the categories within their structure.

Product branding for prescription drugs (ethical drugs) has been the most important in the industry due to the greater technological differentiation and to the patent system (Colyer, 2003:1). In the pharmaceutical industry, patent protection is a critical asset, 10

as it allows companies to sustain the price premium needed to recover the R&D investments. Given the high attrition rates of new chemical entities (NCEs) it is no surprise that block buster or mega brand drugs have had the potential to determine the fortunes of pharmaceutical companies. However, overdependence on a blockbusters can render a company highly vulnerable to generic competition once patent expire. Typically, the generic version will erode 70% or more of the branded drug sales in one year (Cleland et al, 2004:51).

Brands thrive where the relationship between buyer and seller is direct and open, where choice is transparent, and availability unrestricted (Blackett & Robbins, 2001:1). Few of these requirements exist within the prescription pharmaceutical market.

According to Doherty (2004:3), three factors are influencing pharmaceutical brand: The regulatory environment; The relationship with its customers; How pharmaceutical industry sees itself. This view is shared by other authors such as Blackett & Robbins (2001) and Cleland et al (2004).

Regulatory environment

Regulatory bodies, such as managed healthcare as well as the role and impact of government and its public policy challenges - Act 90 and single exit price (SEP) currently implemented in South Africa - control and sanction the availability of medicines, determines what the patient pays, and control the advertising and promotion of prescription drugs. National Health Act of 2004 (Act 61 of 2003), provides a framework for national health system in South Africa, comprising public, private, and non-governmental providers. This will create move towards the creation of centralised formularies at Primary Care level, offering the GPs clearly defined prescribing options.

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Pharmaceutical brands relationship with its customers

Target audiences are no longer limited only to doctors. Currently, there are four distinctly different customers: doctors, payers managed health care organisations and government, pharmacists, patients

The brand is the focal point for competing for the choice of all these stakeholders and depends on how they interact, and the degree of influence they have on one another. (Cleland et al, 2004:51, Colyer, 2003:1, deLor, 2003:3)

Doctors

As prescription drugs in South Africa get no public promotion, doctors are the core audience for pharmaceutical companies. While no longer the primary influencer of prescribing, the GP is still the interface with the patient and can make a prescribing choice between drugs. A doctors choice of medication depends not only on her/his knowledge of the range of available treatment, but also on prescription guidelines (Cleland et al, 2004, Thomas, 2005).

Payers

As GPs influence on a choice of medication has been reduced, pharmaceutical companies are focusing their marketing efforts on the new areas of prescription influence the payers. These are managed healthcare and government authorities, which determine the formularies, and key opinion leaders (KOL) (Cleland et al, 2004, Thomas, 2005).

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Pharmacists

Pharmacists can influence the patients choice by making recommendations, making substitutions with the generic drug, or substituting the drug with another from the formulary, called therapeutic substitution (DoH, 2002).

Patients

Unlike most markets where consumers make their own brand choice and purchase decisions, patients - the end-users of medicines, pass their brand choice for prescription drugs to external parties a GP or specialist who writes the script, and sometimes even to the pharmacist. However, patients are now taking a more active interest in their health, thus becoming much more involved in the treatment decision and in the choice of medicine.

How the pharmaceutical industry sees itself

An important challenge for the pharmaceutical industry is the way in which they present themselves to the world. The public outcry for greater management accountability is driving corporate reputation as a critical concern (deLor, 2003:1). Pharmaceutical companies are building healthcare partnerships with its most valuable customers doctors. Companies are aiming at presenting themselves as a solution provider in debate for healthcare quality (Kelly, 2003:1). Pfizers commitment to innovation and R&D supports its image as a company that makes and sells knowledge and manufacturing is incidental (Rodengen, 1999:102).

2.3.4

Branding of Prescription-only medicines (ethical drugs)

To thrive in today's complex and highly regulated competitive environment, pharmaceutical companies must be able to optimise the value of their brands for ethical drugs. Although companies are spending a lot of time and effort in improving the performance of sales and marketing, the difference between the best performers in the industry and the rest is often marginal (Doherty,2004:1). Therefore, building and

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maintaining distinctive and recognizable brands is very important. Additional sources of value, such as the equity inherent in the brand itself now supplement the traditional emphasis on patents. Managing brand equity has become major imperative in pharmaceutical industry. Brand equity and its set of assets awareness, customer loyalty, reputation and perceived quality, differentiation, and relevance, linked to brand name - add value to pharmaceutical products, and thus giving customers a reason to prescribe, buy and use.

According to Robins (2004:2), getting the branding right will never compensate for a poor product, but getting the branding wrong can make the difference between good brand and great brand recognition and loyalty. She suggests that great brands have to meet key criteria: relevance, credibility, differentiation, and stretch.

Relevance Understanding of the behaviour and characteristics of the stakeholder segments, the unmet needs in the market and the existing brand dynamics of the therapeutic area is crucial to determining the relevance of the window of brand opportunity (Robins, 2004:2).

Credibility Pharmaceuticals brands require careful management to ensure credibility. Brand identities must be credible across all target audiences. Some brands, such as those for erectile dysfunction, could become lifestyle-related products without damaging credibility compare to other drugs, such as those for lowering cholesterol or controlling hypertension, which demand much more science information.

Differentiation Brands enhance the ability of doctors, buyers, and users to interpret and process information, gain confidence and provide the rationale in their decisions. Many pharmaceutical companies have focused on establishing brand recognition. However, with proliferation of products, many of which are with similar safety and efficacy, product differentiation is very limited in many therapeutic areas (Cleland et al, 2004:52). Therefore, pharmaceutical companies are trying to add value into their

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propositions to satisfy stakeholder needs while differentiating their offering (Cleland et al, 2004:52).

Stretch According to Robins (2004:1), the branding foundations should be sufficiently flexible to accommodate changes in the market and for the post-patent life of the brand.

Depth of brand awareness The depth of brand awareness among consumers, and their perception of the brand are very important as well. However, foundations of brand familiarity first need to be established.

Brand loyalty The considerable investment required for the development of new drugs mean that pharmaceutical companies must establish brand loyalty throughout a products lifecycle in order to protect sales at patent expiry. Because of shrinking periods of exclusivity, product branding for prescription-only medicines is becoming a part of the pre-launch process (Doherty, 2004, Kregor, 2004, Robins, 2004, Thomas, 2005). Pfizer for example, involves marketing at the drug discovery stage and claims to make blockbuster drugs rather than discover them (McKinnell, 2002:1). According to Kregor (2004:2-4), establishing clear and differentiating brand values both functional and emotional - is an important task. He points that different products will have a different emphasis between the product-based functional values and the emotional values during different stages of its lifecycle.

Branding of prescription drugs to the GPs

Because of the changing environment, traditional way of branding prescription drugs to the GPs has changed. For decades, pharmaceutical companies have relied on a model where sales representatives visit doctors, explaining the benefits of the drug. This model was successful in raising doctors awareness of the range of available

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medicines. As the number of sales representatives grows and the face time with doctors diminishes, creating expertise in a disease category is one way of differentiating the product messages (deLor & Bowman, 2003:42).

According to Doherty (2004:4), selling a drug based on functional advantage is a short-term goal as product differentiation is very limited in many therapeutic areas. That is why pharmaceutical companies are trying to recognize and meet the other needs underlying doctors choice of medicine: treatment needs, role based needs and personal needs (Doherty, 2004:3).

Pharmaceutical companies are now moving from branding a drug to branding a condition (Robins, 2004:2). Developing propositions around therapeutic categories does not replace the need for a good product with excellent efficacy and safety, but adds more value for all stakeholders and helps differentiate the offering (Cleland, 2004:52).

Addressing doctors evolving needs include not only providing product information; it also includes providing service that supports the total management of patients condition (Cleland, 2004:52, Thomas, 2005:17). By helping doctors to increase their knowledge of various conditions and drug treatments pharmaceutical companies can help to create an affinity and trust for certain brands and thus promoting brand loyalty.

Pharmaceutical companies also use the Internet to interact with the healthcare profession. Use of tools such as eDetailing (available in UK and USA) enable pharmaceutical companies to target GPs with relevant information on new drugs or products, including clinical trial data, prescribing information and marketing materials (Thomas, 2005:17).

Branding of prescription drugs to the patients

Pharmaceutical branding for prescription drugs is an important way of creating awareness among the public of the potential benefits of medicines. The shift in patient power has created a push-pull dynamic, that changed the way in which

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pharmaceutical brand is brought to the market (Cleland et al, 2004, Colyer, 2003, Doherty, 2004, Kregor, 2004, Thomas, 2005). The more the patient is involved in the treatment decision the more brand has role to play. Patient pull can effectively extend the life of a product beyond its clinical differentiation (Kregor, 2004:3).

According to Cleland et al (2004:55), it is important to address both the functional/rational and emotional needs of the customers. Robins (2004:2), acknowledges the importance of the language surrounding the brand which plays a critical role in helping to shift mindsets and influence behaviour. Example is the transition from impotence through erectile dysfunction, to the acronym ED.

Although regulations in SA and Europe limit the use of DTC websites, companies can still raise disease and treatment awareness without directly promoting a drug. Betterinformed patients are more involved in the decision-making process of their treatment.

Building patient continuum

In order to build effective and long-lasting relationships with patients, pharmaceutical companies are providing them with valuable information during the different stages of their conditions.

Condition Awareness companies are providing relevant health information to help patients recognize symptoms. The more aware potential users are about their condition, the more likely they are to seek treatment.

Treatment Awareness can help promote patient preference for a particular drug.

Prescription Request - Studies have shown that 70% of consumers requests for specific prescriptions are honored by doctors (Cleland et al, 2004:51).

Increase compliance and treatment success rates with educational programs that help patients understand why a drug should be taken regularly as prescribed.

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Patients word-of-mouth is one way to expand market coverage and generate further brand equity.

Branding of prescription drugs to the payers

Pharmaceutical companies recognize that they cannot afford to ignore payers and their needs in the branding process (Cleland et al, 2004, Colyer, 2003, Thomas, 2005). Thus, companies are taking messages to the market, which are far more sophisticated. This means the companies have to not only show the drug to be efficacious, but also what are the added medical benefits for the patients that receive the product. The interests in health economics - cost effectiveness, include savings from a reduction in hospital admission to a decrease in side effects that could demand additional medication (Colyer, 2003:2).

Despite the progress made in understanding and engagement with the dynamics of a rapidly changing market, pharmaceutical companies are missing opportunities to leverage the corporate brand (Colyer, 2003, deLor, 2004, Doherty, 2004, Druckenmiller, 2002).

Many prescription drugs reside in isolation with little visual corporate brand endorsement or visual connection to each other (deLor & Bowman, 2003:42). As pharmaceutical companies communicate through an ever-widening spectrum of channels to an increasing number of audiences, putting a unified face on those communications will increase their impact and value.

2.4

CORPORATE BRANDING

2.4.1

Overview

The concept of a corporate brand is the same as the concept of a product brand; it is the enactment of brands that is different (de Chernatony, 2001:18). In the past decade there was a much greater recognition of the importance and power of the corporate

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brand by businesses. Business began shifting their focus from product brands to corporate branding (de Chernatony, 1999:26).

With product branding, the product or service is synonymous with the brand. It strives to build trust in the brand by allowing the consumer to fit product perceptions and brand image into one (Davis, 2002:3). According to de Chernatony (2001:6), the enactment of the brand concentrates predominantly on externally focused activities. Enactment of the corporate brand, on the other hand, follows a different process which is attentive to the needs of stakeholders rather than just consumers (de Chernatony, 2001:6).

According to Aaker (2004b:6), corporate brand represents an organization that stands behind its products in spirit and substance. Davis (2002:3) defines corporate branding as a composite of all the experiences, encounters and perceptions a customer has with a company. It means that all communications - internal and external, are aimed at presenting a single, unified message. The underlying motivator, according to Davis, is to build trust in the company not in a particular product or service. Sony is an example of ultimate corporate endorser with its name firmly attached to everything from its DVD to the Play Station (Davis, 2002:3).

The changing role of brands from marketing tool to an organizational principle for business is part of a historical trend. Initially, brands differentiated one product from another. Now, brands define relationships with all their audiences, especially investors and employees (Interbrand, 2001:3).

According to Aaker and Detert (2004:2), corporate brand represents an organization and reflects its heritage, values, culture, people and strategy, as shown on Figure 2.4. de Chernatony (2001:11) states that values are at the core of the corporate brand. According to him, there are four value sources, as shown on Figure 2.3, which are interlinked and are a critical component for corporate brand success. They must be built into the product, expressed in behavior, and reflected in communication.

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Figure: 2.5. Inter-relationship between Value Sources

VISION

Organizational Culture

Individual Employees Values

Source: Adopted from de Chernatony (2001) Would a brand smell any sweeter by a corporate name?

According to Aaker (2004b:8) values and priorities are the very essence of a company. Innovation, perceived quality and customer concern are three values and priorities which are most frequently seen as drivers of corporate brands.

2.4.2

Corporate Branding in the Pharmaceutical Industry

The research conducted in the 2001 BrandPower Study by Corporate Branding reveals importance of the companys image within the pharmaceutical industry (Corporate branding, 2001:1). The study, which rated 34 leading pharmaceutical companies on their relative strengths across a list of 24 key brand attributes, found that the majority of these companies have relatively weak corporate brands.
(The study was based on survey of senior business executives from top 20% of US corporations. The respondents represented dual audience- end-consumers of prescription drugs and had influence over financial investment decisions.)

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The study showed that the strongest brands in the pharmaceutical industry are diversified consumer products giants such as Johnson & Johnson, Procter & Gamble and 3M and that they scored well ahead of their purely pharmaceutical-focused peers Pfizer, Eli Lilly, and Merk.

In its 2002 and 2004 surveys, Corporate Branding ranked the top 10 companies with the most valuable corporate brands as: General Electric, Microsoft, Exxon Mobil, Wal-Mart, Johnson & Johnson, Pfizer, IBM, Toyota, Procter & Gamble and CocaCola (CoreBrand, 2002, 2004).
For the study, CoreBrand collected Familiarity and Favourability ratings for the largest publicly traded companies to gauge how well known and how well thought of a corporate brand is among senior business decision-makers, a group defined as vice presidents or higher at the top 20% of US corporations based on revenue.

Pharmaceutical companies spend hundreds of millions of dollars to create brands with limited life span (8-10 years), and market them individually. According to IMS (2004), an overall marketing investment of $450 million to $1 billion is required for new blockbusters during the first two years of launch. (Much of this spend has to be directed to convincing new groups of stakeholders of a treatments value and efficacy.) At the same time, their corporate brands are passively and indirectly managed through the opinions of regulatory bodies and the press.

A number of marketing consultants (Blackett & Robbins (2001); Colyer (2003); deLor (2004); deLor & Bowman (2003); Doherty (2004); Stibel and Kapoor (2002); Robins (2004)) believe that pharmaceutical companies have failed to make product and corporate brand benefit each other. However, even in the case of Pfizer, Stibel and Kapoor (2002:2) believe that the success in creating a significant corporate brand is accidental and that the company passively benefit from the Viagra buzz.

According to Aaker and Detert (2004) and a number of other authors (DeLor (2004), Doherty (2004), Aaker (2004b)), the corporate brand has the flexibility to play several roles within the brand portfolio.

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Advantages of strong corporate brand

Corporate brand as differentiator

The corporate brand defines the firm that will deliver and stand behind specific products or therapies (Aaker, 2004b:1). With proliferation of products, many of which have similar efficacy and safety standards, product differentiation is very limited in many therapeutic drug classes. At the same time, organizations are very different; therefore, a corporate brand can potentially find differentiation in the organizational associations (Aaker, 2004b:10). Thus, a strong corporate brand can have a huge impact on establishing preference for companys products.

Corporate brand defines company's uniqueness

By developing brand awareness strategies to define a company's uniqueness, pharmaceutical companies can maximize its recognition and set it apart from competitors.

Corporate brand as endorser to key products

By using corporate brand to endorse key products, pharmaceutical companies can enhance their perceived credibility and differentiation (Aaker and Detert, 2004:2).

Corporate brand provides credibility

A strong corporate brand provides credibility to key therapeutic areas. Some companies are more strongly associated with a particular therapeutic area than others are (Aaker and Detert, 2004:2).

Corporate brand provides reputation for innovation

A reputation for innovation enhances credibility, thus corporate brand offers credibility through endorsement (Aaker and Detert, 2004:2). Pfizer, for example,

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initiates marketing at the drug discovery stage. The company used its corporate logo on Caduet to support the product brand before launch and to create a relationship between the company, the therapeutic area, and the product (DeLor, 2004:1).

Corporate brand requires less brand-building resources

The corporate brand requires less brand-building resources, thus reducing the cost of launching new drugs and increasing the speed of market acceptance (Aaker, 2004b:7).

Corporate brand can achieve economies of communication

The use of the corporate name helps to communicate to professional audiences the strength of the companys brand portfolio and thus achieving economies of communication (Ind, 1997:3). As a result, all of a companys products support each other through a communication endorsement. In his presentation to the AMA, Druckenmiller (2002:2), points out that Pfizer have broadened and changed its selling channels, bringing into play a greater diversity of audiences for whom different attributes of a corporate brand are important.

Long-term benefit after patent expiration

In the long term - after product patent expiration, what remains is the value of the corporate brand.

Corporate brand can strengthen customer relationship

The corporate brand provides a message for the customer relationship that is different from that of the product brand (Aaker, 2004b:11).

Doctors Doctors want to be associated with a trusted partner and the corporate brand will mean trust and that might influence their prescribing decisions (Doherty, 2004:3). Trust is easier to develop for an organisation than for a product. In addition, doctors

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are more likely to see sales representatives from well-known companies than from less well-known companies. More doctor details translate directly into higher sales (Colyer, 2003:3, DeLor, 2004:2).

Patients A strong corporate brand can be an asset in gaining patients trust and loyalty. Strong company brand means patients know who make their medicine. As patients are increasingly interested in learning more about disease states and treatment options information from well-known and admired company can help educate patients, motivate them to seek treatment, and make them feel more confident about long-term use of necessary medication (Colyer, 2003:2, Stibel and Kapoor, 2002:2).

Investors Investors cannot find Viagra on the NYSE when they invest, they invest in Pfizer and not in separate brands, such as Viagra (DeLor, 2004:1). Globalisation requires strong corporate brand identity With globalisation and liberalisation of trade, it is essential to have strong corporate brand identity. This will help in creating a positive image of the company in various markets (Colyer, 2003:2).

Corporate brand has significant influence internally

As corporate brand represents the culture, systems, people and strategy, thus has a significant influence internally (Aaker and Detert, 2004:2). The people of an organization provide the basis for the corporate brand image. Because people and organizations prefer to do business with those they respect and admire it is important what kind of people and values are behind this corporate brand (Aaker, 2004b:10). Ind (1997:83) believes that people are the corporate brand and therefore they should be the corporate brand communicators. Employees can become loyalists or even advocates.

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Risks and challenges

There are risks and challenges of associating pharmaceutical corporate brand with the product brands. Some of them are: clinical drug failure, drug withdrawal, litigations, and payments due to litigations that could lead to declining sales in unrelated brands. However, strong corporate brand translates into the trust in companys ability to deal with problems openly and quickly as in the case of Tylenol (Aaker and Detert, 2004:2, deLor, 2004:2).

Davis (2002:3) acknowledges that product branding allows the ability to have a wider array of products and services that may have no connection to one another under one umbrella, and less fear of failure. It also allows an organization more opportunity to control a place in the consumers mind. According to Ind (1997:42), when a parent and its brand operate under separate names bad news is less likely linked. However, the pervasiveness of media tends to ensure that the connections are made Ind, 1997:42).

2.4.3

Corporate Reputation

One of the key findings from Hill and Knowltons Corporate Reputation Watch 2004 Survey is that 93% of senior executives believe that customers consider corporate reputation important or extremely important (Dalton, 2005:7).

Reputation is the sum of values that stakeholders attribute to a company, based on their perception and interpretation of the image that the company communicates over time (Dalton, 2005:16). According to Davies (in Dalton, 2005:18), reputation is a collective term referring to all stakeholders views of corporate reputation, including identity and image.

It is very important for the pharmaceutical companies to be conscious about the strength and value of its corporate brand because trust in the minds of consumers, is closely aligned with corporate reputation and image (Corporate branding, 2004:3).

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CoreBrand (Corporate branding, 2004:1) defines corporate identity as a companys look which refers to a companys name, logo, and tagline; and corporate image, as the publics perception of a company. Corporate branding, by contrast, is a business process planned, strategically focused, and integrated throughout the organization. Figure: 26. Corporate Reputation

Source: Adopted from Dalton J. (2004) Reputation Management: A Holistic Business Tool. www.lspr.com , Read on 13/05/05

The 2004 annual reputation study conducted by Rating Research LLC (RCC) assessed 19 leading pharmaceutical companies. The study revealed that besides the damaging publicity surrounding the recall of Mercks Vioxx (rofecoxib) and the concern over other COX-2 inhibitors (anti-inflammatory drugs), pharmaceutical executives and industry analysts still view pharmaceutical companies as excellent and are willing to invest in them (Gasorek, 2005:1).

According to the survey, the four most important drivers for reputation strength were ethical behaviour, workforce, financial stability, and role and leadership of CEO.
Eli Lilli was the winner in the overall reputation ranking for 2004. The researchers believe Lillis strong revenue growth from new product sales, as well as companys commitment to R&D, the quality of its employees, and its financial transparency as key element of reputation strength.

Brands need better and socially broader measures of success (Clifton, 2004:2). Corporate Social Responsibility (CSR) is integral to a companys reputation and brand.

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2.4.4 Corporate Social Responsibility (CSR)

The landscape in which companies operate has changed rapidly over the past few years. As public scrutiny has increased, so as the standards by which brands - both product and corporate, are judged. Brands are no longer simply assessed on the basis of performance, whether financial, functional or emotional, without reference to their wider impact (Bolen, 2004:50).

Corporate social responsibility (CSR) is a concept which is influencing the development of brands, especially corporate brands. More then ever companies are concerned about their corporate brand and how it is perceived in the marketplace. The globalization of American business has contributed significantly to concerns about the reputation of companies. Because of the 24-hour news coverage, organisations have nowhere to hide. Any issue, regardless of how local it may be, can travel the world in a matter of minutes and negatively impact a corporate reputation and its brand. According to Olins (2001:2), brands of the future will have to signal something wholesome about the company behind the brand; the next big thing is social responsibility. CSR is rapidly becoming a must have feature of the business and the organizations have recognized how these strategies can add or detract from their value (Blumenthal and Bergstrom, 2003:332).

Corporate Social Responsibility suggests that an organization should not only consider their customers and their profitability; it also refers to the obligations of the firms toward society (Ind, 1997, Smith, 2003). Dunfee et al. (1999) discuss the concept of a social contract between business and society. According to Clifton (2004:2), CSR should be about genuinely solving problems and not only reputation management.

As stakeholder groups are closely interlinked they have enormous potential to influence each other. Customers and general public are more likely to support companies they respect and trust (Olins, 2001:2).

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2.4.5

Philanthropic Programs

According to Blumenthal and Bergstrom (2003:337), because corporations already invest in both branding and philanthropy, there is a rationale for integrating branding and CSR under the umbrella of the brand. They suggest, branded CSR can turn philanthropy from implicit delivery of the promise to an explicit one.

Last year, Pfizers CEO Hank McKinnell accepted an Award of Excellence from the Committee to Encourage Corporate Philanthropy (CECP) (pfizer.com, Press release, 28/2/05). Pfizer has a significant U.S. and International philanthropy effort, including programs funded directly by Pfizer and by the Pfizer Foundation. These programs improve access to quality healthcare for underserved populations and encourage science education in Pfizer's local communities. Many Pfizer country operations also support philanthropic efforts in their communities (pfizer.com, Philanthropy Programs, Read on 01/03/05)

The Diflucan Partnership Program is a public/private partnership that donates Diflucan (fluconazole) for two opportunistic infections associated with HIV/AIDS in developing countries, and trains healthcare providers. As of January 2005, Pfizer has donated more than $100 million in medicine and treated more than 110,000 patients (www.pfizer.com, Read on 01/03/05).

Developed as a public/private partnership, the International Trachoma Initiative (ITI) is dedicated to eliminating trachoma, the worlds leading cause of preventable blindness. The ITI has treated 16 million patients in 11 African and Asian countries with Pfizers antibiotic, Zithromax (azithromycin), and trained thousands of healthcare professionals. The program is also educating millions of patients and promoting local environmental projects to increase access to clean water and sanitation (www.pfizer.com, Read on 01/03/05).

The question remains whether the medical fraternity and particularly, the GPs and public in South Africa are aware about the tremendous good that Pfizer does for the community.

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2.5 CONCLUSION
The literature review has been conducted in relation to the topic: a) theory on the topic of

brands, branding and brand awareness; b) information on pharmaceutical industry and pharmaceutical brands; c) the role of branding in pharmaceutical industry; d) theory on corporate branding and corporate branding in pharmaceutical industry, corporate social responsibility and philanthropic programs. Literature review provides basis for the research design.

Figure: 2.7. The Corporate Bran

Heritage Therapeutic areas People Values/Priorities Culture Systems Programs Strategy Citizenship Performance

Differentiation Credibility trust & expertise. Support for internal brand building A means to supplement product brands More effective management of the brand portfolio Support for Communication

Maintaining relevance to doctors and patients Avoiding negative doctor/patient reactions to linkages Creating value positions Managing the brand across contexts

Source: Adopted from Aaker and Detert (2004), The acquired corporate brand, Pharma Times, December 2004, www.pharmatimes.com, Read on 14/3/05

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