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Domestic & External Trade Future Prospects Research & Development

Research & Development is the key to the future of pharmaceutical industry. The pharmaceutical advances for
considerable improvement in life expectancy and health all over the world are the result of a steadily increasing
investment in research. There is considerable scope for collaborative R & D in India. India can offer several
strengths to the international R & D community. These strengths relate to availability of excellent scientific talents
who can develop combinatorial chemistry, new synthetic molecules and plant derived candidate drugs.

R & D in the pharmaceutical industry in India is critical to find answers for some of the diseases peculiar to a
tropical country like India and also for finding solutions for unmet medical needs. Industrial R & D groups can
carry out limited primary screening to identify lead molecules or even candidate drugs for further in vivo
screening, pre-clinical pharmacology, toxicology, animal and human pharmacokinetics and metabolic studies
before taking them up for human trials. In such collaborations, harmonized standards of screening can be
assured following established good laboratory practices.

The R & D expenditure by the Indian pharmaceutical industry is around 1.9% of the industry¶s turnover. This
obviously, is very low when compared to the investment on R & D by foreign research-based pharma companies.
They spend 10 - 16% of the turnover on R & D. However, now that India is entering into the Patent protection
area, many companies are spending relatively more on R & D.
When it comes to clinical evaluation at the time of multi-center trials, India would provide a strong base
considering the real availability of clinical materials in diverse therapeutic areas. Such active collaboration will be
mutually beneficial to both partners. According to a survey by the Pharmaceutical Outsourcing Management
Association and Bio/Pharmaceutical Outsourcing Report, pharmaceutical companies are utilizing substantially the
services of Contract Research Organizations (CROs).

Indian Pharmaceutical Industry, with its rich scientific talents, provides cost-effective clinical trial research. It has
an excellent record of development of improved, cost-beneficial chemical syntheses for various drug molecules.
Some MNCs are already sourcing these services from their Indian affiliates.

The Pharmaceutical and Biotechnology Industry is eligible for weight deduction for R&D expense upto 150%.
These R&D companies will also enjoy tax holiday for 10 years. A promotional research and development fund of
Rs.150 crores is set up by the Government to promote research and development in the pharmaceuticals sector.

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„motional Branding in the Pharmaceutical Industry

By Preeti Suchanti
As opposed to the FMCG industry, the pharmaceutical industry has not been as efficient in leveraging
the power of their brands. This is primarily because drugs have always competed against each other
based on functional attributes (clinical and product related features). However with patent expiry, this
has become a difficult situation as generics create competition in the market.
Additionally, the switch of drugs from prescription to over-the-counter is making it similar to consumer
goods. The author of this study attempted to find out if pharmaceutical drug manufacturers could utilize
similar methods used in the FMCG industry to connect with consumers at an emotional level, in order to
build in brand loyalty and prevent the switch into branded and generic manufacturers of the same drug.
The objectives were to investigate the functional and emotional benefits and values that are important
to consumers who purchase hay fever medication.

As drugs switch from prescription-only medicines to being sold over the counter (OTC), consumer
power in the healthcare industry is increasing exponentially. Many pharmaceutical companies are
slowly realizing that drugs are increasingly becoming like FMCG goods. Higher healthcare costs and
the rise in consumer healthcare knowledge have forced the government to promote consumer self-
medication in UK.

Several challenges face pharmaceutical brands today. R&D expenses have risen significantly and the
success rate of products is not high. Hence it is difficult to constantly rely on new product development
to achieve competitive advantage. Also, as patents expire, me too products (generics) are available in
the market. Lower priced generic product sales have an advantage, as they are supported by public
authorities who are trying to control health spending all over the world. This leads to erosion of sales for
branded products, which are generally more expensive. Also with pharmaceutical products switching
increasingly from ³prescription-only ´ status to ³over-the-counter´ (OTC) status, these OTC drugs are
adorning an image comparable to FMCGs (fast moving consumer goods).

For OTC drugs where end consumers are an important part of the purchase decision, the role of brands
is significant. Also with patent expiry and the surge of generics into the marketplace, the power of
branded drugs has become significant to ensure consumer loyalty (Mintel Report, 2002). With the
changing face of the Industry, branded drug manufacturers are slowly realizing that they may have to
emulate some of the marketing techniques used by their FMCG counterparts in order to sustain brand
loyalty.

Pharma Branding ± Tilted towards product attributes?

Pharmaceutical branding currently remains at a nascent stage in its approach to techniques adopted by
its FMCG counterpart. In the FMCG industry, the role of brands as a source of competitive advantage
has been well developed as organizations integrate brand thinking early in the product development
process and all departments work in sync towards developing the brand (Moss & Schuiling, 2003).
Coca Cola, Pepsi, Budweiser, Nescafe, which are leading FMCG brands, have created a distinct
identity for themselves through a consistent branding exercise. The power of branding in some
instances has been so rewarding that the Nescafe brand for example, is often used as a generic term
when associated with coffee.

The pharmaceutical drug companies have chosen to focus on developing µproducts¶ rather than the
brand. The traditional sources of value creation have been through extensive research and
development (R&D). Brand managers in pharmaceutical companies usually take the help of expensive
clinical data to demonstrate how their products differ from their competitors. This difference is often
used as the basis for differentiation as it is easy to sell a ³tangible´ functional difference. Example, the
lipid-lowering product Zocor (Simvastatin) is seen as the ³first HMG-CoA reductase inhibitor´, and
licensed to reduce LDL cholesterol and increase HDL cholesterol. The concept of the brand is not well
developed.

However, even though it is acknowledged that medicine has always been a function driven category, it
is equally true that health is an emotive and personal subject. As Matt Giegerich, President of Quantum
Group highlights, ³unless you understand how the patient feels about a category, and then show how
your product can respond to that feeling, the execution is jargon."

The Brand Value Pyramid ± Functional vs. „motional Benefits

Once the functional benefits are met, the customer¶s mind moves to other needs, which are intangible,
emotional and often irrational. This has been highlighted in the brand value pyramid (Davis, 2000). It is
only at the pinnacle of the Brand Value Pyramid that a brand achieves highest level of loyalty. Hence, it
is important for pharmaceutical companies to relate to these needs by interacting with consumers at a
more emotional level and ultimately becoming a trustworthy partner and sustain brand loyalty in the
long run.

Source: Adapted from Davis, 200 0 or Aaker, 1996

From the perspective of the pharmaceutical industry, the following functional benefits are important: 1.
Efficacy ± does the product work in its chosen therapeutic area; 2. Safety ± is the product safe and
without any adverse side-effects; 3. Convenience ± does the product have a complicated dosage
requirement or an unpleasant taste/way of being taken; 4. Cost-effectiveness ± will the cost be a
barrier?

According to Kapfefer (2001), ³a product gives a certain efficacy while a brand gives more trust.´
Brands add value to the product, which helps it differentiate itself from competition. Pharmaceutical
brands often get trapped in the lowest level of the Brand Value Pyramid. The emotional and expressive
benefits are rarely promoted. There are some exceptions however, in the case of lifestyle products like
contraceptive pills. Also, another example is Zestril (lisonopril), previously called Zeneca, a drug used in
the treatment of hypertension. The management at Zeneca used a promotional campaign, which
highlighted that patients would regain a ³zest of life´ with the use of Zestril. The emotional values
touched in their campaign were related to ³become[ing] a new person.´ On a similar note, consumers
no longer buy a headache tablet or even a paracetamol; they buy a ³soluble solution favored by working
mums, the pain relief that works fast´ (Widdowson, 2002). Brands, which have ventured towards
developing the brand, have seen promising results. Hence not managing this interaction between the
product and brand is inherently risky.

Pharmaceutical brands engender trust, which is one of the most powerful emotions. As opposed to the
effectiveness of cola drinks, relief from pain or illness is a far higher state of need than the alleviation of
thirst. Hence trust in pharmaceutical brands is a vital component and once gained can be leveraged
successfully through the brand. This trust built up with the brand also provides emotional justification.

As Sharon DeBacco, Brand Director at Astra Zeneca, and Susan Cavett, VP of Xchange Group, say,
³Loyalty cannot live on efficacy alone.´ Hence functional benefits are not the only way to encourage
loyalty. Companies must create the need for the consumer to be loyal by addressing their emotional
needs. Also, it is important to decide how to communicate these benefits in a coherent way to the target
customers (Moss & Schuiling, 2004). This can be leveraged through advertising, design, packaging,
pharmacist recommendation, family recommendation, website, doctor prescription, etc.

If companies fail to differentiate themselves at a level beyond functional benefits (product based), they
will be unable to sustain brand loyalty. Consumers will opt for the lower priced generic drugs, which
contain the same active ingredients unless they feel that a brand offers them some enhanced value.
Drug manufacturers have to realize that pharmaceutical brands have the potential to connect with
consumers at an emotional level and this aspect has to be conveyed in the advertising.

£ase Study ± Benadryl

The paper explored brand loyalty for a seasonal pharmaceutical brand ± Benadryl, a hay fever
medicine brand manufactured by The Pfizer Consumer Healthcare (PCH) division in UK. Benadryl is
available OTC.
The onset of spring and summer spells misery to a large section of the UK population as it marks the
onset of the hay fever (seasonal allergic rhinitis) season. A survey was done, through which it was
observed that at the start of the hay fever season, brands were at an equal footing in terms of
preference. During the season, customers were usually loyal to a particular brand. However, at the
beginning of the next hay fever season a significant number of customers switch brands, reflecting no
brand loyalty between seasons. This was primarily because consumers did not perceive any difference
between the branded and generic drugs and felt that generics were equally effective.

An interviewing technique developed by Reynolds and Gutman called Laddering was used to
understand how consumers translate the attributes of products into meaningful associations with
respect to the self. Laddering involves a series of direct probes, typified by the question ³Why is that
important to you?´ with the final goal of determining sets of linkages between the range of attributes (A),
consequences (C) and values (V). Attributes are the functional benefits of a product (Davis, 2000). In
the case of Benadryl, possible examples of attributes would be non-drowsy, fast-relief, etc.
Consequences are the benefits that flow from these attributes. They give more meaning to them as to
how they affect the individual. In Davis¶s (2000) terms it would be known as ³emotional benefits.´ Lastly,
values are the motivations underlying consequences and attributes of a product. These are at the
pinnacle of the brand value pyramid.

A series of 20 in-depth were interviews done to determine the underlying values, which influence
people to purchase hay fever medication. The interviews reveals that emotions are subconsciously held
in the consumer¶s mind and the laddering technique helped uncover the emotional reasons by
consumers purchase hay fever medication. The findings from the interviews suggested that consumers
have deep emotional attachment to hay fever medication, rather than merely relying on its functional
attributes. For example, when probed into why ÷ ÷
  (functional attribute) was an important factor
for a consumer to buy a particular medication, most sufferers admitted that they did not want any
interference in their work and wanted to be seen as a  ÷
 ÷ (self expressive value).
Others said that non-drowsy prevented them from feeling tired and hence that would enable them to
enjoy life. A ÷ ÷ was an important value in their lives. Some other reasons for non-
drowsy as a preference was that it enabled working people to drive to work and made them feel secure.
For the product attribute, ³fast-acting,´ an individual felt that he was not affected for long and did not feel
like a social misfit when he/she was outside. The ³feeling of belongingness´ was important for hay fever
sufferers.

Lastly, most hay fever sufferers were concerned with the ³long lasting effect of the medication.´ They
said that it¶s good that a medication works fast and cures the symptoms but long lasting was important,
as they did not want to take the medication several times a day. They desired a ÷   ÷.

The Hierarchical Value maps highlight the range of personal values that are important to consumers
who purchase hay fever medication. The important values include:

{ Freedom
 { Belongingness among peers
{ Responsible person
{ Value for money
{ Sense of adventure
{ Feeling of protection

After evaluating the findings, a brand value pyramid summarizes the emotional and self-expressive
values in addition to the functional attributes.

Source: Author¶s interpretation based on findings, adapted from Davis 2000

It is important to deliver these benefits consistently so that a consumer forms a long-term association
with the brand. Hence, if emotional benefits and values are identified with the brand and effectively
communicated through an advertising campaign it can help create a strong perception in the sufferer¶s
mind and build loyalty for a particular brand.

Benadryl¶s TV advertising for 2004/2005 focused on the fast acting element of hay fever medication.
The campaign called ³Rapid Response´ dramatizes the speed with which Benadryl begins to work. It
shows a woman on the way to meet her boyfriend, confirming that she will see him in 15 minutes.
However, as she is walking along, she is accosted by clouds of dust, pollen and other irritants, making
her sneeze and look uncomfortable. An elite Special Forces team is tracking her, monitoring her
distress. They arrive in a flurry of activity, including a man descending from a helicopter to offers her a
Benadryl allergy tablet, before disappearing as quickly as they arrived. The girl is then seen sitting with
her friend in a beer garden, unaware that Benadryl forces are still monitoring her. The advertising
focuses on the fast acting aspect of the medication and uses the theme of adventure when
communicating this message.

Building a strong brand that connects at an emotional level will be particularly important for Benadryl
and other brands of hay fever medication, as it will help enhance loyalty between seasons. Also in
certain cases, it may help pharmacist recommendation for generics by prompting the consumer to ask
for a product by brand name. Additionally, if hay fever medication brands rely on a functional USP
(unique selling proposition) the company can never truly own that feature due to ongoing R&D
(research & development) and competition from generics.

£onclusion

One may argue that it will take a while for pharmaceutical brands to leverage the same kind of returns
that FMCG¶s have from communicating emotional values in building loyalty, but it is an area, which
should definitely not be neglected.

The inference from the survey findings, and various theories and concepts it is evident that OTC drugs
need to be marketed aggressively like an FMCG brand. Long-term brand loyalty can be established
only with a sustained campaign. While product attributes and pricing do play a significant part in
influencing customers choose a particular brand, an ongoing advertising campaign touching the
consumers in an emotional manner, will enable top-of-the mind recall and help build long term brand
loyalty. Additionally all of the brand¶s communication, including press advertising, public relations (PR),
online, direct marketing should focus on the emotional values. This will help deliver a consistent
message.

By creating brands to differentiate between products, it is possible to see how brands have the potential
to create customer loyalty. In addition to delivering functional benefits, it is only when a product
stimulates an emotional dialogue with the consumer and confers value to its customers, will it sustain
loyalty in the long term (Joel, Desgrippes in Gobe, 2001).

_____________
Preeti Suchanti currently works as client manager at an advertising agency in India. She graduated
from the University of Bath, UK, with a Master¶s in Management, specializing in Marketing. She holds
an undergraduate degree in Economics and Psychology from University of Virginia, USA.
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