There is a commonly held belief that brands serve only one master: the brand owners. Branded products are seen to be more profitable and ensure that the brand owners get a better price, greater loyalty, more trade support in addition to providing the brand owner with legal protection and brand leverage opportunities.
In the book No Logo published in 1999 the author Naomi Klein pushed the argument that with greater and greater access to information (thanks to the internet), consumers will wake up to the fact that there is not much of a difference between say a Nike branded shoe and an unbranded shoe sold in a supermarket. But we did not see a rapid decline of brands in the noughties and later, though digital media and social media has made a lot of product and brand related information available to consumers.
The longevity of brands across sectors is driven by the fact that consumers find brands useful. Brands save consumers time, effort and even money (of trial and error). In addition, brands offer consumers a sense of trust and reliability. In some cases, brands endow their users with a sense of pride.
You may wonder where do prescription branded generic medicines come into this. Pharma brands have a many-sided presence. There is the manufacturer or the brand owner. Then there is the doctor who is prescribing the brand. The patient who gets the brand name on her prescription. The chemist who interprets the prescription and provides the patient or care giver with the right brand or drug.
A pharma brand plays an important role across this entire chain of players. Some of the players only know the brand name, some know a lot more including the key ingredients etc..
Do we really need so many branded generic medicines when their key ingredients are identical? Why can’t all these branded generic medicines be sold under their pharmaceutical ingredient name? Why should a doctor prescribe a brand when they can just prescribe the ingredient name? Why can’t the chemist be told to dispense only unbranded generic pharma products? Won’t that simplify matters for the patient, the chemist and the doctor?
Those may have been the thoughts that was driving the National Medical Commission on Registered Medical Practitioners in drafting their recommendations.
On paper the suggestions made to disallow branding of generic medicines look logical. And appears to be driven by the desire to simplify the entire process. But is it that simple?
Indian pharma market is possibly the most diverse and complex of all markets. There are reported to be over 3,000 manufacturers/marketers of pharma products. These products are made across India in over 10,000 factories. The number of stock keeping units (SKUs) in the market may well exceed 1 lakh. The boom and the competition in Indian pharma manufacturing sector has also driven prices down.The Indian pharma market is the third largest in the world in volume terms but only the 14th largest in value terms.
While India’s doctor-patient ratio may not be at world standards, we still have 1.3 million allopathic doctors (not counting the million or more ayurvedic doctors who also prescribe allopathic medicines) and 1.4 million chemists.
Unlike many developed countries where the entire healthcare is in the hands of the government or a few large private sector players, in India the family doctor or general practitioner, the specialists and private nursing homes and hospitals play a vital role.
If the market is so large and so diverse, shouldn’t we go for generic products? Why add to the confusion with branded generics?
Branding, as we saw earlier plays a critical role in the way consumers remember, buy and consume products. In the case of the Indian consumer who is semi-literate, brands play a vital role of simplifying their lives. This is all the more true in the case of branded generics. As compared to pharmaceutical names, branded generics have catchy, easy to read names. Remember that the name is written by the doctor, prescription is carried by the patient to the chemist and is filled at the chemist counter. Complex pharmaceutical names make this entire process fraught with pitfalls.
The other big issue in India is its geographical spread and the proliferation of chemists across the country. In the absence of a brand name, the chemist can and will dispense the generic drug he chooses. And given the fact that there are 10,000+ manufacturing units in the country, the drug he dispenses may come from a poorly run factory producing sub-standard medicines. It is likely that these companies may flood the market with variable quality generic drugs and incentivise chemists with huge margins. Causing a bigger crisis.
Lastly while multiple companies make the same drug and sell them under different brand names, there is an incentive for the brand owners to innovate, within the limits of what would be permitted.
The extra edge
In order to provide their branded generic offering an extra edge Indian pharmaceutical companies have offered innovations in the packaging of the brand, the shape of the tablets, colour coding them for better patient recall, new delivery systems and more.
If companies are not allowed to continue using their brand, the incentive to innovate and compete goes away.
Will removing brand names bring down prices? Unlikely since Indian prices of medicines is among the lowest in the world. Will removing brand names make doctors become less amenable to deals with pharmaceutical companies? Unlikely and the power equation will shift to the chemist, not a welcome outcome.
The fundamental argument for the continuation of branded generics is the same that is true of all brands. The popular misconception is that a brand serves only one master: the brand owner.
In reality a brand plays a vital role in the lives of consumers, making the process of identification, purchase and remembering simpler and smoother. That is true of any brand in any category. It is also true of pharmaceuticals and branded generics category.
The writer is is an advertising veteran, a best-selling author, an independent brand coach and founder Brand-Building.com a brand advisory