Building a Strong Brand Equity in Pharmaceutical Industry: the Case of Over-the-Counter Drugs in Italian Country

Building a Strong Brand Equity in Pharmaceutical Industry: the Case of Over-the-Counter Drugs in Italian Country

Vincenzo Basile (University of Naples Federico II - Department of Economics, Naples, Italy)
DOI: 10.4018/IJCRMM.2019070101

Abstract

The pharmaceutical industry has begun to exploit the potential of brand management very late compared to other industry. From 2013 to 2017, pharmaceutical companies have worked on the brand rather than on patents, following the example of companies operating in the consumer goods industry. This drives companies to adopt branding strategies that tend to explore the potential of the brand, which until then had remained unexpressed in the pharmaceutical sector. The analysis is focused on over-the-counter (OTC) drugs, a category of pharmaceutical products in which companies have managed to better express the brand's potential, also because they are not subject to prescription or strict regulations. The objective of this article is to analyze: a) at first, the levers of creating brand equity for OTC drugs and b) to evaluate subsequently, the impact of the non-conventional communication of this type of drugs on the consumer in the Italian market. The research methodology used was qualitative and quantitative, based on a dual approach. In the first phase through a comparative case studies of companies operating in the pharmaceutical industry. In the second phase with a field research through a consumer questionnaire and analyzing the data with a statistical-descriptive method. The research results show that the traditional drug selection criteria still prevail, such as the experience and the advice of the doctor and pharmacist, but a non-negligible percentage of consumers considers the brand and the way in which it is communicated also important. in the pharmaceutical sector for their choices. Therefore, managers should exploit this important brand awareness on the part of consumers, implementing appropriate strategies of line or brand extention. Lastly, managers should develop unconventional marketing tools for OTC products, which build consumer experiences that go beyond the mere therapeutic functionality of the product.
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1. Introduction

The pharmaceutical industry has begun to value the brand's potential lagging behind all other industrial sectors. During the decade between 1980 and 1990, the pharmaceutical industry enjoyed a double-digit success globally based on three essential elements: 1. large investments in R&D, favored by new product and process technologies; 2. the use of patents and licenses granted by the public sector, to protect against imitation by competitors; 3. exponential growth in sales, due to the nature of the good offered connected to the well-being of the community. Consequently, the marketing and communication strategies of pharmaceutical companies had been based, about over-the-counter drugs, on a minimum use of conventional advertising channels and, about ethical drugs, on the use of scientific informants. However, in the face of an increasingly complex competitive environment, these marketing techniques appeared increasingly inadequate to build a competitive advantage over time, by pharmaceutical companies. In recent years, the pharmaceutical industry, due to competitive dynamics, has gradually assimilated to the consumer goods industry, although the need to be satisfied, that of health, distinguishes the latter considerably, compared to other markets. The transformation that the pharmaceutical industry has undergone in recent years, has been reflected in the strategic decisions of companies and in the methods chosen by them to compete and collaborate. The pharmaceutical market is an area protected and bound by numerous regulations that are intended to safeguard the health of people. Communication and advertising are supervised by the State, which sets numerous limits so that the messages conveyed by companies respect the general principles of protection and promotion of well-being. Therefore, for a long time, the pharmaceutical sector has not been able to exploit the potential of the brand, as the relationship between the consumer and the producer is mostly mediated by rather stringent regulatory systems, set by national and international governments. In June 2000, Interbrand published the list of the 75 most important brands in the world, but the name of no pharmaceutical company did not appear among them. The data is worrying, as the most recent economic studies had shown that the brand was, among the intangible resources of the company assets, one of the main sources of value and a lasting and defensible competitive advantage for companies. For pharmaceutical companies, the patent is a fundamental tool, as it protects innovations and numerous investments in R&D to achieve high profits, but these rights conferred by a patent can have a maximum duration of twenty years. Instead, the value generated by a strong brand has an indefinite duration. All this is the basis of the enormous potential of the brand for building the competitive advantage of companies operating in any industrial industry. In addition, pharmaceutical companies have become aware of the importance of brand management as a strategic asset in their business model to create economic value. In fact, since the 2000s, some large pharmaceutical multinationals have suffered a decline in sales and an erosion of demand, due to the expiry of patents, with which until then they had presided over the competitive advantage deriving from their medicinal specialties, and the subsequent diffusion of equivalent or generic medicines, and marketed by competitors at lower prices. The trend has been that, pharmaceutical companies have worked on the brand rather than on patents, following the example of companies operating in the consumer goods industry. The difficulties related to the implementation of the branding strategies have also been significant due to the excessive regulation of the pharmaceutical industry, (according to the directives issued by the Ministry of Health). In this scenario, over the counter drugs are pharmaceutical products in which companies have managed to better express the potential of the brand as they are not subject to medical prescription and stringent regulation such as ethical drugs (Statman and Tyebjee, 1981). The present article explores the marketing dynamics in a context that has always been considered atypical and furthermore, points out the progressive approach of pharmaceutical industry to that of consumer goods both in the brand management strategies and in the communication aspects.

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