The Indian pharmaceutical industry is currently passing through a tough phase. In these challenging times, companies are resorting to multiple measures to keep their financial books strong. Among other things, they are selling off non-core businesses, opting for general restructuring exercises, rationalizing their workforce and research and development budgets, and improving their product mix.
The main challenge is market growth. An industry that is used to growing at 14-16% annually is showing only single-digit growth. In such a situation, one of the wiser things for the industry to do is focus on revitalizing mature brands, rather than launching new ones. Typically, mature brands are several decades old, still selling but not growing much—which drags industry growth and profitability down. With a revival strategy, a mature brand could turn into a high-selling product once again, generating handsome returns with negligible marketing expenses. In contrast, ensuring the success of a newly launched product or brand is a tougher task. It requires huge marketing expenditure for several years, and even then the outcome is uncertain.
The revitalization of old brands involves their remodelling by changing the product composition, undertaking new clinical trials, adopting revised marketing strategies and reworking brand communication (with doctors as the primary audience).
Mature brands have a starting advantage in the brand heritage associated with them, which means they already have a strong image in the minds of consumers. Some of them are considered not just effective, but also the gold standard in a particular therapeutic area, with their tried-and-trusted safety profile acting as a bonus. Examples of mature pharmaceutical brands include Crocin, Betadine, Betenovate, Hepatoglobin, Dexorange, Benadryl and Novamox.
The domestic market today has 300 major listed brands. Of these, 30% are mature brands, generating revenues of over₹20,000 crore every year. If properly revived, a mature brand can go from stagnancy to growth as high as 10-12% per year.
The typical life-cycle of a successful brand goes from launch to success, then possibly from success to blockbuster status, before it reaches maturity and begins to fade. Unfortunately, brands tend to suffer in-house neglect once they mature. Some are superseded therapeutically by rival products, and are left with either flat or declining sales. Additionally, doctors are likely to be unresponsive to the brand’s message, since they would have “heard it all before”. Mounting pressure for profits leads some organizations to shift management focus to competitors at the expense of consumers. Companies should realize that they have the option of shoring up consumer loyalty or identifying new uses for their brands, and in turn generating new consumers.
Other than the availability of more effective new formulations, the reasons that mature brands stagnate include the changing tastes of consumers, poor overall category sales, a loss of differentiation in a crowd of other brands, and declining appeal among younger consumers and doctors.
By applying well-conceived strategies, a brand can renew its relevance to consumers, provide long-term value and extend its lifecycle. Of course, not all brands can be revitalized. Every company must ask itself which brands it should work on and invest in, and which it should allow to die or divest.
For rejuvenation, various models can be adopted. Internationally, many brands have been revitalized. In non-pharmaceutical markets, the stories of Colgate, Coca-Cola, Mercedes-Benz and Nescafe stand out, to name a few. These brands are no longer what they once were and have transformed themselves to expand their appeal over the decades. In pharmaceuticals, we have brands like Liv-52, Benadryl, Phenysydyl, Aten, Beplex Forte, among others; all these are old but still alive and thriving, thanks to successful revitalization strategies. Pfizer recently launched a long product-detailing campaign for Becosules to rekindle the passion this brand has long evoked among doctors and chemists.
Revitalization strategies for mature brands depend on the task at hand. Product innovation is one way out. This could involve reformulation, a shift in product composition to deliver added benefits, or a new drug delivery mechanism. New markets could also be identified. Many brands have gained from a rural push. The generation of new data from recent clinical trials, accompanied by scientific papers, meta-analysis and repurposing molecule could also grant a brand a fresh lease of life. Improving communication with doctors can also make a big difference to sales. In some cases, it helps to identify a younger and trendier audience for the brand’s message. Realigning the product proposition to suit today’s digital era could be part of the marketing thrust. A company may also try playing up a legendary brand story by using its heritage to its advantage. Some medicine manufacturers prefer to outsource the sales and marketing of a brand to an external agency, which may have fresh ideas on how it can be repositioned to regain its relevance.
Mature brands are part of a company’s heritage. Revitalizing them can raise its capacity to invest in development by offering cash flow support, while also strengthening the bottom line. Some brands do get outmoded and fade away, but good brands have the capacity to last and last.
R.B. Smarta is chairman and managing director, Interlink – Livemint