Mission brand building

The branding game is 'in' and Indian pharma industry is playing along. Suja Nair tries to analyse how pharma companies are following this trend of building brands of their own as never before

'Branding' is what it takes in today's competitive world for any products to sell and pharma companies do not wish to lag behind. As big deals become more expensive almost all companies are strategising innovative opportunities to fill gap in their product. According to Aditi Kare Panandikar, Director, Business Development and HRD of Indoco Remedies, "Brand building for a pharma company is as important as in any other industry, as it is the brands which help to build volume and sales of a company. It helps in differentiating from competition and creating positive mental association as well as emotional relationship with the customer and also helps to develop business through long term customer loyalty. Indian pharma sector has always been focused on building brands. We have classical examples of Liv-52, Revital, Omez, and Taxim, etc and more recent Zifi, Nise etc."

The post-2005 patent regime seems to have encouraged pharma companies to concentrate more on brand building initiatives for their existing product rather than launching copycat versions. As Panandikar points out, "As per ORG-IMS, the number of new introductions have reduced leading to more effective brand building for existing products. Brand acquisition from targeted companies helps in growth and portfolio expansion, but currently, there are no good brands available for purchase".

Thus well-known brands attract attention and in time become the 'object of desire' of peer companies. An example of this strategy was Maneesh Pharmaceuticals' acquisition of Kopran's brand Smyle for Rs 52.88 crore this month. In June, 2006, Kopran had entered into a tie-up with Maneesh for co-marketing and distribution of the brand. Smyle, with a pan-India presence at major chemist and retail outlets, enjoys high recall and equity in the market place and with consumers.

Smaller but smarter

In fact Indian pharma's acquisitions in 2007 have been fewer and smaller in value than the mega acquisition of 2006. While domestic pharma companies executed more than 40 deals with 32 cross-border transactions worth about $2,000 million in 2006, including big ticket deals like Dr Reddy's acquisition of Betapharm, Germany for $480 million (Rs 2,550 crore) and Ranbaxy's Terapia buy in Romania for $ 324 million (over Rs 1,250 crore). 2007 witnessed only 25 mergers and acquisitions (M&As) with 15 cross border transactions totaling to an estimated value of about $600-700 million.

Some analysts also point out that the big-ticket buys of 2006 are still being integrated into the company, for example the Betapharm acquisition has dragged down Dr Reddy's profitability. One big buy scheduled for 2007, Sun Pharmaceutical's buyout of Taro, has hit a speedbreaker due to shareholders concerns.

Industry experts cite relatively small deals like Lupin's acquisition of Rubamin Laboratories, Baroda to enter into the contract research and manufacturing services (CRAMS) business and Zydus Cadila's buyout of Liva Healthcare of Mumbai to strengthen its dermatology product portfolio as glaring examples of an emerging trend of smaller value but strategic buyouts, targeted brand building.

But a brand is not built overnight. It takes years of strategic planning to fashion a brand out of a product. "Through the process of brand building over the years, we have created brands like Febrex Plus, Cyclopam, Vepan, Sensodent-K, ATM, Cloben-G, Cital etc. Recently, we have taken brand building initiatives for Oxipod (Cefpodoxime proxetil), MCBM 69 (A combination of Methylcobalamin, Pyridoxine and Folic acid), Methycal (A unique combination of Calcium and Homocysteine lowering vitamins)." opines Panandikar citing the strategies used by Indoco for building a niche for their two products (see table below)

In-licensing for brands

The 'brand savvy' Indian pharma companies are also targeting foreign brands. The latest such deal is Elder Pharmaceuticals’ signing an in-licensing deal with GNOSIS S p A, Italy, for marketing the finished product supplied by GNOSIS under the trademark Sampure. Even in the cosmeceuticals segment, we have USV launching Sebamed, a German skin product in select Indian market. No doubt this exercises are calculated to help the India players to burnish their own companies brand image.

To conclude the success of these branding and marketing strategies will play an important role in fulfilling growth projections. In this scenario, the new brand savvy attitude seems to be a natural evolution of the Indian pharma industry.

suja.nair@expressindia.com