Posted by Deborah Dunham on February 16, 2010 12:55 PM
Pharmaceutical companies are becoming highly recognized today by adding their names to generic drugs.
While a branded generic medicine may seem counterintuitive, it’s actually a revolutionary new approach that is keeping the bottom line high for many drug companies.
In order to understand this strategy, it’s important to remember why generic brands are able to offer products at a low cost in the first place. It’s not because associating a name adds to the expense, it’s all of the other marketing and advertising that go along with it. Pharmaceutical companies can spend millions of dollars every year promoting their brands – which ends up getting passed along to consumers and their wallets. But simply putting a company name on a drug – without all of the hype – can go a long way towards increasing consumer confidence and company revenue.
Because consumers in emerging markets outside of the US often pay out-of-pocket for medicine and cannot afford the expensive brands, pharmaceutical leaders like Sanofi-Aventis and GlaxoSmithKline are by-passing the American market and heading straight to Europe, Asia, and Latin America where they can offer lower-priced, lower-profiled drugs to consumers who aren’t biased against generic branding (advertising influenced Americans often associate generic brands with lower quality, even though we all know they are every bit as effective and FDA-approved with the same active ingredients).
As part of its branding strategy, some drug companies are using their main brand to associate with generics, while others like Glaxo have purchased local overseas generic companies to sell their products under a different name. Either way, the drugs are subject to the same quality and control checks that the non-generic ones are, and simply having a reputable company put their stamp of approval on the label offers consumers the best of both worlds – quality, trusted drugs at affordable prices.
“We are able to create different tiers of products at prices they haven’t previously seen with our stamp of approval,” Andrew P. Witty, the chief executive of GlaxoSmithKline told the NY Times.
If branded generics catch on in the US, we could end up seeing a dramatic shift in the $89 billion brand-name drug market as companies come to realize a smarter way of generating more market share for less. “It definitely represents a change in thinking,” said David Simmons, the president of Pfizer’s established products business unit, whose company has already added over 200 generic products to its portfolio.