Drug giants get high on brands

Prozac and Viagra are among a growing number of drugs vying for a place alongside brand legends such as Coca-Cola and Nike.

Executives in the $US300-billion-a-year ($692 billion) drugs industry, seeking to turbocharge their product sales, believe medical brands are the future.

"Pharmaceutical companies have come relatively late to brands," according to Stephen de Looze of Medical Action Communications, a specialist consultancy in London.

"But in today's market there is a commercial imperative to have big brands which command a lot of attention ... because the bigger the brand, the faster the time to peak sales."

The consultancy's clients include United States drugs giant Pfizer, the firm responsible for the anti-impotence pill Viagra, as well as Britain's GlaxoSmithKline and the French group Aventis.

Speed in building sales of a new medicine has never been as important.

The spiralling cost of developing new drugs - about $US500 million on average, including the cost of failures - coupled with the threat of rapid generic competition as soon as patents expire, mean firms must go hell-for-leather to maximise sales.

At the same time, the internet, lighter advertising regulation in the US and the public's demand for healthcare information are breaking down the traditional relationships between drug makers and doctors.

You may still need a prescription to obtain a drug but the 21st century patient - armed with information from the internet and bombarded by direct-to-consumer adverts in the US - has a greater say on what medicine he or she takes than ever before.

Brands are one way to differentiate products which, in practice, may vary little from a number of others.

"Building clinical brands is now the core competency of a drug company," said Andrew Baum, pharmaceuticals industry analyst at Morgan Stanley Dean Witter in London.

"Research and development was the driver of value creation in the past. But today pharmaceutical companies are seeking increasingly to out-license early stage R&D to the biotechnology sector."

It is a radical - and somewhat uncomfortable - proposition for the global drugs industry, used to hammering home the message that its raison d'etre is drug discovery.

The "downstream" shift is clear. The global drugs industry already spends more on marketing than on research and development and analysts expect the trend to continue as mergers unleash new pharmaceutical behemoths with very deep pockets.

- REUTERS