Legacy pharma brands spin gold for GSK, Pfizer; keep newcomers off the turf

Repositioning an old brand helps expand the footprint, say analysts

In any industry, the rule of thumb with legacy brands is that they need a makeover every decade or so. Adapt or lose is the reigning mantra. The Indian pharma business, however, is an exception. Here brands such as Calpol, Betnovate and Betadine (all well over 50 years old) are still raking it in, within their categories and for their companies, besides keeping newcomers off the turf.  

Analysts say that sticking to the old brands is a strategy perfected by global pharma majors. Building a brand needs patience and perseverance and companies have to be prepared for a very long gestation period between its launch and easy recall. It is also expensive, draining off potentially valuable resources from research budgets. Hence even as thousands of new drugs are launched every year, the decades-old brands are the warhorses that global drug makers rely on.

Ranjit Kapadia, an independent pharma analyst and consultant says that doctors continue to prescribe them as there are no reported cases of contra- indications. “Moreover, to ensure uptake of their old products, MNCs often give freebies or quantitative discounts to retailers. That also ensures good traction in trade for mature molecules,” he adds.

The Indian pharma market has notched up an average 9-10 per cent annual growth rate over the last few years. Analysts say that about 30 per cent of this market is constituted by mature brands, clocking high double digit growth rates. GSK’s Calpol for example is growing at 21 per cent annually according to latest data. Ditto for many more (see box)

The power of big money

From GlaxoSmithKline Pharmaceuticals (GSK) to Pfizer, large pharma multinationals are keeping the oldest brands on the list, banking on the vast amounts already spent on building them up into category beaters. Their dominance also prevents newer brands from rising up the ranks.

A senior analyst says that the situation was different 20 years ago when small companies (like Win Medicare with Betadine, a topical disinfectant) had a free run in their categories. His point is that whenever there is a large MNC in play, small companies lose out because they are unable to match their brand power. Vitamins and nutrients is one such category and Becosules (Pfizer) is a case in point. 

“It is difficult to beat the recall of a Becosules that is almost a generic name,” says an Ahmedabad headquartered drug maker. The MNCs know the power of mature brands and have spent the past few years building what they have, instead of expanding the list. Of the total 2,466 brands launched in the last year, MNCs have launched only 109 brands. 

Strategic leverage

GSK sold eight to 10 tail-end brands in 2018-19, including its Vitamin C brand Celin and anti-infective brand Septran. It wants to pare the list in India to about 20 over the next year.  

Analysts point out the big spending on big brands perpetuates the cycle of mature brands leading the pack. It is because the companies spent more on a brand all those years back that it has paid off now, but instead of building a new set of labels for the future, these companies are leaning more heavily on the old winners. 

“It is often considered a prudent business decision to push the established brands as R&D costs are optimised and one cannot afford to allocate funds for creating over the counter brands,” says a sector analyst based in Mumbai. This could open up a weak spot for the MNC firms in the future. 

Some pharma companies have created sub-labels or extensions of popular brands. GSK Consumer has launched a new variant for headaches, over and above Crocin for cold, pain and fever that are already part of its OTC play in the country. Repositioning an old brand helps expand the footprint. “This is something Pfizer did with Corex. After the medicine faced uncertainty over the ban on certain fixed dose combinations, it pulled out the Corex cough syrup in its then existing formulation and retained the brand for a new formulation,” said another analyst. The strategy worked. Corex Dx has clocked a 20.5 per cent growth over the past year.