All companies in any business sector rely on product differentiation and branding is the way companies differentiate their products from each other. A brand communicates the message of the company, it is the differentiator that sets a company and its products apart from the rest of the competition and helps companies compete in an overcrowded marketplace. All commerce relies heavily on branding.

It is the same for us individuals. Our names are our individual brands. But the government’s recent directive to the pharma industry for selling medicines with generic names rather than as branded products has thrown a “cat among pigeons”.

This directive by the government is like asking people to drop their names and use their profession as their identifier. Obviously, it would not work as the consumers would not be able to identify the product with the manufacturer or the service with the service provider.

If we take a look at the Indian Pharma sector we can see that the Indian Pharma industry has grown by reverse engineering pharma formulations and branding generic medicines.

The government’s endeavor to reduce the cost of medicines and medical therapy for the masses is highly laudable. The question is whether the method is right for India? The merit or demerit of the government’s directive is being widely discussed by industry experts. Most of the discussion revolves around the implications for pharma market dynamics and competition, and whether it can be effectively implemented to the benefit of consumers.

Yes, the directive may reduce the cost of medical therapy, but only for a short period of time. It will reduce the pharma industry to a “subzi mandi” where the lowest price will be the only USP. As a result, there would be no R&D, no new development as companies will not have the ability to invest in new products. In the long term the industry will stagnate as there will be no incentive to develop and research new concepts and quality of care will fall and medical costs may rise due to a less healthy population.

India, being a land of enterprising people, will see cottage industries springing up, producing potentially sub-standard pharma products in uncontrolled environments; where just a generic label will do and there is little need to build a brand or reputation to make some sales. We believe this trend may also encourage more counterfeits as producing fakes of generic packaging, especially that of less established companies will become easier. The authorities are already over-stretched trying to regulate the organized sector and the burden to investigate and follow up on these cottage units will be very difficult.

A major risk for the consumer will be safety due to greater distribution of substandard or even fake products. The consumer may struggle to differentiate between what appear to be “vanilla” products but which actually may have real differences in quality and efficacy. The sole purpose of the directive is to benefit the common man, but it may possibly end up putting them in harm’s way.

The directive will result in established, organized player’s sales being at greater risk from marginal generic producers, pass-offs and counterfeiters who put downward pressure on pricing. The organized player should thus take-action to improve their packaging design and use non-copy-able, easily identifiable device(s) to enable consumers and pharmacies to identify genuine products and differentiate from the competition.

This will be necessary to protect the consumer as well as the company’s reputation, market share and profits. Are your pharmaceutical products effectively secured? To find out contact us here!