Forget Brand vs. Brand—This is War

Jul 01, 2009

Have you ever wondered why Procter & Gamble sells nine different brands of laundry detergent? It's because P&G, which helped establish the commercial power of individual brands, recognizes the advantage of competing with multiple brands in a single consumer category. The company's goal is not to have the single best-selling brand; they want to maximize their total sales by owning the product category.

Similarly, Marriott gains competitive advantage by offering a portfolio of 13 different types of lodgings. The Walt Disney Company has leveraged its name to sell not only movies, but also amusement parks, hotels, television shows, consumer products, toys, and Broadway shows. While each of these companies offers a strong brand, they gain significant advantages by competing at multiple levels beyond their individual brand.

Like those companies, pharmaceutical companies are increasingly using multi-level competition (MLC), the process of commercializing similar or related products across the brand, franchise, portfolio, and/or corporate levels to gain market advantages. The objective of MLC is to force your competitors to compete on the level or levels where your company has the advantage.

Pharma Turns to MLC

Progressive pharmaceutical companies are increasingly using multi-level competition to drive business beyond the brand level. This includes taking measures at the franchise, portfolio, and corporate levels.

Franchise Level (single therapeutic area or disease state) As the world's leading producer of insulin by volume, Novo Nordisk's diabetes franchise covers the full range of insulin analogues, oral anti-diabetic drugs, and the new GLP-1 compound Victoza. Novo complements its franchise with an industry-leading line of delivery pens and devices as well as diabetes education and support programs. By 2014, Novo is projected to have a 27 percent share of the anti-diabetic global market, the second highest share dominance of any major chronic care market.

Abbott recently started competing at the franchise level in the cholesterol market. Abbott has focused on creating the world's most extensive cholesterol franchise using various combinations of fibrate, niacin, and statin products. According to John Thomas, Abbott vice president, "With TriCor, Niaspan, Simcor, ABT-335, and our combination with Crestor, Abbott's growing cholesterol franchise has the potential to include at least five unique therapies by 2010."

Portfolio Level (multiple disease states) Roche completed the acquisition of Genentech to enhance the industry's strongest oncology portfolio, which now includes five innovative cancer products (Avastin, Herceptin, Xeloda, MabThera and Tarceva), adjuvant agents, various tumor markers, and a range of molecular oncology tests. According to market research firm EvaluatePharma, by 2014 Roche will have the most dominant single portfolio in the pharmaceutical industry: Sales of its oncology products are projected to reach $28.3 billion, representing a massive 38 percent of the $75 billion cancer market. Moreover, Roche's pipeline of 88 oncology-related products is nearly double the number of its competitors.

Already among the top three vaccine manufacturers, GlaxoSmithKline is seeking to leapfrog its competitors by developing the world's broadest vaccine portfolio. The company currently markets 30 vaccines, and has 25 more in clinical development. In 2008, GSK distributed 1.1 billion doses of vaccines—that's 3 million doses per day around the world.

Corporate Level (multiple disease/health segments) Unlike more mature industries, none of the major pharmaceutical companies has truly applied MLC at the corporate level. Johnson & Johnson is perhaps best positioned to do so because of its strong corporate brand name and product diversity. J&J is the most diversified healthcare company in the world, with more than 250 companies organized into three major business segments: pharmaceuticals, medical devices and diagnostics, and consumer products. And there are signs that J&J may be coordinating some activities across segments to gain competitive advantage. For instance, the company is evaluating a diabetes offering that could integrate pharmaceutical agents, blood glucose monitors, insulin delivery devices, wound-healing products, and other J&J products and services.