Brand New Challenge

A fresh look at trademarks in the pharmaceutical industry

In the past 20 years, the pharmaceutical industry has emerged as one of the most dynamic and competitive in the world. in an extract from CPA Global’s recent white paper, Benedict Ely brings together thoughts and opinions from key industry figures and looks at how changing practices have impacted on the use of trademarks and branding in this key sector

Advances in technology, the growth of the global marketplace and increased competition between products have all driven changes to industry practice in the pharmaceutical sector in the past 20 years. Now, as a result of growing pricing pressures, new regulatory demands and the countdown to patent expiry for key products, further changes look likely for the future. Pharmaceutical companies are faced with the difficult task of leveraging their brands past patent expiry while competing with the lower-priced generic versions of drugs in the marketplace.

Patent protection
Patent protection is undeniably a critical asset for the pharmaceutical industry. It grants companies the right to prevent others from manufacturing a patented product, which is necessary to recover substantial investment in research and development (R&D). For this reason, companies devote considerable time and resources to upholding their IP Rights and are willing to devote further investment to lawsuits against manufacturers which allegedly infringe on those rights.

However, once a drug’s patent term has expired, exploiting the life cycle of a product becomes a much more difficult proposition. More often than not, the loss of patent protection has a significant financial impact on a company’s bottom line: ‘Because brand life is tied very closely to patent life in the pharmaceutical sector, pharmaceutical brands are relatively short-lived,’ says Tom Blackett, deputy chairman of the Interbrand Group. ‘Not all pharmaceutical brands disappear when their products’ patents expire, but such is the pressure from cheaper generic products that expensive brand marketing becomes no longer financially viable, and brands rapidly dwindle.’

As a result, when a drug goes off patent, companies rarely seek to back the existing brand, instead working to offset the loss in revenue by reallocating their sales forces and marketing spend to other, patent-protected variants, or by launching or licensing their own generic versions (the ‘authorised generic’). However, there is no assurance that this strategy will be effective in the long term. As Margaret Lewis, patent attorney at Stephenson Harwood, explains: ‘Until quite recently, it was common practice for pharmaceutical companies to support their product until about three years before its patent was due to expire. They would then launch a variant of the original product, protected by a new patent (for example, a different salt, or isomer, of the active ingredient). They would market it as a newer and better product, although the clinical evidence to support the claimed benefits was often thin, and the validity of the later patent was sometimes questionable.’

Looking beyond the patent
To deal with the falls in sales that traditionally follow patent expiry, many pharmaceutical companies are now looking to create comprehensive trademark strategies that will leverage the brand beyond patent expiration. By patenting the product first and then protecting key aspects of its brand image through trademark registration, companies should ensure that when the patent expires, the end users have already bought into the product values and will remain loyal to the brand, despite the emergence of competing, lower-cost products on the market.

Some companies have already ensured the survival of their pharmaceutical products past patent expiry through the creation of a strong brand. Ventolin is still a highly popular and much-prescribed treatment for asthma – and, famously, viagra remains the best-known treatment for male impotence.

Some companies have already ensured the survival of their pharmaceutical products past patent expiry through the creation of a strong brand. Ventolin is still a highly popular and much-prescribed treatment for asthma – and, famously, Viagra remains the best-known treatment for male impotence. It owes its immediate success to patent protection and to an effective, mass media awareness campaign. However, having built a strong product, Pfizer Inc did not stop there, but instead ensured long-term return on investment by planning past patent expiration. It built an instantly recognisable brand and supported it through key trademark registrations – for example, the blue, diamond shape of the tablet itself. As a result of this consumer recognition, Pfizer Inc is able to fight off other competing drugs that come onto the market. ‘Viagra created the market for such products and its name has become synonymous with the genre,’ explains Tom Blackett.

Trademarks last forever
Although the need for rigorous patent protection will remain ever present in the pharmaceutical sector, companies are increasingly recognising the effectiveness of trademarks when it comes to securing and enhancing the equity of a product.

Unlike patents, trademarks have the advantage that they can last forever as long as their distinctiveness is safeguarded and the registration renewed. As John Peacock, trademark attorney at Eric Potter Clarkson, emphasises: ‘Corporations, no matter what their industry, should be benefiting from the rights afforded by trademark registration by seeking to register distinctive elements of their products – such as name, logo, shape, colour and so on. This will make it difficult for other companies to produce products that echo the registered qualities. If they do create imitation products, the trademark right owner can then pursue them for infringement, a situation which cannot take place in the field of patent protection once the patent has expired.’

The pharmaceutical and home and personal care industries have consistently filed large numbers of trademarks as new products are developed and existing ones have their brands subtly refined. However, a critical barrier to global branding in the pharmaceutical sector is trademark availability. As Tom Blackett explains: ‘Class 5 (pharmaceutical preparations) of the world’s trademark registers is one of the fullest of all trademark classes, and finding names that have not already been registered is extremely difficult. This is why many products are sold globally, yet carry different names in different countries. For example, Zantac is the registered name of GlaxoSmithKline’s antiulcerant in many countries, including the US and the UK, but is known as Azantac in France.’

As a result, companies would be wise to develop their trademark registration strategy in the early phases of product development. Without early planning, it can be difficult to maximise the future success of those products they have invested millions in R&D to develop.

Leveraging brand equity
As with any industry, the creation of a brand within the pharmaceutical industry is intricately linked to the trademarks registered. Brands may evolve over time and geographical reach, but without a registered trademark to support the products, a company cannot protect its valuable brands, leaving them exposed both before and after the protecting patent expires.

To effectively prolong the value of its products, the pharmaceutical industry should be looking to take a more strategic approach to developing new brands and to managing established brands through the use of trademark registrations. After all, starting the process too late can make or break a brand when it finally reaches the market.

For the full version of the white paper, please email Charlotte Presse on cpresse@cpaglobal.com

This article was first published in IP Review, issue 13