Branding generics

Before she takes her favorite lechon, Letty Centeno used to pop the anti-cholesterol tablet of choice, Simvastatin. These days, she keeps a stock of Rite-Med generics, which are 50% cheaper and just as effective.

Rite-Med is the brand name of 57 generic drugs marketed by Rite-Med Phils., Inc., a member of the Unilab Group.

"By using the 57-brands (and growing), one-brand strategy, we have been able to increase the productivity of each of our salesmen. With just one brand to market, there is no need to do one-on-ones with doctors who write the prescriptions; instead, we do en-masse presentations during conventions," said Rizalino Esquivel, vice-president and cluster head of United Laboratories, Inc.

To build a successful brand these days, it is estimated that a pharmaceutical company will have to spend P60 million a year to generate P30 million in sales. The pay-off comes only after three years when spending drops to between P10 million and P15 million to generate the same amount of sales.

Market need

By common definition, a generic drug is the chemical equivalent of an original drug. Strictly speaking, however, generics is the chemical name of a pharmaceutical.

In the Philippines, generic drugs legislation in the late 1980s encouraged the proliferation of local drug companies which went into the production of generic drugs. Since then, many of these companies have either closed shop or have merged with other companies. Government, through the Philippine International Trading Corp., also piloted two years ago the purchase of generic drugs from India which were distributed to 11 public hospitals with limited success.

"In the early years, the common marketing strategy of companies producing generics was to come up with products which looked cheap. The rationale here was consumers would equate the cheap look with affordable products. What happened, however, was that consumers equated the cheap look with unsafe and ineffective products," said Esquivel.

Companies producing generic products also suffered from the inability of consumers to distinguish one from the other. The decision to purchase was made on the basis of the cheapest price or on what a particular drugstore was pushing over the counter.

Savings

"By the time we entered the business, generics, as a name, was badly damaged. We went ahead anyway in response to a real consumer need. The Philippines has the highest drug prices in Southeast Asia because of the large prescription market and of the small purchasing power of the Filipino," said Esquivel. "We saw generics not as a big money-maker but as a crusade that, if allowed to fall in the wrong hands would destroy the industry and the doctors who prescribe the drugs. We wanted to tell Filipinos that they did not have to half the dosage of their medicine or take it every other day because they could not afford the price of the medicine."

Starting with 13 products last year, Rite-Med currently generates P500 million in annual sales. With a growth rate of 50%, the company is expected to be the biggest contributor to the revenue stream of the Unilab Group, the current industry leader with a dominant 20% market share, by 2007. In comparison, the P81-billion drug industry–which is made up of about 100 local companies and about 40 to 50 multinational companies– is expected to grow by an average 8%.

"We have been able to capitalize on the patent lapse of 15 foreign brands, which means we can now make available their therapeu-tically equivalents. Because we have priced our products cheaper, we have saved consumers the equivalent of P5 billion," said Esquivel.