Who Moved My ‘Apple’?

M. Qaiser & P. Mohan Chandran.

This is not cheese versus apple. We are not proposing to replace the famous metaphor for what we want in life. This is not about Washington’s apples; this is about Silicon Valley’s Apple. Unlike Steve Jobs’ annually predictable blue jeans and black T-shirt till last year, Apple has changed its products and services ever so often. From the revolutionary personal computers of 1970s to the very recent iPod and iTunes, Apple has never looked back. In the good old days, when the world was round, life was simple and the businesses so easy to understand: General Motors sold cars, Pfizer sold medicines, McDonald’s sold burgers, Coca Cola sold what-else, Kraft sold real cheese (not the metaphor), and Apple sold personal computers. Press fast-forward. Today, as Apple marches ahead in its technology and design journey, competitors and commentators keep searching for the answer: who (or rather, what) moves Apple?

Apple Computer, Inc. is a Silicon Valley company whose core business is computer technologies. The company designs, manufactures, and markets personal computers and related software, services, peripherals, and networking solutions. Apple is known for its innovative and well-designed hardware and software. Its products and services (Refer Table-1) include the iTunes Music Store, which is an online distribution service of third-party music.

Table 1

Apple’s Panoply of Products

Hardware Products	Software Products
Macintosh	AppleWorks
eMac	Final Cut Studio
iMac	Final Cut Pro
iPod	Aperture
iBook	iLife
Mac Mini	iWork
MacBook Pro	Mac OS X
PowerBook	Quick Time
PowerMac	Photo Booth
Xserve
Xserve RAID
iSight

Source: www.en.wikipedia.org.

Apple reported the highest revenue and earnings in the company’s history in December 2005, by posting a $430 million quarterly profit on increased revenues of $3.68 billion. Year-over-year (YOY) growth was also the best for 2005. The company shipped 1,236,000 Mac units and 6,451,000 iPods during the quarter, representing 48% growth in Macs and 220% growth in iPods over the previous year’s quarter, thereby recording a revenue-growth of 68% and net profit growth of 384%! Apple’s annual revenues for the financial year 2005 were $13.93 billion, while it clocked a profit of $1.34 billion – both of which were new records in the company’s history.

Think Different?

Apple’s phenomenal growth was possible because of its continuous thrust on innovation, resulting in a range of products like Mac OS X v10.2 Jaguar, ‘Switchers’, iPods, iMacs and iBooks. These innovative products have attracted new customers and are in great demand. The demand for iPods exceeded its supply! For instance, in October 2001, 1 million iPod Nanos were sold in the 17 days between the device’s debut and the end of that quarter. The videos purchased and downloaded by customers from Apple’s iTunes Music Store, which had about 3,000 music videos, were more than 2 million songs, over 1,000 independent labels, Pixar and Disney short films, and popular TV shows. According to Peter Oppenheimer, Senior VP and CFO of Apple, the company sold 6.45 million iPods in total in the fourth quarter of 2005.

Apple offered the TV shows at $1.99 per episode, while music videos and short films were also sold at $1.99 each. By February 2006, 12 million videos were purchased and downloaded, which made iTunes Music Store the world’s most popular video download store. By February 2006, about 1 billion songs were sold on the Apple iTunes digital music store. Also, compared to 2004, Apple’s desktop sales in 2005, increased by 56%, while notebook sales increased by 41%. Clearly Apple’s physical and financial achievements are the result of its deep commitment to continuous innovation-led business strategy.

The highly competitive market for personal computers and related software, and peripheral products is characterized by rapid technological advances in both hardware and software. The main competitive factor is innovation in products and services.

Apple’s Innovation-based Business Strategy

Rapid technological advances have increased the capabilities and use of personal computers, thereby triggering frequent innovation of new products. Apple stays ahead of competition because of its emphasis on innovation-based business strategy since its inception. Over the years, Apple has continuously invested in research and development (R&D) to design and develop new products and peripherals.

Apple maintains competitive advantage by effectively integrating an entire solution, including the hardware (iPod), software (iTunes), and distribution of third-party digital content (iTunes Music Store). The company has succeeded in implementing innovation-driven growth strategy despite persistently difficult economic environment in the beginning of the millennium. According to Steve Jobs, CEO, Apple Computers, “This is the direct result of our focus on innovation and the immense talent and creativity at Apple. We could not be more excited about the new products we’re working on for 2006.”[1]

Apple’s Intellectual Property Focus

The core competency of Apple is its capability to innovate continuously, which was systematically facilitated by investment in R&D. Apple’s R&D expenditures totaled $534 million, $489 million, and $471 million in 2005, 2004, and 2003, respectively. Apple’s continuous investment in R&D provides returns because the company protects its innovations through patents. The company takes stringent action against those who infringe upon their intellectual property rights. For instance, Apple has recently accused Iops, a minor Korean portable music player manufacturer of MP3 player models, Iops Jock and Iops Z3, of illegally copying the design of its mega-selling iPod music player. According to Apple, Jock and Z3 models resemble the exterior design and case colors of the iPod Mini, especially, the layout of a display screen and a round-shaped control button on the front panel. Apple has lodged a complaint with Iops demanding Iops to stop selling the two products and compensate Apple for their lost sales.

Apple currently holds patents and copyrights relating to certain aspects of its computer systems, iPods, peripherals and software. In addition, the company has registered, and applied for registering of trademarks and service marks in the U.S., and a number of foreign countries for its “Apple,” logo, “Macintosh,” “iPod,” “iTunes,” “iTunes Music Store,” and numerous other trademarks and service marks.

Apple-Cart of Innovation

Apple has 143 recently published patents, and already has a stockpile of 1,943 patents. In February 2006, the US Patent and Trademark Office (USPTO) granted Apple a patent related to touchscreen technology, which it had applied for on January 31, 2005. The patent, relating to different types of touchscreen technology like touch pad and touch-sensing technology, could be applied on Apple’s numerous products such as iPod, iMac, iBook, MacBook, and PowerBooks. Apple’s iPod is supposed to be one of the first products to get this technology. According to Apple, the US patent process is a very tedious one but Apple would continue to pursue all its patent applications.

According to ThinkSecret, an online magazine, Apple is now developing a button-less iPod video player, which has a 3.5 inch diagonal display with Touchscreen technology. This video player would have a bigger and wider display screen for watching the video content, and users could control the video player by just using the screen. ThinkSecret also claim that Apple had developed this product long before, but was just waiting for the grant of patent to release the product into the market to avoid any unwarranted litigations, as witnessed by it in the past. Apple is also reported to be working with a couple of companies in developing the digital click wheel display technology. Apple expects to retain the exclusive usage rights of this technology for a definite span of time, and market it effectively to capture market share.

Apple’s success of iPod was because of several factors such as on-screen menu, its distinctive click wheel and general trendiness. iPod has catapulted Apple on the top of the digital music market and earned it immense popularity. iPod contributes about 75% of all MP3 players sold in the U.S. Since iPod’s launch, Apple has sold more than 21.8 million iPods; 18.1 million iPods were sold in 2004 alone.

In October 2005, Apple filed for two patent applications related to iTunes. The first patent application is titled “Method and system for sharing playlists.” The invention relates to graphical user interfaces (GUI) that help users share or view a playlist, perform different search queries, sampling, listening, buying items listed in a playlist, or notified to the user through publication of the playlist. The second patent application titled “Method and system for configurable automatic media selection,” relates to Party Shuffle.[2] In January 2006, Apple surprised the market by shifting from IBM’s PowerPC chips to the Intel platform, and by launching the Intel powered Apple iMac and MacBook Pro.

Leveraging Intellectual Property for Competitive Edge

Apple’s success story is an outstanding example of deep commitment to innovation. Each innovation is a differentiator. Customers’ perception of a company improves with every innovation. Most companies who focus on innovation and inventions have excellent returns on their investments in R&D. Comparisons prove that innovators are the industry leaders, whether the comparison is apples and apples, or ‘Apple’ and oranges.

References & Bibliography

1. Perton, Marc, “Apple Files for Patent on Wide Laptop Touchpad,” http://www.engadget.com, March 2, 2006.

2. Sushubh, “Apple Might Soon Offer Complete Films for Download on iTunes,” http://www.news.techwhack.com, February 26, 2006.

3. Ankur, “Intel Based Mac Mini and iBook Might be Next,” http://www.news.techwhack.com, February 25, 2006.

4. Sushubh, “Apple Working on Button Less Touchscreen Enabled iPod?” http://www.news.techwhack.com, February 12, 2006.

5. “Apple Unveils New 1GB iPod Nano at $149,” http://www.apple.com, February 7, 2006.

6. Sushubh, “Touchscreen Technology on Apple Products Coming Soon?” http://www.news.techwhack.com, February 4, 2006.

7. Silverthorne, Sean, “Using the Law to Strategic Advantage,” HBS Working Knowledge, http://www.hbswk.hbs.edu, December 12, 2005.

8. “Apple Expenses, R&D Climb in 2005,” www.macnn.com, December 1, 2005.

9. “Apple Files Two Patent Applications Relating to iTunes Playlists and Party Shuffle,” http://www.macsimumnews.com, October 27, 2005.

10. Krazit, Tom, “Update: Apple Earnings Set Records,” www.computerworld.com, October 11, 2005.

11. “Microsoft Beats Apple on Patent Covering iPod Technology,” http://www.financialexpress.com, August 15, 2005.

12. Fried, Ina, “Microsoft, Apple in iPod Patent Tussle,” http://www.news.com.com, August 12, 2005.

13. Kheit, John, “Apple Granted Patent for Tablet Mac,” http://www.macobserver.com, May 10, 2005.

14. Katz, Ryan, “Apple Patent Watch,” http://www.thinksecret.com, May 4, 2005.

15. Smith, Tony, “Euro Filing Reveals Apple ‘hand-held computer,’” http://www.theregister.co.uk, August 13, 2004.

16. Orlowski, Andrew, “Apple Builds Wireless Hi-Fi Bridge with Pocket Router,” http://www.theregister.co.uk, June 7, 2004.

17. Mainelli, Tom, “Apple Unveils Online Music Service,” http://www.pcworld.com, April 28, 2003.

18. Jin-seo, Cho, “Apple Out to Protect iPod Design, US Giant Tells Korean Firm to Stop Making Similar Models or Face Lawsuit.”

19. http://www.brand.edgar-online.com

20. www.en.wikipedia.org.

21. www.apple.com

22. http://www.appft1.uspto.gov

23. http://www.patft.uspto.gov

[1] “Apple Reports Fourth Quarter Results,” http://www.apple.com, October 11, 2005.

[2] The Party Shuffle feature creates a dynamic playlist, similar to shuffle play, from either the entire library or a specific playlist. Upcoming songs could be reviewed to reorder or remove. The user or a guest could add songs to the mix at any time. The favorite random picks could be always saved in a personal playlist. The user could use Party Shuffle when listening only to music, so that the playlist was always full, and had good tunes.

Jacky’s Gruesome Death

On 30th October, 2004, in the wee hours of morning, between 8 a.m. and 8:15 a.m., my best friend – my dog, Jacky – passed away. It was totally unexpected and took all of us by profound surprise and shock. I was by the side of Jacky during his last moments when he passed away. He gasped for breath twice or thrice, and then, suddenly stopped breathing anymore. His tongue came out and life passed out from his mouth. I couldn’t help, and tears came out naturally, uninhibited.

Earlier, Jacky was suffering from some fever. He did not eat any food for two days and was lying in a static place and position for two days. Apparently, he had contracted some pain due to which he was unable to eat. I called up a vet doctor named S.N. Rao (supposed to be a veteran of 34 years experience). Rao came from Nallakunta in the morning and after seeing the dog, took out four syringes. When I questioned him the logic in giving the dog injections when it was starving for the last two days, he said it didn’t matter and that the conditions were ideal for giving injections. He gave 4 injections to Jacky – three on his left buttock and one on his right. Jacky was in great pain, having not eaten any food for two days. But still he bore the pain with a bold face and a brave heart – an act that I appreciated sincerely from the bottom of my heart. Moreover, he did not even howl or whine and accepted the injections without any demur! Honestly speaking, though the injections were given to him, I felt the pain and I could not tolerate him taking four injections at one time, and that too when he was starving since two days. The doctor charged a fee of Rs. 250 for the four injections, but I later gave him only Rs. 200.

After giving the injections, the doctor gave us a brief lecture on the ‘do’s and don’ts’ of maintaining a dog. He also strongly advised us to get our dog vaccinated against rabies, besides scaring us of fatal consequences, if we failed to do so. When we told him that Jacky was not vaccinated with anti-rabies injection since birth, he said that it should be done immediately to avoid danger to the dog as well as to the other family members. He also went so far as to advise all the family members to get three doses of anti-rabies vaccine injected around our navels! The doctor then left our home and promised to call us later to know the status about Jacky’s progress of health.We later gave Jacky some milk and biscuits, and finally he got up in the evening and started walking around a little. We were all happy for him at home. In the night, we fed him with rice mixed with milk.

But the next day he was limping, and much to our surprise, we found that he had contracted a big swelling on his left foreleg, which was as big as a table tennis ball! He did not eat anything the following day after the doctor had given him four injections. He was again lying in a static place and position. This time, we were almost about to call the doctor again, but he himself appeared suddenly on 26th October, 2004, much to our surprise. This time, he saw the swelling and said that the dog was writhing in pain due to the abscess. He gave three more injections this time – the first, a painkiller, the second, for the abscess, and the third was an anti-rabies injection. Besides, he took a new blade from us and cut the infected part of the dog to remove the abscess. I could not bear all this cruelty and was asked to close my eyes by the doctor, which I did. After cutting the wound, the doctor then took a walking stick and pressed the butt of the stick against the wound to elicit the abscess. The dog was whining in pain and his voice really rent my heart long and deep. This time, the doctor asked Rs. 250, but I bargained for Rs. 200 and paid him the sum.

We thought that Jacky would be able to walk now after the abscess had been busted, since the pain would have subsided by then. But, it was not to be. Jacky did not eat anything again and was lying in a static place and position, totally flat on the ground. We tried all our best to pamper him and coax him to drink milk or eat biscuits, but to no avail. Later, he drank only a few drops of milk, very reluctantly though. I called up the doctor and told him of the situation. He suggested giving boiled egg to the dog. I bought the egg, but did not give him, as he was unwilling to eat anything and was not even opening his mouth. He could not even get up and piddled in the same place where he was lying.

Jacky’s plight continued for four long and arduous days. He couldn’t get up nor even move an inch, as he did not eat anything – neither food, nor milk, nor water – for four consecutive days. Obviously, he must have become very weak and lacked the strength to get up, stand or move. For one whole day, he was at one place lying flat on the ground. Then on another day, he would be in another place lying statically in a prone position on the ground. We were, however, surprised as to how he managed to move from one place to another, as it happened probably at night without our attention. He starved himself for 4 consecutive days and as if waiting for death, he was struggling for life.

Then, finally on the morning of 30th October, the inevitable happened. I got up at 8 am and was brushing my teeth. To our shock, I saw that Jacky was lying flat on the ground, but outside our doorsteps. We were surprised as to how he managed to move some two to three feet, as he had not eaten anything for four days. I pitied him a lot and was just stroking his head. He already seemed to be almost in a ‘dead posture.’ Suddenly, he gasped for breath twice or thrice and…….. and then, his life went out through his mouth and his tongue came out. He breathed his last. My tears broke out naturally and I cried more than once. A trusted, loyal, honest and helpful friend passed away, leaving all of us in this terrible and lonely world. I took a snap of Jacky after it died as a last memory.

I was totally shattered and though I was getting late, I didn’t feel like going to office. But, then I didn’t want to take leave and was constrained to leave home. I left home reluctantly and as I was traveling to office on my bike, my eyes became moist, not by the pollution, but by the profound love that I had – and still have – for my dog. All through my way to office, I was just thinking about Jacky and shedding silent tears. I always treated him as my younger brother – as I don’t have one – and showered all my unadulterated love upon him. He was with me for 14 long years – a time long enough not to grieve or to forget anyone so soon! He had become so much a part of our family and me. Whenever I used to eat anything, I always used to give half of it to him.

Today, whenever I eat something, I look for him to give him the other half. But, alas! He is no more with us now. Without doubt, he will continue to command my love, attention, and memory for many more years to come!

But, as I analyzed the reasons behind his death, I feel all the more tragic. He was intelligent enough not to cause us any trouble and died outside the doorsteps. He knew that the inevitable was coming and sustained his life long enough to die in front of my eyes. Never before had I personally witnessed a life passing away from me – either human or animal! Hence, it shattered me all the more. Even today, whenever I think of him, tears flow down naturally. But, I couldn’t help thinking that the doctor knew that the dog would die, and still came to our home the second time and gave three injections to Jacky just to extract some money out of a dying soul! Can people be really so cruel? The doctor was in his late fifties and perhaps was a perfect embodiment of the saying, “As a man grows old, his greed grows young.”

I sincerely pray to all the Gods that Jacky’s soul rest in peace forever. God bless him and his gentle soul!

Mistaken Love: A True Story

This is a story, but a real one.There was a bloke by name Sachin. He was an Anglophile (who had unfathomable love for English and things associated with English). He was a very studious, hardworking, an altruistic and ‘no-nonsense’ guy. He had excellent communication skills and endeared himself to all by his pleasing manners and etiquette. He never used to shirk from his responsibilities and even willingly accepted additional ones. He used to help all invariably at the drop of a hat. But, he was very bashful in nature, especially towards the fairer sex. He seldom used to accost women and gals, and always gave them a wide berth (by maintaining safe distance from them). Sometimes, whenever he encountered them accidentally, he was overcome by an “inferiority complex.”

Things, however, began to change gradually for the better. He realized his flaw and tried his part to be as sociable as possible with the opposite sex. He understood that women were no different from men and vibed with men without any social inhibitions.

One fine day, he came across a beautiful damsel, who bewitched him abysmally. He was deeply struck by her beauty, simplicity and wit. Hardly ever had he seen a damsel with a blend of beauty and intelligence; for, there goes an adage that “beauty and nonsense are closely related.” He accosted her at an opportune moment and developed good friendship with her. He learned that her name was Deepa and she was very cordial, helpful and obedient by nature. She too was an Anglophile and had great love for English. Congenial interests brought them together and their friendship flourished and blossomed.But, Sachin mistook Deepa’s cordial friendship for “love.” He felt (or was rather made to feel by his own misjudgment) that Deepa’s every gesture and expression was a reciprocation and acknowledgement of her love for him. But alas, how grossly mistaken he was!

One day, he gathered all his spunk and went up to Deepa to express his profound love for her. But, it was not as if he was totally optimistic that Deepa would accept his love. He had his own apprehensions (as does everyone in love) and prepared himself with a commixture of optimism and pessimism. He confessed his unfathomable love for her and sought hers. But, she spurned his love and thus broke an innocent heart. Sachin became deeply depressed. Scarcely had he come into contact with any girl or woman. When he was showered with bounteous love and affection (misconstrued by Sachin, of course) by Deepa, he got carried away. He had never received so much warmth and cordiality from any woman. So, this led him to misconstrue her friendship and feelings for him as “love.”

However, when he reasoned in the solitude of his drawing room, he understood the hard reality that love is a feeling, which comes from the heart, naturally, intrinsically, and spontaneously, and it cannot be forced, coaxed or thrust upon someone. Gradually, he resigned to fate and came to terms with the reality.

Today – after 8 long traumatic years – he still longs for Deepa’s love, who, he hopes, will understand his unselfish and unrequited love, and return to him one day so that he can cherish her forever in the “heart of his hearts.”

The New ‘Stylized’ Brands in Pharma – Part One of Two

P. Mohan Chandran
Wednesday, September 19, 2007

BRANDED FOREVER

Even if you did not invent, discover or patent the drug, now you can give your name to the medicine and claim rights on it! Since times immemorial, men started “branding” their cattle with hot irons to distinguish theirs from others’. That initial concept of branding has evolved into branded products, licensing revenues, distribution channels, and franchising. Using creative brands and expanding the reach of their products, pharmaceutical industry – to a large extent – was still working with drug names, which were reminders of the chemical entities in the medicine. But, the industry has witnessed a change in the past decade. Pharmaceutical companies have started launching drugs with innovative names, and have been advertising to gain popularity for the brand names. There is now a significant focus to promote the brand names as company’s name to create a market advantage.

A research study in 2003 emphasized the importance of brands when blind taste tests proved that people actually liked Pepsi more than Coke. But when Coke brand name was associated with the drink, people’s brain activity intensified and the preferences shifted drastically from Pepsi to Coke. In other words, the branding of a product can do more than the product itself. In case of food and beverages, this shift in brand may be ignored, but when it comes to drugs, and especially life-saving drugs, this is very significant and can have a major impact on the patient’s life. So, if a company’s patented drug is not as good as generics, or if it is expensive than generics, then branding the drug will enable the company to push its sales. Realizing the importance of branding, the Big Pharma companies in 2003 spent about $25.3 billion on marketing, which was almost as much as on R&D ($33.2 billion).

Branding is a very important aspect in pharmaceutical industry. Brands have become synonymous with corporate value. While corporate brands distinguish one company from another, product brands differentiate the products of one company from that of the other. Product brands give unique identity to a company’s product even in the most competitive of markets. A successful brand is considered as a company’s most valuable asset, as it not only ensures repeat sales for the company but also leverages its intangible value. Reinforcing the importance of branding in pharma industry, Tara Rehl (Rehl), Relationship Marketing Manager for Brand Development at Pfizer, said, “Historically, product branding has been prominent in the industry due to greater technological differentiation and to the patent system. Additionally, the intellectual property rights granted to a new molecule contribute to the ‘product brand on a pedestal’ approach to branding in the pharmaceutical industry.”¹

According to industry analysts, most companies (such as Astra Zeneca, Novartis, and Aventis) have traditionally focused more on corporate branding than product branding. These companies were of the opinion that corporate brand would automatically sustain the product brand and leverage sales. Says Mike Rea, MD of IdeaPharma, “The corporate brand does the work of the product brand before launch – it builds a reputation. That’s why people are doing it.”² The companies focusing on corporate branding felt that it would work well even with doctors, since a doctor would prefer to meet the sales representative of a well-branded company than a poorly branded one. Since decades, the system followed in pharma industry was this: invent a new drug, patent it, introduce it to a doctor through a sales representative, and get the prescriptions filled by the doctor. This automatically generated sales and ensured profits, as the drug was patented, which means that there would be no competitors.

However, few other companies (such as P&G) have focused on product branding because they felt that corporate branding is a very time-consuming process. Moreover, the consumer is more concerned about the efficacy of the drug than the name of the company that invents it. P&G emphasizes more on its individual products and promotes them as its brand driver. Unfortunately, most pharma companies still have not understood the significance of product branding, with the exception of a few companies such as Pfizer, GlaxoSmithkline, Eli Lilly, Merck, Bayer, Bristol Myers Squibb, Abbott Labs, etc., who have branded some of their products that became very popular worldwide. Eli Lilly branded its drug “Prozac,” and introduced it in 1986. When Prozac was introduced, not a single study submitted by Eli Lilly to the US Food & Drug Administration (USFDA) mentioned that the drug, when taken alone, was efficacious in curing depression. However, once the drug was approved by USFDA, Eli Lilly aggressively marketed Prozac as a revolutionary substance that selectively targeted serotonin, a brain chemical. Their marketing campaign highlighted the fact that, unlike the cheap generics, Prozac did not affect norepinephrine, which produced side effects. This marketing programme catapulted Prozac to a blockbuster drug category. Prozac is now a very popular medicine and the most prescribed anti-depressant across the world. Prozac is taken by more than 35 million people globally, and it contributes more than $3 billion annually to Eli Lilly’s sales. Eli Lilly has branded several of its drugs, which have paid rich dividends to the company’s topline and bottomline (See Table-1).

TABLE-1

SALES OF ELI LILLY’S POPULAR DRUG BRANDS

Brand Name of Drug	$ Million 2005	$ Million 2006
Zyprexa	4,202	4,364
Gemzar	1,335	1,408
Humalog	1,198	1,300
Evista	1,036	1,045
Strattera	552	579
Forteo	389	594
Cialis	170	216

Source: http://www.lilly.com

Similarly, Bayer branded the drug “Aspirin” and introduced it in 1899. The brand attained a dominant position in the world within a short period. In the U.S., more than 50 million people take Aspirin in a day, which comes up to 15 billion tablets a year. Bayer’s sales revenues also soared because of its initiatives in branding its drugs.
Several of its branded drugs became global best sellers (See Table-2). In October 1999, Aspirin received the prestigious ‘Smithsonian award’ and the drug was added to the Smithsonian Institution’s National Museum of American History’s collection of over 9,000 patented drugs. Interbrand and Business Week ranked Pfizer 38th in the top 100 best global brands of 2006, with a brand value of $9.59 billion. Novartis was ranked 43, with a brand value of $7.88 billion, while Johnson & Johnson was ranked 88, with a brand value of $3.19 billion.

TABLE-2

BAYER’S BEST SELLING PHARMA BRANDS – 2006

Brand Name of Drug	€ Million
Betaferon/Betaseron	991
Yasmin/YAZ/Yasminelle	794
Ascensia	788
Kogenate	787
Adalat	657
Ciprobay / Cipro	513
Aspirin	465
Avalox / Avelox	396
Magnevist	323
Levitra	314
Glucobay	308

Source: http://www.bayerhealthcare.com

GENERIC NAME Vs BRAND NAME

After a drug is developed, it is given a name that indicates the chemical composition of that drug. This is called a generic name, chemical name, or the scientific name. It describes the active ingredient in the drug or its chemical structure. However, some companies also give the drug a ‘brand name’ for marketing it. The brand name is owned by the brand company and other companies cannot use this brand name to distinguish their generic versions of the drug. All prescription drugs usually have generic names. A brand name is usually easier to say and remember than a generic name. Doctors and patients know a new drug by its brand name. For instance, Prozac is a brand name widely known to all, while its generic name – fluoxetine – is known to few people. Similarly, Zantac is a brand name known to millions of people, and few would identify it by its generic name, Ranitidine.

Generic medicines³ are copies of brand name drugs with the same active ingredients, and hence are much cheaper than the brand name drugs. However, sometimes, different non-active ingredients may also be used to produce the final generic medicine, as in creams or nasal sprays. Generic medicines have the same chemical name and same therapeutic effect as equivalent brand name drugs. The approval process for generic medicines is very stringent in many countries, including Western countries. A company manufacturing generic medicine has to prove its efficacy on par with the brand name drug in terms of indications, dosage, labeling, strength, quality, purity, performance, usage, and safety. Moreover, the generic medicine manufacturer has to prove that his generic medicine has the same effect in the body, and is manufactured with the same high standards as that of a brand name drug. USFDA evaluates and approves a generic medicine as therapeutically equivalent to the brand name drug. In the December 1999 issue of the Journal of the American Medical Association, the then USFDA Commissioner, Dr. Jane E. Henney allayed widespread apprehensions about the therapeutic value of a generic medicine, and said “Practitioners and the public may be assured that if the FDA declares a generic drug to be therapeutically equivalent to an innovator drug, the two products will provide the same intended clinical effect.”⁴

According to pharma experts, ‘Creating a generic name is a science; creating a brand name is more of an art.’ They believe that branding is more conspicuous at the corporate level than at the product level, and building a strong brand identity is still in its nascent stage in the pharma industry. For this reason, there was not a single pharma brand or company name in the Top 25 list of the Interbrand / Business Week’s ‘Most Valuable Brands’ in 2002.

If the branding is right, then sometimes the product brand may overtake the corporate brand. For instance, more people remember the product brand ‘Viagra’ more vividly than the corporate brand ‘Pfizer.’ Viagra was patented in 1996 and was approved by the USFDA in 1998. Sildenafil Citrate (Viagra) was originally developed as a medicine for chest pain in men and was later discontinued in the wake of unsatisfactory results in a phase-I angina study. However, it was observed that men who took 50 mg and 75 mg doses of Sildenafil Citrate reported increased tendency for erections. This shifted the focus of the drug from angina to erectile dysfunction (also called impotence). Within one year of its launch in the market, Viagra achieved sales of $ 1 billion, thus becoming a block-bluster drug. In 2006, Viagra’s sales touched $ 1.87 billion.

Similarly, ‘Aspirin’ is more popular than ‘Bayer.’ Many of P&G’s individual products such as Pampers, Crest, Head & Shoulders, Mr. Clean, Old Spice, Lacoste, Oral-B, Pantene, etc., are identified better by their brand names than the company that produces them. Recall of a brand name is higher and faster compared to a generic name (See Table-3). Brands evoke feelings of trust, integrity, value for money, association, and pride in the consumer.

The recall of branded drugs that were advertised had a deeper impact on the consumers. According to a survey conducted by the Kaiser Family Foundation of patients in November 2001, 44% of the patients who saw a branded drug being advertised for a particular ailment and asked the doctor to prescribe it were indeed prescribed by the doctor.

Branding plays a decisive role in the pharma industry. For prescription drugs, it plays a B2B role while for OTC drugs, it plays a direct role with the consumers. For instance, Pfizer sells its fertilizer products directly to the consumers. In this scenario, branding becomes indispensable for any pharma company, since its drugs comprise both prescription drugs as well as OTC drugs. The idea of brand has caught on with the consumers so much so that patients now associate a disease with the brand name of the drug. Prozac has become synonymous with depression; high cholesterol elicits the name of Lipitor; and hay fever (also called pollinosis) reminds of Claritan. The following table presents a list of branded drugs that have become synonymous with the ailment and evokes instant brand recall:

TABLE-3

RECALL OF BRANDED DRUGS

Brand Name	Ailment / Indication
Dettol / Savlon / Band- Aid	Burns, cuts, wounds, germ-killer
Burnol	Anti-septic, cuts, scalds, burns
Viagra	Erectile dysfunction
Aspirin	Headaches, migraines
Coldarin / D’Cold	Cold
Benadryl	Cough
Krack Cream	Cracked heels, corns
Iodex / Amrutanjan / Tiger Balm / Zandu Balm/ Moov	Sprains, headaches, spasms
Colgate	Dental hygiene
Itch Guard	Itching, skin ailments
Dermi Cool / Nycil	Prickly heat
Eno	Indigestion (Dyspepsia), antacid
Baygon Spray	Insect-killer

Branding helps the company in extending its product line and product lifecycle. Whenever the company wants to introduce new products or value-added services, it will always try to combine them more proximately with the already created brand awareness. Says Jeff Smith, Associate Partner at Prophet Management Consultancy, “Without the presence of a valuable brand, line extensions become merely a regulatory tactic. With the existence of an extendable brand, a franchise is able to capture the minds and hearts of individuals and is able to leverage the trust that has been built up over the years.”⁵

Many studies have shown that there is a difference between generic drugs and brand name drugs when we compare the ‘therapeutic index’ between the two. Therapeutic index refers to the difference in a drug’s effective amount in the body and the level at which the drug causes a disagreeable or harmful effect. Also, branded drugs are considered to be more efficacious and safer than generic drugs. Moreover, branded drugs are more costly than the generic drugs. The prices of branded drugs are double that of generic drugs, or sometimes even more. It is estimated that for an equivalent average generic drug that costs $17, the branded drug costs $72. When Sildenafil Citrate, a formulation used in Viagra, was first introduced in the U.S., the international price went up to $20,000 per kg. Sometimes, when a company owns both the branded drugs and the generic drugs, it may deliberately price the generic drugs higher to dissuade the consumer from buying it. According to one estimate, branded drugs are expected to grow by 6% over the next five years, while global generic-drugs market is worth about $60 billion.

A good brand also offers the company adequate time to respond to competitive threats of other companies, which may be unexpected and sudden. Brand loyalty provides the company the necessary time to plan and execute its strategies to counterattack its competitors, as the brand loyal customers will not switch to a competitor brand immediately.

TO BE CONTINUED – (Coming up: Jumping on a “Brand” Wagon; Stealing ‘Brand’ in a ‘Grand’ Way; Market Vigilance is Key)

ENDNOTES:

1. Colyer, Edwin, “Products That Rise Above Their Corporate Brands,” http://www.brandchannel.com, December 8, 2003.

2. Ibid.

3. ‘Generic medicines’ are the copied version of the original brand name drugs; ‘generic name’ refers to the name given to the drug after it is first developed.

4. http://www.barrlabs.com.

5. Brown, Helen, “Dealing With the Generic Threat,” http://www.prophet.com, September 14, 2005.

The New ‘Stylized’ Brands in Pharma – Part Two

P. Mohan Chandran
Friday, September 21, 2007

JUMPING ON THE “BRAND” WAGON

Never before has the importance and impact of brand been felt so strongly upon the pharma industry as in the new millennium. More and more pharma companies are now realizing the need for brand building and are making serious efforts to promote their product brands, along with their corporate brands. Reiterating this point, Rehl said, “Strong corporate branding is necessary whatever the industry. In the post Enron and Worldcom era, public and consumer confidence in corporations is low, and there is increased pressure on companies to rebuild trust and to demonstrate responsibility. Corporate branding plays a vital role in achieving this because it clearly defines who you are and how you behave.”⁶ Pharma companies have now started seriously working on developing their brands even before their product is fully tested and ready. Pharma companies and markets have never witnessed such intense brand competition as it is today. The number of sales representatives for pharma brands seeking the health providers has more than doubled over the last 10 years. Because of innumerable ‘me-too’ and look-alike pharma brands that compete with the established brands, branding has now assumed increased significance.

Pharma branding is vital as it not only creates public awareness about the potential benefits of the drugs but also distinguishes a company and its products from other competitors. Branding enables a company to stay ahead of the competition. It increases the sales revenue of the company and also its corporate value (See Table-4). For instance, according to a survey by Interbrand in July 2005, the top 10 brands accounted for a cumulative value of over $388,359 million at an average of 34.8% market capitalization for those companies. Branding acts as the primary driver of customer purchase decision. Whenever a consumer has to choose between buying a known branded product and an unknown, new product, he will always opt for the former. Branding is directly proportional to the sales revenue of a company. The higher the brand perception and the stronger the brand value, the greater will be the sales revenue and profits for the company that owns the brand. Says Howard Kosgrove, Vice-principal of Marketing at Lindsay, Stone and Briggs Advertising, “The value of brand is huge compared to physical assets.”⁷

TABLE-4

TOP TEN BRANDED DRUGS BY SALES DOLLARS (2001-2004)

Company Name	Brand Name	Sales ($ Billion) 2001	Rank	Sales ($ Billion) 2002	Rank	Sales ($ Billion) 2003	Rank
Pfizer	Lipitor	4.5	1	5.2	1	5.5	1
Takeda/Abbott	Prevacid	3.2	3	3.4	2	3.6	2
Merck	Zocor	2.7	4	3.1	4	3.3	3
Astra Zeneca	Nexium	0.5	62	1.8	10	2.7	4
Pfizer	Zoloft	2.2	6	2.4	6	2.6	5
Glaxo Smithkline	Advair Diskus	0.5	63	1.4	20	2.0	10
Wyeth	Effexor XR	1.2	22	1.5	16	2.0	9
Bristol Myers Squibb	Plavix	0.9	35	1.3	25	1.7	14
Pfizer	Celebrex	2.4	5	2.4	5	2.2	6
Warner Lambert	Neurontin	1.5	16	1.8	11	2.1	8

Source: http://www.drugtopics.com

Bertek Pharma, a branded products subsidiary of Mylan Labs Inc., increased its brand sales by 47% from $83 million in 1999 to $122 million in 2000. Bertek’s brand sales contribution to Mylan Labs also increased from 11% of net sales in 1998 to 15% of net sales in 2000.

Branding enabled six diabetes drugs to achieve sales of about $1 billion in 2001. Moreover, during the same year, the ranking of the 100 highest selling pharma brands globally included six diabetes drug brands, which clocked aggregate sales of $8.2 billion. The top six brands of Astra Zeneca contribute 80% to the company’s sales. This emphasizes the importance of branding in positioning a company in a competitive market and also in its overall market performance in a dynamic environment. The companies’ shift from focus on physical assets to intangible assets, such as brand name and patents, is now clearly visible. Having understood the importance of intangible assets and branding for his company, Yutaka Kobayashi, President and COO of Kobayashi Pharma, said, “In implementing our corporate brand management initiatives, we have understood that the basic foundation of company strength has changed. Previously, a strong company would have had large tangible assets such as land, buildings, and facilities. However, in today’s business environment, a company’s competitive strength will not be judged on the size of its assets, but on how efficiently those assets are marshaled and employed. Corporate brand is one of the most important intangible assets, equivalent in importance with a company’s intellectual assets and human resources. Thus, we have decided that to ensure our future growth, we must ensure our corporate brand.”⁸

Astra Zeneca also launched and promoted a new branded drug for heart burns called ‘Prilosec.’ The drug costs $4 for a single pill and for a year’s consumption, it costs around $1500 for a single patient. This drug became a cash cow for Astra Zeneca and also the world’s No.1 prescription drug with sales of about $6 billion per annum. In 1998, Prilosec became the first ever drug in the world to touch the $5 billion global sales. In 2001, General Motors bought Prilosec worth $55 million for its employees.

STEALING ‘BRAND’ IN A ‘GRAND’ WAY

Counterfeit drugs and products have always been on the rise, cashing in on the popular drug brands. As per the USFDA estimates, counterfeit drugs account for approximately 10% of the global pharma market. It causes a loss of $512 billion globally. According to a survey by Gieschen Consultancy⁹ in March 2005, IP theft accounted for 36% of global counterfeiting. Moreover, more than 95% of all counterfeit products seized by customs, law enforcement, and brand enforcement authorities related to IP theft. In the last one year, more than 1.3 billion counterfeit products, valued at $4.1 trillion were seized.

In India, the findings of a study by AC Nielsen revealed that counterfeiting costs the government more than Rs. 9 billion every year in lost excise revenues and tax evasion, while the loss for companies whose products are being counterfeited is Rs. 40 billion. In India, it is estimated that there are 128 different types of Parachute hair oil, 113 types of Fair & Lovely cream, 44 types of Vicks VapoRub, and 38 types of Clinic Plus Shampoo. Counterfeiting in India spans various product categories ranging from FMCG, medicines, and cosmetics, to food, textiles, and beverages. AC Nielsen studied 30 FMCG companies and found that eight out of every ten consumers who bought counterfeit/knock-off products knew that it was counterfeit only after buying them. Counterfeiting is also widely prevalent in the US, China and other countries (See Table-5). In the UK, counterfeiting results in loss of about 4,100 jobs to the residents there.

TABLE-5

MONEY LOST BY COMPANIES IN CHINA THROUGH COUNTERFEITING

Company	Losses ($ Million)
P&G	150
Nike	70
Unilever	24
Gillette	20
Johnson & Johnson (J&J)	15
BestFoods	6

Source: http://www.blonnet.com

Counterfeiting has been rampant in the US. The market for counterfeit products in the US is approximately between $200 and $250 billion per annum (See Table-6).

TABLE-6

LIST OF MOST COUNTERFEITED DRUGS FOUND IN THE U.S. (JAN 2005)

Sl.No.	Name of the Drug
1	Lipitor
2	Viagra
3	Zyprexa
4	Ortho Evra
5	Serostim
6	Diflucan
7	Procrit
8	Neupogen
9	Epogen
10	Ambien
11	Combivir

Source: Center for Pharmaeconomics Studies, University of Texas, Austin.

Stealing of trademarks of very popular companies in pharma and other industries also, and coining trademarks that is similar to others, or cashing in on the popularity of other brands, is continuously on the rise (See Table-7 & . A Peshawar-based company tried to infringe on Tata’s brand name by launching a similar tea named ‘Tatara Tea.’ After two years of court battle, Tata group, however, won the case in October 2005. Similarly, a newspaper organization from Varanasi also tried to infringe on Tata’s brand name by launching a newspaper called ‘Tata Express.’ There was even a pornographic website launched on Tata’s name called ‘odacioustatas.com.’ A recruitment agency also collected money from prospective job-seekers assuring them of a placement with ‘Tata Management Ltd,’ which was a trademark infringement. Emphasizing the harmful effect of infringement on a company’s brand, Peter F. Corless, Partner at Edwards & Angell LLP, said, “Infringements can do much more than degrade your market share. If those knockoffs are inferior – as they often are – there’s a loss to the trademark owner of the buying public’s confidence. That can be very hard to win back.”

Similarly, P&G’s Vicks Action brand was also imitated in December 1998 by counterfeit manufacturers. The six brands were named as – Endo Action, Anadol Action, Jet Action, API Action, Vicas and Vikas cough drops. However, P&G sued the manufacturer for infringement in January 1999 and won the case, which resulted in withdrawal of the counterfeit products. In June 1999, P&G constituted a Trademark Protection Team and found out that for every 100 genuine strips of Vicks Action 500, 54 look-alike strips were sold in the market. Moreover, for every 100 genuine Vicks cough drops, there were 7 look-alikes, and for every 100 genuine Vicks VapoRub, there were five look-alikes. There were a total of about 106 infringers on the Vicks brand. Because of counterfeiting, P&G’s healthcare business plummeted between October and December 1999 and the company lost 5% sales in just six months.

TABLE-7

RECENT KNOWN CASES OF MISUSE OF TRADEMARKS

Original Trademark	Counterfeit Trademarks
Amoxil	Lymoxyl
Fortwin	Ostwin
Arelon	Arteelon
Pacitane	Parkitane
Lipitor	Lipicor
Honda CR-V	Laibao SR-V
Chevy Spark	Chery QQ
Apple (Computers)	Pineapple
YAHOO	Uhoos
Google	Oogle/Boogle
Tata Tea	Tatara Tea
Pepsi 7Up	1 Up
Lehar	Lahar
Coca Cola	Dream Cola
Vicks Action	Endo Action/Jet Action/Anadol Action
Vicks	Vikas/Vicas
Godrej	Podrej

Source: Compiled from various sources

TABLE-8

TOP-10 MOST POPULAR COUNTERFEITED BRANDS & TRADEMARKS

No.	Brand/Trademark
1	Louis Vuitton
2	Nike
3	Burberry
4	Coach
5	Gucci
6	Microsoft
7	Chanel
8	NFL
9	Viagra
10	Autodesk

Source: http://www.editorials.arrivenet.com

Counterfeiting is prevalent in different countries across the world (See Table 9). The best way to counterattack it is to protect it by registration and keep a vigil in the market to pre-empt infringement. The cost of registering a trademark is very less as compared to the cost of litigation. According to one estimate, the average cost of trademark litigation in the US ranges between $400,000 and $750,000, and can sometimes even be more. In the UK too, the cost of trademark lawsuit is similar to that of US, while in other parts of Europe, it is more expensive.

TABLE-9

LEADING GLOBAL PRODUCERS OF COUNTERFEIT DRUGS

Rank	Country
1	India
2	China
3	Brazil
4	Argentina
5	Pakistan
6	Columbia
7	Mexico
8	Belize
9	Southeast Asia

Source: Center for Pharmaeconomics Studies, University of Texas, Austin.

MARKET VIGILANCE IS KEY

Constant market vigilance against infringement offers strong protection and deters the infringers from misuse of trademarks or other intellectual property (IP). Market vigilance is also a vital part of a company’s IP management strategy. The trademark filing statistics released by the USPTO, the European Community Trade Mark Office, and the China Trade Mark Office for the year 2004 indicate that brand protection is being given more importance by companies. The trademark filings at USPTO increased 12% from 267,218 in 2003 to 298,489 in 2004; while at the European Trademark Community Office it increased 2% from 57,646 in 2003 to 58,848 in 2004; and in China Trade Mark Office, the trademark filings increased 30% from 452,000 in 2003 to 588,000 in 2004. The trademark filings of 588,000 at the China Trade Mark Office for the year 2004 are the highest since the trademark office’s inception in 1994.

To counter the problem of misuse of trademarks and counterfeiting, Hindustan Lever Limited (HLL) and Procter & Gamble (P&G) are working in conjunction with the Brand Protection Committee (BPC) of FICCI, which includes 20 FMCG companies, to track the producers and vendors of spurious products and eliminate them. BPC also frequently coordinates with the Indian government agencies and the judiciary. BPC also proposed to the states to constitute a special IPR cell to provide support for those companies who would like to sue the counterfeit manufacturers. In the wake of BPC’s proposal, special IPR cells have now been set up in Maharashtra and Madhya Pradesh.

P&G formed a Special Multi-Functional Trademark Protection Team and sued all the infringers for counterfeiting. This made the consumers to be more aware about genuine P&G products and reduced the loss from 10-15% in 1999 to 2-3% in 2003.

After Pepsi’s products were counterfeited, Pepsi regularly conducted raids at suspected distributors and sellers of spurious goods. Between 2000 and 2001, Pepsi raided about 70 locations in various cities across India in Delhi, Haryana, Maharashtra and Tamil Nadu. HLL also constantly monitored its products by enquiries, checks, and other market intelligence sources. If HLL found any distributor/franchisee selling any spurious or look-alike products of HLL, it terminated its contract with that distributor/franchisee, and also sued it for losses and criminal damages. According to Ashok Gupta, General Manager (Legal), HLL, speed and constant vigilance was very important in tackling the menace of counterfeiting.

ENDNOTES:

6. Colyer, Edwin, Op. Cit.

7. “Building Your Brand,” http://www.va-interactive.com.

8. “Message From the COO,” http://www.kobayashi.co.jp, April 2002.

9. Gieschen Consultancy, based in Canada, provides counterfeit intelligence analysis and security research pertaining to documents, products and intellectual property.

My Favourite Books

The following are some of my favorite books:

Discover Your Destiny – Robin Sharma
The Greatness Guide – Robin Sharma
Who Will Cry When You Die? – Robin Sharma
The Monk Who Sold His Ferrari – Robin Sharma
The Broken Wings – Kahlil Gibran
Dhirubhaism – A.G. Krishnamurthy
The Present – Spencer Johnson
Who Moved My Cheese? – Spencer Johnson
The Power of Positive Thinking – Norman Vincent Peale
Courage and Confidence – Norman Vincent Peale
The Be-Happy Attitudes – Robert Schuller
Another Word A Day – Anu Garg
The High Performance Entrepreneur – Subroto Bagchi
The Art of the Start – Guy Kawasaki
Chicken Soup for the Soul at Work – Jack Canfield & Mark Victor Hansen
A Word A Day – Anu Garg
The Invisible CEO – A.G. Krishnamurthy
The 7 Habits of Highly Effective People – Stephen R. Covey
Siddhartha – Herman Hesse
Mega Living! 30 Days to a Perfect Life – Robin Sharma

My Favourite Writers/Authors

The following are some of my favorite writers:

Kahlil Gibran
William Shakespeare
O. Henry (a.k.a. William Sidney Porter)
Robin Sharma
Swami Vivekananda
Sudha Murthy
APJ Abdul Kalam
R.K. Laxman
Norman Vincent Peale
Robert Schuller
Mahatma Gandhi
Herman Hesse

My Favourite Movies

The following are some of my favorite movies, which I feel everyone should watch:

Aa Naluguru (Telugu)
Aparichitudu (Telugu)/Anniyan (Tamil)
Bharateeyudu (Telugu)/Indian (Tamil)
Tagore (Telugu)/Ramana (Tamil)
Lakshya (Hindi)
Baghbaan (Hindi)
Munnabhai MBBS (Hindi)
Lage Raho Munnabhai (Hindi)
Lagaan (Hindi)
Yedher Neechal (Tamil)
Samsaram Oru Minsaram (Tamil)
Kaadhal Kotai (Tamil)
The Lord of the Rings (English)
Vanchinathan (Tamil)
Ramachandran (Tamil)

Love in Hindsight

by P. Mohan Chandran

Being afar, my heart you touch,
Is my love for you double-Dutch?
Don’t you know I love you very much?
I’ll never find again, joy such!

You’ve left me completely alone,
Has your heart turned into stone?
But, with you, I’ll never pick a bone,
Even if it means, lifelong I’ve to moan.

My dull life, you’ve enriched,
By your love, I was bewitched.
Before you, my heart, I pitched,
But, to a different plane, your heart, you switched.

An unforgettable lesson, you taught me in life,
The art of killing one’s heart, without a knife!
But, you know not, you’ve given me a rebirth,
To attain it, all trials and tribulations, were truly worth!