Do consumers need branded generics?

Posted on 4th November 2022

Branded products are certainly good for the brand owner’s bottom line–but are they good for the consumer?

Current received wisdom says no. As Naomi Klein argued in No Logo, greater access to information should logically mean consumers wake up to the minimal difference between, say, Nikes and generic sneakers, and stop paying for the label.

But No Logo was published in 1999, and that hasn’t happened yet. Why not?

The reality is that brands serve a useful purpose for consumers. It’s not just about pride in a label, it’s also about reliability and trust: the consumer knows what they’re getting with a branded product. This is particularly important in pharma, where the consumer needs to trust the product with their health and life.

Pharma brands

Pharma brands play a key role across the value chain, from the manufacturer or brand owner to the prescribing doctor to the dispensing chemist and finally the patient.

Branding has a strong influence on how people remember, buy and consume products. Prescribing generic ingredients, which often have long and complex names, might simplify things for the doctor, but would severely confuse things for the patient and potentially for the chemist who has to dispense these medicines.

There’s also the fact that generics are of variable quality, and in the absence of brands, the temptation might be strong for chemists to pick the cheapest and boost profits at the expense of the patient’s health.

Driving innovation

Conversely, when multiple companies are selling the same drug under different brand names, brand owners are incentivised to innovate and improve the product, packaging, and delivery systems, in order to get the edge over their competition. If companies are not allowed to sell branded products, this incentive is lost.

In pharma as in all other industries, the main argument for the continuation of brands is that they serve the consumer, making it easier for them to identify, buy, and remember products.

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