Pharma brand valuation is on the rise. That’s according to Brand Finance’s annual study, which calculated an 11.5% increase in U.S. pharma companies’ brand value and a similar 11.2% increase for global brands.
Roche retained the top spot in the brand ranking, followed by Bayer and Pfizer in the second and third spots, switching places from last year. All three increased their brand valuations over 2018’s showing, with Roche gaining 7.8%, Bayer jumping by 11.5% and Pfizer leaping 16.5%. The Brand Finance report attributed Roche’s growth to «its continued investment in world-leading drug development.»
It was Merck that made the biggest jump in the study, though, with an increase of 29% and a move into the No. 5 spot. Novartis, meanwhile, was the only pharma brand to see a decrease in value, down 6.1%, which Brand Finance consultant Hugo Hensley attributed to its announcement that it would spin off Alcon, a well-known consumer product division that added brand impact.
Pharma brands from the U.S. landed in five of the top 10 spots in the ranking and comprised 46% of the total brand value in the study. Brand Finance evaluates all public pharma companies with valuations of $1 billion or more.
The U.S.-specific growth “was mostly due to strong business growth and M&A activity. The big brands, many of which are U.S.-based, are quickly attempting to improve their pipelines by acquiring promising smaller companies,” Hensley said.
While that worked to their brand value advantage this year, he cautioned Big Pharma to remain aware of the potential that an acquisitive strategy has to stifle the perception of innovation, and to carefully consider the pros and cons of each of the brands acquired.
Hensley had more advice to pharma companies looking to bump up brand valuation in the coming year, too. He suggested focusing on the most actionable areas inside Brand Finance’s Brand Strength Index, which include brand investment in marketing and brand performance.
“Effective brand investment is the only way to enhance the brand value consistently over time, as the effects feed through into stakeholder equity and business performance,” he said.