Newsmaker pharmas Pfizer ($PFE) and Valeant Pharmaceuticals ($VRX) both saw brand valuation increases of more than 30% in this year's Brand Finance ranking.
Pfizer leapfrogged to No. 1 in the 2016 ranking of the top 10 pharma brands with a 34% increase in value, up from No. 4 last year. Valeant, meanwhile, moved up to the No. 6 spot from No. 9 last year, with a 31% increase.
Pfizer's brand value was calculated at $4.4 billion, while Valeant came in at $2.79 billion. In comparison, the top 5 finishers among all global brands were Apple ($AAPL) at $145.9 billion; Google ($GOOG) at $94.1 billion; Samsung at $83.2 billion; Amazon ($AMZN) at $69.6 billion and Microsoft ($MSFT) at $67.3 billion.
One reason why Pfizer's brand value improved so much was due to "aggressive expansion plans" which implies an increased demand for its drugs, said Alex Haigh, a Brand Finance valuation consultant, via email. The company last year rolled out a hot new breast cancer drug, Ibrance, and made a slew of headlines with its $160 billion Allergan ($AGN) merger.
He said Valeant's acquisition approach to drug development with last year's takeovers of Salix, Mercury Holdings and Sprout Pharmaceutical as well as others was likely the main reason for its brand valuation increase.
Perhaps the old adage about bad publicity--there's no such thing--was at work here, too, as Valeant attracted a lot of unwanted attention last fall for some outsized price increases, and for its aversion to spending big money on R&D. Pfizer also attracted lots of press around its Allergan merger plans, and some negative, particularly around the deal's tax benefits.
Bayer, which was No. 1 last year on the Brand Finance pharma list, fell to the second spot after a 10% drop in brand value. However, as part of its overall analysis, Brand Finance assigns a brand strength score ranging from AAA+ and D, similar to a credit rating, and in that, Bayer remained the strongest brand in the study with an AAA-, Haigh said. See more details regarding Brand Finance's methodology here.
"Bayer's success in its endorsement branding approach has meant that it is the strongest corporate brand in our (pharma) study," he said. "That does not necessarily mean that it has the strongest or most valuable collection of brands … However, since Bayer has had the strongest revenue performance over the last five years, one might suggest that they aren't doing too badly on the marketing front."
Endorsement branding such as Bayer's strategy is the linking of a corporate name to a product, for example, Bayer Aspirin. Haigh noted another typical pharma branding strategy is a "house of brands" structure in which the corporate brand is not linked to specific product brands. Consumer packaged goods giant Procter & Gamble, with brands like Crest, Olay and Vicks, is often cited as an example of that, but it's also a common pharma strategy in which individual drug names are used for marketing with little mention of the corporate parent.
Most of the other pharmas on Brand Finance's 2016 list maintained similar positions from last year; however, Haigh said, "Roche, Novartis, Merck, GSK and Sanofi have all seen reductions in value of around 10% following weakening global demand in both developed and emerging markets."
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