Top 25 healthcare brands could lose over $16bn from COVID-19
The world’s top 25 most valuable healthcare brands could lose up to US$16 billion worth of brand value as a result of the COVID-19 pandemic, according to the latest Brand Finance Healthcare 25 2020 report. Brand Finance’s analysis shows that the healthcare sector is a moderately impacted industry globally and could face a potential 10% loss in brand value.
Looking beyond the healthcare sector, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated US$1 trillion as a result of the Coronavirus outbreak.
Brand Finance has assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. The likely impact on brand value was estimated for each sector. The industries have been classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020.
Alex Haigh, Director, Brand Finance, commented:
“Although we are witnessing some short-term damage to the healthcare sector from COVID-19, this pandemic could actually act as a catalyst to reform the industry, which has, over many years, been taking steps towards becoming more virtually enabled and digitalised. For example, we have witnessed the acceleration of telemedicine, remote monitoring and online trials. Without a doubt, COVID-19 has forced the sector to review its operations and capabilities to ensure that it is disaster proof in the future.”
UnitedHealthcare retains top spot
UnitedHealthcare has retained the title of the world’s most valuable healthcare brand despite recording a 7% brand value loss to US$28.3 billion. As the world’s largest healthcare company by revenue it is unsurprising that UnitedHealthcare remains in a league of its own in the Brand Finance Healthcare 25 2020 ranking, with second ranked Anthem’s brand value standing over US$11 billion lower at US$16.6 billion. Anthem recorded a 22% brand value increase as memberships grew from both the government and commercial segments, and as a result of the launch of IngenioRx, which secured its first external contract with Blue Cross Idaho.
UnitedHealthcare, which covers nearly 50 million people, has posted a solid financial performance over the previous year, a result of growth in commercial and Medicare Advantage membership. UnitedHealthcare’s and its subsidiary Optum’s (down 6% to US$11.9 billion) decrease in brand value is largely attributable to expected slowing revenues as the pace of growth of the UnitedHealthcare Community & State segment weakens with Medicaid enrolment dying down.
UnitedHealthcare leads the way for a further 21 US brands in the ranking, with a total brand value of US$153 billion, equating to 94% of the ranking’s value.
HCA grows 40%
HCA Healthcare is the sector’s fastest growing brand recording a 40% brand value increase to US$8.8 billion, simultaneously jumping 3 spots in the ranking from 9th to 6th.
The Nashville-based hospital chain has posted solid revenue growth in 2019 and it marked a record year treating 35 million patients, both of which demonstrating the brand’s successful implementation of its portfolio diversification strategy and robust growth strategy. HCA is rising to the challenges presented to the sector from the increase of urgent care centres and ambulatory surgery centres - which pose a direct threat to traditional hospital services - by expanding its operation to include more specialised health services.
BD is sector’s strongest
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation. Alongside revenue forecasts, brand strength is a crucial driver of brand value. According to these criteria, BD (up 16% to US$4.3 billion) is the world’s strongest healthcare brand with a Brand Strength Index (BSI) score of 77.7 out of 100 and a corresponding AA+ rating.
The global medical technology brand has posted solid results in the environment metrics, a testament to its commitment to both renewable energy and on-site generation, both of which have contributed to a 75% reduction in greenhouse gas emissions between 2008 and 2018. Furthermore, since 2018, the brand has launched more than 20 new products, with a clear focus on innovation in key areas including medication management, lab automation and health care worker and patient safety.
Throughout the COVID-19 pandemic, BD has been working with clinical diagnostics company BioMedomics to successfully develop a test that can confirm exposure to COVID-19 in mere 15 minutes.
Note to Editors
Every year, Brand Finance values 5,000 of the world’s biggest brands. The 25 most valuable healthcare brands are included in the Brand Finance Healthcare 25 2020 report.
Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.
Additional insights, charts, and more information about the methodology, as well as definitions of key terms are available in the Brand Finance Healthcare 25 2020 report.
Data compiled for the Brand Finance rankings and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.
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About Brand Finance
Brand Finance is the world’s leading independent brand valuation consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands.
Brand Finance helped craft the internationally recognised standard on Brand Valuation – ISO 10668, and the recently approved standard on Brand Evaluation – ISO 20671.
Brand Finance is a chartered accountancy firm regulated by the Institute of Chartered Accountants in England and Wales (ICAEW), and also the first brand valuation consultancy to join the International Valuation Standards Council (IVSC).
Brand Finance’s brand value rankings have been certified by the Marketing Accountability Standards Board (MASB) through the Marketing Metric Audit Protocol (MMAP), the formal process for validating the relationship between marketing measurement and financial performance.
Brand Finance has assessed the impact of the COVID-19 outbreak based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. Based on this impact on enterprise value, Brand Finance estimated the likely impact on brand value for each sector. The industries have been classified into three categories – limited impact (0% brand value loss), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the severity of enterprise value loss observed for the sector in the period between January and March 2020
Definition of Brand
Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines a brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Valuation Approach
Brand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Brand revenues are discounted post-tax to a net present value which equals the brand value.