Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. Brands are first evaluated to determine their power / strength (based on factors such as marketing investment, familiarity, loyalty, staff satisfaction and corporate reputation) and given a corresponding score out of 100 and letter grade up to AAA+. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand, which is projected into perpetuity to determine the brand’s value. The world’s most valuable medical and healthcare brands are ranked and included in the Brand Finance Healthcare 25 2017.
Essilor is the most powerful brand in the medical and healthcare industry, with a Brand Strength Index score of 74. Its brand value is US$2.9 billion, backed by strong revenue growth over 2016, particularly from online and sun-wear sales. Essilor recently agreed to join forces with Luxottica in what could become one of Europe’s largest ever international mergers. The proposed merger has caused quite a stir, but has been generally well received. As medical considerations and functional attributes become more important to eyewear brands, there are clear opportunities for collaboration. Brand Finance’s results show however that Essilor brings more that know-how and exceptional products to the table, its brand is an essential asset too. Brand Finance’s David Haigh comments, “The strength and value of the Essilor brand are clear. Post-merger, management will therefore need to structure the new entity’s brand architecture very carefully and understand the sources of and potential threats to brand value going forward.”
The global healthcare industry is dominated by the US with 22 brands in the top 25 table. UnitedHealth Group, the largest US health insurer, leads the industry as the most valuable brand despite a 10% fall in brand value to US$13 billion. Despite the fact that the industry has in many cases struggled to operate profitably under Obamacare, UnitedHealth Group released impressive numbers for fiscal year 2016, with revenue growth of 17.6% year over year. The healthcare giant has already exited from most of the states that offer plans under Obamacare and President Trump’s planed reforms to the policy may make further retrenchment unnecessary. Additionally, the company is planning to buy Surgical Care Affiliates for about US$2.3 billion which is expected to close in the first half of 2017.
The much-hyped US$54 billion merger between Anthem and Cigna was dropped due to an adverse legal judgement, though an appeal has been launched. Cigna, with a brand value of USD 5.3 billion, is the fastest growing brand with 50% brand value growth. Cigna has also been active in collaborations to bring additional features like fingerprint access and more health resources to their customers. Both companies exceeded the earnings and revenue expectations of 2016. Anthem's results were driven by strong performance in its government-business segments and increase in Medicaid membership, whereas Cigna's were driven by its commercial Healthcare and Global Supplemental Benefits business.
Cardinal Health was this year’s highest new entry. It secured 15th place thanks to its strong revenues and its huge contract wins. The growing health giant landed a USD 2.25 billion contract with Pentagon to provide worldwide ordering and distribution of surgical supplies.
Germany’s most valuable healthcare brand (and the only German brand in the table), Fresenius, is looking forward to its largest takeover to date, as it acquires Quironsalud for US$6.4 billion. Acquiring Spain’s biggest private hospital chain solidifies Fresenius’s position as the leading private hospital operator in Europe.
Medtronic saw a disappointing earnings result this year, accounting for the 15% year to year drop in brand value. The company still made a huge leap with the FDA approval of its artificial pancreas for diabetes, which is to hit market in spring of 2017 so brand value could well rebound next year.
Becton Dickinson was another less successful brand. It suffered a major drop in both rankings and brand value, which is down 45%. The Occupational Safety and Health Administration (OSHA) found a dozen health violations by the brand after cases of finger amputations of its employees came on the news.
Note to Editors
Brand values are reported in USD. For precise conversions into local currency values, please confirm rates with the Brand Finance team.
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance for more than 25 years, Brand Finance evaluates the strength of brands and quantifies their financial value to help organizations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes over 100 reports which rank brands across all sectors and countries.
Brand Finance also operates the Global Brand Equity Monitor, conducting original market research annually on over 5,000 brands, surveying more than 150,000 respondents across 38 countries and 31 industry sectors. Combining perceptual data from the Global Brand Equity Monitor with data from its valuation database enables Brand Finance to arm brand leaders with the data and analytics they need to enhance brand and business value.
Brand Finance is a regulated accountancy firm, leading the standardization of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671 and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Brand is defined 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. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
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 Finance calculates the values of brands in its rankings 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, while 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 Discount post-tax brand revenues to a net present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.