View the full Brand Finance Pharma 25 2020 report here
Johnson & Johnson is the world’s most valuable pharma brand, according to the leading independent brand valuation consultancy Brand Finance. Despite suffering an 11% drop in brand value since last year, as the brand failed to meet its financial targets in the final quarter of 2019, Johnson & Johnson retains a healthy lead over competitors with a brand value of US$10.9 billion.
Johnson & Johnson’s top spot in the Brand Finance Pharma 25 2020 ranking, the latest iteration of the annual classification of the industry’s most valuable brands, extended to encompass 25 entries for the first time this year, has been sustained by the brand’s relatively strong performance in developing antimicrobial research and development – a growing area of global concern that has remained largely unaddressed by competitor pharmaceutical brands.
Richard Haigh, Managing Director of Brand Finance, commented:
“Johnson & Johnson is the most valuable pharma brand thanks to its continued investment in research and development, most recently in a vaccine designed to battle the deadly coronavirus. With a timely and relevant R&D programme, Johnson & Johnson can hope to maintain its prime position in the industry for years to come.”
Roche leaves Novartis behind
Growing slowly over the years, the gap between Swiss rivals, Roche (2nd, up 10% to US$7.6 billion) and Novartis (11th, down 4% to US$3.2 billion), has widened even further in the Brand Finance Pharma 25 2020 ranking. While Roche has benefited from a renewed commitment to cancer research and an expanding market in China, Novartis has been dragged down by an unprofitable investment in Alcon (22nd, new entry at US$1.2 billion), which resulted in a spin-off in early 2019.
Aside from determining overall brand value, Brand Finance also evaluates the relative strength of brands through a balanced scorecard of metrics on marketing investment, stakeholder equity, and business performance. According to these criteria, Roche is now the industry’s strongest brand with a Brand Strength Index (BSI) score of 79.7 out of 100 and the only one in the ranking to boast an AAA- rating. Novartis’s brand strength declined year on year to 69.6 with a corresponding AA rating, while Alcon has one of the lowest scores in the ranking and an A rating, weakened by the ongoing investigations by the US Department of Justice into the brand’s business practices in Asia and Russia. While the outcome remains to be seen, Alcon’s revenue forecasts are recovering, aided by an aging global population with increased cases of myopia – inspiring Alcon’s plans to roll out the most comfortable contact lenses in the world.
Bayer’s image tainted by Monsanto
Following three years of growth, Bayer’s acquisition of Monsanto has finally taken its toll, causing a 17% drop in brand value to US$5.1 billion and a decline in brand strength from an AAA- rating to AA+. The deal has been recognised by stakeholders as catastrophic to Bayer’s reputation to the extent that, in 2019, the brand’s market capitalisation fell below the total consideration paid for Monsanto. However, Bayer’s latest acquisition of BlueRock Therapeutics may set the brand back on the right track, signalling a return to a pharmaceutical focus and developing a drug pipeline that has recently been stagnant due to the Monsanto acquisition.
Pfizer is fastest falling
Pfizer is the fastest-falling brand in the Brand Finance Pharma 25 2020 ranking, dropping by 20% to US$3.8 billion due to weak forecasts. Impacted by underperforming consumer products from joint venture with GSK (up 7% to US$3.5 billion), Pfizer’s earnings have been significantly reduced this year, exacerbated by their spread across product segments with varying brand requirements – pharmaceuticals, consumer products, and generic medicines. However, the issue appears to have been recognised, as following the merger of equals between Pfizer’s off-patent business, Upjohn, and Mylan, it was revealed that the combined business would move forward under the name Viatris. This fresh start may deliver greater brand value in the long term, as the Mylan brand has recently been rocked by several years of declining prices, manufacturing issues at a key plant, and the prominent civil lawsuit over the 500% price hike of EpiPens, resolved in a US$465 million settlement.
Takeda & Sinopharm make impressive debut
Following the extension of Brand Finance's ranking of the world's most valuable pharma brands to include 25 entries, Asian brands are featured in the ranking for the first time with the most valuable – Chinese Sinopharm (15th) and Japanese Takeda (16th) – each valued at approximately US$2.0 billion. Indicative of the rapid development within the medical device industry in China, Sinopharm has spent the last year expanding its presence in the industry, purchasing a 60% stake in China National Scientific Instruments and Materials Co. Ltd. Hot on their heels, Takeda’s prompt rebranding of Shire after its 2019 acquisition has increased the Japanese brand’s exposure in the US – the world’s largest pharmaceutical market – while adding Shire’s lucrative drug portfolio to the Takeda pipeline. Now listed on both the Tokyo and New York stock exchanges, Takeda can expand their global footprint through wider access to capital markets and longer trading hours for worldwide investors.
View the full Brand Finance Pharma 25 2020 report here
Note to Editors
Every year, Brand Finance values 5,000 of the world’s biggest brands. The 25 most valuable Pharma brands are included in the Brand Finance Pharma 25 2020 ranking.
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 Pharma 25 2020 ranking.
Data compiled for Brand Finance’s 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.
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.
