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.
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.