Umbrella Branding in Pharmaceutical Markets

Abstract

Umbrella branding is a marketing practice whereby multi-product rms leverage their reputation across dierent product categories. This paper investigates how advertising in the market of over-the-counter (OTC) drugs aects the decision to buy prescription drugs from a promoted brand name. I exploit specic characteristics of market regulation in Germany to identify the eect of advertising and nd positive eects of umbrella branding on sales of prescription drugs. Umbrella branding results in market expansion, particularly for generic rms which invest in OTC drug advertising. If the eect leads to more consumers of generic substitutes or to more patients in undertreated therapeutic areas, market expansion can have a positive eect on welfare.

Advertising, Innovation and Economic Growth

“…Particularly, such effects are present in innovation-driven industries, e.g. the car industry (Sullivan (1990) and Büschken (2007)) or the pharmaceutical industry (see Suppliet (2016)).…”