Healthcare is an essential need in life and with advancements in medical science and technology, directed treatments for ailments are constantly being developed and improved upon. In addition, the Covid-19 pandemic reinstated the importance of healthcare and how more funds have to be invested in the research and development of pharmaceutical products.
The global consumption of pharmaceutical products has expanded rapidly at an unprecedented rate. From the years 2001 to 2021, the worldwide pharmaceutical industry experienced a significant boost in revenue from 390 billion USD to 1.42 trillion USD. Through these global consumption statistics, it is evident that pharmaceuticals provide immense market potential. In order to tap into this market, the number of active pharmaceutical companies has more than quadrupled from 1198 in 2001 to 5099 in 2021.
With a wide range of products and brands available, there is an increasing need for pharmaceutical companies to provide unique propositions in order to remain competitive and capture market share. Pharmaceutical brands incorporate marketing strategies (product, price, place and promotion) to differentiate themselves from generic drugs. This includes product innovations and packaging design, higher pricing, omni-channel presence and prominent direct-to-consumer advertising in order to distinguish branded drugs from the generics.
The role of branding in the pharmaceutical industry is a niche research area that has not been extensively studied. Understanding consumers’ attitudes and purchase behaviour offers useful practical knowledge for brands to improve on their offerings and strengthen their brand equity in a saturated marketplace.
Over-the-Counter medication consumption
Over-the-Counter (OTC) medications are a specific branch of pharmaceutical products. This refers to medication that are “sold directly to a customer without a prescription from a medical professional”. They are typically sold in retail pharmacies, convenience stores and even in supermarkets or grocery stores. OTC medication caters to a wide spectrum of healthcare needs including Non-Steroidal Anti-Inflammatory Drugs (NSAIDs) for pain relief and/or fever, antihistamines for allergy relief, antacids for indigestion, laxatives, cough suppressants, topical antifungal creams for skin conditions or antiseptics for bites, burns and bruises.
Studies have shown high preference for self-medication, particularly amongst young consumers. Higher healthcare knowledge and literacy as well as comparatively better physical health amongst younger consumers which results in low perceived risk of OTC medicine usage, are possible contributing factors to their preference for self-medication. This study seeks to understand OTC consumption choices of young people aged 21-30 within the geographical context of Singapore.
Singapore is an ideal region for this study as it has a strong pharmaceutical sector due to its focus on investment in the biomedical industry. The high profitability of the pharmaceutical industry in Singapore compared to other sectors is particularly attractive – in 2007, the Returns on Investments (ROI) rose to 43% compared to an average of 21% in other sectors. This, therefore, attracts a large number of pharmaceutical brands to expand their operations in Singapore. OTC consumption levels in Singapore have been increasing steadily, experiencing a 7% growth from 2016 to 2021. Moreover, branded drugs in Singapore have captured a significant market share and private label generics in comparison, only account for 0.4% of market share in 2021, which provides grounds for research into the effect of branding on consumers’ purchase preferences.
Since its independence in 1965, Singapore has held firm ethos against the notion of a welfare state and placed emphasis on individual responsibility towards healthcare. As a result, government expenditure on healthcare in Singapore was limited to 2.2% of the Gross Domestic Product in 2019. Instead, a combination approach of individual funding and targeted subsidies towards healthcare is adopted in the country. Therefore, owing to high cost of consultation fees at clinics coupled with the fast-paced lifestyle which drives desire for quick relief and reduced waiting time, many Singaporeans seek OTC medication as the first point of treatment for minor ailments. Therefore, this exploratory study seeks to determine young Singaporean consumers’ attitudes towards OTC consumption and the underlying reasons behind purchase choices of OTC brands.
The following four main research questions emerged from the literature review:
- What are consumers’ attitudes towards choice of OTC pharmaceuticals?
- What are consumers’ reasons behind preference for either generics or branded medication?
- Is the purchase of an OTC pharmaceutical product an instinctive decision (System 1) or is it a cognitive (System 2) decision?
- Does the choice of OTC pharmaceutical brands involve more emotional factors or rational factors?
- To what extent has the Covid-19 pandemic had an impact on consumers’ purchase of OTC pharmaceuticals?
The interview data presented findings that directly addressed the research questions set forth for this study. Pertaining to research question 1 on attitudes towards OTC pharmaceutical consumption, participants used OTC medications to treat minor ailments, which stemmed from preference for convenience as well as convictions about the proven efficacy of OTC drugs. At the same time, preventing overload on the healthcare system was also an interesting collectivist mindset that was demonstrated by some participants. Most participants reported using OTC medication for pain, fever, flu or sore throat, with Panadol being the most commonly used brand.
In terms of examining reasons behind choice of branded or generic drugs, as posited by research question 2, participants demonstrated a strong preference for branded drugs due to a lack of awareness of generics being sold. This was partially due to the latter’s indistinct packaging and placement on shelves, when compared with the visually prominent branded drugs. Although most participants conceded that generics would be just as effective as the branded counterparts, some expressed reservations due to the lack of knowledge on its contents, dosage and effectiveness on oneself. Overall, it was apparent that brand loyalty overruled the consideration of generics as switching behaviour was generally avoided when a particular brand was perceived to work well on oneself or an emotional attachment with the brand was established.
Research question 3(a) sought to determine the automaticity of decisionmaking and this study evidently showed that the decision-making route of choosing OTC pharmaceutical products depended on context. While unfamiliar ailments involved a more cognitive, information seeking thought process, common, familiar ailments elicited an automatic, instinctive response which relied on heuristics.
Research question 3(b), on the other hand, focused on the emotional versus rational behaviour of OTC consumption. The novel finding of this study would be the identification of emotional purchase choices of medication brands, owing to personal memories and experiences. Another prominent finding is the mismatch between consumers’ rational intentions and non-rational purchase behaviour towards OTC brands. While the majority of participants claimed to give importance to rational factors that focused on the functional utility of the products such as efficacy, active ingredients, dosage and portability, these factors were not always evaluated during the actual purchase behaviour. Branding tended to disrupt rational considerations, especially for common, familiar ailments, and comparisons were not carried out at point of purchase due to strong preferences towards particular brands. This presents a new perspective to existing literature, which assume that consumers always rationally evaluate their purchase choice of OTC medications.
Lastly, research question 4 aimed to identify the extent of impact the Covid-19 pandemic has had on consumers’ purchase of OTC pharmaceuticals. Although there were no significant product shortages experienced across the country, preferred OTC brands were sought in spite of hinderances during the pandemic, which highlights the long-term potential of OTC brand loyalty. The main takeaway from the pandemic is an increased awareness of the available OTC medications as well as a wider acceptance of self-medication, which can be harnessed to marketers’ advantage in the promotion of both brands and generics.
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16 November 2022