Own brand instead of interchangeability

When counselling becomes a brand

Almost every pharmacy knows the problem. Many products on the shelf are also available at the competition, online or a few streets away. The customer can compare, check prices and, in case of doubt, buy where the product is cheaper or more quickly available. Counselling alone does remain a central competitive advantage, but it can only be made exclusive to a limited extent.

An own product line changes this starting position. The product is no longer merely part of the range but part of the pharmacy’s identity. A face cream, a barrier serum or a body care product under one’s own brand is available only there or through one’s own distribution channels. The competition thereby shifts from a pure product comparison towards trust, counselling, brand and customer experience.

In dermocosmetics in particular, the pharmacy has a strong starting position for this. Customers are not just looking for a cream but for solutions for dry skin, sensitive skin, first signs of skin ageing, changes during the menopause or an impaired skin barrier. Pharmacists can understand these needs from daily consultations and develop from them products that arise not at the marketing table but from concrete customer problems.

The real competitive advantage therefore does not lie in bringing yet another hyaluronic serum to market. It arises when product, counselling and positioning form a unit.

A magistral formula is not an own brand

Before a pharmacy begins development, a central distinction is necessary. A magistral formula and a cosmetic own brand are not, in legal terms, two different production routes for the same business model.

A medicine under formula magistralis is produced in Switzerland on the basis of a medical or veterinary prescription. Production is carried out by a community or hospital pharmacy authorised to do so, or under a corresponding contract manufacturing arrangement.¹

Alongside this, therapeutic products law recognises, among other things, medicines under one’s own formula. These are exclusively non-prescription medicines produced according to a formula of one’s own or published in the professional literature and dispensed to one’s own customers. For these preparations too, manufacturing authorisations, quantity limits and the rules of Good Manufacturing Practice for medicines in small quantities apply. In-house production fundamentally requires a manufacturing authorisation from the canton or, depending on the risk assessment, from Swissmedic.¹

For building a scalable brand there is a further restriction: formula medicines may not be widely distributed and advertised like ordinary commercial products. Swissmedic notably restricts the public promotion of such products considerably. With formula magistralis, the general public may in principle only be informed that corresponding production orders can be carried out.¹

The classic magistral formula is therefore outstandingly suited to making pharmaceutical competence visible and offering individual care. As a basis for a broadly positioned, heavily marketed dermocosmetics brand, by contrast, it is only of limited use.

For an own care line, the route usually runs through cosmetics

If a pharmacy wants to develop, say, its own cleanser, a serum, a barrier cream and a body care product, it will as a rule go through cosmetics law, provided that composition, purpose and advertising claims actually correspond to a cosmetic product.

This opens up considerably more entrepreneurial scope. The products can be given their own brand name, designed with a uniform visual identity and positioned through the pharmacy’s corresponding offering. At the same time, the impression must not arise that cosmetics are regulatorily simple.

For every cosmetic product regularly placed on the market in Switzerland, a product information file is required. This contains, among other things, a safety report prepared by a qualified professional, a description of the manufacturing method and a declaration of compliance with Good Manufacturing Practice. The GMP requirements are based on ISO 22716. Formal ISO certification is not prescribed for this, but the requirements must be met.²

Small pharmacies too cannot invoke an exemption for artisanally produced cosmetics. The FSVO makes it expressly clear that products sold professionally and continuously through pharmacies, drugstores or the internet must meet the regular requirements.³

The safety report also goes considerably beyond a simple list of ingredients. It takes into account, among other things, composition, physical and chemical properties, stability, microbiological quality, packaging material, exposure and toxicological profiles. With corresponding formulations, microbiological investigations and preservative challenge tests may also be required.⁴

The most frequent mistake begins with the product

Many own-brand projects start with a question such as: “Which products can a manufacturer offer us?” Strategically, the reverse order would be better.

The starting point should be: what should the pharmacy become known for with this line?

Yet another generic anti-ageing series with cleanser, day cream and serum will struggle to hold its own against established brands. It becomes more interesting when a pharmacy develops a clear positioning out of its actual customer base.

That could, for instance, be a minimalist line for highly sensitive skin. A care range for skin changes around the menopause. A barrier line for very dry skin. Or a range that deliberately relies on few active ingredients and transparent formulations and is consistently linked with personal skin counselling.

The pharmacy has in this an advantage that many pure cosmetics brands first have to build up at great cost: trust.

This trust must not, however, be squandered through exaggerated product promises. Cosmetic advertising claims must in Switzerland be truthful, substantiable and not misleading. Medical or therapeutic effects may not be attributed to cosmetic products.²

A cream may therefore, for example, be geared towards the care of dry skin or support of the skin barrier. Claims such as the treatment of eczema, rosacea or another disease can by contrast change the regulatory classification.

The product idea must therefore be thought through from the outset together with claims, packaging and communication.

Produce yourself or have it produced?

The pharmacy then faces the fundamental make-or-buy question.

In-house production has a strong emotional and brand appeal. “Developed and produced in our pharmacy” can create authenticity. Formulations can be adapted comparatively quickly, small batches allow experiments and the pharmaceutical know-how stays in-house.

This advantage, however, has a price.

The pharmacy takes on more than mixing and filling. It needs suitable processes for raw materials, production, hygiene, batch documentation, quality assurance, traceability and storage. For cosmetics, the GMP requirements must be met and the necessary data for the safety assessment must be available. The FSVO names ISO 22716 as the reference standard for cosmetic Good Manufacturing Practice.²

Water-containing creams and serums in particular are technologically considerably more demanding than their appearance suggests. Stability, preservation, microbiological safety and packaging must work together. A formulation that looks good after two weeks in the laboratory is far from a marketable product with reliable quality over its entire shelf life.

Added to this is the economic factor. Every hour a pharmacist spends on production, documentation or quality assurance is not available for counselling, services or other value-adding activities.

In-house production is therefore of interest above all where manufacturing competence, suitable infrastructure and a deliberately small production model already exist.

Contract manufacturing: less romance, often more scalability

For many pharmacies a specialised contract manufacturer is therefore the more pragmatic entry into an own dermocosmetics brand.

There are different models here. In the simplest case, an existing formulation of the manufacturer is offered as a private label with one’s own packaging and branding. This allows a comparatively rapid market entry but offers little genuine product differentiation.

More interesting is the development of an individual formulation. Pharmacy and manufacturer jointly define active ingredients, texture, positioning and target costs. The manufacturer then takes on development, scale-up, production and filling, and depending on the provider can also support safety assessment, stability testing, packaging and regulatory documentation.

The pharmacy thereby gains professionalism and scalability but gives up control.

Minimum order quantities can tie up capital. Production slots lead to longer lead times. Formulation changes are more laborious. And anyone who merely puts a new label on a standard white cream may be building an own brand, but not yet a real competitive advantage.

The choice of manufacturer is therefore decisive.

Before signing a contract, it should be clarified who owns the formulation, whether exclusivity exists, which minimum quantities apply, who may approve changes of raw materials, who provides stability and safety documentation, how complaints and recalls are regulated, and what rights the pharmacy has if it later wishes to change manufacturer.

Regulatory responsibility must also not simply be regarded as “handled by the manufacturer”. For every cosmetic offered in Switzerland, a manufacturer or importer must be named. The respective responsibilities must be clearly regulated according to the actual constellation.³

In-house production versus contract manufacturer

For a pharmacy wanting to establish its own dermocosmetics line for the first time, contract manufacturing is likely in most cases to be the economically more sensible model. In-house production becomes interesting when it is itself part of the brand positioning and the necessary processes already exist.

The strongest solution can be a hybrid model

Particularly interesting is the combination of both worlds.

A pharmacy could offer a professionally produced cosmetic core range under its own brand and in parallel use its compounding competence for individual pharmaceutical solutions. The cosmetics line creates recognisability and scalability. Compounding demonstrates pharmaceutical know-how and individualisation.

“We also sell skincare” thus becomes, for example:

We are the pharmacy for sensitive and demanding skin. We analyse, we advise, we formulate individual solutions where that is medically sensible, and for daily care we have developed our own product range.

Such a concept is considerably harder to copy than a single product.

The road to your own line

Before the first product, therefore, should come not the search for a laboratory but a brand strategy.

The pharmacy must first determine which concrete customer problem it wants to solve better than existing providers. After that, a starting range as focused as possible should be defined. Three outstanding products are usually more valuable for brand building than twelve interchangeable articles.

Then follow the regulatory classification and the decision between in-house and contract manufacturing. Precisely with borderline products, classification should be clarified early, before money is invested in formulation, packaging and communication.

Only then does the actual development begin, with formulation, safety assessment, stability, packaging, product information file and labelling. With cosmetics, the advertised effects must also be substantiable. If formulation, packaging or other relevant product information later change, the product documentation must be updated accordingly.³

In parallel, the brand should be protected and its visual identity developed. Name, packaging and positioning must be designed so that they also work when three products later become eight.

And finally, the own line needs a firm place in the consultation. A product that merely stands somewhere on the shelf between international brands remains a trading good. Only the connection with skin analysis, counselling, samples, follow-up and a comprehensible recommendation turns it into part of the pharmacy concept.

Margin is not the biggest advantage

An own product line is frequently justified primarily by higher margins. That can be a positive effect but should not be the central motivation.

The strategic value lies deeper.

A strong own brand is not directly comparable on price. It raises the likelihood that customers will come back to the same pharmacy. It creates occasions for counselling conversations. It makes pharmaceutical competence visible. And it builds a brand value that is not entirely dependent on suppliers.

The pharmacy can thereby step, to some extent, out of the role of a pure distribution channel and become a brand owner itself.

That is precisely where the entrepreneurial potential lies.

Conclusion

Magistral compounding and own-product marketing should not be played off against one another. They serve different purposes.

Compounding is an expression of pharmaceutical individualisation and can create an enormous competence advantage. Because of the therapeutic products law requirements on production, dispensing and advertising, however, it is not a freely scalable brand model.¹

An own dermocosmetics line, by contrast, offers considerably more possibilities for brand building. It does, however, require professional product development, safety assessment, GMP-compliant production, correct labelling and robust claims.²

For most pharmacies a qualified contract manufacturer is therefore likely to be the most sensible entry point. Anyone who already has manufacturing competence, infrastructure and a strong local positioning, by contrast, can create additional authenticity with in-house production.

What ultimately matters is not who stirs the cream. What matters is whether the pharmacy solves a relevant customer problem better than others, develops a credible product from it and consistently links that product with its pharmaceutical counselling competence.

Then an own brand becomes more than a logo on a package. It becomes a competitive advantage.