World: Analysis - Consumer demand for drugs fuels healthcare sector's rise

Agencies fight for lucrative global pharmaceutical ad tasks.

The top ten pharmaceutical companies, which spend around $15 billion a year on promotion, are looking for more sophisticated global marketing solutions. So, it's hardly surprising that communications agencies are bolstering their healthcare credentials.

WPP has formalised its Health at JWT brand, which works from within the main agency. Euro RSCG Life has been formalised by Havas, Omnicom formed DDB Health and Publicis Groupe has reorganised its health concerns under an umbrella dubbed Publicis Healthcare Group.

Much of this activity can be explained by shifts in the healthcare industry.

"Times have changed significantly," Jane Parker, the group president of the Grey Healthcare Group Worldwide, says. "There's now a need to apply mainstream consumer marketing principles."

As more drugs become available over the counter and consumers are increasingly interested to know about prescription-only drugs, there's a steady rise in more high-profile direct-to-consumer promotion. At TBWA WorldHealth Europe, the chairman, Nick Baum, says: "In the US, DTC (direct-to-consumer) has gone from $670 million in 1996 to $2.5 billion in 2002. It's the fastest- growing sector of the ad industry."

In the US, there are branded TV ads for prescription drugs. But even in Europe, where prescription drugs can't be advertised as brands direct to consumers, companies such as Pfizer have run awareness ads which don't mention brands.

Attitudes to drugs coming out of patent protection are also changing.

There used to be a fatalistic attitude to products as they lost patent protection. In the 21st century, it's costing upwards of $800 million to develop a product and worldwide patents last only seven years. "Clients won't let brands die," Jeff Daniels, who is responsible for European operations at Grey Healthcare Group, says. "More and more look early on, even before a product is launched, at how they will keep the brand going."

At the same time, the healthcare industry is gradually consolidating and its giant international corporations are choosing to market more brands using a harmonised international approach. This spells huge business for the lucky network that lands an account or two. Publicis recently won the $235 million global creative account for Sanofi-Synthelabo. Pfizer's merger with Pharmacia has more recently seen the consolidation of its global advertising business for over-the-counter brands into J. Walter Thompson, which also handles a number of Reckitt Benckiser healthcare brands including Bonjela and Fybogel. Pfizer's $147 million media in the US has been placed with Carat, and rumours of more mergers in the industry continue.

"There's a sea change in the way the pharmaceutical business is conducted," Jonathan Hoare, the managing director of DDB Health, says. "In the past two-and-a-half years, there's been a real surge in globalisation." Part of this is down to cost-saving, but part of it is because companies see what global marketing can do for brands.

More than half of sales by value are made in the US but Europe and Asia are becoming more important markets as the population ages and puts pressure on government and drugs companies to find solutions for the diseases of old age. "There are much more enlightened patients," Hoare says. "They want to keep their willies up, tummies off and hair on, because they want to lead another 20 years of active life."

"International marketing is an inevitable thing," Max Jackson, the European president of Publicis Healthcare Communications Group, says. "With the advent of better communications, the healthcare world really is shrinking and the differences in the practice of medicine and level of knowledge in different countries is decreasing. We now have to address our target audience with one global message or risk confusion and dilution."

That's not always easy, given different regulations and cultures across territories. Pharmaceutical companies are generally conservative, but some will take a bolder stance than others. "If there is a line, how close you get differs by pharma company," Daniels says. "Some see it as a grey one to move about in, others as one you should step over or even a line you should take two steps back from."

Jackson estimates that there will be a 10 per cent growth in healthcare business over the next three years. He singles out preventative medicine for growth and underscores the shift from traditional advertising to education and PR.

Scientific breakthroughs will continue to create new treatments. And then there are new areas: the increasing concern of mainstream food companies with health-conscious messages for one. "I think it's going to be an incredible next 20 years," Parker says.

THE BIG SPENDERS

Ranked by total promotional spend and showing top-spending drug brands

in millions.

$1 Pfizer 2,882

Lipitor 576

Zoloft 411

Viagra 339

2 GlaxoSmithKline 2,303

Paxil 348

3 Merck 2,088

Vioxx 700

Zocor 546

4 AstraZeneca 1,570

Nexium 756

5 Johnson & Johnson 1,399

6 Novartis 863

7 Pharmacia 850

Celebrex 526

8 Schering-Plough 805

Clarinex 320

9 Wyeth 802

10 Aventis 752

Source: IMS Health, Integrated Promotional Services and CMR, 12 months

to end Sept 2002. Includes office and hospital contacts, journal

dollars, retail value of samples and direct-to-consumer advertising.

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