CAMPAIGN REPORT ON HEALTHCARE: In good health - The pharmaceutical sector is undergoing important changes that mean this big bucks business is about to get bigger

Outsiders can dismiss healthcare as an area of unpronounceable brand names and unfathomable regulations, but they can’t ignore the fact that right now it’s the focus of a lot of attention from the major agency groups.

Outsiders can dismiss healthcare as an area of unpronounceable

brand names and unfathomable regulations, but they can’t ignore the fact

that right now it’s the focus of a lot of attention from the major

agency groups.

Bates is the latest, with a multi-million-dollar acquisition at the end

of last year. The reasons aren’t hard to find. Pharmaceuticals is a big

bucks industry that has to invest heavily in marketing on a global


In the UK, pharmaceutical sales total pounds 6.1 billion to the NHS in

the UK and pounds 1.4 billion of over-the-counter products, amounting to

more than pounds 126 per head of the population.

Moreover, there’s a potential communications revolution of enormous

significance rumbling in the background, which is further encouraging

the run of agency takeovers and mergers.

Advertising prescription drugs direct to consumers (DTC) is, at the

moment, both against the law in Europe and contrary to manufacturers’

codes of conduct. However, it has established itself very rapidly in the

US, where DTC advertising expenditure is now estimated to be approaching

dollars 2 billion (pounds 1.3 billion). Despite the complexities of the

issue, and an understandable resistance in some Government quarters,

many in the agency world believe DTC promotion could be accepted

practice in the UK within two years.

The DTC issue is explored in more detail elsewhere in this report


Here, it is worth noting two reasons why supporters of direct

communication believe it is inevitable. The first is the internet. The

second is the arrival of what are termed ’lifestyle’ drugs. Both issues

are covered elsewhere in this report (pp6 and 12). There is high public

demand for such drugs (Viagra being one of the most famous), but the NHS

is reluctant to fund them.

’It seems nuts to me that, at the moment, the UK doesn’t know what to do

about these products,’ Julie Hayward, the client services director at

the independent healthcare agency, PTK, says.

A likely solution, in Hayward’s view, is the German system of grading

drugs A-D, where A acknowledges 100 per cent clinical need, and the

state picks up the bill, and D means that if you want it, you pay for

it. This would reinforce the case for direct-to-consumer


This, of course, is a highly exciting prospect for agencies. But it does

pose organisational problems as they wrestle with the best way of

combining medical expertise with communications skills.

In its recent restructuring, for instance, Saatchi & Saatchi decided not

to run healthcare as a separate operation, but to incorporate it into

the business group run by the managing partner, Paul Tredwell.

Tredwell says: ’It is important to straddle the two worlds of healthcare

and mainstream creativity. DTC advertising is more a question of ’when’

rather than ’if’, although agencies will have to be responsible and

avoid undermining the influence of the medical profession in advising


’It’s a case of taking it in slow, sensible steps rather than rushing

headlong into a new world order.’

Sam Small, a senior account director at Grey Healthcare, is another who

sees a growing role for consumer advertising skills in this specialised

sector. ’This is a trend that has picked up in the last year, and I

suppose it comes from the US,’ she says. ’Many products these days are

not completely novel, offering only an improvement on what has gone

before, such as reduced side effects. There’s a need to find emotional

messages that work across global markets.’

All of which serves to highlight the increasing complexity of healthcare

communications. The context is an industry driving inexorably towards

global marketing. Richard Ley, the spokesman for the Association of the

British Pharmaceutical Industry, estimates that it takes ten to 12 years

and up to pounds 350 million to develop a new medicine.

Investments on that scale are only for big players. There are enormous

pressures to maximise global sales and recoup the outlay before patents

expire. In turn, this requires fast but sophisticated international

communications programmes.

Healthcare, of course, embraces more than prescription medicines.

There’s the over-the-counter sector, the pharmacy-recommended sector,

and related areas such as foods with claimed health benefits, vitamins

and medical insurance.

And communications means much more than advertising. Last year,

Omnicom’s Diversified Agency Services division bought Adelphi, a

UK-based consultancy, which provides strategic planning to

pharmaceutical head offices around the globe. Medical education (’med

ed’) agencies and specialist PR shops get involved from an early stage

in the product lifecycle.

As targeting methods have improved, direct marketing in the broadest

sense has taken on a bigger role, too. Nigel Howlett, the chairman of

OgilvyOne, says that GPs’ practices can be accurately segmented, while

the use of helplines and internet sites for both doctors and patients

can improve customer relationships while reducing overheads.

It’s little wonder, then, that the major agency groups continue to build

their interests in healthcare, both geographically and in the range of

skills they offer. Omnicom and WPP dispute which of them is the biggest

in healthcare on the global stage, and neither is satisfied yet.

’Unlike some agencies, we have been in this area for a long time,’ Brian

Emsell, the group operations director for Omnicom’s DAS International,

declares. ’I suspect that we will acquire further businesses, although

we have no great need.’

’It remains such a viable and important industry that if we found a

great healthcare business, we would, of course, be very interested in

buying it, whether it fitted a hole in our portfolio or not,’ John

Zweig, the chief executive of WPP’s specialist communications division,


The biggest deal last year was Cordiant’s surprise purchase of the

Nasdaq-quoted Healthworld Corporation for pounds 113 million in


Although the details are still being worked out, Healthworld will take

on the role of specialist health arm to the Bates advertising


Snyder Communications, the US group that owns Brann & Partners BDDH,

also raised some eyebrows when it floated off its medical detailing arm

- field-marketing targeting doctors - as a separately quoted entity. ’A

phenomenal business, but a different business,’ was how the chief

operating officer, Michele Snyder, described the move to Campaign

recently. ’We wanted to focus on our core skills.’

But perhaps the group is not saying farewell to healthcare


Its award-winning US ad agency, Arnold Communications, won one of the

hotly contested US pitches of 1999, the American Legacy Foundation’s

pounds 100-pounds 140 million anti-smoking drive.

WPP was also very active during the year, snapping up the UK’s leading

independent healthcare PR agency, Shire Hall, in August, and in

November, on behalf of Ogilvy Public Relations, the US-based Feinstein

Kean Partners.

Also in the WPP stable, the Ogilvy Group bought the UK’s biggest

independent healthcare advertising agency, Matthew Poppy. And Medical

Media Services and Wrigley Foster Media Direct swapped shares in October

to create an alliance and increase buying clout.

There are few independents of any size or quality that have not had

approaches from the industry’s giants. And it seems likely that they

will continue to be courted.

Top 15 Healthcare Agencies Ranked by Declared Billings

Rank  Agency                                                    Declared

1999                                                            billings

                                                         (pounds m) 1999

1     McCann Healthcare UK                                         32.00

      Clients: Astrazeneca, Bristol-Myers Squibb, Glaxo

      Wellcome, Hoechst Marion Roussel, Johnson & Johnson,

      Merck Sharp & Dohme, Reckitt & Colman, Roche,

      Sanofi-Synthelabo, SmithKline Beecham

2     Saatchi & Saatchi Healthcare                                 22.00

      Clients: Galderma, Procter & Gamble Babycare, Roche,

      Dupont, Danone, So Good International, Johnson &

      Johnson/MSD, Merial, Pharmacia & Upjohn

3     Sudler & Hennessey                                           21.40

      Clients: Astrazeneca, Brooke Bond, Colgate Palmolive,

      SmithKline Beecham, Takeda, Wyeth Laboratories, Elida


4     Health@Bates                                                 19.20

      Clients: IPPF, Organon, Leo Pharmaceuticals, Roche,

      Warner Lambert Consumer Health, Ferring

      Pharmaceuticals, Unilever, Pharmacia & Upjohn,


5     Paling Walters Targis                                        19.02

      Clients: Boots Healthcare, Glaxo Wellcome, Aventis & Merck,

      Schering Plough, Nutricia, SmithKline Beecham Consumer

      Healthcare, Medical Defence Union, Crookes Healthcare,

      Pfizer, Eli Lilly

=6    Bray Leino Healthcare                                        18.00

      Clients: Dermal Laboratories, Astrazeneca, Roche

      Diagnostics, Thornton & Ross, Dendron, Lanes Healthcare,

      Cochlear Implants, Jacksons, Bausch & Lomb, Colgate


=6    Euro RSCG Healthcare                                         18.00

      Clients: Novartis, Pharmacia & Upjohn, Wyeth Nutrition,

      Mentholatum, Merial Animal Health, Merck Sharp & Dohme,

      Steifel, UCB, Janssen Cilag, Bayer Diagnostics

8     Money Syner Communications                                   16.26

      Clients: Boehringer Ingelheim, Merck Sharp & Dohme,

      Novartis, Pasteur Merieux MSD, Parke Davis, Pfizer,

      Roche, Schwarz Pharma, Sulzer Vascutek, Wyeth

9     PTK Healthcare                                               16.00

      Clients: Stafford-Miller, Carter-Wallace, Novartis,

      Pharmax Healthcare, Novogen, Roche, Sanofi

10    Matthew Poppy Ogilvy                                         15.90

      Clients: Abbott Laboratories, Biogen, Genzyme, Pharmacia

      & Upjohn, Glaxo Wellcome, Janssen-Cilag, Novo Nordisk,

      Convatec, Bristol-Myers Squibb

11    VB Communications                                            13.30

      Clients: Abbott Laboratories, Elan Pharmaceuticals,

      Takeda, Ipsen, Pharmacia & Upjohn, BASF Pharma, Pfizer,

      Norgine, SB Biologicals, Aventis

12    Medicus UK                                                   12.35

      Clients: Aventis, Crookes, Procter & Gamble, Philips,

      Merck, Regent, R & L, Sanofi Synthelab, SmithKline

      Beecham, Schering Healthcare

13    Brader Perryman                                              11.50

      Clients: Astrazeneca, Athena, 3M, Pathogenesis, Searle,

      Schering, SmithKline Beecham

14    Herman Beasley                                               11.20

      Clients: Asta Medica, Chefaro Proprietaries, Hollister

      Europe, Merck Consumer Health, Novartis Consumer Health,

      Oral-B Laboratories, PBI Home & Garden, Aventis Pharma,

      Seven Seas Healthcare, Smith & Nephew Healthcare

15    Woolley Pau                                                  10.85

      Clients: Allergan, Bioglan, Boehringer Ingelheim,

      Bristol-Myers Squibb, Sankyo, Parke-Davis Stiefel

Top Pharmaceutical Advertisers Oct 98 - Sep 99

Rank  Advertiser                             Total       Press    Cinema

                                          (pounds)    (pounds)  (pounds)

1     Procter & Gamble                  15,860,923     478,397         0

2     SmithKline Beecham Consumer

      Healthcare                        14,889,829   2,507,017         0

3     Roche Consumer Healthcare         10,368,009     675,320         0

4     Johnson & Johnson                  8,013,203     221,256    40,001

5     Pharmacia & Upjohn                 7,831,398     887,642         0

6     Reckitt & Colman Products          7,621,656     612,153   138,493

7     Kimberly-Clark                     7,037,999     626,924         0

8     Crookes Healthcare                 6,248,206   1,076,094         0

9     Warner Lambert Consumer

      Healthcare                         5,610,098     465,735         0

10    Whitehall Laboratories             5,070,820   2,171,521         0

      TOTAL                             88,552,141   9,722,059   178,494

Rank  Advertiser                          Radio     Outdoor           TV

                                       (pounds)    (pounds)     (pounds)

1     Procter & Gamble                      174           0   15,382,352

2     SmithKline Beecham Consumer

      Healthcare                         51,753         856   12,330,203

3     Roche Consumer Healthcare       1,413,749     723,758    7,555,182

4     Johnson & Johnson                 204,350     212,296    7,335,300

5     Pharmacia & Upjohn                495,639           0    6,448,117

6     Reckitt & Colman Products          57,103     310,433    6,503,474

7     Kimberly-Clark                    735,433           0    5,675,642

8     Crookes Healthcare                260,549     923,068    3,988,495

9     Warner Lambert Consumer

      Healthcare                        319,645   1,357,413    3,467,305

10    Whitehall Laboratories            215,830     934,283    1,749,186

      TOTAL                           3,754,225   4,462,107   70,435,256

Top Pharmaceutical Media Agencies Oct 98 - Sep 99

Rank  Agency                           Total          Press       Cinema

                                    (pounds)       (pounds)     (pounds)

1     Zenith Media Services       15,248,541      2,616,174            0

2     MediaCom TMB                13,662,230      2,627,669            0

3     CIA Medianetwork UK         11,843,530      5,007,618            0

4     MindShare Media UK          11,639,374      1,146,731            0

5     Carat                       11,070,148      2,022,896      138,493

      TOTAL                       63,463,823     13,421,088      138,493

Rank  Agency                           Radio        Outdoor           TV

                                    (pounds)       (pounds)     (pounds)

1     Zenith Media Services          591,174              0   12,041,193

2     MediaCom TMB                   733,084        205,444   10,096,033

3     CIA Medianetwork UK            589,080      1,148,369    5,098,463

4     MindShare Media UK             971,273      1,376,103    8,145,267

5     Carat                          805,811        310,433    7,792,515

      TOTAL                        3,690,422      3,040,349   43,173,471


To a greater or lesser extent, all of the major agency groups have a

stake in healthcare, but there’s no common pattern to their


Both WPP and Omnicom are particularly strong in the US, which is the

world’s biggest market. The former lists most of its healthcare

interests under the CommonHealth banner - a grouping with 13 units and

1997 billings of more than dollars 800 million. Agencies here range from

Thomas Ferguson Associates in the US to Gowers Advertising in the UK,

and Hill & Knowlton’s health and pharmaceutical practice. But there are

also links to other WPP companies.

’It is both formal and informal,’ John Zweig, the chief executive of

WPP’s specialist communications division, explains. ’If you try to force

these things, it won’t necessarily work. But if you really do share an

interest or a commitment on some major issues, these things have a

natural way of organising themselves.’

Omnicom’s Diversified Agency Services division lists 11 specialist

healthcare agencies, although only Targis Healthcare boasts an

international network.

In typical Omnicom fashion, they compete in the marketplace, but, as the

group operations director, Brian Emsell, notes, the competition is only

partial because there are so many specialist niches within the total


In the Young & Rubicam group, the PR agency, Burson Marsteller, is a

leading player on medical matters, while its healthcare ad agency,

Sudler & Hennessey, part of the group since 1973, operates in 11

countries. The D’Arcy vehicle is Medicus.

Cordiant’s recent acquisition of Healthworld (see main text) is designed

to bolster Bates’ involvement in the sector. The Interpublic strategy

seems to be to group its healthcare interests around its main ad

agencies - for example, McCann Healthcare, Lowe Azure and Lowe Fusion.

Saatchi & Saatchi has recently taken healthcare into the main agency,

but has a top-level group examining ways of increasing its stake in the

sector internationally.

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