Indie shops rally to retain business as Merck consolidates advertisingMerck, one of the biggest spenders in pharma advertising, said it is consolidating its US creative business.
Among the beneficiaries is a federation of independent agencies that helped themselves retain a spot on the roster by banding together to form a virtual network. Sources also said that two advertising holding companies, Interpublic Group and Omnicom, have been selected in the review.
The drugmaker, which had work spread out among 200-300 different agencies, began reviewing accounts this year, following its 2009 reverse merger with Schering-Plough.
“As part of our integration process, Merck is pursuing a new model for our work with creative agencies supporting our human health business in the US,” Merck spokeswoman Pam Eisele told MM&M by e-mail. “This process is underway. We value the work of our agency partners and look forward to implementing the new model to communicate about Merck and its products to our customers.”
Asked whether any accounts have been reassigned, Eisele said “the process is still ongoing and is rolling out in waves.”
That process could take several months to play out. Merck spends about $320 million on direct-to-consumer media and another $9 million on ads in medical journals, according to 2010 figures from Kantar Media and SDI.
A source on Thursday said that Ogilvy CommonHealth Worldwide still has its Merck business. The WPP agency helps service Merck's arthritis biologic Remicade. Co-marketed with Johnson & Johnson, the drug posted $3.1 billion in US sales in 2010. IPG's Draftfcb Healthcare has also managed some of the Remicade account.
Other incumbents have included independent agencies Juice Pharma Worldwide on the professional side and digital agency MicroMass Communications, both of which work on Merck's top-selling brand, respiratory product Singulair, which had $4.1 billion in US sales last year but is set to lose US patent protection in 2012.
“The independents, led by Juice, retained a roster position in the Merck business,” said Jay Bigelow, president of MicroMass. IPG directed reporter questions to Merck, and phone calls to Omnicom were not immediately returned.
Following the 2009 bid for Schering-Plough and subsequent integration, the new Merck targeted $3.5 billion in cost savings by 2012. Besides shaving headcount by 15%, the firm took a number of other steps including decreasing 2010 promotional spend by 18% to $1.56 billion, according to SDI and Kantar Media. That figure includes detailing, as well as e-promotions and meetings.