Citing decreased demand, pharmaceutical promotional support firm PDI said it intends to exit its TVG Marketing Research & Consulting business unit by month's end.
Associated with the exit, PDI said it will record a third-quarter charge of about $2.3 million, including severance, lease termination and other related costs. PDI added that it is working with a limited group of TVG management to continue to provide market research services under the TVG name on an independent basis and that, if its action is successful, there should be no change in the financial impact to the company or timing of its exit of the TVG business.
“Changes in the healthcare industry, including various mergers and acquisitions as well as sweeping healthcare reform, have resulted in a significant decrease in demand for market research,” said Nancy Lurker, CEO of PDI, in a statement
. “Thus, while the decision to exit our TVG unit was a very difficult one, it was necessary to help ensure the long-term health of our business and is consistent with our stated strategy to focus chiefly on the growth of our core, outsourced promotional services business.”
TVG—originally named The Vanderveer Group—was started in 1979 by Richard Vanderveer. He left the company in 1989, after transferring stock ownership to employees. The research house then changed its name to TVG and later was bought by PDI.
In a commentary
about PDI's decision, Vanderveer, who is now CEO of global marketing-research firm GfK Healthcare, wrote that reading PDI's announcement led to “the shock of realization” that the company he founded “was one of the leaders in the pharmaceutical micromarketing field.”
Although only a fraction of the size of GfK and other large suppliers like Kantar and Adelphi, he wondered whether TVG could kick off a wave of consolidation as others in the sector, including some of the mega-agencies that now exist, succumb to the factors Lurker identified. Speculated Vanderveer: “One can begin to foresee a world devoid of pharmaceutical marketing research agencies as we know them, as groups of various sizes and shapes are sequentially required to close their doors based on an ever-tightening squeeze on profitability.”
As to the reasons for this state of affairs, Vanderveer called the lack of new drug launches combined with the long list of blockbuster agents facing patent expiry a “one-two punch in and of itself [that] has substantially reduced the pharmaceutical industry's marketing research spend.” The growing role of clients' purchasing and procurement departments has further squeezed the industry, he noted.