Omnicom Health's CEO on agency consolidation and why Japan's healthcare market is a 'bellwether'
The last few years have brought a series of structural changes at Omnicom Health Group. In 2016, parent company Omnicom divided its speciality healthcare agency brands into four categories: professional, patient, payer, and regulatory/evidence/medical. Since then, Omnicom Health has instituted a series of agency reshufflings, including combining five professional healthcare agencies to create DDB Health and creating dedicated groups for client Johnson & Johnson.
The network has also been on a buying streak, acquiring BioPharm, Snow Companies, and, in March, Elsevier's pharma communications business in Japan. The deal will expand Omnicom Health's employee count in Japan to about 250. (It already owns Targis, Rx Healthcare, Polaris Consumer Health, CDM Tokyo, and the digital marketing and healthcare market research firm MCI.)
MM&M spoke with Omnicom Health CEO Ed Wise and David Stark, CEO of Omnicom Health Group Asia-Pacific, about the Elsevier acquisition, agency consolidation, and trends we can expect to see this year.
This interview has been edited for length and clarity.
What's behind this latest acquisition?
David Stark: We have a number of agencies [in Japan] going back 20 years. When we look at all our capabilities, one area that we needed more support in was in the medical content business. [Elsevier's pharma communications business delivers medical content for promotional materials and educational programs aimed at doctors and patients.] Fortunately, I've known about this company for 20 years: they are the best in terms of reputation. Our clients have always asked us to collaborate with them, so when this opportunity came up we couldn't pass it up.
Do you expect to make more acquisitions in Japan?
Ed Wise: There aren't many opportunities to make acquisitions in Japan, but we do see a tremendous opportunity for growth within the agencies that we have. Japan is the second largest market for pharma. It's also a super aging population: a tremendous amount of the population is over 60, and it has one of the longest lifespans in the world. You have a tremendous burden on the healthcare system, which requires a fair amount of communication and creates a lot of opportunity for healthcare marketing.
What are the major differences between the Japan and U.S. healthcare markets?
Stark: The access to healthcare is fantastic in Japan. Insurance is 100% reimbursed by the government and prices are fixed by the government; they reduce prices continuously through the lifespan of a drug. The regulatory environment is similar, although direct-to-consumer branded communications is not allowed. You can only talk to consumers about disease awareness, symptoms, “go see your doctor” -- that kind of thing.
Wise: Japan is a very important market because of the aging population. It is a market that we could all learn from. So many people are older and in need of medical treatment, and the burden of the healthcare costs on the system are enormous. We are going to learn from [Japan] for other markets going forward. It's a bellwether.
Switching gears: Omnicom has streamlined its agencies over the past few years. What's driving this consolidation?
Wise: Clients are asking us to take the complexity out of managing agencies. Some of our clients have 400 agency relationships. That takes up a tremendous amount of their time, energy, and effort. So they're looking to us to not only navigate, but curate the best resources across our groups for them. Our clients have less resources; they're counting on us to take some of the agency management burden off the table for them.
Are there additional trends that you think will affect your business in the upcoming year?
Wise: An emphasis by regulatory bodies to approve high-value products like oncology breakthroughs and speciality and rare disease agents. That's an area that is driving us to make sure we have specialist talent throughout the organization, which underlies [the Elsevier] acquisition. This is a group where 40% of all employees have advanced medical degrees. That becomes extremely valuable in a market where the demand for highly specialized talent is outstripping the supply in many cases.