Like the years immediately preceding it, 2023 saw plenty of merger and acquisition activity in the medical marketing space. Much of it has been driven by the creation of private equity platforms and a subsequent obsession with amassing “best of breed” offerings through buying sprees.

Each year, MM+M surveys the industry on its performance, basing its Top 100 on information gleaned from agencies’ responses as well as its year-round reporting. As shown by this year’s survey, not only has the capital flowing into the space altered MM+M’s 2024 Agency 100 landscape, it has also evinced a mass reorganization of value.

In 2023, firms with PE backing accounted for about a fifth of the Top 100 and generated fully one-third of A100 revenue. That’s a lot of pharma marketing money bound up in non-holding-company entities — and it has led to a resurgence of entrepreneurship. 

But the trend also raises certain questions. What does the success of these new-breed marketing platforms say about the traditional agency model? Do networks need to do a better job of integrating their businesses? Will PE firms become the new holding companies?

Winning revenue season

Putting those existential questions aside for the moment, 2023 was another winning year for healthcare marketing. Combined revenue for the Top 100 rose 11.6% to $11.5 billion — a new record – versus the prior year’s adjusted level of $10.3 billion.* 

That marks a fourth straight year of double-digit growth. It jibes with MM+M’s Healthcare Marketers Trend Report survey, which similarly detected an increase in budgets. Staff counts, meanwhile, remained flat at the adjusted tally of 57,000.

Since PE firms became active investors in the sector, medical communication specialists have been sought-after M&A targets, as witnessed by the purchase of former Top 100 firm Avant Healthcare by Real Chemistry. These agencies employ a number of fairly standard tactics to engage doctors, from clinical affairs and peer-to-peer learning to speakers’ bureaus and dinner meetings. 

As such, they’ve been a test case for what most — if not all — Agency 100 firms say they’re trying to do, which is to use artificial intelligence to differentiate the marketing mix. This includes taking a more data-driven approach to identifying influential KOLs, or using predictive analytics to analyze trends and recommend interactions clients can proactively take with clinicians.

Service mix

References to AI may have all but drowned out other oft-heard themes during Agency 100 interviews, such as biopharma’s continued appetite for innovative cell and gene therapies and treatments for cancer and rare diseases, as well as implementation of the Inflation Reduction Act and its effect on drug pricing. 

That said, pharma companies are understandably reluctant to deploy AI of the large language model variety on their HCP- or patient-facing websites, given the lack of regulatory guidance for its use in the consequential healthcare setting. In fact, when asked to identify the sources from which they derive revenue, agencies ranked AI and machine learning a distant 10th, although “data/analytics” came in fifth. 

Per the survey results, web/digital/mobile work for professionals and consumers once again brought in the most money. Together, they account for about 36% of the service mix, which is no doubt a reflection of the prevailing omnichannel mindset. Sales materials advanced a spot to third place, followed by promotional medical education.

Big movers

The big movers this year were consumer broadcast, which rose three spots to sixth place; consumer print, which grew by three to 11th; and print journal ads, which climbed two spots to ninth. The rejuvenation of these tactics suggests marketers are finding new ways to mix newer channels (such as streaming video and audio) with their linear forebears (TV/radio) to reach stakeholders at various points along the continuum.

This year’s ratio of organic to new business wins also mirrored last year’s results. Respondents cited a 61% organic win rate versus 33% inorganic and 3% from acquisitions. 

As for the trends and perceived threats keeping agencies up at night, talent acquisition and retention may no longer be the stuff of nightmares. Just 3% of respondents said this was a significant object of anxiety for them in this year’s survey, down from 15% last year. That’s quite a tumble from the 47% who cited talent as a significant challenge two years ago.

Managing growth, a challenge closely related to staffing, gave fits to about 10% of agencies. Around the same percentage (11%) said they’re struggling with shrinking pharma budgets.

But agencies’ hairiest adventure, and the one that muscled aside talent acquisition/retention for the top spot, was — you guessed it — AI. This likely reflects the potential and pitfalls of effectively integrating this technology. 

By way of example, consider generative AI designed to help patients with lifestyle choices or an online “ask your doctor” tool. While these can be highly influential, they can lead an individual down the wrong decision tree. Similarly, examples of how AI can exacerbate existing class divides and racial biases abound.

But agencies are working with all types of AI and for many different purposes. Beyond interactive virtual assistants, one of the most well-publicized use cases involves deploying a generative AI platform to improve the content supply chain. Gen AI can slash content creation costs, enhance production pipelines and boost the speed of content approval. Generally, there’s a payoff in the form of reduced costs, as well as enhancing the commercialization of new products and ability to engage with HCPs, pharmacists, payers and patients. 

Other broadly observed trends include an intensified focus on ROI/measurement, which 87% of respondents said they expect to see in 2024. Clearly the emphasis on data and analytics has boosted marketers’ ability to assess the impact of their efforts.

Other survey results suggest the industry will wrestle with a potpourri of challenges over the course of 2024’s back half. Emphasis on specialty drugs/high science (80%), digital experimentation (75%), increased concern over drug prices (72%) and empowered patients/consumerization of health (72%) all elicited strong responses. 

With the presidential election and Summer Olympics on tap, advertising agencies should see a lift. But as pharma continues its perennial quest to do more with less — and as marketing and advertising continue to rank among its highest-margin costs — all eyes will be on these budgets come 2025.

* Revenue and head count totals are based on data submitted by companies as part of MM+M’s annual agency review. Survey data are supplemented by estimates made by the MM+M data team, and include numbers from firms not yet founded in 2022 or whose revenue estimates were not finalized until this feature went to press. Revenue and employment numbers for parent companies and certain network-owned firms were accounted for to prevent double-counting in these totals.