Pharma accounts are getting bigger in terms of budget, but fewer in number as industry giants move away from using separate agencies for each facet of their business.
Companies including AstraZeneca, GlaxoSmithKline, Novartis, and Teva have consolidated, or are in the process of consolidating, their agency rosters, and the marketing industry’s major firms are vying for the work.
Two recent pharma consolidations, Teva and AstraZeneca, were won by Interpublic Group network Healix Global. AstraZeneca combined its consumer and HCP media accounts, while Teva brought together its global business communications into the one media company.
Consolidation inevitably favors large holding companies that can share resources and serve as a one-stop-shop for pharma companies looking to simplify their agency roster.
Healix Global president Jeffrey Erb said it makes financial and organizational sense for pharma companies to consolidate.
“If you’ve got a group that is managing your overall budget, from a procurement perspective, you’re looking at it and saying, ‘I’m going to ultimately get more value for my dollar from combining all of my dollars into one pot as opposed to having a little bit here and a little bit there and a little bit over here,’” Erb said.
Holding companies such as IPG have offices around the world, but the individual locations and agency subsidiaries need to work together seamlessly. One challenge is making sure there is a cohesive strategy through all global offices. For instance, holding companies will often buy small agencies around the world and slap their name on them, but the locations will operate independently.
“What we do is we have taken this ‘plan globally, act locally’ approach,” Erb explained. “There is a coordinated effort, there’s coordinated communications, and so the pharma company doesn’t have to deal with work; they don’t have to have the challenges of not having consistent strategy, consistent financial view into all these different markets. So it allows us to really coordinate all the individual markets holistically. That’s what pharma is finding attractive.”
How far will pharma go with agency consolidation? Will companies routinely try to bring together media, creative, PR, and advertising into one group? Erb doesn’t think so, especially for creative accounts.
That type of work benefits from a wide range of ideas, often coming from different agencies, Erb said, but he is in favor of bringing creative and media agencies closer together.
“At one point in time, media really was the afterthought to creative, but in today’s world, the amount of insights you’re able to get about people from media and way people are engaging with their environment really helps drive strategy,” he said.
Erb said Healix tries to get involved in the creative and campaign process as early as possible, rather than near the end when the campaign is going out to the media world. Healix is working to make its insights into consumers’ media habits available earlier and create an more integrated experience for the pharma client.
Consolidation isn’t the only trend Erb has noticed. He pointed out that smaller pharma startups are looking for more marketing and media support to launch drugs, instead of selling them to larger companies. Erb declined to identify these type of clients due to confidentiality.
“There’s been a significant shift with regards to the way pharma’s growing,” he explained. “You’ve got smaller pharma companies that are funded by venture capital and they used to partner, from a marketing perspective, with the bigger pharma or they would sell their molecule. We’re seeing now that the VCs are investing in the actual launch of a brand. So now these smaller pharma companies have significant media dollars to put behind an actual launch.”
That could be an opportunity for smaller agencies that don’t have the reach to land global consolidated pharma accounts, but have the expertise needed for a drug launch.
The pharma landscape is shifting for both holding companies and independents, giving healthcare agencies the chance to push boundaries in a sector that is traditionally more conservative, Erb said.
“What I find exciting about the industry is that it’s going through a significant amount of change,” he said. “What we do is really push people out of their comfort zone. We’re constantly looking at things differently and figuring out ways to evolve with the way the world is evolving and that is where you find your agency’s differentiation.”