DTC execs quick to learn upfront value

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Direct-to-consumer pharmaceutical advertising is expected to show signs of continuing its healthy growth spurt in this year's upfront media-buying period, industry observers say.

The category has undergone dramatic growth since the U.S. Food & Drug Administration loosened its restrictions on broadcast advertising for prescription drugs in mid-1997.

Figures from IMS Health show DTC generated $1.1 billion in TV spending in 1999, up from $664.4 million in 1998 and $309.6 million in 1997.

TRAILS OBVIOUS CATEGORIES

DTC still significantly trails more-established categories such as automobiles and telecommunications when it comes to buying ad space during the upfront season, but it has arrived as an annual upfront player nonetheless. For example, pharmaceuticals comprised 9% of last year's total upfront sales on the CNN family of networks, according to Larry Goodman, CNN president of sales and marketing.

One possible reason for the arrival of DTC in the upfront season is that pharmaceutical companies have grown more comfortable with advertising and expanded its use beyond traditional areas such as allergy and migraine drugs.

Johnson & Johnson, one of the leading upfront advertisers, has used TV for Procrit, which treats anemia caused by chemotherapy, while SmithKline Beecham has tried it for Paxil, which treats social anxiety disorder.

"We're seeing almost anywhere you look a real breakdown between what was considered print-only advertising and what is now shown on TV," Mr. Goodman says.

Pharmaceutical companies also are developing "a growing comfort about how to participate in the upfront," says Charlie Rutman, exec VP-managing director at Carat North America, New York, which represents Pfizer, the No. 2 DTC spender behind Glaxo Wellcome last year.

GOOD USE OF TV CITED

After several years of experimentation, the prevailing view in the pharmaceutical industry appears to be that when used right, DTC TV spots can grow a brand.

"There's nothing with the segment that suggests television isn't working," says Alan Jurmain, exec VP-integrated media services, U.S. at Lowe, Lintas & Partners, New York.

Lowe client Schering-Plough Corp.'s Claritin annually generates more DTC TV spending than any other drug ($80 million in 1999, according to IMS), while sales continue to balloon.

This year appears to have a slew of new drugs primed for DTC advertising. Procter & Gamble Co. recently launched Actonel to treat osteoperosis, while Pharmacia Corp. is readying to market menopausal treatment Activella. The $20 million-to-$30 million hormone replacement therapy drug account landed at Merkley Newman Harty Healthworks this month.

FDA approval is expected for Pfizer's migraine treatment Relpax and heartburn products Nexium from AstraZeneca Pharmaceuticals and Protonix from American Home Products. A major DTC push began in March for AHP's insomnia product Sonata, and Pfizer is expected to spend handsomely to give its Zoloft antidepressant a lift.

Possible letdowns include Hoffmann-La Roche's disappointment with the effectiveness of a campaign for weight-loss drug Xenical, which could lead to a vast curtailing of spending; Bristol Myers-Squibb's delay in marketing hypertension drug Vanlev because of side-effect concerns; and TAP Pharmaceuticals' cautious approach to Uprima, a Viagra competitor in the erectile dysfunction category. TAP says it has no plans for DTC advertising once the product gets FDA clearance.

SUITABILITY PROBLEM

DTC continues to grow in the upfront period even though the category might not be ideally suited to it.

Pharmaceutical companies that have a prospective blockbuster drug coming may want to take advantage of the cost savings during the upfront buying period, but may be forced to proceed with caution because of uncertainty involving the FDA approval process of the drug, not to mention the advertising itself.

"Everything's so fluid because things all depend on FDA approval," says Bob Igiel, exec VP-U.S. director of broadcast buying for Media Edge, New York, which represents Glaxo.

As a partial cushion, Mr. Goodman says most of the major pharmaceutical companies are careful to negotiate options when buying upfront. He says companies ink deals that allow them to get out of perhaps 30% of allotted time in case of an FDA snag.

MERGER FEVER

One factor that could have an impact on this and future upfront periods is the merger mania sweeping the pharmaceutical industry.

In recent months, nuptials have gone forward between Pfizer and Warner-Lambert, Glaxo and SmithKline Beecham, Pharmacia & Upjohn and Monsanto, Hoechst Marion Roussel and Rhone-Poulenc Rorer and Astra and Zeneca. American Home Products is perhaps still looking for a spouse.

The mergers have aroused some uncertainty because companies all have different approaches to marketing, and culture clashes can result in the aftermath. Ad budgets and corresponding approaches to the upfront period could be affected. However, Mr. Goodman adds, so far the mergers "haven't made any impact whatsoever" on the marketing side.

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