Within recent weeks, Omnicom Group's BBDO Worldwide and Havas' Euro RSCG Worldwide, as well as independent Bridge Worldwide, Cincinnati, have set up divisions focused on pharmaceutical accounts. Even BBDO's sibling shop, DDB Worldwide, is considering a health-care unit. A DDB spokeswoman said the agency is looking at its U.S. and European offices to see where it makes sense. "We are formalizing a leadership and process that we have had in place for some time," she said.
The moves come as year-to-year growth for the entire pharmaceutical business fell from 18% in 2001 and 15% in 2000 to 12% last year, according to NDC Health. Total new-product sales in 2002 were just $156 million, well off the $1.2 billion from 2001 and further indication that new blockbuster drugs have been slow to come to market. And, according to the National Institute for Health Care Management, direct-to-consumer advertising spending for pharmaceuticals dropped 7% last year from $2.5 billion to $2.3 billion.
Yet agencies don't seem to have much trepidation about the industry.
"Am I surprised? I'm surprised it's taken some of these agencies this long to get into the category," said Lorene Babcock, president of Omnicom's LLKFB, New York, a direct communications agency that specializes in health care.
$2 billion category
Even with a lack of blockbusters due to hit the market, agencies feel other avenues in pharmaceutical advertising can be lucrative-especially winning work from brands that are late to the DTC game.
"It won't be about introducing the next big drug," said Andrew Robertson, BBDO Worldwide president and North America CEO, who helped create BBDO Health Work. "Even with fewer drugs coming down the pipeline, there's enough business there. Yes, the spending is down. But it's still a $2 billion category, and a category in which we have a share of zero. It's still a market that represents a massive upside for us."
Euro RSCG Worldwide created a single profit-and-loss structure for its global health-care business, Euro RSCG Life, soon after winning the $100 million diabetes drug Lantus from Aventis in February. Bridge Worldwide formed Bridge Healthcare to focus exclusively on its pharmaceutical clients, including Procter & Gamble Co., Johnson & Johnson and Shire Pharmaceuticals. It, too, is less concerned with new blockbusters or typical DTC advertising.
"The game is no longer just about top-of-mind awareness," said Jay Woffington, Bridge Worldwide's chief marketing strategist and VP-account services. "To win, brands have to establish a meaningful, long-term equity that can outlast even patent protection."
DTC advertising has evolved from blanket promotion of a drug to get its name in front of consumers to a more nuanced effort, such as focusing on compliance, or getting a patient to stay on a specific prescription medication.
"Customers have evolved and their knowledge has evolved, so now you have to be more targeted," said Anne Devereux, president of BBDO Health Work. "You're going to see far more intelligent, efficient spending."
LLKFB's Ms. Babcock also believes pharmaceutical companies have matured in their approach to consumers. "More now than we've seen before, companies are committed to the interest of compliance. The notion of relationship marketing as a discipline has become more viable," she said.
Moreover, on the agency side, the investment these agencies require to create dedicated divisions is relatively limited. Euro RSCG and Bridge had existing health-care services in place. BBDO hired Ms. Devereux because of her strong pharmaceutical background, but plans on using its current creative executives and account teams on pitches. And DDB's effort is really just a way to tie together existing health-care-focused units.
Accounts are still out there to be won. Pfizer invited 23 shops, according to VP Dorothy Wetzel, to pitch its Zyrtec and Zoloft accounts, worth a combined $120 million.
"There will be pitches," BBDO's Mr. Robertson said. "Maybe a reduction in scale here in the U.S. is true, but other markets are wide open."