MCCANN TO BUY HEALTH AGENCY;TORRE RENTA PURCHASE TO LIFT GROUP FROM 13TH TO NO. 4 IN HOT SEGMENT

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Seeking to create a global healthcare advertising network, McCann-Erickson Worldwide will buy one of the nation's leading health agencies, Torre Renta Lazur Healthcare Group.

Executives close to the negotiations expect the deal to be announced in the next few weeks. Officials at McCann and Torre Renta, Parsippany, N.J., declined comment.

The acquisition will be the second significant medical agency purchase this year by McCann parent Interpublic Group of Cos. and comes as most ad agencies are making healthcare part of their prescription for growth.

FAST-GROWING SEGMENT

Healthcare is one of the fastest-growing segments in advertising, both on the prescription side, where Torre Renta and other specialist agencies dwell, and over-the-counter, where big agencies have recently introduced a flurry of drugs backed by hundreds of millions of dollars in spending.

The top 50 healthcare agencies pulled in billings of $5.5 billion last year, according to Med Ad News, up 17% from two years earlier.

On the consumer side, U.S. ad spending for drugs and remedies increased 26% during the same period to $2.6 billion, according to Competitive Media Reporting.

CONTINUED DIVERSIFICATION

For McCann Chairman-CEO John Dooner, Torre Renta fits his drive to diversify the agency. Other recent or pending purchases include those of N.W. Ayer & Partners' event marketing unit and business-to-business agency Anderson & Lembke, New York. Mr. Dooner is also said to be shopping for an interactive agency.

Joe Torre, president-CEO of Torre Renta, will become the leader of McCann's fast-growing health network, executives familiar with the deal said. Torre Renta, which also has offices in La Jolla, Calif., and Freiburg, Germany, will keep its name and management but become part of the McCann health network.

Other agencies in the network include: McCann Healthcare Worldwide, Chicago, which Med Ad News said was the second-fastest growing of the world's top 50 healthcare agencies last year; CDRG Group, Paris; CWFS, Sydney; and KK Standard, Tokyo.

McCann's health network has offices in 11 countries overall. With Torre Renta's estimated $150 million billings, McCann will have total healthcare billings of about $300 million and gross income of $50 million, making it the world's fourth-largest health agency group, up from No. 13 before the purchase.

WPP Group, London, owns the largest medical agency, CommonHealth USA, while D'Arcy Masius Benton & Bowles owns No. 2 Medicus Group International. Earlier this year, Interpublic's Lowe Group acquired 11th-ranked William Douglas McAdams, New York.

GROWTH AREA

Big agencies also have made consumer health advertising a priority. Saatchi & Saatchi Advertising, New York, recently created a separate division called Healthcare Connection, hiring away the president of William Douglas McAdams, Tom Lom, to serve as the unit's managing director.

Torre Renta, founded in the late 1970s, launched Zantac and nicotine patch Habitrol. Med Ad News named it Agency of the Year in both 1994 and '95.

Torre Renta and McCann share assignments from Abbott Laboratories and Hoechst Marion Roussel. Other Torre Renta clients include Amgen, Bristol-Myers Squibb Co. and SmithKline Beecham.

Contributing: Michael Wilke.

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