Marriage of Merck, Schering-Plough Would Create Third-Largest Pharma Spender

Omnicom Shops to Win Big if Drug Giants' Merger Goes Through

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NEW YORK (AdAge.com) -- Merck & Co.'s announcement today to acquire Schering-Plough Corp. for $41.1 billion will create the second-largest global pharmaceutical company, after Pfizer, according to 2008 revenue -- with an annual measured media spending of more than $745 million.

It could also create the third-largest advertiser in the pharmaceutical category. According to Ad Age's Datacenter, Schering and Merck spent a combined $1.84 billion in measured media during 2007, which would rank it just below GlaxosSmithKline and Johnson & Johnson. Last year, however, the companies trimmed measured spending substantially.

Merger activity
In 2008, Merck reported annual revenue of $23.9 billion and spent $296.1 million in measured media, excluding national spot radio and internet marketing, according to TNS Media Intelligence. Schering-Plough reported annual revenue of $18.5 billion and spent $449.6 million on measured media fitting the same criteria, TNS figures show.

Huddling together in this economic maelstrom seems to be the preferred course of action for big players in the pharmaceutical industry. The Merck-Schering-Plough deal comes days after Roche Holding put out a sweetened $45.7 billion bid for Genentech, and six weeks after Pfizer, already the world's largest drug-maker, offered $68 billion for Wyeth Pharmaceuticals.

In a joint press release, Merck and Schering-Plough announced that Merck shareholders would own around 68% of the combined company, which will keep the Merck name.

'Complementary' companies
If the deal goes through, it could be a boon for Omnicom Group's DDB and BBDO Worldwide, New York, which has handled creative for Schering-Plough's Nasonex and Asthmanex since 2007, as they are also on the Merck roster. Publicis Groupe's MediaVest handles all Schering-Plough's global prescription brands.

Merck President-CEO Richard T. Clark, who would lead the combined company, called Schering-Plough a "complementary" company with a late-stage pipeline that will boost Merck's own. Merck and Schering-Plough have already partnered on a few drugs, most famously the cholesterol-lowering drug Vytorin, for which they pulled direct-to-consumer drug advertising after a clinical study revealed that the medicine fared no better than generics in reducing arterial plaque.

Since the announcement was made, rumors continue to swirl around Johnson & Johnson placing a counterbid for Schering-Plough.

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