Mergers force shops to adapt

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Recently announced mergers and acquisitions among some of the largest pharmaceutical companies are reverberating throughout the advertising community.

"We do not need to panic. Mergers are a reality," says Glenn DiSimone, chairman-CEO, Medicus Group International, New York, the healthcare unit of MacManus Group, now part of B Com3 Group. Despite the mergers, he says there will remain plenty of work for numerous agencies. "No one client is going to deal with just one agency because of the conflict issue. At least three or four agencies will be involved with each company."

PFIZER GOBBLING W-L

Recently announced mergers include Pfizer's merger with Warner-Lambert Co., a $92 billion deal that erases W-L's $58 billion merger attempt with American Home Products. In January, Glaxo Wellcome announced it was acquiring SmithKline Beecham in a $76 billion deal. And in December, Pharmacia & Upjohn announced a $27 billion merger with Monsanto Co.

"We can see talk of a merger two ways: opportunity or disaster," says Joe Torre, CEO of Torre, Lazur, McCann Healthcare Worldwide, Parsippany, N.J., which represents Glaxo SmithKline. "If two companies are merging and they have used three agencies to market their products, saying that they will release an agency is safe. A merger is opportunity for some, disaster for others."

LESS ROOM SEEN

"In the end, there probably will be about 10 large pharmaceutical companies, and that will mean less room for all the ad agencies," says Mr. DiSimone.

Being proactive, some agencies have formed direct-to-consumer units or strategic alliances with healthcare shops, such as the union last year between Consumer Healthworks and Merkley, Newman & Harty, both New York.

The merger was partly driven by Merkley's failure to win Pfizer's $75 million Zyrtec review.

"Clients have said, `If I'm going to spend $60 million, I want to spend it with an agency that has experience,' " says Anne Devereux, Merkley Newman Harty Healthworks' president-chief operating officer.

Globalization is another issue facing many merged companies and the agencies that represent them.

"We have offices in different countries talking to each other. Japan is talking with Germany. Germany is talking with France," he says. "That communication was not present before. Now we know how each product is faring in each country and pitfalls we have to avoid."

Contributing: David Goetzl

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