Pharmaceuticals

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when it comes to an economic downturn, few things are as bulletproof as the pharmaceutical industry. No matter what the financial climate, everyone needs medicine.

Accordingly, estimates from the industry are that the pharmaceutical giants will have spent between $2.8 billion and $3 billion in 2002 on direct-to-consumer [DTC] advertising, up from $2.5 billion in 2001.

"It's about the only category that actually is growing," said Neil Brown, managing director for the Chicago firm Ross/Brown Integrated Marketing Communications, whose clients include Nobel Biocare AB and Beutlich Pharmaceuticals. It's been so good, in fact, that Mr. Brown tapped Mike O'Connell, formerly VP at Interpublic Group of Cos.' McCann-Erickson Healthcare, to head Concept Two, Ross/Brown's new health-care division.

"We've been in other categories like technology and construction, but health-care has been the one positive thing for us," Mr. Brown said. "Our traditional agency business was off 25% in billings, and now health-care accounts for 40% of our revenue."

But will the new year bring the same growth?

"One question for [2003]: How much more heat does DTC marketing get from the federal government?" asked one health-care industry analyst. "All sorts of bills have been, and will be, introduced regarding this."

debate continues

For years, the pharmaceutical companies complained they were denied the ability to market their products directly to the patients. The Food and Drug Administration several years ago relaxed regulations regarding the use of DTC promotion, but some politicians are now questioning that decision.

Opponents of DTC say the drug companies are spending too much on marketing and promotion and that some of the ads are misleading. A report issued in early December by the General Accounting Office claimed that promotional spending grew 74% between 1997 and 2001, while research spending grew 59% during the same period.

Proponents say that even the estimated $3 billion figure for 2002 on DTC marketing pales in comparison to the $30 billion the Pharmaceutical Research and Manufacturers Association of America says the industry invested in researching and developing new drugs in 2002.

Government investigation of DTC "is something that has certainly been under close scrutiny for some time," said Jim Coyne, senior manager-gastrointestinal public affairs at Astra-Zeneca, which makets Nexium and Prilosec. "It will be interesting to see if it has broader implications, such as what happens with new drug approvals."

In addition to an increase in scrutiny from Congress, 2003 could show a decrease in the introduction of blockbuster drugs. Said one health-care agency VP: "The technology, the method of building new medicines, has run dry." Some believe the next big area to mine is genetic engineering.

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