Lowe spinoff shop Alchemy debuts

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A handful of top executives who quit Interpublic Group of Cos.' Lowe HealthBrands in frustration last December have returned-but to offices with a new name indicative of their intentions: Alchemy.

Rich Pounder, former head of Lowe's HealthBrands, a unit of Lowe, New York, is president-CEO of the shop, which focuses on over-the-counter and direct-to- consumer health brands. His management team includes ex-HealthBrands executives Amy Sacks, now chief creative officer; Kieran Walsh, who runs OTC business; and Elliott Dorfman, who handles all prescription-related accounts.

Despite its new name and a location separate from Lowe's, Alchemy remains very much part of the Interpublic family. Mr. Pounder and his executive team continue to report to Lowe USA chief executive Paul Hammersley. Media buying and planning is executed by Lowe, and most of Alchemy's nearly 40 employees came from HealthBrands, which is also the source of all the new agency's clients.

"When we heard that Rich and the others were leaving, we were concerned," said Bob Carpenter, VP-marketing, Johnson & Johnson's McNeil Consumer and Specialty Pharmaceuticals, who has worked with Mr. Pounder, Ms. Sacks and their colleagues since the late 1980s. "The question was whether we would stay with Interpublic, where Johnson & Johnson has longstanding ties, or would we go with the team."

$150 million

Alchemy's clients include Imodium AD, Motrin IB and Children's Motrin, from Johnson & Johnson's McNeil Consumer and Specialty Pharmaceuticals; Johnson & Johnson's McNeil Nutritionals business and Ortho-McNeil Pharmaceutical, as well as Novartis' Lamisil-over an estimated $150 million in billings. New TV work from Imodium breaks in the next several weeks, and new print is expected for McNeil Nutritionals' Lactaid in August.

Discussions to create a new entity out of Lowe HealthBrands began in early January, 2002, when Lowe USA's Mr. Hammersley returned from Christmas holidays and learned that Mr. Pounder and others had left. "Johnson & Johnson is one of [Interpublic's] top global clients. We were keen to satisfy their needs," he said.

The solution pleased Mr. Carpenter because "we can can sustain both of our relationships." Keeping Alchemy within Lowe satisfied Mr. Hammersley because its specialty "is one of the few areas enjoying rapid growth, these people are good at what they do, and we want to be represented by a strong team in such an area."

Ironically, the group's dissatisfaction stemmed from its success. Mr. Pounder, 55, who worked on Procter & Gamble Co. brands for ten years prior to moving into healthcare-related businesses, launched Lowe HealthBrands in late 2000. The unit grew from a small base of clients "at a compound rate of 60% or 70% annually," Mr. Pounder said. "We were separate. We were growing. No one paid much attention to us."

On the creative side, posits Ms. Sacks, Alchemy's chief creative officer, the over-the-counter advertising didn't represent the image Lowe wanted to project. Though OTC and DTC contributed significantly to revenue, for instance, the group's creative work rarely appeared on agency reels.

"We were doing really good work in an extraordinarily difficult category," she said. "To say that it is as easy to get awards for diarrhea medicine is as easy as getting them for Sprite is crazy." Hence the partial split: "We had important pieces of business. The client wanted it to work. We all had a common goal," Ms. Sacks said.

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