Pfizer/Wyeth Matchup Yields Surprisingly Seamless Combo

Few Conflicts Exist in Betrothal, but Pfizer Likely to Wear the Pants

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NEW YORK ( -- It's a huge integration -- Pfizer's $68 billion acquisition of Wyeth -- yet it appears to be devoid of marketing and agency conflicts.

"When you look at the product lineup and the agency lineup, there's not a lot of overlap," said Michael Guarini, president of Flaum Communications, a health-care agency and consultancy. But if the history is any guide, it's likely Pfizer that will call the marketing shots. "If you take a look at how they handled both their previous purchases, by and large it's been Pfizer people who have been left standing," he said.

Ray Kerins, global communications director for Pfizer, said, "It would be stupid of me to speculate on" how marketing in the new Pfizer will be structured. Mr. Kerins said the companies have complementary strengths: Pfizer remains strong in primary and specialty care; Wyeth is considered an industry leader in biotechnology, and has a strong consumer-health-care portfolio.

Yet Pfizer gave up its consumer brands in December 2006, selling them to Johnson & Johnson for $16.6 billion. Some observers have said the sell-off some 25 months ago, initiated by then-CEO Hank McKinnell, might not have been what everybody thought was best for the company. "We don't dwell on the past," Mr. Kerins said.

There's no question the merger makes Pfizer, already the world's-largest drug maker, more diversified, offsetting what analysts call the "patent cliff" when Pfizer loses patent protection on Lipitor 2011 and Viagra in 2012 -- a potential loss of $15 billion in annual sales.

Pharmaceutical analyst Michael Krensavage, of New York-based Krensavage Asset Management, believes there will not be much cutting in the marketing area. "I still think you see DTC campaigns for both companies run by the people who run them" now, he said.

Pfizer works with Interpublic Group of Cos. and Publicis Groupe shops, while Wyeth works with Euro and WPP.

Just last week, a Pfizer brand changed hands -- Chantix went from McCann to McGarryBowen.

1. Little to no spending. 2. Wyeth has several promising Alzheimer's drugs in its pipeline, one of the reasons for Pfizer's purchase. 3. Zoloft, formerly one of Pfizer's biggest drugs, is off patent protection and receives little advertising. Sources: Ad Age Data Center, TNS Media Intelligence (spending figures January through October 2008). Note: Pfizer sold its consumer-health-care division to Johnson & Johnson in 2006.

Consumers flock to private labels

Pfizer is pushing deeper into over-the-counter remedies as increasingly knowledgeable consumers pull back on branded drugs in a tough economy.

Unit sales of brands such as Robitussin (a Wyeth product), Dimetapp and Vicks DayQuil all tumbled by the double-digits last year, according to Information Resources Inc., in food, drug and mass merchandisers excluding Walmart. During that same period, unit sales of liquid private-label cold, allergy and sinus medicines surged more than 16%. The tablet versions grew nearly 12%.

"People trust our private brand," said Walgreens spokesman Robert Elfinger. "In all cases, it pretty much is the same quality. It's the same ingredients, and it's oftentimes the same manufacturers."

But it may not be just the recession guiding consumers to purchase private-label drugs. Consumers are more informed than they ever have been before, thanks to websites like WebMD and HealthCentral. "Not only are users more educated, they are empowered by what they read," wrote HealthCentral CEO Chris Shroeder in an e-mail. He cited data from Manhattan Research, a pharmaceutical and health-care advisory firm, that found 85% of the site's users are looking specifically for pharmaceutical information.

According to researcher Kline & Co., in 2007, 20.1% of OTC products sold were private label. While the firm is still conducting its analysis for 2008, the company estimates that this number has since jumped to 25%-30%.

That might be because branded players' spending seems to be tracking down. According to TNS Media Intelligence, consumer health product companies spent $619.5 million in the category during 2007 and $457.7 million between January and September of 2008. If they stay on the same spending trajectory as 2007, the total for 2008 will come in under $500 million. The largest spenders in 2008 were Schering-Plough Corp. (Claritin; $107 million), Johnson & Johnson (Zyrtec; $94 million) and Reckitt Benkiser (Mucinex; $36 million).

-- Marissa Miley

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