Healthcare Overview: Good year hides regulation fears

The shift towards OTC products and project-based campaigns explains some of the changes in this year's healthcare league tables, says Robert Gray. Although clients continued to keep a tight grip on procurement and appeared increasingly project-focused and results-driven, 2004 was a solid year for most of the UK's healthcare agencies. As was the case in 2003, the majority posted positive growth.

Communication work linked to ethical pharmaceuticals underpinned the growth of many agencies, but there were also opportunities in the over-the-counter (OTC) sector and in complementary and alternative therapies.

The trend for switching certain drugs from prescription-only to OTC status continued, with the launch in July 2004 of Zocor Heart-Pro, the first statin to be made available OTC. Chime-owned agency Ozone worked on the switch.

But controversy is seldom far away from the healthcare sector, and there was some debate as to whether statins were safe for OTC sale. Other issues on the agenda include the limited supply of new licensed products, the NHS tightening of drugs budgets, established brands losing their patent and political pressure for greater transparency in relation to clinical trials and marketing.

Financial pressures

MediTech Media tops the table, as it did last year. 'The market is pretty strong, but there are downward pressures on price from all clients these days,' says MediTech Media chairman and CEO Dr Stephen Cameron. 'Clients are looking for more volume at lower margins.'

But Cameron says his agency is picking up more global campaigns through the medication therapy management office network than before. This is, in part, driven by clients who want to cut costs by developing programmes that can be rolled out internationally with minor adaptations to suit local markets.

'We had a good year, despite a competitive environment,' says Ruder Finn deputy MD and head of healthcare Pat Pearson. 'There is a decreasing number of clients as companies merge, and accounts are being consolidated as clients go into deals with big comms groups. This makes it challenging for firms like ours.'

Finn posted a creditable 19 per cent rise in fee income. New business included pre-launch comms for Ferring on a prostate cancer drug in phase two development, work for GAVI on the PneumoADIP vaccines programme for the developing world, and PR for medical devices firm Becton Dickinson.

Third-ranked Munro & Forster saw its fee income decline 16 per cent, owing to clients cutting or withdrawing budgets. It lost the GlaxoSmithKline smoking cessation account in 2003, which had an impact on the 2004 figures, as GSK focused on Formula One sponsorship. But an agency rebrand and relaunch towards the end of the year helped to drive wins, which included work for AstraZeneca and making it onto the COI roster, says director Julie Flexen.

Flexen is optimistic about OTC medicines, which she says are experiencing a healthier level of growth than a few years ago. She even notes growth in more traditional areas, such as analgesics and cough/cold treatments.

'Future growth in the OTC sector will continue to be driven by the newer product categories such as allergy/smoking cessation, where the focus is on prevention of illness or "lifestyle" products, rather than just treatment of short-term ailments,' says Flexen. 'We remain optimistic about the PR opportunities in this sector, as consumer health businesses take an FMCG-style approach to marketing their leading brands.'

'We've seen a dramatic shift towards project business,' says Edelman joint CEO for London and head of healthcare business Nigel Breakwell.

'There is a focus on the short term from the pharma industry. We think this will change because people are concerned about the marketing and want more transparency.'

The possibility of a regulatory clampdown (see box) can be interpreted as a threat and an opportunity. Labour's election manifesto, for instance, proposed legislation that would oblige pharmas to publish clinical trial data for all products marketed in the UK. If it is introduced, pharmas will try to manage with the release of such sensitive data carefully - a clear PR opportunity.

Edelman's health policy business has grown, with work for clients such as Aventis and Merck. Its acquisition last year of consumer agency Jackie Cooper PR has broadened its skill set too, with the JCPR working on baby milk brand Nutricia. 'There is a limited number of agencies in the healthcare arena with a deep knowledge of winning the hearts and minds of consumers,' says Edelman executive vice-president and European MD for health Kate Triggs.

A shortage of staff with an in-depth knowledge of healthcare is a concern.

Chandler Chicco Agency MD Jennie Talman says agencies are 'doing a better job' of looking after their staff, as this is driven by a business need. New business for CCA included global work for Merck KGaA on its colon cancer drug Erbitux - for which Avenue HKM has the UK brief.

Avenue rejoined the table this year after being unable to submit figures for 2003 (a financial condition of its acquisition by Huntsworth from Blackwell Publishing).

Nexus Communications, also a table newcomer, says it entered because it wanted to highlight its 40 years of OTC brand experience. Products worked on last year included pharmacy-only acne treatment Freederm.

'The new Community Pharmacy contract will change the face of healthcare in the UK,' believes Nexus director of consumer healthcare Nicky Smith.

'More responsibility is being delegated to pharmacists.'

Heightened public interest

Several agency heads point to celebrity chef Jamie Oliver's recent high-profile campaign to improve the quality of school dinners as representative of a deeper public interest in health issues. Pegasus PR managing director Lisa Bradley, whose clients include Holland & Barrett and Siemens Hearing Instruments, says its campaign for Vielle's clitoral stimulator helped Vielle to become the first-ever sex aid to be sold in Tesco and Boots.

At ethical specialist Ashley Communications, whose strategy is to provide a director-only service for its clients, the last quarter of 2004 was a quiet one and the year as a whole saw a decline in revenue. 'There were no major losses, but budgets did contract because they were post-launch,' says chairman Chrissie Ashley. 'There was some movement of old accounts and that, coupled with new ones taking time to become profitable, meant a reduction in revenues.'

Among the companies to slip out of the Top 25 was Lawson Dodd, primarily because one client, a Japanese pharma firm, only uses the agency for launches and it did not release a product last year. Lawson Dodd director Belinda Lawson sees crossover opportunities in the areas of traditional and complementary medicine: 'With GPs becoming more business-centred, they see an opportunity to use surgeries for longer, so are open to complementary and holistic medicines.'

REGULATION LOOMS FOR THE PHARMA INDUSTRY

On 5 April, the all-party House of Commons Health Select Committee published its report on the influence of the pharmaceutical industry.

This proposed tighter controls on the way in which drugs are marketed, and criticised the increasing amounts spent on marketing by pharmaceutical companies, which it said contributes towards an 'overmedicalised' society.

The Association of the British Pharmaceutical Industry hit back at the report's assertion that intensive marketing encourages inappropriate prescribing.

It stated that most doctors receive only a handful of representative visits a month and that they value the clinical and product information provided.

But the pharmaceutical industry is under intense political scrutiny, and a regulatory clampdown on the promotion of new drugs is a real possibility.

Consequently, healthcare agencies are being doubly careful to ensure that the tactics and techniques they use on behalf of pharmaceutical clients are beyond reproach. Overstepping the mark could have repercussions for the whole sector.

'The principle of regulation is not new,' says Chandler Chicco Agency managing director Jennie Talman. 'Recent events require all healthcare agencies to continue to be sensitive to the environment in which we operate.

Healthcare PR has always been a specialism, and clients will increasingly expect their agencies to have in-depth knowledge of the codes. This is not a game for generalists.'

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