Top 25 Healthcare PR 2006: Big Pharma scrutiny boosts agency fees

Consumer PR specialists might well be facing tough times (The Top 50 Consumer Consultancies, 5 May), but Big Pharma's reputational woes - which have continued into this year via accusations of disease-mongering, negative films such as The Constant Gardener, and March's botched drugs trial - have helped business continue to boom in the healthcare PR sector.

PRWeek's latest listing of the top 25 healthcare agencies shows what appears to have become the annual norm - a sector again turning in impressive fee income growth, with most agencies' figures up compared with the year before. Total fee income in 2005 for the top 25 healthcare agencies was £52.5m, up from £44.3m in 2004, a rise of 18.5 per cent.

MediTech Media has retained its dominance, with fee income of £9.7m. This is despite an income fall of one per cent, a result that suggests its competitors are gaining ground. Chandler Chicco Agency, again in second place, saw its fee income surge by a phenomenal 56 per cent, from £3.3m in 2004 to £5.2m in 2005.

The biggest risers
However, CCA's was not the most spectacular income rise in the table. Twelfth-placed Ashley Communications jumped seven places, with income growth of 206 per cent to nearly £1.7m. All the more impressive is the fact that this extra revenue was the result of organic growth.

‘The scope of our work with existing clients has grown enormously, especially in Europe. Clients are seeking more event management work and opinion-leader targeting,' says Ashley chairman Chrissie Ashley. Two of her largest clients in this area have been Astellas Europe - for the Continental launch of incontinence product Vesicare - and Allergan's Botox brand.

Even more spectacular figures were recorded by Edelman, whose healthcare fee income rocketed by 77 per cent, from £2.9m in 2004 to £5.1m - taking the agency up two places to third. Red Door Communications, meanwhile, rose two places to fifth, with fee income rising from £2.5m to £3.2m.

Elsewhere, Avenue HKM rose seven places to take seventh place, with healthcare fee income of £2.5m. Resolute Communications - PRWeek's Consultancy of the Year in 2005 - rose a place to eighth, having boosted its income by 18 per cent to £2.5m.

Edelman's performance can be explained by new business won from clients such as Pfizer, Johnson & Johnson and GlaxoSmithKline, says Mike Kan, now settled in as UK health MD after his move last year from the same role at Hill & Knowlton. The healthcare arm has recruited 18 new members of staff in the past six months, he adds.

‘In 2005, international clients increasingly wanted agencies with a strong international network. Clients also wanted integrated agency offers, such as PR and public affairs, or consumer and healthcare,' Kan explains.

Edelman's rise came at the expense of Ruder Finn (fourth), whose fee income was, nonetheless, up 25 per cent to £3.7m. Eleventh-placed Virgo Health PR, meanwhile, saw fee income rocket by 45 per cent. Its successful 2005 is explained by major new business, including a UK contract for GlaxoSmithKline's pre-launch cervical cancer treatment Cervarix.

Munro & Forster Communications, however, had less of a good year. It dropped six places to tenth after losing more than £1m in fee income compared with 2004.

One of the biggest ‘people move' stories of 2005 was the simultaneous resignation of CCA managing director Jennie Talman and new-business director Emma Crozier, who have jointly set up their own agency, Just. Given the duo's departure, it will be interesting to see whether CCA can maintain its performance in the year ahead.

Issues of concern
At a broader level, though, healthcare agency staff and their clients were concerned by two dominant issues in 2005. The first was the Health Select Committee's examination of ‘The Influence of the Pharmaceutical Sector'. The second was the Association of the British Pharmaceutical Industry's review of its code of conduct.

The former saw questions raised at the highest level about the influence of marketing campaigns, while the latter showed how concerned the drugs industry is to clamp down - and be seen to be clamping down - on excessive drugs marketing.

In addition, 2005 saw pressure mount on NHS budgetholders to justify their spending, while the National Institute for health and Clinical Excellence (NICE) continues to make headlines with controversial consultations on how best to treat diseases such as Alzheimer's. Both issues, of course, provided PR agencies with business opportunities on which to capitalise.

But it is not all good news. Many agencies in this year's Top 25 were vocal about the difficulty of recruiting quality senior staff. Anecdotal evidence also suggests that a growing number of campaigns were delayed by clients' insistence that procurement staff double-check every pound spent.

Other trends have been spotted by Medicom Group, which fell one place to ninth despite a fee income rise of seven per cent to £2.2m. MD and chairman Martin Ellis says: ‘Towards the latter end of 2005, we perceived a degree of uncertainty and unease, with a number of clients adopting a wait-and-see approach.

‘They were reluctant to do something different and were maybe not as assertive and creative as they could have been.'

Client trends
Lesley Scott is MD of HSD Communications, which fell three places to 18th on income of just under £900,000. She says the agency was affected by a ‘stop-start' approach to the green-lighting of projects. ‘More clients seem to have too many layers of decision-making, with many people having to sign off budgets and activity,' she explains. Scott also flags up greater pressure on clients' product managers to justify spending on PR programmes.

Meanwhile, client-side mergers continued to have an effect on agencies. HSD, for example, won a contract with surgical and wound-care firm Mölnlycke Health Care Group, created by the merger last autumn of Mölnlycke Health Care, Regent Medical and Medlock. But Scott adds: ‘Rumours of mergers can also have a negative impact on PR programmes.'

The Health Select Committee's ‘influence' probe last year may have caused some clients to stymie unusual PR campaigns for fear of attracting the attention of the authorities. But alongside this, the introduction of the ABPI's stricter code of practice had proved a boon for Santé Communications, which scooped a contract to promote the updated code on behalf of the ABPI. Unfortunately, Santé did not submit figures for inclusion in this year's table.

The table also excludes many other major players in the pharma sector: WPP agencies such as Burson-Marsteller, Hill & Knowlton, Cohn & Wolfe, Ogilvy PR Worldwide and The Shire Health Group are missing - as are Omnicom's Porter Novelli, Ketchum and Fleishman-Hillard - all of which run dynamic UK healthcare practices.

PRWeek is, however, unable to include them in the table because of the Sarbanes-Oxley Act. Similarly, IPG's Weber Shandwick, whose UK health arm had an excellent 2005 under the leadership of Fiona Hall and Lucie Harper, is omitted, as is Publicis' Manning Selvage & Lee.

That said, there is evidence that Sarbanes-Oxley-affected agencies have also had a successful year. ‘It's safe to assume we've had excellent growth,' says Jacinta Collins, joint MD of the healthcare unit at C&W.

She flags up a flow of new business into the agency's health team from its consumer side, as clients seek to broaden their approach to comms.

‘Clients don't want discipline-specific solutions all of the time,' she explains. ‘They want skills-specific teams and, for clients such as Unilever, we have used specialists in corporate communications to help us with traditional pharma work.'

Major account wins for the agency included a global brief with AstraZeneca, for its respiratory drug Symbicort, and ophthalmics work with Novartis. Major hires included director Jo Varney, who was poached from Shire Health International, and account director Camilla Dormer, former comms manager at the European Society of Cardiology.

Table leavers
Agencies pushed out of this year's table include Clear Communications and the Portfolio Group. Other independent agencies that handle product comms for pharma firms but which are not in the Top 25 include Tonic Life Communications, Packer Forbes Communications, Axon Communications, Clew Communications, Solaris and Reynolds-Mackenzie.

It should also be noted that a few non-healthcare specialists have joined the lower half of the table: City PR specialist Citigate Dewe Rogerson (14th); consumer-focused The Red Consultancy (21st); PA-oriented AS Biss & Co (22nd); and 23rd-placed Media Strategy (also PA).

So what for the year ahead? While some agencies will continue to claim a creative edge over their rivals, others see 2006 as a year that will be characterised by less adventurous campaigns. One healthcare head asserts that clients and agencies are ‘regrouping' as they digest the implications of the ABPI's revised code of practice.

Angie Wiles, joint managing director of Virgo PR, concludes: ‘The revised code of practice has created a sense of caution as people weigh up how to interpret it. I think it's a huge issue for the PR industry.'

Referring to recent attacks on Big Pharma, Wiles adds: ‘I hope people stand up for the industry and put their heads above the parapet. We aren't disease-mongers.'

TOP 25 PROFILES

RED DOOR COMMUNICATIONS(5) - £3,165,581G 29%
Red Door's growth rate of 29 per cent backs up managing director Catherine Warne's description of 2005 as ‘a brilliant year'.

But 2005 was not characterised by strong growth alone: it was also a time of change. Marketing services group Creston acquired Red Door for around £13.5m last July. The deal has led to speculation that Creston is setting punishing targets for the agency, a charge Warne refutes: ‘Our targets have not changed since pre-acquisition. Creston bought a thriving agency and wants us to continue to thrive.'

In 2005, new business brought in £450,000, and the firm grew from 27 staff in January 2005 to 36 by the end of the year. Roche handed the consultancy a contract in September to promote its non-Hodgkins lymphoma product, MabThera, as a rheumatoid arthritis treatment. At the end of the year, Schering-Plough overhauled its agency support for its two UK cancer treatments - brain cancer drug Temodal and ovarian cancer treatment Caelyx - appointing Red Door after a three-way pitch. As we report this week (see Healthcare News, p10) Red Door no longer works on these brands, while 2005 saw a parting of ways with Wyeth Pharmaceuticals.

Ethical business accounted for 60 per cent of Red Door's income,  but most growth was achieved in its global practice, which focuses on pan-European and global drug launches. Notable pan-European work in 2005 included campaigns for clients such as GSK and Novo Nordisk.

This year will see Red Door focusing on the ramping up of its NHS consultancy practice, as well as its consumer health division. Former freelance PRO Jeannine Nolan was appointed as practice director of the latter in March this year.

At a glance:

Best-performing area of business in 2005
Global practice doubled in size
Top three client wins Procter & Gamble, Bristol-Myers Squibb, and Sanofi-Aventis
Best hire Vicky Kelham as head of the new NHS Consulting  practice. She started on 1 January 2006
Expected healthcare fee income in 2006 £3.6m-£3.7m
Plans for 2006 Strong growth in the two newly launched consumer health and NHS consulting practices


AVENUE HKM (7) - £2,476,745 G 115%
An income rise of 115 per cent, split between organic growth and new client wins, made for ‘a steady year', says Avenue HKM chief executive Sandy Thomson.

For Thomson, 2005 was a mixed year. Despite losing director Jennifer Garratt in June to Manning Selvage & Lee, the agency lost no clients, but growth was unremarkable for the first six months.

The second half marked a change in pace. ‘Most wins took place in Q3 and Q4,' says Thomson. In October, Novartis handed the agency a brief to promote its iron-reducing drug Exjade to medical specialists, while Norgine awarded the firm a global brief for chronic constipation treatment Movicol. Among its best-performing areas was the ‘professional relations' division, which focuses on advocacy development and medical education. Thomson also cites ‘strong performance' at the agency's nascent multimedia arm, which she says ‘began to grow for the first time last year'.

For 2006 there are plans to increase new business from 50 to 65 per cent of growth. So far this year, the agency has grown new business by 20 per cent, Thomson says.

New business got an added push last October when CPR Worldwide co-founder Steve Carroll joined as a consultant, dividing his time between existing and potential clients. Carroll was not the only change in the senior management. Thomson, who joined Avenue HKM from Novartis in April 2005, was made CEO in February this year after chief executive Jeff Smith relocated to the US - to become CEO at sister agency Broad Street.

‘This year will be very much like 2005, except for our new-business drive where we will aim to increase business broadly across therapy areas, where we have experience but few clients,' says Thomson.

At a glance:

Best-performing area of business in 2005 Medical communications
Top three client wins Altana Pharma brand Alvesco, Alliance   Pharmaceutical's Periostat, and Novartis
Best hire Steve Carroll, co-founder of CPR Worldwide
Expected healthcare fee income in 2006 Just under £3m
Plans for 2006 Building an integrated healthcare service across other Huntsworth-owned agencies to provide a seamless PR, medical education and advertising offering


NORTHBANK COMMUNIOCATIONS (16) - £1,228,000 G 81%
With an income rise of 81 per cent in 2005, Northbank Communications is one of the fastest-growing consultancies in the UK.

The agency offers a wide range of marketing services around early stage drug discovery, trials and development. The year started with ‘a great first quarter', according to CEO Sue Charles, following a new business drive to recover from the 2004 loss of its biggest client, Swiss laboratory instrument maker Tecan. ‘We put significant effort into replacing income, but that effort turned into a little tree that continued to bear fruit for the rest of the year,' says Charles.

In all, the company's organic growth was 42 per cent, with new business increasing by 87 per cent.

In February the company won a corporate image, website and logo development brief from MNLPharma, followed in March with PR briefs from Scandinavian life science companies Santaris Pharma and BioInvent. Such wins took the company to a new stage in its development, which led to the recruitment of chartered accountant Andrew Millard as its first finance and operations director.

Charles sums up the company's performance last year as follows: ‘Our third year of operations was focused on growth. We had established the brand and people knew who we were, and we grew in each quarter of the year, resulting in near 100 per cent growth by the end of the year. Significantly, we converted the amount of retained business from 28 per cent in 2004 to 44 per cent in 2005.'

The agency's other entrepreneurial resources were devoted to the establishment of its financial practice, set up in late 2004, for which Charles reports strong progress (during April this year alone, the practice handled two IPOs).

By October, Northbank reopened its Munich office after a short hiatus owing to the market slowdown in Germany. UK-based account director Douglas Pretsell was appointed Munich bureau chief, and is now running an office with two staff, focusing on the German and Swiss markets.

Charles says that this year the agency will focus on consolidating growth before considering its next major steps for development, and anticipates growth of around 25 per cent. And 2006 is already looking positive, with Northbank beating six agencies in the US to handle a six-figure PR, advertising and design remit for St Louis-based chemicals firm Sigma-Aldrich.

At a glance:

Best-performing area of business in 2005 Retained corporate PR
Top three client wins Ablynx, Biacore and CeNes Pharmaceuticals
Best hire Adam Michael, who joined from running his own  agency, Placenta Publicity, as an account director, bringing two clients with him
Expected healthcare fee income in 2006 Just over £2m
Plans for 2006 To focus on the German and Swiss life sciences and pharma industries


GRAYLING (20) - £700,734 G 69%
Grayling's healthcare business showed a strong performance in 2005, although direct comparison is harder this year because in 2004, the company omitted its healthcare events income, which is included in the 2005 table. The agency's healthcare business is split into over-the-counter; corporate and public affairs; food science issues management; and event management.

Grayling Group CEO Nigel Kennedy says growth was spilt between public relations and public affairs (generating £150,000), and events (£110,000). After these, the best-performing area of business was OTC work, while no client losses were reported.

Client wins included Bayer Consumer Care (for OTC brands Canesten, Germolene, Alka Seltzer, Sanatogen and Rennie), Western Provident, a not-for-profit healthcare insurer, and the Nuffield Trust. For the latter, Grayling helped the NHS publish the first major assessment of its progress under Labour.

Some of the agency's largest jobs have been in corporate PR for Roche, PR and public affairs for GE Healthcare's R&D site in Wales, and several major events for the NHS, including an HR project and The Chief Executive's Conference. Grayling's ‘food sciences issues management' work, for which Kennedy cannot give details, focused on the food and drinks sector, involving corporate and public affairs surrounding the obesity debate. An account that can be discussed was won in February, when Grayling picked up an obesity-related brief from RHM, the home of brands such as Hovis, Mr Kipling, Sharwood's and Bisto.

But Kennedy is cautious in his expectations for Grayling's healthcare arm in 2006. ‘We expect to see growth from private sector clients, but there will be reductions from the public sector. We have not lost clients in 2006, and forecast limited new-business growth,' he says.

That said, significant new hires have helped consolidate existing business. These include the recruitment of Chris Davies, previously head of communications at Bristol Myers Squib in the UK, to the position of deputy chief executive. Tanya Joseph, meanwhile, was appointed to the role of deputy CEO of Grayling Political Strategy. Joseph was previously a press officer at Number 10 for almost five years, and had health as part of her portfolio.
No specialist divisions were launched in 2005, but this year the agency plans to unveil a significant practice area (see below), in conjunction with sister operation Huntsworth Health.

At a glance:

Best-performing area of business in 2005 Corporate and public affairs
Top three client wins Bayer Consumer Care, not-for-profit health insurer, Western Provident, and the Nuffield Trust
Best hire Camilla Horwood, who joined from Wyeth as a senior account executive in March 2005
Expected healthcare fee income in 2006 Flat-to-modest increase
Plans for 2006 A cross-agency project to launch a healthcare/pharma PA offer


TOP 25 HEALTHCARE CONSULTANCIES 2006, and their respective Healthcare fee income

01.  Medi Tech Media:  £9,745,179
02.  Chandle Chicco Agency:  £5,176,573
03.  Edelman:  £5,063,986
04.  Ruder Finn:  £3,670,422
05.  Red Door Communications:  £3,165,581
06.  Galliard Healthcare Communications:  £2,606,871
07.  Avenue HKM:  £2,476,745
08.  Resolute Communications:  £2,449,930
09.  Medicom Group:  £2,239,000
10.  Munroe & Forster Communications:  £1,914,212
11.  Virdo Health PR:  £1,891,652
12.  Ashley Communications:  £1,681,371
13.  Jago Pearce:  £1,390,729
14.  Citigate Dewe Rogerson:  £1,245,000
15.  Nexus Communications:  £1,236,000
16.  Northbank Communications:  £1,228,950
17.  Myriad PR:  £1,016,028
18.  HSD Communications:  £896,035
19.  Pegasus PR:  £757,222
20.  Grayling:  £700,734
21.  The Red Consultancy:  £576,544
22.  AS Biss & Co:  £492,201
23.  Media Strategy:  £480,293
24.  College Hill Associates:  £231,311
25.  Four Communications:  £174,028  

All figures relate to year ended December 2005. Fee income=PR fees plus mark-up. All figures are gathered from forms submitted to PRWeek for Top 150 Consultancies report (21 April)

Click here to download full table in PDF format

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