ANALYSIS: MERGERS; Novartis treads the PR path for drugs merger

The merger of Sandoz and Ciba-Geigy is different from others in the pharmaceutical sector in that they have chosen a completely new identity and put a PR firm in charge of launching it

The merger of Sandoz and Ciba-Geigy is different from others in the

pharmaceutical sector in that they have chosen a completely new identity

and put a PR firm in charge of launching it



The merger of Swiss pharmaceutical companies Sandoz and Ciba-Geigy,

which subject to regulatory approval will take place this autumn, will

create the second largest drugs company in the world. It is the latest

in a string of mergers within the sector.



The consolidation has been driven by the benefits to be had from lower

overheads and shared research, sales and marketing costs. There is also

the opportunity to greatly reduce the corporate wage bill by phasing out

overlapping roles - in the case of the Sandoz and Ciba merger 13,000

people, or about ten per cent of the staff are expected to lose their

jobs.



With the exception of the sheer size of the combined entity, all this is

pretty much run-of-the-mill for pharmaceutical mergers. But what sets

the merger of Sandoz and Ciba apart from the others is the decision not

to combine the corporate names in the manner of Glaxo Wellcome or indeed

Ciba-Geigy, itself the product of a merger 20-odd years ago.



The newly merged company will bear the name Novartis, derived from the

Latin for new skills. The thinking here is that a fresh name will help

employees set aside their old affiliations and embrace the values of the

new company.



‘What is an important point to consider is that the new company is

unique,’ says Ciba head of corporate identity communications Henner

Lappe. ‘The result of the merger is not just Sandoz and Ciba coming

together but a new company. We’ll be demonstrating the strength of the

new entity as opposed to building on old blocks.’



Such a fundamental change - together with the restructuring ahead -

needs to be carefully communicated both internally and externally. That

is why Novartis has hired Ruder Finn (PR Week, 12 July) to co-ordinate a

year-long pounds 29 million integrated global communications and

advertising programme.



Ruder Finn picked up the contract after a two month pitching process

involving 12 PR and advertising agencies. It beat competition from

advertising agencies with more clout by assembling a team that included

other external consultants: London-based media buyer CIA and New York

technology group Tumble Interactive.



‘We wanted to guarantee that they had the best combination of resources

in the world,’ says Ruder Finn president Kathy Bloomgarden. ‘I’ve worked

with many, many companies but I’ve rarely seen one as global as this.’



The work, to be co-ordinated out of Ruder Finn’s New York office will

comprise media relations, event management, direct marketing, internal

communications, Internet promotions and advertising.



Using the Intranet to inform employees of changes will also be an

important element in the communications programme.



The sheer scale of the task explains why Novartis chose to bring in an

outside firm to co-ordinate communications. But why did it choose a PR

firm rather than an advertising agency?



Ironically part of the answer is that the Ruder Finn beat the

advertising boys at their own game. The agency’s own in-house design and

creative group is handling the creative work for both the Internet

promotions and more traditional advertising.



But more than that it demonstrated a belief in an integrated approach to

communications. ‘It turned out that Ruder Finn could come up with a good

creative solution for our needs, and it means we can combine the

strength of an advertising and PR campaign,’ says Lappe.



‘We have always used an open and integrated approach to communications,

we always felt it was more than printed ads and TV,’ adds Walter von

Wartburg, Novartis’ designated head of communications in Basle. Whatever

the reasons, Novartis’ decision to hand the communications reins to

Ruder Finn is good news for PR firms. ‘It’s good for PR because if the

Ruder Finn example is followed by others then the precedent will be set

for PR driving the communications for mergers,’ says a pharmaceutical

industry PR man.



One senior in-house communicator at a large pharmaceutical company has

doubts about the wisdom of outsourcing such a major project wholesale.

‘The danger in hiring one outfit to oversee the communications is that

you need to manage your consultants. It’s not the way that we go about

things.’



However, von Wartburg does not think this will be a problem. ‘We will

exercise strategic control,’ he says.



Post merger, Novartis will have to commit itself to building a new

corporate image. It wants to establish itself as a leading life sciences

company - a corporation whose interests span healthcare, agri-business

and nutrition.



‘We want the important people to associate the name Novartis with a

large innovation-based worldwide life sciences company,’ says von

Wartburg. ‘We won’t go into detail during the launch stage. You can’t

have detail without people first being clear about the name.’



Glaxo Wellcome also felt the need to pay attention to its corporate

brand following its merger. For the first time it is running a corporate

TV advertising campaign. Its purpose - apart from reinforcing the

corporate name to investors, consumers and health professionals - is ‘to

explain the role of the pharmaceutical industry,’ says Glaxo Wellcome

corporate communications manager Martin Sutton.



This championing of the industry as a whole is a by-product of Glaxo

Wellcome’s status - in other words, what’s good for the pharmaceutical

sector as a whole must also be good for a player as large as Glaxo

Wellcome. Another change linked to its inflated size is a subtle shift

from straight product marketing to a broader promotion of the disease

areas in which it is involved.



In those areas where the company has a strong product portfolio it makes

sense to promote corporate expertise in the area rather than just

individual brands. With its own enlarged product portfolios and the

prospect of economies of scale in campaigns covering a number of brands,

it seems inevitable that Novartis will follow a similar route.



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