Schering-Plough looks to remedy an ailing image

Following a steep decline in sales and investigations into its manufacturing processes, drug maker Schering-Plough is rebuilding its corporate image with a streamlined approach.

Following a steep decline in sales and investigations into its manufacturing processes, drug maker Schering-Plough is rebuilding its corporate image with a streamlined approach.

Schering-Plough's turnaround has been so remarkable that Fred Hassan, the drug company's chairman and CEO, now refers to it as the "new Schering-Plough." He's eager to differentiate it from the company that faced serious financial losses and lawsuits, and leave all that in the past.

And while that "old" company is still fresh in the minds of employees, after two and a half years under Hassan's leadership, it's also a world away.

"We did a lot of damage control for awhile," notes Jeff Winton, group VP of global communications. "We're starting to see progress. I think we can now start to celebrate [our] successes. We have a lot more time to do proactive outreach."

The company has had a rough road since what Winton calls "the glory days of Claritin," the blockbuster allergy drug that built both Schering-Plough's reputation and its bottom line.

Claritin lost patent protection in 2002, and while Schering-Plough managed to relaunch the brand as an over-the-counter drug shortly thereafter, some financial analysts saw its plummeting sales as the beginning of the company's downfall.

Schering-Plough also faced investigations into the safety of its manufacturing processes, as well as whether its former CEO had violated Regulation FD by disclosing material information to analysts ahead of the public.

Prescription for success

This year, Schering-Plough has been able to reclaim the spotlight, after surprising Wall Street with third-quarter profits that had tripled compared to the previous year.

"Since October 2003, there's been a very methodical upward trend," notes John Stewart, a research analyst at Schaeffer's Investment Research.

Schering-Plough's PR team attributes the company's comeback to new leadership, particularly Hassan, the former Pharmacia CEO who took over in April 2003.

One of Hassan's first mandates was to reorganize the company from its "holding company" structure into one that operates around three business units: pharma, consumer healthcare, and animal health.

"We needed to be looking and acting like one global company," Winton says. "Because the organization was so decentralized, no one was really aware of what the problems were. We [now] have a much clearer delineation of who's doing what."

Schering-Plough streamlined operations at its headquarters in Kenilworth, NJ. Nearly all of the company's positions, including PR, encompass global responsibilities.

There is also greater specialization. In the past, team members served as PR generalists, but now they focus on specific areas such as financial communications or issues management.

The "new" Schering-Plough also created a product communications team, which mirrors the marketing group at the company. Its staff handles outreach for flagship brands such as Remicade, Clarinex, Nasonex, Afrin, Dr. Scholl's, and Coppertone.

The company has also applied its streamlined philosophy to its agency relationships.

Where each marketing team once worked with its own PR firm, a small group of agencies now handles assignments that are mostly global. Its agency roster includes Edelman and Porter Novelli, as well as local firms MCS PR (for Remicade) and BNY (for community affairs).

With just under two dozen people responsible for PR, the company's department is one of the leaner operations in the industry.

"We've got a lean staff...but feel we have some of the best people in the business," Winton says. "You have to have people who thrive on change - and even chaos."

Stewart, the research analyst, cautions that investor enthusiasm might be artificially raising the company's stock price. "One area of analysis that we look into is the sentiment of investors," notes Stewart, pointing to the stock's lower performance over the past three months. "That level of optimism is kind of a concern."

Going forward, the company will need to build its product portfolio and enhance its pipeline so its performance meets investor expectations.

It is banking on new products, including the launch of Vytorin, which it is co-marketing with Merck. Fitch Ratings, for instance, expects the company's performance to improve due to the "rapid market uptake" of Vytorin, which hasn't hurt sales of its older cholesterol drug Zetia.

"There were a lot of things that came together for Vytorin," says Mary-Fran Faraji, VP of global product communications and advocacy development. The product's launch, for instance, coincided with the release of new guidelines that set a lower target for LDL (or bad) cholesterol levels. "We had the external environment that patients weren't being treated to goal," she adds.

The marketing team knew that it would need to raise awareness about the fact that there are two sources of cholesterol - produced naturally in the body and absorbed through diet - in order for patients to understand what differentiates the product.

"We had a lot of [educating] to do," Faraji recalls. "Most of what we do is make sure that our products are understood."

Reviving a reputation

In addition to bringing new products to market, Schering-Plough is also rebuilding its reputation.

The company frequently works with patient advocacy groups to communicate about hot-button issues such as drug compliance, risk information, and patient assistance programs.

Hassan has also been one of the biggest advocates for the beleaguered drug industry. "He believes in telling the collective good the company is doing," Winton says.

Rosemarie Yancosek, executive director of corporate communications, notes that Schering-Plough has also assembled a cross-departmental team from its medical, legal, compliance, IR, and global supply teams to respond to potential crises.

"You can't [anticipate] every crisis," she says. "The key is to be prepared. I think it's important to have a team in place that knows what's going on."

Schering-Plough's reputation efforts are also very much focused inward.

"We have 32,000 publicists right here in the company," Winton says. "A lot of what we send out to our employees is to equip them to be ambassadors for not only Schering-Plough, but also the industry."

"Bringing out our people can be extremely valuable in terms of telling our story," adds Stephen Galpin, VP of financial and strategic communications. "If they can't carry the message, then who can?"

One of the team's daily projects is Current, a newsletter of company and industry news. In the past, only the top 500 senior managers at Schering-Plough received the newsletter, which is now distributed throughout the company.

"That's one of things that's really changed the culture here," says Cathy Dunn, director of global internal communications. "What we're seeing is people really appreciate working here. It's hard to describe how it's changing morale, but you can tell."

Winton notes that Current has been particularly well received by the company's sales representatives, who get bombarded with questions from doctors about what they've seen or heard in the media.

"Our sales force isn't out there keeping up with the media; they're out there selling products," Winton says. "For us to keep up with the fast pace of our business, we [publish Current] five days a week. Our management feels strongly that we need to be communicating to each of our employees every day."

Human resources is another avenue for the company to communicate with its employees. Robyn Gay, director of global HR communications, notes that the HR department is often one of the first to see the impact of internal outreach efforts.

Exit surveys suggest that employees are giving the company higher marks and are more likely to say they would choose to work there again.

There's also less tension during the company's town hall meetings. "The tone of those have definitely changed," Gay says.

Hassan "gets very involved in the communications process," Winton says, adding that Hassan also communicates directly with employees via e-mail. "He is a very hands-on type of CEO."

"I think you'll see greater transparency" than the company had in the past, Galpin adds. "It's a great pleasure to work with a CEO who values communications. It doesn't take a long time to blow up a reputation. It takes a very long time to win it back."

PR contacts

Group VP of global communications
Jeff Winton

Executive director of corporate communications
Rosemarie Yancosek

VP of corporate communications
Steve Galpin

VP of global product communications and advocacy development
Mary-Fran Faraji

VP of international communications
Gail Thornton

PR agencies
Porter Novelli, Edelman, MCS PR, B&Y, MS&L, Biosector2, Ogilvy, GCI Group, Ritz Communications, Fleishman-Hillard, Hill&Knowlton, Joelle Frank, Euro RSCG Magnet, and Moran and Myers

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