It seems a different company announces layoffs, plant closures, or budget cuts each week. Recent reports of cost-cutting efforts have included the loss of 1,000 sales jobs at GlaxoSmithKline, 1,000 at Schering-Plough, and 550 at Novartis, while Pfizer announced in 2007 that it planned to cut 10,000 posts, or 10% of employees, by the end of this year.
For healthcare agencies and practices that have built their businesses around traditional pharma PR – product launches, disease awareness campaigns – the key to maintaining a healthy business is diversification.
“Any company, any business does better during tough economic times when it's diversified,” says Carin Canale, president of Porter Novelli Life Sciences.
Whether diversification focuses on biotech and consumer health or health policy and advocacy relations, agencies are facing similar woes to their Big Pharma clients. Diversification can come at a cost, though.
Agencies must assess the cash position of the smaller clients that are expected to make up the diversified healthcare practices like biotechnology and health information technology, Canale says. While this is a common practice for the firm, now is the time to be more aware.
She adds: “Pfizer is going to be here next year. [It] might look different, but [it is] going to be here... A number of [the smaller companies] won't be here next year.”
And, where the healthcare story used to be about pharma companies selling drugs, it's now about promoting healthcare, says Peter Pitts, SVP and director of global health affairs for the global health practice at MS&L Worldwide.
Kelly Dencker, SVP and practice director for the global health practice at MS&L, believes the change is a chance for agencies to expand what communications can do for the healthcare industry.
“Healthcare agencies were really launch factories,” he says. Social media, mobile PR, litigation communications, and the sister issues of access and reimbursement are driving the changes of what MS&L provides to clients.
As healthcare marketing and communications have become more sophisticated, healthcare agencies and PR pros are finding expanded roles in the client universe, Pitts adds. Although PR once engaged minimally with the legal and regulatory departments at pharmaceutical companies, agencies now work closely with these departments as the role of PR firms expands.
“It's less about PR than healthcare communications,” Dencker says.
And, as agencies work with clients during the economic downturn, they can provide advice to companies about which categories, like lifestyle drugs, will suffer, while medications for chronic illnesses like cancer will maintain because cancer patients are more likely to stay on their treatment plans.
Chris Foster, chair of the US healthcare practice at Burson-Marsteller, notes that the healthcare industry, in general, is on the “eve of fairly significant healthcare reform.” The changes, he says, are inevitable and the economy might simply accelerate what already lies ahead.
He says that in the last year, Burson's healthcare practice began to take on more clients in sectors like hospitals, managed care, trade organizations, and biotechs, as it shifts away from a singular focus on product marketing and pharmaceuticals.
“We've been worried about healthcare reform for the last two years in a real way,” Foster says. “Healthcare is transforming. Agencies are transforming, too.”
Now, healthcare practices are working toward offering a well-rounded platform to clients, including government relations, health policy, and advocacy work.
“The economy has been an eye-opening experience,” Foster says. “But, even more so is the impact of R&D, generics, transparency, and DTC. They have a... profound impact.”