The pharmaceutical asset-trading market is red hot. Deals between Bayer and Merck; GlaxoSmithKline, Novartis, and Eli Lilly; and the potential $100-billion-plus takeover of AstraZeneca by Pfizer are pushing branding and communications to the top of the priority list at pharma companies.
However, top health and pharma communicators tell PRWeek that the industry’s major players usually fit neither the "house of brands" nor "branded house" structures. Instead, many are looking to a hybrid model to explain either their individual drug brands or those of the parent company to consumers and stakeholders.
Kym White, global practice chair for health at Edelman, said via email that "recent asset swaps have been designed to help pharma companies consolidate their already strong positions in certain areas such as consumer health, vaccines, and oncology."
Therefore, "they have less of an uphill battle ahead of them to establish their presence since they are already known players in these categories," she explained. White added that companies such as GSK, Merck, and Bayer will have a "stronger story to tell" in lieu of having to introduce themselves to new audiences.
The industry’s main players will have to embrace an approach that doesn’t fit neatly into the branded house or house of brands strategies used by many multinational companies overseeing a range of brands. The move toward a hybrid model is a result of the "massive transformation that’s happening in the industry," says Kristen Spensieri, head of corporate and consumer practices at Chandler Chicco Companies’ Brandtectonics and Allidura units.
"I don’t think we’re just going to see a house of brands or a branded house," she says. "It’s becoming increasingly confusing to the end user, which means they need to have a great corporate road map and a brand promotion plan existing side by side."
Spensieri adds that the model used is "very specific" to an organization. For instance, a branded house may work better in some cases, given industry dynamics.
"Every organization has to evaluate what is preferable," she explains. "We may see the hybrid model emerge as the preferred methodology, given the dynamic corporate landscape and the need to promote brands."
Susan Goldstein, MD in Ruder Finn’s global healthcare practice, agrees that the industry is moving toward a mixed approach to branding. She adds that patients know the brands, but not the companies in most cases – with Johnson & Johnson being an exception. Companies are known by patient groups, through which they communicate with consumers.
Other experts note that pharma companies are more vulnerable to external influences than consumer brands, such as those in the technology industry.
Laura Schoen, chair for Latin America and president of Weber Shandwick’s global healthcare practice, says there’s been a shift toward pharma companies being more invested in their corporate brands.
She notes that "the most famous example" of corporate branding in pharma is Johnson & Johnson, but says the days of companies trying to be "all things to all people are long gone."
A deluge of deals
Three of Pfizer’s bids to take over AstraZeneca have been rejected, yet the company is continuing to pursue the UK-based drug manufacturer. On Tuesday, Pfizer entered yet another bid for AstraZeneca for about $106 billion. A day later, The Independent reported that Pfizer CEO Ian Read said some jobs and research spending could be casualties of a successful takeover.
Negotiations between the two rivals follow a flurry of pharma deals. Bayer agreed to sell its interventional division for $415 million to Boston Scientific this week. The company has also made deals with Merck to buy its non-prescription unit, containing products such as allergy pill Claritin and Coppertone sun lotion, for $14.2 billion
In April, GSK and Novartis engaged in a multibillion-dollar asset swap that resulted in Novartis getting GSK’s oncology products and Glaxo acquiring Novartis’ vaccines, sans its flu business. The transactions are expected to close in the first half of next year.
Eli Lilly also agreed to buy Novartis’ animal health division for about $5.4 billion last month.
Communicating the new pharma world
Pharma companies are also affected by a new generation of consumers who are "increasingly concerned" about a company’s values – who they are, what they stand for, and how they operate – says Jeffrey Winton, SVP and CCO at Astellas. That is leading to drug-makers spending resources on corporate reputation and CSR and discovering what makes them genuine, unique, and credible.
"They want to know what kind of good corporations are doing for the world and how we’re giving back," adds Winton.
Pharma companies are also dealing with more stakeholders than in the past, such as patient and professional advocacy groups, he explains. Companies such as Astellas are spending more time getting to know them and involving them in focus areas.
The digital and social media space is also continuing to change, Winton adds. After waiting years for the Food and Drug Administration to deliver guidelines, they’re "scrambling to catch up" with other, less regulated industries. And while the physician will always play a role in decision-making, patients are taking to the Internet more often to educate themselves on products.
In the case of a merger or acquisition, Winton says he "can’t overestimate the chaos that occurs, regardless of how well-planned a merger is, when it relates to the employee state of mind – regardless of who the acquirer or acquire is."
Employees are living in a constant state of transition, given the realignments, meaning the unknown is "the new normal," says Spensieri. She contends that "over communication to stakeholders is important, especially for employees who are on the frontline of visibility efforts," because they are the ambassadors to payors and other professionals that have "emerged under health care reform."
Pharma stays positive
APCO Worldwide released a report on Thursday that shows the industry is maintaining its positive reputation with stakeholders. Respondents said they would like to see the industry "do more to demonstrate its commitment as a leader in addressing critical public-health concerns" in areas such as chronic disease management, research transparency, and advocacy.
Christine Harrison, senior director for healthcare policy at APCO, says healthcare is such a "personal piece of people’s lives," that making a connection with stakeholders is paramount. It’s not necessarily a "warm and fuzzy" connection, she explains, but stakeholders do want to know a company is working on their behalf.
The dynamics of pharma mergers and acquisitions are different from those of other industries, such as consumer goods "or even the financial industry," says Farah Speer, executive director, North American healthcare lead at GolinHarris, because a consumer isn’t going to just "walk in and make a decision."
"There are so many gatekeepers," she adds.
Spensieri notes there is a "confluence of operating regulatory and reimbursement considerations that are happening simultaneously in an era of big data and social technologies."