Pharma firms give comms bigger share of budgets

Around half of pharmaceutical companies are spending more of their marketing budgets on PR than before, according to the latest report by the Healthcare Communications Association (HCA).

Pharma firms give comms bigger share of budgets

The 2006-07 HCA benchmarking programme questioned staff at healthcare consultancies and drugs firms. It found that five of the 11 drugs firms surveyed were increasing the proportion of their marketing budget allocated to comms activities.

Of the other drugs firms questioned, five reported a static budget allocation and only one saw a decrease.

The report also found that five of the drugs companies said they were increasing their use of communications agencies.

HCA would not reveal the names of the consultancies and pharma companies that took part in the survey.

This year the report found the perceived value of PR versus medical education among in-house comms managers had dropped.

Last year PR was rated seven out of 10, while med ed rated 7.1. This year saw PR drop to 6.6 while med ed rose to 7.6.

Independent market res­earcher and sub-committee chair Aline Beresford said: ‘The overall trend in favour of med ed could be reflected in the cautious attitude to some PR activities, including media relations, as a result of ABPI code changes.’

This year has also seen an impact on consultancy profit margins. The report found that the requirement for in-house teams to deliver ‘more for less’ has had a knock-on effect on consultancies, which are experiencing continued high client expectations but without an increase in programme budgets. Combining this with the high cost of securing new business means a third of consultancies have reported a decline in profit margins.

Transparency, trust, chemistry and honesty were rated highly as important for successful relationships bet­ween pharma clients and consultancies.

This year’s report inclu­ded a specific focus on the procurement process. Half of the consultancies surveyed had not increased their billing rates in 2006 or 2007. Three-quarters of consultancies surveyed also said that they would be prepared to walk away from procurement negotiations even after being successful at a pitch.

At the ‘Consultancy or Commodity?’ debate held this week to publicise the rep­ort findings, Pfizer’s external affairs director Colette Goldrick said: ‘We value and need comms agencies more than ever, but we are being pressured to manage our financial accounts more than ever at the same time. We respond well to attempts to offload costs and need value-add to be apparent.’

Healthcare specialist Onyx Health’s partner Karen Winterhalter said: ‘The easy ride is over. We are working in a market saturated with healthcare comms agencies. Procurement is here to stay and we have to work to understand clients’ requirements. Comms agencies need to become experts in negotiation.’

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