Larger PR agencies have been eager to snap up small healthcare PR
specialists in recent times but there are signs that the smaller firms
are now trying to hang on to their autonomy. Hilary Freeman reports
The healthcare PR consultancy sector is enjoying a boom. But the
uneducated client looking through a directory of healthcare agencies
would be forgiven for thinking otherwise. Over the last year, an
increasing number of well-established small specialist agencies have
disappeared from the market. Rather than signifying decay, the
disappearance of small agencies is evidence of a healthy growth, as
generalist agencies move into the healthcare market, swallowing up or
merging with the small specialists.
In only the last 18 months Lowe Bell has acquired MC2, European
Marketing Consultants has bought Fulcrum and Charles Barker has taken
over Concept. Vox Prism Targis has been absorbed by Countrywide Porter
Novelli, Manning Selvage and Lee has acquired Joan Scott and Grayling
has announced it is looking to buy.
Neil Kendle, managing director of specialist, Fusion, says many
generalist agencies have been attracted to the healthcare market because
of its durability and growth during the recession, and the new
opportunities afforded by changes in the NHS. ‘When times get tough
agencies go back to the drawing board. While everyone else was
struggling, healthcare PR agencies were successful. Healthcare PR is a
young and underused discipline which has now come of age,’ he says.
But he warns generalist agencies that healthcare PR cannot be treated
like other consumer areas: ‘They must take a different approach. You
can’t wheel in consumer PR people to help out when times are tough. The
agency’s general philosophy must be conducive to healthcare PR.’
Such advice does not deter the large agencies who are seeking to acquire
specialists in order to break down the barriers between disciplines. The
Grayling Group has made it known that it is looking to buy a small
specialist, which will enable it to grow in the healthcare sector.
Managing director Peter Holden has headed an independent specialist and
is well aware of the small company’s benefits in expertise and
experience.
‘The marketplace for healthcare PR personnel is very competitive. Good
people get snapped up very quickly. If we bought a small specialist, we
could absorb its expertise, experience and client list into ourselves.’
The alternative is to buy an agency and let it stand alone: ‘Once a PR
company gets to a particular size, the number of accounts it can hold is
self-limiting. Buying a company and having it stand alone avoids the
problem of conflict of interest,’ says Holden.
Acquisition also brings benefits to the small specialist. Nicky Garsten,
former director of Joan Scott PR, and now account director of Manning
Selvage and Lee says her agency has gained better resources, financial
security and an international network. ‘It’s a different culture, but
MS&L have been extremely welcoming and most of our clients have stayed
with us,’ she says. ‘MS&L already had a strong healthcare department. We
have brought in our patient group experience and they had the
pharmaceutical knowledge. It’s a good match.’
In the two months since its acquisition by European Marketing
Consultants, Fulcrum has enjoyed the advantages of a worldwide network
of PR contacts, allowing it to explore a new international client base.
Managing director Richard Price says access to consumer PR knowledge has
been extremely useful to Fulcrum, as has EMC’s respected reputation. As
for disadvantages: ‘We have to be careful not to swallow up Fulcrum. The
market is littered with acquisitions gone awry. We have planned very
carefully.’
Some mergers and acquisitions are carried out to save a failing
independent specialist. When Countrywide Porter Novelli absorbed
healthcare specialist Vox Prism Targis in spring 1995, its motives were
to rescue its poor relation, rather than to benefit from its expertise.
Although Vox Prism had a good reputation for healthcare PR, it had begun
to stagnate - both in terms of client relationships and new business
prospects.
Paul Miller, managing director of Countrywide, says the merger was
performed to improve the overall position of parent Omnicom in the
healthcare market.
‘The merger has given Countrywide the benefit of Vox Prism’s healthcare
knowledge and Vox Prism has benefited from the benefits of Countrywide
management structures,’ he says.
EMC’s marriage with Fulcrum brought the agency a new double-barrelled
name - EMC-Fulcrum, recognising the brand reputation of the specialist.
But since its absorption by Countrywide, the name Vox Prism has vanished
from the market, together with several of its clients and personnel and
pounds 300,000 of its fee income.
Miller is philosophical: ‘Compared with 18 months ago, the group is
smaller in size, but it is actually starting to make money. We now have
a stable, happy staff, new clients such as the World Cancer Research
Fund and a profitable business.’
Although the takeover and merger trend appears unstoppable, it is likely
that the market will settle down within the next few years, leaving a
broad spectrum of the generalist agencies, the large and the small
healthcare specialists from which clients can pick and choose.
Pharmaceutical clients, such as SmithKline Beecham, use a variety of
agency types for different accounts. Director of consumer healthcare
communications, Anne-Marie Sal-mon says both large and small agencies
have their strengths and weaknesses: ‘The issue is the ability of the
agency to meet the need of the client group, not what size it is.’
Many small specialists plan to remain independent despite tempting
offers from larger agencies. Justin Clark, director of specialist Clark
Coombes Drake, says the future looks bright for the small agency: ‘The
market is expanding, it is becoming more deregulated and there are more
OTC products, which are governed by less restrictive rules than
prescription products. The small specialists will grow rapidly in the
OTC market.’
Clark says there is nothing a large generalist agency can do better than
the small specialist. The small agency has no distractions, no conflicts
of interest and can put all its efforts into building contact lists and
developing expertise.
‘When a big agency buys a smaller one, the personnel are often used for
general PR activities for other clients, making their work more general
and less specialist,’ says Clark. ‘It is a complex and delicate sector
and clients want people who know their market inside out.’
Clark says the only disadvantage for the independent specialist is that
it may not have the international corporate image or resources of the
large generalist.
‘The challenge is to make clients aware of the small agencies through
press and publicity work,’ he says. ‘We just have to do more to make
ourselves known.’
