Pharma companies invested a hefty $12 billion in promoting to physicians and consumers in 2001, according to Scott-Levin. But after the highs of 2000, spending in 2001 seemed stunted-a growth rate of 9 versus 13 percent. Although industry observers point out that pharma spent promotional dollars at a time when most sectors didn't, the macroeconomic downturn and September 11th affected companies' fourth quarter spending much like other sectors and proved that pharma is not "recession-proof" as many analysts once thought.
"Will pharma marketing people change their strategies because of the attention?" asks Robert Coen, senior vice-president, director of forecasting for Universal McCann and a leading ad industry prognosticator. "Unless it's terribly depressing and destructive to their business or has political consequences, most marketers won't give a damn-they want results.""Pharma still wants to maximize opportunities and treat as many patients as it can, and it needs to use a mix of promotional vehicles," says Kathleen Blankenhorn, IMS' director of marketing research/IT. "Although there has been considerable attention paid to the industry's promotional practices, it will not keep companies from using these methods to reach the right patients with the right product information, while at the same time creating a positive return."
Physician Promotion Pharma companies continued to rely on detailing, meetings and events, and sampling to both introduce and augment product sales. In 2001, journal advertising, once the cornerstone of prescription launches, decreased after staying flat for the last few years.
"Sales force sizes aren't getting cut, even as of July 2002," says David Johnson, Scott-Levin's executive director of product management. "Merger and acquisition activity are creating really large field forces like those of GlaxoSmithKline (GSK) and what you'll see with Pfizer/Pharmacia."
Pfizer led the industry in detail spending for the second year in a row with $696 million, up 5.3 percent from 2000. GSK, which overtook Pfizer as the largest sales force for Q4 2001, spent $616 million. Other top detail spenders included Merck ($480 million) and AstraZeneca ($370 million).
"Over the next five years, clients will allocate more of the rep's time to other areas such as managed care and PBMs," says Blankenhorn. "As the difficulty in getting face time with physicians increases, companies will look for other influencers."
Another important part of the detailing spend equation is sampling. IMS Health reported that between March 2001 and March 2002, reps gave away $10.8 billion in samples, a 20 percent increase over the same period the previous year-repeating the growth seen in 2000. Blankenhorn predicts that branded sampling will continue and that generics companies may soon follow suit to entice patients to switch.
"Meetings and events are the most interesting piece of the puzzle. Spending increased quite a bit in 2001 and has been escalating for the last ten years," says Johnson. "However, the self-imposed [PhRMA] guidelines, effective as of July of 2002, may cause a decline. Much of the increased spending included rep-involved activities, such as dinner meetings with speakers, which is not allowed under the new code."
Journal advertising is the only promotional line item that decreased. Scott-Levin reports that companies reduced spending in 2001 by 20 percent to $400 million. Because journal ads are considered a staple in raising awareness of new products, some media spenders blame slower FDA approvals and decreased launch activity for the reduction. Others note the Association of Medical Publications' ROI Analysis of Pharmaceutical Promotion (RAPP) study's failure to convince the industry to increase journal advertising spend.
"People were blown away by how much journal advertising was down last year," says Linda Cicarelli, media director for Sudler & Hennessey and former president of the Association of Healthcare Media Directors. "This year, things will be down even more, although some products are coming out that will keep specialty journals afloat. For 2003, it might stabilize, but it won't be better.
"The big launches that we saw three or four years ago are now few and far between. But it's more than just the lack of big launches. Healthcare practitioner dollars are diminishing and going toward DTC-and that's not news. That's been happening over the last few years, and it will continue to happen." (See PE, "Flexing Their Budgets," September 2001.)