Will Pharma's Big Ad Spend Move Online?

APRIL 22, 2008

Drug companies won't abandon traditional media.

US direct-to-consumer pharmaceutical marketers say they plan to increase their online marketing spending this year and decrease spending on traditional media, according to a March 2008 Cegedim Dendrite study.

Respondents generally said they planned to spend more this year on Web sites, search and e-mail marketing, and less on TV and radio.

Respondents were split over the effectiveness of DTC marketing; 31% said it was less effective than in the past, while the same number said it is now more effective.

Among those who said DTC had become less effective, a plurality (36%) said there were just too many ads in a saturated market. They also cited public backlash and poor media plans as reasons for declining effectiveness.

Those who said DTC was more effective were most likely to credit increasingly savvy consumers who conduct independent research.

Cegedim said that while respondents said they wanted to see more focus on emerging and targeted channels, and less on general mass media tactics, the industry seemed reluctant to actually reallocate budgets to make it happen.

eMarketer predicts that online ad spending by the pharmaceutical industry will indeed increase through 2011, reaching $2.2 billion from $1.2 billion in 2008.

Yet this will represent almost no change as a percentage of total media spending by the industry. US pharmaceutical and healthcare companies spent about 5% of their ad budgets online in 2006—almost the exact same percentage as they will spend in 2011.

"The pharmaceutical industry is in a state of flux or siege depending on your point of view," said Lisa Phillips, senior analyst at eMarketer. "Some of the trouble is self-induced and some is caused by market and regulatory forces, a change in congressional leadership and just plain bad luck.

"In the face of all this, pharmaceutical marketers are sticking with what they know —brand awareness messages—in the media they know best: TV and print," Ms. Phillips said.

The eMarketer Pharmaceutical Marketing Online report will be published next month. Click here to be notified when it is released.

Online Ads Healthy as Pharma Sales Slow

MARCH 20, 2008

Rx for sales: Web marketing.

Overall sales growth in the US prescription drug market slowed to 3.8% in 2007 from more than 8% in 2006, according to IMS Health's "US Pharmaceutical Market Performance Review."

The company said that sales growth slowed because many branded medicines lost their exclusivity, fewer new products were approved, Medicare Part D year-over-year growth leveled and safety issues slowed approval rates.

IMS said that 2007 US prescription sales totaled $286.5 billion.

"In 2007, the US pharmaceutical market experienced its lowest growth rate since 1961," said Murray Aitken, senior vice president at IMS.

IMS forecasts annual growth in US pharmaceutical of between 3% and 6% through 2012.

"In recent years IMS Health has consistently reported that emerging markets such as Brazil, China and Russia would become the growth engines for pharmaceutical companies," said Lisa Phillips, senior analyst at eMarketer.

"However, in the US, Medicare Part D is a bright spot for online pharmacies, which can offer online prescription renewals and offer all manner of other products and services to seniors who are not visiting the physical drug store as often," Ms. Phillips said.

Online advertising is a bright spot as well. eMarketer projects that annual growth in US pharmaceutical online ad spending is rising again after a dip last year, and that it will hit 28.6% in 2009.

Pharmaceutical marketers surveyed for a March 2007 Guideline-Med Ad News survey said that online ads were already more important to them than traditional media. Respondents said the trend would solidify through 2010.

Pharmaceutical Marketing Online: Stuck in Web 1.5

After 10 years of direct-to-consumer (DTC) advertising and growth of the US Internet population, the question is not who is searching for health information online but rather who isn't?

The Pharmaceutical Marketing Online report checks the temperature of online advertising spending by the US pharmaceutical and healthcare industry.

By 2011, the pharmaceutical category will account for 5% or $2.2 billion of Internet advertising. Growth will come from pharmaceuticals, hospitals and other healthcare services, courtesy of the increasing influence of consumer-directed health plans.

Meanwhile, the pharmaceutical industry hasn't fully adopted Web 2.0, and by restricting their brand sites to simple online information centers, pharma marketers are missing opportunities to engage consumers and boost compliance.

Key questions the "Pharmaceutical Marketing Online" report answers:

• Where are pharmaceutical companies spending their ad budgets?
• How are consumers searching for health information online?
• What can pharmaceutical marketers do to improve trust online?
• And many others...

eMarketer Reports—On Target and Up to Date

The Pharmaceutical Marketing Online report aggregates the latest data from marketing and communications researchers with eMarketer analysis to provide the information you need to make the right business decisions—right now.

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