Pharma Giant GSK Consolidates Its Global Agency Roster Across 4 Holding Companies

In 2015, GlaxoSmithKlein and Novartis completed a deal worth more than $20 billion that combined the two companies' assets. In November of that year, various sources reported that the newly created company planned to launch a review of its agency partners to effectively reset its global relationships.

This week, the company made what it called an "agency simplification" by consolidating its creative, digital, content, PR, expert and shopper marketing accounts with nine agencies across four holding companies. Publicis Groupe was the biggest short-term winner, with the lion's share of the business going to that company and its chief rival, WPP.

"GSK Consumer Healthcare has just completed a rigorous marketing agency roster review to strengthen agency partnerships to deliver effective marketing and accelerate brand growth," reads an internal memo acquired by Adweek today. "This follows the set up of the joint venture between GSK [Consumer Healthcare] and Novartis, which has cemented GSK's position as a world leader in consumer healthcare and accounts for 25 percent of GSK turnover."

WPP had been the dominant holding company on the business, and earlier today The Drum reported on an internal email stating that Sir Martin Sorrell's network had been "working hard" to beat Publicis. But the new arrangement again splits the majority of the business between the two holding companies. After winning Novartis's Theraflu and Voltaren in a 2004 review, Saatchi & Saatchi will continue to serve as global agency of record for those two, which are both among GSK's top seven global "power brands." Grey Worldwide will handle the rest of the "power" group after adding nasal decongestant Otrivin to its existing roster, which previously included four other brands.

An internal memo sent out this morning from Grey CEO and chairman Jim Heekin reads, "We now serve five out of seven of GSK's most important global brands including Sensodyne, Poligrip, Parodontax and Panadol. This is a tremendous vote of confidence in our partnership that began in 1955."

While Publicis and WPP are the new arrangement's biggest winners, GSK also extended its relationship with Havas and sent new business to IPG, naming the latter's McCann Health as one of its expert marketing partners while tasking top communications firm Weber Shandwick with advertising, digital, content and PR responsibilities. On the WPP side, WPP Digital (which is led by Wunderman Health) will work on both digital and content while Ogilvy Commonhealth with share responsibilities on the expert business and Geometry Global will handle GSK's shopper marketing accounts. Havas will work on digital and content-related marketing efforts.

Omnicom was the designated loser in this deal as none of its agencies appear on GSK's final list. Beyond the major holding companies, Edelman will share PR and content duties with Weber Shandwick.

According to the memo, "Agencies were evaluated on a number of different criteria with those selected demonstrating key capabilities, talent and capabilities on a global scale to meet our objectives." All of the aforementioned shops had been working with GSK in some capacity before this development, and an unknown number of agencies were dropped from the client's roster.

"At the center of our [Consumer Healthcare] strategy is our focus on seven power brands," the memo states, adding that these seven brands have "a global presence, proven track record and a higher gross margin than average, and we expect them to deliver double market growth rate." The memo claims that these products, combined with "12 core brands with regional opportunities," will account for 90 percent of GSK's future growth.

The note concludes, "The transition to the new model will take place over a period of time, and we are currently working through the specific allocations of work by area and brand."

This announcement follows a late 2015 global media review that saw GSK stick with incumbents PHD (Omnicom) and MediaCom (WPP). Kantar Media and other sources have reported that GSK spends nearly $1 billion on measured media in the U.S. each year.