Special Report: Prescription Drugs

NEW YORK Once again, the pharmaceutical advertising business is beset by the Chicken Little syndrome: Everyone runs around saying “The sky is falling, the sky is falling”—but it never actually does.

For the last three years, drug marketers have talked of pulling back on their massive TV budgets, moving more money into the Web and reducing their prime-time TV profile in response to political and legislative pressures. And for the last three years, spending overall—and on TV in particular—has done nothing but rise.

In 2006, total drug spending rose 14.1 percent to $4.7 billion, according to Nielsen Monitor-Plus. Of that, network TV was a major beneficiary. Investment with the broadcast networks rose 9.4 percent to $1.6 billion. Cable, which has been frequently praised by brand managers for its more targeted nature, actually lost share of dollars, with its total spend across all dayparts dipping 6.1 percent to $621 million.

Network TV’s real competitor for ad dollars isn’t cable. It’s print. Spending on magazines and newspapers rose a healthy 24.7 percent to $1.8 billion, proving that for the drug business—which likes the extra pages it can buy for the reams of disclosure and side-effect information it must convey with every ad—the 19th-century medium is far from dead.

And any network sales exec who thinks the Web is eating his or her lunch is wrong: Ad spend on Internet rose a strong 9.5 percent, but still only reached $163 million.

One reason network remains competitive is that drug marketers are moving away from straightforward spots featuring uplifting imagery—before viewers are urged “Ask your doctor”—toward more direct-response messages. “We’re seeing direct-response elements added to almost all the ads,” says Kurt Holstein, chief operating officer of Rosetta, a drug marketing firm based in Princeton, N.J. His clients have included Allergan, Pfizer and AstraZeneca.

Typically, Holstein says, a marketer will take an existing “brand equity” ad and bolt onto it a call for viewers to visit a Web site or call a phone number. The company then measures the response from each ad to each site or number, figuring out which ads work and which don’t. DR ads, unlike other appeals, tend to remain on the air as long as they can demonstrate that they are reaching customers—one reason the TV spend has actually increased at a time when brand managers have pledged to be more conservative with their dollars.

Also burning more TV dollars: Pfizer, which recently rolled out a new campaign for Celebrex, the Cox-2 pain reliever that was beset by controversy after a similar drug, Merck’s Vioxx, was removed from the market. The new Celebrex ad is a mammoth, two-and-a-half-minute spot loaded with disclaimers, health warnings and calls for consumers to discuss the drug with a doctor.

“TV is doing well; it’s just being used slightly differently,” says Anne Devereaux, CEO of TBWA\Worldhealth, New York. “The long-form Celebrex ad is very informative and really is trying to have a more in-depth, fully disclosed conversation” with viewers.

Network TV has every reason to see more drug dollars coming its way. In addition to Celebrex, there have been a number of high-profile campaigns that have launched recently or are set to launch in the near future. They include Pfizer’s anti-smoking drug Chantix and its diabetes product Exubera (which the company has pledged to start promoting in the second half of ’07).

Another brand on the move is Gardasil, the Merck vaccine for HPV. Merck spent $46 million on ads last year and an astonishing $24 million in the first two months of this year. There are a number of reasons to expect this firehose of cash to continue showering networks. First, Merck must combat significant political resistance; the anti-pharmaceutical industry crowd doesn’t like that Merck initially lobbied to make the drug mandatory for schoolgirls, while conservatives are concerned it promotes teen sex. Furthermore, GlaxoSmithKline has pending approval to market a rival vaccine, Cervarix. So Merck has every incentive to capitalize on its first-mover status.

But there’s bad news for the nets. Novartis suspended marketing for irritable-bowel drug Zelnorm, which was heavily promoted via TV, after concern over heart attack and stroke risks arose. And Congress is currently considering a bill that would ban companies from advertising new drugs directly to consumers for two years. Such a bill has been voted down before, but the legislation has a better chance to pass with Democrats in charge.

Should it pass, one might assume that pharmaceutical ad spending would be curtailed—unless, of course, companies simply shift budgets to support established brands.