RxCowboy
05-05-2009, 02:34 PM
If I were head of the FDA I would do away with DTC Rx advertising altogether. It does nothing but increase the cost of medications.
DTC ad spending decreased last year
Apr 27, 2009
By: Fred Gebhart, Contributing Editor
Drug Topics E-News
Drugmakers cut consumer advertising for prescription drugs by 8 percent in 2008. The retreat from $4.8 billion in 2007 to $4.4 billion last year is the first reduction in direct-to-consumer Rx spending since the late 1990s.
DTC spending was flat in 2007, according to market research firm TNS Media Intelligence. Drug industry watcher John Mack, principal consultant for VirSci Corp, predicted a further 11 percent decline in DTC spending for 2009.
“There is a lot of highly visible spending in DTC,” Mack said. “When the economy goes bad, that visible spending is one of the first areas to be cut, along with the number of drug reps, which has also been slashed. Drug makers are cutting costs across the board.”
Manufacturers are also seeing Rx sales slow as more consumers decide not to fill scripts and move instead to generics. Both changes make brand advertising an easy target for cost cutting. “Consumers are just not buying as much,” said Chicago-area independent pharmacist Dennis Bryan, incoming president of the Illinois Pharmacists Association.
“Sales are hurting as food trumps meds. Everybody is taking a hit.” Recession is just one reason drugmakers are cutting their DTC budgets. Blockbuster drugs typically drive DTC advertising, Mack noted, and blockbusters have been few and far between the past two years.
Even fewer blockbusters seem poised to enter the market anytime soon. “Current drug approvals are largely extensions of existing products,” said David Kweskin, senior vice president and practice leader in brand and communications, TNS Healthcare. “Take Cymbalta (duloxetine, Lilly). They got a new indication for fibromyalgia, which is good for sales, but you’re not going to put a ton of money behind a new indication.”
Declining DTC spending is just part of the story. Pharmaceutical companies are also changing their advertising mix. Less money is going to print ads in magazines and newspapers and more money is going into television and online ads. “The pullback was much stronger in print than in other media,” said John Busbice, principal, commercial effectiveness practice, IMS Health. “And there was more pullback in lower-volume areas than in the top 25 DTC advertisers.”
The top 25 DTC advertisers accounted for 62 percent of total DTC spending in 2008, $2.7 billion, Busbice said. Another 100 or so products pitched direct to consumers accounted for the remaining $1.7 billion. The top 25 brands cut DTC spending by about 5.5 percent, IMS reported. Smaller brands cut spending much more.
The smaller brands had the right idea, he continued. Brands with sales of less than $750 million generally had a lower return on their DTC investment than brands with sales above $750 million. Busbice said the large brands went too far. The top 25 brands should have increased their ad spending by about four percent. IMS estimates they could have maximized sales by cutting $40 million from network television and adding $50 million each to print, cable TV, and syndicated TV.
IMS reported that the typical return on DTC investment ranges from 1.9 for syndicated TV to 1.4 for network television. Network TV audiences are falling, Busbice said. Viewers are moving to cable and syndicated programs. And they are moving online. “We see a significant migration online,” said West Shell, president and CEO of HealthLine, an online health site based on consumer information searches.
“Recent data shows an ROI of five to one for online DTC because online ads are better targeted than print or TV. The Internet audience is as big as the TV audience and still growing, while TV is shrinking. Consumers are moving online and advertisers have to follow them. Pharma is relatively late to the game and lags other sectors in online DTC.”
TNS Media Intelligence agrees. Jon Swallen, TNS senior vice president, research, said that online Rx DTC spending moved from two percent in 2007 to three percent in 2008. U.S. advertisers overall spent seven percent of their ad dollars online.
“Online DTC is going to be one of the very last channels to be cut,” predicted Didi Discar, partner, MedAccess, a pharma-focused advertising and marketing agency in Southern California. “Online is significantly less expensive than other channels and today’s medical consumer is very web savvy.” That bodes well for pharmacy, said Jeremy Shane, president and COO of HealthCentral.com, a consumer health information Web site.
“The pharmacist remains an important consumer touchstone,” he said. “People don’t want to buy blindly, they want advice. The pharmacist is the source they trust and want to touch as a part of the treatment and buying decision.”
DTC ad spending decreased last year
Apr 27, 2009
By: Fred Gebhart, Contributing Editor
Drug Topics E-News
Drugmakers cut consumer advertising for prescription drugs by 8 percent in 2008. The retreat from $4.8 billion in 2007 to $4.4 billion last year is the first reduction in direct-to-consumer Rx spending since the late 1990s.
DTC spending was flat in 2007, according to market research firm TNS Media Intelligence. Drug industry watcher John Mack, principal consultant for VirSci Corp, predicted a further 11 percent decline in DTC spending for 2009.
“There is a lot of highly visible spending in DTC,” Mack said. “When the economy goes bad, that visible spending is one of the first areas to be cut, along with the number of drug reps, which has also been slashed. Drug makers are cutting costs across the board.”
Manufacturers are also seeing Rx sales slow as more consumers decide not to fill scripts and move instead to generics. Both changes make brand advertising an easy target for cost cutting. “Consumers are just not buying as much,” said Chicago-area independent pharmacist Dennis Bryan, incoming president of the Illinois Pharmacists Association.
“Sales are hurting as food trumps meds. Everybody is taking a hit.” Recession is just one reason drugmakers are cutting their DTC budgets. Blockbuster drugs typically drive DTC advertising, Mack noted, and blockbusters have been few and far between the past two years.
Even fewer blockbusters seem poised to enter the market anytime soon. “Current drug approvals are largely extensions of existing products,” said David Kweskin, senior vice president and practice leader in brand and communications, TNS Healthcare. “Take Cymbalta (duloxetine, Lilly). They got a new indication for fibromyalgia, which is good for sales, but you’re not going to put a ton of money behind a new indication.”
Declining DTC spending is just part of the story. Pharmaceutical companies are also changing their advertising mix. Less money is going to print ads in magazines and newspapers and more money is going into television and online ads. “The pullback was much stronger in print than in other media,” said John Busbice, principal, commercial effectiveness practice, IMS Health. “And there was more pullback in lower-volume areas than in the top 25 DTC advertisers.”
The top 25 DTC advertisers accounted for 62 percent of total DTC spending in 2008, $2.7 billion, Busbice said. Another 100 or so products pitched direct to consumers accounted for the remaining $1.7 billion. The top 25 brands cut DTC spending by about 5.5 percent, IMS reported. Smaller brands cut spending much more.
The smaller brands had the right idea, he continued. Brands with sales of less than $750 million generally had a lower return on their DTC investment than brands with sales above $750 million. Busbice said the large brands went too far. The top 25 brands should have increased their ad spending by about four percent. IMS estimates they could have maximized sales by cutting $40 million from network television and adding $50 million each to print, cable TV, and syndicated TV.
IMS reported that the typical return on DTC investment ranges from 1.9 for syndicated TV to 1.4 for network television. Network TV audiences are falling, Busbice said. Viewers are moving to cable and syndicated programs. And they are moving online. “We see a significant migration online,” said West Shell, president and CEO of HealthLine, an online health site based on consumer information searches.
“Recent data shows an ROI of five to one for online DTC because online ads are better targeted than print or TV. The Internet audience is as big as the TV audience and still growing, while TV is shrinking. Consumers are moving online and advertisers have to follow them. Pharma is relatively late to the game and lags other sectors in online DTC.”
TNS Media Intelligence agrees. Jon Swallen, TNS senior vice president, research, said that online Rx DTC spending moved from two percent in 2007 to three percent in 2008. U.S. advertisers overall spent seven percent of their ad dollars online.
“Online DTC is going to be one of the very last channels to be cut,” predicted Didi Discar, partner, MedAccess, a pharma-focused advertising and marketing agency in Southern California. “Online is significantly less expensive than other channels and today’s medical consumer is very web savvy.” That bodes well for pharmacy, said Jeremy Shane, president and COO of HealthCentral.com, a consumer health information Web site.
“The pharmacist remains an important consumer touchstone,” he said. “People don’t want to buy blindly, they want advice. The pharmacist is the source they trust and want to touch as a part of the treatment and buying decision.”