Pharmaceutical Market Europe • December 2022 • 14
MIKE DIXON
MIKE DIXON
RETROSPECTIVE PROSPECTIVE
Looking back at what we learned in 2022 and what the new year may bring
As the year draws to a close, we look back at 2022 and what we’ve learnt. For the Healthcare Communications Association (HCA), 2022 has been our anniversary year, so we have been looking back at the last 20 years.
Since 2002, the HCA has undertaken its unique benchmarking survey and, although only looking at agencies, the insights provided are valuable for their pharma partners as well. It is enlightening to see how communications within the pharmaceutical sector have changed during this period. Some of you will have experienced it first-hand, but with such a rapid expansion over this time period, the majority will be much newer to the sector.
Firstly, consider the environment in 2002. The euro became a cash currency for many EU countries, the Labour party had just been elected for a second term in the UK, social media was in its infancy with another year to come before we heard of LinkedIn, Myspace and then Facebook, and it would be another five years before the arrival of the iPhone. Within pharma, the cholesterol-lowering drug Lipitor was about to become the best-selling pharmaceutical drug and worldwide pharmaceutical sales were less than a third of what they are today.
Two decades of change
Change is a great descriptor for what we have seen highlighted by the survey since 2002, with a shift from pharma having big programme comms budgets and retainers to commissioning more on an individual project-by-project basis. Digital communications have clearly been a monumental change to the way we communicate and the vehicles we use. But we have also seen significant changes in the way we work, with much more flexibility, accelerated by COVID-19, and in the type of work, with a greater focus on across-market communications programmes, capitalised on by the domestic markets, rather than solely created by them.
The changing type of communications that agencies are undertaking for their pharma clients
In 2002, when people talked ‘communication agencies’, they predominantly meant PR and media relations. The shift in the communication requirements from pharma and correspondingly the nature of the business of the HCA’s members has definitely been towards more integrated brand and unbranded/medical affairs communications work. This reflects how pharma itself has recognised that strong foundations of good evidence-based scientific communications and relationship building, not just marketing dominance, are essential for success. The rise of the medical affairs communications role within pharma exemplifies this, with those practitioners coming from both brand comms and medical affairs backgrounds.
Let’s talk money
Agencies have certainly seen a shift from retained programmes to commissioning on a project-by-project basis. Like most changes, there are pros and cons. This has probably been driven as part of creating competition and reducing costs, while believing it helps to bring in fresh and different perspectives. The downside is that if agency teams are constantly changing (often alongside the fluidity of the pharma client teams) the depth of brand knowledge, insight and consistency in internal and external relationships may be lost.
There has also been an increasing pressure on agencies to ‘discount’ rates, either due to volume of work or just to get the work. This, of course, is understandable as we all instinctively want more for our money, but how far this can continue to go is probably a question about the sustainability of the agency model itself. Similarly, the logic of a price reduction for volume is realistic in some procurement areas, but when you are buying time-based professional services there is no real cost saving for the agency itself as you don’t get to pay lower salaries by having more people.
All these trends have added to the squeeze on agencies and their viability.
Everybody wants to have great talent working on their brand
I discussed the challenge of recruiting and maintaining good talent in last month’s PME and this is one of the consistent challenges we have seen over the last 20 years. Suffice it to say, unless we all work together to address this, we will all ultimately lose out. The most pronounced consequence of this talent shortage is increasing costs for agencies in their biggest expenditure – salaries. And agencies have not gone crazy. Our survey results indicate that mean salaries have increased by less than inflation over the same time period, with the difference perhaps being made up in increasing benefit packages. However, while billing rates have kept pace and slightly exceeded salary increases at more junior levels, for the more expensive and more experienced practitioners pharma has on their brand, salary rises have outstripped increases in rates. Basic business acumen tells us that this trend can not be maintained indefinitely.
Open and honest discussions
Pharma and agencies have had a successful, symbiotic relationship over the last 20 years. but some of the above challenges that have transcended the years have the potential to destabilise the whole pharma/agency partnership model unless they are recognised and addressed.
Mike Dixon is CEO of the Healthcare Communications Association (HCA)
and a communications consultant