Healthy margins from healthcare specialisms: Why pharma is interesting marketing acquirers
The lines between public relations and advertising have, ever since the advent of digital, become increasingly blurred. PR used to be about crisis management, stunts and other events, and sending out press releases, all in the cause of gaining some valuable – and hopefully favourable – column inches for the client.
Pharma is interesting marketing acquirers, writes Barry Dudley
PR people were a different breed from advertising folk, because their work was mediated by journalists, and cultivating good contacts and relationships was vital. Ad people, on the other hand, sought to influence the consumer. And the PRs might argue that editorial coverage was more 'valuable' than the equivalent ad space in printed media or broadcast airtime, because, well, people believe the news more than they do adverts, don’t they?
But all that’s changed. PR is increasingly about reputation, about being seen, and reaching out to influencers; and about interacting directly with consumers and creating one’s own media channels, as opposed to hoping someone else’s media channel will run your story.
All of this, of course, presents both advertising agencies and PR shops with something of a dilemma, as they move closer and closer to each other’s territory. I suspect we’ll return to this subject later in the year, but for the moment, let’s concentrate on one area of the discipline where the gulf (or rather, the lack of one) between PR and advertising hasn’t really been a problem – and that’s the specialist field of healthcare comms.
This is because prescribed drugs and other medical services are not permitted to be advertised directly to consumers, nor are they allowed to be 'PR’d' in the traditional sense. Healthcare comms has always been about reaching influencers. As a discipline it targets doctors, consultants, pharmacists, nutritionists and other professionals. You’ll only find ads for, say, the antibiotic Erythromycin in professional journals. Although it’s a highly-regulated business, it’s also a hugely profitable one. Big pharma companies spend billions on R&D and are more than happy to spend a bit more ensuring their products and messages get in front of the right people.
And this is why healthcare comms companies – usually staffed by highly qualified specialists – are so keenly snapped up. Already this month there have been three significant deals, all a testament to the liveliness of the sector, and acquirers’ confidence in its long-term health and profitability.
First of all Fishawack, one of the largest independent medical communications organisations, acquired Facilitate, a medical communications specialist based in Brighton, as part of its stated 'ongoing buy and build' strategy. Facilitate is a full-service agency, but the team have also developed a unique 'Independent Global Leadership Board' service, which provides detailed daily content analysis by expert physicians at key medical congresses. An offering like that is hugely attractive to pharmaceutical clients, but it’s also difficult for an agency to develop from scratch; and it is this, one suspects, which made Fishawack (which has bought three agencies in the past year with the help of Capital Growth Partners) shell out.
Established in 2002 by Ann Dieckmann and Alan Bromley, Facilitate has primarily been supporting global pharmaceutical clients based in the US and Europe. Bromley will be retiring, but Dieckmann will stay with the business – another plus.
Facilitate will be integrated into the Fishawack Group, and Fishawack (which will now have more than 240 staff worldwide) will provide its new baby with additional resources and representation in the US. Facilitate will rebrand as Fishawack-Facilitate.
“Medical communications in the UK is based around an axis that connects Manchester to Oxford to London to Brighton,” said Oliver Dennis, CEO of Fishawack in a press release. “Being present in those areas puts you within reach of 75 per cent of all experienced medical communications professionals. Brighton is a great place for Fishawack to be.”
Also this month, Leeds-headquartered communications agency Home has expanded with the acquisition of two specialist marketing businesses.
In the first deal, Home bought face-to-face agency Rectangle Group, but more relevantly here, it also acquired a majority stake in PLM Healthcare, which specialises in providing marketing services to the NHS and private healthcare sectors.
Home chief executive Dave Sewards said: "The purchase… continues our ongoing growth plans, providing a full-service marketing approach, under the Home roof." It seems to me that this 140-strong regional agency – which also has operations in Leeds, London, Gibraltar and Sydney, and has a turnover in excess of £25m – has ambitions to be a mini-agency network, offering a '360' service. It will also be adding high-margin business to its portfolio as well.
Then earlier this week, UDG Healthcare, a FTSE 250 company specialising in pharma packaging, sales, marketing, and medical services paid £6.5m (plus another £6.5m payable over the next three years, subject to performance) to acquire two London-based agencies, Nyxeon and Galliard.
Services offered by the two agencies include media relations, issues management, scientific and medical education, corporate and employee communications. £13m may seem a lot to pay for two such specialised shops, but the deal allows UDG to add strong scientific public relations capabilities to the services it already offers clients, and is in line with the company’s stated growth strategy of extending its range of services in high value multichannel healthcare communications; in the past year it has acquired no fewer than three specialist agencies – InforMed, Watermeadow and more recently Knowledgepoint360 – in pursuit of this strategy.
Barry Dudley is a partner at Green Square, corporate finance advisors to the media and marketing sector