Consumer Advertising Spend Drops as New Drugs Dwindle

With a shortage of blockbuster drugs in the pipeline and a deluge of prescription meds going off patent in the next few years, pharma has trimmed back its consumer advertising spend considerably, according to a recent report by TNS Media Intelligence.

DTC ad spend for prescription drugs was down 3.6 percent in the first eight months of 2008, offsetting the 3.5 percent gain in 2007. The biggest hit appears to be in ad spend for new product launches. In the past three years, the top marketing launches set their respective companies back anywhere from $130 million (Vytorin, 2004) to $312 million (Lunesta, 2005). This year, not a single drug launch spent more than $100 million on marketing spend. Veramyst came the closest with $97.8 million, followed by Orcencia ($59.5 million) and Vyvanse ($52.6 million).

“I think it’s a reflection of the lack of a new drug pipeline,” said Jon Swallen, senior vice president for TNS Media Intelligence. “You go back a couple of years when new drugs like Lunesta and Ambien were coming to market, backed by hundreds of millions of dollars in ad budgets-those were the good old days. Those kinds of mass market blockbuster drugs are not coming into the market.”

Meanwhile, television ad spend increased to 63.4 percent from 58.8 percent in 2007, while magazine spend dropped from 35.8 percent to 30.2 percent. All other forms of advertising accounted for only 6.4 percent of ad spend, including online advertising.

“If you look over the past decade of DTC marketing, television and magazines have accounted for the lion share of spend,” Swallen said. “What’s significant about the current downturn in spending is that it’s coming out of the hide of magazines. This indicates to me that pharma CMOs think that television is a better ROI than print.”

TNS explained that the company does not currently track keyword ads, which is difficult to track on a sufficient scale, or salesforce marketing.

The report noted a rising trend in pharma companies seeking new indications for existing drugs as a way of restarting the patent clock and to hedge against the lack of pipeline development.

Swallen however notes that ad spend does not necessarily increase to new launch levels for new indications, but instead, spend correlates more with how much time has past since the drug was last advertised. For example, Requip, which was approved for Parkinson’s in the ‘90s was recently was approved for restless leg syndrome. Since many years have past sine the initial launch, GSK pounded consumers with an ad campaign worthy of a new launch.

Drugs with new indications approved only a few years after launch would necessitate far less ad spend, Swallen said.