Drug Company TV Ads Expected to Drop Sharply, but Broadcasters Seen Replacing That Revenue
The amount of TV ads large drug companies buy has been dropping with a wave of patent exclusivity expiration washing over the drug industry, and is expected by industry officials to continue falling sharply, putting hundreds of millions of dollars of annual TV revenue at risk. So-called blockbuster drugs such as Plavix, Lipitor, Singulair and Seroquel have either lost their exclusivity or are about to. Historically, drugmakers stop advertising treatments up to a year before they expect to face competition from generics.
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The makers of those drugs and Symbicort spent a combined total of more than $300 million in their last full year of advertising and mostly on TV, said Chief Research Officer Jon Swallen of Kantar Media, which tracks media spending. “That’s $300 million worth of advertising that goes ‘poof.'” In 2013, more drugs, including Reclast, Cymbalta and Zetia, are set to lose exclusivity. Eli Lilly, which makes Cymbalta, spent $238 million in advertising the drug last year, said Swallen.
Direct-to-consumer TV ad spending by the drug industry has peaked for several reasons, said John Kamp, an attorney with Wiley Rein who runs the Coalition for Healthcare Communication. As the exclusivity protections for major drugs expire, the new products drug companies have in their pipeline are not expected to reach as broad a market, he said. “The new drugs are more niche products, better suited to niche media."
Drug companies have fewer products coming onto the market than a decade ago, when new drug approvals were more common, Swallen said. “They haven’t disappeared, but there are fewer of them,” he said. “And the new drugs that have hit the market have generally been supported with smaller ad budgets."
"We've seen some softness in that category and it’s probably going to continue,” said Jack Poor, vice president at the TV Ad Bureau. TV stations carry a very small portion of the drug industry’s ads, he said. “We do get some spillover, if the networks don’t deliver,” he said. “But it’s basically the networks and the cable networks that will really suffer if the blockbusters aren’t on the scene.”
TV networks are accustomed to replacing clients, Swallen said, and overall, drug-industry spending makes up a relatively small slice of the $60 billion annual TV ad business. The pharmaceuticals most advertised on TV -- erectile dysfunction drugs -- still have several years remaining on their patent exclusivity, he said. It will not be simple to replace some of the blockbuster drug brands that are expected to stop advertising soon, he said. “If you're making a $1 million sale to the pharma industry, that might be one customer and one brand,” Swallen said: “If you're going to get a $1 million” ad buy from other sectors of the healthcare industry such as medical service providers, “it’s going to take 10-15 brands to generate that amount of money.”