The PM Society’s Industry-Agency Relationships interest group met last week led by Rachel Farrow and Stephen Page. It’s a group where senior people from pharma marketing and agency leadership come together to discuss how we can improve practice in pharma-agency selection and partnership. The meeting began by asking the members what challenges they have seen over the last 12 months and what does 2024 look like for them?

Pharmaceutical, biotech and medical technology companies are trying to balance the need to continue investing in the development of better therapies, with rapidly reducing healthcare budgets, while ensuring shareholder value. We’ve seen many go through restructures or recalibrations and there is a continuing pressure to find efficiencies and reduce budgets generally for marketing activities. Some companies are bringing more services in-house, saving their budgets for the bigger strategic work. We have also seen all-encompassing procurement contracts with larger agency networks, shutting out smaller more specialised agencies.

In 2023, and continuing to some extent, there was a pausing on many agreed projects, pitches resulting in no win, and wins that didn’t turn into business. The word ‘ghosted’ was used. We are also seeing payment terms extended, which means waiting longer to get paid for work done. Sadly, for the smaller agencies and consultants this can have a huge impact.

There was consensus among pharma members of the group that there is an appetite to spend less on media and channels, and more on impressive and impactful creative and quality content. This fits with the idea that people will still pay well for what they perceive to be of most value. But agencies should expect to have budgets scrutinised and some of the more operational tasks taken in-house. For example, amends and changes to slides decks might be done by an in-house team rather than the agency that created the content. The technical and production elements are also being decoupled from projects with creative and strategic elements with the result that some big pharma have in-house studios.

So, it’s a mixed picture so far this year. There are signs of a settling down after the big changes of last year, but all companies need to adapt to the new normal. It’s certainly not going to be a return to life before 2023.

Author: Rachel Farrow, Director, PM Society