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Executive summary

In a competitive pharmaceutical marketplace, successful

commercialisation of products depends on both speed-

to-market and meeting the objectives of a number of

stakeholders. Over the past two decades the route to successful

commercialisation has evolved considerably in response to

the changes undergoing the pharmaceutical industry, namely

declining R&D productivity, the demise of the blockbuster

model, the increasing prevalence of chronic diseases and

increasing patient expectations. Healthcare organisations

worldwide have been forced to seek innovative approaches to

optimise revenue from their products. As the stakeholder group

has evolved, pharmaceutical companies are looking for the most

eff ective ways to inform customers, whether patients, healthcare

professionals or payers, about the benefi ts of their products,

while government agencies are also seeking to increase patient

awareness & education and encourage disease prevention.

These factors have led to the emergence of a specialised

healthcare marketing communications sector which can play a

critical role in determining the success of a product, from clinical

development, through launch and to maturity.

Healthcare Marketing and Communicationsmarket drivers and M&A trends



Background to the sector

Healthcare communication strategies for branded medicines

traditionally focused almost exclusively on prescribers.

By demonstrating clinical effi cacy and safety they were

enabling and encouraging healthcare providers to prescribe

medicines to patients. Between 1996 and 2005, the number

of sales representatives employed by the pharmaceutical

industry nearly doubled, although the number of medical

doctors increased by just over 25%. Estimates of spending on

pharmaceutical promotion between 1996 and 2005 rose from

$11.4bn to $29.9bn in the US1, 2, a direct result of this expansion

in sales forces. Today, with many markets saturated with sales

representatives, aggressive marketing to prescribers is becoming

increasingly ineff ective. Fundamental changes to the industry

have also diminished the infl uence of patient-facing providers,

calling into question the vast amounts of money and time

that pharmaceutical companies continue to invest in direct-

to-practitioner marketing3. Pharmaceutical companies have

responded to these trends by cutting sales force numbers and

re-allocating budgets into areas that focus on other, increasingly

infl uential stakeholders in the market: initially payers but now

also patients and prospective patients. Growing areas of focus

include medical education, market access, Real World Evidence

and direct to consumer advertising. Delivery channels for

marketing have also evolved, spurred by the advent of the digital

age, away from publications and towards websites and platforms

such as patient engagement forums.

Commercialisation and marketing strategies have also become

an earlier consideration in the product lifecycle. In a tougher

reimbursement environment, pharmaceutical companies now

routinely subject early-stage drugs to market access strictures

before committing to expensive late-stage clinical trials,

meaning market access fi rms are engaging with clients earlier

and for longer-lasting projects. The trend is also evident on the

creative marketing side of the sector, with creative agencies

being engaged both earlier (for example, to help ‘package’

scientifi c messaging and data to payers or KOLs in the healthcare

professional community) and later (for example, to help

maximise revenues for mature products).

An evolving audience – from patients to consumers

Historically, relatively little attention was paid to the

experiences of large groups of patients, perhaps because

information about the user experience or the opinions of

the patients was hard to compile, or perhaps because of an

entrenched ‘the doctor is the customer’ mentality. Over the past

decade, an exponentially increasing fl ood of information has

become available about patient experiences, largely provided

by the patients themselves through new technologies such

as online forums, blogs and support groups. Coupled with the

emergence of the internet as a primary information source for

patients (supplementing or even replacing the doctor), patients

are starting to become experts about their conditions and to

1 Donohue et al (2007) A decade of Direct-to-Consumer Advertising of Prescription drugs.

N Eng J Med, 375(7): 673- 681

2 Pharma 2020: Marketing the future. Which path will you take? PWC, 2008

3 MM&M Healthcare Marketers Trend Report 2013

4 “Herceptin: Was patient power key?” BBC News, 2006

5 NEJM Study, 2002

6 United HealthCare Services, Inc., 2008

7 Rozenblum R, et al. Quality and Safety in Health Care 2013;0:1–4. doi:10.1136/bmjqs-2012-001744

take charge of their treatment. This has caused a paradigm shift

in healthcare communications, with the emphasis moving from

simply informing and directing patients to creating engaged

relationships between patients and their healthcare brands.

Not only is the patient ‘voice’ increasingly easy to hear, it is also

increasingly organised. Patient groups have started to play a

direct role in healthcare decision making. For example, as long

ago as 2006 the approval of Herceptin by the British NHS for the

treatment of early breast cancer4 was critically infl uenced by

patient pressure. Recognition of the importance of the patient

experience can be seen across the product development

landscape, from clinical trial design and management, to the use

of Real World Evidence in post-approval product evaluations.

It is diffi cult not to conclude that this trend will continue and

accelerate, especially as, compared to non-healthcare product

markets, consumers / patients still play a relatively minor role.

This is particularly apparent in the US where recent healthcare

reforms have accelerated the transformation of the patient

into both consumers and payers. We expect the needs and

perspectives of patients to become even more important

in healthcare delivery as access to reliable user experience

information increases and as the methods used to analyse this

data mature.

The role of the patient in preventative care

Regulatory bodies have not failed to recognise the

importance of patient engagement for curbing the

spiralling costs of healthcare through preventive care.

Governments and policy makers are encouraging patients to

be increasingly involved in their own care, both to improve

diagnosis and quality of care as well as to reduce healthcare

ineffi ciencies. The reasons are not hard to understand. Taking

just one example in the US, the Diabetes Prevention Program

has estimated that lifestyle interventions can reduce the onset

of Type 2 diabetes onset by 58%5. This approach would lead to

signifi cant savings at current levels of incidence, even without

factoring in estimates that treatment costs might triple in 20

years. We have seen a patient engagement theme behind a

wave of healthcare reforms designed to address problems like

these, across the US and Europe. In the US many large employers

now off er consumer-driven plans, which require employees and

benefi ciaries to become more involved in healthcare issues6.

Healthcare organisations are also striving to become more

patient oriented and measure their progress. Finally, Hospital

Consumer Assessment of Healthcare Providers and Systems

(HCAHPS), which attempt to measure patient perspectives on

care, are now a national requirement7.



Marketing to payers – market access

The focus of regulatory reimbursement agencies (and private

payers) on budget discipline and cost benefi t analysis is no

longer a ‘growing trend’ in the sector, it has long since become

routine. This emphasis on cost benefi t analysis has represented a

major shift for pharmaceutical companies – it is fair to conclude

the industry has been slow to grasp this shift, but it now seems

generally accepted that, in addition to satisfying effi cacy and

safety requirements, the cost-eff ectiveness of a product must

also be ‘sold’ to payers, whether governments, private insurance

plans or pharmacy benefi ts managers.

Policy making bodies themselves have, of course, changed

in structure over recent years. To drive safe, eff ective and

patient-focused policy-making, a number of countries such

as the UK, Germany, Australia, and Canada have established

agencies to conduct the formal clinical and economic

evaluations of medicines and therapies, known as Health

Technology Assessment (HTA). These assessments can measure

cost eff ectiv eness, benefi t assessment, budget impact and

therapeutic gain, and form the basis for reimbursement and

pricing decisions. In the US, the Senate is considering creating

a Healthcare Comparative Eff ectiveness Research Institute to

perform a similar function.

Achieving the optimal price and reimbursement status from

these agencies is a key factor in maximizing return on R&D

investment for pharmaceutical companies. The economic value

of the pharmaceutical product (as beheld by the payer) is now

at the centre of product development and commercialisation

processes from early stages onward, driving a shift from

prescriber-led decision making to payer-led decision making

and resulting in signifi cant shifts in pharmaceutical marketing

budgets away from the prescriber and towards the payer. The

long-established demand for outsourced market access services

is a function of this trend, and continues to feed the growth of

both specialised market access companies and broader ‘value

communication’ groups. These groups practice a diverse range

of disciplines aimed at communicating product value to industry

stakeholders, such as product/pricing/budget impact modelling,

landscape and stakeholder mapping, HTA submissions,

statistical analysis (such as meta-analysis and mixed-treatment

comparisons) systematic reviews and health economics training

and communication toolkits.

The impact of digital technology

Perhaps no single factor has had a bigger impact on

healthcare marketing and communications in the last few

years than the emergence of new technologies and social

media. The number of patients using technology to diagnose

and manage their conditions has soared in a remarkably short

period – it is estimated that 66% of all US patients go online

to research their conditions and it is predicted that 500 million

smartphone users worldwide will have downloaded at least one

health-related app by the end of 20158. Every stakeholder group

is aff ected by this trend: physicians are using smart devices

8 Mobile Health Market Report, Research2guidance, 2013

9 Healthcare Communications in the Digital World: Mitigating the risks in a highly regulated

environment, 2008

10 Bayer rapped over Levitra, Sativex tweets, PharmaTimes July 2011

11 IBM Institute for Business Value, The value of analytics in healthcare, 2011

for patient education and practice management; hospitals

are installing Electronic Health Record systems, allowing

data sharing across diff erent healthcare settings; insurers are

reaching out to patients to encourage treatment-conscious

lifestyle choices; and pharmacies are allowing patients to fi ll

prescriptions online.

As noted above, governments are encouraging patients to

take control of their care, and are using technology to do

so. The European Commission unveiled a plan in 2012 to

address barriers to the adoption of digital solutions in Europe’s

healthcare system. The UK Department of Health initiated Digital

First in 2011, with similar aims. In the US, the government is

also encouraging the use of information and communication

technology to reduce healthcare expenditure.

With the increasing role of technology and media in healthcare,

pharmaceutical companies need to incorporate digital and

social media messages into their communication strategies.

Yet compared to other industries they have been slow to do

so. Whereas by 2008 a typical company was already spending

about 37% of its marketing budget online, a pharmaceutical

company was spending an average of 4% of its marketing and

PR budget online – signifi cantly less that in any other industry9.

Challenged by the lack of clear regulations surrounding digital

marketing and chastened by early mis-steps10, this conservative

industry continues to use traditional communication channels

such as medical reps, conferences and print materials. As the

declining eff ectiveness of these channels becomes clearer, the

ability of technology to help create a brand, and drive patient

engagement with that brand is slowly being recognised. We see

providers of digital-based patient engagement services, from

patient-focused creative agencies to online community builders,

becoming increasingly valuable to pharmaceutical clients.

Big data and data analytics

The sheer volume and complexity of data now being

generated by the healthcare industry is staggering, and

continues to grow strongly. This unprecedented explosion

of information has both been driven by and helped create a

proliferation of clinical information systems, electronic health

records and connected health devices. In a world with hugely

suboptimal healthcare outcomes (ineffi ciencies that cost up to

$2 trillion in the US alone11) the potential benefi ts from utilizing

this data are obvious.

Healthcare providers are increasingly using data analytics to

digest this information, draw lessons from it and apply the

resultant insights across the product lifecycle. The ultimate goal

is to develop a more personalised approach to treatment –

providing the right intervention to the right patient at the right

time, leading to the most effi cient outcome.



Aside from improving patient outcomes, big data analytics are

also being used to benefi t healthcare players on a corporate

level: from enabling operational improvements and streamlining

internal processes, to generating data-driven tools which

can inform strategic decision making development, product

research, clinical trials12 or sales and marketing processes.

Finally, patients themselves, in their new guise as consumers,

are beginning to demand access to their own healthcare data,

to understand the breakdown of their costs and make their own

informed choices. The US pioneer in this area, Castlight Health,

recently underwent a successful IPO that valued the healthcare

IT start-up at $3bn, demonstrating the demand for personalized

healthcare cost breakdowns which integrate pharmacy, hospital

and doctor information in a consumer-friendly form.

For healthcare marketing companies, the obvious application of

big data analytics is in providing accurate measurement of the

impact of marketing activities. We expect the increasing links

between traditional creative agencies and data gathering and

analysis consultancies to be a key corporate activity trend over

the coming decade.

Real World Evidence

The previously described changes in the regulatory and

reimbursement environment have driven the growth and

use of Real World Evidence studies (a pragmatic, observational

approach to outcomes measurement), as opposed to more

traditionally used randomised clinical trials (RCTs). RCTs have

long been considered the most reliable way of generating

clinical evidence yet they have well recognised failings: they

tend to rely on a narrow patient profi le and only compare the

experimental group and a placebo control group – there is no

comparison with the real world standard treatment. Real World

Evidence studies, used as supplemental studies, help to address

these ‘blind spots’. They can pick up on potential benefi ts and

adverse events which might go unnoticed in the restrictive

RCT environment as well as provide relative value assessments

against existing treatments.

Payers have become increasingly concerned with measuring

the real-life effi cacy of drugs, as refl ected in the emergence

of outcomes based payments13. The trend towards outcomes

based payments, now gaining real momentum at the sub-

national level in the US, brings together a number of the themes

we have noted above: severe budgetary pressures, a sharp focus

on creating patient engagement and adherence and the use of

smart information/education tools to both provide treatments

and measure their eff ectiveness. With a growing number of

increasingly complex treatments now administered at home

(such as oral chemotherapy14) adherence and measurement will

continue to grow in importance.

With the shift towards outcomes based reimbursement,

we believe eff ective value communication will need to be

increasingly substantiated by Real World Evidence. We see a

greater demand for healthcare data analytics businesses which

12 Clinical trial recruitment in the age of the epatient, Tudor Reilly, 2013

13 The Trillion Dollar Prize, McKinsey, 2013

14 Oral chemotherapy treatments, Cancer Nursing, Jan/Feb 2013

can provide the data for these studies as well as the consulting

businesses which can analyse the data and communicate the

resultant insights eff ectively to payers.

M A activity in the sector

We have noted a number of trends we see driving the

healthcare communications sector, which in turn is

driving corporate activity and acquisitions in the sector. A case

in point is IMS Health, a perennially active acquirer which has

spent $587m on 22 assets since 2011, including some notable

healthcare communications transactions. The $100m acquisition

of Apparture gave IMS a cloud-based marketing platform, HGS

Europe extended IMS’s market access capabilities, and Swedish

company Pyrargus gave IMS a technology-enabled Real World

Evidence platform. Taken private for $5.2bn in 2010, acquisitions

have driven sales towards $2.5bn and the company is now

poised to re-fl oat on NASDAQ. At this larger end of the market,

IMS follows the successful example of Quintiles: taken private,

expanding through acquisition and re-fl oating as a substantially

larger group.

Other ‘on-trend’ deals include the recent acquisition

of KnowledgePoint 360, a US & UK-based healthcare

communications group, by UDG Healthcare, an outsourced

services group. Originally a pharmaceutical distribution

business, UDG is one of a number of mid-sized fi rms moving

into healthcare marketing and communications (in UDG’s case

through a series of acquisitions) once again highlighting the

strategic interest in the sector from a diverse buyer group.

As pharmaceutical companies continue to outsource their

market access capabilities, there have been numerous deals

in the market access consultancy space, with a CRO-led buyer

group snapping up smaller market access specialists. Parexel,

acquired a market access consultancy Heron Group, following in

the footsteps of rival CRO, Icon, which acquired PriceSpective in

early 2012. In the same year, Decision Resources Group, owned

by Piramal, acquired health economics consultancy Abacus

International. We see sustained interest in the space from CROs,

diversifi ed marketing and communications groups, market

research fi rms, data and analytics players and even pure-play

consulting and strategy fi rms.

Private Equity (PE) groups are also active in this space, and not

just with giant fi rms like Quintiles and IMS. There are signifi cant

growth and consolidation opportunities amongst SME-sized

medical communications groups: UK fi rm Fishawack’s PE

owners, Growth Capital Partners, are supporting its strategy

to build a diversifi ed value communications group with

multiple follow-on transactions in areas like market access

and pharmacovigilence. On the data and analytics side of the

sector, Truven, a healthcare information and analytics division

of Thomson Reuters, was acquired by Veritas Capital for $1.3bn.



In market access Hobart, a US payer-focused fi rm, was acquired

by Precision for Medicine and Evidera, a health outcomes and

market access company, was acquired by Symphony Technology

Group. Evidera subsequently acquired bolt-on Archimedes from

Kaiser Permanente, highlighting a trend of buying technology

assets to improve the ability of consulting businesses to harness

and analyse big data. Also noteworthy was the acquisition of

Envision Pharma, which provides evidence-based solutions in

the area of scientifi c publication planning, by The Halifax Group.

A list of selected transactions over the last two years is provided

in Appendix A.

What buyers want – premium factors

A noteworthy aspect of corporate activity in healthcare

marketing and communications is the diversity of

businesses monitoring the sector: we have seen marcomms

networks, CROs, data providers, strategic consultancies and PE

groups express interest in the sector. They are all seeking greater

exposure to pharmaceutical outsourcing budgets but, with such

diff erent heritages, they assess targets on very diff erent criteria.

However, there are a number of ‘premium factors’, common to

most buyer groups:

❙ Real World Evidence, outcomes based research and market

access remain the ‘hot’ sectors, and are accorded premium

valuations (compared to businesses at the creative end of the

spectrum). This premium translates down to an individual staff

profi le level: health economists and technical expertise such

as economic modellers is seen as particularly valuable

❙ The growing importance of the patient and the payer as

stakeholders has translated into acquisition appetite for

businesses focused on these stakeholders. Hobart’s acquisition

by Precision for Medicine and Abacus’s acquisition by Decision

Resources Group are the benchmark deals in the US and

Europe respectively

❙ The fundamental reason many buyers wish to enter this sector

is to increase their exposure to big pharma’s outsourcing

budgets, in this case the brand, marketing, medical education

and communications budgets. A broad base of pharma

clients is thus a strong premium factor. Demonstrating ‘sticky’

relationships with these clients is also important, whether

through retainer-based contracts, master service agreements

(MSA) and preferred supplier agreements (PSA) status or

simply by having relationships with multiple independent

budget holders within pharma clients

❙ Data-led services, which use big data as the basis for

sophisticated qualitative insights are highly sought after

❙ While true service based businesses may have appealing

capabilities, it can be diffi cult to scale these businesses

beyond adding more staff . The ability to productise, or at least

‘templatise’ processes is seen as highly valuable. Productised

business models can be more easily scaled and repeated than

truly bespoke consulting services. A productised business also

allows buyers to become more comfortable with paying a

premium valuation – there is more concern about acquiring a

purely people-based consultancy or agency

❙ Size is also a factor. Large acquirers are looking for platform

assets they can integrate and grow, not small bolt-on deals

which might be lost within their organisations

❙ Allied to scale is the ability to perform global projects and

service global accounts. The most attractive contracts handed

out by pharma clients are global (or global-ex-US) and a

demonstrated ability to win and deliver these projects is a

strong premium factor. At the consultancy end of the sector,

there is more acceptance of the ‘virtual teams’ model, allowing

consultants to work remotely to deliver projects (through a

local sales presence is required to win the project in the fi rst

place). At the creative end of the spectrum, big pharma still

want to see boots on the ground, particularly when awarding

US domestic or region-specifi c projects

❙ Finally, integration risk is also a factor – fi rms like Quintiles and

Covance are trying to widen their exposure to pharmaceutical

outsourcing budgets but are not interested in building a

network of businesses – how the culture of, for example, a

creative people-based business would survive integration

into a more formal corporate structure is an important

consideration for larger buyers

Future predictions

As healthcare regulatory reform continues and the role of

the patient continues to develop we see opportunities

for sector incumbents to expand and transform their business

model. We also expect the buyer landscape to continue to

grow and evolve as more buyer groups are drawn to businesses

catering to the evolving demands of payers and consumers.



Appendix ASelected transactions in healthcare marketing and communications (Last two years)

Date Target Acquirer Financials Rationale

Feb-14 KnowledgePoint360 UDG

Healthcare

$144m KnowledgePoint360 complements UDG Healthcare’s existing

global healthcare communication off ering

Jan-14 Total Therapeutic

Management

Indegne n/a Indegne acquired an Atlanta-based quality improvement,

outcomes research, and clinician engagement services company

to expand its healthcare division service portfolio and market

presence

Dec-13 PMGroup Datateam n/a The acquisition of PMLive publisher PMGroup aims to broaden the

medical footprint of Datateam

Dec-13 Pygargus IMS Health n/a IMS Health acquired Pygargus, an industry-leading life sciences

advisory and analytics fi rm based in Sweden, to advance its

technology-enabled Real World Evidence solutions

Dec-13 Vericom Corporation Spectrio n/a Spectrio will incorporate Vericom’s SoundCare® on-hold

messaging and ChannelCare® digital signage into Spectrio’s array

of communications products currently focused in healthcare and

other industries

Dec-13 HGS Europe IMS Health n/a Expands IMS’s market access capabilities in the UK and Ireland

Dec-13 Verilogue Publicis n/a Verilogue specialises in using technology to provide insights on

conversations between physicians and patients

Nov-13 Everyday Doctors Advice Media n/a Merger of digital marketing fi rms focused on private healthcare

practices

Nov-13 Passport Healthcare Experian $850m Passport Health’s physician orders, scheduling, patient access,

patient engagement services will expand Experian’s market reach,

portfolio of products and access to data

Oct-13 Catalina Health InVentiv n/a With this acquisition, inVentiv Health’s Adheris becomes the US’s

largest provider of tailored, direct-to-patient medication adherence

programs

Oct-13 Heartbeat Ideas Saatchi &

Saatchi

n/a Acquisition of digitally focused healthcare marketing agency

Oct-13 Solaris The Mission n/a Acquisition of medical communications agency based in Richmond

off ering strategic communications, medical and patient education

and a rare disease specialism

Oct-13 Refreshed Wellbeing WCG n/a Strengthens WCG’s client base, digital capability, regulatory

expertise and analytical capabilities

Aug-13 Medical

Communications

Group

UDG

Healthcare

$14.8m UDG acquired the healthcare multi-channel marketing business

of Medical Communications Group, bolstering UDG Healthcare’s

position in Canada

Jul-13 Evidera Symphony TG n/a The health economics, health outcomes, market access and

retrospective epidemiology and data analytics divisions of UBC

were acquired by Symphony to form an independent portfolio

company EVIDERA

Results advised EVIDERA shareholders



Date Target Acquirer Financials Rationale

Jul-13 Meta Pharmaceutical

Services

NexGen RX

Marketing

n/a Creates a leading pharma-focused multi-channel marketing

services and communication company. In particular, MetaPharm’s

marketing automation expertise will allow NexGen to off er

increasingly targeted personalized solutions

Jun-13 Envision Pharma The Halifax

Group

n/a Envision off ers evidence-based solutions in the areas of scientifi c

publication planning and related data dissemination services

Jun-13 Archimed Fishawack £6m Archimed supplements Fishawack’s specialist pharmacovigilance

services

Apr-13 Semantelli IMS Health n/a Semantelli Corporation is a social media analytics company

Apr-13 Heron Parexel $38.2m Heron provides a range of services in evidence development, from

evidence review to data analytics and modelling

Apr-13 Fishawack Growth Capital

Partners

£13m PE acquisition of a diversifi ed UK-based healthcare communications

business

Mar-13 Appature IMS Health >$100m Appature is a leading Software-as-a-Service company based in

Seattle. Appature off ers an innovative, cloud-based relationship

marketing platform

Jan-13 Mash Cello £1.5m Mash complements Cello Health’s insight, advisory and evidence

capabilities in consumer health

Dec-12 Abacus Decision

Resources

n/a Abacus is a pioneer in evidence-based market access

Results advised Abacus International

Nov-12 Pharmaexpert Open Health n/a Pharmexpert is a provider of market intelligence for the Russian

pharma industry

Oct-12 pH Associates Open Health n/a pH Associates is a specialist in real world data generation and data

driven solutions

Aug-12 SynopiaRx UDG

Healthcare

$12m SynopiaRx broadens UDG’s off erings with market access and

market research capabilities

Jun-12 Double Helix McCann £35m

+£15m

Double Helix elevates McCann Health’s off erings in customised

healthcare market research, market access, P&R, and HEOR

Jun-12 Truven Health

Analytics

Veritas Capital $1.3bn Truven was formerly the healthcare information and analytics

business of Thomson Reuters

Jun-12 Watermeadow

Medical

UDG

Healthcare

£13m Enhances UDG’s medical communications capability and global

off ering

Jun-12 BioMedCom Laser n/a Increases LASER’s pharmacoepidemiology capabilities to include

health outcomes and health economics research

Mar-12 Bridgehead

International

GfK n/a Bridgehead provides services in health economics, market access,

and PR

Results advised Bridgehead International

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