Johnson & Johnson has kicked off a soup-to-nuts review for its $25 billion pharmaceuticals group.
Marc Monseau, Director-Public Affairs at Johnson & Johnson, confirmed the review to Advertising Age, but declined to give details. Executives familiar with the situation, however, said the marketer is seeking a holding company to manage all marketing disciplines for its pharma group, which includes pain medication Ultram ER, cancer and blood disease treatment Procrit and migraine remedy Topamax.
"It's a big one no doubt," said one. "It's a very serious sum of money given the scope of it."
J&J spent about $110 million of its $1.4 billion measured-media budget last year on pharmaceuticals, according to TNS Media Intelligence. Some $49 million of that was for the Topamax, which loses patent protection and faces generic competition starting September 26. Even so, the current review stands to be quite lucrative, as it also cuts across unmeasured media -- a thriving part of pharmaceutical marketers' budgets. (PR, though, for some reason, was singled out as not being part of the "baseline request.")
"(The review) is part of our ongoing efforts to ensure that we leverage the best creative talent in advertising and marketing and to enhance efficiencies through a more integrated approach," Mr. Monseau said. "And because of that, we are undertaking a review of the creative and marketing agencies that support our pharmaceuticals group."
Asked if the goal is to consolidate the agencies under a single holding company, Mr. Monseau said, "We are looking at a number of options including folding into several holding companies, but we really can't speculate what that's going to look like."
"(Consolidation) is the way they are talking about it to the holding companies," said one executive familiar with the review. "They are going into this process with that idea in mind."
"I would say it's more than (just) advertising, because to go to holding companies and say it's only for advertising is kind of silly," said another executive with knowledge of the review. "You go to holding companies and say we're looking for solutions in markets which are highly specialized and cross many different channels. The category being what it is, advertising is actually not a solution for some of these things in the traditional mass-media sense."
Mr. Monseau declined to offer a timeline, but it is believed the pitches will start in September, with the company looking to put the winning agencies to work immediately. "All the work is due to start in 2009," an executive said.