DTC advertising expenditures exceed $1.3 billion in 1998

Drug Store News, June 7, 1999 by Kim Roller

Direct-to-consumer advertising spending increased 23 percent in 1998 to $1.3 billion, according to research company IMS Health. Overall pharmaceutical company promotional spending directed toward healthcare professionals and consumers exceeded $5.8 billion--up 19 percent over the previous year.

The top DTC-advertised brand in 1998 was Schering Plough's Claritin, with a DTC investment of $185.1 million, up 171 percent over the previous year. Schering-Plough spent $81.8 million on promoting the Claritin family of products to healthcare professionals, an increase of 23 percent over 1997 levels.

"Creating and maintaining a brand image among consumers is a vital component of promotional strategies in the pharmaceutical industry today," said Bob Hooper, president of IMS Health. "It is an investment in current product sales and in the future of the product, particularly in brand recognition following patent expiration."

While Claritin's total promotional investment grew 98 percent between 1997 and 1998, its chief competitors, Pfizer's Zyrtec and Hoechst Marion Roussel's Allegra, held their total promotional budgets steady. Zyrtec's promotion spend grew 6 percent in 1998, while Allegra's spend was up 3 percent. Pfizer shifted its promotional spend strategy for Zyrtec last year, according to IMS, investing $75.6 million in DTC ads and $53.6 million in professional promotion, down 20 percent from 1997. Hoechst Marion Roussel took the opposite tack, shifting its promotional emphasis for Allegra to the professional audience, spending $60.7 million in 1998, up 33 percent over the previous year, while reducing its DTC investment to $52.5 million for the same period.

Other brands undergoing a shift in promotional resources included Eli Lilly's Prozac, which saw its DTC investment increased by 82 percent over 1997 levels to $41.1 million. Astra raised DTC ad spending for Prilosec by 19 percent, while at the same time boosting its professional promotional efforts for the antiulcerant by 95 percent to $52.2 million. Glaxo Wellcome increased its professional promotional spending for Zyban by just 4 percent last year, yet fueled its consumer ad campaigns for the smoking deterrent with a 69 percent boost in DTC spending over the 1997 launch-year levels.

In 1998, the top 10 DTC advertisers--which accounted for more than 53 percent of the total DTC spend--together invested 43 percent more on ads to reach consumers ($706.9 million) than on ads directed to physicians ($494.2 million). Of the top 10 DTC spenders, six invested more than half of their total promotional budgets to reach consumers. Notably, Merck & Co. spent 83 percent of its total promotional budget on DTC advertising for Propecia as it sought to optimize the product's launch-year ramp-up. Schering-Plough's Claritin followed, with 69 percent of the company's total promotional budget invested in promoting the drug to consumers.

In the consumer arena, television received the lion's share of DTC budgets, with $664 million invested in 1998 or 50 percent of the total. Advertising in print followed, with a $630 million spend.

Medical journal ads down

The year-end figures reveal a trend among top DTC advertisers to divert spending from traditional medical journal advertising, according to Kelly Peters of IMS. "In fact, six of the top 10 DTC-advertised brands actually lowered their journal spending significantly, with Zyban's 52 percent decrease at the top of the list."

However, the top DTC spenders didn't abandon medical journal advertising for most of their newly launched products, with $13.6 million invested for Viagra, followed by Evista ($6.5 million), Propecia ($5.6 million) and Zomig ($5.1 million).

Commenting on how the industry invested the majority of its professional promotional budget, Peters noted that $4.1 billion, or nearly 90 percent, was used for face-to-face selling with office- and hospital-based physicians during 1998, a 20 percent increase over the previous years.

                           DTC spending by brand

Rank Brand        DTC $    % change
               in millions
1    Claritin   $185.1       171%
2    Propecia     92.3       N/A
3    Zyrtec       75.6        39
4    Zyban        64.4        69
5    Pravachol    59.7       -23
6    Allegra      52.5       -18
7    Prilosec     49.7        19
8    Zocor        44.5        -3
9    Evista       42.3       N/A
10   Prozac       41.1        82


Source: IMS Health

How drugs were paid for in 1998

Third party payers covered 1.6 billion new and refill prescriptions in 1998, almost twice the number paid for by cash and Medicaid combined, according to the pharmaceutical consulting firm Scott-Levin. As the jump in third party payments corresponded with a drop in cash payments, from 29 percent of all retail prescriptions in 1997 to 24 percent in 1998, the top 10 most prescribed drugs by payment type in 1998 were:

Top 10 drugs by third party payment

* Premarin Tabs (Wyeth Ayerst)

* Hydrocodone (various generic)

* Synthroid (Knoll)

* Trimox (Apothecon)

* Athenolol (various generic)