2010 – 2014

Beginning around 2010 a new and extremely radical trend began to metastasize through our industry.

In response to our great recession, the drive for greater efficiencies grabbed hold of the management class across pharma and healthcare.  After enjoying bloated profits and the profligate spending that accompanies riches, clients and their Boards looked at brand budgets with a renewed vigor and a yearning to cut costs.

Years of partnerships with the large consulting firms and specialized healthcare industry analysts had been focused on cost-cutting: staffing efficiencies, resource allocation, sales territory optimization, IT transformation and more. But with promotional expenditures under a magnifying class from management, stockholders, State and Federal governments, our clients were counseled, “Why not employ the same critical eye at the promotional budget and Agency fees?”

And so, the consultancies began with a deep dive into the Agency selection process.

They must have been horrified. Agency assignments were deeply based on personal relationships across the C-suite.  Brands – even potential billion-dollar blockbusters – were often contracted to an Agency on a handshake. Suddenly, Agencies were being told, “Sorry, but they told me we need to get 3 bids before we can make any assignment.”

Simultaneously, Purchasing was evolving into Procurement – a “certificate” discipline focused on getting the best for the least, regardless of category, across the budget gamut.  Agency Relations and Procurement were the new frontline gatekeeper for assignments, and the Agencies scrambled to get themselves known, to provide credentials and overviews and build relationships with an entirely new audience of decision-makers.

And so began the downward spiral of “widget to widget”, as if having ideas, developing strategies and creating memorable, branding campaigns could fit into the lowest bidder paradigm.  Although there were many complaints about the shift in Agency selection processes, clients happily abdicated their responsibility for managing promotional budgets and agency fees.

In order to collect and compare all this agency data, Procurement turned to their already-in-place on-line purchasing systems, such as Ariba, and slowly tuned the questions and requests to be more in line with the competencies and requirements for vetting an Agency.

The Agencies’ response needed a radical change from the ways of doing business in the past.  Suddenly, out-bound business efforts could be meaningless if you weren’t on a Procurement roster.  New business efforts needed to be focused on getting the RFI, progressing to the RFP and forcefully, creatively, persuasively responding in a way that would differentiate from the competition. 

Agencies reorganized their efforts, centralizing responses and making sure that a single point of contact in Procurement was getting consistent and accurate information from any group in the organization.  This drove emphasis on truly knowing the capabilities of each office worldwide on demand, as well as being able to navigate and capture both lateral and vertical integration opportunities within the huge holding companies.

The lasting change engendered by the rise of Procurement and their efforts to quantify Agency activities and profit can’t be underestimated.  Agency new business departments became focused on a rapid response, brilliantly prepared, driving towards gaining an opportunity as well as managing the process for a winning pitch. 

By 2014 many smaller and independent Agencies began to look for business with mid-sized pharma, biotech start-ups, diagnostic and device companies that had fewer barriers (and no preferred lists) as they often did not in big Pharma’s powerful, sophisticated procurement departments.

Simultaneously, client procurement drove the holding companies to participate in unbelievably costly (in time and money) gauntlets just to get on a preferred roster list, often with no guarantee it would lead to a pitch or other opportunity.  This process eventually resulted in clients consolidating with specific holding companies — and the creation of “bespoke integrated agencies”.  Our entire industry benefited by the “de-siloing”of competencies within a global holding company, leveraging all their worldwide healthcare, research, PR, digital and consumer assets in new and innovative ways.