The DTC juggernaut is weakening. As The New York Times reports, industry spending on TV ads fell by 2% in 2011, the fourth consecutive year of decline. Altogether, TV spending is down 20% from 2007 levels. While it's quite a turnabout from the run-up in drug-brand advertising over the previous decade, the dwindling TV ad budgets aren't a huge surprise.
After all, the advent of pharma advertising on TV coincided with a wave of new mass-market medications that would lift brand revenues to unprecedented heights. Merck's ($MRK) cholesterol pill Zocor and Pfizer's ($PFE) Lipitor; Sanofi ($SNY) and Bristol-Myers Squibb's ($BMY) blood thinner Plavix; Sanofi's sleep drug Ambien; GlaxoSmithKline's ($GSK) antidepressant Wellbutrin (now marketed by Valeant Pharmaceuticals ($VRX)); Merck's Fosamax... the list goes on. Not coincidentally, it's these very drugs that have been falling off patent--or soon will--as brands accelerate over that cliff through 2014.
The New York Times points out advertising controversies may have played a role in the DTC decline. It can't have helped, for instance, the heavily advertised Vioxx and Avandia both ended up facing big safety scandals. Plus, payers have grown increasingly aware that ads push patients toward newer--and thus more expensive--products. And then there's the TV viewers' lamentation about erectile dysfunction drug ads during prime time, which ended up prompting Eli Lilly ($LLY), which makes Cialis, and Pfizer, which boasts that little blue pill, to release their commercial scheduling in advance.
But by far the biggest driver has to be the dwindling stable of mass-market blockbusters. Between 2007 and 2012, drugs worth some $63 billion in sales lost market exclusivity. And between 2011 and 2015, the NYT says, the total is $100 billion. Drugmakers have been laying off sales reps by the thousands, because detailing those fallen brands isn't necessary, and the specialty drugs of the future are highly targeted, so they can be handled by fewer reps. Same goes for TV ads: As fewer new primary-care drugs hit the market, there's less need to reach the masses with commercials.
- get the blog post from NYT