Direct-to-consumer pharmaceutical advertising has quietly become the seventh-largest ad category in the U.S., based on total spending, racking up $6.4 billion in ad spending in 2016. That’s a staggering 64% increase since 2012. Radio has benefitted from the trend with pharma advertising up 26% from 2015 to 2016.
A new report from Kantar Media drills down into this high-growth category, uncovering several trends driving the expenditure increases. First, drug manufacturers have increased their direct-to-consumer ad budgets. The number of brands spending at least $50 million annually, as well as the number of brands spending over $100 million, have both more than doubled since 2012, according to Jon Swallen, chief research officer, Kantar Media Intelligence North America. When Kantar examined the top 10 prescription drug brands ranked by 2016 ad investments, it found eight had double-digit growth rates year-over-year and all of them spent over $100 million. Topping the list of big pharma advertisers is Humira, which shelled out $439 million in 2016 on advertising, a 20% increase from 2015. Other top-five spenders were Lyrica ($392 million, up 19%), Eliquis ($296 million, up 17%), Xeljanz ($258 million, up 37%) and Opdivio ($168 million, a 32% increase).
Radio has benefitted handsomely from the trend. Pharmaceutical advertising, including for prescription drug and pharmaceutical house spend, jumped 26% on radio, from $26.36 million in 2015 to $33.19 million in 2016 according to Kantar data. Radio’s top prescription drug spender by far was AbbVie, which allocated $23.89 million to radio in 2016. AbbVie’s anti-inflammatory Humira is the best-selling drug in the U.S., according to pharma industry news publication FiercePharma. Pfizer ranked second, with $2.05 million in radio ad spend, followed by Vanda Pharmaceuticals (3rd, $1.93 million), AstraZeneca (4th, $785,000) and Johnson & Johnson (fifth, $704,000). Kantar tracks radio revenue for national spot, network and local radio from 36 markets.
The other major trend in the category has been well-funded marketing launches for new prescription drug approvals. “During the past several years stepped-up R&D by major pharma companies has filled the product pipeline with new drug treatments, many of which have promising sales potential and have been commensurately supported by DTC advertising,” Swallen says in a report. Looking at the start date of advertising for every new Rx introduced into the market since 2013, Kantar tabulated expenditures over their first 12 months. The analysis found that the first-year investments made by newcomers accounted for as much as 13% of total category spending.
How long will the trend last? “Incremental spending is generated from new product launches which in turn can prompt competitors to raise their investments in defense of market share,” Swallen says in the report. “More competition also provides an impetus for brands to sustain these higher spending levels over time.”
At the same time, there are factors that could cause pharma advertisers to hold the line or pull back on spending. For one, the rising cost of prescription drugs has become a public policy issue that could lead to actions that impact the revenue stream that funds ad budgets. And changes to the drug insurance marketplace could affect consumer demand and use of prescription medications. With these and other variables in play, Kantar concludes it’s too early to know to whether current spending levels can be sustained.