Industry Insights

How is the medcomms landscape evolving?

  • Private Equity
  • Healthcare
  • Europe

The pharmaceutical industry has become incredibly competitive, with the number of companies with active R&D pipelines increasing from 1,198 in 2001 to over 5,500 in 2023*. Companies are seeking innovative ways to boost the chances of a drug’s success throughout the product life cycle, including - and increasingly - during the critical pre-launch period.

Against this backdrop, demand for medical communications (medcomms) services is “incredibly sustainable”, according to an industry expert interviewed by Third Bridge Forum. Pharmaceutical companies are actively looking for new ways to communicate increasingly complex information and data, and also building awareness much earlier in the product life cycle.

The former executive at Real Chemistry International believes the medcomms industry is poised for growth given “the sheer number of drugs that are in the pipeline”. The market leaders, they added, “have truly embraced integrated communications”. In the last 5-7 years, some large global pharmaceutical companies have been breaking down internal silos to work in a more integrated fashion, and our specialist anticipates this trend will continue. This creates additional opportunities for medcomms players to serve as an extension of science teams, bringing deep strategic knowledge and experience to advise on communication strategies. 

As we heard in another Forum Interview, there is an opportunity for agencies to partner with pharmaceutical companies much earlier on in the product life cycle and support them all the way through launch and expansion. Competition is increasing though as pharmaceutical companies simultaneously reduce the number of partners they work with, a former executive at Envision Pharma Group said.

Company focus: Real Chemistry

Real Chemistry’s roots are in public relations and medcomms, with the company bolstering its machine learning and artificial intelligence capabilities through its acquisitions of Swoop and in 2021. At the time, Jim Weiss, founder and CEO, said using value-based and outcomes-driven messaging to “connect the right patients to the right treatment at the right time” is healthcare’s next frontier – something we have also been hearing across Forum Interviews. 

As noted by the former Real Chemistry executive, the company’s core competencies are traditional marketing communications, and commercial and medical solutions services vs AI and data analytics, and the specialist expects this to remain the case going forward. Even with the acquisitions, the company’s AI and analytics capabilities are at an early stage, we heard, with social analytics currently its greatest area of strength.  

Company focus: Fishawack

Marketing is Fishawack’s traditional focus, but the company has recently expanded into medical strategy and consultancy. It is also looking to shift from a multichannel to an omnichannel approach. “That part of the market [omnichannel], there’s a lot of room for growth for medical communications companies, and I do think Fishawack is well-placed there simply because they have such a strong heritage in the commercial marketing space,” the former Envision executive said. 

Although medcomms digitalisation is in the development phase, our expert believes Fishawack is stronger in AI and digital positioning vs its peers. The company’s M&A activity focuses on adding complementary services to its core, we heard, concentrating on integrated capabilities across the product development life cycle. Our specialist expects M&A will continue to be a part of its growth strategy.

Labour challenges remain

Forum Interviews suggest one of the major headwinds affecting the wider medcomms industry is talent acquisition and retention, particularly within more niche parts of the business. Specialists we have spoken to have observed a 20-25% attrition rate and the former Real Chemistry executive told us “you always want to be under 20%”. However, they noted it is important to consider the proportion of voluntary vs involuntary resignations. 

Ultimately, how medcomms players leverage their talent to meet increasing demand for their services while also remaining profitable will be a key driver of success. With an attrition gap of 25-35%, there is currently 2-3x demand for the available resources, and this could increase further as more drugs are added to the pipeline. Wage inflation has calmed but remains high. As competition for talent has intensified, associate salaries have risen from USD 80,000 to USD 120,000, representing inflation of about 20%. However, 10% would be more sustainable, our specialist said. 

The future of medcomms

Content remains critical, but what is increasingly important is how that content is communicated. In our Interview with the former Envision executive, we were told AI will have a profound impact on medcomms agencies as content development becomes more commoditised and pricing pressures mount. “There’s going to be a real demand from pharma on medical communication companies to enhance their efficiency and move from manpower-driven types of support to more automated,” the expert said. Given the industry’s exposure to labour challenges, it will be interesting to see how and when AI technologies will begin to revolutionise operational models, which, as we heard, are “absolutely going to have to evolve based on the implications of AI”. 

Meanwhile, pharmaceutical companies are expected to choose to work with agencies as they adopt the digital solutions required for a successful omnichannel marketing strategy, though no single medcomms player has yet reached omnichannel level, we were told. “Omnichannel strategy… is very loosely defined at the moment and a lot of people have different definitions of exactly what it is, and each company is in a very different space in terms of how they’re embracing and approaching omnichannel planning.” As part of this shift, many players are “aggressively” acquiring AI-based companies. However, for now, the industry ultimately remains relationship-oriented and highly dependent on intellectual knowledge.

* Statista

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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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