Is Healthcare Communications Experiencing a Market Correction?
What’s happening in the industry, and what it means for communications leaders.
Rewind 12 months, and you would see a different picture for healthcare communications. One where the industry boomed, marketing activity accelerated, and the tone was set largely by communications talent.
In fact, this spike maintained momentum throughout the pandemic - and for a number of reasons. For once, the pharmaceutical industry stepped further into the spotlight, and their brand reputation became more powerful, and more intrinsic to a successful organisation.
Simultaneously, reallocation of marketing funds meant many pharma and healthcare companies needed more communications professionals on the ground. All leading to a highly candidate-driven market.
Now, out the "other side", the industry has seen a shift. And for many of us who have operated in the healthcare space for years, even decades, it’s a shift we’ve not seen before.
Here's why healthcare communications could be going through a market correction, and what it means for those at the centre.
A swinging pendulum.
During the pandemic, two core things happened for pharmaceuticals.
Firstly, the pandemic heighted public focus. Healthcare received a surge in attention and information-share, enhancing the need to manage brand reputation like never before.
Secondly, conferences and congresses were made digital. For many pharma corps, attending events in-person was a traditional marketing method, and often one of the most significant cost allocations in the annual budget. Resulting in a surplus.
In-house and in agencies, communications professionals gained 'slush funds'. Budget was allocated to broader marketing projects and brand reputation in a bid to drive market impact and bridge the gap.
Demand for strategic communications grew, so demand for new talent grew. Competition for quality candidates led to many more junior and mid-level comms professionals securing great roles with great opportunities attached.
Between 2020 and 2022, the peak of this ‘boom’, pharmaceutical companies were happy to pay expanding rates to fulfil their marketing needs. But this year, demand began to drop.
A perfect storm.
The easing of COVID restrictions and a softening public rhetoric towards the pandemic contributed to this shift, but the situation is much more nuanced than that.
Global inflation rates have made pharma budgets as tight as most other sectors'. Increased costs of labour, raw materials, and transportation, alongside imminent change to VPAS in 2024 have led to pressurised profit margins.
Supply chain disruptions aren't only a direct result of inflation - politically polarised regions, Brexit, and ESG pressures all contribute. And despite long-standing dual sourcing, potential disruptions still represent a potential loss of 25% of EBITA over the next decade.
Placing the burden of increased costs on patients and healthcare groups isn’t a viable option for pharma brands, but comparatively, shareholders need to maintain revenue. And many companies turned to marketing budgets as the best solution to bridge the gap.
The recruitment surge of the past two or three years meant that agency rates and salaries were comparatively high, but unlike many other business functions (like sales) demonstrating the value of comms in facts and figures was still difficult. It’s easier to cut a budget and reclaim funds when direct outcomes are tough to see.
A time for opportunity.
For pharma companies, the drive to cultivate a strong brand reputation hasn't changed, but the execution has. They're increasingly looking to comms leaders who will provide commercialised outcomes.
In many cases, companies see this as an opportunity to build strong internal teams with experienced talent who will cultivate a great reputation from within. In others, smaller agencies with agile models are growing in appeal, since they can be deployed as and when they’re required.
Embedding the need for communications in pharmaceutical and healthcare will require comms leaders to maintain two key focuses: diversification and upskilling.
Comms has evolved from being solely about press releases and corporate statements, and there's an expectation for in-house teams and agencies to fulfil every corner of PR and marketing. Service diversification will only grow in importance in the future of the market.
Additionally, leaders need to prioritise cultivating a skilled, qualified workforce. Upskilling the talent onboarded during the pandemic, reducing operational pressures, and revisiting how candidates are supported during their progression should take precedence.
Underlying it all, pharma companies need to find their position and voice in a post-pandemic market. The seismic change during the 2020 to early 2023 period has forever shifted the direction of the sector, and many are yet to define what that looks like.
Real impact will come from demonstrating the value of PR and communications to C-Suite - particularly in a healthcare space. It will require strong political skills to secure comms buy-in and investment from a Board, and the right proof points that more accurately demonstrate comms' worth.
A market correction isn't a market shutdown. Managed well, leaders can establish a clear path for communications to strategically progress in the pharma market, and validate the untapped potential of PR and comms for the sector.
At Hanson Search, we’re more than simply talent partners. We offer businesses and organisations all around the world tailored advice on their workplace, workforce, and how to thrive in a changing landscape. If you could benefit from an external perspective and consultation, get in touch today.
Author: Amy Hayer - Partner, Healthcare
Posted on 02.11.2023